Thermo Fisher Scientific reported mostly strong results for the fourth quarter and all of last year, while projecting even healthier 2014 results—helped by the planned $15.8 billion acquisition of Life Technologies and its debt, in a deal the company expects could close as soon as next month.
“Our excellent performance in 2013 positions us well for the year ahead,” Marc N. Casper, Thermo’s president and CEO, said in a statement. “We look forward to successfully integrating Life Technologies and fully leveraging our depth of capabilities to create value for our customers and achieve our goals for growth in 2014.”
Speaking this morning in the company’s quarterly earnings call with analysts, Casper said the integration of Life Technologies is in its homestretch, with its final hurdle being approval by the U.S. Federal Trade Commission (FTC): “We believe we’re close, and expect to complete the transaction very shortly.”
In a reflection of the company’s optimism, Casper said that Thermo had incorporated Life Technologies results that assumed an “early” February close date for the deal into its full-year 2014 guidance to investors. Also, the company said it will continue most Life Technologies operations into a fourth operating segment, to which it will shift some existing biopharma-focused operations.
However, Thermo will make $275 million in cost cuts or “synergies” over three years.
The lab equipment giant finished the fourth quarter of 2013 with a 9% dip in net income, which fell to $342.1 million or 92 cents per share, from $376.4 million or $1.04 per share a year earlier. The dip came despite a 6% increase in revenue, to a record-high $3.47 billion, with Thermo noting that last year’s results were buoyed by a tax rate change in an undisclosed foreign jurisdiction. The company, however, trumpeted adjusted net income excluding special charges that rose 9% over Q4 2012, to $530.3 million, and a record-high adjusted earnings per share (EPS) of $1.43, up 5% from a year earlier.
For all of 2013, Thermo generated net income of $1.27 billion, up 9.7% from 2012, on revenue that rose 5% year-over-year to $13.09 billion. Adjusted earnings per share grew 10%, to $5.42.
Casper attributed Thermo’s revenue growth to improved market conditions affecting two business segments—industrial and applied, and healthcare and diagnostics—as many business customers released funding for projects delayed for much of 2013, and as demand grew for chromatography systems used in environmental and food safety applications.
Demand was also strong, Casper said, for healthcare diagnostics, particularly in Asia but with improved growth in western Europe as well. Even the U.S. results showed some improvement, as healthcare customers stepped up their use of the equipment toward year’s end.
In the biopharma segment, Casper said, “We had an exceptional performance and grew by more than 10% in the quarter, with particularly strong results across our clinical trials logistics, bioprocess production, and laboratory products businesses.”
But the academic and government customer segment in Q4 saw a decline “in the low single digits,” Casper said. That appears to reflect continuing tight spending, bookended by the March across-the-board federal budget cut or sequestration and the October federal government shutdown.
For 2014, Thermo Fisher is projecting a jump in adjusted earnings per share of between 24% and 27%, to a range of $6.70 per share to $6.90 per share. Revenues are expected to rise between 27% and 29% over 2013, to between $16.63 billion and $16.83 billion.