10-QPeriod: Q2 FY2008

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q2 Ended Jun 28, 2008

Filed July 31, 2008For Securities:TMO

Summary

Thermo Fisher Scientific Inc. reported solid financial performance for the quarter and six months ended June 28, 2008. Revenue grew by 14% year-over-year for the quarter, reaching $2.71 billion, and by 11% for the six-month period to $5.26 billion. This growth was driven by increased demand across both the Analytical Technologies and Laboratory Products and Services segments, as well as contributions from recent acquisitions and favorable currency translation effects. The company demonstrated improved profitability, with operating income increasing significantly due to higher revenues, integration savings, and productivity improvements. Despite increased amortization expenses related to acquisitions, net income from continuing operations rose considerably, indicating strong operational execution. The company maintains a healthy balance sheet with substantial cash and investments, providing ample liquidity. While debt levels are significant, the company's cash flow from operations and available credit facilities are expected to be sufficient to meet its financial obligations. Management highlighted ongoing strategic acquisitions as a key growth driver. Investors should note the continued focus on integrating acquisitions, driving organic growth through new product introductions, and maintaining operational efficiencies. The company reiterated its positive outlook on meeting working capital requirements for at least the next 24 months, supported by strong operational cash generation.

Financial Highlights

25 data points
Beta

Revenue

$2.71B

49.2% Gross Margin

Net Income

$246.10M

9.1% Net Margin

EPS (Diluted)

$0.56

Cash & Equivalents

$1.01B

Free Cash Flow

$480.20M

Financial Statements
Beta
Revenue$2.71B
Cost of Revenue$1.38B
Gross Profit$1.33B
SG&A Expenses$698.90M
Operating Expenses$2.38B
Operating Income$330.20M
Net Income$246.10M
EPS (Basic)$0.59
EPS (Diluted)$0.56
Shares Outstanding (Basic)418.00M
Shares Outstanding (Diluted)437.10M

Key Highlights

  • 1Revenue for the second quarter of 2008 increased by 14% to $2.71 billion compared to the prior year's quarter.
  • 2Net income from continuing operations rose to $246.3 million in Q2 2008, up from $187.9 million in Q2 2007.
  • 3Operating income for the quarter improved by 36% to $330.2 million, driven by increased revenues and cost efficiencies.
  • 4The company completed several strategic acquisitions in the first six months of 2008, contributing to revenue growth.
  • 5Cash provided by operating activities for the first six months of 2008 was $589.5 million, an increase from $554.1 million in the same period last year.
  • 6Total debt stood at $2.19 billion as of June 28, 2008, with significant cash and short-term investments of $1.02 billion.
  • 7The Analytical Technologies segment showed strong revenue growth of 14% and improved operating income margin to 21.1%.

Frequently Asked Questions

Thermo Fisher Scientific Inc. experienced robust revenue growth, with a 14% increase in the second quarter of 2008 to $2.71 billion and an 11% increase for the first six months of 2008 to $5.26 billion, compared to the respective periods in 2007. This growth was driven by both organic demand across its key segments and contributions from strategic acquisitions.

As of June 28, 2008, Thermo Fisher Scientific Inc. had approximately $2.19 billion in outstanding debt. However, the company reported substantial cash and cash equivalents of $1.01 billion and short-term investments of $13.5 million, totaling over $1.02 billion. Management believes that its existing resources, future cash flow from operations, and available borrowing capacity under its revolving credit agreement are sufficient to meet its working capital needs for at least the next 24 months.

Profitability has been driven by several factors, including increased revenues from higher demand and price increases, successful integration savings from acquisitions, and productivity improvements such as material sourcing and operational efficiencies from restructuring actions. While amortization expenses related to intangible assets from acquisitions have increased, these have been largely offset by these other positive drivers, leading to improved operating income and net income.

The company continues to pursue a strategy of augmenting internal growth with complementary acquisitions. In the first six months of 2008, Thermo Fisher Scientific completed several acquisitions to expand its product lines and services. These acquisitions are accounted for using the purchase method, with their results included in the financial statements from their respective dates of acquisition, and are expected to generate synergies and expand sales.