Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in
serving science, today reported its financial results for the
second quarter ended June 29, 2024.
Second Quarter 2024 Highlights
- Second quarter revenue was $10.54 billion.
- Second quarter GAAP diluted earnings per share (EPS) increased
15% to $4.04.
- Second quarter adjusted EPS increased 4% to $5.37.
- Advanced our proven growth strategy, launching a range of
high-impact, innovative new products during the quarter. This
included a number of analytical instruments introduced at the
American Society for Mass Spectrometry conference, including the
Thermo Scientific™ Stellar™ mass spectrometer, which validates
proteins of clinical interest discovered through our groundbreaking
Thermo Scientific Orbitrap™ Astral™ mass spectrometer; and three
new built-for-purpose editions of the Thermo Scientific Orbitrap
Ascend Tribrid™ mass spectrometer tailored to MultiOmics,
Structural Biology and BioPharma applications. To help our
customers meet their sustainability goals, we also launched: a
first-of-its-kind biobased film for our bioprocessing containers,
which uses plant-based materials to deliver lower-carbon solutions
in the manufacturing of therapies; and a new line of ENERGY
STAR-certified Thermo Scientific™ TSX™ Universal Series ULT
Freezers, which deliver industry-leading performance and energy
efficiency.
- Continued to strengthen our industry-leading commercial engine
and deepen our trusted partner status with customers to accelerate
their innovation and enhance their productivity. In the quarter, we
expanded our leading clinical trial supply services with a new
ultra-cold facility in Bleiswijk, the Netherlands and a new
state-of-the-art innovation lab at our site in Center Valley,
Pennsylvania, to enable our pharmaceutical and biotech customers to
accelerate the development of therapies and medicines. Also in the
quarter, to support Indonesia’s growing investments in healthcare,
scientific research, and renewable energy, we expanded our presence
and capabilities in the country, further demonstrating our
relevance to customers around the world.
- Shortly after the quarter ended, we completed our acquisition
of Olink, a provider of differentiated next-generation proteomic
solutions. The addition of Olink’s technology extends our
capabilities and further advances our leadership position in
protein research, enabling our customers to meaningfully accelerate
discovery and scientific breakthroughs while delivering on the
promise of precision medicine.
“Our excellent execution enabled us to deliver another quarter
of strong financial performance and share gain,” said Marc N.
Casper, chairman, president, and chief executive officer of Thermo
Fisher Scientific. “We continue to see the benefit of our proven
growth strategy and the impact of our PPI Business System in our
performance. Shortly after the quarter ended, we were also pleased
to welcome our Olink colleagues to Thermo Fisher and are excited
about the power of this new combination to better serve our
customers and advance science.”
Casper added, “We have made very good progress through the
halfway point of the year and are in a great position to deliver
differentiated performance in 2024. We’ve further extended our
industry leadership and positioned our company for an even brighter
future.”
Second Quarter 2024
Revenue for the quarter declined 1% to $10.54 billion in 2024,
versus $10.69 billion in 2023. Organic revenue was 1% lower and
Core organic revenue growth was flat.
GAAP Earnings Results
GAAP diluted EPS in the second quarter of 2024 increased 15% to
$4.04, versus $3.51 in the same quarter last year. GAAP operating
income for the second quarter of 2024 grew to $1.82 billion,
compared with $1.58 billion in the year-ago quarter. GAAP operating
margin increased to 17.3%, compared with 14.8% in the second
quarter of 2023.
Non-GAAP Earnings Results
Adjusted EPS in the second quarter of 2024 increased 4% to
$5.37, versus $5.15 in the second quarter of 2023. Adjusted
operating income for the second quarter of 2024 was $2.35 billion,
compared with $2.37 billion in the year-ago quarter. Adjusted
operating margin increased to 22.3%, compared with 22.2% in the
second quarter of 2023.
Annual Guidance for 2024
Thermo Fisher is raising its full-year revenue and adjusted EPS
guidance. The company is raising its revenue guidance to a new
range of $42.4 to $43.3 billion versus its previous guidance of
$42.3 to $43.3 billion. The company is raising its adjusted EPS
guidance to a new range of $21.29 to $22.07 versus its previous
guidance of $21.14 to $22.02.
Use of Non-GAAP Financial Measures
Adjusted EPS, adjusted net income, adjusted operating income,
adjusted operating margin, free cash flow, organic revenue growth
and Core organic revenue growth are non-GAAP measures that exclude
certain items detailed after the tables that accompany this press
release, under the heading “Supplemental Information Regarding
Non-GAAP Financial Measures.” The reconciliations of GAAP to
non-GAAP financial measures are provided in the tables that
accompany this press release.
Note on Presentation
Certain amounts and percentages reported within this press
release are presented and calculated based on underlying unrounded
amounts. As a result, the sum of components may not equal
corresponding totals due to rounding.
Conference Call
Thermo Fisher Scientific will hold its earnings conference call
today, July 24, at 8:30 a.m. Eastern Daylight Time. During the
call, the company will discuss its financial performance, as well
as future expectations. To listen, call (833) 470-1428 within the
U.S. or (404) 975-4839 outside the U.S. The access code is 023107.
You may also listen to the call live on the “Investors” section of
our website, www.thermofisher.com. The earnings press release and
related information can also be found in that section of our
website under the heading “Financials”. A replay of the call will
be available under “News, Events & Presentations” through
Wednesday, August 7, 2024.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. is the world leader in serving
science, with annual revenue over $40 billion. Our Mission is to
enable our customers to make the world healthier, cleaner and
safer. Whether our customers are accelerating life sciences
research, solving complex analytical challenges, increasing
productivity in their laboratories, improving patient health
through diagnostics or the development and manufacture of
life-changing therapies, we are here to support them. Our global
team delivers an unrivaled combination of innovative technologies,
purchasing convenience and pharmaceutical services through our
industry-leading brands, including Thermo Scientific, Applied
Biosystems, Invitrogen, Fisher Scientific, Unity Lab Services,
Patheon and PPD. For more information, please visit
www.thermofisher.com.
Safe Harbor Statement
The following constitutes a “Safe Harbor” statement under the
Private Securities Litigation Reform Act of 1995: This press
release contains forward-looking statements that involve a number
of risks and uncertainties. Important factors that could cause
actual results to differ materially from those indicated by
forward-looking statements include risks and uncertainties relating
to: the COVID-19 pandemic; the need to develop new products and
adapt to significant technological change; implementation of
strategies for improving growth; general economic conditions and
related uncertainties; dependence on customers' capital spending
policies and government funding policies; the effect of economic
and political conditions and exchange rate fluctuations on
international operations; use and protection of intellectual
property; the effect of changes in governmental regulations; any
natural disaster, public health crisis or other catastrophic event;
and the effect of laws and regulations governing government
contracts, as well as the possibility that expected benefits
related to recent or pending acquisitions, may not materialize as
expected. Additional important factors that could cause actual
results to differ materially from those indicated by such
forward-looking statements are set forth in our most recent annual
report on Form 10-K, and subsequent quarterly report on Form 10-Q,
which are on file with the SEC and available in the “Investors”
section of our website under the heading “SEC Filings.” While we
may elect to update forward-looking statements at some point in the
future, we specifically disclaim any obligation to do so, even if
estimates change and, therefore, you should not rely on these
forward-looking statements as representing our views as of any date
subsequent to today.
Condensed Consolidated Statements of
Income (unaudited)
Three months ended
June 29,
% of
July 1,
% of
(Dollars in millions except per share
amounts)
2024
Revenues
2023
Revenues
Revenues
$
10,541
$
10,687
Costs and operating expenses:
Cost of revenues (a)
6,106
57.9
%
6,323
59.2
%
Selling, general and administrative
expenses (b)
1,687
16.0
%
1,673
15.7
%
Amortization of acquisition-related
intangible assets
513
4.9
%
585
5.4
%
Research and development expenses
339
3.2
%
345
3.2
%
Restructuring and other costs (c)
77
0.7
%
183
1.7
%
Total costs and operating expenses
8,722
82.7
%
9,109
85.2
%
Operating income
1,820
17.3
%
1,578
14.8
%
Interest income
295
178
Interest expense
(354
)
(326
)
Other income/(expense) (d)
5
—
Income before income taxes
1,765
1,430
Provision for income taxes (e)
(128
)
(52
)
Equity in earnings/(losses) of
unconsolidated entities
(84
)
(16
)
Net income
1,553
1,362
Less: net income/(losses) attributable to
noncontrolling interests and redeemable noncontrolling interest
6
1
Net income attributable to Thermo Fisher
Scientific Inc.
$
1,548
14.7
%
$
1,361
12.7
%
Earnings per share attributable to Thermo
Fisher Scientific Inc.:
Basic
$
4.05
$
3.53
Diluted
$
4.04
$
3.51
Weighted average shares:
Basic
382
386
Diluted
383
388
Reconciliation of adjusted operating
income and adjusted operating margin
GAAP operating income
$
1,820
17.3
%
$
1,578
14.8
%
Cost of revenues adjustments (a)
1
0.0
%
18
0.2
%
Selling, general and administrative
expenses adjustments (b)
(64
)
-0.6
%
6
0.1
%
Restructuring and other costs (c)
77
0.7
%
183
1.7
%
Amortization of acquisition-related
intangible assets
513
4.9
%
585
5.4
%
Adjusted operating income (non-GAAP
measure)
$
2,347
22.3
%
$
2,370
22.2
%
Reconciliation of adjusted net
income
GAAP net income attributable to Thermo
Fisher Scientific Inc.
$
1,548
$
1,361
Cost of revenues adjustments (a)
1
18
Selling, general and administrative
expenses adjustments (b)
(64
)
6
Restructuring and other costs (c)
77
183
Amortization of acquisition-related
intangible assets
513
585
Other income/expense adjustments (d)
—
(1
)
Provision for income taxes adjustments
(e)
(102
)
(171
)
Equity in earnings/losses of
unconsolidated entities
84
16
Noncontrolling interests adjustments
(f)
(1
)
—
Adjusted net income (non-GAAP measure)
$
2,057
$
1,997
Reconciliation of adjusted earnings per
share
GAAP diluted EPS attributable to Thermo
Fisher Scientific Inc.
$
4.04
$
3.51
Cost of revenues adjustments (a)
0.00
0.05
Selling, general and administrative
expenses adjustments (b)
(0.17
)
0.01
Restructuring and other costs (c)
0.20
0.47
Amortization of acquisition-related
intangible assets
1.34
1.51
Other income/expense adjustments (d)
0.00
0.00
Provision for income taxes adjustments
(e)
(0.26
)
(0.44
)
Equity in earnings/losses of
unconsolidated entities
0.22
0.04
Noncontrolling interests adjustments
(f)
0.00
0.00
Adjusted EPS (non-GAAP measure)
$
5.37
$
5.15
Reconciliation of free cash
flow
GAAP net cash provided by operating
activities
$
1,960
$
1,540
Purchases of property, plant and
equipment
(301
)
(284
)
Proceeds from sale of property, plant and
equipment
15
4
Free cash flow (non-GAAP measure)
$
1,674
$
1,260
Business Segment Information
Three months ended
June 29,
% of
July 1,
% of
(Dollars in millions)
2024
Revenues
2023
Revenues
Revenues
Life Sciences Solutions
$
2,355
22.3
%
$
2,463
23.0
%
Analytical Instruments
1,782
16.9
%
1,749
16.4
%
Specialty Diagnostics
1,117
10.6
%
1,109
10.4
%
Laboratory Products and Biopharma
Services
5,758
54.6
%
5,831
54.6
%
Eliminations
(470
)
-4.5
%
(465
)
-4.4
%
Consolidated revenues
$
10,541
100.0
%
$
10,687
100.0
%
Segment income and segment income
margin
Life Sciences Solutions
$
865
36.7
%
$
817
33.2
%
Analytical Instruments
439
24.6
%
432
24.7
%
Specialty Diagnostics
299
26.7
%
297
26.7
%
Laboratory Products and Biopharma
Services
745
12.9
%
824
14.1
%
Subtotal reportable segments
2,347
22.3
%
2,370
22.2
%
Cost of revenues adjustments (a)
(1
)
0.0
%
(18
)
-0.2
%
Selling, general and administrative
expenses adjustments (b)
64
0.6
%
(6
)
-0.1
%
Restructuring and other costs (c)
(77
)
-0.7
%
(183
)
-1.7
%
Amortization of acquisition-related
intangible assets
(513
)
-4.9
%
(585
)
-5.4
%
Consolidated GAAP operating income
$
1,820
17.3
%
$
1,578
14.8
%
(a) Adjusted results in 2024 and 2023
exclude charges for inventory write-downs associated with
large-scale abandonment of product lines. Adjusted results in 2023
exclude $11 of charges for the sale of inventory revalued at the
date of acquisition and $5 of accelerated depreciation on
manufacturing assets to be abandoned due to facility
consolidations.
(b) Adjusted results in 2024 and 2023
exclude certain third-party expenses, principally
transaction/integration costs related to recent acquisitions, and
charges/credits for changes in estimates of contingent acquisition
consideration.
(c) Adjusted results in 2024 and 2023
exclude restructuring and other costs consisting principally of
severance, impairments of long-lived assets, net charges for
pre-acquisition litigation and other matters, and abandoned
facility and other expenses of headcount reductions and real estate
consolidations. Adjusted results in 2023 also exclude $26 of
contract termination costs associated with facility closures.
(d) Adjusted results in 2024 and 2023
exclude net gains/losses on investments.
(e) Adjusted results in 2024 and 2023
exclude incremental tax impacts for the reconciling items between
GAAP and adjusted net income, incremental tax impacts as a result
of tax rate/law changes, and the tax impacts from audit
settlements.
(f) Adjusted results exclude the
incremental impacts for the reconciling items between GAAP and
adjusted net income attributable to noncontrolling interests.
Note:
Consolidated depreciation expense is $276
and $270 in 2024 and 2023, respectively.
Organic and Core organic revenue growth
Three months ended
June 29, 2024
Revenue growth
-1 %
Acquisitions
0 %
Currency translation
-1 %
Organic revenue growth (non-GAAP
measure)
-1 %
COVID-19 testing revenue
-1 %
Core organic revenue growth (non-GAAP
measure)
0 %
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Condensed Consolidated Statements of
Income (unaudited)
Six months ended
June 29,
% of
July 1,
% of
(Dollars in millions except per share
amounts)
2024
Revenues
2023
Revenues
Revenues
$
20,886
$
21,397
Costs and operating expenses:
Cost of revenues (a)
12,146
58.2
%
12,760
59.6
%
Selling, general and administrative
expenses (b)
3,417
16.4
%
3,319
15.5
%
Amortization of acquisition-related
intangible assets
1,065
5.1
%
1,191
5.5
%
Research and development expenses
670
3.2
%
691
3.2
%
Restructuring and other costs (c)
106
0.5
%
295
1.4
%
Total costs and operating expenses
17,404
83.3
%
18,256
85.3
%
Operating income
3,483
16.7
%
3,141
14.7
%
Interest income
574
324
Interest expense
(717
)
(626
)
Other income/(expense) (d)
14
(46
)
Income before income taxes
3,354
2,793
Provision for income taxes (e)
(408
)
(98
)
Equity in earnings/(losses) of
unconsolidated entities
(61
)
(41
)
Net income
2,885
2,654
Less: net income/(losses) attributable to
noncontrolling interests and redeemable noncontrolling interest
9
4
Net income attributable to Thermo Fisher
Scientific Inc.
$
2,875
13.8
%
$
2,650
12.4
%
Earnings per share attributable to Thermo
Fisher Scientific Inc.:
Basic
$
7.53
$
6.86
Diluted
$
7.50
$
6.83
Weighted average shares:
Basic
382
386
Diluted
383
388
Reconciliation of adjusted operating
income and adjusted operating margin
GAAP operating income
$
3,483
16.7
%
$
3,141
14.7
%
Cost of revenues adjustments (a)
17
0.1
%
59
0.3
%
Selling, general and administrative
expenses adjustments (b)
(45
)
-0.2
%
14
0.1
%
Restructuring and other costs (c)
106
0.5
%
295
1.4
%
Amortization of acquisition-related
intangible assets
1,065
5.1
%
1,191
5.5
%
Adjusted operating income (non-GAAP
measure)
$
4,625
22.1
%
$
4,700
22.0
%
Reconciliation of adjusted net
income
GAAP net income attributable to Thermo
Fisher Scientific Inc.
$
2,875
$
2,650
Cost of revenues adjustments (a)
17
59
Selling, general and administrative
expenses adjustments (b)
(45
)
14
Restructuring and other costs (c)
106
295
Amortization of acquisition-related
intangible assets
1,065
1,191
Other income/expense adjustments (d)
(11
)
45
Provision for income taxes adjustments
(e)
(51
)
(342
)
Equity in earnings/losses of
unconsolidated entities
61
41
Noncontrolling interests adjustments
(f)
(1
)
—
Adjusted net income (non-GAAP measure)
$
4,016
$
3,953
Reconciliation of adjusted earnings per
share
GAAP diluted EPS attributable to Thermo
Fisher Scientific Inc.
$
7.50
$
6.83
Cost of revenues adjustments (a)
0.04
0.15
Selling, general and administrative
expenses adjustments (b)
(0.12
)
0.03
Restructuring and other costs (c)
0.28
0.76
Amortization of acquisition-related
intangible assets
2.78
3.07
Other income/expense adjustments (d)
(0.03
)
0.11
Provision for income taxes adjustments
(e)
(0.13
)
(0.88
)
Equity in earnings/losses of
unconsolidated entities
0.16
0.11
Noncontrolling interests adjustments
(f)
0.00
0.00
Adjusted EPS (non-GAAP measure)
$
10.47
$
10.18
Reconciliation of adjusted free cash
flow
GAAP net cash provided by operating
activities
$
3,211
$
2,269
Purchases of property, plant and
equipment
(648
)
(742
)
Proceeds from sale of property, plant and
equipment
20
10
Free cash flow (non-GAAP measure)
$
2,583
$
1,537
Business Segment Information
Six months ended
June 29,
% of
July 1,
% of
(Dollars in millions)
2024
Revenues
2023
Revenues
Revenues
Life Sciences Solutions
$
4,640
22.2
%
$
5,075
23.7
%
Analytical Instruments
3,469
16.6
%
3,472
16.2
%
Specialty Diagnostics
2,227
10.7
%
2,217
10.4
%
Laboratory Products and Biopharma
Services
11,480
55.0
%
11,594
54.2
%
Eliminations
(930
)
-4.5
%
(961
)
-4.5
%
Consolidated revenues
$
20,886
100.0
%
$
21,397
100.0
%
Segment income and segment income
margin
Life Sciences Solutions
$
1,705
36.7
%
$
1,653
32.6
%
Analytical Instruments
838
24.2
%
853
24.6
%
Specialty Diagnostics
593
26.6
%
577
26.0
%
Laboratory Products and Biopharma
Services
1,489
13.0
%
1,617
14.0
%
Subtotal reportable segments
4,625
22.1
%
4,700
22.0
%
Cost of revenues adjustments (a)
(17
)
-0.1
%
(59
)
-0.3
%
Selling, general and administrative
expenses adjustments (b)
45
0.2
%
(14
)
-0.1
%
Restructuring and other costs (c)
(106
)
-0.5
%
(295
)
-1.4
%
Amortization of acquisition-related
intangible assets
(1,065
)
-5.1
%
(1,191
)
-5.5
%
Consolidated GAAP operating income
$
3,483
16.7
%
$
3,141
14.7
%
(a) Adjusted results in 2024 and 2023
exclude charges for inventory write-downs associated with
large-scale abandonment of product lines and accelerated
depreciation on manufacturing assets to be abandoned due to
facility consolidations. Adjusted results in 2023 exclude $21 of
charges for the sale of inventory revalued at the date of
acquisition.
(b) Adjusted results in 2024 and 2023
exclude certain third-party expenses, principally
transaction/integration costs related to recent acquisitions, and
charges/credits for changes in estimates of contingent acquisition
consideration.
(c) Adjusted results in 2024 and 2023
exclude restructuring and other costs consisting principally of
severance, impairments of long-lived assets, net charges for
pre-acquisition litigation and other matters, and abandoned
facility and other expenses of headcount reductions and real estate
consolidations. Adjusted results in 2023 also exclude $26 of
contract termination costs associated with facility closures.
(d) Adjusted results in 2024 and 2023
exclude net gains/losses on investments.
(e) Adjusted results in 2024 and 2023
exclude incremental tax impacts for the reconciling items between
GAAP and adjusted net income, incremental tax impacts as a result
of tax rate/law changes and the tax impacts from audit
settlements.
(f) Adjusted results exclude the
incremental impacts for the reconciling items between GAAP and
adjusted net income attributable to noncontrolling interests.
Notes:
Consolidated depreciation expense is $562
and $523 in 2024 and 2023, respectively.
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Condensed Consolidated Balance Sheets (unaudited)
June 29,
December 31,
(In millions)
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
7,073
$
8,077
Short-term investments
1,750
3
Accounts receivable, net
7,943
8,221
Inventories
5,198
5,088
Other current assets
3,512
3,200
Total current assets
25,476
24,589
Property, plant and equipment, net
9,282
9,448
Acquisition-related intangible assets,
net
15,519
16,670
Other assets
4,377
3,999
Goodwill
43,843
44,020
Total assets
$
98,496
$
98,726
Liabilities, redeemable noncontrolling
interest and equity
Current liabilities:
Short-term obligations and current
maturities of long-term obligations
$
5,121
$
3,609
Other current liabilities
9,651
10,403
Total current liabilities
14,772
14,012
Other long-term liabilities
5,907
6,564
Long-term obligations
30,284
31,308
Redeemable noncontrolling interest
115
118
Total equity
47,419
46,724
Total liabilities, redeemable
noncontrolling interest and equity
$
98,496
$
98,726
Condensed Consolidated Statements of
Cash Flows (unaudited)
Six months ended
June 29,
July 1,
(In millions)
2024
2023
Operating activities
Net income
$
2,885
$
2,654
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
1,626
1,714
Change in deferred income taxes
(607
)
(328
)
Other non-cash expenses, net
311
480
Changes in assets and liabilities,
excluding the effects of acquisitions
(1,003
)
(2,251
)
Net cash provided by operating
activities
3,211
2,269
Investing activities
Purchases of property, plant and
equipment
(648
)
(742
)
Proceeds from sale of property, plant and
equipment
20
10
Proceeds from cross-currency interest rate
swap interest settlements
111
35
Acquisitions, net of cash acquired
—
(2,751
)
Purchases of investments
(1,778
)
(188
)
Other investing activities, net
12
51
Net cash used in investing activities
(2,283
)
(3,585
)
Financing activities
Net proceeds from issuance of debt
1,204
—
Repayment of debt
—
(1,000
)
Net proceeds from issuance of commercial
paper
—
1,620
Repayment of commercial paper
—
(1,441
)
Purchases of company common stock
(3,000
)
(3,000
)
Dividends paid
(284
)
(252
)
Other financing activities, net
145
24
Net cash used in financing activities
(1,936
)
(4,049
)
Exchange rate effect on cash
7
(19
)
Decrease in cash, cash equivalents and
restricted cash
(1,000
)
(5,384
)
Cash, cash equivalents and restricted cash
at beginning of period
8,097
8,537
Cash, cash equivalents and restricted cash
at end of period
$
7,097
$
3,153
Free cash flow (non-GAAP measure)
$
2,583
$
1,537
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Supplemental Information Regarding Non-GAAP Financial
Measures
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), we use
certain non-GAAP financial measures such as organic revenue growth,
which is reported revenue growth, excluding the impacts of
acquisitions/divestitures and the effects of currency translation.
We also report Core organic revenue growth, which is reported
revenue growth, excluding the impacts of COVID-19 testing revenue,
and excluding the impacts of acquisitions/divestitures and the
effects of currency translation. We report these measures because
Thermo Fisher management believes that in order to understand the
company’s short-term and long-term financial trends, investors may
wish to consider the impact of acquisitions/divestitures, foreign
currency translation and/or COVID-19 testing on revenues. Thermo
Fisher management uses these measures to forecast and evaluate the
operational performance of the company as well as to compare
revenues of current periods to prior periods.
We report adjusted operating income, adjusted operating margin,
adjusted net income, and adjusted EPS. We believe that the use of
these non-GAAP financial measures, in addition to GAAP financial
measures, helps investors to gain a better understanding of our
core operating results and future prospects, consistent with how
management measures and forecasts the company’s core operating
performance, especially when comparing such results to previous
periods, forecasts, and to the performance of our competitors. Such
measures are also used by management in their financial and
operating decision-making and for compensation purposes. To
calculate these measures we exclude, as applicable:
- Certain acquisition-related costs, including charges for the
sale of inventories revalued at the date of acquisition,
significant transaction/acquisition-related costs, including
changes in estimates of contingent acquisition-related
consideration, and other costs associated with obtaining short-term
financing commitments for pending/recent acquisitions. We exclude
these costs because we do not believe they are indicative of our
normal operating costs.
- Costs/income associated with restructuring activities and
large-scale abandonments of product lines, such as reducing
overhead and consolidating facilities. We exclude these costs
because we believe that the costs related to restructuring
activities are not indicative of our normal operating costs.
- Equity in earnings/losses of unconsolidated entities;
impairments of long-lived assets; and certain other gains and
losses that are either isolated or cannot be expected to occur
again with any predictability, including gains/losses on
investments, the sale of businesses, product lines, and real
estate, significant litigation-related matters,
curtailments/settlements of pension plans, and the early retirement
of debt. We exclude these items because they are outside of our
normal operations and/or, in certain cases, are difficult to
forecast accurately for future periods.
- The expense associated with the amortization of
acquisition-related intangible assets because a significant portion
of the purchase price for acquisitions may be allocated to
intangible assets that have lives of up to 20 years. Exclusion of
the amortization expense allows comparisons of operating results
that are consistent over time for both our newly acquired and
long-held businesses and with both acquisitive and non-acquisitive
peer companies.
- The noncontrolling interest and tax impacts of the above items
and the impact of significant tax audits or events (such as changes
in deferred taxes from enacted tax rate/law changes), the latter of
which we exclude because they are outside of our normal operations
and difficult to forecast accurately for future periods.
We report free cash flow, which is operating cash flow excluding
net capital expenditures, to provide a view of the continuing
operations’ ability to generate cash for use in acquisitions and
other investing and financing activities. The company also uses
this measure as an indication of the strength of the company. Free
cash flow is not a measure of cash available for discretionary
expenditures since we have certain non-discretionary obligations
such as debt service that are not deducted from the measure.
Thermo Fisher Scientific does not provide GAAP financial
measures on a forward-looking basis because we are unable to
predict with reasonable certainty and without unreasonable effort
items such as the timing and amount of future restructuring actions
and acquisition-related charges as well as gains or losses from
sales of real estate and businesses, the early retirement of debt
and the outcome of legal proceedings. The timing and amount of
these items are uncertain and could be material to Thermo Fisher
Scientific’s results computed in accordance with GAAP.
The non-GAAP financial measures of Thermo Fisher Scientific’s
results of operations and cash flows included in this press release
are not meant to be considered superior to or a substitute for
Thermo Fisher Scientific’s results of operations prepared in
accordance with GAAP. Reconciliations of such non-GAAP financial
measures to the most directly comparable GAAP financial measures
are set forth in the tables above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240723465896/en/
Media Contact Information: Sandy Pound Thermo Fisher Scientific
Phone: 781-622-1223 E-mail: sandy.pound@thermofisher.com
Investor Contact Information: Rafael Tejada Thermo Fisher
Scientific Phone: 781-622-1356 E-mail:
rafael.tejada@thermofisher.com
Thermo Fisher Scientific (NYSE:TMO)
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