Thermo Fisher Scientific first quarter revenues increase 14% to record $3.10 billion

Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the first quarter ended March 31, 2012.

“Our revenue growth was fueled largely by demand for analytical instruments across a broad base of customers, as well as ongoing strength in our biopharma services business. In addition, our investments in emerging markets continued to pay off, highlighted by another excellent quarter in China.”

First Quarter Highlights

• Adjusted earnings per share (EPS) grew 27% to a record $1.17.
• Revenues increased 14% to a record $3.10 billion.
• Adjusted operating income rose 20% to $573 million.
• Adjusted operating margin expanded by 90 basis points to 18.5%.
• Free cash flow increased by 25% to $328 million.
• Strengthened innovation leadership by launching new ion chromatography, gas chromatography, mass spectrometry and handheld instruments for life sciences and applied markets.
• Expanded presence in emerging high-growth geographies, and opened a new state-of-the-art customer demonstration and training center in South Korea.
• Deployed $300 million to repurchase 6.0 million shares and initiated a quarterly dividend of $0.13 per share.

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 carried our momentum of strong financial performance into 2012 by delivering 27% growth in adjusted EPS on solid top-line results," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "Our revenue growth was fueled largely by demand for analytical instruments across a broad base of customers, as well as ongoing strength in our biopharma services business. In addition, our investments in emerging markets continued to pay off, highlighted by another excellent quarter in China.

"We kicked off the year with an impressive line-up of new Thermo Scientific products that create value for our customers by improving performance and productivity in applications ranging from pharmaceutical QA/QC to environmental and food safety testing. Among our many new products featured at major conferences in the U.S. and Europe were the ICS-4000 and ICS-5000 ion chromatography systems, the Trace™ 1300 Series gas chromatograph and the iCAP™ Q mass spectrometer. For life sciences researchers, we launched the new automated MYECL™ Imager and the PikoReal™ PCR System to simplify workflows and improve results."

Casper added, "We continued to create value for our shareholders through effective capital deployment. During the quarter, we bought back $300 million of our shares and initiated our first quarterly dividend, which is testament to our strong financial performance, consistent cash flow generation and excellent opportunities for growth."

For the first quarter of 2012, adjusted EPS grew 27% to a record $1.17, versus $0.92 in the first quarter of 2011. Revenues for the quarter grew 14% to $3.10 billion in 2012, versus $2.72 billion in 2011. On a pro forma basis, as if Dionex and Phadia were owned in the first quarter of 2011, revenues increased 4%. Acquisitions (other than Dionex and Phadia) added 1% to revenues, which was fully offset by a 1% decrease due to currency translation. Adjusted operating income for the first quarter of 2012 increased 20% compared with the year-ago period, and adjusted operating margin expanded 90 basis points to 18.5%, compared with 17.6% in the first quarter of 2011.

GAAP diluted EPS for the first quarter of 2012 was $0.75, versus $0.64 in the same quarter last year. GAAP operating income for the first quarter of 2012 increased 10% to $355 million, compared with $322 million in 2011. GAAP operating margin was 11.4%, compared with 11.8% in the first quarter of 2011, due to acquisition-related charges.

Annual Guidance for 2012

Thermo Fisher is raising its revenue and adjusted EPS guidance for full year 2012 primarily due to improved foreign currency exchange. The company is raising its previous 2012 revenue guidance of $12.15 to $12.35 billion to a new range of $12.27 to $12.43 billion, for 5% to 6% revenue growth year over year. Thermo Fisher is also raising its adjusted EPS guidance of $4.67 to $4.82 to a new range of $4.71 to $4.83, which would result in 13% to 16% adjusted EPS growth over 2011.

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 first quarter of 2012, Analytical Technologies Segment revenues increased 21% to $1.01 billion, compared with revenues of $830 million in the first quarter of 2012. Segment adjusted operating income increased 35% in the first quarter of 2012, and adjusted operating margin increased to 18.4%, versus 16.5% in the 2011 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenues in the first quarter increased 27% to $729 million in 2012, compared with revenues of $577 million in the first quarter of 2011. Segment adjusted operating income increased 31% in the first quarter of 2012, and adjusted operating margin increased to 25.5%, versus 24.6% in the 2011 quarter.

Laboratory Products and Services Segment

In the first quarter of 2012, Laboratory Products and Services Segment revenues increased 4% to $1.51 billion, compared with revenues of $1.44 billion in the first quarter of 2011. Segment adjusted operating income increased 1% in the first quarter of 2012, and adjusted operating margin was 13.4%, versus 13.8% in the 2011 quarter.