10-QPeriod: Q2 FY2010

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q2 Ended Apr 3, 2010

Filed May 6, 2010For Securities:TMO

Summary

Thermo Fisher Scientific Inc. reported robust financial performance for the first quarter ended April 3, 2010, showcasing significant year-over-year revenue growth of 19% to $2.68 billion. This increase was driven by strong demand across both the Analytical Technologies and Laboratory Products and Services segments, bolstered by strategic acquisitions and a rebound from a weaker prior-year period. The company's operating income surged by 54% to $293 million, reflecting improved profitability due to higher sales, price increases, and productivity enhancements, despite increased restructuring and other costs. The company also demonstrated a strong commitment to growth through strategic acquisitions, notably Ahura Scientific and Finnzymes, which expanded its product portfolios and market reach.

Financial Statements
Beta
Revenue$2.63B
Cost of Revenue$1.35B
Gross Profit$1.07B
SG&A Expenses$698.30M
Operating Expenses$2.34B
Operating Income$284.60M
Interest Expense$22.30M
Net Income$232.30M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)409.60M
Shares Outstanding (Diluted)418.20M

Key Highlights

  • 1Total revenues increased by 19% year-over-year to $2.68 billion, driven by strong performance in both the Analytical Technologies (18% growth) and Laboratory Products and Services (19% growth) segments.
  • 2Operating income saw a significant jump of 54% to $293 million, with operating margin improving to 11.0% from 8.4% in the prior year's quarter.
  • 3The company completed two key acquisitions in the first quarter of 2010: Ahura Scientific for $147 million and Finnzymes for $59 million, aimed at expanding its analytical devices and molecular biology offerings, respectively.
  • 4Net income rose to $232.3 million from $148.9 million in the comparable prior-year period, with diluted earnings per share increasing to $0.56 from $0.35.
  • 5Cash flow from operations remained strong at $343 million, though slightly down from $359 million in the prior year, primarily due to increased investment in working capital to support sales growth.
  • 6Thermo Fisher Scientific issued $750 million in senior notes in late April 2010 and announced plans to use the proceeds to redeem outstanding convertible debentures and senior subordinated notes, demonstrating proactive debt management.
  • 7The company continues to invest in growth, with capital expenditures of $51 million in the quarter and identified future restructuring actions expected to yield annual cost savings of approximately $109 million.

Frequently Asked Questions

The primary driver of the revenue increase was strong demand across both the Analytical Technologies and Laboratory Products and Services segments. This was supported by strategic acquisitions, a rebound from a weaker first quarter in 2009, and the company's fiscal calendar having four additional selling days in the first quarter of 2010 compared to the prior year.

Thermo Fisher Scientific actively managed its debt by issuing $750 million in senior notes in late April 2010. These proceeds are earmarked for redeeming outstanding Floating Rate Convertible Debentures and Senior Subordinated Notes. Financing activities also included settling convertible debt, resulting in a net use of cash for the quarter.

The company has identified future restructuring actions that are expected to result in additional charges of approximately $27 million in 2010. These actions, along with those already implemented, are projected to yield annual cost savings of approximately $109 million.

In the first quarter of 2010, Thermo Fisher Scientific acquired Ahura Scientific, Inc. for $147 million to enhance its handheld spectroscopy offerings, and Finnzymes for $59 million to expand its molecular biology reagents and consumables portfolio.