Thermo Electron Reports Third Quarter 2002 Results
Tuesday October 22, 4:11 pm ET
WALTHAM, Mass., Oct. 22 /PRNewswire-FirstCall/-- Thermo Electron Corporation (NYSE: TMO - News) today reported that diluted cash operating earnings per share (EPS)* increased 25 percent to $.25 for the third quarter of 2002, versus $.20 in the year-ago period. The company reported GAAP diluted earnings per share of $.23, compared with $.14 in the 2001 quarter.** Third quarter revenues were $517 million in 2002, versus $513 million in the 2001 quarter. Eliminating favorable currency effects of 2 percent and the impact of acquisitions and divestitures, organic revenues* declined by 2 percent. Third quarter cash operating margin was 10.8 percent in 2002, versus 9.8 percent in the year-ago quarter, and 10.6 percent in the second quarter of 2002.
"We are pleased to report cash operating EPS growth for the third quarter of 2002, both year-over-year and sequentially Q3 2002 versus Q2 2002, particularly given that the third quarter is, as a rule, seasonally weak," said Richard F. Syron, chairman and chief executive officer of Thermo Electron. "Our productivity initiatives are reflected directly in the year- over-year improvement in our bottom line. Additionally, we are beginning to make strides with improved integrated sales and marketing efforts, doing a better job demonstrating the breadth and depth of our offerings to customers, and making it easier for them to buy a full range of our products and services. We also continue to innovate with new products that are being well received in the marketplace, and we have received noteworthy recognition from industry experts. For example, Thermo Elemental's SOLAAR S Series atomic absorption instrument won the 2002 IBO Gold Award for Excellence from Instrument Business Outlook, and R&D Magazine selected Thermo Nicolet's FT- Raman View Stage for its prestigious R&D 100 Awards. The FT-Raman View Stage is a micro- and macro-sampling system for Thermo Nicolet's FT-Raman spectrometers.
"With this combination of continued success in new product development, commercial execution, and productivity enhancements, I am confident that we can continue to make progress on earnings and that we are well positioned to grow the company substantially when the economy improves. Our goal for the fourth quarter of 2002 is to deliver diluted cash operating EPS of $.28 to $.30, which would bring us to a diluted cash operating EPS range of $.97 to $.99 for the full 2002 year."
Sector Results
Life and Laboratory Sciences
During the third quarter, revenues for the Life and Laboratory Sciences sector were $282 million, with organic revenues up 3 percent versus the year- ago quarter. We continue to see strong orders for mass spectrometers, and also had strong orders growth for gas chromatography systems resulting from new product introductions, including the Trace(TM) DSQ single quadrupole GC/MS system, launched in June. Market conditions for sample-preparation products continue to be difficult. Cash operating income margin for the sector as a whole was 17.2 percent for the quarter, up from 15.1 percent in 2001, due to revenue growth and reduced operating expenses from the productivity initiatives implemented over the past several quarters.
We launched a number of exciting new products in the Clinical Diagnostics division this quarter, including Thermo BioStar's RSV OIA® rapid diagnostic test for respiratory syncytial virus, the leading cause of lower respiratory tract infections in children worldwide. Thermo BioStar also introduced the PocketChem(TM), a palm-sized point-of-care urinalysis instrument for detection of the 10 common analytes found in urine. PocketChem launches Thermo BioStar into the hand-held instrument market. Also, at the end of the quarter, we launched for sale outside the United States the Shandon PapSpin(TM) - a cost- effective, liquid-based screening system for cervical cancer. The PapSpin addresses limitations in conventional Pap tests by depositing a thin, even layer of cells to ensure that abnormal cells are not obscured by normal cells. We expect to begin U.S. clinical trials for PapSpin in 2003.
Measurement and Control
For the Measurement and Control sector, third quarter 2002 revenues were $150 million, with organic revenues down 8 percent due to continued weak capital spending in the industrial sector. Cash operating income margin for the sector was 10.6 percent in the 2002 quarter, versus 11.5 percent in 2001, due to the significant decline in revenues, offset in part by continued successful productivity and integration initiatives.
Conditions in the industrial markets we serve continue to be challenging; however, we have seen increased orders for our security-related products, including explosives-detection instruments and our newly expanded portfolio of radiation-monitoring products. The integration of Saint-Gobain's radiation- monitoring products business into our Environmental Instruments division is proceeding smoothly, and its revenues and earnings exceeded expectations for the quarter. We acquired the business in July. During the quarter, we sold our strain-gauge business for approximately $19 million in cash.
Optical Technologies
In Optical Technologies, third quarter 2002 revenues were $87 million, with organic revenues down 6 percent due to continuing weakness in the worldwide semiconductor industry and general economic conditions affecting our industrial markets. Cash operating income margin for the sector was 2.3 percent for the third quarter of 2002, compared with 1.5 percent in 2001. Reduced operating expenses from ongoing productivity programs and the suspension of telecom activities enabled us to improve year-over-year margins, despite the decrease in revenues.
While challenges persist in its industrial and electronics markets, the Lasers division has intensified its efforts in biomedical applications and has gained momentum with additional wins in the design-in phase of product development with OEM customers. Our Semiconductor division took aggressive actions to reduce operating expenses, while continuing to introduce products for next-generation devices, such as the NORAN System SIX, a high-throughput X-ray microanalysis system for materials analysis in research, failure analysis, and quality control applications. As part of our integration efforts, we began aligning international distribution of the Lasers and Photonics divisions and expanded the key account program to focus on customers who buy products from both divisions.
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