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Thermo Fisher Scientific reports Second Quarter 2021 results



WALTHAM, Mass., July 28, 2021 /PRNewswire/ -- Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the second quarter ended July 3, 2021.

 

Second Quarter 2021 Highlights

  • Second quarter revenue increased 34% to $9.27 billion.
  • Second quarter GAAP diluted earnings per share (EPS) increased 59% to $4.61.
  • Second quarter adjusted EPS increased 44% to $5.60.
  • Announced collaborations with leading academic medical centers including the Mayo Clinic to accelerate the development and adoption of more precise and personalized diagnostics for blood-based cancers; a new clinical and commercial cGMP cell therapy manufacturing facility at University of California, San Francisco, to advance innovation in cell and gene therapy; and at the University of California, Davis, a research collaboration to support the rapid scale-up of large cohort studies and clinical research in metabolomics.
  • Continued to expand both our capacity and capabilities to better serve our customers. In the quarter, we brought additional capacity online to support vaccine and therapy production globally and expanded the production of laboratory plastics in North America and Europe. Shortly after the quarter closed, we opened a new plasmid DNA facility in Carlsbad, California to meet rapidly growing demand for plasmid DNA-based therapies and mRNA-based vaccines.

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."

 

"Our team delivered an incredibly strong second quarter, building on our excellent start to the year. The strength of our base business reflects our proven growth strategy, and we continue to enable the societal response to the pandemic, which allowed us to deliver exceptional performance in revenue, earnings and free cash flow for the quarter," said Marc N. Casper, chairman, president and chief executive officer of Thermo Fisher Scientific. "We extended our leading innovation track record, and our ongoing investments in talent, capabilities and infrastructure are positioning our company for an even brighter future." 

 

Casper added, "We're in a great position at the halfway point of the year and on track to deliver an outstanding 2021."

 

Second Quarter 2021

Revenue for the quarter grew 34% to $9.27 billion in 2021, versus $6.92 billion in 2020. Organic revenue growth was 28%; acquisitions increased revenue by 2% and currency translation increased revenue by 5%1. Organic revenue growth from the base business was 27%. COVID-19 response revenue was $1.9 billion.

 

GAAP Earnings Results

GAAP diluted EPS in the second quarter of 2021 increased 59% to $4.61, versus $2.90 in the same quarter last year. GAAP operating income for the second quarter of 2021 was $2.16 billion, compared with $1.39 billion in the year-ago quarter. GAAP operating margin was 23.3%, compared with 20.1% in the second quarter of 2020.

 

Non-GAAP Earnings Results

Adjusted EPS in the second quarter of 2021 increased 44% to $5.60, versus $3.89 in the second quarter of 2020. Adjusted operating income for the second quarter of 2021 grew 44% compared with the year-ago quarter. Adjusted operating margin was 29.0%, compared with 27.0% in the second quarter of 2020.

 

2021 Guidance Update

Thermo Fisher is raising its 2021 revenue and earnings guidance. The company is raising its revenue guidance by $300 million to $35.90 billion; this would result in 11% revenue growth over 2020. The company is raising its adjusted EPS guidance by $0.10 to $22.07, which would represent 13% growth year over year.

 

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company's four business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

 

Life Sciences Solutions Segment

Life Sciences Solutions Segment revenue grew 37% to $3.56 billion in the second quarter of 2021, compared with revenue of $2.60 billion in the second quarter of 2020. Segment adjusted operating margin was 48.3%, versus 47.4% in the 2020 quarter.

 

Analytical Instruments Segment

Analytical Instruments Segment revenue grew 41% to $1.48 billion in the second quarter of 2021, compared with revenue of $1.05 billion in the second quarter of 2020. Segment adjusted operating margin was 18.9%, versus 12.9% in the 2020 quarter.

 

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue grew 25% to $1.24 billion in the second quarter of 2021, compared with revenue of $0.99 billion in the second quarter of 2020. Segment adjusted operating margin was 19.9%, versus 21.6% in the 2020 quarter.

 

Laboratory Products and Services Segment

Laboratory Products and Services Segment revenue grew 29% to $3.58 billion in the second quarter of 2021, compared with revenue of $2.79 billion in the second quarter of 2020. Segment adjusted operating margin was 12.4%, versus 10.1% in the 2020 quarter.

 

Use of 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, including adjusted EPS, adjusted operating income and adjusted operating margin, which exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs; restructuring and other costs/income; and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and the impact of significant tax audits or events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. We also use a non-GAAP measure, 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. We believe that the use of non-GAAP 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 performance, especially when comparing such results to previous periods or forecasts.

 

For example:

We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.

 

We exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs. We exclude these costs because we do not believe they are indicative of our normal operating costs.

 

We exclude the expense and tax effects 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. Based on acquisitions closed through the end of the second quarter of 2021, adjusted EPS will exclude approximately $3.40 of expense for the amortization of acquisition-related intangible assets. 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.

 

We also exclude certain gains/losses and related tax effects, the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate changes), which are either isolated or cannot be expected to occur again with any predictability and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business or real estate, gains or losses on significant litigation-related matters, gains on curtailments of pension plans and the early retirement of debt.

We also 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.

 

Thermo Fisher Scientific's management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the company's core operating performance and comparing such performance to that of prior periods 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.

 

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 accompanying tables. 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.

 

Conference Call

Thermo Fisher Scientific will hold its earnings conference call today, July 28, 2021, at 8:30 a.m. Eastern time. To listen, dial (833) 714-0931 within the U.S. or (778) 560-2662 outside the U.S. The conference ID is 6292118. You may also listen to the call live on our website, www.thermofisher.com, by clicking on "Investors." You will find this press release, including the accompanying reconciliation of non-GAAP financial measures and related information, in that section of our website under "Financial Results." An audio archive of the call will be available under "Webcasts and Presentations" through Friday, August 13, 2021.

 

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. is the world leader in serving science, with annual revenue exceeding $30 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, improving patient diagnostics and therapies or increasing productivity in their laboratories, we are here to support them. Our global team of more than 80,000 colleagues 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 and Patheon. 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 duration and severity of 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, including our pending acquisition of PPD, Inc., 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.

###

____________________

1 The components of revenue growth do not sum due to rounding.

 

Media Contact Information:


Sandy Pound
Thermo Fisher Scientific
781-622-1223
sandy.pound@thermofisher.com

 

Investor Contact Information:
Rafael Tejada
Thermo Fisher Scientific
781-622-1356
rafael.tejada@thermofisher.com

 

Condensed Consolidated Statement of Income (unaudited) (a)(b)

               
   

Three Months Ended

   

July 3,

 

% of

 

June 27,

 

% of

(In millions except per share amounts)

 

2021

 

Revenues

 

2020

 

Revenues

                 

Revenues

 

$

9,273

       

$

6,917

     

Costs and Operating Expenses:

               

Cost of revenues (c)

 

4,585

   

49.4

%

 

3,416

   

49.4

%

Selling, general and administrative expenses (d)

 

1,614

   

17.4

%

 

1,417

   

20.5

%

Amortization of acquisition-related intangible assets

 

449

   

4.8

%

 

417

   

6.1

%

Research and development expenses

 

343

   

3.7

%

 

264

   

3.8

%

Restructuring and other costs (e)

 

119

   

1.3

%

 

12

   

0.2

%

   

7,110

   

76.7

%

 

5,526

   

79.9

%

Operating Income

 

2,163

   

23.3

%

 

1,391

   

20.1

%

Interest Income

 

11

       

8

     

Interest Expense

 

(122)

       

(137)

     

Other Expense (f)

 

(5)

       

(9)

     

Income Before Income Taxes

 

2,047

       

1,253

     

Provision for Income Taxes (g)

 

(219)

       

(97)

     

Net Income

 

$

1,828

   

19.7

%

 

$

1,156

   

16.7

%

                 

Earnings per Share:

               

Basic

 

$

4.65

       

$

2.92

     

Diluted

 

$

4.61

       

$

2.90

     

Weighted Average Shares:

               

Basic

 

393

       

395

     

Diluted

 

396

       

398

     
                 
                 

Reconciliation of Adjusted Operating Income and Adjusted Operating Margin

               

GAAP Operating Income (a)

 

$

2,163

   

23.3

%

 

$

1,391

   

20.1

%

Cost of Revenues Charges (c)

 

   

0.0

%

 

2

   

0.0

%

Selling, General and Administrative (Credits) Charges (d)

 

(42)

   

-0.4

%

 

42

   

0.6

%

Restructuring and Other Costs (e)

 

119

   

1.3

%

 

12

   

0.2

%

Amortization of Acquisition-related Intangible Assets

 

449

   

4.8

%

 

417

   

6.1

%

Adjusted Operating Income (b)

 

$

2,689

   

29.0

%

 

$

1,864

   

27.0

%

                 

Reconciliation of Adjusted Net Income

               

GAAP Net Income (a)

 

$

1,828

       

$

1,156

     

Cost of Revenues Charges (c)

 

       

2

     

Selling, General and Administrative (Credits) Charges (d)

 

(42)

       

42

     

Restructuring and Other Costs (e)

 

119

       

12

     

Amortization of Acquisition-related Intangible Assets

 

449

       

417

     

Other Expense (f)

 

8

       

25

     

Benefit from Income Taxes (g)

 

(142)

       

(104)

     

Adjusted Net Income (b)

 

$

2,220

       

$

1,550

     
                 

Reconciliation of Adjusted Earnings per Share

               

GAAP Diluted EPS (a)

 

$

4.61

       

$

2.90

     

Cost of Revenues Charges, Net of Tax (c)

 

0.00

       

0.00

     

Selling, General and Administrative (Credits) Charges, Net of Tax (d)

 

(0.11)

       

0.08

     

Restructuring and Other Costs, Net of Tax (e)

 

0.23

       

0.03

     

Amortization of Acquisition-related Intangible Assets, Net of Tax

 

0.88

       

0.85

     

Other Expense, Net of Tax (f)

 

0.01

       

0.05

     

Benefit from Income Taxes (g)

 

(0.02)

       

(0.02)

     

Adjusted EPS (b)

 

$

5.60

       

$

3.89

     
                 

Reconciliation of Free Cash Flow

               

GAAP Net Cash Provided by Operating Activities (a)

 

$

2,227

       

$

1,886

     

Purchases of Property, Plant and Equipment

 

(540)

       

(269)

     

Proceeds from Sale of Property, Plant and Equipment

 

       

2

     

Free Cash Flow

 

$

1,687

       

$

1,619

     

 

Segment Data

 

Three Months Ended

   

July 3,

 

% of

 

June 27,

 

% of

(In millions)

 

2021

 

Revenues

 

2020

 

Revenues

                 

Revenues

               

Life Sciences Solutions

 

$

3,557

   

38.4

%

 

$

2,602

   

37.6

%

Analytical Instruments

 

1,481

   

16.0

%

 

1,051

   

15.2

%

Specialty Diagnostics

 

1,235

   

13.3

%

 

988

   

14.3

%

Laboratory Products and Services

 

3,583

   

38.6

%

 

2,787

   

40.3

%

Eliminations

 

(583)

   

-6.3

%

 

(511)

   

-7.4

%

Consolidated Revenues

 

$

9,273

   

100.0

%

 

$

6,917

   

100.0

%

                 

Operating Income and Operating Margin

               

Life Sciences Solutions

 

$

1,718

   

48.3

%

 

$

1,234

   

47.4

%

Analytical Instruments

 

280

   

18.9

%

 

135

   

12.9

%

Specialty Diagnostics

 

245

   

19.9

%

 

214

   

21.6

%

Laboratory Products and Services

 

446

   

12.4

%

 

281

   

10.1

%

Subtotal Reportable Segments

 

2,689

   

29.0

%

 

1,864

   

27.0

%

                 

Cost of Revenues Charges (c)

 

   

0.0

%

 

(2)

   

0.0

%

Selling, General and Administrative Credits (Charges) (d)

 

42

   

0.4

%

 

(42)

   

-0.6

%

Restructuring and Other Costs (e)

 

(119)

   

-1.3

%

 

(12)

   

-0.2

%

Amortization of Acquisition-related Intangible Assets

 

(449)

   

-4.8

%

 

(417)

   

-6.1

%

GAAP Operating Income (a)

 

$

2,163

   

23.3

%

 

$

1,391

   

20.1

%

                 

(a)

"GAAP" (reported) results were determined in accordance with U.S. generally accepted accounting principles (GAAP).

   

(b)

Adjusted results are non-GAAP measures and, for income measures, exclude certain charges to cost of revenues (see note (c) for details); certain credits/charges to selling, general and administrative expenses (see note (d) for details); amortization of acquisition-related intangible assets; restructuring and other costs (see note (e) for details); certain other gains or losses that are either isolated or cannot be expected to occur again with any predictability (see note (f) for details); and the tax consequences of the preceding items and certain other tax items (see note (g) for details).

   

(c)

Reported results in 2020 include accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations.

   

(d)

Reported results in 2021 and 2020 include certain third-party expenses, principally transaction/integration costs related to recent/terminated acquisitions. Reported results in 2021 also include $60 of credits for changes in estimates of contingent acquisition consideration.

   

(e)

Reported results in 2021 and 2020 include restructuring and other costs consisting principally of severance, abandoned facility and other expenses of headcount reductions within several businesses and real estate consolidations. Reported results in 2021 also include $110 of charges for impairment of acquired technology.

   

(f) 

Reported results in 2021 include $6 of amortization of bridge loan commitments fees related to a pending acquisition and $2 of losses on investments.  Reported results in 2020 include $27 of costs for a subsequently terminated acquisition, primarily for amortization of bridge loan commitments fees and entering hedging contracts, offset in part by $2 of gains from investments.

   

(g)

Reported provision for income taxes in 2021 and 2020 includes incremental tax benefit for the pre-tax reconciling items between GAAP and adjusted net income. Reported results in 2021 also include $8 of incremental tax benefit from adjusting the company's non-U.S. deferred tax balances as a result of tax rate changes. Reported results in 2020 also include $2 of incremental tax benefit from audit settlements.

   

Notes:

 

Consolidated depreciation expense is $211 and $157 in 2021 and 2020, respectively.

 

Base Business Organic Revenue Growth

   
   

Three Months Ended

   

July 3, 2021

     
     

Revenue Growth

 

34

%

COVID-19 Response Revenue (a)

 

2

%

Base Business Revenue Growth

 

32

%

Acquisitions

 

0

%

Currency Translation

 

5

%

Base Business Organic Revenue Growth

 

27

%

     

(a) COVID-19 response revenue includes effects of COVID-19 response revenues from acquired businesses and foreign currency translation.

 

Condensed Consolidated Statement of Income (unaudited) (a)(b)

               
   

Six Months Ended

   

July 3,

 

% of

 

June 27,

 

% of

(In millions except per share amounts)

 

2021

 

Revenues

 

2020

 

Revenues

                 

Revenues

 

$

19,179

       

$

13,147

     

Costs and Operating Expenses:

               

Cost of revenues (c)

 

9,142

   

47.7

%

 

6,781

   

51.6

%

Selling, general and administrative expenses (d)

 

3,157

   

16.5

%

 

2,668

   

20.3

%

Amortization of acquisition-related intangible assets

 

872

   

4.5

%

 

842

   

6.4

%

Research and development expenses

 

663

   

3.5

%

 

509

   

3.9

%

Restructuring and other costs (e)

 

133

   

0.7

%

 

50

   

0.4

%

   

13,967

   

72.8

%

 

10,850

   

82.5

%

Operating Income

 

5,212

   

27.2

%

 

2,297

   

17.5

%

Interest Income

 

23

       

44

     

Interest Expense

 

(247)

       

(263)

     

Other (Expense) Income (f)

 

(188)

       

3

     

Income Before Income Taxes

 

4,800

       

2,081

     

Provision for Income Taxes (g)

 

(635)

       

(137)

     

Net Income

 

$

4,165

   

21.7

%

 

$

1,944

   

14.8

%

                 

Earnings per Share:

               

Basic

 

$

10.58

       

$

4.91

     

Diluted

 

$

10.50

       

$

4.87

     

Weighted Average Shares:

               

Basic

 

394

       

396

     

Diluted

 

397

       

399

     
                 
                 

Reconciliation of Adjusted Operating Income and Adjusted Operating Margin

               

GAAP Operating Income (a)

 

$

5,212

   

27.2

%

 

$

2,297

   

17.5

%

Cost of Revenues Charges (c)

 

8

   

0.0

%

 

4

   

0.0

%

Selling, General and Administrative (Credits) Charges (d)

 

(26)

   

-0.1

%

 

48

   

0.4

%

Restructuring and Other Costs (e)

 

133

   

0.7

%

 

50

   

0.4

%

Amortization of Acquisition-related Intangible Assets

 

872

   

4.5

%

 

842

   

6.4

%

Adjusted Operating Income (b)

 

$

6,199

   

32.3

%

 

$

3,241

   

24.7

%

                 

Reconciliation of Adjusted Net Income

               

GAAP Net Income (a)

 

$

4,165

       

$

1,944

     

Cost of Revenues Charges (c)

 

8

       

4

     

Selling, General and Administrative (Credits) Charges (d)

 

(26)

       

48

     

Restructuring and Other Costs (e)

 

133

       

50

     

Amortization of Acquisition-related Intangible Assets

 

872

       

842

     

Other Expense (f)

 

205

       

39

     

Benefit from Income Taxes (g)

 

(272)

       

(202)

     

Adjusted Net Income (b)

 

$

5,085

       

$

2,725

     
                 

Reconciliation of Adjusted Earnings per Share

               

GAAP Diluted EPS (a)

 

$

10.50

       

$

4.87

     

Cost of Revenues Charges, Net of Tax (c)

 

0.01

       

0.01

     

Selling, General and Administrative (Credits) Charges, Net of Tax (d)

 

(0.09)

       

0.10

     

Restructuring and Other Costs, Net of Tax (e)

 

0.26

       

0.10

     

Amortization of Acquisition-related Intangible Assets, Net of Tax

 

1.72

       

1.67

     

Other Expense, Net of Tax (f)

 

0.44

       

0.07

     

(Benefit from) Provision for Income Taxes (g)

 

(0.03)

       

0.01

     

Adjusted EPS (b)

 

$

12.81

       

$

6.83

     
                 

Reconciliation of Free Cash Flow

               

GAAP Net Cash Provided by Operating Activities (a)

 

$

4,205

       

$

2,242

     

Purchases of Property, Plant and Equipment

 

(1,168)

       

(522)

     

Proceeds from Sale of Property, Plant and Equipment

 

5

       

6

     

Free Cash Flow

 

$

3,042

       

$

1,726

     

 

Segment Data

 

Six Months Ended

   

July 3,

 

% of

 

June 27,

 

% of

(In millions)

 

2021

 

Revenues

 

2020

 

Revenues

                 

Revenues

               

Life Sciences Solutions

 

$

7,760

   

40.5

%

 

$

4,376

   

33.3

%

Analytical Instruments

 

2,868

   

15.0

%

 

2,152

   

16.4

%

Specialty Diagnostics

 

2,850

   

14.9

%

 

1,946

   

14.8

%

Laboratory Products and Services

 

7,180

   

37.4

%

 

5,517

   

42.0

%

Eliminations

 

(1,479)

   

-7.8

%

 

(844)

   

-6.5

%

Consolidated Revenues

 

$

19,179

   

100.0

%

 

$

13,147

   

100.0

%

                 

Operating Income and Operating Margin

               

Life Sciences Solutions

 

$

3,997

   

51.5

%

 

$

1,909

   

43.6

%

Analytical Instruments

 

552

   

19.3

%

 

306

   

14.2

%

Specialty Diagnostics

 

673

   

23.6

%

 

450

   

23.1

%

Laboratory Products and Services

 

977

   

13.6

%

 

576

   

10.4

%

Subtotal Reportable Segments

 

6,199

   

32.3

%

 

3,241

   

24.7

%

                 

Cost of Revenues Charges (c)

 

(8)

   

0.0

%

 

(4)

   

0.0

%

Selling, General and Administrative Credits (Charges) (d)

 

26

   

0.1

%

 

(48)

   

-0.4

%

Restructuring and Other Costs (e)

 

(133)

   

-0.7

%

 

(50)

   

-0.4

%

Amortization of Acquisition-related Intangible Assets

 

(872)

   

-4.5

%

 

(842)

   

-6.4

%

GAAP Operating Income (a)

 

$

5,212

   

27.2

%

 

$

2,297

   

17.5

%

                 

(a)

"GAAP" (reported) results were determined in accordance with U.S. generally accepted accounting principles (GAAP).

   

(b)

Adjusted results are non-GAAP measures and, for income measures, exclude certain charges to cost of revenues (see note (c) for details); certain credits/charges to selling, general and administrative expenses (see note (d) for details); amortization of acquisition-related intangible assets; restructuring and other costs (see note (e) for details); certain other gains or losses that are either isolated or cannot be expected to occur again with any predictability (see note (f) for details); and the tax consequences of the preceding items and certain other tax items (see note (g) for details).

   

(c)

Reported results in 2021 include charges for the sale of inventories revalued at the date of acquisition. Reported results in 2020 include $2 of charges to conform the accounting policies of a recently acquired business with the company's accounting policies and $2 of accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations.

   

(d)

Reported results in 2021 and 2020 include certain third-party expenses, principally transaction/integration costs related to recent/terminated acquisitions. Reported results in 2021 also include $58 of credits for changes in estimates of contingent acquisition consideration.

   

(e)

 Reported results in 2021 and 2020 include restructuring and other costs consisting principally of severance, abandoned facility and other expenses of headcount reductions within several businesses and real estate consolidations. Reported results in 2021 also include $110 of charges for impairment of acquired technology and $13 of charges for compensation contractually due to employees of acquired businesses at the date of acquisition.

   

(f)

Reported results in 2021 include $197 of losses on the early extinguishment of debt, $6 of amortization of bridge loan commitments fees related to a pending acquisition and $2 of losses on investments.  Reported results in 2020 include $44 of costs for a subsequently terminated acquisition, primarily for entering hedging contracts and amortization of bridge loan commitments fees; and $1 of net charges for the settlement/curtailment of pension plans, offset in part by $6 of gains from investments.

   

(g)

Reported provision for income taxes in 2021 and 2020 includes incremental tax benefit for the pre-tax reconciling items between GAAP and adjusted net income and $12 and $(6) of incremental tax benefit (provision), respectively, from adjusting the company's non-U.S. deferred tax balances as a result of tax rate changes. Reported results in 2020 also include $2 of incremental tax benefit from audit settlements.

   

Notes:

   

Consolidated depreciation expense is $409 and $306 in 2021 and 2020, respectively.

 

Condensed Consolidated Balance Sheet (unaudited)

       
         
   

July 3,

 

December 31,

(In millions)

 

2021

 

2020

         

Assets

       

Current Assets:

       

Cash and cash equivalents

 

$

7,023

   

$

10,325

 

Accounts receivable, net

 

5,476

   

5,741

 

Inventories

 

4,625

   

4,029

 

Other current assets

 

2,136

   

1,862

 

Total current assets

 

19,260

   

21,957

 

Property, Plant and Equipment, Net

 

6,560

   

5,912

 

Acquisition-related Intangible Assets, Net

 

12,390

   

12,685

 

Other Assets

 

2,584

   

2,457

 

Goodwill

 

26,904

   

26,041

 

Total Assets

 

$

67,698

   

$

69,052

 
         
         

Liabilities and Shareholders' Equity

       

Current Liabilities:

       

Short-term obligations and current maturities of long-term obligations

 

$

4

   

$

2,628

 

Other current liabilities

 

6,921

   

7,676

 

Total current liabilities

 

6,925

   

10,304

 

Other Long-term Liabilities

 

5,146

   

5,134

 

Long-term Obligations

 

18,773

   

19,107

 

Total Shareholders' Equity

 

36,854

   

34,507

 

Total Liabilities and Shareholders' Equity

 

$

67,698

   

$

69,052

 
         
         

Condensed Consolidated Statement of Cash Flows (unaudited)

       
 
   

Six Months Ended

   

July 3,

 

June 27,

(In millions)

 

2021

 

2020

         

Operating Activities

       

Net income

 

$

4,165

   

$

1,944

 
         

Adjustments to reconcile net income to net cash provided by operating activities:

       

Depreciation and amortization

 

1,281

   

1,148

 

Change in deferred income taxes

 

(307)

   

(318)

 

Other non-cash expenses, net

 

513

   

202

 

Changes in assets and liabilities, excluding the effects of acquisitions and disposition

 

(1,447)

   

(734)

 

Net cash provided by operating activities

 

4,205

   

2,242

 
         

Investing Activities

       

Acquisitions, net of cash acquired

 

(1,425)

   

(3)

 

Purchases of property, plant and equipment

 

(1,168)

   

(522)

 

Proceeds from sale of property, plant and equipment

 

5

   

6

 

Other investing activities, net

 

(36)

   

 

Net cash used in investing activities

 

(2,624)

   

(519)

 
         

Financing Activities

       

Net proceeds from issuance of debt

 

   

3,464

 

Repayment of debt

 

(2,805)

   

(2)

 

Net proceeds from issuance of commercial paper

 

   

383

 

Repayment of commercial paper

 

   

(387)

 

Purchases of company common stock

 

(2,000)

   

(1,500)

 

Dividends paid

 

(190)

   

(163)

 

Net proceeds from issuance of company common stock under employee stock plans

 

72

   

125

 

Other financing activities, net

 

(3)

   

(121)

 

Net cash (used in) provided by financing activities

 

(4,926)

   

1,799

 
         

Exchange Rate Effect on Cash

 

44

   

(107)

 

(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

 

(3,301)

   

3,415

 

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

 

10,336

   

2,422

 

Cash, Cash Equivalents and Restricted Cash at End of Period

 

$

7,035

   

$

5,837

 
         
         

Free Cash Flow (a)

 

$

3,042

   

$

1,726

 
         

(a) 

Free cash flow is net cash provided by operating activities less net purchases of property, plant and equipment.

 

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. is the world leader in serving science, with annual revenue exceeding $30 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, improving patient diagnostics and therapies or increasing productivity in their laboratories, we are here to support them. Our global team of more than 80,000 colleagues 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 and Patheon. For more information, please visit www.thermofisher.com.

 

 

SOURCE Thermo Fisher Scientific

 

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