US lab supplies firms post bumper 1Q results

Four of the top companies in this category – namely Fisher Scientific, Thermo Electron, Apogent and Waters – have all reported double-digit sales and operating income growth for the quarter.

Fisher​, which is expecting to close its merger with Apogent in the third quarter of this year, reported a 21.3 per cent hike in first-quarter revenues to $1.01 billion (€845m), with eight points of this coming from organic growth and the remainder coming from exchange rate factors and the contribution of Oxoid and Perbio, two recent acquisitions.

A year ago, the scientific reagents and consumables company reported a net loss of $900,000, on the back of onerous debt-refinancing charges.

Sales growth was driven by contributions from the cell culture and bioresearch divisions of the new additions to the Fisher stable, strong US sales and increased growth in international markets, said the firm.

Group operating income was $68.3 million, up 12.3 per cent, with the best-performing segment scientific and products and services, which reported a 37 per cent hike in operating income to $66.6 million on sales up 25 per cent to $715 million.

Laboratory workstation sales decreased 23 per cent to $38.4 million following delays in the progress of new projects, driving the unit into an operating loss of $0.2 million, while healthcare products and services made an 8.5 per cent step up in turnover to $234.4 million, with operating income firming 23 per cent to $12.1 million.

Paul Montrone, Fisher’s chief executive, noted that the results “reflect improved market dynamics and solid performance in our principal businesses, as well as contributions from our recent acquisitions.”​ Aside from its acquisitions of Oxoid and Perbio, Fisher also snapped up Dharmacon, a specialist in RNA reagents, on April 1.

Thermo Electron​ also said it had got off to a good start in 2004, with first-quarter sales of $582 million, up 16 per cent, and operating income up a whopping 47.3 per cent to $57.9 million. Organic revenue growth was 5 per cent, providing further evidence that demand is strengthening in the sector.

Chief executive Marijn Dekkers said that Thermo is seeing the benefits of improved market conditions across all three of its segments – life and laboratory sciences, measurement and control and optical technologies – and the major restructuring exercise that has been undertaken over the last few years to streamline its once-bloated corporate structure. Sales of instruments in particular have been picking up, and it appears that budgets for these sorts of purchases have been freed up at Thermo’s customers.

Life and laboratory sciences led the field at Thermo in the first quarter, helped by a swathe of new products for customers involved in proteomics, drug discovery, compliance, lab productivity and trace chemical analysis. This includes the new range of Nicolet FT-IR spectrometers, debuted at Pittcon earlier this year. Turnover at the division rose 22 per cent to $365 million, while operating income was up 19 per cent to $46.6 million.

Since the end of the first quarter, Thermo has acquired US Counseling Services (USCS) to expand its laboratory and informatics business, which focuses on asset management, inventory tracking and other elements of lab operations. Dekkers also said that additional acquisitions are on the cards in the coming months.

The measurement and control business saw a 5 per cent hike in sales to $161 million, with operating income up by nearly a third to $14 million, while optical technologies sales improved 18 per cent and the division returned to a $4.8 million profit after posting a loss in the first quarter of 2003.

Apogent​ saw its revenues for the second-quarter ended 31 March reach $297 million, a rise of 7.7 per cent, while operating income rose 4 per cent, held back somewhat by restructuring expenses relating to its upcoming $2.7 billion merger with Fisher.

The company, whose business is split between life science research products and clinical diagnostics, said that underlying organic growth was 2.5 per cent, with the major contribution coming from the clinical segments. Research products had some bright spots – including consumables, plastic labware and chromatography equipment – which managed 7.3 per cent organic growth.

Like its expectant parent, Apogent has been snapping up companies in a consolidation wave that has passed through the pharma, biotech, hospital and clinical lab sectors and is now hitting the supply sector. In February the company bought flexible packaging company H A L Baggin and formed Pactech, following this up with the purchase of clinical diagnostics firm J&S medical Associates in March and EaglePicher Scientific Products in early April. These three business are expected to add a total of around $30 million to 2004 revenues.

Analytical instrument specialist Waters​ reported a 15 per cent sales hike (8 per cent organic) to $255 million, which chief executive Douglas Berthiaume put down to a return to ‘typical levels’ of capital expenditures among the firm’s pharmaceutical customers. Operating income grew 18.7 per cent to $50.8 million.

Berthiaume said that mass spectrometry sales were down on the first quarter of 2003, but had staged a recovery since the firm launched its Quattro Premier tandem quadrupole MS system, used in drug development labs.

The company also has high hopes for its Acquity​ UPLC system, introduced at Pittcon and said to significantly improve productivity in the lab by giving scientists chromatographic run times up to nine times shorter than the fastest current HPLC systems.

Smaller players also doing well​

Turning to the smaller laboratory equipment companies reporting this week, strong sales increases were seen across the board.

Varian​, which makes scientific equipment and consumable and vacuum products such as pumps and leak detectors, recorded a double-digit (13.6 per cent) hike in sales to $233 million in the period – its fiscal second quarter - while operating income managed a 5 per cent boost to $22.4 million.

The company said that the results reflect improved demand from both industrial and life science customers and a number of new product launches in its scientific instruments and vacuum technologies segments, and particularly in its flagship nuclear magnetic resonance (NMR) portfolio, used to for mapping molecular structures and learning how molecules function and relate to each other.

NMR is used as a workhorse technology by pharmaceutical and life science researchers for organic synthesis analysis, protein structure, function, and dynamics. Additionally, it is a highly useful tool for metabolite profiling, especially as it relates to uncovering potentially toxic side effects of a new drug candidate.

Last week, Varian unveiled the first-ever commercial system capable of automatically processing NMR sample tubes using the standard 96-sample format. The 768AS instrument is designed to replace the current protocol that requires operators to manually introduce NMR tubes into specific holders, called turbines, prior to analysis.

Finally, Charles River Laboratories​ reported a 13.5 per cent increase in first-quarter sales to $173 million, while operating income soared 16.8 per cent to $39.5 million.

The company put the result down to a strengthening market for outsourced development services and increased spending in the pharmaceutical and biotechnology sectors. This drove sales in its research models and services division - which focuses on drug discovery and development tools such as animal models - up 10 per cent to $113 million.