39th Annual J.P. Morgan Healthcare Conference
Marc N. Casper
Chairman, President and Chief Executive Officer January 11, 2021
The world leader in serving science
1
Safe Harbor / Non-GAAP Measures
Various remarks that we may make in the following presentation 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, including statements about future revenue and impacts of the COVID-19 pandemic. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, under the caption "Risk Factors," which is on file with the Securities and Exchange Commission and available in the "Investors" section of our website under the heading "SEC Filings." Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: the duration and severity of the COVID-19 pandemic; the need to develop new products and adapt to significant technological change; implementation of strategies for improving growth; general economic conditions and related uncertainties; dependence on customers' capital spending policies and government funding policies; the effect of economic and political conditions and exchange rate fluctuations on international operations; use and protection of intellectual property; the effect of changes in governmental regulations; and the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to recent or pending acquisitions may not materialize as expected. 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 estimates change, therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.
During this presentation, we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles, or GAAP, including adjusted EPS and free cash flow. The non-GAAP financial measures of Thermo Fisher's results of operations and cash flows included in this presentation are not meant to be considered superior to or a substitute for Thermo Fisher's results of operations prepared in accordance with GAAP. Definitions of these non-GAAP financial measures and, for historical periods, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available under the heading "GAAP/Non-GAAP Reconciliation & Financial Package" in the "Investors" section of our website, www.thermofisher.com.
2
Key takeaways
- As in years past, we executed our growth strategy in 2020 strengthening our position as the world leader in serving science
- We played an extraordinary role in supporting the global response to the pandemic:
- Supporting COVID-19 testing around the world
- Enabling the development and production of therapies and vaccines
- Resulted in our strongest year of performance in our history:
- Delivered approximately 50% organic revenue growth in Q4'201
- Resulting in approximately 25% organic revenue growth for full year 20201
- Took actions to accelerate our long-term growth outlook from the 5% - 7% range we entered the year with
- Exceptionally well positioned entering 2021:
- Base business performance strengthening, and
- Significant COVID-19 response role and revenue generation
3 1. [As provided on January 11, 2020]
Thermo Fisher is the world leader in serving science
$30B | 80,000 | $1B | |||||
revenue | employees | R&D investment | |||||
Industry-leading scale | Unmatched depth of capabilities | ||||||
• Unparalleled commercial reach | • Leading innovative technologies | • Comprehensive pharma | |||||
• Unique customer access | • Deep applications expertise | services offering | |||||
• Expanding global footprint | • Premier productivity partner |
Powered by our Practical Process Improvement (PPI) Business System
4
Our Mission is our purpose
Gold-standard PCR testing | Electron microscopy for advanced | Vanquish UHPLC QA / QC lab | ||
materials analysis | ||||
Delivering diagnostic tests, | Supporting innovative | |||
vaccine/therapy development | research and development | Ensuring the quality and | ||
and production to fight | of cleaner, more efficient | safety of medicines | ||
COVID-19 globally | power sources | |||
We enable our customers to make the world healthier, cleaner and safer
5
Attractive revenue profile
Diverse Customer Base | Strong Recurring |
in Attractive End Markets | Revenue Mix |
Diagnostics | Services | ||
& Healthcare | Pharma | 23% | |
26% | & Biotech | ||
41% | |||
Industrial | Instruments | ||
& Applied | 22% | ||
15% Academic & | Consumables | ||
55% | |||
Government |
18%
Revenue: $28.5B
- NOTE: Amounts based on LTM through Q3 2020. Percentages are before intercompany eliminations.
Industry - Leading Scale in
Emerging Markets
ROW
3%
Asia-Pacific
19%
North
America
52%
Europe
26%
Consistently delivering exceptional financial performance
Revenue ($B)
11% CAGR
$28.5 | |
$10.4 | |
2010 | Q3'20 LTM |
Adjusted EPS
17% CAGR
$16.01 | |
$3.43 | |
2010 | Q3'20 LTM |
Free Cash Flow ($B)
17% CAGR
$5.7 | |
$1.2 | |
2010 | Q3'20 LTM |
2020 Goals (as communicated at JPM Conference on January 13, 2020)
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the business
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
8
2020 Goals
- Enable the global pandemic response
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the business
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
9
Our approach to responding to COVID-19
- Set clear guiding
principles
- Leverage scale and depth of capabilities
-
Drive operational
agility
- Create an even brighter future
Our experienced team established guiding principles to appropriately manage through the pandemic and quickly mobilize our COVID-19 response
Rapidly developed and deployed relevant products and services to comprehensively respond to COVID-19
Anticipated meaningful headwinds and executed thoughtful mitigation plans while rapidly scaling up our ability to meet COVID-19 demand
Intensely focused on strengthening our competitive position
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Leveraging scale and depth of capabilities to address COVID-19
Global Testing and Sample Collection
20M+
weekly
COVID-19 test kit production capacity
Therapies and Vaccines
Research | Development |
and Production |
250+
COVID-19
related
projects1
Essential
Personal Protection
Equipment (PPE)
7K+
Customers
served
11 Proprietary & Confidential | 1. COVID-related projects supporting the development and production of therapies and vaccines |
Executed comprehensive response to COVID-19
Addressed Customer
Bottlenecks
- Acute shortage of global viral transport media (VTM) used to transport samples to laboratories for processing
- Won scale contracts in U.S. and U.K.
- Built two dedicated facilities to help solve global shortages
Impact | Permanently strengthened |
our competitive position | |
COVID-19 qPCR Testing
- Industry-leadinginstalled base of qPCR instruments
- Rapidly developed qPCR test (TaqPath COVID-19 Combo Kit)
- Exponentially increased testing capacity to >20M tests/week
- Took a leading role in sample preparation
- Broadened testing solutions to enable labs to increase testing capacity
Enhanced our competitive position in molecular
Impact diagnostics and increased our installed base
Therapies & Vaccines
- Partnering with pharma and biotech to accelerate therapy and vaccine programs
- Broad portfolio of best-in-class products and CDMO services to support all therapy and vaccine types
- Enabling bioproduction with leading cell culture media, biosciences reagents, purification products, and single use technologies
- Entered into long-term partnership with BARDA and in Singapore
Expect $1B+ impact
Impact in revenue and will benefit from repurposing
our expanded capacity
12
Thermo Fisher's COVID-19 response summary
- Speed at scale: Quickly mobilized to enable the global societal response to the pandemic
- Significantly deepened our relationships with customers and governments around the world
- Generated >$6B in COVID-19 response revenue in 2020
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2020 Goals
- Enable the global pandemic response
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the business
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
14
High-impact innovation strategy: Resulting in outstanding product launches
COVID-19 qPCR Test | Mass Spectrometry | |
Cell & Gene Therapy
Applied Biosystems TaqPath COVID-19 Combo Kit
Multiplex real-time PCR diagnostic kit to enable accurate COVID-19 diagnosis
Orbitrap Exploris 240 and 120
Market leading performance, versatility and ease-of-use to enable customer success
Gibco CTS Rotea
Flexible closed cell-processing system, enabling superior process flexibility
Electron Microscopy
Glacios Cryo-TEM | Selectris Imaging Filter |
Sample screening and high-resolution data | World-record resolution enabling the viewing |
acquisition made easy through automation | of precise molecular detail |
15
Next-Generation Sequencing
Ion Torrent Genexus System
First turnkey clinical NGS system to deliver results in a single day
Unique customer value proposition
End-to-end offering for pharma and biotech
Leading Life Sciences offering | Leading CDMO services | |||
(spanning R&D to bioproduction) | ||||
Strong track record of growth
in Pharma and Biotech
$11.6B | |
$2.6B | |
2010 | Q3 2020 LTM |
We help our customers accelerate innovation and enhance productivity -
underpinned by quality
16 1. Average annual organic growth
Unique customer value proposition in action: Pharma & biotech
Looking for an edge in vaccines, Thermo Fisher plots major expansions across global manufacturing sites in its portfolio
17
Scale in high-growth and emerging markets
Our key differentiators
- Unique depth of product and service offerings
- Industry-leadingscale
- Leading commercial infrastructure
- Expanding e-commerce platform
- World-classsupply-chain capabilities
- Localized R&D and manufacturing
Driving material impact
for the company
- $5.6B revenue
- Strength across the major geographies
20% | |
15% | |
2010 | Q3 2020 LTM |
High-growth and emerging region
revenue as % of total revenue
2020 highlights
Thermo Fisher goes in on a biologics facility in China
Thermo Fisher to expand sterile filling capacity with $130M Singapore facility
Industry-leading scale and depth create a differentiated experience for our customers
18
2020 Goals
- Enable the global pandemic response
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the business
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
19
PPI Business system
Drives culture of continuous improvement
Impact of PPI:
- Accelerates organic growth
- Expands margins
- Enhances cash flow
Quality
Consistently deliver world-class products and services
Productivity
Improve operating and process efficiency to strengthen our competitive position
Customer Allegiance
Exceed expectations to maximize customer success
PPI Enabled our comprehensive COVID-19 response
20
2020 Goals
- Enable the global pandemic response
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the business
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
21
Deploying capital to create shareholder value
2020 Capital Deployment
M&A:
- CSL ‒ New state of the art biologics drug substance capability
- Innoforce Joint Venture - Establish biologics and steriles drug
manufacturing facility in Hangzhou, China
- Phitonex - Spectral dye platform that expands multiplexing capabilities in flow cytometry and imaging for protein and cell analysis research
CapEx:
• Increased net CapEx from $0.9B to ~$1.5B
- Driving attractive returns and accelerating long-term growth
Return of Capital:
• Share repurchases: $1.5B
• Dividends: $350M (16% YoY increase)
Balance Sheet
Debt:
• Lowered net debt by $1.8B through Q3'2020
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Investing in industry-leading Biosciences, BioProduction & Pharma Services capabilities
Biosciences
- Revenue: $4B
- Strong leadership position in life science reagents and consumables
- Investing in global capacity to increase the manufacturing of enzymes and nucleotides used in vaccines
BioProduction
- Revenue: $2B
- Strong leadership position in cell culture media and single-use containers
- Investing to capitalize on the robust growth of biologics and vaccines with rapidly growing purification business
Pharma Services
- Revenue: $4.5B
- World's leading Contract Development and Manufacturing Organization (CDMO) with comprehensive end-to-end solution
- Three-prongedinvestment strategy:
- Internal capacity expansions
- Acquiring world-class facilities from pharma companies
- Adding new capabilities through acquisitions
Total Company CapEx Investments
~$1,500M
$890M
2019 | 2020E |
Supporting our customer needs in the short- and long-term
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2020 Goals (as communicated at JPM Conference on January 13, 2020)
- Enabled the global pandemic response
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
24
We are committed to doing business the right way
It starts with our Mission:
To enable our
customers to make the world healthier, cleaner and safer
- Our products, technologies and services benefit the environment and society globally
- We take deliberate actions to address sustainability issues today in order to strengthen our business for tomorrow's customers, colleagues and communities
- Our approach focuses on areas that are aligned to our strategy and material to our stakeholders
Operations | Colleagues | Communities | Environment | |||
Leveraging our capabilities to support | Providing resources and embracing | Making a difference worldwide with | Innovating to serve our customers | |||
our customers, while conducting our | unique perspectives to reach our full | an emphasis on inspiring students | while actively minimizing our own | |||
business and relationships with integrity | potential as one global team | through STEM education | global footprint | |||
Strong focus on environmental, social, and governance (ESG)
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We are committed to doing business the right way: 2020 ESG spotlight
30% | Greenhouse gas |
emissions by 2030 |
Leveraging innovation and our PPI Business System to increase efficiency and reduce our carbon footprint
Giving back to the communities
where we live and work
• | Launched $30M Foundation for Science to expand our |
STEM education programs, especially in underserved | |
communities | |
• | Enhanced programs that empower colleagues to support |
Process optimization
Built
Environment
Efficiency
Smart energy sourcing
Redesigning operations to lower environmental impact
Investing in equipment to make our sites more efficient
Expanding use of solar energy
social justice issues |
• Extended collaboration with |
Historically Black Colleges and |
Universities, creating new |
educational opportunities, |
contributing $25M in COVID-19 |
tests and increasing our |
commitment to hiring students |
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2020 Goals
- Enabled the global pandemic response
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to reduce cost, enhance productivity, and quality
- Deliver the benefits of recently completed acquisitions
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
Extraordinary performance in the most challenging of times
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2021 Goals: Build on our outstanding momentum
- Significantly Enabling the Societal Response to the Pandemic
- Industry leader in COVID-19 testing
- Leading role in therapy and vaccine production
- Create sustainable value from investments initiated in 2020
- Revenue - Continue Share Gain Momentum
- Another year of high-impact new product launches
- Leverage our unique customer value proposition by cross selling our total portfolio
- Continue to leverage our commercial reach in high growth and emerging markets
- Margins/Below the Line
- Leverage PPI business system to enable operational excellence and speed at scale
- Capital Deployment
- Maximize the use of our significant cash flow and leverage capacity to continue to fuel the growth trajectory of the business
- Continue shareholder friendly capital deployment through strategic M&A, share buybacks, and dividends
- Environmental, Social and Governance (ESG)
- Continue to execute on our ESG priorities
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Thermo Fisher Scientific Inc. published this content on 21 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 January 2021 12:15:06 UTC.