Baird 2016 Global Industrial Conference Tom Loewald Senior Vice - - PowerPoint PPT Presentation

baird 2016 global industrial conference
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Baird 2016 Global Industrial Conference Tom Loewald Senior Vice - - PowerPoint PPT Presentation

Baird 2016 Global Industrial Conference Tom Loewald Senior Vice President and Chief Commercial Officer November 8, 2016 The world leader in serving science Safe Harbor / Non-GAAP Measures Various remarks that we may make in the following


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The world leader in serving science

Tom Loewald

Senior Vice President and Chief Commercial Officer

November 8, 2016

Baird 2016 Global Industrial Conference

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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. 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 Form 10-Q for the quarter ended July 2, 2016, 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 need to develop new products and adapt to significant technological change; implementation of strategies for improving internal growth; general economic conditions and related uncertainties; dependence on customers' capital spending policies and government funding policies; the effect of exchange rate fluctuations on international operations; the effect of healthcare reform legislation; 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 adjusted operating margin. 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.

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We Are The World Leader in Serving Science

Unmatched Depth

  • Leading innovative technologies
  • Deep applications expertise
  • Premier laboratory productivity partner
  • >50,000 employees in 50 countries
  • $18 billion in annual revenue
  • Unparalleled commercial reach

Global Scale

Our Mission: To enable our customers to make the world healthier, cleaner and safer

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Diverse Customers, Product Mix & Geographic Reach

End Markets Products Geographies

62%

Consumables Consumables

24%

Europe Europe

24%

Instruments Equipment & Software Instruments Equipment & Software Services Services

14% 53%

North America North America

19%

Asia- Pacific Asia- Pacific ROW ROW

4% 25%

Academic & Government Academic & Government

19%

Industrial & Applied Industrial & Applied Diagnostics & Healthcare Diagnostics & Healthcare

25% 31%

Pharma & Biotech Pharma & Biotech

Balanced and diverse customer base Growing presence in emerging markets Strong recurring revenue mix

Note: Percentage estimates based on unaudited LTM combined revenues of Thermo Fisher Scientific through Q3 2016

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Four Complementary Reporting Segments

Percentages based on unaudited LTM revenues through Q3 2016 including estimates for intercompany eliminations and other accounting policy adjustments.

  • Clinical Assays
  • Immunodiagnostics
  • Microbiology
  • Anatomical Pathology
  • Transplant Diagnostics
  • Healthcare Market Channel
  • Biosciences
  • Genetic Sciences
  • Bioproduction
  • Chromatography and Mass Spectrometry
  • Chemical Analysis Instruments
  • Environmental and Process Instruments
  • Research and Safety Market Channels
  • Laboratory Products
  • BioPharma Services

Life Sciences Solutions

26%

Life Sciences Solutions

26%

Specialty Diagnostics

18%

Specialty Diagnostics

18%

Analytical Instruments

18%

Analytical Instruments

18%

Laboratory Products and Services

38%

Laboratory Products and Services

38%

Total revenues ~$18B Total revenues ~$18B

Leading positions in attractive niche diagnostics segments Extensive portfolio to accelerate life sciences research, discovery and diagnosis Industry-leading technologies to solve a broad range of complex analytical challenges Industry-leading offering to increase laboratory productivity

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Complementary Segments Fundamental to Our Growth Strategy

  • High-impact innovation
  • Life science tools into the clinic
  • Laboratory technologies for

applied markets

  • R&D centers of excellence (COE)

and ability to leverage cross-business technologies and programs

  • Unique customer value proposition
  • Scale in emerging markets
  • Customer reach and experience
  • Manufacturing COEs in low-cost regions

Life Sciences Solutions Life Sciences Solutions Specialty Diagnostics Specialty Diagnostics Analytical Instruments Analytical Instruments Laboratory Products and Services Laboratory Products and Services

Customer

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Innovation - Largest R&D Spend in Our Industry Delivers High-impact Products

R&D Spend and percentages based on LTM through Q3 2016.

Life Sciences Solutions Life Sciences Solutions Specialty Diagnostics Specialty Diagnostics

Laboratory Products

Analytical Instruments Analytical Instruments

>$700M

R&D Spend

46% 46% 18% 18% 6% 6% 30% 30%

Life Sciences Solutions

  • Genetic analysis
  • Bioproduction
  • Cell analysis
  • Molecular biology

Analytical Instruments

  • Mass spectrometry
  • Chromatography
  • Portable analytical instruments

Laboratory Products

  • Cold-temperature storage
  • Centrifugation
  • Liquid handling

Specialty Diagnostics

  • Transplant diagnostics
  • Allergy and

autoimmunity

  • Drugs of abuse
  • Biomarkers
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Building Industry Leadership Over the Decade

A clear and proven strategy, consistently executed

Innovation Innovation

China Innovation Center established

B.R.A.H.M.S B.R.A.H.M.S

Established environmental instruments HQ in Shanghai South America HQ in Brazil India Chromatography Center of Excellence Suzhou factory Lithuania Biosciences Center of Excellence Dubai Customer Experience Center

Global footprint Global footprint

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Singapore

  • Mfg. Center
  • f Excellence

Opened India clinical packaging facility Raman portable spectrometers Bioproduction single-use technologies Vanquish UHPLC Exactive Orbitrap Fusion Tribrid Orbitrap Sorvall LYNX centrifuge ImmunoCap Attune Nxt Ion Torrent S5 Cryo-EM

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Accelerate research Support regulatory compliance Utilize strategic

  • utsourcing

Optimize supply chain Enable technical innovation Improve production efficiency Improve diagnostics Solve complex analytical challenges Increase lab productivity Partner

  • n R&D

projects

  • Unique customer value proposition
  • Ultimate channel partner
  • Comprehensive services offering
  • Leading e-Business presence
  • Extensive corporate accounts program

Commercial Capabilities are Unmatched in Our Industry

Customer Customer

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  • Broadest product portfolio
  • Leading e-Commerce

transaction platform

  • Customer / supplier self-service
  • Superior product availability and

service levels

Choice and Convenience

  • Purchasing / supplier

aggregation services

  • Customized inventory

management solutions

  • Diversity solutions

Differentiated Services

  • Integrated supply chains and

warehouses

  • Web platform
  • Pan-European operating model
  • Company leverage in emerging

markets

Global Presence

The Ultimate Channel Partner with Unrivaled Customer Access

Broadest market offering

>800,000 products

Broadest market offering

>800,000 products

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Industry-leading Presence in Emerging Markets

Developed Markets

81%

Emerging Markets

19% $18B Revenue China

>$1.5B Revenue

South Korea

>$250M Revenue

S.E. Asia

>$350M Revenue

India

>$200M Revenue

Brazil

>$100M Revenue

  • E. Europe, Middle

East, Africa

>$550M Revenue

Latin America (excl. Brazil)

>$250M Revenue

NOTE: Revenue based on LTM through Q3 2016 * LCR: Low-cost region.

Demonstration labs: 26 Total employees: >12,000 LCR* manufacturing revenue: $1.4B

| |

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Global Reach and Scale Creates Market Differentiation

Emerging markets remain a significant growth opportunity

  • Leverage our well-established infrastructure in

China, India and South Korea to drive additional share gain

  • Capitalize on tailwinds from China’s 5-year plan
  • Further leverage our recent expansions in

Southeast Asia

  • Poised to capitalize on longer-term potential in

Russia, Middle East and Brazil

Our Opportunity

Annual Revenue $B % of Total Company Revenue

2010 2015 2010 2015

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PPI Business System Fuels Growth and Profitability

Operational discipline is our foundation for strong earnings growth

Practical Process Improvement (PPI) = Continuous improvement every day

  • 5S
  • Lean
  • Kaizen
  • Stand-up meetings
  • KPI boards

Strategic PPI deployment for long-term benefit

  • Global sourcing
  • Footprint optimization
  • Low-cost region manufacturing
  • Shared services
  • Proven M&A playbook

Our Opportunity

Adjusted Operating Margin %

2010 2015

Quality Productivity Customer Allegiance

Consistently deliver world-class products and services Exceed expectations to maximize customer success Improve operating and process efficiency to strengthen our competitive advantage

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$100B

Market Our Opportunity Capital Deployed

2010 – Q3 2016 Dividends

M&A

81%

M&A

81%

Buybacks

16%

Buybacks

16%

3% 3%

$32B

Notable M&A

  • 2011 – Dionex
  • 2011 – Phadia
  • 2012 – One Lambda
  • 2014 – Life Technologies
  • 2016 – Affymetrix, FEI

Share Buybacks

  • $5.1B deployed to

repurchase 78M shares

Dividend

  • Dividend payer

since 2012

Continuing our disciplined approach to capital deployment

100s of smaller companies 100s of smaller companies Thermo Fisher Scientific plus top 2 competitors Thermo Fisher Scientific plus top 2 competitors

Strong Track Record of Effectively Deploying Our Capital

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Acquisition of Affymetrix: a Highly Complementary Business

Company Background

  • Leading provider of cellular and genetic analysis products

Benefits of Transaction

  • Adds complementary genetic analysis products serving research, clinical and applied markets
  • Significantly expands portfolio of antibodies and assays for high-growth flow cytometry
  • Creates attractive financial benefits by leveraging our scale and customer reach
  • Expect to generate $70M of cost and revenue synergies in year three

~$350M Annual Revenue

Consumables Instruments Services/Other Europe Asia- Pacific ROW U.S.

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Acquisition of FEI: New Opportunities in High-End Instrumentation

Company Background

  • Leader in high performance electron microscopy (EM)

Benefits of Transaction

  • EM complements our mass spectrometry leadership to accelerate advancements in structural biology
  • Combined technology portfolio creates new opportunities in attractive material sciences market
  • Thermo Fisher’s unmatched global reach opens new opportunities for FEI

~$930M Annual Revenue

North America North America

32% 32%

Europe Europe

27% 27% 41% 41%

APAC & ROW APAC & ROW Services & Software Services & Software

29% 29%

Instrument Systems Instrument Systems

71% 71%

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Continuing Our Impressive Track Record

Delivering on our commitment to create shareholder value

$1.87 $2.55 $3.02 $2.92 $3.43 $4.16 $4.94 $5.42 $6.96 $7.39

$100 invested

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

$470.79 Thermo Fisher Scientific $163.74 S&P 500

Shareholder Return

Adjusted EPS Performance

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We are the World Leader in Serving Science

  • Diverse product and geographic mix serving a large, fragmented and growing market
  • Largest R&D investment in our industry
  • Unique customer value proposition
  • Industry-leading presence in emerging markets
  • Continuous improvement drives growth and profitability
  • Strong track record of operational performance and capital deployment