10-KPeriod: FY2015

THERMO FISHER SCIENTIFIC INC. Annual Report, Year Ended Dec 31, 2015

Filed February 25, 2016For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported fiscal year 2015 results, demonstrating a robust performance despite currency headwinds. The company's mission to enable customers to make the world healthier, cleaner, and safer is supported by its broad portfolio across Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Services. The company achieved revenue growth driven by strong demand in the pharmaceutical and biotech sectors, particularly in Asia, with notable contributions from acquisitions, partially offset by unfavorable currency translation. Thermo Fisher continues to invest in research and development, emphasizing innovation and strategic acquisitions to maintain its market leadership and address evolving customer needs. The company's financial stability is supported by strong operational cash flow and available borrowing capacity. Key financial highlights for 2015 include consolidated revenues of approximately $16.97 billion, a slight increase year-over-year, with operating income of $2.34 billion. Despite a significant negative impact from currency translation ($938 million), the company managed to grow organically through increased demand and strategic acquisitions. The company also highlighted its ongoing commitment to R&D with significant expenditures and a forward-looking strategy focused on expanding its capabilities and market reach. Investors should note the company's significant long-term debt obligations and its strategy for managing them, as well as its ongoing acquisition strategy, which was further exemplified by the planned acquisition of Affymetrix in early 2016.

Financial Highlights

58 data points
Beta

Revenue

$16.96B

55.3% Gross Margin

Net Income

$1.98B

11.6% Net Margin

EPS (Diluted)

$4.92

Total Assets

$40.83B

Cash & Equivalents

$452.10M

Free Cash Flow

$2.52B

Financial Statements
Beta
Revenue$16.96B
Cost of Revenue$7.58B
Gross Profit$9.38B
R&D Expenses$692.00M
SG&A Expenses$4.61B
Operating Expenses$14.63B
Operating Income$2.34B
Interest Expense$415.00M
Net Income$1.98B
EPS (Basic)$4.96
EPS (Diluted)$4.92
Shares Outstanding (Basic)399.00M
Shares Outstanding (Diluted)402.00M

Key Highlights

  • 1Consolidated revenues reached $16.97 billion in 2015, a marginal increase from $16.89 billion in 2014, driven by organic growth and strategic acquisitions.
  • 2The company experienced a significant negative impact of $938 million on revenues due to unfavorable currency translation in 2015.
  • 3Operating income was $2.34 billion in 2015, down from $2.50 billion in 2014, largely due to net gains on business sales in 2014 and acquisition-related charges.
  • 4Thermo Fisher continues to invest heavily in research and development, with $692 million spent in 2015, underscoring its commitment to innovation.
  • 5The Life Sciences Solutions segment showed strong growth, with revenues increasing by 6% to $4.44 billion, driven by demand in bioprocess production and biosciences.
  • 6The company completed several strategic acquisitions in 2015, including Advanced Scientifics and Alfa Aesar, and announced the planned acquisition of Affymetrix in early 2016 for approximately $1.3 billion.
  • 7Despite $12.53 billion in outstanding indebtedness as of December 31, 2015, the company believes its cash flow from operations and available credit facilities are sufficient to meet its needs for the foreseeable future.

Frequently Asked Questions

In 2015, Thermo Fisher's revenue growth was primarily driven by increased demand in the pharmaceutical and biotech industries, with particularly strong performance in Asia. Organic revenue growth was also supported by strategic acquisitions such as Advanced Scientifics and Alfa Aesar, contributing to overall sales, despite the significant negative impact of currency translation.

The company's acquisition strategy played a crucial role in its 2015 performance. Acquisitions like Advanced Scientifics and Alfa Aesar expanded its product offerings and market reach. While these acquisitions contributed to revenue growth, the company also incurred integration costs. The announcement of the planned $1.3 billion acquisition of Affymetrix in early 2016 signals a continued aggressive pursuit of strategic growth through M&A.

Key risks identified include the need for continuous innovation and adaptation to rapid technological changes in the scientific industry, potential adverse impacts from general economic conditions, fluctuations in currency exchange rates (which negatively impacted 2015 revenues), healthcare reform legislation, and the protection of intellectual property. The company also faces risks related to integrating acquisitions, managing significant debt levels, and potential disruptions in its supply chain or operations.

As of December 31, 2015, Thermo Fisher had approximately $12.53 billion in outstanding indebtedness. The company manages its liquidity through a combination of operating cash flow, existing cash reserves, and a $2.0 billion revolving credit facility. While debt levels are substantial, the company believes its financial resources are sufficient to meet its obligations and fund its operations and growth initiatives for the foreseeable future. It also reported repaying $3.78 billion of long-term debt and issuing $1.80 billion in senior notes during 2015.