10-QPeriod: Q1 FY2012

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 4, 2012For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported solid financial results for the first quarter of 2012, with revenues growing 14% year-over-year to $3.10 billion, driven by contributions from recent acquisitions like Phadia and Dionex, as well as organic growth in existing businesses. Net income increased to $277.3 million, or $0.75 per diluted share, up from $252.2 million, or $0.64 per diluted share, in the prior year's quarter. The company demonstrated strong operational cash flow generation of $392 million. Management expressed confidence in the company's liquidity and ability to meet future cash requirements, supported by existing cash, operating cash flow, and new revolving credit facilities. The company is actively managing its business through ongoing restructuring efforts aimed at streamlining operations and achieving cost efficiencies, with approximately $70 million in additional charges anticipated for the remainder of 2012. Despite increased interest expenses related to debt financing for acquisitions, the overall financial health appears robust. Investors should note the company's strategic focus on integrating acquisitions and driving organic growth across its three key segments: Analytical Technologies, Specialty Diagnostics, and Laboratory Products and Services.

Financial Highlights

56 data points
Beta

Revenue

$3.06B

42.2% Gross Margin

Net Income

$277.30M

9.1% Net Margin

EPS (Diluted)

$0.75

Total Assets

$26.82B

Cash & Equivalents

$788.30M

Free Cash Flow

$322.80M

Financial Statements
Beta
Revenue$3.06B
Cost of Revenue$1.50B
Gross Profit$1.29B
R&D Expenses$91.70M
SG&A Expenses$824.30M
Operating Expenses$2.70B
Operating Income$361.50M
Interest Expense$57.70M
Net Income$277.30M
EPS (Basic)$0.76
EPS (Diluted)$0.75
Shares Outstanding (Basic)367.30M
Shares Outstanding (Diluted)370.10M

Key Highlights

  • 1Revenue increased by 14% to $3.10 billion in Q1 2012 compared to Q1 2011, driven by acquisitions and organic growth.
  • 2Net income rose to $277.3 million ($0.75 per diluted share) in Q1 2012, up from $252.2 million ($0.64 per diluted share) in Q1 2011.
  • 3Operating cash flow was strong at $392 million for the first three months of 2012.
  • 4Acquisitions, notably Phadia and Dionex, contributed significantly to revenue growth.
  • 5The company entered into new revolving credit facilities totaling up to $2.0 billion, enhancing its liquidity.
  • 6Restructuring and other costs totaled $34 million in Q1 2012, with an additional $70 million expected for the remainder of the year.
  • 7The company initiated a quarterly cash dividend of $0.13 per share, paid in April 2012.

Frequently Asked Questions

Revenue growth was primarily driven by contributions from recent acquisitions, particularly Phadia and Dionex, and to a lesser extent, by increased sales at existing businesses. Demand was strong across most segments, although sales to academic and government markets showed some weakness due to funding uncertainties.

Net income increased to $277.3 million in Q1 2012 from $252.2 million in Q1 2011. While operating income margin slightly decreased due to acquisition-related charges and higher amortization expenses, overall profitability improved due to revenue growth and lower income taxes.

As of March 31, 2012, the company had $924 million in short-term debt, including commercial paper and senior notes. To enhance liquidity, Thermo Fisher entered into new revolving credit facilities providing up to $2.0 billion in unsecured credit. Management believes its current cash, operating cash flow, and available credit are sufficient to meet its financial needs for at least the next 24 months.

Yes, the company is undertaking restructuring efforts to streamline operations, which resulted in $34 million of restructuring and other costs in Q1 2012. An additional $70 million in charges is expected for the remainder of 2012. These actions are aimed at achieving annual cost savings of approximately $25 million.