10-QPeriod: Q1 FY2015

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q1 Ended Mar 28, 2015

Filed May 1, 2015For Securities:TMO

Summary

Thermo Fisher Scientific Inc. reported its first-quarter 2015 financial results, demonstrating resilience amidst a dynamic market. Total revenues for the quarter ended March 28, 2015, reached $3.92 billion, a slight increase of $15 million compared to the same period last year. This growth was primarily driven by higher demand across key end markets, partially offset by unfavorable currency translation effects due to a stronger U.S. dollar. The company's Life Sciences Solutions segment showed robust growth, increasing by 22%, largely attributed to the integration of Life Technologies. However, other segments like Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Services experienced modest declines in revenue, largely due to currency headwinds and divestitures. Operating income saw a significant decrease to $487 million from $876 million in the prior year. This was primarily influenced by a substantial gain from business sales recorded in the first quarter of 2014, coupled with increased amortization expenses related to the Life Technologies acquisition. The company continues to focus on operational efficiencies and cost management. Despite the year-over-year decline in operating income, the company maintained a strong liquidity position, with existing cash, short-term investments, and available borrowing capacity expected to be sufficient for its near-term needs. Strategic acquisitions and product development remain key components of Thermo Fisher's growth strategy.

Financial Statements
Beta
Revenue$3.92B
Cost of Revenue$1.72B
Gross Profit$1.82B
R&D Expenses$165.80M
SG&A Expenses$1.14B
Operating Expenses$3.43B
Operating Income$487.30M
Interest Expense$108.40M
Net Income$385.10M
EPS (Basic)$0.97
EPS (Diluted)$0.96
Shares Outstanding (Basic)397.80M
Shares Outstanding (Diluted)401.40M

Key Highlights

  • 1Total revenues for Q1 2015 were $3.92 billion, a modest increase of $15 million (0.4%) year-over-year, driven by organic demand.
  • 2The Life Sciences Solutions segment exhibited strong growth, with revenues up 22% to $1.02 billion, primarily due to the integration of Life Technologies.
  • 3Operating income decreased significantly to $487 million from $876 million in Q1 2014, largely due to a large gain on business sales in the prior year and increased amortization expenses.
  • 4The company experienced an unfavorable currency translation effect of $229 million on revenues due to a stronger U.S. dollar.
  • 5Acquisition activity included the purchase of Advanced Scientifics, Inc. for approximately $289 million in February 2015 to expand bioprocessing offerings.
  • 6The company repurchased $500 million of its common stock during the quarter.
  • 7Despite a decrease in reported operating income, the company expects its cash flow from operations, existing cash, and available borrowing capacity to be sufficient for its foreseeable future needs.

Frequently Asked Questions

The primary driver of the revenue increase was higher demand across the company's end markets, with the Life Sciences Solutions segment showing particular strength due to the integration of Life Technologies. However, these increases were partially offset by unfavorable currency translation effects from a stronger U.S. dollar.

The significant decrease in operating income was mainly due to a large gain on the sale of businesses recorded in the first quarter of 2014. Additionally, amortization expenses increased in 2015, largely related to the acquisition of Life Technologies.

Thermo Fisher Scientific believes its current cash and short-term investments, combined with its future cash flow from operations and available borrowing capacity under its revolving credit agreement, will be sufficient to meet its cash requirements for at least the next 24 months.

In February 2015, Thermo Fisher acquired Advanced Scientifics, Inc. for approximately $289 million to enhance its bioprocessing capabilities. In 2014, the company had completed the significant acquisition of Life Technologies and divested certain businesses to GE Healthcare and its Cole-Parmer specialty channel business.