The operator introduces the Thermo Fisher Scientific 2024 First Quarter Conference Call and introduces the moderator, Rafael Tejada. Tejada introduces the participants and provides information on where to access the webcast and earnings press release. He also mentions the safe harbor statement and disclaims any obligation to update forward-looking statements.

The second paragraph of the article discusses the financial measures used during the call and provides a reconciliation of non-GAAP measures to GAAP measures. The speaker, Marc Casper, then summarizes the company's strong financial performance in the first quarter, including revenue of $10.34 billion, adjusted operating income of $2.28 billion, and a 2% increase in adjusted EPS. He attributes the success to the company's growth strategy and PPI business system. He also mentions that the company's performance in the first quarter has led to an increase in guidance and sets them up for differentiated performance in 2024. He then provides a breakdown of their performance by end-market, with pharma and biotech seeing a low single-digit decline in the quarter, but with a sequential improvement compared to the previous quarter.

In the first quarter, the company faced challenges in the vaccine and therapy revenue runoff, resulting in a decline in the academic and government, industrial and applied, and diagnostics and healthcare segments. However, they saw strong growth in their clinical research and electron microscopy businesses. The company's growth strategy, which includes high-impact innovation, trusted partnerships, and a strong commercial engine, had a successful start to the year with the launch of new products. Positive developments in the biotech funding environment and stimulus programs in China support the company's expectation of a modest pickup in economic activity in 2024.

Thermo Fisher Scientific has launched several innovative products in analytical instruments, including the Thermo Scientific Dionex Inuvion Ion Chromatography system, the Thermo Scientific LInspector Edge In-line metrology solution, and the Thermo Scientific TruScan G3 Handheld Raman Analyzer. The company also received recognition for its high-impact innovation from Fast Company Magazine. Thermo Fisher Scientific has also been strengthening its partnerships with customers, with the CEO personally meeting with senior executives to discuss opportunities and challenges. These conversations are happening throughout the company at all levels.

Our customers trust us as their partner and we strive to always find better ways to serve them. We have collaborated with Bayer to develop a next-generation sequencing-based companion diagnostic for cancer therapies and are partnering with the North Carolina Collaboratory to support PFAS research. In our clinical research business, we have expanded our portfolio of services to include faster testing methods and launched a clinical registry for a rare disease. These examples demonstrate our commitment to being a trusted partner for our customers.

The PPI business system has led to strong profitability and cash flow in the first quarter. The company is utilizing Generative AI to increase efficiency and improve customer experience. Thermo Fisher is also focusing on corporate social responsibility initiatives, including a collaboration with the South African Medical Research Council and achieving a perfect score on the Human Rights Campaign Foundation's Corporate Equality Index.

Thermo Fisher has successfully executed their capital deployment strategy, with strong performance from their protein diagnostics business and progress on the Olink acquisition. They have also returned capital to shareholders through share repurchases and a dividend increase. The company has been recognized for their team and track record, and has raised their 2024 guidance due to a strong start to the year. Thermo Fisher's success is attributed to their growth strategy and PPI Business System, which solidifies their position as a trusted partner to their customers.

In the first quarter, the company had strong results that exceeded expectations, with core organic revenue and adjusted EPS both ahead of previous guidance. The CFO provided an overview of the financial performance, highlighting a $0.40 increase in adjusted EPS due to strong profitability, phasing of spending, lower FX headwinds, and net interest expense. Adjusted EPS grew by 2%, while GAAP EPS increased by 4%. Reported revenue was 3% lower, with a 4% decrease in organic revenue and a small contribution from acquisitions. Pandemic-related revenue was approximately $200 million, including $175 million from vaccines and therapies.

In the first quarter, the company saw declines in revenue in North America, Europe, and Asia-Pacific and China. However, they were able to execute well and deliver strong productivity through the use of the PPI Business System. This resulted in a 22% adjusted operating income and a 150 basis point increase in adjusted gross margin. The company also continued to invest in high-impact innovation and saw a decrease in net interest expense and a lower average diluted shares due to share repurchases. They also had a strong start to the year in terms of cash flow generation and returned capital to shareholders through a dividend increase and share buybacks.

The company ended the quarter with $7.25 billion in cash and $35.6 billion in total debt, with a leverage ratio of 3.3 times gross debt-to-adjusted EBITDA and 2.6 times on a net debt basis. The adjusted ROIC was 11.8%, showing strong returns on investment. The Life Sciences Solutions segment saw a 13% decline in reported revenue and a 12% decline in organic revenue, but adjusted operating income increased by 1%. In the Analytical Instruments segment, reported revenue declined by 2% and organic growth was 1% lower, with a 5% decrease in adjusted operating income. The Specialty Diagnostics segment had flat reported and organic revenue compared to the previous year.

In the first quarter, the company saw strong growth in their transplant diagnostics, immunodiagnostics, and healthcare market businesses. Adjusted operating income for Specialty Diagnostics increased by 5% and adjusted operating margin also improved. However, the Laboratory Products and Biopharma Services segment reported a decrease in revenue and organic growth due to the decline in vaccines and therapies revenue. Despite this, the company delivered strong growth in their clinical research business. The company has also raised their full-year guidance due to a strong start to the year, with an increase in revenue and adjusted EPS. They expect core organic revenue growth to be between minus 1% to positive 1% and assume market declines in the low single-digits. The increase in adjusted EPS is mainly due to the core revenue raise and lower net interest expense.

The company has updated its guidance for 2024 and expects a slightly improved adjusted operating income margin. They will continue to use the PPI Business System to manage costs and make necessary investments. The company remains well positioned to deliver strong performance. The underlying assumptions for the guidance remain unchanged, including a headwind of $1.3 billion to $1.4 billion in revenue and a neutral impact from foreign exchange rates. The company also expects a 10.5% adjusted income tax rate, net capital expenditures of $1.3 billion to $1.5 billion, and free cash flow of $6.5 billion to $7 billion. They have completed $3 billion in share buybacks and plan to return $600 million to shareholders through dividends. The Olink acquisition is expected to be completed by mid-year and the average diluted share count is estimated to be 383 million shares. In the second quarter, the company expects revenue to increase and organic growth to be 2 points higher than the first quarter, with adjusted EPS similar to Q1.

The first quarter of the year was better than expected due to strong execution and market conditions in line with expectations. The company's outlook for the year has been raised and the long-term outlook for the industry remains bright due to durable growth and strong pipelines. The company's 2024 guidance assumes a modest increase in economic activity throughout the year.

The company saw positive developments in their end-markets, including improvements in the biotech funding environment and a stimulus program in China. They define success as delivering short-term performance and gaining market share while also strengthening their competitive position in the long term. The first quarter of the year was in line with their expectations, with March showing a slight improvement over the first two months. The lab products and services segment performed better than expected, particularly in the CRO and CDMO businesses. The company is seeing some pickup in these areas, which aligns with updates from other CDMO peers.

The speaker discusses the impact of the strong biopharma funding in the first quarter and its potential effects on the CRO (clinical research organization) market. They mention that the company's performance was in line with expectations and that the former PPD business had excellent execution. They also note that there has been an increase in the pipeline of work in the CRO segment, thanks to the improved biotech funding environment and the stimulus in China. However, they acknowledge that it is still early and there have been previous false starts in end-markets.

The speaker is confident that the company has turned a corner and will see a modest pickup in revenue due to improved biotech funding and a stimulus program in China. The quarter played out as expected, showing good visibility and predictability. Electron microscopy is doing well, but there are tough comps for chromatography and mass spec.

Marc Casper, CEO of Thermo Fisher Scientific, addressed concerns about the company's pharma and CapEx budgets for 2024. He highlighted the strong performance of the analytical instruments segment, particularly in electron microscopy and chromatography and mass spectrometry. The company has seen a high uptake of their Astral product and has launched a new ion chromatography instrument for PFAS testing. Additionally, Casper mentioned new product launches in the chemical analysis business, such as a Handheld Raman Analyzer for battery production and improving QAQC in pharmaceutical manufacturing. Overall, Casper is optimistic about the outlook for the different segments within the analytical instruments business.

The speaker discusses the strong growth and performance of the company in the beginning of the year, particularly in the area of clinical research. They mention that there were no adjustments made for the COVID pandemic and that the business is expected to continue growing in the mid-term. They also mention the success of their pharma services business, despite changes in the industry such as a competitor's acquisition. The company remains the market leader in sterile fill-finish.

The company's CEO discusses the recent acquisition of a competitor in the CDMO business and how it will benefit their business as the market leader. He also mentions the potential impact of China's stimulus package on their business and the timeline for seeing its effects.

The speaker, Marc Casper, expresses enthusiasm about the Chinese government's efforts to stimulate the economy. He believes that this is a multiyear program that will focus on investments in instrumentation equipment, technological advances, and advanced research. While there are currently no orders, there is a lot of dialogue with customers and he expects to see orders and revenue later in the year. However, he does not anticipate material shipments in Q2.

The indirect effect of the Chinese government's efforts to boost the economy is a confidence booster and sets up for future growth. There have been headlines about Biosecure Act and its potential impact on supply chains, but it is uncertain if it will be enacted. Thermo Fisher Scientific may benefit from this in the long term through its vertical integration, but it is currently a capacity-constrained sector.

The speaker discusses the impact of shifting relationships between countries on their business, particularly in China. They believe that their company will benefit in the long term as customers consider their supply chains and partners. The first quarter in China met expectations and the team executed well. The company does not provide guidance by geography or business.

The speaker discusses the performance of the company in China and mentions that it is not significant enough to impact overall revenue. They also mention their plans to return to China and gather more information. The speaker then addresses the bioprocessing segment and mentions that it performed as expected in the first quarter, with a decline in organic growth due to strong comparisons from the previous year. However, orders have shown improvement in the past two quarters and the speaker is confident about the company's performance.

The company does not manage its business by end segment, but rather by specific customers. The Industrial and Applied segment remains strong, while the other segments played out as expected. The company has potential for long-term margin expansion in its LPS business, and revenue improvement would help.

The company is seeing strong margin expansion in the clinical research business due to strong operational execution and synergies. However, there is short-term pressure on margins in the pharma services business due to capacity coming online and the loss of COVID-related revenues. The team is operating well and margins are expected to expand in the future. In regards to the Biosecure Act, the company is hearing positive feedback from customers and multinationals operating in that region.

The CEO and CFO of the company were asked about the potential impact of China retaliating and excluding them from the region, but they could not speculate on the matter. They are focused on supporting their customers and complying with regulations. The CFO also discussed the strong performance of the life science segment and attributed it to cost-cutting measures. The CEO concluded by expressing confidence in the company's ability to continue creating value and building a bright future.

The speaker is excited to share the company's second quarter results in July and discuss their positive future at an upcoming Investor Day on September 19. They thank the listeners for their support and the call is now ending.

This summary was generated with AI and may contain some inaccuracies.