Thermo Fisher Scientific's revenues decrease by 2% in third quarter 2009

Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, reported that revenues decreased 2% to $2.53 billion in the third quarter of 2009, compared with $2.59 billion in the 2008 quarter. These results reflect the impact of foreign currency translation, which lowered revenues by 2%, and acquisitions, which increased revenues by 2%. GAAP diluted earnings per share (EPS) were $.53 in 2009, versus $.50 in the year-ago period. GAAP operating income for the 2009 quarter was $275 million, compared with $286 million in 2008, and GAAP operating margin was 10.9%, compared with 11.1% a year ago.

Adjusted EPS increased 4% to $0.78 in the third quarter of 2009, versus $0.75 in the 2008 quarter. Adjusted operating income for the 2009 quarter decreased 4% versus 2008 results, and adjusted operating margin declined 20 basis points to 17.3%, compared with adjusted operating margin of 17.5% in the 2008 period.

Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.” All prior-year results have been adjusted to reflect the new accounting rules concerning convertible debt and the calculation of earnings per share that took effect at the beginning of 2009.

Quarterly Snapshot

• Revenues decreased 2%
• Adjusted EPS increased 4%
• Generated significant free cash flow of $346 million
• Acquired B.R.A.H.M.S. AG, a leading provider of specialty in-vitro diagnostic tests
• Showcased new technologies and workflows at major clinical chemistry and food safety exhibitions
• Recorded strong shipments of Thermo Scientific LTQ Velos ion trap and LTQ Velos Orbitrap mass spectrometry systems for proteomics research

“We’re pleased that our third quarter results have continued our trend of improving revenue and operating performance as the year has progressed, keeping us firmly on track to meet our financial goals for 2009,” said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. “In line with our expectations, the economy continued to constrain our customers’ spending on capital equipment, while sales of consumables showed increasing strength. We again reported significant improvement in our operating margin over the preceding quarter, and delivered growth in adjusted EPS on both a sequential and year-to-year basis. Finally, we generated another strong quarter of free cash flow, and also invested approximately $480 million just after quarter close to acquire B.R.A.H.M.S., which significantly broadened our offering in high-growth specialty diagnostics applications.

“Looking ahead, we remain intently focused on pursuing opportunities that will generate shareholder value for the long term. These include:

• Developing innovative technologies that our customers need for their specific applications, from life sciences to food safety
• Expanding our strong commercial presence in growing geographic markets, particularly Asia
• Capitalizing on opportunities presented by global government stimulus programs, and
• Extending our track record of effective capital deployment.

Casper added, “Entering the fourth quarter, we are narrowing our annual revenue guidance to a range of $9.95 to $10.05 billion. This would lead to a 4% to 5% decline from our 2008 results. We are also narrowing our adjusted EPS guidance to a new range of $2.95 to $3.05 for the year, which would result in a 3% to 6% decline compared with our 2008 adjusted EPS of $3.13.” (The 2009 guidance does not include any future acquisitions or divestitures, and is based on present currency exchange rates. In addition, the adjusted EPS estimate excludes amortization expense for acquisition-related intangible assets and certain other items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”)

Management uses adjusted operating results to monitor and evaluate performance of the company’s business segments.

Analytical Technologies Segment

Revenues in the Analytical Technologies Segment declined 6% in the third quarter of 2009 to $1.02 billion, compared with 2008 revenues of $1.09 billion. Adjusted operating income decreased 11% in the third quarter of 2009, and adjusted operating margin decreased to 19.9%, versus 2008 results of 21.1%.

Laboratory Products and Services Segment

In the Laboratory Products and Services Segment, revenues increased 1% in the third quarter of 2009 to $1.63 billion, compared with 2008 revenues of $1.61 billion. Adjusted operating income increased 4% in the third quarter of 2009, and adjusted operating margin increased to 14.4%, versus 2008 results of 14.0%.