WALTHAM, Mass., Oct. 23, 2019 /PRNewswire/ -- Thermo Fisher
Scientific Inc. (NYSE: TMO), the world leader in serving science,
today reported its financial results for the third quarter ended
September 28, 2019.
Third Quarter 2019 Highlights
- Third quarter revenue increased 6% to $6.27 billion.
- Third quarter GAAP diluted earnings per share (EPS) increased
7% to $1.88.
- Third quarter adjusted EPS increased 12% to $2.94.
- Launched innovative new products for clinical, life sciences
and bioproduction applications, highlighted by the FDA-cleared
Thermo Scientific TSQ Altis and Quantis MD mass spectrometers and
the Vanquish MD HPLC for clinical diagnostic laboratories, a new
Real-time PCR solution for respiratory pathogen detection, the
Thermo Scientific Krios G4 compact electron microscope for
structural biology and the Thermo Scientific TruBio Discovery
bioproduction automation system.
- Strengthened global capabilities to enhance our unique customer
value proposition, including opening a new Center of Excellence for
transplant diagnostics near Los
Angeles and, in China,
establishing a new Biosciences Customer Exploration Center in
Shanghai and expanding our
clinical trials logistics facility in Suzhou.
- Completed acquisition of active pharmaceutical ingredient (API)
manufacturing facility in Cork,
Ireland, from GlaxoSmithKline (GSK) on September 30 to expand global capacity for API
development and manufacturing services.
- After quarter end, repurchased $750
million worth of shares and completed refinancing of
$5.6 billion of debt.
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're pleased to continue our strong momentum in
the third quarter, with excellent performance on the top and bottom
line," said Marc N. Casper, president and chief executive
officer of Thermo Fisher Scientific. "Our team executed very well
and captured opportunities to gain share and drive growth.
"We continued to enhance our value proposition to
be an even stronger partner for our customers. Among the
highlights, we launched innovative new products across our
analytical instrument, bioproduction and genetic sciences
businesses. We further strengthened our global capabilities to
support growth, opening new facilities in the U.S. and China. We were also pleased to close our
acquisition of the GSK site in Ireland, significantly expanding our API
manufacturing network to meet customer demand for our pharma
services."
Casper added, "With a strong nine months behind
us, we are in a great position to deliver another excellent
year."
Third Quarter 2019
Revenue for the quarter grew 6% to $6.27 billion in 2019, versus $5.92 billion in 2018. Organic revenue growth was
7% and currency translation decreased revenue by 1%.
GAAP Earnings Results
GAAP diluted EPS in the third quarter of 2019
increased 7% to $1.88, versus
$1.75 in the same quarter last year.
GAAP operating income for the third quarter of 2019 grew to
$0.95 billion, compared with
$0.91 billion in the year-ago
quarter. GAAP operating margin was 15.1%, compared with 15.4% in
the third quarter of 2018.
Non-GAAP Earnings Results
Adjusted EPS in the third quarter of 2019
increased 12% to $2.94, versus
$2.62 in the third quarter of 2018.
Adjusted operating income for the third quarter of 2019 grew 9%
compared with the year-ago quarter. Adjusted operating margin
increased to 22.7%, compared with 22.1% in the third quarter of
2018.
2019 Guidance Update
Thermo Fisher is
raising its 2019 revenue and earnings guidance primarily to reflect
stronger operational performance and the benefits of refinancing
activities, partially offset by a more adverse foreign exchange
environment. The company is raising its revenue guidance to a new
range of $25.34 to $25.50
billion versus its previous guidance of $25.30 to
$25.50 billion. This would
result in 4 to 5% revenue growth over 2018. The company is
also raising its adjusted EPS guidance to a new range of
$12.28 to $12.34, versus its previous guidance of
$12.16 to $12.26, for 10 to 11% growth year over year.
Segment Results
Management uses adjusted operating results to
monitor and evaluate performance of the company's four business
segments, as highlighted below. Since these results are used for
this purpose, they are also considered to be prepared in accordance
with GAAP.
Life Sciences Solutions Segment
In the third quarter of 2019, Life Sciences
Solutions Segment revenue grew 13% to $1.70
billion, compared with revenue of $1.50 billion in the third quarter of 2018.
Segment adjusted operating margin increased to 34.5%, versus 32.9%
in the 2018 quarter.
Analytical Instruments Segment
Analytical Instruments Segment revenue grew 2% to
$1.36 billion in the third quarter of
2019, compared with revenue of $1.33
billion in the third quarter of 2018. Segment adjusted
operating margin increased to 23.0%, versus 22.0% in the 2018
quarter.
Specialty Diagnostics Segment
Specialty Diagnostics Segment revenue was
$0.88 billion in the third quarter of
2019, compared with revenue of $0.89
billion in the third quarter of 2018, reflecting the
divestiture of the Anatomical Pathology business in June 2019. Segment adjusted operating margin
increased to 25.3%, versus 25.0% in the 2018 quarter.
Laboratory Products and Services Segment
In the third quarter of 2019, Laboratory Products
and Services Segment revenue grew 6% to $2.62 billion, compared with revenue of
$2.47 billion in the third quarter of
2018. Segment adjusted operating margin was 11.6%, versus 12.1% in
the 2018 quarter.
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in
accordance with generally accepted accounting principles (GAAP), we
use certain non-GAAP financial measures, including adjusted EPS,
adjusted operating income and adjusted operating margin, which
exclude certain acquisition-related costs, including charges for
the sale of inventories revalued at the date of acquisition and
significant transaction costs; restructuring and other
costs/income; and amortization of acquisition-related intangible
assets. Adjusted EPS also excludes certain other gains and losses
that are either isolated or cannot be expected to occur again with
any predictability, tax provisions/benefits related to the previous
items, the impact of significant tax audits or events and the
results of discontinued operations. We exclude the above items
because they are outside of our normal operations and/or, in
certain cases, are difficult to forecast accurately for future
periods. We also use a non-GAAP measure, free cash flow, which is
operating cash flow, excluding net capital expenditures, and also
excludes operating cash flows from discontinued operations to
provide a view of the continuing operations' ability to generate
cash for use in acquisitions and other investing and financing
activities. We believe that the use of non-GAAP measures helps
investors to gain a better understanding of our core operating
results and future prospects, consistent with how management
measures and forecasts the company's performance, especially when
comparing such results to previous periods or forecasts.
For example:
We exclude costs and tax effects associated with
restructuring activities, such as reducing overhead and
consolidating facilities. We believe that the costs related to
these restructuring activities are not indicative of our normal
operating costs.
We exclude certain acquisition-related costs,
including charges for the sale of inventories revalued at the date
of acquisition and significant transaction costs. We exclude these
costs because we do not believe they are indicative of our normal
operating costs.
We exclude the expense and tax effects associated
with the amortization of acquisition-related intangible assets
because a significant portion of the purchase price for
acquisitions may be allocated to intangible assets that have lives
of 3 to 20 years. Based on acquisitions closed through the end of
the third quarter of 2019, adjusted EPS for full year 2019 will
exclude approximately $3.31 of
expense for the amortization of acquisition-related intangible
assets. Exclusion of the amortization expense allows comparisons of
operating results that are consistent over time for both our newly
acquired and long-held businesses and with both acquisitive and
non-acquisitive peer companies.
We also exclude certain gains/losses and related
tax effects, the impact of significant tax audits or events (such
as changes in deferred taxes from enacted tax rate changes or the
estimated initial impacts of U.S. tax reform legislation), which
are either isolated or cannot be expected to occur again with any
predictability and that we believe are not indicative of our normal
operating gains and losses. For example, we exclude gains/losses
from items such as the sale of a business or real estate, gains or
losses on significant litigation-related matters, gains on
curtailments of pension plans, the early retirement of debt and
discontinued operations.
We also report free cash flow, which is operating
cash flow, excluding net capital expenditures, and also excludes
operating cash flows from discontinued operations to provide a view
of the continuing operations' ability to generate cash for use in
acquisitions and other investing and financing activities.
Thermo Fisher's
management uses these non-GAAP measures, in addition to GAAP
financial measures, as the basis for measuring the company's core
operating performance and comparing such performance to that of
prior periods and to the performance of our competitors. Such
measures are also used by management in their financial and
operating decision-making and for compensation purposes.
The non-GAAP financial measures of Thermo Fisher's results of operations and cash
flows included in this press release are not meant to be considered
superior to or a substitute for Thermo
Fisher's results of operations prepared in accordance with
GAAP. Reconciliations of such non-GAAP financial measures to the
most directly comparable GAAP financial measures are set forth in
the accompanying tables. Thermo
Fisher does not provide GAAP financial measures on a
forward-looking basis because we are unable to predict with
reasonable certainty and without unreasonable effort items such as
the timing and amount of future restructuring actions and
acquisition-related charges as well as gains or losses from sales
of real estate and businesses, the early retirement of debt and the
outcome of legal proceedings. The timing and amount of these items
are uncertain and could be material to Thermo Fisher's results computed in accordance
with GAAP.
Conference Call
Thermo Fisher Scientific will hold its earnings
conference call today, October 23,
2019, at 8:30 a.m. Eastern
time. To listen, dial (877) 273-7122 within the U.S. or
(647) 689-5496 outside the U.S. You may also listen to the call
live on our website, www.thermofisher.com, by clicking on
"Investors." You will find this press release, including the
accompanying reconciliation of non-GAAP financial measures and
related information, in that section of our website under
"Financial Results." An audio archive of the call will be available
under "Webcasts and Presentations" through Friday, November 8, 2019.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is
the world leader in serving science, with revenues of more
than $24 billion and
approximately 70,000 employees globally. Our mission is to enable
our customers to make the world healthier, cleaner and safer. We
help our customers accelerate life sciences research, solve complex
analytical challenges, improve patient diagnostics, deliver
medicines to market and increase laboratory productivity. Through
our premier brands – Thermo Scientific, Applied Biosystems,
Invitrogen, Fisher Scientific and Unity Lab Services – we offer an
unmatched combination of innovative technologies, purchasing
convenience and comprehensive support. For more information, please
visit www.thermofisher.com.
Safe Harbor Statement
The following constitutes a "Safe Harbor"
statement under the Private Securities Litigation Reform Act of
1995: This press release contains forward-looking statements that
involve a number of risks and uncertainties. Important factors that
could cause actual results to differ materially from those
indicated by forward-looking statements include risks and
uncertainties relating to: the need to develop new products and
adapt to significant technological change; implementation of
strategies for improving growth; general economic conditions and
related uncertainties; dependence on customers' capital spending
policies and government funding policies; the effect of economic
and political conditions and exchange rate fluctuations on
international operations; use and protection of intellectual
property; the effect of changes in governmental regulations; and
the effect of laws and regulations governing government contracts,
as well as the possibility that expected benefits related to our
recent or pending acquisitions may not materialize as expected.
Additional important factors that could cause actual results to
differ materially from those indicated by such forward-looking
statements are set forth in our Quarterly Report on Form 10-Q for
the quarter ended June 29,
2019, which is on file with the SEC and available in
the "Investors" section of our website under the heading "SEC
Filings." While we may elect to update forward-looking statements
at some point in the future, we specifically disclaim any
obligation to do so, even if estimates change and, therefore, you
should not rely on these forward-looking statements as representing
our views as of any date subsequent to today.
Consolidated
Statement of Income (unaudited) (a)(b)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September
28,
|
|
% of
|
|
September
29,
|
|
% of
|
(In millions except
per share amounts)
|
|
2019
|
|
Revenues
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
6,272
|
|
|
|
|
$
|
5,920
|
|
|
|
Costs and Operating
Expenses:
|
|
|
|
|
|
|
|
|
Cost of revenues
(c)
|
|
3,384
|
|
|
54.0
|
%
|
|
3,181
|
|
|
53.7
|
%
|
Selling, general and
administrative expenses (d)
|
|
1,230
|
|
|
19.6
|
%
|
|
1,183
|
|
|
20.0
|
%
|
Amortization of
acquisition-related intangible assets
|
|
434
|
|
|
6.9
|
%
|
|
431
|
|
|
7.3
|
%
|
Research and
development expenses
|
|
247
|
|
|
3.9
|
%
|
|
240
|
|
|
4.1
|
%
|
Restructuring and
other costs (income), net (e)
|
|
31
|
|
|
0.5
|
%
|
|
(27)
|
|
|
-0.5
|
%
|
|
|
5,326
|
|
|
84.9
|
%
|
|
5,008
|
|
|
84.6
|
%
|
Operating
Income
|
|
946
|
|
|
15.1
|
%
|
|
912
|
|
|
15.4
|
%
|
Interest
Income
|
|
52
|
|
|
|
|
41
|
|
|
|
Interest
Expense
|
|
(164)
|
|
|
|
|
(162)
|
|
|
|
Other (Expense)
Income, Net (f)
|
|
(12)
|
|
|
|
|
19
|
|
|
|
Income Before Income
Taxes
|
|
822
|
|
|
|
|
810
|
|
|
|
Provision for Income
Taxes (g)
|
|
(62)
|
|
|
|
|
(101)
|
|
|
|
Net Income
|
|
$
|
760
|
|
|
12.1
|
%
|
|
$
|
709
|
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
Earnings per
Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.89
|
|
|
|
|
$
|
1.76
|
|
|
|
Diluted
|
|
$
|
1.88
|
|
|
|
|
$
|
1.75
|
|
|
|
Weighted Average
Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
401
|
|
|
|
|
402
|
|
|
|
Diluted
|
|
404
|
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Operating Income and Adjusted Operating
Margin
|
|
|
|
|
|
|
|
|
GAAP Operating Income
(a)
|
|
$
|
946
|
|
|
15.1
|
%
|
|
$
|
912
|
|
|
15.4
|
%
|
Cost of Revenues
Charges (Credits), Net (c)
|
|
5
|
|
|
0.1
|
%
|
|
(1)
|
|
|
0.0
|
%
|
Selling, General and
Administrative Charges (Credits), Net (d)
|
|
7
|
|
|
0.1
|
%
|
|
(4)
|
|
|
-0.1
|
%
|
Restructuring and
Other Costs (Income), Net (e)
|
|
31
|
|
|
0.5
|
%
|
|
(27)
|
|
|
-0.5
|
%
|
Amortization of
Acquisition-related Intangible Assets
|
|
434
|
|
|
6.9
|
%
|
|
431
|
|
|
7.3
|
%
|
Adjusted Operating
Income (b)
|
|
$
|
1,423
|
|
|
22.7
|
%
|
|
$
|
1,311
|
|
|
22.1
|
%
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net Income
|
|
|
|
|
|
|
|
|
GAAP Net Income
(a)
|
|
$
|
760
|
|
|
|
|
$
|
709
|
|
|
|
Cost of Revenues
Charges (Credits), Net (c)
|
|
5
|
|
|
|
|
(1)
|
|
|
|
Selling, General and
Administrative Charges (Credits), Net (d)
|
|
7
|
|
|
|
|
(4)
|
|
|
|
Restructuring and
Other Costs (Income), Net (e)
|
|
31
|
|
|
|
|
(27)
|
|
|
|
Amortization of
Acquisition-related Intangible Assets
|
|
434
|
|
|
|
|
431
|
|
|
|
Other Expense
(Income), Net (f)
|
|
38
|
|
|
|
|
(5)
|
|
|
|
Benefit from Income
Taxes (g)
|
|
(88)
|
|
|
|
|
(37)
|
|
|
|
Adjusted Net Income
(b)
|
|
$
|
1,187
|
|
|
|
|
$
|
1,066
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Earnings per Share
|
|
|
|
|
|
|
|
|
GAAP EPS
(a)
|
|
$
|
1.88
|
|
|
|
|
$
|
1.75
|
|
|
|
Cost of Revenues
Charges (Credits), Net of Tax (c)
|
|
0.01
|
|
|
|
|
0.00
|
|
|
|
Selling, General and
Administrative Charges (Credits), Net of Tax (d)
|
|
0.01
|
|
|
|
|
(0.01)
|
|
|
|
Restructuring and
Other Costs (Income), Net of Tax (e)
|
|
0.10
|
|
|
|
|
(0.06)
|
|
|
|
Amortization of
Acquisition-related Intangible Assets, Net of Tax
|
|
0.85
|
|
|
|
|
0.82
|
|
|
|
Other Expense
(Income), Net of Tax (f)
|
|
0.08
|
|
|
|
|
(0.01)
|
|
|
|
Provision for Income
Taxes (g)
|
|
0.01
|
|
|
|
|
0.13
|
|
|
|
Adjusted EPS
(b)
|
|
$
|
2.94
|
|
|
|
|
$
|
2.62
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Free Cash Flow
|
|
|
|
|
|
|
|
|
GAAP Net Cash Provided
by Operating Activities (a)
|
|
$
|
1,117
|
|
|
|
|
$
|
1,220
|
|
|
|
Purchases of Property,
Plant and Equipment
|
|
(216)
|
|
|
|
|
(173)
|
|
|
|
Proceeds from Sale of
Property, Plant and Equipment
|
|
6
|
|
|
|
|
3
|
|
|
|
Free Cash
Flow
|
|
$
|
907
|
|
|
|
|
$
|
1,050
|
|
|
|
Segment
Data
|
|
Three Months
Ended
|
|
|
September
28,
|
|
% of
|
|
September
29,
|
|
% of
|
(In
millions)
|
|
2019
|
|
Revenues
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Life Sciences
Solutions
|
|
$
|
1,701
|
|
|
27.1
|
%
|
|
$
|
1,504
|
|
|
25.4
|
%
|
Analytical
Instruments
|
|
1,358
|
|
|
21.7
|
%
|
|
1,333
|
|
|
22.5
|
%
|
Specialty
Diagnostics
|
|
879
|
|
|
14.0
|
%
|
|
894
|
|
|
15.1
|
%
|
Laboratory Products
and Services
|
|
2,619
|
|
|
41.8
|
%
|
|
2,470
|
|
|
41.7
|
%
|
Eliminations
|
|
(285)
|
|
|
-4.6
|
%
|
|
(281)
|
|
|
-4.7
|
%
|
Consolidated
Revenues
|
|
$
|
6,272
|
|
|
100.0
|
%
|
|
$
|
5,920
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
Operating Income
and Operating Margin
|
|
|
|
|
|
|
|
|
Life Sciences
Solutions
|
|
$
|
586
|
|
|
34.5
|
%
|
|
$
|
495
|
|
|
32.9
|
%
|
Analytical
Instruments
|
|
311
|
|
|
23.0
|
%
|
|
294
|
|
|
22.0
|
%
|
Specialty
Diagnostics
|
|
223
|
|
|
25.3
|
%
|
|
223
|
|
|
25.0
|
%
|
Laboratory Products
and Services
|
|
303
|
|
|
11.6
|
%
|
|
299
|
|
|
12.1
|
%
|
Subtotal Reportable
Segments
|
|
1,423
|
|
|
22.7
|
%
|
|
1,311
|
|
|
22.1
|
%
|
|
|
|
|
|
|
|
|
|
Cost of Revenues
(Charges) Credits, Net (c)
|
|
(5)
|
|
|
-0.1
|
%
|
|
1
|
|
|
0.0
|
%
|
Selling, General and
Administrative (Charges) Credits, Net (d)
|
|
(7)
|
|
|
-0.1
|
%
|
|
4
|
|
|
0.1
|
%
|
Restructuring and
Other (Costs) Income, Net (e)
|
|
(31)
|
|
|
-0.5
|
%
|
|
27
|
|
|
0.5
|
%
|
Amortization of
Acquisition-related Intangible Assets
|
|
(434)
|
|
|
-6.9
|
%
|
|
(431)
|
|
|
-7.3
|
%
|
GAAP Operating Income
(a)
|
|
$
|
946
|
|
|
15.1
|
%
|
|
$
|
912
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
"GAAP" (reported)
results were determined in accordance with U.S. generally accepted
accounting principles (GAAP).
|
|
|
(b)
|
Adjusted results are
non-GAAP measures and, for income measures, exclude certain charges
to cost of revenues (see note (c) for details); certain
credits/charges to selling, general and administrative expenses
(see note (d) for details); amortization of acquisition-related
intangible assets; restructuring and other costs, net (see note (e)
for details); certain other gains or losses that are either
isolated or cannot be expected to occur again with any
predictability (see note (f) for details); and the tax consequences
of the preceding items and certain other tax items (see note (g)
for details).
|
|
|
(c)
|
Reported results in
2019 and 2018 include $5 and $2, respectively, of charges for the
sale of inventories revalued at the date of acquisition. Reported
results in 2018 also include $3 of credits to conform the
accounting policies of recently acquired businesses with the
company's accounting policies.
|
|
|
(d)
|
Reported results in
2019 and 2018 include i) $6 and $10, respectively, of certain
third-party expenses, principally transaction/integration costs
related to acquisitions and ii) $1 and $11, respectively, of income
associated with product liability litigation. Reported results in
2019 also include $2 of accelerated depreciation on fixed assets to
be abandoned due to integration synergies and facility
consolidations. Reported results in 2018 also include $3 of credits
from changes in estimates of contingent acquisition
consideration.
|
|
|
(e)
|
Reported results in
2019 and 2018 include restructuring and other costs, net,
consisting principally of severance, abandoned facility and other
expenses of headcount reductions within several businesses and real
estate consolidations. Reported results in 2019 include net charges
of $19 associated with sales of businesses in prior periods,
including post-closing adjustments. Reported results in 2018
include $52 of credits from litigation and $1 of hurricane response
costs.
|
|
|
(f)
|
Reported results in
2019 include $42 of losses on the early extinguishment of debt, and
$1 of net charges for the settlement/curtailment of pension plans,
offset in part by $5 of net gains from investments. Reported
results in 2018 include $6 of net gains from investments and $1 of
net charges for the settlement/curtailment of pension
plans.
|
|
|
(g)
|
Reported provision
for income taxes includes i) $93 and $89 of incremental tax benefit
in 2019 and 2018, respectively, for the pre-tax reconciling items
between GAAP and adjusted net income; ii) $5 and $5 in 2019 and
2018, respectively, of incremental tax provision from adjusting the
company's non-U.S. deferred tax balances as a result of tax rate
changes; and iii) $47 of incremental tax provision in 2018,
principally to adjust the impacts of U.S. tax reform legislation
based on new guidance/regulations issued during the
period.
|
|
Notes:
|
Consolidated
depreciation expense is $141 and $132 in 2019 and 2018,
respectively.
|
Consolidated
Statement of Income (unaudited) (a)(b)
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
September
28,
|
|
% of
|
|
September
29,
|
|
% of
|
(In millions except
per share amounts)
|
|
2019
|
|
Revenues
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
18,713
|
|
|
|
|
$
|
17,851
|
|
|
|
Costs and Operating
Expenses:
|
|
|
|
|
|
|
|
|
Cost of revenues
(c)
|
|
10,045
|
|
|
53.7
|
%
|
|
9,536
|
|
|
53.4
|
%
|
Selling, general and
administrative expenses (d)
|
|
3,722
|
|
|
19.9
|
%
|
|
3,613
|
|
|
20.2
|
%
|
Amortization of
acquisition-related intangible assets
|
|
1,285
|
|
|
6.8
|
%
|
|
1,316
|
|
|
7.4
|
%
|
Research and
development expenses
|
|
741
|
|
|
4.0
|
%
|
|
716
|
|
|
4.0
|
%
|
Restructuring and
other (income) costs, net (e)
|
|
(442)
|
|
|
-2.4
|
%
|
|
35
|
|
|
0.2
|
%
|
|
|
15,351
|
|
|
82.0
|
%
|
|
15,216
|
|
|
85.2
|
%
|
Operating
Income
|
|
3,362
|
|
|
18.0
|
%
|
|
2,635
|
|
|
14.8
|
%
|
Interest
Income
|
|
179
|
|
|
|
|
92
|
|
|
|
Interest
Expense
|
|
(534)
|
|
|
|
|
(495)
|
|
|
|
Other Income, Net
(f)
|
|
25
|
|
|
|
|
18
|
|
|
|
Income Before Income
Taxes
|
|
3,032
|
|
|
|
|
2,250
|
|
|
|
Provision for Income
Taxes (g)
|
|
(338)
|
|
|
|
|
(210)
|
|
|
|
Net Income
|
|
$
|
2,694
|
|
|
14.4
|
%
|
|
$
|
2,040
|
|
|
11.4
|
%
|
|
|
|
|
|
|
|
|
|
Earnings per
Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
6.73
|
|
|
|
|
$
|
5.07
|
|
|
|
Diluted
|
|
$
|
6.68
|
|
|
|
|
$
|
5.03
|
|
|
|
Weighted Average
Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
400
|
|
|
|
|
402
|
|
|
|
Diluted
|
|
403
|
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Operating Income and Adjusted Operating
Margin
|
|
|
|
|
|
|
|
|
GAAP Operating Income
(a)
|
|
$
|
3,362
|
|
|
18.0
|
%
|
|
$
|
2,635
|
|
|
14.8
|
%
|
Cost of Revenues
Charges (c)
|
|
16
|
|
|
0.1
|
%
|
|
7
|
|
|
0.0
|
%
|
Selling, General and
Administrative Charges, Net (d)
|
|
54
|
|
|
0.3
|
%
|
|
7
|
|
|
0.0
|
%
|
Restructuring and
Other (Income) Costs, Net (e)
|
|
(442)
|
|
|
-2.4
|
%
|
|
35
|
|
|
0.2
|
%
|
Amortization of
Acquisition-related Intangible Assets
|
|
1,285
|
|
|
6.8
|
%
|
|
1,316
|
|
|
7.4
|
%
|
Adjusted Operating
Income (b)
|
|
$
|
4,275
|
|
|
22.8
|
%
|
|
$
|
4,000
|
|
|
22.4
|
%
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net Income
|
|
|
|
|
|
|
|
|
GAAP Net Income
(a)
|
|
$
|
2,694
|
|
|
|
|
$
|
2,040
|
|
|
|
Cost of Revenues
Charges (c)
|
|
16
|
|
|
|
|
7
|
|
|
|
Selling, General and
Administrative Charges, Net (d)
|
|
54
|
|
|
|
|
7
|
|
|
|
Restructuring and
Other (Income) Costs, Net (e)
|
|
(442)
|
|
|
|
|
35
|
|
|
|
Amortization of
Acquisition-related Intangible Assets
|
|
1,285
|
|
|
|
|
1,316
|
|
|
|
Other Expense, Net
(f)
|
|
31
|
|
|
|
|
4
|
|
|
|
Benefit from Income
Taxes (g)
|
|
(91)
|
|
|
|
|
(215)
|
|
|
|
Adjusted Net Income
(b)
|
|
$
|
3,547
|
|
|
|
|
$
|
3,194
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Earnings per Share
|
|
|
|
|
|
|
|
|
GAAP EPS
(a)
|
|
$
|
6.68
|
|
|
|
|
$
|
5.03
|
|
|
|
Cost of Revenues
Charges, Net of Tax (c)
|
|
0.03
|
|
|
|
|
0.01
|
|
|
|
Selling, General and
Administrative Charges, Net of Tax (d)
|
|
0.10
|
|
|
|
|
0.01
|
|
|
|
Restructuring and
Other (Income) Costs, Net of Tax (e)
|
|
(0.62)
|
|
|
|
|
0.07
|
|
|
|
Amortization of
Acquisition-related Intangible Assets, Net of Tax
|
|
2.50
|
|
|
|
|
2.54
|
|
|
|
Other Expense, Net of
Tax (f)
|
|
0.06
|
|
|
|
|
0.01
|
|
|
|
Provision for Income
Taxes (g)
|
|
0.05
|
|
|
|
|
0.20
|
|
|
|
Adjusted EPS
(b)
|
|
$
|
8.80
|
|
|
|
|
$
|
7.87
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Free Cash Flow
|
|
|
|
|
|
|
|
|
GAAP Net Cash Provided
by Operating Activities (a)
|
|
$
|
3,060
|
|
|
|
|
$
|
2,742
|
|
|
|
Purchases of Property,
Plant and Equipment
|
|
(637)
|
|
|
|
|
(474)
|
|
|
|
Proceeds from Sale of
Property, Plant and Equipment
|
|
18
|
|
|
|
|
6
|
|
|
|
Free Cash
Flow
|
|
$
|
2,441
|
|
|
|
|
$
|
2,274
|
|
|
|
Segment
Data
|
|
Nine Months
Ended
|
|
|
September
28,
|
|
% of
|
|
September
29,
|
|
% of
|
(In
millions)
|
|
2019
|
|
Revenues
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Life Sciences
Solutions
|
|
$
|
5,018
|
|
|
26.8
|
%
|
|
$
|
4,572
|
|
|
25.6
|
%
|
Analytical
Instruments
|
|
4,004
|
|
|
21.4
|
%
|
|
3,901
|
|
|
21.9
|
%
|
Specialty
Diagnostics
|
|
2,779
|
|
|
14.9
|
%
|
|
2,773
|
|
|
15.5
|
%
|
Laboratory Products
and Services
|
|
7,765
|
|
|
41.5
|
%
|
|
7,433
|
|
|
41.6
|
%
|
Eliminations
|
|
(853)
|
|
|
-4.6
|
%
|
|
(828)
|
|
|
-4.6
|
%
|
Consolidated
Revenues
|
|
$
|
18,713
|
|
|
100.0
|
%
|
|
$
|
17,851
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
Operating Income
and Operating Margin
|
|
|
|
|
|
|
|
|
Life Sciences
Solutions
|
|
$
|
1,756
|
|
|
35.0
|
%
|
|
$
|
1,534
|
|
|
33.5
|
%
|
Analytical
Instruments
|
|
879
|
|
|
22.0
|
%
|
|
831
|
|
|
21.3
|
%
|
Specialty
Diagnostics
|
|
707
|
|
|
25.5
|
%
|
|
719
|
|
|
25.9
|
%
|
Laboratory Products
and Services
|
|
933
|
|
|
12.0
|
%
|
|
916
|
|
|
12.3
|
%
|
Subtotal Reportable
Segments
|
|
4,275
|
|
|
22.8
|
%
|
|
4,000
|
|
|
22.4
|
%
|
|
|
|
|
|
|
|
|
|
Cost of Revenues
Charges (c)
|
|
(16)
|
|
|
-0.1
|
%
|
|
(7)
|
|
|
0.0
|
%
|
Selling, General and
Administrative Charges, Net (d)
|
|
(54)
|
|
|
-0.3
|
%
|
|
(7)
|
|
|
0.0
|
%
|
Restructuring and
Other Income (Costs), Net (e)
|
|
442
|
|
|
2.4
|
%
|
|
(35)
|
|
|
-0.2
|
%
|
Amortization of
Acquisition-related Intangible Assets
|
|
(1,285)
|
|
|
-6.8
|
%
|
|
(1,316)
|
|
|
-7.4
|
%
|
GAAP Operating Income
(a)
|
|
$
|
3,362
|
|
|
18.0
|
%
|
|
$
|
2,635
|
|
|
14.8
|
%
|
|
|
|
|
(a)
|
"GAAP" (reported)
results were determined in accordance with U.S. generally accepted
accounting principles (GAAP).
|
|
|
(b)
|
Adjusted results are
non-GAAP measures and, for income measures, exclude certain charges
to cost of revenues (see note (c) for details); certain
credits/charges to selling, general and administrative expenses
(see note (d) for details); amortization of acquisition-related
intangible assets; restructuring and other costs, net (see note (e)
for details); certain other gains or losses that are either
isolated or cannot be expected to occur again with any
predictability (see note (f) for details); and the tax consequences
of the preceding items and certain other tax items (see note (g)
for details).
|
|
|
(c)
|
Reported results in
2019 and 2018 include $16 and $10 respectively, of charges for the
sale of inventories revalued at the date of acquisition. Reported
results in 2018 also include $3 of credits to conform the
accounting policies of recently acquired businesses with the
company's accounting policies.
|
|
|
(d)
|
Reported results in
2019 and 2018 include i) $54 and $22, respectively, of certain
third-party expenses, principally transaction/integration costs
related to acquisitions and a divestiture, ii) $1 and $11,
respectively, of income associated with product liability
litigation and iii) $3 and $4 of credits from changes in estimates
of contingent acquisition consideration. Reported results in 2019
also include $4 of accelerated depreciation on fixed assets to be
abandoned due to integration synergies and facility
consolidations.
|
|
|
(e)
|
Reported results in
2019 and 2018 include restructuring and other costs, net,
consisting principally of severance, abandoned facility and other
expenses of headcount reductions within several businesses and real
estate consolidations. Reported results in 2019 include $486 of
gain principally on sale of the Anatomical Pathology business and
$6 of charges for impairment of acquired technology in development.
Reported results in 2018 include $46 of net credits from litigation
and $5 of hurricane response costs.
|
|
|
(f)
|
Reported results in
2019 include $42 of losses on the early extinguishment of debt and
$2 of net charges for the settlement/curtailment of pension plans
offset in part by $13 of gains from investments. Reported results
in 2018 include $2 of net gains from investments, $3 of losses on
the early extinguishment of debt and $3 of net charges for the
settlement/curtailment of pension plans.
|
|
|
(g)
|
Reported provision
for income taxes includes i) $109 and $297 of incremental tax
benefit in 2019 and 2018, respectively, for the pre-tax reconciling
items between GAAP and adjusted net income; ii) $16 and $14 in 2019
and 2018, respectively, of incremental tax provision from adjusting
the company's non-U.S. deferred tax balances as a result of tax
rate changes; and iii) $2 and $68 of incremental tax provision in
2019 and 2018, respectively, principally to adjust the impacts of
U.S. tax reform legislation based on new guidance/regulations
issued during the period.
|
|
Notes:
|
Consolidated
depreciation expense is $416 and $393 in 2019 and 2018,
respectively.
|
Condensed
Consolidated Balance Sheet (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
September
28,
|
|
December
31,
|
(In
millions)
|
|
2019
|
|
2018
|
|
|
|
|
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,273
|
|
|
$
|
2,103
|
|
Accounts receivable,
net
|
|
4,384
|
|
|
4,136
|
|
Inventories
|
|
3,308
|
|
|
3,005
|
|
Other current
assets
|
|
1,549
|
|
|
1,381
|
|
Total current
assets
|
|
10,514
|
|
|
10,625
|
|
Property, Plant and
Equipment, Net
|
|
4,420
|
|
|
4,165
|
|
Acquisition-related
Intangible Assets
|
|
14,311
|
|
|
14,978
|
|
Other
Assets
|
|
1,860
|
|
|
1,117
|
|
Goodwill
|
|
25,624
|
|
|
25,347
|
|
Total
Assets
|
|
$
|
56,729
|
|
|
$
|
56,232
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Short-term obligations
and current maturities of long-term obligations
|
|
$
|
661
|
|
|
$
|
1,271
|
|
Other current
liabilities
|
|
5,183
|
|
|
4,876
|
|
Total current
liabilities
|
|
5,844
|
|
|
6,147
|
|
Other Long-term
Liabilities
|
|
5,138
|
|
|
4,780
|
|
Long-term
Obligations
|
|
16,392
|
|
|
17,719
|
|
Total Shareholders'
Equity
|
|
29,355
|
|
|
27,586
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
56,729
|
|
|
$
|
56,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Cash Flows (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
September
28,
|
|
September
29,
|
(In
millions)
|
|
2019
|
|
2018
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
Net income
|
|
$
|
2,694
|
|
|
$
|
2,040
|
|
|
|
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
1,701
|
|
|
1,709
|
|
Change in deferred
income taxes
|
|
(356)
|
|
|
(317)
|
|
Gain on sales of
businesses
|
|
(486)
|
|
|
—
|
|
Other non-cash
expenses, net
|
|
261
|
|
|
214
|
|
Changes in assets and
liabilities, excluding the effects of acquisitions and
disposition
|
|
(754)
|
|
|
(904)
|
|
Net cash provided by
operating activities
|
|
3,060
|
|
|
2,742
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
(1,687)
|
|
|
(59)
|
|
Purchases of property,
plant and equipment
|
|
(637)
|
|
|
(474)
|
|
Proceeds from sale of
property, plant and equipment
|
|
18
|
|
|
6
|
|
Proceeds from sale of
business, net of cash divested
|
|
1,128
|
|
|
—
|
|
Other investing
activities, net
|
|
30
|
|
|
(5)
|
|
Net cash used in
investing activities
|
|
(1,148)
|
|
|
(532)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Net proceeds from
issuance of debt
|
|
—
|
|
|
690
|
|
Repayment of
debt
|
|
(1,702)
|
|
|
(2,048)
|
|
Net proceeds from
issuance of commercial paper
|
|
2,581
|
|
|
3,378
|
|
Repayment of
commercial paper
|
|
(2,578)
|
|
|
(3,842)
|
|
Purchases of company
common stock
|
|
(750)
|
|
|
(250)
|
|
Dividends
paid
|
|
(221)
|
|
|
(198)
|
|
Net proceeds from
issuance of company common stock under employee stock
plans
|
|
115
|
|
|
97
|
|
Other financing
activities, net
|
|
(49)
|
|
|
(51)
|
|
Net cash used in
financing activities
|
|
(2,604)
|
|
|
(2,224)
|
|
|
|
|
|
|
Exchange Rate Effect
on Cash
|
|
(120)
|
|
|
(236)
|
|
Decrease in Cash,
Cash Equivalents and Restricted Cash
|
|
(812)
|
|
|
(250)
|
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of Period
|
|
2,117
|
|
|
1,361
|
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
|
$
|
1,305
|
|
|
$
|
1,111
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
(a)
|
|
$
|
2,441
|
|
|
$
|
2,274
|
|
|
|
|
|
|
|
|
|
|
|
(a) Free cash flow is
net cash provided by operating activities less net purchases of
property, plant and equipment.
|
|
Media Contact Information:
Karen Kirkwood
Phone: 781-622-1306
E-mail: karen.kirkwood@thermofisher.com
Investor Contact Information:
Ken Apicerno
Phone: 781-622-1294
E-mail: ken.apicerno@thermofisher.com
Website: www.thermofisher.com
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SOURCE Thermo Fisher Scientific