Thermo Fisher Scientific Inc. (TMO) today reported financial results for the third quarter of fiscal 2009. Earnings per share came in at 78 cents, exceeding both the Zacks Consensus Estimate and the year-ago earnings of 75 cents.
Net sales declined 2% year over year to $2.5 billion. The decline was due to lower Analytical Technologies revenues, partly offset by higher Laboratory Products and Services revenues. Analytical Technologies revenues declined 6% year over year to $1.0 billion. Laboratory Products and Services revenues increased 1% year over year to $1.6 billion. The company has a practice of reporting inter-segment revenues which were a negative $118.8 million for the quarter.
Gross margin increased marginally by 10 basis points (bps) year over year to 41.2%. Selling, general and administrative (SG&A) expenses as a percentage of sales increased 30 bps year over year to 21.5%. Research and development expenses as a percentage of sales remained flat year over year at 2.4%. Higher SG&A expenses as a percentage of sales were primarily responsible for a lower operating margin that declined 20 bps year over year to 10.9%.
Effective tax rate in the reported quarter declined 650 bps year over year to 10.4%. Despite a decline in operating margin, a lower effective tax rate was solely responsible for an increase in net margin that went up 30 bps year over year to 8.7%. Thermo Fisher ended the reported quarter with cash, cash equivalents and short-term investments of roughly $1.8 billion, an increase of approximately $0.5 billion in the first nine months of the year. The company generated free cash flow of $346 million in the quarter.
Thermo Fisher has provided guidance for full fiscal 2009. For the full year, revenues are expected between $9.95 and $10.05 billion, 4% to 5% lower from the 2008 level. Earnings per share should range between $2.95 and $3.05, a decline of 3% to 6% from the prior year level.
Thermo Fisher is a scientific instrument maker and a world leader in serving science. The company was formed through the merger of Thermo Electron Corporation with Fisher Scientific International Inc. in Nov 2006. Thermo Fisher Scientific serves its customers through two principal brands: Thermo Scientific and Fisher Scientific.
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