WASHINGTON, Oct. 20, 2016 /PRNewswire/ -- Danaher
Corporation (NYSE: DHR) today announced results for the third
quarter 2016. All results in this release reflect only continuing
operations unless otherwise noted. For the quarter ended
September 30, 2016, net earnings were
$402.6 million, or $0.57 per diluted share, which represents a 6%
year-over-year increase.
Non-GAAP adjusted diluted net earnings per share for the third
quarter 2016 was $0.87 per share,
which reflects the adjustments identified in the attached
reconciliation schedule. This represents a 23% increase over
the comparable 2015 amount.
For the third quarter 2016, revenues increased 17.5%
year-over-year to $4.1 billion, with
core revenue growth of 3.0% (non-GAAP). Year-to-date
operating cash flow of $2.4 billion
was up 29% on the comparable 2015 amount.
For the fourth quarter 2016, the Company anticipates that
diluted net earnings per share will be $0.85
to $0.89. Non-GAAP adjusted diluted net earnings per share
is expected to be $1.01 to $1.05,
reflecting the adjustments identified on the attached
reconciliation schedule.
For the full year 2016, the Company anticipates diluted net
earnings per share to be $2.86 to
$2.90. Non-GAAP adjusted diluted net earnings per
share is expected to be $3.57 to
$3.61, reflecting the adjustments identified on the attached
reconciliation schedule.
Thomas P. Joyce, Jr., President
and Chief Executive Officer, stated, "Our team executed well
despite the economic backdrop, and we were pleased with our
performance in the third quarter as the strength and diversity of
our portfolio continued to be a key differentiator."
Joyce added, "Since July, we announced two strategic
acquisitions, of Cepheid and Phenomenex. We believe that the
addition of these businesses into our Diagnostics and Life Sciences
segments, respectively, will enhance our portfolio's strategic
positions and broaden our product offering to customers."
Both the Cepheid and Phenomenex acquisitions are subject to
customary closing conditions, including receipt of applicable
regulatory approvals and in the case of Cepheid, approval of the
Cepheid shareholders, and we expect both acquisitions to close in
the fourth quarter of 2016.
Danaher will discuss its results during its quarterly investor
conference call today starting at 8:00 a.m.
ET. The call and an accompanying slide presentation will be
webcast on the "Investors" section of Danaher's website,
www.danaher.com, under the subheading "Events & Presentations."
A replay of the webcast will be available in the same section of
Danaher's website shortly after the conclusion of the presentation
and will remain available until the next quarterly earnings
call.
The conference call can be accessed by dialing (800) 344-6491
within the U.S. or by dialing (785) 830-7988 outside the U.S. a few
minutes before the 8:00 a.m. ET start
and telling the operator that you are dialing in for Danaher's
investor conference call (access code 7811806). A replay of the
conference call will be available shortly after the conclusion of
the call and until Thursday, October 27,
2016. You can access the replay dial-in information on the
"Investors" section of Danaher's website under the subheading
"Events & Presentations." In addition, presentation materials
relating to Danaher's results have been posted to the "Investors"
section of Danaher's website under the subheading "Financial
Information - Quarterly Earnings."
ABOUT DANAHER
Danaher is a global science and
technology innovator committed to helping its customers solve
complex challenges and improving quality of life around the world.
Its family of world class brands has leadership positions in some
of the most demanding and attractive industries, including health
care, environmental and industrial. With more than 20 operating
companies, Danaher's globally diverse team of 59,000 associates is
united by a common culture and operating system, the Danaher
Business System. For more information please visit
www.danaher.com.
NON-GAAP MEASURES
In addition to the financial
measures prepared in accordance with generally accepted accounting
principles (GAAP), this earnings release also contains non-GAAP
financial measures. Calculations of these measures, the reasons why
we believe these measures provide useful information to investors,
a reconciliation of these measures to the most directly comparable
GAAP measures and other information relating to these non-GAAP
measures are included in the supplemental reconciliation schedule
attached.
FORWARD-LOOKING STATEMENTS
Statements in this release
that are not strictly historical, including the statements
regarding the Company's anticipated financial performance for the
fourth quarter and full year 2016, the anticipated acquisition of
each of Cepheid and Phenomenex, the anticipated timing thereof and
future expectations relating thereto, the Company's future
prospects and any other statements regarding events or developments
that we believe or anticipate will or may occur in the future are
"forward-looking" statements within the meaning of the federal
securities laws. There are a number of important factors that could
cause actual results, developments and business decisions to differ
materially from those suggested or indicated by such
forward-looking statements and you should not place undue reliance
on any such forward-looking statements. These factors include,
among other things, deterioration of or instability in the economy,
the markets we serve and the financial markets, the impact of our
restructuring activities on our ability to grow, contractions or
growth rates and cyclicality of markets we serve, competition, our
ability to develop and successfully market new products and
technologies and expand into new markets, the potential for
improper conduct by our employees, agents or business partners, our
ability to successfully identify, consummate and integrate
appropriate acquisitions and successfully complete divestitures and
other dispositions, our ability to integrate the acquisition of
Pall Corporation and achieve the anticipated benefits of that
transaction, contingent liabilities relating to acquisitions and
divestitures (including tax-related and other contingent
liabilities relating to the distributions of each of Fortive
Corporation and our communications business), our compliance with
applicable laws and regulations (including regulations relating to
medical devices and the health care industry) and changes in
applicable laws and regulations, our ability to effectively address
cost reductions and other changes in the health care industry,
risks relating to potential impairment of goodwill and other
intangible assets, currency exchange rates, tax audits and changes
in our tax rate and income tax liabilities, litigation and other
contingent liabilities including intellectual property and
environmental, health and safety matters, risks relating to
product, service or software defects, product liability and
recalls, risks relating to product manufacturing, the impact of our
debt obligations on our operations and liquidity, our relationships
with and the performance of our channel partners, commodity costs
and surcharges, our ability to adjust purchases and manufacturing
capacity to reflect market conditions, reliance on sole sources of
supply, labor matters, international economic, political, legal,
compliance and business factors (including the impact of the UK
referendum to leave the EU), disruptions relating to man-made and
natural disasters, security breaches or other disruptions of our
information technology systems, pension plan costs, general
economic conditions and conditions affecting the industries in
which Danaher, Cepheid and Phenomenex operate, the uncertainty of
acquisition-related regulatory approvals, the respective parties'
ability to satisfy the respective conditions to the acquisition of
each of Cepheid and Phenomenex and consummate each transaction on
the anticipated timetable or at all, and Cepheid's and Phenomenex's
performance and maintenance of important business relationships.
Additional information regarding the factors that may cause actual
results to differ materially from these forward-looking statements
is available in our SEC filings, including our 2015 Annual Report
on Form 10-K and Quarterly Report on Form 10-Q for the third
quarter of 2016. These forward-looking statements speak only as of
the date of this release and the Company does not assume any
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events and
developments or otherwise.
DANAHER
CORPORATION
|
CONSOLIDATED
CONDENSED STATEMENTS OF EARNINGS
|
($ and shares in
millions, except per share amounts)
|
(unaudited)
|
|
|
Three Month Period
Ended
|
|
Nine Month Period
Ended
|
|
|
September 30,
2016
|
|
October 2,
2015
|
|
September 30,
2016
|
|
October 2,
2015
|
|
Sales
|
$
|
4,132.1
|
|
|
$
|
3,512.2
|
|
|
$
|
12,298.1
|
|
|
$
|
10,110.7
|
|
|
Cost of
sales
|
(1,846.1)
|
|
|
(1,618.8)
|
|
|
(5,463.5)
|
|
|
(4,596.8)
|
|
|
Gross
profit
|
2,286.0
|
|
|
1,893.4
|
|
|
6,834.6
|
|
|
5,513.9
|
|
|
Operating
costs:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(1,345.8)
|
|
|
(1,201.2)
|
|
|
(4,105.2)
|
|
|
(3,378.0)
|
|
|
Research and
development expenses
|
(241.1)
|
|
|
(212.2)
|
|
|
(707.1)
|
|
|
(625.3)
|
|
|
Operating
profit
|
699.1
|
|
|
480.0
|
|
|
2,022.3
|
|
|
1,510.6
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
Other
income
|
—
|
|
|
12.4
|
|
|
223.4
|
|
|
12.4
|
|
|
Loss on early
extinguishment of borrowings
|
(178.8)
|
|
|
—
|
|
|
(178.8)
|
|
|
—
|
|
|
Interest
expense
|
(43.7)
|
|
|
(39.1)
|
|
|
(152.1)
|
|
|
(89.1)
|
|
|
Interest
income
|
0.1
|
|
|
0.6
|
|
|
0.1
|
|
|
4.6
|
|
|
Earnings from
continuing operations before income taxes
|
476.7
|
|
|
453.9
|
|
|
1,914.9
|
|
|
1,438.5
|
|
|
Income
taxes
|
(74.1)
|
|
|
(74.0)
|
|
|
(508.5)
|
|
|
(212.8)
|
|
|
Net earnings from
continuing operations
|
402.6
|
|
|
379.9
|
|
|
1,406.4
|
|
|
1,225.7
|
|
|
Earnings (loss) from
discontinued operations, net of income taxes
|
(11.0)
|
|
|
1,023.4
|
|
|
400.3
|
|
|
1,443.1
|
|
|
Net
earnings
|
$
|
391.6
|
|
|
$
|
1,403.3
|
|
|
$
|
1,806.7
|
|
|
$
|
2,668.8
|
|
|
Net earnings per
share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.58
|
|
|
$
|
0.55
|
|
|
$
|
2.04
|
|
|
$
|
1.75
|
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
0.54
|
|
|
$
|
2.01
|
|
|
$
|
1.72
|
|
|
Net earnings per
share from discontinued operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.02)
|
|
|
$
|
1.49
|
|
|
$
|
0.58
|
|
|
$
|
2.06
|
|
|
Diluted
|
$
|
(0.02)
|
|
|
$
|
1.46
|
|
|
$
|
0.57
|
|
|
$
|
2.03
|
|
|
Net earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.57
|
|
*
|
$
|
2.04
|
|
|
$
|
2.62
|
|
|
$
|
3.80
|
|
*
|
Diluted
|
$
|
0.56
|
|
*
|
$
|
2.01
|
|
*
|
$
|
2.59
|
|
*
|
$
|
3.75
|
|
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
692.2
|
|
|
688.5
|
|
|
690.6
|
|
|
701.7
|
|
|
Diluted
|
701.3
|
|
|
698.7
|
|
|
699.1
|
|
|
712.3
|
|
|
|
* Net earnings per
share amount does not add due to rounding.
|
This information is presented for reference only. A
complete copy of Danaher's Form 10-Q financial statements is
available on the Company's website (www.danaher.com).
DANAHER
CORPORATION
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
Adjusted Diluted
Net Earnings Per Share from Continuing Operations
|
|
|
Three Month Period
Ended
|
|
Nine Month Period
Ended
|
|
|
September 30,
2016
|
|
October 2,
2015
|
|
September 30,
2016
|
|
October 2,
2015
|
|
Diluted Net
Earnings Per Share from Continuing Operations (GAAP)
|
$
|
0.57
|
|
|
$
|
0.54
|
|
|
$
|
2.01
|
|
|
$
|
1.72
|
|
|
Pretax amortization
of acquisition-related intangible assets A
|
0.20
|
|
A
|
0.14
|
|
A
|
0.61
|
|
A
|
0.36
|
|
A
|
Pretax charge for
early extinguishment of borrowings B
|
0.26
|
|
B
|
—
|
|
|
0.26
|
|
B
|
—
|
|
|
Pretax gain on
resolution of acquisition-related matters C
|
(0.02)
|
|
C
|
—
|
|
|
(0.02)
|
|
C
|
—
|
|
|
Pretax gain on sales
of investments D,E
|
—
|
|
|
(0.02)
|
|
D
|
(0.32)
|
|
E
|
(0.02)
|
|
D
|
Pretax
acquisition-related transaction costs deemed significant, change in
control payments and fair value adjustments F
|
—
|
|
|
0.10
|
|
F
|
—
|
|
|
0.13
|
|
F
|
Tax effect of all
adjustments reflected above G
|
(0.14)
|
|
G
|
(0.05)
|
|
G
|
(0.12)
|
|
G
|
(0.10)
|
|
G
|
Discrete tax
adjustments and other tax-related adjustments
H,I
|
—
|
|
|
—
|
|
|
0.14
|
|
H
|
(0.02)
|
|
I
|
Adjusted Diluted
Net Earnings Per Share from Continuing Operations
(Non-GAAP)
|
$
|
0.87
|
|
|
$
|
0.71
|
|
|
$
|
2.56
|
|
|
$
|
2.07
|
|
|
Adjusted
Forecasted Diluted Net Earnings Per Share from Continuing
Operations
|
|
|
Three Month Period
Ending
December 31, 2016
|
|
Year Ending
December 31, 2016
|
|
|
Low
End
|
|
High
End
|
|
Low
End
|
|
High
End
|
|
Forecasted Diluted
Net Earnings Per Share from Continuing Operations
(GAAP)
|
$
|
0.85
|
|
|
$
|
0.89
|
|
|
$
|
2.86
|
|
|
$
|
2.90
|
|
|
Anticipated pretax
amortization of acquisition-related intangible assets
A
|
0.20
|
|
A
|
0.20
|
|
A
|
0.81
|
|
A
|
0.81
|
|
A
|
Pretax charge for
early extinguishment of borrowings B
|
—
|
|
|
—
|
|
|
0.26
|
|
B
|
0.26
|
|
B
|
Pretax gain on
resolution of acquisition-related matters C
|
—
|
|
|
—
|
|
|
(0.02)
|
|
C
|
(0.02)
|
|
C
|
Pretax gain on sales
of investments E
|
—
|
|
|
—
|
|
|
(0.32)
|
|
E
|
(0.32)
|
|
E
|
Tax effect of all
adjustments reflected above G
|
(0.04)
|
|
G
|
(0.04)
|
|
G
|
(0.16)
|
|
G
|
(0.16)
|
|
G
|
Discrete tax
adjustments and other tax-related adjustments
H
|
—
|
|
|
—
|
|
|
0.14
|
|
H
|
0.14
|
|
H
|
Forecasted
Adjusted Diluted Net Earnings Per Share from Continuing Operations
(Non-GAAP) 1
|
$
|
1.01
|
|
|
$
|
1.05
|
|
|
$
|
3.57
|
|
|
$
|
3.61
|
|
|
|
|
1
|
The forward-looking
estimates set forth above do not reflect future gains and charges
that are inherently difficult to predict and estimate due to their
unknown timing, effect and/or significance, such as certain future
gains or losses on the sale of investments, acquisition or
divestiture-related gains or charges and discrete tax
items.
|
Core Revenue
Growth
|
|
Components of Revenue
Growth
|
Three Month Period
Ended September 30, 2016
vs.
Comparable 2015 Period
|
|
Nine Month Period
Ended September 30, 2016
vs.
Comparable 2015 Period
|
Core (non-GAAP)
2
|
3.0
|
%
|
|
2.5
|
%
|
Acquisitions
(non-GAAP)
|
14.5
|
%
|
|
20.0
|
%
|
Impact of currency
translation (non-GAAP)
|
—
|
%
|
|
(1.0)
|
%
|
Total Revenue
Growth from Continuing Operations (GAAP)
|
17.5
|
%
|
|
21.5
|
%
|
|
|
2
|
We use the term "core
revenue" to refer to GAAP revenue from continuing operations
excluding (1) sales from acquired businesses recorded prior to the
first anniversary of the acquisition less the amount of sales
attributable to divested product lines not considered discontinued
operations ("acquisition sales") and (2) the impact of currency
translation. The portion of GAAP revenue from continuing
operations attributable to currency translation is calculated as
the difference between (a) the period-to-period change in revenue
(excluding acquisition sales) and (b) the period-to-period change
in revenue (excluding acquisition sales) after applying current
period foreign exchange rates to the prior year period. We
use the term "core revenue growth" to refer to the measure of
comparing current period core revenue with the corresponding period
of the prior year.
|
DANAHER
CORPORATION
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(continued)
|
|
A
|
Amortization of
acquisition-related intangible assets in the following historical
and forecasted periods ($ in millions) (only the pretax amounts set
forth below are reflected in the amortization line item
above):
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted
|
|
|
|
|
Three Month Period
Ended
|
|
Nine Month Period
Ended
|
|
Three Month
Period Ending
|
|
Year
Ending
|
|
Year
Ended
|
|
|
September 30,
2016
|
|
October 2,
2015
|
|
September 30,
2016
|
|
October 2,
2015
|
|
December 31,
2016
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Pretax
|
$
|
143.2
|
|
|
$
|
100.6
|
|
|
$
|
426.6
|
|
|
$
|
256.3
|
|
|
$
|
141.2
|
|
|
$
|
567.8
|
|
|
$
|
396.7
|
|
|
After-tax
|
113.1
|
|
|
79.5
|
|
|
332.8
|
|
|
206.4
|
|
|
111.5
|
|
|
444.3
|
|
|
313.4
|
|
|
|
B
|
Charge for early
extinguishment of borrowings ($179 million pretax as presented in
this line item, $112 million after-tax) for the three and nine
month periods ended September 30, 2016. The Company did not
incur any charges related to the early extinguishment of borrowings
in the first half of 2016 or in 2015, and therefore no such
elimination item is reflected in the calculation of Adjusted
Diluted Net Earnings Per Share From Continuing Operations for any
such prior period.
|
C
|
Gain on resolution of
acquisition-related matters ($18 million pretax is presented in
this line item, $14 million after-tax) for the three and nine month
periods ended September 30, 2016.
|
D
|
Gain on sales of
investments in the three month period ended October 2, 2015 and in
the year ended December 31, 2015 ($12 million pretax is presented
in this line item, $8 million after-tax).
|
E
|
Gain on sales of
investments in the three month period ended April 1, 2016 and nine
month period ended September 30, 2016 ($223 million pretax is
presented in this line item, $140 million after-tax).
|
F
|
Fair value
adjustments to inventory ($20 million pretax as presented in this
line item, $15 million after-tax) and incurred in the three month
period ended April 3, 2015 and nine month period ended October 2,
2015, related to the acquisition of Nobel Biocare and
acquisition-related transaction costs deemed significant ($21
million pretax is presented in this line item, $16 million
after-tax), change in control payments and fair value adjustments
to inventory ($47 million pretax is presented in this line item,
$36 million after-tax), in each case related to the acquisition of
Pall Corporation and incurred in the three and nine month periods
ended October 2, 2015. The Company deems acquisition-related
transaction costs incurred in a given period to be significant
(generally relating to the Company's larger acquisitions) if it
determines that such costs exceed the range of acquisition-related
transaction costs typical for the Company in a given
period.
|
G
|
This line item
reflects the aggregate tax effect of all nontax adjustments
reflected in the table above. In addition, the footnotes
above indicate the after-tax amount of each individual adjustment
item. Danaher estimates the tax effect of the adjustment
items identified in the reconciliation schedule above by applying
Danaher's overall estimated effective tax rate to the pretax
amount, unless the nature of the item and/or the tax jurisdiction
in which the item has been recorded requires application of a
specific tax rate or tax treatment, in which case the tax effect of
such item is estimated by applying such specific tax rate or tax
treatment.
|
H
|
Consists of Fortive
separation-related tax costs related to repatriation of earnings,
legal entity realignments and other discrete matters ($99 million)
in the three and nine month periods ended September 30,
2016.
|
I
|
Discrete income tax
gains net of discrete income tax charges incurred in the three
month period ended October 2, 2015 ($16 million).
|
Statement Regarding Non-GAAP Measures
Each of the non-GAAP measures set forth above should be
considered in addition to, and not as a replacement for or superior
to, the comparable GAAP measure, and may not be comparable to
similarly titled measures reported by other companies.
Management believes that these measures provide useful information
to investors by offering additional ways of viewing Danaher
Corporation's ("Danaher" or the "Company") results that, when
reconciled to the corresponding GAAP measure, help our investors
to:
- (with respect to the non-GAAP profitability measures)
understand the long-term profitability trends of our business and
compare our profitability to prior and future periods and to our
peers; and
- (with respect to the non-GAAP revenue measures) identify
underlying growth trends in our business and compare our revenue
performance with prior and future periods and to our peers.
The items excluded from the non-GAAP profitability and revenue
measures set forth above have been excluded for the following
reasons:
- With respect to the non-GAAP profitability measures, we exclude
the amortization of acquisition-related intangible assets because
the amount and timing of such charges are significantly impacted by
the timing, size, number and nature of the acquisitions we
consummate. While we have a history of significant acquisition
activity we do not acquire businesses on a predictable cycle, and
the amount of an acquisition's purchase price allocated to
intangible assets and related amortization term are unique to each
acquisition and can vary significantly from acquisition to
acquisition. Exclusion of this amortization expense facilitates
more consistent comparisons of operating results over time between
our newly acquired and long-held businesses, and with both
acquisitive and non-acquisitive peer companies. We believe however
that it is important for investors to understand that such
intangible assets contribute to revenue generation and that
intangible asset amortization related to past acquisitions will
recur in future periods until such intangible assets have been
fully amortized. With respect to the other items excluded from the
non-GAAP profitability measures, we exclude these items because
they are of a nature and/or size that occur with inconsistent
frequency, occur for reasons that may be unrelated to Danaher's
commercial performance during the period and/or we believe are not
indicative of Danaher's ongoing operating costs or gains in a given
period. With respect to each of the items excluded from the
non-GAAP profitability measures, we believe that such items may
obscure underlying business trends and make comparisons of
long-term performance difficult.
- With respect to the non-GAAP revenue measures, (1) we exclude
the impact of currency translation because it is not under
management's control, is subject to volatility and can obscure
underlying business trends, and (2) we exclude the effect of
acquisitions and divested product lines because the nature, size
and number of such transactions can vary dramatically from period
to period and between us and our peers, which we believe may
obscure underlying business trends and make comparisons of
long-term performance difficult.
The Company estimates the tax effect of the items excluded from
the non-GAAP measures above, as applicable, by applying the
Company's overall estimated effective tax rate to the pretax amount
of each adjustment item, unless the nature of the item and/or the
tax jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment, in which case
the tax effect of such item is estimated by applying such specific
tax rate or tax treatment.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/danaher-reports-third-quarter-2016-results-300348078.html
SOURCE Danaher Corporation