Thermo Fisher Scientific Inc 10-Q for FY2023 Q1

Thermo Fisher Scientific Inc. (TMO)

10-Q 2023-05-05 For: 2023-04-01

Added on April 07, 2026

About this 10-Q

Thermo Fisher Scientific Inc filed this 10-Q on May 5, 2023, covering the quarter ended April 1, 2023 (FY2023 Q1).

Headline figures

Quarter ended April 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $10.71B; down 9.4% from $11.82B a year earlier
Net income: $1.29B; down 41.8% from net income of $2.22B a year earlier
Diluted EPS: $3.32; down 40.8% from $5.61 a year earlier

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Delaware			04-2209186
(State of incorporation)			(I.R.S. Employer Identification No.)


TABLE OF CONTENTS
		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28



Item 6.	Exhibits	29


	April 1,		December 31,
(In millions except share and per share amounts)	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	3,482	$	8,524
Accounts receivable, less allowances of $190 and $189	7,922		8,115
Inventories	5,664		5,634
Contract assets, net	1,375		1,312

Other current assets	1,766		1,644
Total current assets	20,209		25,229
Property, plant and equipment, net	9,354		9,280
Acquisition-related intangible assets, net	17,972		17,442
Other assets	3,983		4,007
Goodwill	43,140		41,196
Total assets	$	94,658	$	97,154

Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
Short-term obligations and current maturities of long-term obligations	$	6,122	$	5,579
Accounts payable	2,798		3,381
Accrued payroll and employee benefits	1,307		2,095
Contract liabilities	2,662		2,601
Other accrued expenses	2,995		3,354
Total current liabilities	15,884		17,010
Deferred income taxes	2,976		2,849
Other long-term liabilities	4,230		4,238
Long-term obligations	29,135		28,909
Redeemable noncontrolling interest	123		116
Equity:
Thermo Fisher Scientific Inc. shareholders’ equity:
Preferred stock, $100 par value, 50,000 shares authorized; none issued	—		—
Common stock, $1 par value, 1,200,000,000 shares authorized; 441,166,292 and 440,668,112 shares issued	441		441
Capital in excess of par value	16,889		16,743
Retained earnings	43,064		41,910
Treasury stock at cost, 55,445,006 and 50,157,275 shares	(15,083)		(12,017)
Accumulated other comprehensive income/(loss)	(3,054)		(3,099)
Total Thermo Fisher Scientific Inc. shareholders’ equity	42,257		43,978
Noncontrolling interests	53		54
Total equity	42,310		44,032
Total liabilities, redeemable noncontrolling interest and equity	$	94,658	$	97,154


	Three months ended
		April 1,		April 2,
(In millions except per share amounts)		2023		2022
Revenues
Product revenues		$	6,404	$	8,017
Service revenues		4,306		3,801
Total revenues		10,710		11,818

Costs and operating expenses:
Cost of product revenues		3,337		3,555
Cost of service revenues		3,233		2,799
Selling, general and administrative expenses		2,119		2,277
Research and development expenses		346		364
Restructuring and other costs		112		2
Total costs and operating expenses		9,147		8,997
Operating income		1,563		2,821
Interest income		146		18
Interest expense		(300)		(136)
Other income/(expense)		(46)		(163)
Income before income taxes		1,363		2,540
Provision for income taxes		(46)		(301)
Equity in earnings/(losses) of unconsolidated entities		(25)		(19)
Net income		1,292		2,220
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest		3		5
Net income attributable to Thermo Fisher Scientific Inc.		$	1,289	$	2,215

Earnings per share attributable to Thermo Fisher Scientific Inc.
Basic		$	3.34	$	5.66
Diluted		$	3.32	$	5.61

Weighted average shares
Basic		386		392
Diluted		388		395


	Three months ended
		April 1,		April 2,
(In millions)		2023		2022
Comprehensive income
Net income		$	1,292	$	2,220
Other comprehensive income/(loss):
Currency translation adjustment:
Currency translation adjustment (net of tax provision (benefit) of $(36) and $89)		44		(23)

Unrealized gains and losses on hedging instruments:

Reclassification adjustment for losses included in net income (net of tax benefit of $1 and $0)		3		1
Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax (provision) benefit of $(1) and $(1))		1		3
Amortization of net loss included in net periodic pension cost (net of tax benefit of $0 and $1)		—		2
Total other comprehensive income/(loss)		48		(17)
Comprehensive income		1,340		2,203
Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest		6		2
Comprehensive income attributable to Thermo Fisher Scientific Inc.		$	1,334	$	2,201


	Redeemable Noncontrolling Interest		Common Stock			Capital in Excess of Par Value		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Items		Total Thermo Fisher Scientific Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
(In millions)			Shares	Amount						Shares	Amount
























			Three months ended April 1, 2023
Balance at December 31, 2022	$	116	441	$	441	$	16,743	$	41,910	50	$	(12,017)	$	(3,099)	$	43,978	$	54	$	44,032

Issuance of shares under employees' and directors' stock plans	—		—	—		70		—		—	(36)		—		34		—		34
Stock-based compensation	—		—	—		76		—		—	—		—		76		—		76
Purchases of company common stock	—		—	—		—		—		5	(3,000)		—		(3,000)		—		(3,000)
Dividends declared ($0.35 per share)	—		—	—		—		(135)		—	—		—		(135)		—		(135)

Net income/(loss)	4		—	—		—		1,289		—	—		—		1,289		(1)		1,288
Other comprehensive income/(loss)	3		—	—		—		—		—	—		45		45		—		45

Excise tax from stock repurchases	—		—	—		—		—		—	(30)		—		(30)		—		(30)

Balance at April 1, 2023	$	123	441	$	441	$	16,889	$	43,064	55	$	(15,083)	$	(3,054)	$	42,257	$	53	$	42,310

			Three months ended April 2, 2022
Balance at December 31, 2021	$	122	439	$	439	$	16,174	$	35,431	45	$	(8,922)	$	(2,329)	$	40,793	$	62	$	40,855

Issuance of shares under employees' and directors' stock plans	—		1	1		40		—		—	(39)		—		2		—		2
Stock-based compensation	—		—	—		78		—		—	—		—		78		—		78
Purchases of company common stock	—		—	—		—		—		3	(2,000)		—		(2,000)		—		(2,000)
Dividends declared ($0.30 per share)	—		—	—		—		(118)		—	—		—		(118)		—		(118)
Net income/(loss)	5		—	—		—		2,215		—	—		—		2,215		—		2,215
Other comprehensive income/(loss)	(11)		—	—		—		—		—	—		(14)		(14)		1		(13)
Contributions from (distributions to) noncontrolling interests	(3)		—	—		—		—		—	—		—		—		(1)		(1)
Balance at April 2, 2022	$	113	440	$	440	$	16,292	$	37,528	48	$	(10,961)	$	(2,343)	$	40,956	$	62	$	41,018




(In millions)	April 1, 2023		December 31, 2022
Raw materials	$	2,416	$	2,405
Work in process	708		660
Finished goods	2,540		2,569
Inventories	$	5,664	$	5,634


(In millions)	The Binding Site
Purchase price
Cash paid	$	2,416
Debt settled	307


Cash acquired	(19)
	$	2,704

Net assets acquired


Definite-lived intangible assets:
Customer relationships	$	868
Product technology	173
Tradenames	42



Goodwill	1,758
Net tangible assets	142

Deferred tax assets (liabilities)	(279)




	$	2,704


(In millions)	2023
Balance at beginning of year	$	572


Additions for tax positions of current year	4
Additions for tax positions of prior years	26
Reductions for tax positions of prior years	(27)



Settlements	(15)
Balance at end of period	$	560


	Effective interest rate at April 1,		April 1,		December 31,
(Dollars in millions)	2023		2023		2022
Commercial Paper	4.15	%	$	824	$	310

Floating Rate (SOFR + 0.35%) 1.5-Year Senior Notes, Due 4/18/2023			1,000		1,000
Floating Rate (SOFR + 0.39%) 2-Year Senior Notes, Due 10/18/2023			500		500
0.797% 2-Year Senior Notes, Due 10/18/2023	1.04	%	1,350		1,350
Floating Rate (EURIBOR + 0.20%) 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)	2.74	%	1,842		1,819
0.000% 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)	0.06	%	596		589
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.93	%	1,084		1,071
Floating Rate (SOFR + 0.53%) 3-Year Senior Notes, Due 10/18/2024			500		500
1.215% 3-Year Senior Notes, Due 10/18/2024	1.42	%	2,500		2,500
0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.40	%	867		857
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	694		686
0.853% 3-Year Senior Notes, Due 10/20/2025 (yen-denominated)	1.05	%	168		170
0.000% 4-Year Senior Notes, Due 11/18/2025 (euro-denominated)	0.15	%	596		589

3.20% 3-Year Senior Notes, Due 1/21/2026 (euro-denominated)	3.39	%	542		535
1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	759		749
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.65	%	542		535
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.96	%	650		642
1.054% 5-Year Senior Notes, Due 10/20/2027 (yen-denominated)	1.18	%	217		221
4.80% 5-Year Senior Notes, Due 11/21/2027	5.00	%	600		600
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.77	%	867		857
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	650		642
1.75% 7-Year Senior Notes, Due 10/15/2028	1.89	%	700		700
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.08	%	759		749
2.60% 10-Year Senior Notes, Due 10/1/2029	2.74	%	900		900
1.279% 7-Year Senior Notes, Due 10/19/2029 (yen-denominated)	1.44	%	35		36
0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)	0.88	%	1,897		1,873
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.13	%	976		963
2.00% 10-Year Senior Notes, Due 10/15/2031	2.23	%	1,200		1,200
2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.54	%	650		642
1.49% 10-Year Senior Notes, Due 10/20/2032 (yen-denominated)	1.60	%	47		48
4.95% 10-Year Senior Notes, Due 11/21/2032	5.09	%	600		600
1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)	1.20	%	1,626		1,606
3.65% 12-Year Senior Notes, Due 11/21/2034 (euro-denominated)	3.76	%	813		803
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	759		749
1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.73	%	976		963
2.80% 20-Year Senior Notes, Due 10/15/2041	2.90	%	1,200		1,200
1.625% 20-Year Senior Notes, Due 10/18/2041 (euro-denominated)	1.77	%	1,355		1,339
2.069% 20-Year Senior Notes, Due 10/20/2042 (yen-denominated)	2.13	%	110		111
5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	400		400
4.10% 30-Year Senior Notes, Due 8/15/2047	4.23	%	750		750
1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)	1.98	%	1,084		1,071
2.00% 30-Year Senior Notes, Due 10/18/2051 (euro-denominated)	2.07	%	813		803


(In millions)	Currency translation adjustment		Unrealized losses on hedging instruments		Pension and other postretirement benefit liability adjustment		Total
Balance at December 31, 2022	$	(2,880)	$	(33)	$	(186)	$	(3,099)
Other comprehensive income/(loss) before reclassifications	44		—		1		45
Amounts reclassified from accumulated other comprehensive income/(loss)	(3)		3		—		—
Net other comprehensive income/(loss)	41		3		1		45
Balance at April 1, 2023	$	(2,839)	$	(30)	$	(185)	$	(3,054)


	April 1,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
(In millions)	2023		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	891	$	891	$	—	$	—
Investments	21		21		—		—
Warrants	11		—		11		—
Insurance contracts	169		—		169		—
Derivative contracts	51		—		51		—
Total assets	$	1,143	$	912	$	231	$	—

Liabilities
Derivative contracts	$	80	$	—	$	80	$	—
Contingent consideration	136		—		—		136
Total liabilities	$	216	$	—	$	80	$	136


	Fair value – assets				Fair value – liabilities
	April 1,		December 31,		April 1,		December 31,
(In millions)	2023		2022		2023		2022
Derivatives designated as hedging instruments

Cross-currency interest rate swaps (a)	$	50	$	77	$	79	$	85
Derivatives not designated as hedging instruments
Currency exchange contracts (b)	1		2		1		16

Total derivatives	$	51	$	79	$	80	$	101


		Gain (loss) recognized
	Three months ended
		April 1,		April 2,
(In millions)		2023		2022







Derivatives designated as cash flow hedges
Interest rate swaps

Amount reclassified from accumulated other comprehensive items to other income/(expense)		$	(4)	$	(1)
Financial instruments designated as net investment hedges
Foreign currency-denominated debt and other payables
Included in currency translation adjustment within other comprehensive items		(144)		362
Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items		(9)		23
Included in other income/(expense)		17		2
Derivatives not designated as hedging instruments
Currency exchange contracts
Included in cost of product revenues		(3)		(9)
Included in other income/(expense)		23		(1)


	April 1, 2023				December 31, 2022
	Carrying		Fair		Carrying		Fair
(In millions)	value		value		value		value
Senior notes	$	34,149	$	30,738	$	33,889	$	29,901

Commercial paper	824		824		310		310
Other	78		78		79		79
	$	35,051	$	31,640	$	34,278	$	30,290


	Three months ended
	April 1,		April 2,
(In millions)	2023		2022
Operating activities
Net income	$	1,292	$	2,220
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	253		250
Amortization of acquisition-related intangible assets	606		609
Change in deferred income taxes	(146)		(339)

Loss on early extinguishment of debt	—		26
Stock-based compensation	76		78
Other non-cash expenses, net	181		233
Changes in assets and liabilities, excluding the effects of acquisitions	(1,533)		(875)
Net cash provided by operating activities	729		2,202

Investing activities
Acquisitions, net of cash acquired	(2,704)		(40)

Purchase of property, plant and equipment	(458)		(640)
Proceeds from sale of property, plant and equipment	6		2
Other investing activities, net	14		8
Net cash used in investing activities	(3,142)		(670)

Financing activities

Repayment of debt	—		(375)
Proceeds from issuance of commercial paper	1,027		626
Repayments of commercial paper	(523)		(1,259)
Purchases of company common stock	(3,000)		(2,000)
Dividends paid	(117)		(103)

Other financing activities, net	20		(34)
Net cash used in financing activities	(2,593)		(3,145)

Exchange rate effect on cash	(31)		(99)
Decrease in cash, cash equivalents and restricted cash	(5,037)		(1,712)
Cash, cash equivalents and restricted cash at beginning of period	8,537		4,491
Cash, cash equivalents and restricted cash at end of period	$	3,500	$	2,779


	Three months ended
		April 1,		April 2,
(In millions)		2023		2022
Revenues
Life Sciences Solutions		$	2,612	$	4,231
Analytical Instruments		1,723		1,518
Specialty Diagnostics		1,108		1,482
Laboratory Products and Biopharma Services		5,763		5,442
Eliminations		(496)		(855)
Consolidated revenues		10,710		11,818

Segment Income
Life Sciences Solutions		836		2,176
Analytical Instruments		421		301
Specialty Diagnostics		280		353
Laboratory Products and Biopharma Services		793		620
Subtotal reportable segments		2,330		3,450
Cost of revenues adjustments		(41)		(11)
Selling, general and administrative expenses adjustments		(8)		(7)
Restructuring and other costs		(112)		(2)
Amortization of acquisition-related intangible assets		(606)		(609)
Consolidated operating income		1,563		2,821
Interest income		146		18
Interest expense		(300)		(136)
Other income/(expense)		(46)		(163)
Consolidated income before taxes		$	1,363	$	2,540


	Three months ended


(In millions)	April 1, 2023		April 2, 2022
Non-cash investing and financing activities
Acquired but unpaid property, plant and equipment	$	242	$	208



Declared but unpaid dividends	137		119
Issuance of stock upon vesting of restricted stock units	91		99
Excise tax from stock repurchases	30		—


	Three months ended


(In millions)	April 1, 2023
Life Sciences Solutions	$	60
Analytical Instruments	—
Specialty Diagnostics	8
Laboratory Products and Biopharma Services	43
Corporate	1
	$	112


(In millions)	Total (a)
Balance at December 31, 2022	$	41
Net restructuring charges incurred in 2023 (b)	50
Payments	(36)

Balance at April 1, 2023	$	55


	Three months ended
	April 1, 2023
Revenue growth	(9)	%
Impact of acquisitions	1	%
Impact of currency translation	(2)	%
Organic revenue growth* (non-GAAP measure)	(8)	%


	Three months ended												Organic* (non-GAAP measure)
(Dollars in millions)	April 1, 2023			April 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	2,612		$	4,231		(38)	%	(2)	%	—	%	(37)	%
Segment income	836			2,176			(62)	%
Segment income margin	32.0		%	51.4		%	-19.4 pt



Period	Total number of shares purchased	Average price paid per share (1)		Total number of shares purchased as part of publicly announced plans or programs (2)	Maximum dollar amount of shares that may yet be purchased under the plans or programs (1)(2) (in millions)
Fiscal January (Jan. 1 - Feb. 4)	5,222,234	$	574.47	5,222,234	$	1,000
Fiscal February (Feb. 5 - Mar. 4)	—	—		—	1,000
Fiscal March (Mar. 5 - Apr. 1)	—	—		—	1,000
Total first quarter	5,222,234	$	574.47	5,222,234	$	1,000


Exhibit Number						Description of Exhibit
10.1						Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreement effective as of February 22, 2023*
10.2						Form of Thermo Fisher Scientific Inc.’s Restricted Stock Unit Agreement effective as of February 22, 2023*
10.3						Form of Thermo Fisher Scientific Inc.’s Nonstatutory Stock Option Agreement effective as of February 22, 2023*
10.4						Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc. and Marc N. Casper effective as of February 22, 2023*
10.5						Form of Thermo Fisher Scientific Inc.’s Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc. and Marc N. Casper effective as of February 22, 2023*
10.6						Form of Thermo Fisher Scientific Inc.’s Nonstatutory Stock Option Agreement between Thermo Fisher Scientific Inc. and Marc N. Casper effective as of February 22, 2023*
10.7						Form of Executive Change in Control Retention Agreement for Officers (other than Marc N. Casper)*
31.1						Certification of Chief Executive Officer required by Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer required by Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer required by Exchange Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2						Certification of Chief Financial Officer required by Exchange Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Definition Linkbase Document.
101.LAB						XBRL Taxonomy Label Linkbase Document.
101.PRE						XBRL Taxonomy Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
						The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, to furnish to the Commission, upon request, a copy of each instrument with respect to long-term debt of the Registrant or its consolidated subsidiaries.




Date:	May 5, 2023	THERMO FISHER SCIENTIFIC INC.



		/s/ Stephen Williamson
		Stephen Williamson
		Senior Vice President and Chief Financial Officer



		/s/ Joseph R. Holmes
		Joseph R. Holmes
		Vice President and Chief Accounting Officer


Name of participant (the “Participant”):
Award date (“Award Date”):
Number of shares of the Company’s Common Stock subject to this Award (“Shares”):


Vesting date (“Vesting Date”):			Number of RSUs that vest:
See Schedule A

Except as otherwise provided in this Agreement, all vesting is dependent on the Participant remaining an Eligible Participant (as defined in Exhibit A) through the applicable Vesting Date.


			THERMO FISHER SCIENTIFIC INC.
Date:
			By:_________________________________ Name: Title: ____________________________________ Participant


Name of participant (the “Participant”):
Grant date (“Grant Date”):
Number of shares of the Company’s Common Stock subject to this Option (“Shares”):
Option exercise price per Share:
Final exercise date (“Final Exercise Date”):


Vesting date (“Vesting Date”):			Number of Options that vest:


Except as otherwise provided in this Agreement, all vesting is dependent on the Participant remaining an Eligible Participant (as defined in Exhibit A) through the applicable Vesting Date.


Name of participant (the “Participant”):			Marc N. Casper
Award date (“Award Date”):
Number of shares of the Company’s Common Stock subject to this Award (“Shares”):


			THERMO FISHER SCIENTIFIC INC.


			____________________________________
			By:


			EXECUTIVE


			____________________________________


			/s/ Marc N. Casper
			Marc N. Casper Chairman, President and Chief Executive Officer


			/s/ Stephen Williamson
			Stephen Williamson Senior Vice President and Chief Financial Officer