Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2016 third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. . Thank you. I would like to introduce our moderator for the call, Mr. Kenneth Apicerno, Vice-President Investor Relations. Mr. Apicerno, you may begin your call. .

Good morning, and thank you for joining us. On the call with me today is Marc Casper, our President and Chief Executive Officer and Stephen Williamson, Senior Vice-President and Chief Financial Officer. Please note this call is being webcast live and will be archived on our website thermofisher.com under the heading Webcasts and Presentations until November 11, 2016. A copy of the press release of our third quarter 2016 earnings and future expectations is available on the investor section of our web site under the heading Financial Results. So, before we begin, let me briefly cover our safe harbor statement Various remarks that we may make about the company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions of 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 the company's quarterly report on 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 also available on the investor section of our website under the heading SEC filings. 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; therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. Also during this call we'll be referring to certain financial measures not prepared in accordance with generally accepted accounting principles, or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in the press release of our third quarter 2016 earnings and future expectations and also in the investor section of our website under the heading financial information. So with that, I'll now turn the call over to Marc.

Thanks, Ken. Good morning, everyone. Thanks for joining us today for our Q3 earnings call. We're pleased to tell you that we had another great quarter and we're right where we should be at this point of the year. We delivered strong financial performance on the top and bottom lines. We continued to execute our growth strategy to best serve our customers and gain share. And we also completed our acquisition of FEI earlier than we expected, and the integration process is in full swing. So terrific progress across the board. I'll cover these points in more details in a few moments. But the key message is that with three great quarters behind us, we're well positioned to deliver another very successful year. I'll start by covering the Q3 financials at a high level, give you some color on our performance by end market, and provide a recap of the quarterly highlights in the context of our growth strategy. Then I'll wrap up with our revised guidance. In terms of financials, revenue in Q3 grew 9% to $4.49 billion. Adjusted operating income was up 11% and we expanded our adjusted operating margin by 40 basis points to 23%. Finally, I'm very pleased that we achieved a 13% increase in adjusted earnings per share to $2.03. As you know, adjusted EPS is our primary performance metric and we continue to deliver consistently strong results to extend our long track record here. In summary, it was a great quarter financially and our teams are really executing well to take advantage of the opportunities we have to help our customers meet their goals. As you hear from us every quarter, we're committed to building on our capabilities to being an even stronger partner for them whether we're launching new products or making strategic…

So thanks, Marc, and good morning, everyone. I'll take you through an overview of the third quarter results for the total company, and then I'll provide some color on our four segments and conclude with the updated 2016 guidance. Before I get into the details of our financial performance, I thought it would be helpful to provide a high level view of how the quarter played out versus our expectations at the time of our last earnings call. Operationally, we're right in line with our expectations both on organic growth and earnings generation. Given the level of volatility in foreign exchange rates so far this year, it was good to see that Q3 FX was $0.02 less adverse than we previously estimated and finally it was great to get the FEI deal closed in September, and we were able to deliver $0.04 of additional adjusted earnings per share in the quarter. So the high level summary is we had a strong Q3 and we were able to deliver $0.06 of adjusted earnings per share above what we had previously expected. Now let me give you some more color on the quarter. Starting with adjusted earnings per share, as you saw in our press release, we grew adjusted EPS in Q3 by 13% to $2.03. GAAP EPS was $1.19 up 1% from Q3 last year. On the top line, our reported revenue grew 9% year-over-year. The components of our Q3 reported revenue included 4% organic growth, a 5% contribution from acquisitions, and a slight headwind from currency translation. In Q3, we recognized just under $100 million of revenue from FEI. Looking at our growth by geography in Q3, this was very similar to what we saw in Q2. Both North America and Europe continued to grow in the low-single digits. Asia…

Thanks, Stephen. Operator, we're ready to take questions.

Your first question comes from the line of Jon Groberg of UBS. Please go ahead.

Great. Thanks. And congratulations on another solid quarter. Marc, obviously, there's a lot of concern out there in the investor community around the biopharma market. You noted another strong, almost looked like accelerating, growth in that market. Any comments at all around early indications of what you may be seeing there? Any potential concern around what you're hearing from customers or elections?

Jon, thanks for the question. Been a great end market for us. The outlook continues to be very bright. Let's talk about why the market is generally good. The science is good and the number of approved drugs continues to go well. Vaccines are continuing to play a more and more important role in healthcare, and that's a good positive as well. And as more and more biotech, large molecule drugs are making it through the pipeline versus small molecules, biotech is a larger consumer on a relative basis of lifescience tools and diagnostics because it's not just in the research and clinical trials phase, but all the way into production you would use our products. So actually the industry looks very bright. And then obviously on top of that is the company's position within the industry. And we have a great value proposition with these customers and we have consistently gained share for a number of years. We have strong relationships across all of the major biotech and pharmaceutical companies. And they see us as their partner to drive innovation and productivity, and that has allowed us to have a great historical performance, but, more importantly, positioned for a very bright outlook in this end market.

Great. And then a quick follow-up, Marc, on I guess it looks to me like Affymetrix is still a little bit underperforming relative to maybe where you expected or at least what they were doing. And so I'm just curious, as you initially get to know FEIC and, again, given some of the end markets out there, are you feeling comfortable with your initial outlook of FEIC as you've gotten to know it better? Any updated thoughts there? Thanks.

So in terms of FEI, really we're very excited to have the company as part of Thermo Fisher Scientific and a great addition in terms of colleagues. The business is on track to have a good year in terms of growth, and obviously had a nice contribution in Q3 and a good contribution to our success in Q4. So integration is just getting underway. We did the planning between announcement and close, and the teams are executing well and we're very excited about what FEI is going to bring to the company over time. What we expect over time, as we said back in May, is that this business will grow faster than the company average. Thanks, Jon.

Thanks.

Your next question comes from the line of Derik de Bruin of Bank of America Merrill Lynch. Please go ahead. Derik de Bruin - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Hi. Good morning.

Good morning, Derik. Derik de Bruin - Merrill Lynch, Pierce, Fenner & Smith, Inc.: So, Marc, I know it's a little early to start thinking about 2017 maybe, but you're doing 11% to 12% EPS growth this year, 12% or 13% FX adjusted. At your Analyst Day, you said that, with capital deployment, 12% to 15% EPS growth was how we should think about the Thermo model going forward. Is that still the best way to think about, given the FEI and the Affy deals that are in there, is that a good starting point for next year?

So, Derik, thanks for the question. Obviously, we'll give our guidance in early 2017 on the Q4 call. The way that I see it is you have the base operational assumptions and the capital deployment assumptions. And if I think about the environment, the environment looks very similar to what it was in May. So that puts us in a range of 4% to 6% organic growth in terms of that. And in terms of capital deployment, we will clearly benefit from the accretion that we get from FEI on a year-over-year basis, and certainly the accretion that we get from the Affymetrix transaction. So at a high level, the way you articulated it I agree with. You obviously have to work through all the math, but given the strong acquisitions that we've done this year, we're going to get a nice contribution to our earnings from the capital deployment actions in this year. Derik de Bruin - Merrill Lynch, Pierce, Fenner & Smith, Inc.: And then just one quick follow-up. So was there any signs at all that delayed equipment purchases in the academic labs in both/either the U.S. or Europe?

The academic end markets, the government end markets, were very similar to what we saw in Q2, with the U.S. growing in the low-single digits and the rest of the world a little bit more muted than that. And we didn't really see any meaningful changes in the trends. Derik de Bruin - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Great. Thank you

You're welcome.

Your next question comes from the line of Ross Muken of Evercore ISI. Please go ahead.

Good morning, guys.

Good morning, Ross.

So I want to dig back into pharma. I was hoping you could maybe parse out what your expectations are going forward within the sub-segment by some of the key areas. So we've heard from the pharmas themselves and from the CROs and from the CDMOs sort of varying comments around demand. So can you give us a feel for what you're seeing in sort of base discovery and the tools and equipment that gets sold there versus production, which seems like it's still on fire. And then maybe your biopharma service business, just give us a feel if it's sort of consistent across the three or four key buckets and across the customer bases or if there's maybe one or two areas that you're either more or less constructive on.

We're doing well, all right. So, I mean, that is the summary. So you can parse it different ways, and the growth is strong no matter how you parse it. Obviously, the bioproduction and the clinical trials logistics, or bio-pharma services businesses, continue to perform very well. And, you know, are growing a little bit above the rates there. But if you just kind of do the math, it implies that the rest is growing very strongly as well. So there wasn't much nuance in terms of the strong performance. I would say that our chromo-mass spec business obviously had a good quarter serving that business as well, but that's not implying that something did poorly. But given that there's been a lot of questions about what's going on in capital equipment, it's actually been pretty good. So we feel good about the end market. It's been a good nine months and it's been a good number of years. And we're well positioned.

And I guess on the industrial side, and applied, is there any geographic bias to the weakness there? We've heard varying comments in sort of Eastern Europe much worse than Western Europe and maybe mix out of Japan, but China good. I'm just curious to see your perspective on that and where, maybe if anywhere, you're seeing any positive signs of stabilization or improvement.

You know, from the industrial and applied markets, they declined very slightly in the quarter. As I read things outside of Thermo Fisher, just what's going on in the broader world, clearly industrial markets are soft globally. You know, it didn't seem like any particular geography really jumped out at us as a particular standout off of that. The applied markets in China continue to be good. So that's obviously positive; things like food safety and environmental protection. So that's a bright spot. But we didn't really get any particular pockets of weakness on the industrial or applied that we saw.

Great. Thank you.

You're welcome. .

Your next question comes from the line of Tycho Peterson of JPMorgan. Please go ahead.

Hi. Thanks. Marc, I want to go back to the academic markets. Obviously, there's kind of heightened sensitivity and I appreciate your business has been holding up better than others. It does seem like academic went from low single digit growth to slight growth. But can you give us a sense from your perspective on the market on what's going on? I mean, you were very positive at the beginning of the year on NIH dynamics and now we're seeing the outlays drop off about 13% in September. Obviously, university endowments are under pressure as well. So I guess what I'm trying to get to is there a risk that you might actually see this in the fourth quarter? If we go back to 3Q 2011 you saw things later than your peers. And what's the risk for bigger ticket items like cryo-em [cryo electron microscopy], which you now have with FEIC?

So, Tycho, the first thing I'd say I think we're performing incredibly well. I don't think anything other than that. And then in terms of the academic and government markets, if you go back to what we said at the very beginning of the year, right, which is probably the best way to think about what's different or what's the same, we expected that the year would start slower in the U.S. in academic and government and then build as the year went on. And actually the year started a little bit stronger than we had expected and has stayed steady with that that low single digit growth. So it came a little bit early, and it's been very steady. In terms of the other geographies, obviously, given that we expected academic and government to be a little bit better in aggregate, it basically says those must be slightly weaker, and clearly that's been offset by the strength in biopharma. So that's the sort of looking back in late January what's changed. In terms of are we off cycle versus others, I don't know. I think we're gaining share versus others. But that's my opinion. And, you know, when we thought about our range of outcomes for the year, we felt comfortable with raising the guidance at the end of Q2 to 4.5% organic growth, and we feel comfortable reaffirming that 4.5% outlook. And the way I think about it is our commercial teams cover a range of customers. We focus on where the best opportunities are, and, in a way, we don't force a lot of micro level of analysis for the investment community. It's our job to manage through it and we feel well positioned to deliver a really nice year in terms of performance.

Okay. And then on FEI, one of the dynamics they had talked about prior to the acquisition was an anticipated recovery in the semi market as you had the shift to 10-nanometer production, can you maybe talk about whether your view on that has changed at all and whether we might see that at some point next year.

Yeah, so given that we own the business for nine days, you know, but obviously been working with the team for a while, the life sciences business is performing very well both with strong revenue growth and strong bookings performance. The industrial-related material sciences businesses are a little bit more muted. And as we look at the numbers, it seems like the industrial businesses have bottomed out, which is encouraging. And then, obviously, as we get into owning the business longer and, in the future, we can give you more color in that.

Okay. Thank you.

Thanks, Tycho.

Your next question comes from the line of Jack Meehan of Barclays. Please go ahead.

Hi. Good morning, guys.

Good morning, Jack.

Marc, you know, I appreciate your perspective on the healthcare channel. There's been a little bit more noise on the provider side as of late. Just as you've talked with your customers, what are they saying about volumes? And as it pertains to the specialty diagnostics business, which of the segments need to improve to get us back to the 4% to 6% target range?

So, Jack, good question. As I think about the healthcare and diagnostic, it's very similar in Q3 to what we saw in Q2. What I would say is the more – the super high value added businesses, transplant diagnostics, the allergy and autoimmunity business, the clinical next-gen sequencing businesses, those businesses are performing very well. The more routine volume related businesses, your basic consumables you use every day, has been a little bit softer but not a change in trend. So what would have to happen for pickup in growth, two different factors could help drive it. You don't need both. Which is a little higher level of activity in the basic consumption of the products for consumables would help. And the other is, we have a number of programs that are driving our life science tools into the clinic, and they will be meaningful drivers as well. So the driving into the clinic, that's in our control entirely, and that puts us very optimistic about the mid-term prospects for the diagnostic business. And then we'll always take the upside if the markets get even better.

Great. That's helpful. And then just to follow-up on the Affymetrix integration, how that's going and any update on the array environment, any sequential changes you've seen there. Thank you.

So, Jack, in terms of Affymetrix, let me give you an update on the integration, let me give you an update on the business performance. Integration has gone really well. We are running very smoothly there. Our synergies are running ahead of plan. We'll achieve about $11 million in synergies this year, which is $5 million to $6 million better than we had assumed for this year. In terms of the business performance, the bioscience business is doing very well, growing sharply, and that's very positive. The micro array business, like we mentioned last quarter, is soft. We expect it to be soft for a few more quarters as we really drive adoption of the precision medicine microarray, and we're obviously actively marketing that. So that's a quick update on Affymetrix.

Great. Thank you.

You're welcome.

Your next question comes from the line of Doug Schenkel of Cowen & Company. Please go ahead. Doug Schenkel - Cowen & Co. LLC: All right. Good morning. Thanks for taking the questions, guys. Based on what we've heard from peers in the group, I think it's fair to assert that your organic revenue growth performance in the quarter and your guidance for Q4 looks fairly solid, certainly relatively speaking. Other companies do seem to have suggested that the end of the quarter was maybe not as strong as expected and that the order book at the end of Q3 and in the early part of Q4 maybe didn't build as much as they might have expected. Could you comment on end of quarter and early Q4 order trends? Relatedly, if there's anything notable by geography or end market? And I guess also relatedly, in a seemingly more uncertain environment, are there any changes you're making regarding spending or operational plans relative to how you were planning a quarter ago?

Yeah, in terms of the sequencing of the quarter, nothing really jumped out as particularly meaningful in terms of what happened in each month. And obviously we have the benefit of the first three weeks of October's results, so if they were off that trend line, that would have factored into our thinking, and it wasn't. So from that perspective, we didn't really see anything from a calendarization that was any particular impact. In terms of spending and those things, we're managing the business like we always do, which is we spend aggressively in the areas to drive value-added, and we're very conservative and frugal on the things that are low value-added, and that's kind of how we run the company day in and day out. So no significant changes on that front either. Doug Schenkel - Cowen & Co. LLC: Okay. Thanks for that, Marc. And then a quick follow-up. Would you guys be willing to provide growth by end market in Europe and parse out how growth compared in Eastern versus Western Europe?

I don't know the growth by end market by Europe because we don't manage the company that way. Qualitatively, Western Europe was a little bit stronger than Eastern Europe in terms of performance, but that's not a change in the trajectory over the last several quarters. But that's what we've seen. And from recollection, Germany had a pretty good quarter in terms of growth within the Western Europe, but that's not implying anything in particular about any of the other countries. Doug Schenkel - Cowen & Co. LLC: Okay. Thanks again.

You're welcome.

Your next question comes from the line of Steve Beuchaw of Morgan Stanley. Please go ahead.

Steve, are you there? Steve C. Beuchaw - Morgan Stanley & Co. LLC: I am. Sorry. Got a little feedback there. Good morning and thanks for taking the questions. So we've covered a lot of ground here in the Q&A and discussions around what's going on out in the end markets. But, Marc, I wonder if you could put it into broader perspective for us and think about as you go into business planning for 2017, from your perspective, what are the two or three things that you want to focus on most acutely as you make a decision about where to put the budget within the 4% to 6% range?

Yeah, the things that I think about in planning, it always goes through the, one, new product launches and what are the exciting things we've got in the pipeline and what the impact is going to be and making sure that's well characterized. Two, any particular special causes year-over-year one way or another. And at least as I sit here today, I don't see any special effects one way or another, so next year should look like this year in terms of some of the high-level things. One of the things we mentioned at the beginning of the year, which we're continuing to execute on, which I'm encouraged about, is when the medical device tax was put on a two-year hiatus, we spent the savings on investing in some mid-term restructuring activities. We will get one more year of that hiatus and we will invest those monies as well. So there's no effect year-over-year, but that means we'll have invested about $30 million in actions to drive more efficiency in the second half of 2017 and 2018, which I think is really good and encouraging and is something that we embedded into our long-term model. So those are some of the things we're thinking about. And I know that Stephen is looking forward to giving a detailed set of guidance at the beginning of 2017. Steve C. Beuchaw - Morgan Stanley & Co. LLC: And a follow-up for me is actually on competitive positioning. I think, as you can tell from the questions here in Q&A, we're all struggling to try to develop a broader perspective on the environment, given the fairly varied results in terms of growth from the companies in broader lifescience tools and diagnostics here over the last few weeks. Marc, do you think that you're getting stronger over the course of the year in terms of your competitive positioning? Is market share, even in certain specific verticals, a driver for you more so than it was even 12 months ago now that, in some areas, thinking about eCommerce, you're a stronger player than arguably you were 12 or 24 months ago?

Yeah, I mean, it's our job to widen the gap versus others in the industry every day, right? That's what we're paid to do is to make the company stronger and get better every day. And when I think about how we're performing this year, I think the company is performing very well. I'm very proud of the effort and the capabilities of our team, and they're delivering. So I think that's very positive. Obviously, we benefit from the strong competitive position we have. We have a very strong eCommerce platform, as you said. We have the largest commercial team. We have the best commercial team, in my mind. And, when I think about it, we've got great products; we've got a unique position in the emerging markets, which allows us to capitalize on those opportunities. I highlighted a couple during the quarter, but the way I really believe it is when I visit a customer in China, it's rationale for them to doing a disproportionate amount of their business with us because they simply get a better experience. We've got better people, better supply chain, and a more comprehensive set of offerings. So I think we're very well positioned, and we feel good about the outlook for the balance of the year and certainly as we get into 2017 and beyond. Steve C. Beuchaw - Morgan Stanley & Co. LLC: Really appreciate the perspective. Thanks again.

Thanks, Steve.

Your next question comes from the line of Isaac Ro of Goldman Sachs. Please go ahead Isaac Ro - Goldman Sachs & Co.: Good morning, guys. Thank you. Just maybe one more question on the academic side. We're obviously trying to reconcile what we've seen elsewhere in the sector this earnings season versus what you guys are saying, which is clearly more dovish. And as we look at the end of this year and into next year, it seems like the overall budget, at least in the U.S., should be a little bit better, Europe hopefully stable, and China hopefully better. So if we look at sort of the global picture for academic funding, is there any reason to think why we might see pockets of softness? And I know you guys can only speak for yourselves, but as the prior question pointed out, we're just trying to reconcile disparate data points in the context of a generally better funding environment

Yeah, I guess it's hard for – there's always challenges in the world. We do our very best to navigate through them so that we don't have to spend a lot of time explaining all of the things that go wrong. I think we do a good job of that because we deliver good results consistently. I guess it's – I really can't reconcile for you. I think the only two comments I can make is that, we had very good growth in chrome and mass spec. So if I look at what I have read about that, we did really well in that end market. And when I look at our clinical next-gen sequencing business, we grew very quickly. So I really can't reconcile for you what others are saying. It's hard to do. Isaac Ro - Goldman Sachs & Co.: Sure, sure. I understand that. Maybe I'd just follow up on the NGS comment you guys called out in the script. You mentioned it again here. Can you talk a little bit about the types of customers where you think you're seeing the most traction? Clearly, it's a high growth marketplace, and a rising tide floats all boats, but it has been a market where we had one pretty strong player here, and in the context of that competitive dynamic, I'm interested to know where you guys are finding the best upside and kind of the path forward to continue that momentum. Thank you

Yeah, Isaac, our business is really focused on the clinical applications of sequencing, and we benefit from the ease of use, the low capital cost, and, most importantly, the very low volume of sample that you need to run oncology panel on our sequencer. And that's allowed for really good adoption, and you're seeing a steady cadence of new assays that we're launching, which reaffirms to our customers that we're investing and meeting their needs. So that's the area that we have seen good momentum in. Thanks, Isaac.

Your next question comes from the line of Dan Arias of Citi. Please go ahead.

Yeah, hi, good morning. Thanks, guys. Marc, maybe just on pricing, obviously a mixed operating environment for interest and sales with industrial pretty choppy but pharma doing well. So can you maybe just touch on net pricing in the AI business and then what your expectations there are as we look out a bit?

Hi, Dan, this is Stephen. I'll take the pricing one. So we look at pricing in total for the company, and we're about 60 basis points of price. So it's very consistent with what we've seen for the rest of this year, and actually what we saw pretty much for all of last year. We're kind of lapping some of the things that we did in Japan in terms of the FX offsets, but that's going to be offset by some pricing actions we're taking in the UK as well. So pricing has been pretty consistent for us.

Got it. Okay. And then maybe just a follow-up on China and what you're seeing there with the precision medicine programs that you highlighted. I'm just curious about how you're finding predictability there or just maybe visibility there. Any reason that would be more or less sort of speculative in nature than some of the other things going on in China?

We've been on a really nice consistent roll for a number of quarters, and having visited China twice last quarter, the business is performing well, the bookings are strong, the outlook is good, and so we really haven't seen anything that would say that visibility is any different or if there's any particular storm clouds on the horizon. The business seems to look good, and we're benefiting from our strong competitive position here.

Okay. Thanks very much

Operator, we have time for just one more.

Your last question comes from the line of Sung Ji Nam of Avondale Partners. Please go ahead.

Hi. Thanks for taking the questions. Marc, I was wondering, you know, you guys seem to have a pretty unique diagnostic business with decent margins. Given your recent announcement about the cancer – your participation in the cancer moon shot initiative, and I believe you also have a prostate cancer testing under development, I was curious as to if your kind of interest in the diagnostic market has shifted a little bit and potentially considering, you know, higher risk opportunities.

We have a really strong position there. It's been a core part of our business for a long time. But we really haven't changed the risk profile of it as much. We do have, obviously, a couple big investment areas that will position us for accelerating growth over time. One is in the adoption of clinical next-gen sequencing into those applications, and our announcement, as you highlight, on the cancer moon shot is an example of that. And the other is obviously in the area of mass spectrometry where we've got a fairly big program as well. So we're not really taking a different strategy, but we've been pursuing for a number of years on driving new applications into the clinic while benefiting from a very strong highly profitable consumables business.

So, thank you for the question. Let me wrap up with just a quick comment, which is as I reflect back, we're certainly on track to deliver another excellent year, and we look forward to announcing our year-end results early in 2017. And, of course, thank you for your support of Thermo Fisher Scientific.

This concludes today's conference call. You may now disconnect.