Thermo Fisher Scientific Reports First Quarter 2016 Results
OREANDA-NEWS. Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the first quarter of 2016, ended April 2, 2016.
First Quarter 2016 Highlights
- Reported adjusted earnings per share (EPS) of $1.80 and GAAP diluted EPS of $1.01.
- Reported record revenue of $4.29 billion.
- Strengthened our Thermo Scientific analytical instrument offering for applied markets with new product launches at Pittcon, highlighted by the Integrion high-pressure ion chromatography system (HPIC) for environmental, food safety and industrial markets.
- Delivered strong performance in emerging markets, led by double-digit growth in China and India.
- Completed $1.3 billion acquisition of Affymetrix, enhancing our customer value proposition by strengthening our leadership in biosciences and expanding our opportunities in genetic analysis.
- Deployed $1 billion of capital on share buybacks in the quarter.
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’re pleased with our strong start to the year,” said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. “We delivered excellent EPS growth on great top-line performance, demonstrating that our growth strategy is clearly working.
“We made good progress in implementing our plans to meet the needs of our customers, and effectively deployed our capital to create shareholder value. We kicked off the year with a number of new product launches at Pittcon, including our Integrion HPIC system, which sets a new standard of performance for customers in applied markets. We also had a strong start across all of our major geographies, led by very strong performance in China.
“During the quarter, we deployed $2.4 billion of capital on M&A, stock buybacks and our dividend to create value for both customers and shareholders. I’m excited about our acquisition of Affymetrix, which we completed at quarter-end. This is another great example of how we continue to enhance our customer value proposition.
“In summary, with an excellent first quarter behind us, we’re positioned to deliver a strong 2016.”
First Quarter 2016
As previously communicated, the company’s 2016 fiscal calendar includes four additional days in the first quarter versus the first quarter of 2015. Consequently, revenue results in the 2016 quarter benefitted from the extra days, and operating margin was negatively affected due to costs related to the extra days.
For the first quarter of 2016, adjusted EPS grew 10% to $1.80, versus $1.63 in the first quarter of 2015. Revenue for the quarter also grew 10%, to $4.29 billion in 2016, versus $3.92 billion in 2015. Organic revenue growth was 10%; acquisitions increased revenue by 1% and currency translation decreased revenue by 2%. Adjusted operating income for the first quarter of 2016 increased 9% compared with the year-ago quarter. Adjusted operating margin was 21.7%, compared with 21.9% in the first quarter of 2015.
GAAP diluted EPS for the first quarter of 2016 increased to $1.01, versus $0.96 in the same quarter last year. GAAP operating income for the first quarter of 2016 increased 6% to $518 million, compared with $487 million in 2015. GAAP operating margin was 12.1%, compared with 12.4% in the first quarter of 2015.
2016 Guidance Update
Thermo Fisher is raising its revenue and adjusted EPS guidance for 2016 to reflect the inclusion of Affymetrix results for nine months, a less adverse foreign exchange environment, additional stock buybacks completed in the first quarter and stronger operational performance. The company is raising revenue guidance to a new range of $17.86 to $18.04 billion versus its original guidance of $17.36 to $17.56 billion announced in January 2016. This would result in 5 to 6 percent revenue growth over the previous year. The company is raising its adjusted EPS guidance to a new range of $8.05 to $8.19 versus the $7.80 to $7.96 previously communicated, for 9 to 11 percent growth over 2015.
Management uses adjusted operating results to monitor and evaluate performance of the company’s four business segments, as highlighted below. Year-over-year results were negatively affected by the impact of foreign currency exchange rates. In addition, revenue results benefitted from the four extra days in the first quarter of 2016 and operating margin was negatively affected due to costs related to the extra days. The impact of both foreign exchange and the extra days affects the business segments to varying degrees.
Life Sciences Solutions Segment
In the first quarter of 2016, Life Sciences Solutions Segment revenue grew 11% to $1.13 billion, compared with revenue of $1.02 billion in the first quarter of 2015. Segment adjusted operating margin was 29.1%, versus 29.3% in 2015.
Analytical Instruments Segment
Analytical Instruments Segment revenue increased 4% to $759 million in the first quarter of 2016, compared with revenue of $727 million in the first quarter of 2015. Segment adjusted operating margin was 14.7%, versus 16.7% in the 2015 quarter.
Specialty Diagnostics Segment
Specialty Diagnostics Segment revenue in the first quarter increased 9% to $855 million in 2016, compared with revenue of $785 million in the first quarter of 2015. Segment adjusted operating margin was 26.9%, versus 27.3% in the 2015 quarter.
Laboratory Products and Services Segment
In the first quarter of 2016, Laboratory Products and Services Segment revenue grew 14% to $1.72 billion, compared with revenue of $1.51 billion in the first quarter of 2015. Segment adjusted operating margin increased to 15.0%, versus 14.7% in the 2015 quarter.