10-QPeriod: Q1 FY2020

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q1 Ended Mar 28, 2020

Filed May 1, 2020For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported its first quarter 2020 results, ending March 28, 2020. Total revenues increased slightly year-over-year to $6.23 billion, driven by growth in Life Sciences Solutions and Laboratory Products & Services segments, partially offset by a decline in Analytical Instruments. The company noted increased demand for products supporting the COVID-19 response, particularly in diagnostic and healthcare markets. Operating income saw a slight decrease to $906 million, with a corresponding margin of 14.5%, impacted by strategic growth investments and sales mix. Net income was $788 million, down from $815 million in the prior year, with diluted EPS at $1.97. The company highlighted its ongoing strategic acquisition of QIAGEN N.V. for approximately $11.5 billion, expected to close in the first half of 2021, and its robust liquidity position to fund this acquisition and ongoing operations.

Financial Highlights

54 data points
Beta

Revenue

$6.23B

Net Income

$788.00M

12.6% Net Margin

EPS (Diluted)

$1.97

Total Assets

$58.69B

Cash & Equivalents

$3.01B

Free Cash Flow

$103.00M

Financial Statements
Beta
Revenue$6.23B
R&D Expenses$245.00M
SG&A Expenses$1.55B
Operating Expenses$5.32B
Operating Income$906.00M
Interest Expense$126.00M
Net Income$788.00M
EPS (Basic)$1.99
EPS (Diluted)$1.97
Shares Outstanding (Basic)397.00M
Shares Outstanding (Diluted)400.00M

Key Highlights

  • 1Total revenues for Q1 2020 were $6.23 billion, a 2% increase compared to $6.13 billion in Q1 2019.
  • 2Life Sciences Solutions segment revenue grew by 10% to $1.77 billion, driven by demand for COVID-19 diagnostic products and bioproduction.
  • 3Analytical Instruments segment revenue declined by 17% to $1.10 billion, impacted by reduced demand from industrial customers in China due to COVID-19.
  • 4Operating income decreased to $906 million from $920 million in the prior year, with operating margin at 14.5% (down from 15.0%).
  • 5Net income was $788 million, a decrease from $815 million in Q1 2019, and diluted EPS was $1.97 (down from $2.02).
  • 6The company announced a significant pending acquisition of QIAGEN N.V. for approximately $11.5 billion, which is expected to close in the first half of 2021.
  • 7Cash flow from operations was $356 million, a decrease from $649 million in the prior year, primarily due to higher investment in working capital.

Frequently Asked Questions

Thermo Fisher experienced increased demand for products supporting the COVID-19 response, particularly in diagnostic and healthcare markets, which positively impacted revenues in segments like Life Sciences Solutions and Specialty Diagnostics. However, the pandemic also led to reduced customer activity in some sectors, such as academic labs and industrial markets, and a decrease in overall sales growth compared to the prior year. Management anticipates COVID-19 will materially adversely affect results through at least the second quarter of 2020.

Thermo Fisher entered into a purchase agreement to acquire QIAGEN N.V. for approximately $11.5 billion. The transaction is expected to close in the first half of 2021, subject to customary closing conditions, including regulatory approvals. The company is evaluating future debt financings to fund the acquisition.

During the first quarter of 2020, Thermo Fisher repurchased approximately 4.5 million shares of its common stock for a total of $1.5 billion. The company also paid $76 million in cash dividends to shareholders.

As of March 28, 2020, Thermo Fisher had $2.98 billion in cash and cash equivalents. The company believes its existing cash, proceeds from recent debt issuances, future cash flow from operations, and available borrowing capacity are sufficient to meet its cash requirements for existing businesses and the funding of the QIAGEN acquisition for at least the next 24 months.