Summary
Thermo Fisher Scientific Inc. (TMO) reported its third-quarter 2006 financial results, showing a 7% increase in revenue to $725.0 million compared to the prior year's quarter. This growth was driven by strong demand across its Life and Laboratory Sciences and Measurement and Control segments, particularly for mass spectrometry and spectroscopy instruments. The company also highlighted significant progress towards its merger with Fisher Scientific International Inc., announced in May 2006, which is expected to close by November 9, 2006, subject to regulatory approval. This merger, a tax-free, stock-for-stock exchange valued at approximately $10.3 billion, will create a combined entity named Thermo Fisher Scientific Inc. The company also made several strategic acquisitions in the quarter to broaden its product offerings. Operationally, Thermo Fisher Scientific demonstrated improved profitability with an operating income of $75.1 million, up from $62.1 million in the prior year's quarter, leading to an increased operating income margin of 10.4%. Diluted earnings per share from continuing operations were $0.30. The company also provided an update on its cash flow, with $200.2 million provided by operating activities for the first nine months of 2006, an increase from the same period in 2005. Management expressed confidence in its liquidity and ability to meet capital requirements, further supported by a new $1 billion revolving credit agreement to become effective upon the merger's closing.
Key Highlights
- 1Revenue increased by 7% to $725.0 million for the third quarter of 2006, compared to $679.4 million in the same period of 2005.
- 2Operating income grew to $75.1 million, an increase from $62.1 million in Q3 2005, with the operating margin improving to 10.4% from 9.1%.
- 3Net income for the quarter was $48.8 million, resulting in diluted earnings per share of $0.30 for continuing operations.
- 4Significant progress was made on the pending merger with Fisher Scientific International Inc., with shareholder approvals obtained and expected closing by November 9, 2006.
- 5The company completed several strategic acquisitions in Q3 2006, including GV Instruments Limited and EGS Gauging, Inc., to expand its product portfolio.
- 6Cash provided by operating activities for the first nine months of 2006 was $200.2 million, up from $144.9 million in the prior year's period.
- 7As of September 30, 2006, the company's goodwill was $2.0 billion, reflecting the strategy of growth through acquisitions.