WALTHAM, Mass., Jan. 30, 2020 /PRNewswire/ -- Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter and Full Year 2019 Highlights

• Fourth quarter revenue increased 5% to $6.83 billion.
• Fourth quarter GAAP diluted earnings per share (EPS) increased 12% to $2.49.
• Fourth quarter adjusted EPS increased 9% to $3.55.
                                       
• Full year revenue grew 5% to $25.54 billion.
• Full year GAAP diluted EPS increased 27% to $9.17.
• Full year adjusted EPS increased 11% to $12.35.
                               
• Delivered another excellent year of high-impact innovation, launching new products across our businesses, highlighted by the Thermo Scientific Orbitrap Exploris 480 and Eclipse Tribrid mass spectrometers, Thermo Scientific Krios G4 cryo-electron microscope, Applied Biosystems QuantStudio 6 and 7 Pro real-time PCR systems, the addition of numerous allergens to the Thermo Scientific ImmunoCAP menu and, in the fourth quarter, the launch of our new Ion Torrent Genexus next-generation sequencing instrument.
                                  
• Built on our industry-leading scale in emerging and high-growth markets, opening new customer solution centers in Seoul and Shanghai for life sciences applications, new centers in Beijing and Delhi for improving food quality and safety, and a new pharma and biotech customer center in Shanghai to accelerate development of new drug therapies.
                                         
• Significantly strengthened our pharma services network in 2019 to develop and deliver high-quality medicines to patients around the world by acquiring leading viral vector manufacturer Brammer Bio and the GSK active pharmaceutical ingredient manufacturing site in Ireland, and expanding production capacity at facilities in North America and Europe to support growing demand for biologics and gene therapies.
                                
• Continued to successfully execute our capital deployment strategy during the year, completing $1.8 billion of bolt-on acquisitions, returning $1.8 billion of capital to shareholders through stock buybacks and dividends, and refinancing $5.6 billion of debt to generate $80 million of savings annually.

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."

"We finished the year strong and exceeded the goals we set out to accomplish in 2019," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "From a financial perspective, we again delivered excellent revenue and earnings growth, along with strong cash flow performance.

"We continued to execute our proven growth strategy to create a differentiated experience for our customers and gain share. Across our technology-focused businesses, we extended our leading innovation track record to support our customers' work in life sciences, clinical and applied markets. In high-growth and emerging markets, we opened new solution centers to help our customers address their challenges in a range of applications. We also strengthened our pharma services and bioproduction capabilities through a combination of strategic acquisitions and capacity investments." 

Casper added, "We're pleased to deliver another excellent year, and are even more excited about our prospects ahead as we kick off the next decade an even stronger company."  

Fourth Quarter 2019

Revenue for the quarter grew 5% to $6.83 billion in 2019, versus $6.51 billion in 2018. Organic revenue growth was 5%; acquisitions, net of a divestiture, increased revenue by 1% and currency translation decreased revenue by 1%.

GAAP Earnings Results

GAAP diluted EPS in the fourth quarter of 2019 increased 12% to $2.49, versus $2.22 in the same quarter last year. GAAP operating income for the fourth quarter of 2019 grew to $1.23 billion, compared with $1.15 billion in the year-ago quarter. GAAP operating margin increased to 18.0%, compared with 17.6% in the fourth quarter of 2018.

Non-GAAP Earnings Results

Adjusted EPS in the fourth quarter of 2019 increased 9% to $3.55, versus $3.25 in the fourth quarter of 2018. Adjusted operating income for the fourth quarter of 2019 grew 5% compared with the year-ago quarter.  Adjusted operating margin increased to 24.9%, compared with 24.8% in the fourth quarter of 2018.

Full Year 2019

Revenue for the full year grew 5% to $25.54 billion in 2019, versus $24.36 billion in 2018. Organic revenue growth was 6%; acquisitions, net of a divestiture, increased revenue by 1% and currency translation decreased revenue by 2%.

GAAP Earnings Results

GAAP diluted EPS for the full year increased 27% to $9.17, versus $7.24 in 2018. GAAP operating income for 2019 grew to $4.59 billion, compared with $3.78 billion a year ago. GAAP operating margin increased to 18.0% in 2019, compared with 15.5% in 2018. GAAP results for 2019 reflect the gain on the sale of the company's Anatomical Pathology business during the second quarter.

Non-GAAP Earnings Results

Adjusted EPS for the full year rose 11% to $12.35, versus $11.12 in 2018. Adjusted operating income for 2019 grew 6% compared with 2018, and adjusted operating margin increased to 23.4%, compared with 23.1% a year ago.

Annual Guidance for 2020

The company will provide 2020 financial guidance during its earnings conference call this morning at 8:30 a.m. Eastern time.

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

In the fourth quarter of 2019, Life Sciences Solutions Segment revenue grew 8% to $1.84 billion, compared with revenue of $1.70 billion in the fourth quarter of 2018. Segment adjusted operating margin increased to 37.5%, versus 36.8% in the 2018 quarter.

For the full year 2019, Life Sciences Solutions Segment revenue rose 9% to $6.86 billion, compared with revenue of $6.27 billion in 2018. Segment adjusted operating margin increased to 35.7% in 2019, compared with 34.4% a year ago.

Analytical Instruments Segment

Analytical Instruments Segment revenue was $1.52 billion in the fourth quarter of 2019, compared with revenue of $1.57 billion in the fourth quarter of 2018. Segment adjusted operating margin was 26.0%, versus 26.6% in the 2018 quarter.

For the full year 2019, Analytical Instruments Segment revenue increased 1% to $5.52 billion, compared with revenue of $5.47 billion in 2018. Segment adjusted operating margin grew to 23.1%, versus 22.8% in 2018.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue was $0.94 billion in the fourth quarter of 2019, compared with revenue of $0.95 billion in the fourth quarter of 2018, reflecting the divestiture of the Anatomical Pathology business in June 2019. Segment adjusted operating margin was 23.7%, versus 24.5% in the 2018 quarter.

For the full year 2019, Specialty Diagnostics Segment revenue was flat at $3.72 billion, compared with 2018. Segment adjusted operating margin was 25.0%, versus 2018 results of 25.6%.

Laboratory Products and Services Segment

In the fourth quarter of 2019, Laboratory Products and Services Segment revenue grew 9% to $2.83 billion, compared with revenue of $2.60 billion in the fourth quarter of 2018. Segment adjusted operating margin increased to 13.8%, versus 13.1% in the 2018 quarter.

For the full year 2019, Laboratory Products and Services Segment revenue grew 6% to $10.60 billion, compared with revenue of $10.04 billion in 2018. Segment adjusted operating margin was 12.5% in both years.

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, the impact of significant tax audits or events and the results of discontinued operations. 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, and also excludes operating cash flows from discontinued operations 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 3 to 20 years. Based on acquisitions closed through the end of the fourth quarter of 2019, adjusted EPS will exclude approximately $3.21 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 or the estimated initial impacts of U.S. tax reform legislation), 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, the early retirement of debt and discontinued operations.

We also report free cash flow, which is operating cash flow, excluding net capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations' ability to generate cash for use in acquisitions and other investing and financing activities.

Thermo Fisher'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'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'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 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's results computed in accordance with GAAP.

Conference Call

Thermo Fisher Scientific will hold its earnings conference call today, January 30, at 8:30 a.m. Eastern time. To listen, dial (877) 273-7122 within the U.S. or (647) 689-5496 outside the U.S. 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, February 7, 2020.

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc.(NYSE: TMO) is the world leader in serving science, with annual revenue exceeding $25 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 75,000 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 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; and the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to recent or pending acquisitions 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 Quarterly Report on Form 10-Q for the quarter ended September 28, 2019, which is 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.

SOURCE Thermo Fisher Scientific