Thermo Fisher Scientific Inc 10-Q for FY2022 Q1

Thermo Fisher Scientific Inc. (TMO)

10-Q 2022-05-06 For: 2022-04-02

Added on April 07, 2026

About this 10-Q

Thermo Fisher Scientific Inc filed this 10-Q on May 6, 2022, covering the quarter ended April 2, 2022 (FY2022 Q1).

Headline figures

Quarter ended April 2, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $11.82B; up 19.3% from $9.91B a year earlier
Net income: $2.22B; down 5.0% from net income of $2.34B a year earlier
Diluted EPS: $5.61; down 4.6% from $5.88 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

Item 1.	Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

PART II

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 5.	Other Information	29

Item 6.	Exhibits	30


	April 2,		December 31,
(In millions except share and per share amounts)	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	2,752	$	4,477
Accounts receivable, less allowances of $170 and $150	7,889		7,977
Inventories	5,483		5,051
Contract assets, net	1,064		968

Other current assets	1,588		1,640
Total current assets	18,776		20,113
Property, plant and equipment, net	8,448		8,333
Acquisition-related intangible assets, net	19,378		20,113
Other assets	4,424		4,640
Goodwill	41,721		41,924
Total assets	$	92,747	$	95,123

Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
Short-term obligations and current maturities of long-term obligations	$	1,866	$	2,537
Accounts payable	2,667		2,867
Accrued payroll and employee benefits	1,634		2,427
Contract liabilities	2,871		2,655
Other accrued expenses	3,032		2,950
Total current liabilities	12,070		13,436
Deferred income taxes	3,493		3,837
Other long-term liabilities	4,664		4,540
Long-term obligations	31,389		32,333
Redeemable noncontrolling interest	113		122
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; 439,530,820 and 439,154,741 shares issued	440		439
Capital in excess of par value	16,292		16,174
Retained earnings	37,528		35,431
Treasury stock at cost, 48,068,820 and 44,720,112 shares	(10,961)		(8,922)
Accumulated other comprehensive items	(2,343)		(2,329)
Total Thermo Fisher Scientific Inc. shareholders’ equity	40,956		40,793
Noncontrolling interests	62		62
Total equity	41,018		40,855
Total liabilities, redeemable noncontrolling interest and equity	$	92,747	$	95,123


	Three months ended
		April 2,		April 3,
(In millions except per share amounts)		2022		2021
Revenues
Product revenues		$	8,017	$	7,856
Service revenues		3,801		2,050
Total revenues		11,818		9,906

Costs and operating expenses:
Cost of product revenues		3,555		3,327
Cost of service revenues		2,799		1,370
Selling, general and administrative expenses		2,277		1,826
Research and development expenses		364		320
Restructuring and other costs		2		14
Total costs and operating expenses		8,997		6,857
Operating income		2,821		3,049
Interest income		18		12
Interest expense		(136)		(125)
Other income/(expense)		(163)		(183)
Income before income taxes		2,540		2,753
Provision for income taxes		(301)		(416)
Equity in earnings/(losses) of unconsolidated entities		(19)		—
Net income		2,220		2,337
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interest		5		—
Net income attributable to Thermo Fisher Scientific Inc.		$	2,215	$	2,337

Earnings per share attributable to Thermo Fisher Scientific Inc.
Basic		$	5.66	$	5.93
Diluted		$	5.61	$	5.88

Weighted average shares
Basic		392		394
Diluted		395		397


	Three months ended
		April 2,		April 3,
(In millions)		2022		2021
Comprehensive income
Net income		$	2,220	$	2,337
Other comprehensive items:
Currency translation adjustment:
Currency translation adjustment (net of tax provision (benefit) of $89 and $118)		(23)		224

Unrealized gains and losses on hedging instruments:

Reclassification adjustment for losses included in net income (net of tax benefit of $0 and $4)		1		13
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 $(2))		3		6
Amortization of net loss included in net periodic pension cost (net of tax benefit of $1 and $1)		2		2
Total other comprehensive items		(17)		245
Comprehensive income		2,203		2,582
Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest		2		—
Comprehensive income attributable to Thermo Fisher Scientific Inc.		$	2,201	$	2,582


	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 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	5		—	—		—		2,215		—	—		—		2,215		—		2,215
Other comprehensive items	(11)		—	—		—		—		—	—		(14)		(14)		1		(13)
Contributions from (distributions to) noncontrolling interest	(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

			Three months ended April 3, 2021
Balance at December 31, 2020	$	—	437	$	437	$	15,579	$	28,116	40	$	(6,818)	$	(2,807)	$	34,507	$	10	$	34,517

Issuance of shares under employees' and directors' stock plans	—		1	1		54		—		1	(34)		—		21		—		21
Stock-based compensation	—		—	—		51		—		—	—		—		51		—		51
Purchases of company common stock	—		—	—		—		—		4	(2,000)		—		(2,000)		—		(2,000)
Dividends declared ($0.26 per share)	—		—	—		—		(103)		—	—		—		(103)		—		(103)
Net income	—		—	—		—		2,337		—	—		—		2,337		—		2,337
Other comprehensive items	—		—	—		—		—		—	—		245		245		—		245

Balance at April 3, 2021	$	—	438	$	438	$	15,684	$	30,350	45	$	(8,852)	$	(2,562)	$	35,058	$	10	$	35,068


	Effective interest rate at April 2,		April 2,		December 31,
(Dollars in millions)	2022		2022		2021
Commercial Paper	0.16	%	$	1,852	$	2,522

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)	0.00	%	1,877		1,933
0.000% 2-Year Senior Notes Due 11/18/2023 (euro-denominated)	0.06	%	607		625
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.94	%	1,104		1,137
1.215% 3-Year Senior Notes, Due 10/18/2024	1.42	%	2,500		2,500
Floating Rate (SOFR + 0.53%) 3-Year Senior Notes, Due 10/18/2024			500		500
0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.41	%	883		910
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	707		728
0.000% 4-Year Senior Notes, Due 11/18/2025 (euro-denominated)	0.15	%	607		625
3.65% 10-Year Senior Notes, Due 12/15/2025			—		350
1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	773		796
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.65	%	552		568
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.97	%	663		682
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.77	%	883		910
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	663		682
1.750% 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	%	773		796
2.60% 10-Year Senior Notes, Due 10/1/2029	2.74	%	900		900
0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)	0.89	%	1,933		1,990
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.13	%	994		1,023
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)	2.55	%	663		682
1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)	1.20	%	1,656		1,706
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	773		796
1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.73	%	994		1,023
2.80% 20-Year Senior Notes, Due 10/15/2041	2.90	%	1,200		1,200


(In millions)	Currency translation adjustment		Unrealized losses on hedging instruments		Pension and other postretirement benefit liability adjustment		Total
Balance at December 31, 2021	$	(2,065)	$	(35)	$	(229)	$	(2,329)
Other comprehensive items before reclassifications	(20)		—		3		(17)
Amounts reclassified from accumulated other comprehensive items	—		1		2		3
Net other comprehensive items	(20)		1		5		(14)
Balance at April 2, 2022	$	(2,085)	$	(34)	$	(224)	$	(2,343)


	April 2,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
(In millions)	2022		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	833	$	833	$	—	$	—
Investments	141		141		—		—
Warrants	14		—		14		—
Insurance contracts	172		—		172		—
Derivative contracts	55		—		55		—
Total assets	$	1,215	$	974	$	241	$	—

Liabilities
Derivative contracts	$	2	$	—	$	2	$	—
Contingent consideration	261		—		—		261
Total liabilities	$	263	$	—	$	2	$	261


	Fair value – assets				Fair value – liabilities
	April 2,		December 31,		April 2,		December 31,
(In millions)	2022		2021		2022		2021
Derivatives designated as hedging instruments

Cross-currency interest rate swaps (a)	$	49	$	25	$	—	$	—
Derivatives not designated as hedging instruments
Currency exchange contracts (b)	6		11		2		1

Total derivatives	$	55	$	36	$	2	$	1


		Gain (loss) recognized
	Three months ended
		April 2,		April 3,
(In millions)		2022		2021
Fair value hedging relationships
Interest rate swaps
Hedged long-term obligations - included in other income/(expense)		$	—	$	25
Derivatives designated as hedging instruments - included in other income/(expense)		—		(3)
Derivatives designated as cash flow hedges
Interest rate swaps

Amount reclassified from accumulated other comprehensive items to other income/(expense)		(1)		(17)
Financial instruments designated as net investment hedges
Foreign currency-denominated debt
Included in currency translation adjustment within other comprehensive items		362		466
Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items		23		38
Included in other income/(expense)		2		2
Derivatives not designated as hedging instruments
Currency exchange contracts
Included in cost of product revenues		(9)		12
Included in other income/(expense)		(1)		183


	April 2, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
(In millions)	value		value		value		value
Senior notes	$	31,132	$	30,324	$	32,072	$	33,449

Commercial paper	1,852		1,852		2,522		2,522
Other	76		76		76		76
	$	33,060	$	32,252	$	34,670	$	36,047


(In millions)	Total (a)
Balance at December 31, 2021	$	17
Net restructuring charges incurred in 2022 (b)	6
Payments	(11)

Balance at April 2, 2022	$	12


	Three months ended
	April 2, 2022
Revenue growth	19	%
Impact of acquisitions	18	%
Impact of currency translation	(2)	%
Organic revenue growth* (non-GAAP measure)	3	%


	Three months ended												Organic* (non-GAAP measure)
(Dollars in millions)	April 2, 2022			April 3, 2021			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	4,231		$	4,203		1	%	(2)	%	3	%	(1)	%
Segment income	2,176			2,279			(5)	%
Segment income margin	51.4		%	54.2		%	-2.8 pt


	April 2,		December 31,
(In millions)	2022		2021
Raw materials	$	2,135	$	1,922
Work in process	723		676
Finished goods	2,625		2,453
Inventories	$	5,483	$	5,051


	Three months ended
		April 2,		April 3,
(In millions)		2022		2021
Revenues
North America		$	6,323	$	5,101
Europe		3,050		2,785
Asia-Pacific		2,064		1,709
Other regions		381		311
Consolidated revenues		$	11,818	$	9,906


	Three months ended
		April 2,		April 3,
(In millions)		2022		2021
Contingent consideration
Beginning balance		$	317	$	70
Acquisitions (including assumed balances)		(18)		162
Payments		(30)		(7)
Changes in fair value included in earnings		(8)		2
Ending balance		$	261	$	227


	Three months ended
	April 2,		April 3,
(In millions)	2022		2021
Non-cash investing and financing activities
Acquired but unpaid property, plant and equipment	$	208	$	181

Fair value of acquisition contingent consideration	—		162

Declared but unpaid dividends	119		104
Issuance of stock upon vesting of restricted stock units	99		88


(a) Adjusted results in 2022 and 2021 exclude charges for the sale of inventories revalued at the date of acquisition.
(b) Adjusted results in 2022 and 2021 exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions and charges/credits for changes in estimates of contingent acquisition consideration.
(c) Adjusted results in 2022 and 2021 exclude restructuring and other costs consisting principally of severance, abandoned facility and other expenses of headcount reductions within several businesses and real estate consolidations. Adjusted results in 2021 also exclude $13 million of charges for compensation due to employees at recently acquired businesses at the date of acquisition.
(d) Adjusted results in 2022 and 2021 exclude net gains/losses on investments and losses on the early extinguishment of debt.
(e) Adjusted provision for income taxes in 2022 and 2021 excludes incremental tax impacts for the pre-tax reconciling items and incremental tax impacts as a result of tax rate changes.



Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (1)	Maximum dollar amount of shares that may yet be purchased under the plans or programs (1) (in millions)
Fiscal January (Jan. 1 - Feb. 5)	3,278,186	$	610.09	3,278,186	$	1,000
Fiscal February (Feb. 6 - Mar. 5)	—	$	—	—	1,000
Fiscal March (Mar. 6 - Apr. 2)	—	$	—	—	1,000
Total first quarter	3,278,186	$	610.09	3,278,186	$	1,000


Exhibit Number						Description of Exhibit
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 6, 2022	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


			/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