Logo
Log in Sign up


← Back to Stock Analysis

Earnings Transcript for TMO - Q3 Fiscal Year 2024

Operator: Good morning, ladies and gentlemen and welcome to the Thermo Fisher Scientific 2024 Third Quarter Conference Call. My name is Ezra and I will be your coordinator today. [Operator Instructions] I would like to introduce our moderator for the call, Mr. Rafael Tejada, Vice President, Investor Relations. Mr. Tejada, you may begin the call.
Rafael Tejada: Good morning, and thank you for joining us. On the call with me today is Marc Casper, our Chairman, 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 Investor section of our website thermofisher.com, under the heading News, Events, and Presentations until November 6, 2024. A copy of the press release of our third quarter 2024 earnings is available in the investor section of our website under the heading financials. 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 under the Private Securities and 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 most recent annual report on Form 10-K and subsequent quarterly report on Form 10-Q, which are on file with the SEC and available in the Investors section of our website under the heading Financials, 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 will 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 2024 earnings and also in the investor section of our website under the heading financials. So with that I'll now turn the call over to Marc.
Marc Casper: Thank you, Raf. Good morning, everyone, and thanks for joining us today for our third-quarter call. As you saw in our press release, we delivered another quarter of strong financial performance. We're seeing the benefit of our trusted partner status, which is resonating strongly with our customers and we're continuing to deliver differentiated performance in the short-term, while further strengthening our long-term competitive position. So first, let me recap the financials. Our revenue in the quarter was $10.6 billion. Our adjusted operating income was $2.36 billion, adjusted operating margin was 22.3% and we delivered another quarter of strong adjusted EPS performance, achieving $5.28 per share. Our performance in the third quarter is allowing us to raise our adjusted EPS guidance once again and continues our track record of delivering differentiated results. Turning to our performance by end market. In the third quarter, underlying market conditions played out as we'd expected and we delivered another quarter of sequential improvement in growth. Let me provide you with some additional context. Starting with pharma and biotech, we declined in the low-single-digits in Q3, including a five point headwind from the runoff of vaccines and therapy revenue. This marks the third quarter in a row of sequential improvement in growth for this customer segment. Performance in the quarter was led by our research and safety market channel and our clinical research business. In academic and government, we grew in the low-single-digits during the quarter. We delivered strong growth in our electron microscopy business and in our research and safety market channel. In industrial and applied, we grew in the low-single-digits during the quarter, highlighted by strong growth in our electron microscopy business. Finally, in diagnostics and healthcare, growth was flat for the quarter. As a reminder, the reported growth in this end market is impacted by the runoff of COVID-19 testing-related revenue. During the quarter, the team delivered good revenue growth in our transplant diagnostics and immunodiagnostics businesses, as well as the healthcare market channel. As I reflect on the end markets, underlying conditions have modestly improved each quarter as the year has progressed. This is in line with the framing we provided as part of the guidance at the beginning of the year. Let me now turn to an update on our growth strategy. As a reminder, our strategy consists of three pillars
Stephen Williamson: Thanks, Marc, and good morning, everyone. I'll take you through an overview of our third quarter results for the total company and provide color on our four business segments. And I'll conclude by providing our updated 2024 guidance. Before I get into the details of our financial performance, let me provide you with a high-level view on how the third quarter played out versus what we'd assumed for Q3 in the midpoint of our prior guide. On the top line, both organic revenue growth and core organic revenue growth increased sequentially for the third consecutive quarter. Revenue was largely in line with what we'd assumed for Q3 in the midpoint of our prior guide. Turning to the bottom line, adjusted EPS was $0.06 ahead of what we'd assumed in the prior guide for Q3. That was a net impact of the following
Rafael Tejada: Thank you, Stephen. Operator, we're ready for the Q&A portion of the call.
Operator: Thank you very much. [Operator instructions] Our first question comes from Michael Ryskin with Bank of America. Michael, your line is now open. Please go ahead.
Michael Ryskin: Great. Thank you, and thanks for taking the question. Marc, maybe kick things off with you. You talked a number of times during the prepared remarks about some sequential improvement as the year has gone on. And I think the view is that will continue into 4Q and into 2025? It looks like this continues to be a very gradual recovery, just a very slight step up in market conditions as we go through the year. No major changes, no step function change. Do you expect that pace of recovery to continue into the next quarter and into 2025, or do you think there could be an inflection at some point over the next two to four quarters where things accelerate a little bit? I guess, put another way, sort of what's holding the market back from a faster snapback?
Marc Casper: Yes, Mike, thanks for the question. Good morning. So what I thought to do is maybe actually put some framing comments overall, then I'll get to your 2025 question as well. So for the Q&A session today, as I think about the third quarter as we sit here in October and how the year has progressed
Michael Ryskin: Okay, all right. Thanks, I appreciate that. I guess for my follow-up, maybe we'll -- I want to dig a little into pharma and biotech. As a customer group, you talked about low-single-digit decline, and obviously, there's some headwind there from the COVID-19 runoff as well. But any additional color you can give on how that segment's performing, whether between larger pharma or smaller biotech, whether it's between some of the reagent and businesses in biosciences, versus the clinical trial business or the pharma services business, just that's been a focus point for investors, and would love to get some color on that?
Marc Casper: So you're going to get a lot of fan mail from your peers on this call, sort of asking each of all the questions within pharma and biotech. I'll take a high-level shot at it. So first, when I think about the third quarter and how things progressed, you're seeing a sequential improvement, which is good. And when I think about underlying performance, right? We obviously had a mid-single-digit headwind from the pandemic runoff. So you're seeing that the conditions continue to improve. In aggregate, obviously, they're somewhat muted, because they're below the long-term expectations for the market growth, right? So that's nothing surprising where the positives are sort of the data points as we sit here, confidence in biotech is improving, funding in biotech in the industry has been modestly improving as the year progresses. So, it's definitely meaningfully better than it was in 2023. And when I think about the large pharma, in a way, I think it's kind of normal distribution amongst the different companies, some doing extraordinarily well, others adjusting to how their pipelines are performing. And customers have been adjusting to the IRA, and you see that in a more muted growth environment, but we're obviously incredibly well positioned with this customer base and we're clearly delivering differentiated performance relative to others. So the trusted partner status, our unique value proposition, these things resonate. So we feel good about the long-term health of pharma and biotech and how we're performing this year. Thanks, Mike.
Michael Ryskin: Thank you. Thank you.
Operator: Our next question is from Rachel Vatnsdal with JPMorgan. Rachel, your line is now open. Please go ahead.
Rachel Vatnsdal: Great. Thank you. Thanks for taking the questions, you guys. First up on the CRO, maybe following up on some of your comments there about pharma versus biotech, but really specifically looking at PPD here. Could you give us an update on how much of PPD is indexed to large pharma customers versus biotech? And did you see any differences in trends across the two customer types this quarter within PPD? And then as a follow-up, some of your peers in the CRO sector have started to create some noise around their outlooks on 2025 and what that recovery looks like. So for Thermo, if PPD is more or less, let's call it a mid-single-digit business this year and normal is 8% for PPD, how are you thinking about the pace of recovery for PPD into 2025?
Marc Casper: So, Rachel, thanks for the question. Good morning. When I think about our clinical research business, actually it's performing well. When I think about the business delivered growth in the quarter, it obviously has a meaningful headwind from the runoff of vaccines and therapies of CRO-related activity. So from that perspective, I feel good about how we're doing. Next quarter, I'm going to really spend some time talking about the magic that we're unlocking on the combination between our pharma services and our clinical research business and how that really adds differentiated value for our customers in terms of performance. So I want to focus on that one. We just announced how we talk about that to our customers. We've been doing this for quite some time and it's really been quite spectacular. So our momentum with the customer base is quite good and we're executing well. When I think about the -- our position, we have a slightly larger position serving biotech more broadly than we do serving pharma within clinical research in terms of the mix of the business, but both customer sets are very important. And when I think about some of the highlights, the biotech customers more quickly adopt that unified set of capabilities, because it's easier for them just organizationally to leverage all of pulling everything together one. So you're seeing that in authorizations and momentum, and biotech is particularly moving in the right direction. So that's how we see it. In terms of the 25% and long-term 8%, all of these things, we don't -- as you know, we're going to give our views on '25 next year. And we don't go -- we don't guide down to the business unit performance within the company, but we'll give the puts and takes of what's growing faster and what's growing at the average and what's growing more slowly than the average when we get to the guidance next year.
Rachel Vatnsdal: Understood. And then on my second question, just around Life Science Solutions. So growth was a little softer than what the Street was looking for this quarter for that segment. We've heard from a few of your bioprocessing peers that pointed towards solid trends in 3Q -- so can you unpack for us the performance within that Life Sciences Solutions segment, how did bioproduction versus biosciences and genetic sciences trend in the quarter? And what, if anything, fall below your expectations there?
Marc Casper: Yes, Rachel, thanks for the question, and thank you for the framing of the question. Because actually, the numbers are different than what seems to have been modeled in the analyst models, but actually, the business performed in line with our expectations for the quarter. So when I think about what happened in the quarter, in the third quarter, we had our largest impact of the COVID roll-off in this segment. That's something we knew, something -- that's why it came in line with our expectations relative to the other quarters. Q3 was the most difficult comparison in the COVID-related activities for us. So that probably explains a little bit of the modeling difference. In terms of how our business is performing, bioproduction is certainly the one that gets the most interest because there are a number of companies that are just bioproduction companies that have stocks out there. Actually, the quarter played out as we expected. It was nice to see strong momentum in orders, both sequentially and year-over-year. Revenue continues to progress in the right direction sequentially in terms of growth, and that obviously is going to be less of a headwind going forward and ultimately going to in not-distant future in terms of bioproduction, that's good. The only other commentary I would make on the LSS segment, it's not an enormous business, but our clinical sequencing business is doing really well, right? You see the announcements I talked about. One of them with the National Cancer Institute. You saw after the quarter-end, an announcement from one of our customers in terms of companion diagnostic approved using our sequencing for brain cancer. These are really positives in terms of customers applying our technology to make a huge difference on patient lives and the course of treatment, so that business is doing quite well. Thank you, Rachel.
Operator: Our next question is from Jack Meehan with Nephron Research. Jack, your line is now open. Please go ahead.
Jack Meehan: Thank you. Good morning.
Marc Casper: Good morning, Jack.
Jack Meehan: Maybe for Marc, I hate to ask a question about month-by-month dynamics, but can you just talk a little bit more about how the quarter played out? The reason I ask is core organic growth was flat. I think the Street was looking for 1%, so technically missed that. And I always assume there's some conservatism embedded. So I was just curious, like did September fall short for some reason? If so, why? I know you talked about the hurricane, but just any color on kind of how the quarter played out would be great.
Marc Casper: Yes. So Jack, in terms of the growth, it was largely in line with what we expected to happen for the quarter. So from that perspective versus the external models, I always think there's a degree of accuracy between the Street and what we say we try to give as clear as we can on these calls about what our expectations are for the year and the upcoming quarter. And I think Stephen gave some very clear views again this quarter about the next one. So from our perspective, kind of, played out as we thought, in terms of the pacing through the quarter, largely as we expected, I would say, at the very, very end of the quarter, academic and government wasn't quite as strong as you normally would see. But like in the scale of our company, like a $10.5 billion-plus quarter, that's $10 million, $20 million. It's not a big number, but -- so I didn't really jump out any patterns of any significance in terms of how the month played out during the quarter.
Jack Meehan: Got it. Okay, and then for Stephen, on guidance, you still have a $900 million range from the bottom top end. I know you're putting us to the midpoint here, but was there any consideration to narrowing it was the real level of variability in the business?
Stephen Williamson: Yes, Jack. So for simplicity, we kept the range in our guidance from the last time around. And as you said, I encourage you to not overthink it. I'll just focus on the midpoint. That's the kind of current view where we most likely outcome for the quarter as we see it right now. And other than macro events, the largest swing factor for Q4 is likely to be the level of year-end spend by our customers.
Marc Casper: Thanks, Jack.
Jack Meehan: Thank you, Stephen.
Stephen Williamson: Thanks.
Operator: Our next question is from Doug Schenkel with Wolfe Research. Your line is now open. Please go ahead.
Doug Schenkel: Alright, thank you and good morning Marc and Stephen. As we sit here nine months, you know, about 10 months into the year with nine months of financials in the books, the portfolio seems to be tracking the plan. That said, there are always puts and takes on what's working better or worse than original target? As we sit here today, what geographies, customer groups, product categories, however you want to frame it, what's tracking ahead of expectation? What's below expectation? And as you think about the next few quarters, would you expect things to normalize back to what you were targeting at the beginning of the year? Or are there seemingly some more durable changes to how things are coming together? I ask not just to look back, but also just as kind of we're thinking about exit rates looking ahead to 2025.
Marc Casper: So Doug, thanks for the question. So if we go back to January and we say -- we had a set of expectations for the year, and those expectations have really played out with an incredible degree of precision so far through the first nine months. First quarter on revenue was a little bit higher. The next two quarters were super tight around what we expected, and we're looking forward to the fourth quarter where we return to growth. And when you unpack the different businesses, there's actually not a lot there in terms of them also performing differently than what we expected. And I'll come back to that with a couple of added things. But -- so it was not like something is meaningfully different than what we thought in January, better or worse. The two things we did talk about, about what we could change the range for this year, was how would biotech perform in terms of funding and what would happen in China, right? And biotech is progressing in the right direction. Funding is improving, confidence is improving. As you know, there's a lag between funding and ultimately how that flows into our industry. So that's encouraging relative to what we saw certainly in the previous couple of years in that dimension. So that kind of helps you think a little bit about market conditions going forward. The second was China. China has not progressed, right? In terms of economic activity has been incredibly muted in terms of the environment. The government did announce two different types of stimulus programs, actually interesting. First, that affect our industry in a positive way, which is around the equipment stimulus and the loan program that they have for their customers or their institutions. And we expect that's largely a 2025 impact and beyond, so that's encouraging. And more recently, they actually announced stimulus programs to spur economic growth and business confidence and consumer confidence that actually would also be helpful for the long-term there. So that one is more on the come, right, because it hasn't -- the words have said, but in terms of the impact as to the economy, it hasn't seen. So that will be a swing factor going forward on how that plays out. And then it turns within our businesses, probably the only thing that I would really call out is it really is awesome to see the adoption of our high-end technologies and analytical insurance, right? It's just -- it's amazing how customers, even though it's obviously it’s a muted environment in total, right? The industry is declining this year, and that's nothing of a surprise. That business is just getting great adoption for our technologies. And it was one of the cool things we said during the pandemic when we were just really driving great growth, because of our response, we reinvested in R&D, and that reinvestment has really led to differential performance in terms of how our technology has been adopted. So I'd call that out. Is that massively different than what we expected in January? No, but it's great to see, and it's a little bit better than what we expected. And the offsets to that are immaterial across the rest of the company.
Doug Schenkel: Thanks for all that, Marc. I think my follow-up is probably a Stephen question, but obviously, welcome either of you as always to chime in. As I look at our model, I'm reminded that from 2022 to 2024, your core growth would have been about 0% down about 5%, and about flat again this year, year-by-year. So in a period where revenue growth has been challenging, you've actually maintained operating margin at similar levels for two years in a row, assuming you meet guidance this year. So as growth starts to improve slowly, but surely into next year. Is it fair to assume that there could be outsized margin improvement and incremental margin generation, essentially the benefit of strong operating discipline through a challenging period. I guess, I'm just wondering if margin expansion gets back into the LRP range before revenue cash?
Stephen Williamson: Yes. So thanks for the question. So just to frame up how we think about the long-term financials. So for us, long-term 7% to 9% top line growth, which enables 40 basis points to 50 basis points of expansion. So that's kind of how we think about the future. And then you get down to the near-term and could it be slightly higher? I think I've said in the past that certain aspects of our business, where volumes have been more challenged and we've appropriately addressed the cost base, that there's some incremental benefit that can come from the return to volumes in those businesses. So there's an aspect of this that could be slightly higher and as we get into the next year and give guidance in January, we've got to frame up kind of how we think about the world, what's the level of the top line growth. And then what's an appropriate level of margin expansion, which is always a trade-off between making sure we get good profitability for our shareholders and then appropriately investing in the business as we think about going forward. So that kind of frames it up and look forward to getting to the details on the next call. Thanks, Doug.
Doug Schenkel: All right, thanks, guys.
Operator: Our next question is from Tycho Peterson with Jefferies. Tyko, your line is now open. Please go ahead.
Tycho Peterson: Hey, thanks. Marc, wondering if you can just touch a little bit more on some of the drivers in LPS. You talked about, obviously, the channel, the safety and the market channel. But curious, we've heard more about share gains for Fisher. So I'm curious if you can kind of comment on that dynamic? And then you didn't call out PPD and Patheon within your comments specifically on that. I'm just wondering if they were actually up in the quarter.
Marc Casper: You want to start, Stephen?
Stephen Williamson: Yes, Tycho. So in my prepared remarks, I did talk about the dynamic where when you think about the underlying growth in both pharma services and clinical research, that offset the significant pandemic headwinds. So from an organic growth standpoint, that's kind of a net neutral. But when I think about what the underlying growth is there, it's strong. Marc, in terms of color...
Marc Casper: No, the channel is doing really well. Actually, both the health care market channel and the research and safety market channel continue to do well. They're delivering nice growth and actually winning some really nice customers, which bodes well for the future. So part of the commentary that I talked about, customer wins and those things in my remarks, really a number of our businesses. But in those comments are really around large wins and channel clearly had some nice ones during the quarter, which doesn't show up at all in revenue in the quarter that you win them, but over the coming quarters ahead, it really is quite a positive.
Tycho Peterson: Okay. And then I guess a follow-up just on the margins for the lab products and services. Obviously, you had the vaccine and therapy runoff. Is there anything you're willing to comment around price in this environment, the ability to potentially take more? Or are you getting more -- try to grab more CRO and CDMO work? And then how are you also thinking about capacity expansion for Patheon? Obviously, we saw Novo offload one of the Catalent facilities in Europe. I'm just curious how you're thinking about as more capacity comes to market, both from Novo and Catalent, but also Wuxi uptick, how interesting that might be for you.
Marc Casper: You want to talk about price in aggregate…
Stephen Williamson: Yes, price in aggregate for the company, we're just over 1% of price for the quarter. So still ahead of the kind of the normal run rate that we see as kind of 0.5% to 1% price on a net basis across the whole company. So a trend that's similar to what we've seen in the further first 3 quarters of the year, it's been consistent.
Marc Casper: Yes, I'd say probably the pricing environment is back to normal. It's a good industry. Price goes up modestly each year. You have the dynamic inflation where price went up certainly more than what is usual and we're kind of back to the normal dynamic. In terms of our pharma services business, capacity expansions, as everyone knows, we've expanded our investments in sterile fill/finish capacity and have a number of lines that are coming online, if you will, during the course of 2025 and 2026 to support customer demand. So that's positive. That does put pressure on margins in the short term, because there's costs in training and getting the kind of the qualification process for the facilities. But certainly, as we get through 2025, you'll see higher levels of utilization on that capacity to support the strong growth in sterile fill/finish. And so that's the dynamic there. As I announced in my remarks, because of the specific capabilities of interest in oral solid dose, which is not our biggest part of our offering in drug products. We did do some capacity expansions in Bend, Oregon and Cincinnati, Ohio to meet the customer demand, which is good on the development side of the equation. So that's the dynamic there.
Tycho Peterson: Okay, thank you.
Marc Casper: Thanks, Tycho.
Operator: Our next question is from Matt Sykes with Goldman Sachs. Matt, your line is now open. Please go ahead.
Matt Sykes: [Technical Difficulty] analytical Instrument segment, you've shown pretty consistent growth in what has been, I would call, a challenging environment. I know that Astral and microscopy have been big drivers of that. If you strip those two out and just look at the rest of your instrument categories, could you maybe talk about what demand looks like from them in those interesting categories from the biopharma side as well as other customers? And do you sense any kind of replacement cycle kicking in for some of those instruments as we move to '25? Just any thoughts on that would be great?
Marc Casper: Yes, Matt, thanks for the question. So when I think about analytical instruments, we had 3% organic growth in the quarter playing out as we expected. Obviously, innovation really matters. For us, we've been able to launch a number of products that have been adopted. Actually on the high-end, we talk about Iliad in this particular quarter, that bodes well to continue to drive momentum in electron microscopy obviously, Astral has done very well as you noted. Stellar, which we launched last quarter, the early interest is quite strong. So those things are going well. Innuvion, which is non- chromatography more of a midrange technology, very important in that particular category of chromatography, incredibly strong demand. So our innovation has been well adopted. When you take out all of those things, you just kind of say the routine capital equipment aspects of instruments, actually pretty muted conditions, right? Nothing is surprising. When we talk about for the full-year for the whole company, to have market down in the low-single-digits, you would expect capital equipment to have you the conditions they are. And a big driver of that, obviously, is China, which is, in instrument businesses for the whole industry, is a large portion of demand and obviously that market is most challenged. So exactly where we are in the replacement cycle for those things, I think it really varies by customer, by product type and all of that. And we didn't see any particular pattern that jumped out to indicate any change in trajectory.
Matt Sykes: Got it. Thanks. And then, Stephen, just a modeling question for you. Just the implied Q4 operating margin looks like over 100 basis point step-up to get to that full-year guide? I understand there's a return to growth expectation on the top line, some probably some gross margin leverage. Is there anything on the cost saving guides or mix that we should be aware of driving that step up in margins for the Q4?
Stephen Williamson: Yes. So for Q4, the kind of the midpoint of that guide is a 50 basis points increase year-over-year for the quarter, and that's in line with when I think about the margin profile. It's really the step-up in the level of revenue and the kind of the seasonality to our revenue profile. So it logically makes sense and look at it sequentially in terms of the change.
Matt Sykes: Okay, thank you.
Stephen Williamson: Great. Thanks, Matt.
Rafael Tejada: Operator, we will take one more question.
Operator: Our next question is from Dan Brennan with TD Cowen. Dan, your line is now open. Please go ahead.
Dan Brennan: Great. Thanks. Thanks for the questions. Great. Maybe, Marc, just on pharma R&D, headlines have been mixed, but we just looked at like a global analysis of R&D trends. And then actually they look pretty good for large pharma, up nearly 8%, and kind of global pharma, up like mid-5s? So I'm just wondering, like trying to square the circle with kind of the weaker end market growth that you're kind of base your guide on and maybe why we're not seeing what appears to be a decent level of R&D growth, you're not translating into better revenues. Like has anything changed? Maybe is there more dollars going to service? Inflation? Or just in terms of the traditional amount of dollars that your business would see from R&D, is anything kind of different this time?
Stephen Williamson: Yes. I think one element is significant investment by our customers in AI. Unfortunately not on medical instruments. But when I think about generative AI and where the spending on technology, there's a significant piece to that, what you need to factor that in the guide.
Marc Casper: Yes. So Dan, probably when we think about pharma and biotech, right, it covers the full spectrum of activity. And one of the things that's within that is on production, you have the headwinds across the industry of bioproduction, right? So there's not like an R&D specific call out that you can derive from the numbers. We all understand the runoff on the pandemic is largely in the clinical research side and largely in the bioproduction and pharma services side. So that's a little bit of what's muting the growth in total for our industry. In terms of the dialogue that I've had with customers and sort of what's the tone? People are super excited about the pipeline, right? Whether it's the fact of the GLP-1s and the scale of a high-impact medicine that it just really is getting people excited. But there's really interesting work going on, on Alzheimer's, which is fantastic. And you've seen some interesting approvals in other neurological diseases that there's just a lot of excitement about pipelines and opportunities. And so I believe that the data you're quoting about the R&D investment is looking good, it reflects that customers have optimism for the future. And ultimately, that's going to translate into our space. So which is why we're so confident about the long-term prospects for our industry.
Dan Brennan: Great. Thanks for that. And then maybe just one follow-up on China. A few peers have discussed that they're seeing a pause in instrument spending ahead of the stimulus next year. I think you mentioned in a prior question, how like China instrument demand is kind of a weaker spot. Any color there? And as the stimulus comes through, is this going to be a meaningful lift for you guys in '25? Or do you think it will be more modest? Thanks a lot.
Marc Casper: Dan, thanks. So when I think about China and I think about stimulus, certainly a discussion I had when I was meeting with government officials and certainly with customers as well, really, activity has been around applying for the funding, right, and going through that process. So there's quite a bit of that activity. So I'm not sure that trade is something else off, but it might have. Like I don't know, like, none of the customers specifically mentioned it, but I didn't ask the question that way. I was much more interested about how are they tapping into the available new funds and how are they thinking about it, and there seems to be optimism and enthusiasm for the upcoming investments. So I think stimulus will be a 2025 activity, maybe a little bit in Q4, probably not all that significant, but -- so that's how I think about what's going on in China. The other thing from the China trip that I came away with -- and obviously, I knew it going in, but we are incredibly well positioned in the country. I mean we have deep relationships with our customers, very strong earned relationships with government. Being a scale player for 40-years in the country and supporting their response to the pandemic, various crises in the past, just a good local participant to help society out there, we benefit from that. And we're well positioned to help our customers, and we have great discussions about customer dialogue with where can we collaborate, and how can we help them, have the Chinese population be healthier through our technology business. So I think as the economy improves there, we're going to be well positioned to capitalize on that. So thank you for the questions today. Let me just make a quick closing comment. And it's good to have another strong quarter behind us. And we're very well positioned to deliver differentiated performance into 2024 as we continue to create value for all of our stakeholders and to build an even brighter future for our company. We look forward to updating you on our fourth quarter and full year performance in our January call. And as always, thank you for your support of Thermo Fisher Scientific. Thanks, everyone.
Operator: Thank you very much, everyone, for joining today's call. You may now disconnect your lines.