The operator introduces the Thermo Fisher Scientific 2024 Second Quarter Conference Call and introduces the moderator, Rafael Tejada. He then provides information about the webcast and where to find the press release. Tejada briefly covers the Safe Harbor Statement and mentions that actual results may differ from forward-looking statements. He also mentions the company's annual and quarterly reports and disclaims any obligation to update forward-looking statements.

The second quarter call discussed financial measures not in accordance with GAAP and provided a reconciliation of these measures. CEO Marc Casper recapped the company's strong financial performance, highlighting revenue of $10.54 billion, adjusted operating income of $2.35 billion, and a 4% increase in adjusted EPS. The company's growth strategy and PPI business system were credited for their success. In terms of end markets, there was a sequential improvement in growth in all four markets, with pharma and biotech declining in the low-single-digits due to vaccine and therapy revenue runoff.

The company's performance in the second quarter was led by its biosciences and clinical research businesses, with growth in the low-single-digits in academic and government and industrial and applied markets. The electron microscopy business saw strong growth in both markets. In diagnostics and healthcare, there was a decline due to the runoff of COVID-19 testing-related revenue. The company's growth strategy, consisting of three pillars, saw a successful quarter with the launch of new high-impact products at a conference. These include the Thermo Scientific Stellar Mass Spectrometer for biomarker validation and the Thermo Scientific Orbitrap Astral for protein discovery.

The company is excited about the positive customer testimonials for their Orbitrap Astral technology and has launched three new editions of the Thermo Scientific Orbitrap Ascend Tribrid Mass Spectrometer. They have also introduced new products to help customers meet sustainability goals. The company is focused on strengthening their commercial engine and being a trusted partner to customers, and has been working closely with them to understand their priorities and improve their capabilities.

During the quarter, we expanded our clinical trial supply services with a new facility in the Netherlands and opened an innovation lab in Pennsylvania to showcase our solutions. We also strengthened partnerships and collaborations in the Asia Pacific region, including with the National Battery Research Institute and Mandaya Hospital Group in Indonesia and the National University Hospital and Mirxes in Singapore. Our PPI business system played a key role in our excellent execution during the quarter, empowering our colleagues to find better ways to improve operations in all areas, including lab equipment manufacturing.

In the sixth paragraph, the speaker discusses how PPI has positively impacted their clinical research business, leading to improvements in efficiency and customer loyalty. They also mention their strong profitability and cashflow in the second quarter, as well as their corporate social responsibility priorities, including their progress towards environmental sustainability goals. The speaker also provides an update on their capital deployment strategy, highlighting their recent acquisition of Olink and how it complements their existing technology.

In the second quarter, our company achieved strong results driven by our growth strategy and PPI business system. We raised our guidance for 2024 due to our strong performance. Our four business segments also showed positive results. Our CFO will provide more details on our financial performance and updated 2024 guidance.

In the second quarter, the company exceeded their financial expectations due to strong market conditions and excellent execution. They saw a 0.5% increase in core organic revenue and a $0.25 increase in adjusted EPS compared to their prior guidance. The increase in EPS was attributed to operational performance, tax planning benefits, and lower net interest expenses. The company also saw a 68% increase in free cash flow compared to the same period last year. In Q2, adjusted EPS grew by 4% and GAAP EPS grew by 15%. The company reported a 1% decrease in revenue, with a 1% headwind from foreign exchange and a slight contribution from acquisitions. They also saw a 3% decrease in organic revenue growth due to pandemic-related revenue.

In Q2, the company saw a decline in North America, growth in Europe and Asia Pacific (including China). Adjusted operating income was $2.3 billion with a margin of 22.3%, and adjusted gross margin was 42.1%. The company continues to focus on cost management and investments in innovation. Net interest expense was lower due to higher cash and investment balances. Free cash flow for the year was $2.6 billion, with $8.8 billion in cash and $35.4 billion in debt. Leverage ratio was 3.3 times gross debt to adjusted EBITDA and 2.5 times on a net debt basis.

In the second quarter, our company's ROIC was 11.8%, indicating strong returns on investment. The life sciences solutions segment saw a 4% decline in reported revenue and a 3% decline in organic revenue due to the pandemic. However, adjusted operating income increased by 6% and adjusted operating margin improved by 350 basis points. The analytical instrument segment reported a 2% increase in revenue and a 3% increase in organic growth, with strong performance in the electron microscopy business. Adjusted operating income increased by 1%, but adjusted operating margin decreased by 10 basis points due to unfavorable mix and strategic investments. Specialty diagnostics saw a 1% increase in both reported and organic revenue, with strong growth in transplant diagnostics, immunodiagnostic, and healthcare market channels. Adjusted operating income and margin remained flat. Overall, the company delivered strong productivity but was offset by strategic investments in all segments.

The Laboratory Products and Biopharma Services segment saw a decrease in reported revenue and organic growth due to the decline in vaccines and therapies revenue. The segment was led by growth in the clinical research business. Adjusted operating income and margin also declined, but the company is still raising its 2024 full-year guidance due to strong performance in Q2. They expect revenue to be in the range of $42.4 billion to $43.3 billion and adjusted EPS to be in the range of $21.29 to $22.07. The core organic revenue growth is still expected to be between -1% to 1% for the year, with market declines in the low-single digits. The company's growth strategy and PPI business system will continue to enable them to take market share. They also expect their adjusted operating income margin to be slightly higher than previously guided. Net interest costs are expected to be between $380 million to $400 million, and the adjusted EPS guidance has been raised by $0.15 on the low end and $0.05 on the high end.

The company had a strong quarter and has increased its guidance for the year. They have certain assumptions for their revenue and expenses, and are expecting to return capital to shareholders. For modeling purposes, they recommend a 1% increase in Q3 organic revenue and core organic revenue compared to Q2, and an adjusted EPS of just over 24% of the full-year. The company remains committed to delivering on their promises.

In paragraph 13, the speaker states that the company is in a good position to deliver strong performance for stakeholders in 2024. They then turn the call over to the operator for the Q&A portion. In response to a question about the company's 2025 market expectations, the speaker says that the team executed well in Q2 and exceeded expectations, allowing them to raise their guidance. They also mention that core performance is now flat and there was 4% adjusted EPS growth and margin expansion.

The speaker is pleased with the company's performance in the market and notes that all four of their markets saw sequential improvement in growth. They have also actively deployed $6 billion in capital and are well positioned for strong results. They will provide a view of their performance in 2025 in January of that year. The speaker expects the market to continue to improve in the second half of the year and mentions China's mid-single-digit growth in the quarter, which is surprising. They are unable to provide further details on China at this time.

The speaker, Marc Casper, is discussing the company's performance in the second quarter. They delivered mid-single-digit growth, which exceeded expectations. The team did a good job executing and the quarter was relatively easy compared to previous ones. The environment is still muted, but the team delivered a solid result. The speaker then addresses a question about the Life Science Solutions segment, mentioning that biosciences had a strong quarter with good adoption in the pharma and biotech segment. They also saw improvement in bioproduction, with sequential revenue and order growth, as well as a favorable book-to-bill ratio. The speaker feels confident about their performance compared to others in the industry.

The company's life science solution segment has seen growth due to the drivers of companion diagnostics and clinical sequencing. The analytical instruments segment also performed well, with strong momentum in differentiated products. However, market conditions are still muted, particularly in China. The company has seen mid-single-digit growth in China, partly due to the comparison with last year's weak performance. The company has not yet seen orders related to China's stimulus package, which was released earlier this quarter.

The speaker, Marc Casper, addresses the question about customers holding back spending related to the stimulus program. He explains that China's weak economy was a surprise and the stimulus programs announced earlier in the year were a sign of the government's efforts to boost the economy. The company is seeing a lot of activity from customers looking to apply for stimulus funds, and they expect it to show up in revenue in 2025. The speaker also mentions a potential trip to China and states that the team did not see any "air pockets" or pauses in customer activity. The outperformance in clinical research drove growth in the quarter.

In the paragraph, the speaker, Marc Casper, discusses the performance of PPD, a clinical research business, in the second quarter. He notes that despite a significant headwind from the runoff of vaccines and therapies, the company delivered positive organic revenue growth. He also mentions that the team has executed well and commercial performance was strong, with an acceleration of authorizations in the biotech customer base. This bodes well for the future, although revenue may not be seen until 2025 or 2026 due to the time it takes for clinical trials to start. Finally, the speaker mentions that when looking at two-year stacks and CAGRs, most business lines within Thermo continue to trend positively, and the key question is the pace of improvement from here.

The speaker addresses two questions about the recovery of the market, specifically where it is occurring quickly and where it is lagging. They also discuss the assumption that the market will grow 4-6% on a normalized basis and whether this will happen gradually or quickly. The speaker expresses confidence in the market's visibility and progression, and notes that the guidance for the full year predicts a slight increase in Q3 and a larger increase in Q4.

The company's market growth is progressing well and is expected to be flat or slightly up in the fourth quarter. The CEO is confident in the long-term market growth of 4-6% and believes the scientific drivers and customer base are strong. The company's ability to grow 2% faster than the market is also a source of confidence. The CEO will provide more information on next year's forecast at Investor Day and is confident in the company's forecast accuracy.

Doug asks Marc if Thermo is feeling confident enough to make aggressive moves in capital deployment and business evolution, as they have in previous cycles. Marc responds by saying that Thermo's long-term perspective and trusted partner status with customers allows them to take advantage of opportunities, such as accelerating investments in innovation during the pandemic. He believes this will further differentiate Thermo's industry leadership and result in superior organic growth. Tycho asks a question about operating margins or Stephen may have more information on this topic.

The speaker, Stephen Williamson, responds to a question about the margin profile for lab products going forward and the potential for margin expansion in 2025. He attributes the current lower margin to the transition of vaccine-related capacity and expresses confidence in the ability to drive strong margin expansion as volumes recover. The speaker, Marc Casper, also mentions feeling good about their position in the pharma services business and their capacity.

The company has strong demand for their sterile fill finish abilities and is expanding their lines to meet the demand. They also have a strong position in clinical trials and are transitioning from COVID-related activities to normal therapies. The CEO is optimistic about the company's future, but acknowledges a headwind in 2024 due to the transition. In regards to conversations with biopharma customers, there is a divergence between larger and smaller companies, but it is unclear when this will narrow.

The speaker discusses the patterns they have observed in their customers, both larger and smaller. Larger customers are focused on resiliency and innovation, while smaller customers are more confident in funding and showing early indicators of increased activity. The company's EPS beat expectations by $0.25, but the guidance was only raised by $0.10.

The company's Q2 results were positively impacted by timing-related factors, but overall, the outlook for the year remains neutral. The company has raised its low-end and high-end expectations, but this is seen as appropriate and not indicative of any major changes. The academic market showed low single-digit growth in Q2, and the company is seeing strong demand for its high-end products due to its track record of innovation.

The speaker is discussing the excitement surrounding the Thermo Scientific Stellar mass spectrometer and the eclipse series. They believe that these developments will have a positive impact on the long-term growth of the academic and government market. They also mention the potential for increased demand in China due to government stimulus, but note that there is a process for institutions to receive funding and place orders. The speaker emphasizes the importance of reminding customers about the new instrumentation and prioritizing funding for it. They thank the audience for joining the call.

Thermo Fisher Scientific is pleased with their strong quarter and is confident in their ability to continue creating value for stakeholders and building a bright future for the company. They will be discussing this future at their upcoming Investor Day and will provide an update on their third quarter performance in October. The company thanks their supporters and the call is now concluded.

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