Thermo Fisher Scientific Inc (TMO)

TMO 
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Thermo Fisher Scientific Inc. (TMO)

January 10, 2012 11:00 am ET

Executives

Marc N. Casper - Chief Executive Officer, President, Director, Member of Strategy & Finance Committee and Member of Science & Technology Committee

Analysts

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Presentation

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Okay. Good morning. We're going to go ahead and get started. I'm Tycho Peterson, from the science tools and diagnostics team. It's my pleasure this morning to introduce our next company, Thermo Fisher. For those of you interested in the breakout, it will be across the hall in the Georgian Room. So, let me turn it over to Marc Casper to tell you a little bit more about the Thermo story.

Marc N. Casper

Well, good morning, Tycho. Thank you for the welcome. With me here today is Ken Apicerno, our Vice President of Investor Relations.

I'm really excited to kick off the year from our investor side of things here out in San Francisco. What we'll do is give you a quick overview of the company, a recap of how we did against the goals without getting into the financials for 2011 and then talk about our goals for 2012.

Let me start with our Safe Harbor statement and the use of non-GAAP financials. When you -- as you look at the numbers, feel free to go to the investor section of our website, www.thermofisher.com for the reconciliations or our various SEC filings.

Thermo Fisher Scientific. So let me just give a brief orientation for those of you that aren't as familiar with the company. Although, I do see a lot of familiar faces here in the room.

So we're the leading provider of analytical instruments, equipment, reagents, software, services, consumables for research, analysis, discovery and specialty diagnostics. Basically, if you walk into any laboratory in the world, you will see a huge range of capabilities from Thermo Fisher Scientific.

We have a truly unique scale in our industry as the industry leader with $12 billion in revenue and an unparalleled commercial reach, so we can really touch our 350,000 customers anywhere in the world and provide them with outstanding service and a world-class team.

In terms of our unmatched depth of capability, not only do have size, but we have an amazing suite of technologies, that makes a huge difference on our customers and then a little later in the presentation, I'll give you a sense for just 3 of the new products that we launched in recent history.

We have a deep applications expertise. We understand what our customers are using the products for, and what they're going to need to use them for in the future and that allows us to really make a difference in driving value for our customers.

And we're known by our broad base of customers as a productivity provider. So as the world has its twists and turns, we are well positioned to help our customers navigate their own productivity challenges that they face, and we have an incredible track record of doing that.

We have 2 well-known leading brands and today will be at least our investor debut of our third. Thermo Scientific is our technology brand, 50 years plus in the making, an incredible reputation of bringing out high-impact technologies. Fisher Scientific is our channel brand, and I'll talk more in a few moments about Unity Lab Services, but that's our services brand. This is a great growth opportunity for Thermo Fisher Scientific and we'll talk about why we're so excited about Unity Lab Services.

Ultimately, the company enables our customers to make the world healthier, cleaner and safer. And that mission allows us to just attract the very best people out there from the best colleges, grad schools, from industries around the world to join our company and really make a difference in creating value.

When you look at our revenue profile, really, we benefit from our unmatched reach. In terms of our diverse end markets, industrial and applied is our largest. We'll soon probably represent in the 30th percent range of our mix, and the other 3 market segments we serve are each about the same size, healthcare and diagnostics, pharma and biotech, and academic and government. We have a complete portfolio with 2/3 of our revenue being recurring in nature, 53% consumables, 14% services, and 1/3 of our business is capital equipment in terms of instruments, equipment and software.

Geographically, the mix of the company has changed a lot over the years. I'm going to highlight that in our review of 2011 in a few moments. But today, Asia-Pacific and other emerging markets represent 18% of our company's revenue, that's up from about 8% at the time of the creation of the company 5 years ago. So a huge emphasis on building out our presence and scale in the fastest growing markets around the world.

We have 3 complementaries, reporting segments. When you look at them, starting with our Specialty Diagnostics segment, represents about 20% of our total revenue. We have an incredible portfolio of Specialty Diagnostics that improves patient care.

We have a very specific strategy about picking segments to participate in diagnostics where there are high barriers to entry, very high customer loyalty and ultimately superior margins. And that has allowed us to really hand pick a very exciting portfolio and puts us in a very enviable position of having good growth and really good profitability and cash flows coming out of our diagnostic business. We think it's actually quite a unique set of capabilities.

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