Thermo Fisher Scientific Inc

followed by T. I would like to introduce our moderator for the call, Mr. Rafael Tejada, Vice President, Investor Relations. Mr. Tejada, you may begin the 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 Steven 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 Views, Events, and Presentations until May 8, 2024. A copy of the press release of our first quarter 2024 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, which is on file with the SEC and available in the investor 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 or 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 GAAP measures is available in the press release of our first quarter 2024 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 first quarter call as you saw in our press release we had a great start to the year we delivered another quarter of strong financial performance

I'm proud of our team's ongoing focus on enabling the success of our customers while demonstrating incredibly strong commercial execution and operational discipline, and our continued success as a result of our proven growth strategy and our PPI business system. So let me first recap the financials. Our revenue in the quarter was $10.34 billion. Our adjusted operating income was $2.28 billion. We expanded our adjusted operating margin in Q1 to 22%, and we delivered another quarter of strong adjusted EPS performance, achieving a 2% increase year over year to $5.11 per share. Our performance in the first quarter is allowing us to raise our guidance and sets us up to deliver differentiated performance in 2020. Turning to our performance by end market, in the first quarter, Underlying market conditions played out as we'd expected. Our team's excellent execution enabled us to deliver differentiated revenue performance that was ahead of our expectations. Now, let me provide you some additional context. Starting with pharma and biotech, we declined in the low single digits for the quarter, which was a sequential improvement in performance over Q4 2023. In the first quarter, the vaccine and therapy revenue runoff resulted in a three-point headwind for this customer segment, and we also delivered strong growth in our clinical research business. A quick reminder on academic and government and industrial and applied. A year ago, we had very strong shipments of analytical instruments as we worked down the backlog that was caused by pandemic-related supply chain disruptions. As a result, in academic and government, we declined in the low single digits during the quarter. We delivered strong growth in our electron microscopy business, as well as in our research and safety market channel. In industrial and applied, we declined in the low single digits for the quarter. We delivered strong growth in our electron microscopy business in this segment. Finally, in diagnostics and healthcare and Q1, we declined in the high single digits. The reported growth in this end market was impacted by the runoff of COVID-19 testing-related revenue. During the quarter, core revenue growth was highlighted by our transplant diagnostics and immunodiagnostics businesses, as well as our healthcare market channel. So wrapping up on our end markets, underlying market conditions played out as we expected to start the year. As you recall, our assumption for 2024 is that we'll see a modest pickup in economic activity as the year progresses. During the quarter, it was good to see a couple of positive developments in our end markets that support this view, including continued improvements in the biotech funding environment and the stimulus program announced by China. I'll now turn to an update on our growth strategy. As a reminder, our strategy consists of three pillars, high impact innovation, our trusted partner status with customers, and our unparalleled commercial engine. Starting with the first pillar, high-impact innovation. We had an excellent start to the year, launching a number of new products across our businesses during the first quarter. Let me first highlight a number of products in analytical instruments that demonstrate our continued market leadership. In our chromatography and mass spectrometry business, we launched the thermoscientific dionics Inuvion ion chromatography system, which enables higher resolution, faster time-to-results, and streamlined workflows to more efficiently identify contaminants for environmental testing. In our chemical analysis business, we launched the thermoscientific Linspector Edge in-line metrology solution to enhance battery safety, performance, and production. And we also launched the thermoscientific TruScan G3 handheld Raman analyzer, a next-generation handheld instrument for the rapid identification of chemical compounds used in drug production. And then in life science solutions, We launched the Axiom Pangenomics Array, a high-throughput microarray for use in human genomic studies across global populations, including disease risk and detection research, as well as population-scale disease research programs. So another strong quarter of product launches. One other highlight of our high-impact innovation during the quarter was being named as one of Fast Company Magazine's Most Innovative Companies. It's great external recognition for the impact that our team is driving for our customers. Moving to the second pillar of our strategy. We are in the trusted partner status over many years and it gives me the unique opportunity to connect with our customer senior executive teams. Since the beginning of the year, I've had many meetings with our customers as they're turning to us more than ever. This is to both reinforce our partnership as well as to help them navigate the opportunities and challenges that they face. These conversations are happening across our company at all levels of the organization. Our customers see our team as part of theirs, and our culture of always finding a better way every day serves to reinforce our trusted partner status with our customers. We do not take lightly the trust our customers have in our company and will continue to partner closely with them to enable their innovation and productivity. The first example of this is in our clinical next generation sequencing business. In the quarter, we announced a collaboration with Bayer to develop a next-generation sequencing-based companion diagnostic that will help identify patients who may benefit from Bayer's growing portfolio of precision cancer therapies. The second example is our analytical instruments business. We are partnering with the North Carolina Collaboratory to support PFAS research capacity in the state as they help to identify and implement solutions to address PFAS contaminations. This is the first network of its kind, and they'll use several of our state-of-the-art instruments, including the Orbitrap Astral in their research. And finally, in our clinical research business, I'll share two examples of how our trusted partner status comes to life as our customers look for solutions to their unmet needs. We expanded our portfolio of GMP lab services to include qPCR-based biosafety testing capabilities for the detection of bacteria and other contaminants in medicines. This offering enables significantly faster results versus traditional testing methods, allowing for quicker delivery of medicines to patients. And we launched the Core Avitas syndicated clinical registry in generalized pustular psoriasis to address an unmet need for real-world evidence related to outcomes for patients with this rare disease. As you recall, Core Avitas became part of our company last year. The business is performing very well and making a difference for our customers and patients. All of these are great examples of our trusted partner status. Now, let me turn to our PPI business system, which enables outstanding execution during the quarter. PPI engages and empowers all of our colleagues to find a better way every day. You can see it in our strong profitability and cash flow that we delivered in the first quarter. Looking forward, our team is actively utilizing generative AI as part of the PPI business system to increase efficiency and productivity, as well as to continually improve the customer experience across the company. To share a couple of examples of how we're applying AI, it's enabling us to accelerate software development timelines in our analytical instruments and life science solutions businesses. We're also leveraging the combination of large language models with a vast and differentiated amount of data at our disposal. One benefit we're seeing is our ability to enhance the capability of our technical and customer service teams to more effectively serve our customers. Generative AI is another great example of how we continually strengthen the impact of the PPI business system. Let me now give you an update on our corporate social responsibility initiatives. As a mission-driven company, we help to make the world a better place by enabling the important work of our customers. We also have a positive impact by supporting our communities, being a good steward of our planet, and the focusing on STEM education and advancing global health equity. To that end, during the first quarter, we announced a collaboration with the South African Medical Research Council. Together, we'll establish a center of excellence and training program focused on molecular biology and life sciences. The facility will provide specialized education and support for professional development to scientists and laboratory professionals in Africa. I'm also pleased to share that Thermo Fisher achieved a perfect score on the Human Rights Campaign Foundation's Corporate Equality Index for the eighth year in a row. Let me now give you an update on capital deployment. We continue to successfully execute our disciplined capital deployment strategy, which is a combination of strategic M&A and returning capital to our shareholders. During the quarter, we reached the one-year anniversary of the binding site acquisition, now our protein diagnostics business. Its financial performance is tracking ahead of the deal model with really strong growth. I recently had the chance to visit the headquarters of our protein diagnostics business, and saw the great progress they're making, given the exciting new products that can positively impact patient care from multiple myeloma. Turning to our planned acquisition of O-Link, we're working through the regulatory process, and the transaction is on track to close by mid-2024. We look forward to welcoming our new colleagues to the company later this year. And in terms of return of capital during the quarter, we repurchased $3 billion of shares and increased our dividend by 11%. As I reflect on the quarter, I'm very proud of what our team accomplished and grateful for their contributions to our success. In a nice recognition of both our team and track record, Thermo Fisher has once again been included on Fortune Magazine's list of most admired companies. Let me now turn to our guidance. Given the stronger operational performance to start the year, we are raising our 2024 guidance. We now expect revenue to be in the range of $42.3 billion to $43.3 billion, and we expect adjusted EPS to be in the range of $21.14 to $22.02 per share. Stephen will take you through the details in his remarks. So to summarize our key takeaways from the first quarter, We delivered another quarter of strong financial results driven by our proven growth strategy and PPI business system. We continue to enable our customer success, and this continually reinforces our trusted partner status. Our strong results in Q1 position us to deliver differentiated performance in 2024 as we continue to create value for all of our stakeholders and build an even brighter future for our company. With that, I'll now hand the call over to our CFO, Steven Williamson. Steven.