10-QPeriod: Q3 FY2009

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q3 Ended Sep 26, 2009

Filed October 30, 2009For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported its third-quarter and nine-month results for the period ending September 26, 2009. For the third quarter, revenues were $2.53 billion, a slight decrease of 2% ($57 million) compared to the prior year, impacted by global economic conditions leading to reduced demand, particularly for equipment. However, the company saw growth in consumables. Net income for the quarter increased to $221.2 million from $218.1 million in the prior year, partly due to a lower effective tax rate. For the first nine months of 2009, revenues were $7.27 billion, a decrease of 7% ($581 million) year-over-year, also reflecting the economic downturn and unfavorable currency translation. Despite revenue pressures, the company demonstrated strong cash flow from operations, totaling $1.12 billion for the nine months, an increase from $960 million in the prior year, attributed to improved working capital management. The company also announced a significant acquisition, B.R.A.H.M.S. AG, for approximately $480 million, expanding its specialty diagnostics portfolio. Thermo Fisher maintains a strong liquidity position with substantial cash and investments, sufficient to cover anticipated operational needs.

Financial Highlights

51 data points
Beta

Revenue

$2.53B

40.0% Gross Margin

Net Income

$221.20M

8.7% Net Margin

EPS (Diluted)

$0.53

Total Assets

$21.42B

Cash & Equivalents

$1.75B

Free Cash Flow

$343.80M

Financial Statements
Beta
Revenue$2.53B
Cost of Revenue$1.29B
Gross Profit$1.01B
SG&A Expenses$662.10M
Operating Expenses$2.26B
Operating Income$275.50M
Interest Expense$29.20M
Net Income$221.20M
EPS (Basic)$0.54
EPS (Diluted)$0.53
Shares Outstanding (Basic)407.90M
Shares Outstanding (Diluted)420.20M

Key Highlights

  • 1Third-quarter revenue of $2.53 billion declined 2% year-over-year, driven by decreased demand in equipment sales due to economic uncertainty, though consumables showed resilience.
  • 2Net income for the third quarter increased to $221.2 million from $218.1 million in the prior year, aided by a lower effective tax rate.
  • 3Nine-month revenue decreased by 7% to $7.27 billion, reflecting continued impacts from the global economic downturn and currency translation.
  • 4Operating income for the nine months decreased by 20% to $724.6 million, impacted by lower revenues and increased restructuring costs.
  • 5Cash flow from operating activities for the first nine months was robust at $1.12 billion, up from $960 million in the prior year, due to improved working capital management.
  • 6The company acquired B.R.A.H.M.S. AG in October 2009 for approximately $480 million, strengthening its specialty diagnostics segment and European manufacturing presence.
  • 7Thermo Fisher Scientific maintained a strong liquidity position with $1.76 billion in cash and short-term investments as of September 26, 2009, sufficient for foreseeable future cash requirements.

Frequently Asked Questions

In the third quarter of 2009, Thermo Fisher Scientific saw a slight decrease in revenues to $2.53 billion from $2.59 billion in the prior year, a 2% decline. This was primarily attributed to reduced customer demand for equipment due to economic uncertainty, although consumable sales provided some offset. Despite lower revenues, net income increased to $221.2 million from $218.1 million, largely due to a more favorable effective tax rate.

The company demonstrated a strong liquidity position as of September 26, 2009, with $1.76 billion in cash and cash equivalents and short-term investments. Furthermore, cash flow from operating activities for the first nine months of 2009 was robust at $1.12 billion, an increase from $960 million in the same period of 2008. Management believes these resources, along with available borrowing capacity, are sufficient to meet cash requirements for at least the next 24 months.

Thermo Fisher Scientific completed a significant acquisition of B.R.A.H.M.S. AG in October 2009 for approximately $480 million. This acquisition is expected to enhance the company's specialty diagnostics portfolio and its manufacturing capabilities in Europe. Additionally, the company continued to implement restructuring actions aimed at streamlining operations and reducing costs in response to the economic downturn.

The global economic downturn significantly impacted Thermo Fisher Scientific's performance, leading to decreased demand for equipment and certain industrial instruments. This resulted in a decline in consolidated revenues for both the third quarter and the first nine months of 2009 compared to the prior year. However, the company experienced resilience in its consumables business and implemented productivity improvements and cost reductions to mitigate some of the negative effects.