Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the second quarter ended July 2, 2011.
“In addition to record top-line results, we achieved record adjusted EPS, with 22 percent growth over the year-ago quarter. We are executing our plan and reaping the benefits of our investments in new products and emerging markets, our PPI productivity initiatives and effective capital deployment.”
Second Quarter 2011 Highlights
- Adjusted earnings per share (EPS) grew 22% to a record $0.99.
- Revenues grew 12% to a record $2.90 billion.
- Adjusted operating margin increased 40 basis points to 17.6%.
- Completed acquisition of Dionex to create leading chromatography offering and announced acquisition of Phadia to enhance leadership in specialty diagnostics.
- Launched breakthrough products at ASMS conference that redefine mass spectrometry analysis for life sciences, environmental protection and food safety applications.
- Spent $225 million to buy back 3.8 million shares of company stock.
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."
"We delivered a solid second quarter, which keeps us right on track to meet our financial goals for the year," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "In addition to record top-line results, we achieved record adjusted EPS, with 22 percent growth over the year-ago quarter. We are executing our plan and reaping the benefits of our investments in new products and emerging markets, our PPI productivity initiatives and effective capital deployment.
"We had an exceptional quarter in terms of new product launches. This year's ASMS showing was our strongest yet, with three new mass spectrometry systems that will revolutionize the way our customers perform analysis in a range of applications. In our specialty diagnostics business, we introduced six oral fluid tests that have been cleared by the U.S. Food and Drug Administration for drugs-of-abuse screening. On a separate note, two of our products made the R&D Magazine list of the top 100 innovations in 2011.
"We also continue to effectively deploy our capital to create shareholder value. We've spent $2.1 billion on acquisitions completed so far this year. In addition to creating a leading chromatography portfolio with Dionex, we expanded our range of laboratory consumables with Sterilin, and last week acquired TREK Diagnostic Systems to broaden our microbiology offerings. Earlier in the quarter, we announced the acquisition of Phadia, which will enhance our specialty diagnostics capabilities with tests for allergies and autoimmune disorders. I'm pleased to report that the acquisition process is moving along faster than we expected and we now anticipate closing the transaction late in the third quarter. Finally, we deployed $225 million of capital during the quarter to buy back our stock."
For the second quarter of 2011, adjusted EPS grew 22% to a record $0.99, versus $0.81 in the second quarter of 2010. Revenues for the quarter grew 12% to $2.90 billion in 2011 versus $2.60 billion in 2010. Adjusted operating income for the second quarter of 2011 increased 14% compared with the year-ago period, and adjusted operating margin expanded 40 basis points to 17.6%, compared with 17.2% in the second quarter of 2010.
On a pro forma basis, as if Dionex were owned for the entire second quarter in both years, revenues increased 9%, including a 4% increase from the favorable effect of currency translation and a 1% increase from acquisitions other than Dionex.
GAAP diluted EPS for the second quarter of 2011 was $1.36, versus $0.57 in the same quarter last year. Results in 2011 include the gain on sale of discontinued operations (primarily Athena Diagnostics and Lancaster Laboratories), which increased GAAP diluted EPS by $0.79. GAAP operating income for the second quarter of 2011 declined to $265.8 million, compared with $297.9 million in 2010, due to acquisition-related charges. GAAP operating margin was 9.2%, compared with 11.5% in the second quarter of 2010.
Annual Guidance for 2011
Thermo Fisher announced that it is raising its adjusted EPS and revenue guidance for the full year 2011. The company is raising its adjusted EPS guidance by $0.03 to a new range of $4.08 to $4.18 for 2011, which would result in 18% to 21% EPS growth over 2010. The company is also raising its 2011 revenue guidance by $80 million to a new range of $11.60 billion to $11.70 billion as a result of more favorable foreign exchange and recent acquisitions. This would lead to 10% to 11% revenue growth over 2010. This guidance does not include any impact from the pending acquisition of Phadia and does not include any other future acquisitions or divestitures.
The 2011 guidance is based on current foreign 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
In the second quarter of 2011, Analytical Technologies Segment revenues increased 19% to $1.28 billion, compared with revenues of $1.07 billion in the second quarter of 2010. Segment adjusted operating income increased 27% in the second quarter of 2011, and adjusted operating margin increased to 21.1%, versus 19.9% in the 2010 quarter.
Laboratory Products and Services Segment
In the second quarter of 2011, Laboratory Products and Services Segment revenues increased 6% to $1.76 billion, compared with revenues of $1.65 billion in the second quarter of 2010. Segment adjusted operating income increased 2% in the second quarter of 2011, and adjusted operating margin was 13.6%, versus 14.1% in the 2010 quarter.
Thermo Fisher Scientific Inc.