Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2016 Fourth 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. I would like to introduce our moderator for the call, Mr. Kenneth Apicerno, Vice President, Investor Relations. You may begin the 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 the Investors section of our website, thermofisher.com, under the heading Webcasts and Presentations, until February 17, 2017. A copy of the press release of our fourth quarter 2016 earnings and future expectations is available in the Investors section of the website under the heading Financial Results. So before we begin, let me cover our Safe Harbor statement. Various remarks we 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 October 1, 2016 under the caption Risk Factors, which is on file with the Securities and Exchange Commission and also available in the Investors 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 fourth quarter 2016 earnings and future expectations and also in the Investors section of our website under the heading Financial Information. So with that, I will now turn the call to Marc.

Thank you, Ken. Good morning, everyone. Thank you for joining us today for our Q4 and year-end call. I'm pleased to report that we delivered an excellent 2016 and we had many significant accomplishments that strengthened our industry leadership. At a high level, we leveraged our unique scale and depth of capabilities to gain market share. We continued to execute our growth strategy to strengthen our competitive position. We deployed significant capital to enhance our value proposition for our customers and create value for our shareholders. And we delivered another very strong year of financial performance. I'll cover each of these highlights of my remarks, starting with our fourth quarter financial results. We delivered very strong adjusted EPS growth in Q4, with a 14% increase to $2.41. Our revenue in Q4 grew 6% year-over-year. Our adjusted operating income increased 14% and we expanded our adjusted operating margin by 160 basis points to 24.8%. Turning to the full year. Our strong adjusted EPS performance all year led to excellent growth of 12% in 2016 to $8.27 a share. We grew revenues by 8% for the full year to a record $18.27 billion. Adjusted operating income grew 10% and we expanded our adjusted operating margin by 60 basis points to 23.1%. We've steadily and significantly increased our profitability, and this is a tribute to the power of our PPI business system. PPI has allowed us to continuously expand our margins over the past 10 years, which positions us for a very strong future. In summary, our team achieved a great year, and that positions us very well going into 2017. Turning to our performance by end market, starting with pharma and biotech. We delivered a strong Q4 to cap off another excellent year serving this customer base. We grew 10% in this…

Thanks, Marc, and good morning, everyone. I'll take you through our fourth quarter and full-year results for the total company, then I'll provide some color on our four segments and conclude with a detailed review of our 2017 guidance. Before I get into the details of our financial performance, I thought it'd be helpful to provide a high-level view of how the year played out versus our expectations at the time of our last earnings call. Organic growth was in line with our previous guidance range and we delivered just under 4.5% organic growth for the full year. From an earnings standpoint, we finished $0.03 higher than our previous guidance midpoint. This was driven by good performance from the FEI acquisition as well as FX, tax rate and share count being slightly more favorable than we'd previously estimated. For the full year 2016, we delivered $8.27 of adjusted EPS, 12% growth year-over-year despite a 1% headwind from foreign exchange. Free cash flow was $2.74 billion for the year, slightly higher than our guidance. So, overall, another year of excellent financial performance. Now let me give you more color on the quarter and the full year. Starting with adjusted earnings per share, as you saw in our press release, we grew adjusted EPS in Q4 by 14% to $2.41. For the full year, as I just mentioned, adjusted EPS was $8.27, up 12% versus 2015. GAAP EPS in the quarter was $1.59, up 6% from Q4 last year, and $5.09 for full year 2016, up 3% versus 2015. On the top line, in Q4 our reported revenue grew 6% year-over-year. This included 8% growth from acquisitions and a 1% headwind from foreign exchange. Normalizing Q4 for fewer days, we estimate that organic growth was approximately 4% during the quarter. As you're…

Thanks, Stephen. Operator, we're ready to open it up for Q&A.

Your first question comes from the line of Derik de Bruin of Bank of America. Please go ahead.

Hi. Good morning.

Good morning, Derik.

Good morning, Derik.

9% organic revenue growth in Life Sciences Solutions, that's a bigly number, to quote somebody. Can you give us a little bit more color on what's driving that?

So, Derik, the business had a very strong year. And when I look at the combination between the Life Sciences Solutions business kind of year three into the integration, you're seeing the full potential of our company in terms of just great performance. We saw strength in our Biosciences business. We saw excellent strength in our Bioproduction business and excellent strength in our Clinical Next-Gen Sequencing. So that combination was common through the year and continued into the fourth quarter.

Great. And just a little bit of a follow up. Are you getting any sense, given the amount of uncertainty that's out there with the new administration, that there's going to be any hesitation at all in spending in Q1? Basically, your expectations are you have a day headwind, but you're expecting a little bit softer organic revenue growth, more so than normal seasonality in Q1 because of some potential hesitation in spending in pharma or academia until they figure out what's going on?

I think the way we think about the phasing is with the 4% organic growth in the guidance, we're just assuming a difference based on the calendar days. So a little bit below the 4% in Q1, and then obviously mathematically slightly above the 4% average over the balance of three quarters. So that's the phasing. In terms of the views on certainty or uncertainty, I've had the opportunity actually in the month of January to see a very significant number of customers, interacting with probably about 25 CEOs or head of major academic institutions around the world. My take is that there is optimism based on a more business-friendly environment in the U.S., but that optimism will start to pan out into good news over time because none of the policies are really in effect. So there's a bit of let's figure out what's going to happen. But I would say versus a year ago, actually I thought the tone was more positive as I did my kind of year-end reviews and catch-up with our customers.

Great. Thank you very much.

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

Good morning, guys.

Good morning, Ross.

If we think about underlying trends from an end market standpoint, obviously a lot of noise in Q4 because of the days impact. But if you can think about versus plan maybe where things came in potentially ahead and then where maybe you saw order trends, if at all, maybe not hit what you were looking for as we enter the first part of the year, what were the end markets you would sort of highlight for us to watch in the first part of the year that are probably most important relative to whether there's upside or maybe a bit of pressure on the organic line?

So, Ross, if I think about the fourth quarter, the one thing that was different was really the industrial portion of our industrial and applied, as bookings after really four very difficult and consistently difficult years clearly picked up. It's longer lead time items, so that really probably doesn't show up in the numbers until Q2 and Q3. But the thing we're really looking at is that bookings trend continue, because that was encouraging. We're assuming this year that last year we had low-single digit growth in the industrial and applied markets, and we are assuming in our guidance that we will be at or around the company average, a little bit of a pick up in that market. That really is the only significant thing that I'd say that we really saw from an overall end market perspective.

What do you make of all the probably more investor concern in pharma and more on the CapEx side where folks are looking at all of the noise coming on drug pricing and the like and are worried about that market decelerating. It certainly doesn't feel like that's the case. And I guess from your standpoint, you've been pretty consistent with your messaging. But as you spend a lot of time with customers, maybe give us a little bit of feel or color how they're kind of interpreting the opportunity set on the pipeline versus maybe some of the risks they see to their business on the policy side and how they're kind of calibrating those two things from a purchasing standpoint.

Yeah. So as you know, we're very well positioned serving this customer set and have delivered very strong growth for quite a number of years. And that's been in environments that were very good and environments that were actually quite challenging, right? So our value proposition of helping our customers be more innovative and productive has helped us gain share through the different parts of the cycle. As we discussed with our customers, generally they feel good about the science that they're doing and they feel good about what the prospects are for their investments. So what I would say is that we haven't seen a significant change in tone. Obviously, they'll navigate the various dialogues as will every industry will have their own nuances that they have to address in the current state. But I didn't see a change really in tone. What we're assuming, Ross, in our guidance is that we will grow mid to high-single digits serving this end market versus our 10% comparison for the year. And that's the same posture that we've taken the last few years of using BioPharma as – or believing that our growth will be strongest in that end market and giving a little bit of a broader range because we obviously have a good comparison in terms of performing well last year. But we feel good about the outlook in the market.

Very helpful. Thanks, Marc.

You're welcome, Ross.

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

Hi. Thanks. Good morning, guys. I wanted to start with the Lab Products and Services segment. I think even after adjusting for the workdays, it was a little bit softer than we were looking for. Can you walk through some of the products? You mentioned clinical trial logistics, again, good growth. What was moving the other way in the quarter?

So, if I think about the year-end in the segment that probably saw the most effect in terms of the year-end pattern, it probably sits in that segment, less so a specific business, than the following dynamic. The last three years, kind of the 2013, 2014, 2015 type timeframe, we had very robust year-end spending. When we look at the year-end spend we saw in 2016, it was kind of more of a normal level of spend and that would be what would be most reflected in our Lab Products and Services business. So that's where we saw it, from that perspective, being a little bit softer. When you look at things like stack comparisons and things of that sort, actually the trends are identical throughout the year. So when we look at the underlying health, it's pretty much identical through the four quarters.

Great. That's helpful. And then as a follow-up, Stephen, you mentioned the guide does not include potential net benefit from tax reform. Could you just give the latest thoughts on policy and how the moving parts impact Thermo? Thanks.

Sure. So, obviously, it's a very fluid situation in terms of U.S. tax reform and a lot of press, but not many details. As we assess the various logical options that are being discussed, we're confident we'll see a net benefit to our current tax rate. The benefit has the potential to be significant because there are really two key factors. First, we're a net exporter, which is a positive should a border adjustment provision be part of the plan. And secondly, the majority of the taxes we pay today are actually in the U.S. So even with the potential limitation on interest deductibility, the rate coming down would certainly be beneficial to us. And in terms of repatriation, we already have a very efficient structure that has substantial capacity on a go-forward basis.

Excellent. Thank you.

Thanks, Jack.

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

Hey. Thanks. Maybe I'll just start out with some rounding out the end market discussion questions. Marc, can you tell us what's embedded for academic growth for the year? And then it also seems like you saw a little bit of a pick up in Europe. We've heard about that from other peers. So I'm wondering if you can you talk a little bit more about what you're seeing there.

Yeah. So, Tycho, thanks for the question. In terms of academic and government, we had low-single digit growth for the full year. And in the quarter when you normalize for days, it was pretty much the same conditions we saw as the full year. Geographically, the U.S. and China have stronger growth. And other parts of the world were not strong. From a guidance perspective in 2017, we're looking at similar conditions to 2016. So, low-single digit growth.

And the thing across Europe, in Q4 just where certain projects landed in terms of Bioproduction and our BioPharma Services business with more weighted toward Europe than U.S. And those things shift over time, so nothing to read into the performance in Europe in Q4.

Yeah, I would agree. I would say from an outlook perspective, we would assume that over time the U.S. is going to get a little bit stronger and Europe is probably going to be slightly more muted in terms of our outlook for the year.

And then I think one of the things you touched on at our conference in January was taking more price actions this year. Can you maybe just talk about how you're thinking about pricing?

Yeah. So with the strengthening of the dollar, certainly in markets where there's not strong local competition, we've been taking actions. We had done that in Japan a couple years ago. Benefited from that and we're doing that in additional markets where we have the opportunity to do so. We took some of those actions in the UK and continue to do so just given how the pound has been. So those are some of the things.

And then I guess last one on capital deployment. Just wondering if you can characterize the M&A funnel. You did talk a lot about the buyback that you did in December and the ones you have planned for this year. But wondering on the M&A front what you're seeing out there and if there's still interesting assets you're looking at?

Well, there are. I mean, the funnel is busy and pretty full. We continue to look at a variety of opportunities. As you know, the industry is incredibly fragmented. So we follow our strategy of looking at things that will strengthen the company strategically, clearly be understood and valued by our customers and create shareholder value, with the primary metric being return on invested capital. While we don't assume any in our guidance because you never know what will ultimately get over the finish line, we feel good about what the pipeline looks like.

Okay. Thanks.

Thanks, Tycho.

Your next question comes from the line of Jonathan Groberg of UBS. Please go ahead.

Hey. Thanks a million. And congratulations on a solid end of the year. So, Marc, maybe – you guys are very diversified across kind of all metrics. Your target range is 4% to 6%. You're saying industrial is getting a little bit better. I guess as you think about it big picture, to get you up to that 5% to 6%, what would you need to see in 2017?

So in terms of the drivers in the end markets to get to higher organic growth, I would say obviously Industrial and Applied would be one. Obviously, coming in at the higher end of the range in the BioPharma, given the range we've assumed there, would ultimately do that. And then the other area is going to be academic and government. It has really been very low-single digits for several years, and that's probably 1 point below the long-term historical trend line. So there's some growth embedded there as well. And the 4% to 6%, as we mentioned, is the long-term outlook. So any particular year, Jon, it's going to vary, but we've been solidly in that range for a number of years.

Okay. Thanks. And then I guess bigger picture, Marc, one of the things that seems pretty obvious is that the new administration in the U.S., and who knows what happens in some of the other regions, there's just a lot of change that's coming. Maybe it's difficult to predict what that change is. I know your philosophy and your track record is it's your job to manage through all that change. Is there anything that you see on the horizon that you're particularly focused on that you think might impact your own strategy through all of this? I'm just trying to get an understanding of how you're thinking about everything that's going on.

So we read every change through the lens of our customers and how we're going to help our customers navigate the new opportunities and any challenges that they may face. And when there's periods of any type of inflection point, we've done a good job of strengthening our relationships with our customers and growing our share. And when I think about the specific things for us, obviously tax policy, as Stephen mentioned, should be a nice benefit for us as that gets enacted. So we're paying attention to that as probably the one that's most immediate and affects us.

Okay. Thanks.

You're welcome.

Thanks, Jon.

Your next question comes from the line of Doug Schenkel of Cowen & Company. Please go ahead. Chris Lin - Cowen & Co. LLC: Hi. Good morning. This is Chris on for Doug today. Thanks for taking my question.

Sure. Chris Lin - Cowen & Co. LLC: Marc, I was curious if you could provide some more commentary on innovation. I think you have some commentary on new product contributions in your Annual Proxy Statement. But ahead of that, I was curious if you could just help quantify the new product impact in 2016 and how you would think about contributions in 2017?

Yeah. So, Chris, thanks for the question. So innovation has been a good year. We finished ahead of our internal goals in terms of the impact for innovation in the year 2016. We use a variety of metrics to measure that, but felt like performance was good. We have some big areas of investment that we're focused on that will drive really good growth into the future. I would categorize them in the areas of Mass spectrometry and broadening the application of that technology. The expansion of our next-gen sequencing further and further into the clinical space, we've had good momentum there. And we're extremely excited about the structural biology applications that FEI brings us and the combination with our leading position in mass spec, So those are some of the things that when I look at what are likely to be continuous good growth drivers for us going forward based on innovation, that's some of the highlights. Chris Lin - Cowen & Co. LLC: Actually, I just have a related question, and I think you've noted (48:55) both of them. We have been curious about the potential impact of new products, such as NGS assays and mass spec, specifically in Specialty Diagnostics and how that can improve the growth rate in that segment going forward. So I was wondering if you could provide any commentary there on improving the Specialty Diagnostics growth outlook?

Sure. So in terms of the growth in Specialty Diagnostics, it's been operating just below the company average for a period of time. We have a fairly large program in clinical mass spectrometry and that's something that we are targeting to have an impact in 2018. And that, obviously, when we launch and when it drives adoption, should be a nice tailwind for that part of our business. Thanks, Chris.

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: Hi. Good morning. Can you hear me now?

Yep. Steve C. Beuchaw - Morgan Stanley & Co. LLC: Okay. Sorry about that. Just looking to fill in the picture here a bit on two things. One, Marc, in genetics and genomics, your tone there has been really positive for some time. And, of course, now with Affymetrix, you have a fuller toolkit, if you will. I wonder if you could just level set us a little bit to help us from a modeling perspective. In the clinical sequencing business, any way you'd be able to size that for us, given where we are here? And you mentioned really strong growth there. How strong is the growth, what are we talking about? And then on the Affymetrix side, how have you seen the growth at Affymetrix, or the legacy Affymetrix business progress since the completion of the deal? And how are you thinking about those businesses for 2017? Thanks.

So, Steve, thanks for the questions. So we obviously have a strong competitive position in our genomics offering from the only company having Sanger sequencing, qPCR, Next-Gen Sequencing and Microarrays within the portfolio. So let's start with the clinical Next-Gen Sequencing. That's a business that has grown in the teens for us and continues to progress very well, so at least gives you a sense. From the Affymetrix integration, let me give you an update there. The integration has gone very smoothly. The eBioscience's business portion, which is complementary to our Biosciences position, is growing very well. And it was encouraging to see in the fourth quarter some stabilization of the Microarray business. Still below our expectations from the beginning of the year, but clearly a nice set of momentum from the actions we put in place during the course of the year. So I feel better about that. And we're looking forward to a strengthening year in the Affymetrix business in 2017. Steve C. Beuchaw - Morgan Stanley & Co. LLC: I really appreciate all the color. Thanks, Marc.

You're welcome, 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. Wanted to spend a little bit more time on the BioPharma outlook for this year. Obviously a lot of concern out there, just given how strong those market have been for everybody last couple of years. And you covered some of that in the prepared comments. But I was hoping maybe you could speak a little bit about how you think about visibility between the R&D side of BioPharma versus Bioproduction. Obviously, you got good exposure in both halves. But if you could talk a little bit about the process you went through when you set your 2017 guidance and handicapping the R&D versus production outlook, that be helpful.

Sure. So, Isaac, in our mix, we have roughly a $1 billion Bioproduction business. Been a very strong grower. It's a bit lumpy. But the growth is very strong. And when we look at the outlook for this full year, it continues to be very robust. The reason for that is as you move through the R&D process into production to the ramp of production, those products are very life science tools – consumption is very intensive. So as volume grows, you really do consume a lot of product relative to a small molecule, which is once you get it into production, really you're just down to the Chromatography for QA/QC. So that's a tailwind that should be with us for the long term in terms of the growth in that part of the business. In terms of the research and development portions of the business and visibility, you never have perfect visibility. But generally, based on the strength of the customer relationships that we have and the access that we have to the customer base, our takeaway is that this is an end market where we're very well positioned to continue to drive meaningful growth. Isaac Ro - Goldman Sachs & Co.: Great. And then just a follow up on a couple product specifics. One is on FEI. Obviously that's been a nice acquisition from a technology standpoint. And then I think at the same time, the end markets, as you mentioned, in structural biology have started to pick up. So can you talk little bit about where we are in terms of recognizing the orders that you have in structural biology? Is that an uptick that we should expect to continue throughout the course of 2017, or is it really going to be more about the first half of the year? And then second to that would be Affymetrix. If you could help us level set how growth in that business settled out for 2016 and what your expectation is for this year. Thank you.

Yeah. So in terms of FEI, it is an incredibly strong fit with our company and probably one of the most under-appreciated things if I think about in terms of what we did last year and in terms of how that will create a very bright future for the company. When I look at the momentum in structural biology and the orders and the shipments, the business should grow well this year. Obviously, most of the year does not count in our organic growth calculation just because we don't do it until the anniversary. But the business in aggregate should grow above the company average and, last year, certainly had bookings well in excess of their revenue. So a very strong outlook from that perspective. In terms of Affymetrix, we're expecting the business to grow around the company average, maybe slightly better in 2017. So thank you, Isaac.

Operator, we have time for just one more.

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

Hi. Good morning, thanks. Just wanted to follow up on the Specialty Diagnostics growth drivers there with two quick ones. First is just on contributions from the collaborations such as what you are doing with Siemens. What should we expect out of those? And then the second is whether you feel like some of the things that could maybe give the portfolio a deeper reach will be meaningful to growth this year? I think your PCP assay got cleared for broader use. I think you've signed some licensing deals there. So how might those contribute? Thanks very much.

Yeah. Thanks for the question. So in terms of our position in Specialty Diagnostics, we really have a unique position because we are large partner to each of the OEM companies in the field. So customers like Siemens and Roche are important customers and collaborators with us. One of the interesting areas of growth for us has really been in the sepsis biomarker, PCT. The additional clearances in the U.S. should be a nice tailwind for that business, as not only did we get the clearance on our platform as did a number of our partners. So that should drive further adoption in the U.S., where originally it was usually for a single test and now it's used for monitoring a patient with sepsis, which allows for a larger recurring revenue stream. So we're excited about those opportunities. So thank you for the question. Let me just conclude with a quick comment. As a company and as a team, we're very pleased to delivered strong 2016. We're very well positioned to achieve our growth goals for the years ahead. And certainly I want to thank each of you for your support for Thermo Fisher Scientific. Thanks, everyone.

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