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Thermo Posts 13 Percent Jump in Q3 Revenues but Lowers Guidance Due to Academic, Government Weakness

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This story originally ran on Oct 26.

By Adam Bonislawski

Thermo Fisher Scientific this week reported a 13 percent rise in third-quarter revenue but lowered its full-year guidance, citing weakness in the academic and government markets, which account for roughly 23 percent to 24 percent of the company's revenues.

Revenues for the quarter were $2.97 billion compared to $2.63 billion from the year-ago period and missed analyst estimates of $3 billion.

The company's Laboratory Products and Services segment was particularly affected by the academic and government slowdown, CFO Pete Wilver said in a conference call following release of the results. He noted that "the primary driver of [the segment's] weakness is clearly more on the equipment and instrumentation side."

Laboratory Products and Services saw revenues rise 5 percent to $1.48 billion from $1.41 billion. The company's Analytical Technologies segment grew to $1.01 billion, up 22 percent from $827.9 million for Q3 2010, while the newly created Specialty Diagnostics segment posted sales of $614.7 million, a 20 percent jump from $513.1 million it would have reported a year ago.

President and CEO Marc Casper cited mass spectrometers and liquid chromatography systems as among the products negatively impacted. He said the company expected that slow academic and government spending would likely continue into the fourth quarter of this year, but added that lack of budget clarity as opposed to actual funding levels was the driver of the slowdown in the US.

"Once that gets a little more clarity, I think customers will have more confidence to spend on bigger ticket items," he said.

Thermo Fisher is the second large mass spec vendor to lower its 2011 guidance in response to softness in the academic and government sectors, following Waters, which also reported its Q3 earnings this week (see story this issue).

Despite these struggles, Casper said the company was enjoying "a lot of interest in and adoption of" its new Q Exactive mass spectrometer, which it launched at the 2011 American Society for Mass Spectrometry annual meeting in June.

He also said the company's HPLC business – bolstered by the purchase of Dionex in May – had gained market share and showed double-digit revenue growth during the quarter.

For full-year 2011, Thermo Fisher lowered its earnings-per-share guidance to a range of between $4.11 and $4.17 from an earlier guidance of $4.15 to $4.25 given during the second quarter. The new range would represent growth of between 19 percent and 21 percent from 2010 levels.

Full-year revenue guidance was reduced to a range of between $11.62 billion and $11.70 billion from between $11.79 billion and $11.89 billion, which would represent a 10 percent to 11 percent growth rate over 2010.

The company's net income dipped to $265.4 million, or $.69 per share, down 1 percent from $268.5 million, or $.66 per share, a year ago. On an adjusted basis, EPS was $1.07, matching Wall Street estimates.

Its R&D spending rose 21 percent to $86.8 million from $71.5 million a year ago.

As of Oct. 1, Thermo Fisher had $890 million in cash and cash equivalents.


Have topics you'd like to see covered in ProteoMonitor? Contact the editor at abonislawski [at] genomeweb [.] com.

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