10-QPeriod: Q3 FY2017

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 3, 2017For Securities:TMO

Summary

Thermo Fisher Scientific Inc. reported solid financial results for the nine months ended September 30, 2017, demonstrating growth driven by strategic acquisitions and organic demand. Total revenues increased by 12% year-over-year to $14.87 billion, with significant contributions from the recent acquisition of Patheon. The company's operating income saw an 18% increase, reflecting successful integration and operational efficiencies. Financially, the company maintained a strong liquidity position, with substantial cash flow from operations and available borrowing capacity. While debt levels increased due to acquisitions, the company's covenants remain within manageable limits, and its ability to service debt appears sound. Investors can take comfort in the company's strategic growth initiatives and its consistent performance across its diverse business segments.

Key Highlights

  • 1Total revenues grew 12% to $14.87 billion for the first nine months of 2017, compared to $13.32 billion in the prior year, driven significantly by acquisitions.
  • 2Operating income increased by 18% to $2.01 billion for the first nine months of 2017, compared to $1.70 billion in the prior year, indicating improved profitability.
  • 3The company successfully integrated major acquisitions, notably Patheon, which contributed to a 15% revenue increase in the Laboratory Products and Services segment.
  • 4Cash flow from operating activities remained robust, totaling $2.14 billion for the first nine months of 2017, providing ample liquidity.
  • 5Despite an increase in debt levels to fund acquisitions, the company maintained a healthy balance sheet and sufficient borrowing capacity.
  • 6The Analytical Instruments segment showed strong performance with a 39% revenue increase for the nine-month period, largely due to acquisitions.
  • 7Strategic growth investments are ongoing, with the company focusing on expanding commercial capabilities and enhancing customer experience.

Frequently Asked Questions

The primary driver of revenue growth was strategic acquisitions, most notably the acquisition of Patheon. These acquisitions contributed $1.07 billion to the total revenue increase of $1.55 billion for the first nine months of 2017.

Profitability improved significantly. Operating income increased by 18% to $2.01 billion for the first nine months of 2017, compared to $1.70 billion in the same period of 2016. This was driven by higher sales, productivity improvements, and the impact of acquisitions.

The company maintains a strong liquidity position. Cash provided by operating activities was $2.14 billion for the first nine months of 2017. As of September 30, 2017, the company had $741 million in cash and cash equivalents and ample borrowing capacity under its revolving credit facility.

The company's debt level increased due to funding acquisitions, with total borrowings at carrying value reaching $21.99 billion as of September 30, 2017. While this increases financial leverage, the company's debt covenants are being managed, and it believes its cash flow and credit facilities are sufficient to meet its obligations.