Thermo Fisher Scientific (TMO)

Q2 2010 Earnings Call

July 27, 2010 8:30 am ET


Peter Wilver - Chief Financial Officer and Senior Vice President

Kenneth Apicerno - Vice President of Investor Relations and Treasurer

Marc Casper - Chief Executive Officer, President and Director


Derik De Bruin - UBS Investment Bank

Jonathan Groberg - Macquarie Research

Ross Muken - Deutsche Bank AG

Tycho Peterson - JP Morgan Chase & Co

Quintin Lai - Robert W. Baird & Co. Incorporated

Paul Knight - Credit Agricole Securities (USA) Inc.

Marshall Urist - Morgan Stanley

Doug Schenkel - Cowen and Company, LLC

Jon Wood - Jefferies & Company, Inc.

Charles Butler - Barclays Capital

Amit Bhalla - Citigroup Inc



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Previous Statements by TMO
» Thermo Fisher Scientific, Inc. Q1 2010 Earnings Call Transcript
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» Thermo Fisher Scientific, Inc. Q3 2009 Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the Thermo Fisher Scientific Second Quarter 2010 Earnings Conference Call. I would like to introduce our moderator for the call, Mr. Kenneth Apicerno, Vice President Investor Relations. Mr. Apicerno, you may begin the call.

Kenneth Apicerno

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 be aware that this call is being webcast live and will be archived on the Investors section of our website,, under the headings Webcasts and Presentations, until August 27, 2010. A copy of the press release of the second quarter 2010 earnings and future expectations is available on our website under the heading Financial Results.

So before we begin, let me briefly cover our Safe Harbor statement. Various remarks that we may 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 Form 10-Q for the quarter ended April 3, 2010, under the caption Risk Factors, which is on file with the Securities and Exchange Commission and is available in the Investors section of the 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 the call, we'll 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 second quarter 2010 earnings and future expectations and also in the Investors section of our website under the heading Financial Results.

So with that, I will now turn the call over to Marc.

Marc Casper

Thanks, Ken. Good morning, everyone, and thank you for joining us for our review of the second quarter. The last time I spoke to most of you was at our Analyst Meeting back in May. If you recall, our theme for the meeting was leveraging our leadership to drive earnings growth. It was a great opportunity to share with you how we are driving a combination of growth investment and operating performance to achieve our earnings goals. I'm pleased to tell you that we're right on track with our strategy and that we delivered record EPS performance again in Q2 on solid top line results. I'm especially pleased with our performance because the business environment obviously still has its challenges. However, we have built a company that is the recognized industry leader. As such, we have three key strengths that gives us a market advantage and drive our performance.

These strengths are: our unique depth of capabilities; second, our proven track record of operating performance; and third, our commitment to continued investment for growth, a combination of developing new technologies and making complementary acquisitions. We discussed this back in May in some detail. I will highlight some recent examples today that show you how these strengths not only contributed to our strong results for the quarter but position us for a great future.

First, I will run through our Q2 financial highlights. We reported second quarter revenues of $2.65 billion, 7% higher than 2009. This translated to 5% organic growth, which was in line with our expectation for the quarter. Our revenue growth reflected strong performance across our Laboratory Equipment, Consumables, Clinical Diagnostics and Biosciences businesses. We also saw strength in our Analytical Instrument businesses that serve applied markets, such as food safety testing and environmental monitoring. We are especially pleased with our organic growth results, given the headwinds of a weak flu season and the Biosite contract transition, which, together, lowered our organic growth by over a percentage point in the quarter.

We delivered solid adjusted operating margin expansion in Q2, achieving 17.6% versus 16.8% in the year-ago quarter. Through proven operating discipline, we are fully leveraging our top line revenue growth for pull-through to the bottom line and benefiting from our ongoing cost-saving activities, including practical process improvement, PPI lean and global sourcing.

Last, we're pleased to report that adjusted EPS was a second quarter record at $0.84, 14% higher than 2009. We continue to build on our strong track record of delivering double-digit EPS growth.

So I'm proud of how our teams executed operationally and their efforts resulted in a strong quarter. This, combined with our excellent performance in Q1, added up to a great first half of the year for Thermo Fisher.

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