Thermo Fisher: rising sales and two views of earnings
· BehindLines newsroom
Thermo Fisher Scientific reported higher quarterly sales and margins on 21 October. The US supplier of laboratory equipment and services released results covering a period that ended on 26 September. These figures describe business already completed, rather than a forecast for the closing months of the year.
Sales totalled $12.14 billion, up from $11.12 billion a year earlier, a gain of 9%. The company’s release gives those amounts alongside organic growth of 6%.
Reading the growth figures
Reported growth and organic growth measure different things. The company’s reconciliation assigns three percentage points to acquisitions and divestitures, while the rounded currency contribution is zero. The organic figure strips out those effects. Adding the two headline growth rates together would therefore incorrectly suggest an increase of 15%.
Thermo Fisher’s release gives adjusted earnings of $6.68 per share. Analysts had expected $6.40, based on the estimates gathered by MarketBeat. That consensus is an estimate, rather than a guaranteed company target. Adjusted earnings exclude selected accounting items; they differ from diluted earnings under US generally accepted accounting principles, which came to $4.64 per share.
Better margins include a one-off benefit
The GAAP operating margin moved from 17.4% to 18.6%, and the adjusted margin from 23.3% to 24.5%. Each increase amounts to 1.2 percentage points.
According to the StockAnalysis and Benzinga transcripts of the earnings call, management estimated that tariff refunds provided a net benefit of about $60 million to the quarter’s adjusted operating profit. Management also put the effect at about 0.5 percentage points of adjusted margin. That is roughly 42% of the 1.2-point improvement, showing how much of the gain was temporary without implying it will recur.
S&P Capital IQ separately reports net income of $1.721 billion. Revenue, net income and earnings per share remain distinct measures. Comparing them helps explain this quarter’s performance without predicting how subsequent quarters will turn out.