Thermo Fisher Scientific (TMO)
Q2 2012 Earnings Call
July 25, 2012 8:30 am ET
Marc N. Casper - Chief Executive Officer, President, Director, Member of Strategy & Finance Committee and Member of Science & Technology Committee
Peter M. Wilver - Chief Financial Officer and Senior Vice President
Kenneth J. Apicerno - Vice President of Investor Relations and Treasurer
Jonathan P. Groberg - Macquarie Research
Ross Muken - ISI Group Inc., Research Division
Vamil Divan - Crédit Suisse AG, Research Division
Daniel Brennan - Morgan Stanley, Research Division
Daniel L. Leonard - Leerink Swann LLC, Research Division
Amit Bhalla - Citigroup Inc, Research Division
Jon Davis Wood - Jefferies & Company, Inc., Research Division
Doug Schenkel - Cowen and Company, LLC, Research Division
Tycho W. Peterson - JP Morgan Chase & Co, Research Division
Derek De Vries - BofA Merrill Lynch, Research Division
Daniel Arias - UBS Investment Bank, Research Division
Isaac Ro - Goldman Sachs Group Inc., Research Division
Previous Statements by TMO
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Good morning, and thank you for joining us. On the call with me today is Marc Casper, our President and Chief Executive Officer; and Pete Wilver, Senior Vice President and Chief Financial Officer.
Please note this call is being webcast live and will be archived on the Investors section of our website, thermofisher.com, under the heading Webcasts and Presentations until August 24, 2012. A copy of the press release of our 2012 second quarter and future expectations is available on our website under the heading Financial Results.
So before we begin, let me briefly cover Safe Harbor statement. Various remarks that we make about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's annual report on Form 10-K for the year ended December 31, 2011, under the caption Risk Factors, which is on file with the Securities and Exchange Commission 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 our estimates change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.
Also, during this call, we will be referring to certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in the press release of our first quarter 2012 earnings and future expectations and also in the Investors section of our website under the heading Financial Information.
With that, I will now turn the call over to Marc Casper.
Marc N. Casper
Well, good morning, and this is Marc. And don't worry, I know Pete is here as well as is Ken, and I know from our investors' perspective, Ken is always the highest rated IR executive out there in the industry, and he's smiling next to me. So no anxiety should be on the phone, we actually have good news to report throughout this call.
So I'm pleased to report that we had another excellent quarter, with record Q2 results on both the top and bottom line. The quarter was all about execution or change executed well to deliver solid revenue growth and another quarter of double-digit growth in adjusted EPS.
Our strong performance in the first half puts us in very good position to achieve our revenue and earnings goals for the full year. I'll frame my remarks this morning by first covering the financial highlights, give you a sense of what we're seeing in our key end markets relative to our results, and then review some of the exciting new developments we announced during the quarter and in recent weeks.
First, the financials. As I mentioned, we delivered record adjusted EPS again this quarter, a 23% increase over 2011. Our revenue grew by 9% over last year. Our adjusted operating income increased 16% in Q2, and we achieved 110 basis points of adjusted operating margin expansion. Our Q2 results clearly show that our teams are focused on the right priorities. Our growth initiatives are delivering real value for our customers, and our ongoing cost actions are strengthening the bottom line. On the growth side of the equation, our investments in Asia-Pacific are really paying off, with strong results again this quarter. I'll mention a little more on that in a few moments.
In new products, we're seeing nice uptick across our analytical instruments portfolio, and we continue to innovate to keep that pipeline full. Our unique value proposition is clearly resonating across a broader customer set from pharma and biotech where we initiated the approach, to medical device manufacturers, reference and contract testing labs as well.
Turning to cost actions for a moment. This is an area that we're always extremely focused on, and is a key contributor to our margin expansion. Our PPI and PPI Lean business systems are way of life of Thermo Fisher, and they helped earn us a reputation for operational excellence. Well, PPI is just one of the ways that we drive margin expansion. As you know, we have multiple levers we can pull and in the environment we're managing through today, this gives us the ability to quickly adapt to changing market conditions.
For example, our restructuring actions are being implemented smoothly and are contributing to our growth on the bottom line. Let me now put our second quarter performance in the context of our key end markets. We all know the world is uncertain. We're focused on planning accordingly and adjusting as necessary, always with a sharp eye on using our unique depth of capabilities to gain competitive advantage.
I'll start with a focus on our 4 key end markets and then I'll comment on our performance in the major geographies. From an overall perspective, our end markets remain consistent with what we've been seeing in recent quarters.