Thermo Fisher Scientific Q3 2007 Earnings Call Transcript

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é??ç¸?hermo Fisher Scientific Q3 peuterey outlet shop 2007 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific Third Quarter 2007 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.Good morning, and thank you for joining us. On the call today, we have Marijn Dekkers, our President and Chief Executive Officer, Marc Casper, Executive Vice President, and Pete Wilver, our Chief Financial Officer. To reach the replay of the call on our website, click on "investors," then "webcast," then "presentations."Please also be aware that a copy of the press peuterey prezzi release setting forth our third quarter 2007 earnings and future expectations is available in the investor section of our website under the heading quarterly results.We'd like to begin the call by reading the Safe Harbor statement. Various remarks that we may make about the company's future expectations, plans, and prospects constitute forwardlooking 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 forwardlooking statements, as a result of various important factors including those discussed in the company's Form 10Q for the quarter ended June 30, 2007, under the caption, risk factors, which is on file with the Securities and Exchange Commission and available in the investor section of our website, under the heading "SEC Filings."We also may make forwardlooking statements about the benefits of the merger of Thermo Electron and Fisher Scientific, including statements about future financial impacts on operating results, the new company's plans, objectives, expectations, and intentions and other statement that are not historical facts.While we may elect to update forwardlooking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change, and therefore, you should not rely on these forwardlooking statements as representing our views as of any date subsequent to today.Also during this call, we'll be referring to certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP.Thanks, Ken. Good morning to all of you listening in. Thanks for joining us. We have very good news to report to you again this quarter. As you can saw in the press release, we had record third quarter financial performance.We are about two weeks away from the one year anniversary of the Thermo Fisher merger, and the success of our integration can be seen in our strong operating results. The business is doing well; our key end markets are healthy, and we have the resources to invest in internal initiatives as well as acquisitions that will lead to future growth.Let me get right to the Q3 highlights. As I have done earlier, I'm going to compare our revenues and adjusted operating results except for EPS on a pro forma basis, as if Thermo and Fisher were combined for all of 2006.So revenues grew 7% to a record 2.4 billion. Adjusted EPS was also a record for the quarter, increasing 48% to $0.65. Adjusted operating income rose 17%. We also had an excellent quarter of adjusted operating margin expansion, up 150 basis points to 16.9%, and there are several reasons for our consistent margin improvement.First, we are fully leveraging our top line growth including driving price. Second, we're on track delivering the synergies from the merger with Fisher. And as you know, in 2007 most of those are cost synergies. Third, we continuously improve our productivity through our companywide Practical Process Improvement program called PPI, which has now been rolled out in all of the legacy Fisher businesses. And then fourth, another contributor to our margin expansion is that we have undertaken an initiative across the company to discontinue low or no profit product lines.With our gross portfolio, there are some unattractive product lines and rationalizing those gives us an opportunity to be more focused on our strong products. This obviously improves our margins even though it creates some headwinds for revenue growth.So let me give you a brief update on our primary markets. Again no significant change from what we saw in the first half of the year. Our general end markets remain healthy, biotech still strong, big pharma is stable with spending levels similar to <a href="http://www.cai-catanzaro.it/abercrombie/">Abercrombie And Fitch Outlet</a> what we've seen so far this year.BioPharma outsourcing services is experiencing doubledigit growth. Clinical diagnostics is growing well. Academic is growing at average levels. Government is declining, and environmental sees very strong growth, especially in air quality in the United States. And then the question I get to be asked a lot. We still see no Abercrombie And Fitch Outlet signs of weakness in the global commodities markets.Let me comment a little bit on acquisitions. We continue to strengthen our presence by making acquisitions that compliment on our existing capabilities. As we stated in the press release, since August we've completed acquisitions totaling nearly links of london fake $200 million in annualized revenues.The life laboratory and health sciences industry remains highly fragmented, and that gives us opportunities to create value by acquiring businesses that offer global expansion, or new commercial capabilities, or complementary technologies, or any combination of these factors.So let me give you some highlights of our recent activity. First, Qualigens, this acquisition closed in September, and Qualigens is the largest laboratory chemical supplier in India formerly owned by GlaxoSmithKline. Qualigens is now part of our customer channel business for research markets, and it significantly expands our laboratory, chemicals offerings and our customer base in a high growth Asian market.Secondly, in early September, we acquired the instrument sales business of Davis Inotek. Davis is also being integrated into our customer channels business and broadens our portfolio with a range of specialty instruments and consumables for research and industrial process application.Thirdly, Priority Solutions, which closed in early October. Now this one is exciting because it strengthens the outsourcing services that we can offer our biotech and big pharma customers for clinical trials management. Priority Solutions has a great logistics infrastructure that we can use to deliver clinical trial supplies to the patients participating in those clinical trials.Fourthly, a good example of a technology acquisition is NanoDrop, which we just completed a couple of weeks ago. NanoDrop expands our UVvis portfolio with instrumentation that can analyze micro volume samples. This is important because life sciences research that involves measuring DNA and proteins require scientists to work with very small samples, and that makes sample preparation difficult.NanoDrop specific technologies allow our customers to easily analyze micro samples without having to dilute them, leading to better results and greater lab productivity. So, quite a few of these bolton acquisitions <a href="http://www.madeelodesign.de/peuterey/">peuterey outlet shop</a> materialized recently, and I am not saying we are going to keep up this space of acquisitions, but we expect to continue doing these type of bolton acquisitions on a regular basis.A few comments on our internal investments. Our acquisitions compliment significant internal peuterey prezzi investments we make to better serve our customers and position the company for longterm growth. Just let me mention a few. One is employee development, which <a href="http://www.barrioroma.it/peutereypeuterey/">peuterey prezzi</a> is a very important component of the merger integration, particularly, driven to cultural integration.We've spent a lot of time training our employees to help them add depth to our companywide processes. And this ranges all the way from high level leadership <a href="http://www.photo2video.co.uk/linksoflondon/">links of london fake</a> training for managers to training in our PPI <a href="http://www.cai-catanzaro.it/peuterey/">peuterey prezzi</a> productivity program for all employees. And I am extremely pleased with how well this has gone, and of course, it's an ongoing process.