Thermo Fisher Scientific, Inc. (TMO) reported its fourth-quarter and full-year 2014 financial results, accounting for the inclusion of Life Technologies and excluding divestures related to the acquisition.
Adjusted earnings per share (EPS) in the reported quarter came in at $1.99. Earnings steered 5 cents ahead of the Zacks Consensus Estimate and exceeded the year-ago adjusted EPS number by a formidable 39.2%. On a reported basis, fourth-quarter EPS of $1.49 showed a year-over-year improvement of 61.9% largely due to an improved top line and margin.
For the full year, adjusted EPS was $6.96, up 28.4% from the year-ago equivalent and 5 cents above the Zacks Consensus Estimate. The result also exceeded the company’s forecast of $6.87 to $6.95.
Revenues increased 29.8% year over year to $4.49 billion during the quarter, outpacing the Zacks Consensus Estimate of $4.39 billion. The year-over-year increase was owing to 6% organic growth and 26% increase in revenues due to acquisition (net of divestitures). Currency translation had a 3% negative impact on revenues.
Full-year 2014 sales reached $16.89 billion, up 29% year over year, surpassing the Zacks Consensus Estimate of $16.79 billion. The year’s performance also outshone the company’s projection of $16.74 to $16.82 billion.
With the acquisition of Life Technologies, Thermo Fisher currently operates in four business segments viz. Life Sciences Solutions Segment, Analytical Instruments Segment, Specialty Diagnostics Segment, and Laboratory Products and Services Segment.
The four aforementioned segments recorded fourth-quarter revenues of $1.19 billion (519.8% annualized growth), $902 million (up 2%), $863 million (up 4%) and $1.68 billion (up 2%), respectively. The stupendous growth in the Life Sciences Solutions Segment was due to the inclusion of the Life Technologies acquisition for the entire quarter.
Gross margin of 49.0% during the fourth quarter was up 471 basis points (bps) year over year. In addition, Thermo Fisher witnessed a 48% increase in adjusted operating income leading to an expansion of a huge 280 bps year over year in adjusted operating margin to 22.8%.
The company exited the year with cash and cash equivalents and short-term investment of $1,343.5 million compared with $5.83 billion at the end of 2013. For the full year, operating cash flow was $2.62 billion versus the year-ago figure of $2.01 billion.
Guidance
Thermo Fisher will be providing its 2015 financial guidance at its earnings conference call today morning.
Our Recommendation
With another full quarter of operation post the Life Technologies acquisition, Thermo Fisher posted an outstanding fourth-quarter 2014 with adjusted EPS and revenues both exceeding the Zacks Consensus Estimate. The top and the bottom line also sailed past the respective year-ago numbers. Moroever, the fiscal numbers exceeded the company’s projections.
According to the company, the successful integration of Life Technologies has strengthened its customer value proposition and enabled the company to begin achieving revenue synergies in 2015. This acquisition has led to the emergence of an unrivaled market leader serving research, Specialty Diagnostics and applied markets. As per management at Thermo Fisher, the acquisition supports its three-pronged growth strategy of technological innovation, a unique customer value proposition and expansion in emerging markets.
The company has also performed well with respect to innovation, with significant product launches across our specialty diagnostics, analytical instruments and life sciences businesses. In emerging markets, Thermo Fisher expanded its presence in high-growth regions like Southeast Asia, India and Brazil.
However, currency headwind continues to pose a setback (currency translation reduced revenues by 3% in the reported quarter).
Thermo Fisher currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the medical instrument sector are Edwards Lifesciences Corp. (EW), ABIOMED, Inc. (ABMD) and Hologic Inc. (HOLX), all carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment