10-QPeriod: Q2 FY2011

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q2 Ended Apr 2, 2011

Filed May 6, 2011For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported its first quarter 2011 results, showing a robust increase in revenues and operating income. Total revenues grew by 4% year-over-year to $2.72 billion, driven by strong performance in the Analytical Technologies segment and steady growth in Laboratory Products and Services. The company's operating income improved significantly, rising 13% to $321.5 million, with an operating margin of 11.8%, up from 10.8% in the prior year period. This improvement was attributed to productivity gains, cost efficiencies from restructuring, and reduced amortization expenses. The company also made significant strategic moves, including the pending acquisition of Dionex Corporation for approximately $2.1 billion, which was being funded by significant debt issuance, leading to a substantial increase in short-term obligations. Additionally, TMO completed the divestiture of its Athena Diagnostics and Lancaster Laboratories businesses, which have been classified as discontinued operations. Despite increased debt levels and integration efforts for Dionex, the company maintained a strong liquidity position with substantial cash and cash equivalents, believing it has sufficient resources to fund the acquisition and ongoing operations.

Financial Highlights

53 data points
Beta

Revenue

$2.68B

41.6% Gross Margin

Net Income

$252.20M

9.4% Net Margin

EPS (Diluted)

$0.64

Total Assets

$23.43B

Cash & Equivalents

$2.79B

Free Cash Flow

$274.90M

Financial Statements
Beta
Revenue$2.68B
Cost of Revenue$1.35B
Gross Profit$1.12B
SG&A Expenses$708.70M
Operating Expenses$2.40B
Operating Income$321.50M
Interest Expense$27.80M
Net Income$252.20M
EPS (Basic)$0.65
EPS (Diluted)$0.64
Shares Outstanding (Basic)388.60M
Shares Outstanding (Diluted)394.60M

Key Highlights

  • 1Total revenues increased by 4% to $2.72 billion for the first quarter of 2011, compared to $2.63 billion in the prior year period.
  • 2Operating income grew by 13% to $321.5 million, with operating margin improving to 11.8% from 10.8% year-over-year.
  • 3The company is in the process of acquiring Dionex Corporation for approximately $2.1 billion, a significant strategic move funded by new debt issuance.
  • 4Thermo Fisher completed the sale of its Athena Diagnostics and Lancaster Laboratories businesses, which are now reported as discontinued operations.
  • 5Cash and cash equivalents significantly increased to $2.79 billion as of April 2, 2011, largely due to debt financing for the Dionex acquisition.
  • 6Restructuring actions resulted in additional charges but are expected to yield annual cost savings of approximately $20 million.
  • 7Diluted earnings per share from continuing operations were $0.63, an increase from $0.54 in the first quarter of 2010.

Frequently Asked Questions

In the first quarter of 2011, Thermo Fisher Scientific reported a 4% increase in revenues to $2.72 billion and a 13% increase in operating income to $321.5 million. The operating margin improved to 11.8% from 10.8% in Q1 2010. Diluted earnings per share from continuing operations were $0.63, up from $0.54 in the prior year.

The most significant event is the pending acquisition of Dionex Corporation for approximately $2.1 billion, for which the company issued substantial debt. Additionally, Thermo Fisher completed the sale of its Athena Diagnostics and Lancaster Laboratories businesses. The company also continued its restructuring efforts to streamline operations and achieve cost savings.

The company's liquidity strengthened considerably, with cash and cash equivalents and short-term investments rising to $2.79 billion from $0.93 billion at the end of 2010. This increase was primarily driven by the issuance of new debt to fund the Dionex acquisition. Total debt increased to $4.30 billion.

The divestitures of Athena Diagnostics and Lancaster Laboratories are reported as discontinued operations, impacting prior period results for comparability. The pending acquisition of Dionex is a major strategic development that influenced the company's financing activities and debt levels, with the transaction expected to close in the near future.