Please note that the following presentation contains financial projections and other forward-looking statements that are specific to the date of the presentation – November 5, 2013 – and should not be considered current after that date.
Baird Industrial Conference Marc Casper President and Chief Executive Officer
Safe Harbor / Non-GAAP Measures Various remarks that we may make in this 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 such forward-looking statements as a result of various important factors, including those discussed in our Form 10-Q for the quarter ended September 28, 2013, 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; the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to the pending acquisition of Life Technologies 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 our estimates change and, therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. During these presentations, we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles, or GAAP, including adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow. 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 Information” in the “Investors” section of our website, www.thermofisher.com. All prior results have been adjusted to present the results of the Laboratory Workstations business as discontinued operations. 2
We Are the World Leader in Serving Science Global Scale • 39,000 employees in 40 countries • $13 billion in annual revenues • Unparalleled commercial reach • Ranked 220 on Fortune 500 Unmatched Depth • Innovative technologies • Applications expertise Industry-leading Brands • Lab productivity partner 3
We Enable Our Customers to Make the World… Cleaner Safer Healthier 4
Our Unique Scale and Depth of Capabilities Leading portfolio of Premier supplier Specialty specialty diagnostic tests to enable laboratory Diagnostics to improve patient care productivity and Segment accelerate innovation 24% Laboratory Products and Services Revenue Segment Most comprehensive 46% Analytical technology portfolio for both Technologies research and applied markets Segment 30% 5 Note: Revenue based on LTM through Q3 2013. Percentages shown are before inter-company eliminations.
Diverse Customers, Product Mix & Geographic Reach Balanced and diverse Strong recurring Growing presence customer base revenue mix in emerging markets ROW 4% Services Asia- Pharma Healthcare Pacific 14% & Biotech & Diagnostics 17% 26% 26% Instruments, Consumables Europe Equipment & North America Industrial Academic & 56% 25% Software & Applied Government 54% 30% 27% 21% End Markets Products Geographies 6 Note: Revenue based on LTM through Q3 2013.
Strong Track Record of Financial Performance Revenue Adjusted Operating Adjusted ($B) Income ($B) EPS ($) $12.5 $4.94 $2.4 $9.4 $1.6 $2.55 2007 2012 2012 2007 2012 2007 7
Technological Value Innovation Proposition Our customers’ needs define our growth strategy Emerging Markets 8
Strengthening Our Innovation Pipeline Facts: $375M $235M • Total R&D spend: $375M • 3.0% of total revenue • 5.4% of manufacturing revenue 2007 2012 • 3,000 scientists and engineers • 2,800 patents granted globally since 2007 • Product vitality index: 15%* • Premier scientific advisory board • Leaders in healthcare, science, academia 9 * Percentage of product revenue from products launched in last two years
Innovating to Solve New Customer Challenges Pharma Academic & Biotech & Government Innovation Industrial Healthcare & Applied & Diagnostics 10
Increasing Need to Screen Food for Contaminants Thermo Scientific iCAP Q ICP-MS Problem • Metal impurities of regulatory concern for potential health hazards • Increased focus on inorganic arsenic and other elements Solution • Government research needs for • Thermo Fisher uniquely positioned to potential legislative action provide complete workflow • iCAP Q ICP-MS for robust uptime, sub-picogram detection capability Supporting research of The National Food Institute, • Qtegra software for workflow, data Technical University of Denmark management, scalability, compliance 11
Measuring the Quality of Precious Metals Problem • Identifying quality and value of precious metals • Accuracy of current detection methods • Damage to precious metal during the process Solution Niton DXL Desktop X-Ray Lab • Portable, onsite, purity analysis • Fire-assay comparable accuracy • Non-destructive, no harsh chemicals or acids • Easy to use, one-touch operation 12
Delivering a Unique Value Proposition Facts: Biopharma Industry Growth* • >$3B in revenue serving biopharma customers • Driving productivity and accelerating innovation • Industry-leading customer channel 2007 2012 • Leading offering of scientific instruments, Thermo Fisher reagents and lab supplies Biopharma Growth • Technical collaboration • Unity Lab Services • Clinical trials supplies and logistics • Bioprocess production capabilities • Production supply chain expertise • Portable instruments 2007 2012 • Companion diagnostics 13 * EvaluatePharma, “Worldwide R&D Spend by Pharma & Biotech Companies (2004-2018)”
Delivering a Unique Value Proposition Focus: • Applying the model to additional customer sets • Opportunity to continue • Contract testing laboratories to gain share in biopharma • Medical device manufacturers • Deep partnerships with • Petrochemical companies customers • Academic institutions • Problem-solver vs. vendor • Emergence of new cell therapies, biologics, vaccines 14
Expanding Footprint in High-Growth Regions Facts: China: Tier two China: Singapore: commercial second expansion Bioprocess S. Korea: demo center production Center Demo center India: Biopharma of Excellence services capability India: Laboratory China: Opened chemicals Lithuania: China: Suzhou Brazil: China: R&D first factory China: Biosciences laboratory products commercial capability China: Established Center of factory expansion Instruments Center commercial Excellence of Excellence presence 10% 21% % Revenue from North Europe North APAC and ROW* Europe America America 2007 2012 15 * APAC and ROW does not include emerging markets in Eastern Europe
Expanding Footprint in High-Growth Regions Focus: • Ramping up commercially in emerging markets • South Korea, Russia, Brazil, India • Accelerating momentum • Further expansion in high- in China growth markets • Strengthening capabilities: manufacturing, R&D, commercial • e.g. Turkey APAC & • Further expansion into tier-two cities ROW 25 % • Vertical approach: healthcare & diagnostics, environmental, food safety North America Europe 2017 Goal 16 Note: APAC and ROW does not include emerging markets in Eastern Europe
Operational Excellence is a Core Competency Low-Cost-Region Global Manufacturing Sourcing 25% 10% $250M Savings expected PPI in 2013 Business 25% 40% System Facility Rationalization and Restructuring Significant ongoing opportunity to drive margin expansion 17
Proven Track Record of Manufacturing Productivity Annual goal: move $100M Revenue per of production to low-cost regions manufacturing facility to deliver over $20M in annual savings $62M $41M Manufacturing revenue from low-cost regions $600M 2007 2012 $200M • 125 global sites as of Q1 2013 • 70 consolidations since 2006 • Each consolidation saves an average of $2 - 3M 2007 2012 Expanded in Lithuania $20M of estimated savings in 2013 and China (Suzhou) in 2012 18
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