Thermo Fisher Scientific Inc

Good morning, ladies and gentlemen, and welcome to the Fermo Fisher Scientific 2022 Fourth Quarter Conference Call. My name is Brika, and I will be your event specialist running today's call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your touch-phone keypad. If you change your mind at any time, press star 2. And for operator assistance at any point, it's star zero. Thank you. I would like to introduce our moderator for the call, Mr. Rafael Tejada, Vice President, Investor Relations. Mr. Tejada, you may begin your call.

Good morning, and thank you for joining us. On the call with me today is Mark Casper, our Chairman, President, and Chief Executive Officer, and Stephen Williamson, Senior Vice President and Chief Financial Officer. Please note this call is being webcast live and will be archived on the investor section of our website, thermofisher.com, under the heading News and Events until February 17, 2023. A copy of the press release of our fourth quarter and full year 2022 earnings is available in the investor section of our website under the heading Financials. So, before we begin, let me briefly cover our safe harbor statement. Various remarks that we may make about the company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, which are on file with the SEC and available in the Investors section of our website under the heading Financials SEC Filings. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. Also, during this call, we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable gap measures is available in the press release of our fourth quarter and full year 2022 earnings and also in the investor section of our website under the heading financials. So with that, I'll now turn the call over to Mark.

Thank you, Raf. Good morning, everyone, and thanks for joining us today for our fourth quarter call and a wrap-up of a truly exceptional year for Thermo Fisher Scientific. We delivered another quarter of outstanding results in Q4, and as I reflect on the year, three things stand out to me. Our proven growth strategy continues to drive significant share gain. Our differentiated customer value proposition is further elevating our trusted partner status with our customers. And this, in combination with the power of our PPI business system, drove outstanding financial performance for the quarter and full year, exceeding our ambitious goals. Our ability to deliver these results in a year that included global supply chain disruptions, a war in Ukraine, COVID-19 lockdowns in China, and inflationary headwinds wouldn't be possible without the incredible dedication of our team around the world. I'm very grateful for our team's great execution in effectively navigating dynamic times and enabling the success of our company and our customers. Thanks to our colleagues, our company delivers spectacular 2022. and I couldn't be more excited for 2023. I'll get into more of the details in my remarks later, but first, let me recap the financials. Starting with the quarter, our revenue grew 7% to $11.45 billion. Our adjusted operating income was $2.56 billion, and we delivered another quarter of strong adjusted EPS performance, achieving $5.40 per share. Turning to our results for the full year, We grew revenue by 15% to $44.92 billion in 2022. Adjusted operating income was $10.99 billion, and adjusted EPS was $23.24 per share. Let me turn to our end markets. We continue to deliver excellent and differentiated performance in Q4. This was driven by a continuation of good market conditions and outstanding execution from our global team, resulting in meaningful share gain. Let me now give you some color for the quarter and the year. Starting with our largest end market farmer in biotech, we continue to deliver impressive performance with growth in the low teens for the quarter and mid-teens for the full year. Our differentiated customer value proposition is further elevating our trusted partner status with our farmer and biotech customers. Throughout the year, we had broad-based strength across our businesses serving this end market. Highlighted by our bioproduction, farmer services, chromatography and mass spectrometry businesses, as well as the research and safety market channel. In academic and government, we grew in the mid single digits for both the quarter and for the full year. We delivered strong growth across a range of our businesses, including biosciences, electron microscopy, chromatography and mass spectrometry, as well as in the research and safety market channel. In industrial and applied, we grew in the low teens for the quarter and mid teens for the full year. During the year, we delivered strong growth in our electron microscopy and chromatography and mass spectrometry businesses. And finally, in diagnostics and healthcare. In Q4, revenue was approximately 40% lower than the prior year quarter and 25% lower than full year 2021. The team delivered good core business growth during the year, led by our microbiology and transplant diagnostic businesses, as well as our healthcare market channel. I'll now turn to our growth strategy, which is delivering differentiated performance and setting us up for an even brighter future. As a reminder, our strategy consists of three pillars, developing high-impact innovative new products, leveraging our scale in high-growth and emerging markets, and delivering a unique value proposition to our customers. Starting with the first pillar, it was another terrific year of high-impact innovation as we launched outstanding new products across our businesses that strengthened our industry leadership, by enabling our customers to break new ground in their important work. In chromatography and mass spectrometry, our innovations are accelerating our customers' research and unlocking deeper analytical insights. In 2022, we extended our industry-leading thermoscientific Orbitrap portfolio, launching the Orbitrap Ascend Tri-Bird Mass Spectrometer to advance proteomics, metabolomics, and cancer biomarker research. We also launched the thermoscientific TRACE 1600 series gas chromatograph to advance analytical testing for food environmental, industrial, and pharmaceutical applications. In electromicroscopy, the new thermoscientific Glacios II cryo-EM was launched during the fourth quarter. It'll help our customers accelerate structure-based drug discovery for debilitating disorders such as Alzheimer's, Parkinson's, and Huntington's diseases as well as research for cancer and gene mutations. We also continue to build our genetic sciences capabilities to help our customers understand, diagnose, and treat disease. During the fourth quarter, our C-Core CDX HLA sequencing system was granted marketing authorization by the US FDA for use as a companion diagnostic with a T-cell receptor therapy for adults with oculomelanoma. This is a really nice example of how our specialty diagnostics business is benefiting from our capabilities in life sciences solutions. In addition, we expanded our PCR test menu to leverage our incredibly large install base of instruments and launched the TrueMark Infectious Disease Research Panels for rapid detection and research of infectious disease pathogens. To wrap up the innovation highlights, we added to our cell and gene therapy offering, most recently launching the GIMCO CTS Dynaselect Magnetic Separation System. Our solutions are helping customers advance their cell and gene therapy programs. So another spectacular year of innovation, and we have an exciting pipeline of launches in 2023 and beyond. The second pillar of our growth strategy is leveraging our scale and high growth in emerging markets to create a differentiated experience for our customers. We continue to strengthen our capabilities serving these markets during the year, and I'll highlight a recent example. In the quarter, we opened a new CGMP biologics and sterile manufacturing facility in Hangzhou, China, which provides integrated clinical and commercial drug substance and drug product capabilities to help customers in China and in the Asia Pacific region deliver patient therapies more quickly. Turning to the third pillar of our growth strategy, we continue to enhance our customer value proposition by strengthening our capabilities. We've been executing on the significant investments we've made over the past couple of years, and throughout 2022, we brought new capacity and capabilities online for pharma services, bioproduction, and clinical research services. Most recently, during the fourth quarter, we opened a new state-of-the-art bioanalytical lab in Richmond, Virginia to support our clinical research business and the increasing demand for our laboratory services to accelerate drug development. As always, our PPI business system enabled our success during the year. It's helping us to drive meaningful share gain, maximize the return on investments, meet our customers' needs, and successfully navigate a dynamic environment, including effectively addressing inflation and global supply chain challenges. PPI engages and empowers all of our colleagues to find a better way every day and enables outstanding execution. We continue to successfully execute our capital deployment strategy, which is a combination of strategic M&A and returning capital to our shareholders. In 2022, we successfully integrated PPD, our clinical research business. For the full year, PPD delivered core organic growth in the high teens, generating over $7 billion in revenue and contributing over $2 to our adjusted earnings per share. The combination of a great first year performance and excellent progress on our synergy realization is delivering very strong returns for our shareholders that is well ahead of the deal model. From a customer lens, the acquisition has further elevated our trusted partner status as customers are realizing significant value in partnering with our team to advance a scientific idea to an approved medicine. In 2022, we also returned $3.5 billion of capital to our shareholders through stock buybacks and dividends. And on the first business day of 2023, we completed the acquisition of the binding site, a leading specialty diagnostics company. The binding site is an exciting addition and highly complimentary to our specialty diagnostic business. Together, we'll be able to advance the diagnosis and management of patients afflicted with multiple myeloma and immune disorders. Reflecting on our progress of our ESG priorities in 2022, we further advance our environmental and philanthropic efforts while also continuing to strengthen our company culture. During the year, we continue to advance our environmental sustainability roadmap, reducing our carbon emissions and finalizing significant power purchasing agreements to accelerate our transitions towards 100% renewable energy. Looking forward, we've also increased our 2030 greenhouse gas emissions reduction target to achieve a 50% reduction in this decade. Through our Foundation for Science, we continue to advance our philanthropic efforts and supported students across the globe during the year with our STEM education programs. This included an announcement in the quarter for the Thermo Fisher Scientific Junior Innovators Challenge, the premier middle school STEM competition in the US. And throughout the year, Thermo Fisher Scientific was recognized for its industry leadership and inclusive culture. This includes earning 100% score on the Human Rights Campaign 2022 Corporate Equality Index for LGBTQ equality for the seventh consecutive year. as well as inclusion on Fortune's list of the world's most admired companies. In the quarter, we were recognized by Forbes magazine as one of the world's top female-friendly companies and one of America's best employers for veterans. As I reflect on the year, I'm very proud of what our team accomplished. 2022 is a special year for Thelma Fisher, and I'm excited about 2023 and beyond. Stephen will outline the assumptions that factor into our revenue and earnings guidance, but let me quickly cover the highlights. we're initiating 2023 revenue guidance of $45.3 billion and adjusted EPS guidance of $23.70 per share. This very strong financial outlook reflects a continuation of our track record of delivering excellent financial performance and sustainable value creation for all of our stakeholders. So to summarize our key takeaways for 2022, our proven growth strategy continues to drive significant share gain. Our differentiated customer value proposition is further elevating our trusted partner status. And this in combination with the power of our PPI business system drove outstanding financial performance for the quarter and full year, exceeding our ambitious goals while navigating a very dynamic macro environment. And we entered 2023 with strong momentum and we're incredibly well positioned beyond 2023. With that, I'll now hand the call over to our CFO, Steven Williamson. Steven.