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, 2022.
Fourth Quarter and Full Year 2022 Highlights
- Fourth quarter revenue grew 7% to $11.45 billion.
- Fourth quarter GAAP diluted earnings per share (EPS) was
$4.01.
- Fourth quarter adjusted EPS was $5.40.
- Full year revenue grew 15% to $44.92 billion.
- Full year GAAP diluted EPS was $17.63.
- Full year adjusted EPS was $23.24.
- During the year, we strengthened our industry leadership,
advanced our trusted partner status with our customers, delivered
excellent financial performance for our shareholders, and invested
in our world class team.
- Achieved outstanding and differentiated Core organic revenue
growth, growing 14% in both the fourth quarter and for the full
year.
- Delivered another outstanding year of high-impact innovation,
highlighted by the Applied Biosystems SeqStudio Flex Series genetic
analyzer, the Thermo Scientific TRACE 1600 Series Gas
Chromatograph, the Phadia 2500+ series of instruments, as well as
the Orbitrap Ascend Tribrid mass spectrometer. During the quarter,
we launched the Thermo Scientific Glacios 2 Cryo-TEM (transmission
electron microscope) to accelerate structure-based drug discovery,
the Gibco CTS DynaCellect Magnetic Separation System to advance the
manufacturing of cell therapies, and the SeCore CDx HLA Sequencing
System, which received marketing authorization by the FDA for use
as a companion diagnostic with an immunotherapy to treat patients
with a rare eye cancer.
- Continued to strengthen our unique customer value proposition
by adding capacity and capabilities globally for pharma services,
bioproduction, and clinical research services. During the fourth
quarter, this included the opening of a new state-of-the-art
bioanalytical lab in Richmond, Virginia, to support our clinical
research business and the increasing demand for analytical services
to accelerate drug development.
- Advanced our industry-leading scale and depth of capabilities
in high-growth and emerging markets. During the fourth quarter,
this included opening a new biologics manufacturing facility in
Hangzhou, China, to offer integrated clinical and commercial drug
substance and drug product capabilities for customers.
- Very active year advancing our environmental, social and
governance (ESG) priorities. We made strong progress on our Scope 1
and Scope 2 emissions initiatives, enabling us to increase our 2030
greenhouse gas emissions reduction target and accelerate our
transition to 100% renewable energy. Among the highlights from our
Foundation for Science, we supported students across the globe
through our STEM education programs and colleague-led Community
Action Councils. Throughout the year, the company also received a
variety of awards and recognition for its industry leadership and
inclusive culture including being recognized by Forbes magazine
during the quarter as one of the World’s Top Female-Friendly
Companies and one of America’s Best Employers for veterans.
- Continued to successfully execute our capital deployment
strategy in 2022. The integration of PPD is largely complete and
drove strong returns for our shareholders with outstanding
execution and business performance throughout the year. For the
full year, PPD delivered outstanding Core organic revenue growth
and is on track to deliver total synergies of $175 million by year
3. Additionally, we returned $3.5 billion of capital to
shareholders through stock buybacks and dividends. Shortly after
year end, we completed the acquisition of The Binding Site for $2.7
billion.
“We had another exceptional year, exceeding our goals and
delivering for all of our stakeholders in 2022,” said Marc N.
Casper, chairman, president and chief executive officer of Thermo
Fisher Scientific. “Thanks to our incredible global team, we
successfully executed our proven growth strategy, effectively
navigated the macro-environment, and delivered impressive financial
results, as we continued to enable our customers to make the world
healthier, cleaner and safer.”
Casper added, “We are incredibly well positioned as we enter
2023. Our high-impact innovation and unique customer value
proposition continue to drive significant share gain. Our
experienced management team, PPI Business System and the benefits
of scale, position our company to deliver another outstanding year
of value creation for all of our stakeholders and ensure we create
an even brighter future.”
Fourth Quarter 2022
Revenue for the quarter grew 7% to $11.45 billion in 2022,
versus $10.70 billion in 2021. Organic revenue was 3% lower, Core
organic revenue growth was 14%, and COVID-19 testing revenue was
$0.37 billion.
GAAP Earnings Results
GAAP diluted EPS in the fourth quarter of 2022 was $4.01, versus
$4.17 in the same quarter last year. GAAP operating income for the
fourth quarter of 2022 was $1.86 billion, compared with $2.54
billion in the year-ago quarter. GAAP operating margin was 16.3%,
compared with 23.7% in the fourth quarter of 2021.
Non-GAAP Earnings Results
Adjusted EPS in the fourth quarter of 2022 was $5.40, versus
$6.54 in the fourth quarter of 2021. Adjusted operating income for
the fourth quarter of 2022 was $2.56 billion, compared with $3.16
billion in the year-ago quarter. Adjusted operating margin was
22.4%, compared with 29.5% in the fourth quarter of 2021.
Full Year 2022
Revenue for the full year grew 15% to $44.92 billion in 2022,
versus $39.21 billion in 2021. Organic revenue grew slightly, Core
organic revenue growth was 14%, and COVID-19 testing revenue was
$3.11 billion.
GAAP Earnings Results
GAAP diluted EPS for the full year was $17.63, versus $19.46 in
2021. GAAP operating income for 2022 was $8.39 billion, compared
with $10.03 billion a year-ago. GAAP operating margin was 18.7%,
compared with 25.6% in 2021.
Non-GAAP Earnings Results
Adjusted EPS for the full year was $23.24, versus $25.13 in
2021. Adjusted operating income for the full year was $10.99
billion, compared with $12.14 billion a year-ago. Adjusted
operating margin was 24.5%, compared with 31.0% in 2021.
Annual Guidance for 2023
Thermo Fisher is initiating revenue and adjusted EPS guidance
for the full year 2023. The company expects to achieve 2023 revenue
of $45.3 billion and full year Core organic revenue growth of 7%.
The company expects to achieve adjusted EPS of $23.70.
Use of Non-GAAP Financial Measures
Adjusted EPS, adjusted net income, adjusted operating income,
adjusted operating margin, free cash flow, organic revenue growth
and Core organic revenue growth are non-GAAP measures that exclude
certain items detailed after the tables that accompany this press
release, under the heading “Supplemental Information Regarding
Non-GAAP Financial Measures.” The reconciliations of GAAP to
non-GAAP financial measures are provided in the tables that
accompany this press release.
Conference Call
Thermo Fisher Scientific will hold its earnings conference call
today, February 1, 2023, at 8:30 a.m. Eastern Time. To listen, dial
(844) 200-6205 within the U.S. or (929) 526-1599 outside the U.S.
The conference ID is 982319. 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 “Financials.” An
audio archive of the call will be available under “News &
Events” through Friday, February 17, 2023.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. is the world leader in serving
science, with annual revenue over $40 billion. Our Mission is to
enable our customers to make the world healthier, cleaner and
safer. Whether our customers are accelerating life sciences
research, solving complex analytical challenges, increasing
productivity in their laboratories, improving patient health
through diagnostics or the development and manufacture of
life-changing therapies, we are here to support them. Our global
team delivers an unrivaled combination of innovative technologies,
purchasing convenience and pharmaceutical services through our
industry-leading brands, including Thermo Scientific, Applied
Biosystems, Invitrogen, Fisher Scientific, Unity Lab Services,
Patheon and PPD. 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 duration and severity of the COVID-19 pandemic; 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; any natural disaster, public health crisis or other
catastrophic event; and the effect of laws and regulations
governing government contracts, as well as the possibility that
expected benefits related to 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 most recent
annual report on Form 10-K and subsequent quarterly reports on Form
10-Q, which are 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.
Condensed Consolidated Statement of Income (unaudited)
Three Months Ended
December 31,
% of
December 31,
% of
(In millions except per share amounts)
2022
Revenues
2021
Revenues
Revenues
$
11,450
$
10,702
Costs and operating expenses:
Cost of revenues (a)
6,715
58.6
%
5,302
49.5
%
Selling, general and administrative
expenses (b)
1,836
16.0
%
1,958
18.3
%
Amortization of acquisition-related
intangible assets
592
5.2
%
466
4.4
%
Research and development expenses
391
3.4
%
392
3.7
%
Restructuring and other costs (c)
55
0.5
%
46
0.4
%
9,589
83.7
%
8,164
76.3
%
Operating income
1,861
16.3
%
2,538
23.7
%
Interest income
150
11
Interest expense
(269
)
(161
)
Other income/(expense) (d)
35
(526
)
Income before income taxes
1,777
1,862
Provision for income taxes (e)
(173
)
(202
)
Equity in earnings/(losses) of
unconsolidated entities
(30
)
(1
)
Net income
1,574
1,659
Less: net income/(losses) attributable to
noncontrolling interests and redeemable noncontrolling interest
(2
)
1
Net income attributable to Thermo Fisher
Scientific Inc.
$
1,576
13.8
%
$
1,658
15.5
%
Earnings per share attributable to Thermo
Fisher Scientific Inc.:
Basic
$
4.03
$
4.20
Diluted
$
4.01
$
4.17
Weighted average shares:
Basic
391
394
Diluted
393
398
Reconciliation of adjusted operating
income and adjusted operating margin
GAAP operating income
$
1,861
16.3
%
$
2,538
23.7
%
Cost of revenues adjustments (a)
5
0.0
%
—
0.0
%
Selling, general and administrative
expenses adjustments (b)
47
0.4
%
111
1.0
%
Restructuring and other costs (c)
55
0.5
%
46
0.4
%
Amortization of acquisition-related
intangible assets
592
5.2
%
466
4.4
%
Adjusted operating income (non-GAAP
measure)
$
2,560
22.4
%
$
3,161
29.5
%
Reconciliation of adjusted net
income
GAAP net income attributable to Thermo
Fisher Scientific Inc.
$
1,576
$
1,658
Cost of revenues adjustments (a)
5
—
Selling, general and administrative
expenses adjustments (b)
47
111
Restructuring and other costs (c)
55
46
Amortization of acquisition-related
intangible assets
592
466
Other income/expense adjustments (d)
(46
)
532
Provision for income taxes adjustments
(e)
(138
)
(213
)
Equity in earnings/losses of
unconsolidated entities
30
1
Adjusted net income (non-GAAP measure)
$
2,121
$
2,601
Reconciliation of adjusted earnings per
share
GAAP diluted EPS attributable to Thermo
Fisher Scientific Inc.
$
4.01
$
4.17
Cost of revenues adjustments (a)
0.01
0.00
Selling, general and administrative
expenses adjustments (b)
0.12
0.28
Restructuring and other costs (c)
0.14
0.11
Amortization of acquisition-related
intangible assets
1.50
1.17
Other income/expense adjustments (d)
(0.11
)
1.34
Provision for income taxes adjustments
(e)
(0.35
)
(0.53
)
Equity in earnings/losses of
unconsolidated entities
0.08
0.00
Adjusted EPS (non-GAAP measure)
$
5.40
$
6.54
Reconciliation of free cash
flow
GAAP net cash provided by operating
activities
$
3,487
$
2,457
Purchases of property, plant and
equipment
(550
)
(831
)
Proceeds from sale of property, plant and
equipment
6
11
Free cash flow (non-GAAP measure)
$
2,943
$
1,637
Segment data
Three Months Ended
December 31,
% of
December 31,
% of
(In millions)
2022
Revenues
2021
Revenues
Revenues
Life Sciences Solutions
$
3,046
26.6
%
$
4,150
38.8
%
Analytical Instruments
1,878
16.4
%
1,725
16.1
%
Specialty Diagnostics
1,115
9.7
%
1,447
13.5
%
Laboratory Products and Biopharma
Services
5,947
51.9
%
4,195
39.2
%
Eliminations
(536
)
-4.6
%
(815
)
-7.6
%
Consolidated revenues
$
11,450
100.0
%
$
10,702
100.0
%
Operating income and operating
margin
Life Sciences Solutions
$
1,040
34.1
%
$
1,999
48.2
%
Analytical Instruments
476
25.4
%
381
22.1
%
Specialty Diagnostics
208
18.6
%
297
20.5
%
Laboratory Products and Biopharma
Services
836
14.1
%
484
11.5
%
Subtotal reportable segments
2,560
22.4
%
3,161
29.5
%
Cost of revenues adjustments (a)
(5
)
0.0
%
—
0.0
%
Selling, general and administrative
expenses adjustments (b)
(47
)
-0.4
%
(111
)
-1.0
%
Restructuring and other costs (c)
(55
)
-0.5
%
(46
)
-0.4
%
Amortization of acquisition-related
intangible assets
(592
)
-5.2
%
(466
)
-4.4
%
GAAP operating income
$
1,861
16.3
%
$
2,538
23.7
%
(a) Adjusted results in 2022 exclude
charges for inventory write-downs associated with large-scale
abandonment of product lines.
(b) Adjusted results in 2022 and 2021
exclude certain third-party expenses, principally
transaction/integration costs related to recent acquisitions,
charges/credits for changes in estimates of contingent acquisition
consideration, and charges associated with product liability
litigation.
(c) Adjusted results in 2022 and 2021
exclude restructuring and other costs consisting principally of
severance, impairments of long-lived assets, charges/credits for
environmental-related matters, abandoned facility, and other
expenses of headcount reductions within several businesses and real
estate consolidations. Adjusted results in 2022 also exclude $14 of
gain on the sale of intellectual property. Adjusted results in 2021
also exclude $22 of charges for compensation due to employees at
recently acquired businesses at the date of acquisition.
(d) Adjusted results in 2022 and 2021
exclude net gains/losses on investments. Adjusted results in 2022
also exclude $67 of net gains on derivative instruments to address
certain foreign currency risks and $4 of net settlement gains for
pension plans. Adjusted results in 2021 also exclude $570 of losses
on the early extinguishment of debt and $10 of charges for the
amortization of bridge loan commitment fees related to recent
acquisitions.
(e) Adjusted provision for income taxes in
2022 and 2021 excludes incremental tax impacts for the reconciling
items between GAAP and adjusted net income, incremental tax impacts
as a result of tax rate/law changes and the tax impacts from audit
settlements.
Note:
Consolidated depreciation expense is $256
and $217 in 2022 and 2021, respectively.
Organic and Core organic revenue growth
Three months ended
December 31, 2022
Revenue growth
7%
Acquisitions
14%
Currency translation
-4%
Organic revenue growth
-3%
COVID-19 testing revenue
-16%
Contribution of PPD to Core organic
revenue growth (a)
1%
Core organic revenue growth
14%
(a) Adjustment to include the contribution
of PPD to Core organic revenue growth as though the acquisition had
occurred on January 1, 2021.
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Condensed Consolidated Statement of Income (unaudited)
Year ended
December 31,
% of
December 31,
% of
(In millions except per share amounts)
2022
Revenues
2021
Revenues
Revenues
$
44,915
$
39,211
Costs and operating expenses:
Cost of revenues (a)
25,415
56.6
%
18,977
48.4
%
Selling, general and administrative
expenses (b)
7,127
15.9
%
6,842
17.4
%
Amortization of acquisition-related
intangible assets
2,395
5.3
%
1,761
4.5
%
Research and development expenses
1,471
3.3
%
1,406
3.6
%
Restructuring and other costs (c)
114
0.3
%
197
0.5
%
36,522
81.3
%
29,183
74.4
%
Operating income
8,393
18.7
%
10,028
25.6
%
Interest income
272
43
Interest expense
(726
)
(536
)
Other income/(expense) (d)
(104
)
(694
)
Income before income taxes
7,835
8,841
Provision for income taxes (e)
(703
)
(1,109
)
Equity in earnings/(losses) of
unconsolidated entities
(172
)
(4
)
Net income
6,960
7,728
Less: net income/(losses) attributable to
noncontrolling interests and redeemable noncontrolling interest
10
3
Net income attributable to Thermo Fisher
Scientific Inc.
$
6,950
15.5
%
$
7,725
19.7
%
Earnings per share attributable to Thermo
Fisher Scientific Inc.:
Basic
$
17.75
$
19.62
Diluted
$
17.63
$
19.46
Weighted average shares:
Basic
392
394
Diluted
394
397
Reconciliation of adjusted operating
income and adjusted operating margin
GAAP operating income
$
8,393
18.7
%
$
10,028
25.6
%
Cost of revenues adjustments (a)
46
0.1
%
8
0.0
%
Selling, general and administrative
expenses adjustments (b)
37
0.1
%
144
0.4
%
Restructuring and other costs (c)
114
0.3
%
197
0.5
%
Amortization of acquisition-related
intangible assets
2,395
5.3
%
1,761
4.5
%
Adjusted operating income (non-GAAP
measure)
$
10,985
24.5
%
$
12,138
31.0
%
Reconciliation of adjusted net
income
GAAP net income attributable to Thermo
Fisher Scientific Inc.
$
6,950
$
7,725
Cost of revenues adjustments (a)
46
8
Selling, general and administrative
expenses adjustments (b)
37
144
Restructuring and other costs (c)
114
197
Amortization of acquisition-related
intangible assets
2,395
1,761
Other income/expense adjustments (d)
117
732
Provision for income taxes adjustments
(e)
(672
)
(593
)
Equity in earnings/losses of
unconsolidated entities
172
4
Adjusted net income (non-GAAP measure)
$
9,159
$
9,978
Reconciliation of adjusted earnings per
share
GAAP diluted EPS attributable to Thermo
Fisher Scientific Inc.
$
17.63
$
19.46
Cost of revenues adjustments (a)
0.12
0.02
Selling, general and administrative
expenses adjustments (b)
0.09
0.36
Restructuring and other costs (c)
0.29
0.50
Amortization of acquisition-related
intangible assets
6.07
4.43
Other income/expense adjustments (d)
0.30
1.84
Provision for income taxes adjustments
(e)
(1.70
)
(1.49
)
Equity in earnings/losses of
unconsolidated entities
0.44
0.01
Adjusted EPS (non-GAAP measure)
$
23.24
$
25.13
Reconciliation of free cash
flow
GAAP net cash provided by operating
activities
$
9,154
$
9,312
Purchases of property, plant and
equipment
(2,243
)
(2,523
)
Proceeds from sale of property, plant and
equipment
24
20
Free cash flow (non-GAAP measure)
$
6,935
$
6,809
Segment data
Year ended
December 31,
% of
December 31,
% of
(In millions)
2022
Revenues
2021
Revenues
Revenues
Life Sciences Solutions
$
13,532
30.1
%
$
15,631
39.9
%
Analytical Instruments
6,624
14.7
%
6,069
15.5
%
Specialty Diagnostics
4,763
10.6
%
5,659
14.4
%
Laboratory Products and Biopharma
Services
22,511
50.1
%
14,862
37.9
%
Eliminations
(2,515
)
-5.5
%
(3,010
)
-7.7
%
Consolidated revenues
$
44,915
100.0
%
$
39,211
100.0
%
Operating income and operating
margin
Life Sciences Solutions
$
5,582
41.2
%
$
7,817
50.0
%
Analytical Instruments
1,507
22.8
%
1,197
19.7
%
Specialty Diagnostics
1,024
21.5
%
1,280
22.6
%
Laboratory Products and Biopharma
Services
2,872
12.8
%
1,844
12.4
%
Subtotal reportable segments
10,985
24.5
%
12,138
31.0
%
Cost of revenues adjustments (a)
(46
)
-0.1
%
(8
)
0.0
%
Selling, general and administrative
expenses adjustments (b)
(37
)
-0.1
%
(144
)
-0.4
%
Restructuring and other costs (c)
(114
)
-0.3
%
(197
)
-0.5
%
Amortization of acquisition-related
intangible assets
(2,395
)
-5.3
%
(1,761
)
-4.5
%
GAAP operating income
$
8,393
18.7
%
$
10,028
25.6
%
(a) Adjusted results in 2022 and 2021
exclude charges for the sale of inventories revalued at the date of
acquisition. Adjusted results in 2022 also exclude $27 of inventory
write-downs associated with large-scale abandonment of product
lines.
(b) Adjusted results in 2022 and 2021
exclude certain third-party expenses, principally
transaction/integration costs related to recent acquisitions,
charges/credits for changes in estimates of contingent acquisition
consideration, and charges associated with product liability
litigation.
(c) Adjusted results in 2022 and 2021
exclude restructuring and other costs consisting principally of
severance, impairments of long-lived assets, charges/credits for
environmental-related matters, abandoned facility and other
expenses of headcount reductions within several businesses and real
estate consolidations. Adjusted results in 2022 also exclude $14 of
gain on the sale of intellectual property. Adjusted results in 2021
also exclude $122 of charges for impairments of acquired intangible
assets and $35 of charges for compensation due to employees at
recently acquired businesses at the date of acquisition.
(d) Adjusted results in 2022 and 2021
exclude net gains/losses on investments and losses on the early
extinguishment of debt. Adjusted results in 2022 also exclude $67
of net gains on derivative instruments to address certain foreign
currency risks and $2 of net settlement gains for pension plans.
Adjusted results in 2021 also exclude $36 of charges for
amortization of bridge loan commitment fees related to a pending
acquisition.
(e) Adjusted provision for income taxes in
2022 and 2021 excludes incremental tax impacts for the reconciling
items between GAAP and adjusted net income, incremental tax impacts
as a result of tax rate/law changes and the tax impacts from audit
settlements (including a $658 benefit from an audit settlement in
2022). Adjusted results in 2022 also exclude a $423 charge for the
impact of deferred tax realizability assessments as a result of
audit settlements.
Notes:
Consolidated depreciation expense is $986
and $831 in 2022 and 2021, respectively.
Organic and Core organic revenue growth
Twelve months ended
December 31, 2022
Revenue growth
15%
Acquisitions
18%
Currency translation
-3%
Organic revenue growth
0%
COVID-19 testing revenue
-13%
Contribution of PPD to Core organic
revenue growth (a)
1%
Core organic revenue growth
14%
(a) Adjustment to include the contribution
of PPD to Core organic revenue growth as though the acquisition had
occurred on January 1, 2021.
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Condensed Consolidated Balance Sheet
(unaudited)
December 31,
December 31,
(In millions)
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
8,524
$
4,477
Accounts receivable, net
8,274
7,977
Inventories
5,634
5,051
Other current assets
2,933
2,608
Total current assets
25,365
20,113
Property, plant and equipment, net
9,280
8,333
Acquisition-related intangible assets,
net
17,442
20,113
Other assets
4,007
4,640
Goodwill
41,196
41,924
Total assets
$
97,290
$
95,123
Liabilities, redeemable noncontrolling
interest and equity
Current liabilities:
Short-term obligations and current
maturities of long-term obligations
$
5,579
$
2,537
Other current liabilities
11,535
10,899
Total current liabilities
17,114
13,436
Other long-term liabilities
7,119
8,377
Long-term obligations
28,909
32,333
Redeemable noncontrolling interest
116
122
Total equity
44,032
40,855
Total liabilities, redeemable
noncontrolling interest and equity
$
97,290
$
95,123
Condensed Consolidated Statement of
Cash Flows (unaudited)
Year ended
December 31,
December 31,
(In millions)
2022
2021
Operating activities
Net income
$
6,960
$
7,728
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
3,381
2,592
Change in deferred income taxes
(995
)
(647
)
Other non-cash expenses, net
857
1,187
Changes in assets and liabilities,
excluding the effects of acquisitions
(1,049
)
(1,548
)
Net cash provided by operating
activities
9,154
9,312
Investing activities
Acquisitions, net of cash acquired
(39
)
(19,395
)
Purchases of property, plant and
equipment
(2,243
)
(2,523
)
Proceeds from sale of property, plant and
equipment
24
20
Other investing activities, net
99
(34
)
Net cash used in investing activities
(2,159
)
(21,932
)
Financing activities
Net proceeds from issuance of debt
3,193
18,137
Repayment of debt
(375
)
(11,738
)
Net proceeds from issuance of commercial
paper
1,526
2,512
Repayment of commercial paper
(3,690
)
—
Purchases of company common stock
(3,000
)
(2,000
)
Dividends paid
(455
)
(395
)
Other financing activities, net
(9
)
65
Net cash (used in) provided by financing
activities
(2,810
)
6,581
Exchange rate effect on cash
(139
)
194
Increase (decrease) in cash, cash
equivalents and restricted cash
4,046
(5,845
)
Cash, cash equivalents and restricted cash
at beginning of period
4,491
10,336
Cash, cash equivalents and restricted cash
at end of period
$
8,537
$
4,491
Free cash flow (non-GAAP measure)
$
6,935
$
6,809
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Supplemental Information Regarding 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 such as organic revenue growth,
which is reported revenue growth, excluding the impacts of revenues
from acquired businesses and the effects of currency translation.
We also report Core organic revenue growth, which is reported
revenue growth including the impact of PPD revenue, excluding the
impacts of COVID-19 testing revenue, and excluding the impacts of
acquisitions other than PPD and currency translation. We calculate
period-to-period Core organic revenue growth by adding to the
baseline period PPD’s pre-acquisition revenues from such period. We
report these measures because Thermo Fisher management believes
that in order to understand the company’s short-term and long-term
financial trends, investors may wish to consider the impact of
acquisitions, foreign currency translation and/or COVID-19 testing
on revenues. In particular, given PPD’s significance relative to
our existing businesses, management believes it is appropriate to
also present information on a basis that includes PPD
pre-acquisition revenues in order to demonstrate the impact PPD has
on our current growth profile. Core organic revenue growth amounts
are not necessarily indicative of the combined results of
operations that would have been realized had the PPD acquisition
occurred on January 1, 2021. Thermo Fisher management uses these
measures to forecast and evaluate the operational performance of
the company as well as to compare revenues of current periods to
prior periods.
We report adjusted operating income, adjusted operating income
margin, adjusted net income, and adjusted EPS. We believe that the
use of these non-GAAP financial measures, in addition to GAAP
financial 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 core operating
performance, especially when comparing such results to previous
periods, forecasts, 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. To
calculate these measures we exclude, as applicable:
- Certain acquisition-related costs, including charges for the
sale of inventories revalued at the date of acquisition,
significant transaction/acquisition-related costs, including
changes in estimates of contingent acquisition-related
consideration, and other costs associated with obtaining short-term
financing commitments for pending/recent acquisitions. We exclude
these costs because we do not believe they are indicative of our
normal operating costs.
- Costs/income associated with restructuring activities and
large-scale abandonments of product lines, such as reducing
overhead and consolidating facilities. We exclude these costs
because we believe that the costs related to restructuring
activities are not indicative of our normal operating costs.
- Equity in earnings/losses of unconsolidated entities;
impairments of long-lived assets; and certain other gains and
losses that are either isolated or cannot be expected to occur
again with any predictability, including gains/losses on
investments, the sale of businesses, product lines, and real
estate, significant litigation-related matters,
curtailments/settlements of pension plans, and the early retirement
of debt. We exclude these items because they are outside of our
normal operations and/or, in certain cases, are difficult to
forecast accurately for future periods.
- The expense 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 up to 20 years. 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.
- The tax impacts of the above items and the impact of
significant tax audits or events (such as changes in deferred taxes
from enacted tax rate/law changes), the latter of which we exclude
because they are outside of our normal operations and difficult to
forecast accurately for future periods.
We report free cash flow, which is operating cash flow excluding
net capital expenditures, to provide a view of the continuing
operations’ ability to generate cash for use in acquisitions and
other investing and financing activities. The company also uses
this measure as an indication of the strength of the company. Free
cash flow is not a measure of cash available for discretionary
expenditures since we have certain non-discretionary obligations
such as debt service that are not deducted from the measure.
Thermo Fisher Scientific 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
Scientific’s results computed in accordance with GAAP.
The non-GAAP financial measures of Thermo Fisher Scientific’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 Scientific’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 tables above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230131005797/en/
Media Contact Information: Sandy Pound Thermo Fisher Scientific
Phone: 781-622-1223 E-mail: sandy.pound@thermofisher.com
Investor Contact Information: Rafael Tejada Thermo Fisher
Scientific Phone: 781-622-1356 E-mail:
rafael.tejada@thermofisher.com
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