Thermo Fisher fourth quarter revenues increase 15% to $3.13B

Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the fourth quarter and full year ended December 31, 2011.

Fourth Quarter and Full Year 2011 Highlights

• Adjusted earnings per share (EPS) in the fourth quarter of 2011 grew 23% to a record $1.18, and for the full year grew 20% to a record $4.16.
• Revenues in the fourth quarter of 2011 increased 15% to a record $3.13 billion.
• Adjusted operating margin in the fourth quarter of 2011 expanded 100 basis points to 18.9%.
• Generated full year 2011 free cash flow of $1.42 billion.
• Launched significant new products in 2011 to strengthen leadership in mass spectrometry, specialty diagnostics and laboratory equipment.
• Increased revenues in high-growth Asia-Pac markets to 15% of total company revenues, up from 13% in 2010.
• Acquired Dionex and Phadia to create leadership positions in chromatography and immunodiagnostics.
• Deployed $350 million in the fourth quarter of 2011 to repurchase 7.0 million shares, and $1.3 billion for the full year to repurchase 24.5 million shares.

Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."

"We were pleased to close 2011 on a strong note by delivering excellent revenue and earnings growth in the fourth quarter," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "This solid performance capped another successful year, highlighted by 20% growth in adjusted EPS."

"Our commitment to innovation drove significant product launches this year across all three business segments, and our expansion in high-growth emerging markets led to strong double-digit performance in China, India and Brazil. We are gaining significant traction with the additional share gain initiatives we launched in the second half of the year when the economic environment became more challenging. We also enhanced our leadership position by deploying capital on complementary acquisitions, and I'm pleased to report that the synergies we outlined for Dionex and Phadia are both tracking better than we expected. Finally, we continued to deploy our capital to buy back our shares, spending a total of $1.3 billion in 2011."

Fourth Quarter 2011

For the fourth quarter of 2011, adjusted EPS grew 23% to a record $1.18, versus $0.96 in the fourth quarter of 2010. Revenues for the quarter grew 15% to $3.13 billion in 2011, versus $2.72 billion in 2010. On a pro forma basis, as if Dionex and Phadia were owned for the fourth quarter in both years, revenues increased 6%, including a 1% increase from acquisitions other than Dionex and Phadia and a negligible impact from currency translation. Adjusted operating income for the fourth quarter of 2011 increased 22% compared with the year-ago period, and adjusted operating margin expanded 100 basis points to 18.9%, compared with 17.9% in the fourth quarter of 2010.

GAAP diluted EPS for the fourth quarter of 2011 was $0.77, versus $0.75 in the same quarter last year. GAAP operating income for the fourth quarter of 2011 increased 7% to $343 million, compared with $321 million in 2010. GAAP operating margin was 10.9%, compared with 11.8% in the fourth quarter of 2010, due to acquisition-related charges.

Full Year 2011

For the full year 2011, adjusted EPS grew 20% to a record $4.16, versus $3.46 in 2010. Revenues for 2011 grew 11% to $11.73 billion, versus $10.57 billion a year ago. Adjusted operating income for 2011 increased 16% compared with 2010, and adjusted operating margin expanded to 18.1%, compared with 17.4% a year ago.

GAAP diluted EPS for 2011 increased to $3.46, versus $2.53 in 2010, due primarily to gains on the sale of discontinued operations. GAAP operating income for 2011 increased 3% to $1.25 billion, compared with $1.21 billion a year ago. GAAP operating margin was 10.6%, compared with 11.4% in 2010, due to acquisition-related charges.

Annual Guidance for 2012

Thermo Fisher is initiating adjusted EPS and revenue guidance for the full year 2012. The company expects to achieve adjusted EPS in the range of $4.67 to $4.82 for 2012, which would result in 12% to 16% EPS growth over 2011. The company expects to achieve 2012 revenues in the range of $12.15 billion to $12.35 billion, for 4% to 5% revenue growth year over year.

Casper added, "Although there is still uncertainty in the macro-economic environment, our proven strategy for creating shareholder value through the combination of revenue growth, margin expansion and effective capital deployment positions us to achieve our goals for 2012."

The 2012 guidance does not include any future acquisitions or divestitures and is based on current foreign exchange rates. In addition, the adjusted EPS estimate excludes amortization expense for acquisition-related intangible assets and certain other items detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company's three business segments, as highlighted below.

Analytical Technologies Segment

In the fourth quarter of 2011, Analytical Technologies Segment revenues increased 23% to $1.08 billion, compared with revenues of $880 million in the fourth quarter of 2010. Segment adjusted operating income increased 38% in the fourth quarter of 2011, and adjusted operating margin increased to 21.1%, versus 18.7% in the 2010 quarter.

For the full year 2011, Analytical Technologies Segment revenues increased 19% to $3.85 billion, compared with revenues of $3.24 billion in 2010. Segment adjusted operating income increased 31% in 2011, and adjusted operating margin increased to 18.7%, versus 2010 results of 17.0%.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenues in the fourth quarter increased 32% to $705 million in 2011, compared with revenues of $536 million in the fourth quarter of 2010. Segment adjusted operating income increased 42% in the fourth quarter of 2011, and adjusted operating margin increased to 24.0%, versus 22.2% in the 2010 quarter.

For the full year 2011, Specialty Diagnostics Segment revenues increased 15% to $2.47 billion, compared with revenues of $2.15 billion in 2010. Segment adjusted operating income increased 22% in 2011, and adjusted operating margin increased to 24.2%, versus 2010 results of 22.7%.

Laboratory Products and Services Segment

In the fourth quarter of 2011, Laboratory Products and Services Segment revenues increased 5% to $1.48 billion, compared with revenues of $1.41 billion in the fourth quarter of 2010. Segment adjusted operating income decreased 4% in the fourth quarter of 2011, and adjusted operating margin was 13.2%, versus 14.3% in the 2010 quarter.

For the full year 2011, Laboratory Products and Services Segment revenues increased 5% to $5.94 billion, compared with revenues of $5.65 billion in 2010. Segment adjusted operating income increased 1% in 2011, and adjusted operating margin was 13.7%, versus 2010 results of 14.2%.