WASHINGTON, Oct. 19, 2017 /PRNewswire/ -- Danaher Corporation
(NYSE: DHR) today announced results for the third quarter of
2017. For the quarter ended September
29, 2017, net earnings were $572.1
million, or $0.81 per diluted
share which represents a 42.0% year-over-year increase.
Non-GAAP adjusted diluted net earnings per share were
$1.00. This represents a 15.0%
increase over the comparable 2016 period. For the third
quarter 2017, revenues increased 9.5% year-over-year to
$4.5 billion, with non-GAAP core
revenue growth of 3.0%.
For the fourth quarter of 2017, the Company anticipates that
diluted net earnings per share will be in the range of $0.94 to $0.98 and non-GAAP adjusted diluted net
earnings per share will be in the range of $1.12 to $1.16.
For the full year 2017, the Company anticipates that diluted net
earnings per share will be in the range of $3.23 to $3.27. The Company is raising its
2017 non-GAAP adjusted diluted net earnings per share guidance, and
now expects a range of $3.96 to
$4.00.
Thomas P. Joyce, Jr., President
and Chief Executive Officer, stated, "We are pleased with our third
quarter performance, with the team delivering mid-teens adjusted
earnings per share growth, strong margin expansion and cash flow,
and improving revenue growth. With the Danaher Business System as
our foundation, the team's commitment to continuous improvement was
a key driver of our results."
Joyce continued, "Our performance in the quarter - combined with
significant opportunities across the portfolio and our strong
balance sheet - positions us to build on this momentum through the
end of 2017 and into next year."
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 888-280-4443
within the U.S. or by dialing +1 719-325-4886 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 1825026). A
replay of the conference call will be available shortly after the
conclusion of the call and until Thursday,
October 26, 2017. 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 "Quarterly Earnings."
All results in this release reflect only continuing operations
unless otherwise noted.
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 over 62,000 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 2017,
the Company's opportunities and positioning for 2017 and beyond 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,
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 compliance with applicable laws and regulations
(including regulations relating to medical devices and the health
care industry), our ability to effectively address cost reductions
and other changes in the health care industry, our ability to
successfully identify, consummate and integrate appropriate
acquisitions and successfully complete divestitures and other
dispositions, our ability to integrate the recent acquisitions of
Pall Corporation and Cepheid and achieve the anticipated benefits
of such transactions, 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), security
breaches or other disruptions of our information technology systems
or violations of data privacy laws, the impact of our restructuring
activities on our ability to grow, 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, changes in tax laws applicable to multinational
companies, litigation and other contingent liabilities including
intellectual property and environmental, health and safety matters,
the rights of the United States
government to use, disclose and license certain intellectual
property we license if we fail to commercialize it, 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, uncertainties
relating to collaboration arrangements with third parties,
commodity costs and surcharges, our ability to adjust purchases and
manufacturing capacity to reflect market conditions, reliance on
sole sources of supply, the impact of deregulation on demand for
our products and services, labor matters, international economic,
political, legal, compliance and business factors (including the
impact of the UK's decision to leave the EU), disruptions relating
to man-made and natural disasters, and pension plan costs.
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 2016 Annual Report
on Form 10-K and Quarterly Report on Form 10-Q for the third
quarter of 2017. These forward-looking statements speak only
as of the date of this release and except to the extent required by
applicable law, 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 AND SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENTS OF EARNINGS
($ and shares in
millions, except per share amounts)
(unaudited)
|
|
|
Three-Month Period
Ended
|
|
Nine-Month Period
Ended
|
|
|
September 29,
2017
|
|
September 30,
2016
|
|
September 29,
2017
|
|
September 30,
2016
|
|
Sales
|
$
|
4,528.2
|
|
|
$
|
4,132.1
|
|
|
$
|
13,244.0
|
|
|
$
|
12,298.1
|
|
|
Cost of
sales
|
(1,991.4)
|
|
|
(1,846.1)
|
|
|
(5,890.6)
|
|
|
(5,463.5)
|
|
|
Gross
profit
|
2,536.8
|
|
|
2,286.0
|
|
|
7,353.4
|
|
|
6,834.6
|
|
|
Operating
costs:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(1,490.1)
|
|
|
(1,345.8)
|
|
|
(4,448.4)
|
|
|
(4,105.2)
|
|
|
Research and
development expenses
|
(279.2)
|
|
|
(241.1)
|
|
|
(829.9)
|
|
|
(707.1)
|
|
|
Operating
profit
|
767.5
|
|
|
699.1
|
|
|
2,075.1
|
|
|
2,022.3
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
Other
income
|
—
|
|
|
—
|
|
|
—
|
|
|
223.4
|
|
|
Loss on early
extinguishment of borrowings
|
—
|
|
|
(178.8)
|
|
|
—
|
|
|
(178.8)
|
|
|
Interest
expense
|
(39.9)
|
|
|
(43.7)
|
|
|
(120.9)
|
|
|
(152.1)
|
|
|
Interest
income
|
2.2
|
|
|
0.1
|
|
|
5.6
|
|
|
0.1
|
|
|
Earnings from
continuing operations before income taxes
|
729.8
|
|
|
476.7
|
|
|
1,959.8
|
|
|
1,914.9
|
|
|
Income
taxes
|
(157.7)
|
|
|
(74.1)
|
|
|
(346.6)
|
|
|
(508.5)
|
|
|
Net earnings from
continuing operations
|
572.1
|
|
|
402.6
|
|
|
1,613.2
|
|
|
1,406.4
|
|
|
Earnings from
discontinued operations, net of income taxes
|
—
|
|
|
(11.0)
|
|
|
22.3
|
|
|
400.3
|
|
|
Net
earnings
|
$
|
572.1
|
|
|
$
|
391.6
|
|
|
$
|
1,635.5
|
|
|
$
|
1,806.7
|
|
|
Net earnings per
share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.82
|
|
|
$
|
0.58
|
|
|
$
|
2.32
|
|
|
$
|
2.04
|
|
|
Diluted
|
$
|
0.81
|
|
|
$
|
0.57
|
|
|
$
|
2.29
|
|
|
$
|
2.01
|
|
|
Net earnings per
share from discontinued operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
(0.02)
|
|
|
$
|
0.03
|
|
|
$
|
0.58
|
|
|
Diluted
|
$
|
—
|
|
|
$
|
(0.02)
|
|
|
$
|
0.03
|
|
|
$
|
0.57
|
|
|
Net earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.82
|
|
|
$
|
0.57
|
|
*
|
$
|
2.35
|
|
|
$
|
2.62
|
|
|
Diluted
|
$
|
0.81
|
|
|
$
|
0.56
|
|
*
|
$
|
2.32
|
|
|
$
|
2.59
|
|
*
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
696.2
|
|
|
692.2
|
|
|
695.3
|
|
|
690.6
|
|
|
Diluted
|
705.6
|
|
|
701.3
|
|
|
705.5
|
|
|
699.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 29,
2017
|
|
September 30,
2016
|
|
September 29,
2017
|
|
September 30,
2016
|
Diluted Net
Earnings Per Share from Continuing
Operations (GAAP)
|
$
|
0.81
|
|
|
$
|
0.57
|
|
|
$
|
2.29
|
|
|
$
|
2.01
|
|
Pretax amortization
of acquisition-related intangible assets A
|
0.24
|
|
|
0.20
|
|
|
0.70
|
|
|
0.61
|
|
Pretax gain on sale
of investments B
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.32)
|
|
Pretax charge for
early extinguishment of borrowings C
|
—
|
|
|
0.26
|
|
|
—
|
|
|
0.26
|
|
Pretax gain on
resolution of acquisition-related matters D
|
—
|
|
|
(0.02)
|
|
|
—
|
|
|
(0.02)
|
|
Pretax restructuring,
impairment and other related
charges recorded in the second quarter of 2017
E
|
—
|
|
|
—
|
|
|
0.11
|
|
|
—
|
|
Tax effect of all
adjustments reflected above F
|
(0.05)
|
|
|
(0.14)
|
|
|
(0.18)
|
|
|
(0.12)
|
|
Discrete and other
tax-related adjustments G
|
—
|
|
|
—
|
|
|
(0.08)
|
|
|
0.14
|
|
Adjusted Diluted
Net Earnings Per Share from
Continuing Operations (Non-GAAP)
|
$
|
1.00
|
|
|
$
|
0.87
|
|
|
$
|
2.84
|
|
|
$
|
2.56
|
|
Forecasted
Adjusted Diluted Net Earnings Per Share from Continuing
Operations
|
|
|
Three-Month Period
Ending
December 31,
2017
|
|
Year
Ending
December 31,
2017
|
|
Low
End
|
|
High
End
|
|
Low
End
|
|
High
End
|
Forecasted Diluted
Net Earnings Per Share from
Continuing Operations (GAAP) 1
|
$
|
0.94
|
|
|
$
|
0.98
|
|
|
$
|
3.23
|
|
|
$
|
3.27
|
|
Anticipated pretax
amortization of acquisition-related
intangible assets A
|
0.23
|
|
|
0.23
|
|
|
0.93
|
|
|
0.93
|
|
Pretax restructuring,
impairment and other related
charges recorded in the second quarter of 2017
E
|
—
|
|
|
—
|
|
|
0.11
|
|
|
0.11
|
|
Anticipated tax
effect of all adjustments reflected above F
|
(0.05)
|
|
|
(0.05)
|
|
|
(0.23)
|
|
|
(0.23)
|
|
Discrete and other
tax-related adjustments recorded
during the first nine months of 2017 G
|
—
|
|
|
—
|
|
|
(0.08)
|
|
|
(0.08)
|
|
Forecasted
Adjusted Diluted Net Earnings Per Share
from Continuing Operations (Non-GAAP) 1
|
$
|
1.12
|
|
|
$
|
1.16
|
|
|
$
|
3.96
|
|
|
$
|
4.00
|
|
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 other discrete tax items
(including equity compensation-related excess tax benefits that
exceed or fall below anticipated levels).
|
Revenue
Performance
|
|
|
% Change
Three-
Month Period Ended
September 29, 2017
vs. Comparable 2016
Period
|
|
% Change Nine-
Month Period Ended
September 29, 2017
vs. Comparable 2016
Period
|
Total Sales Growth
(GAAP)
|
9.5
|
%
|
|
7.5
|
%
|
Less the impact
of:
|
|
|
|
Acquisitions
|
(5.5)
|
%
|
|
(5.5)
|
%
|
Currency
translation
|
(1.0)
|
%
|
|
0.5
|
%
|
Core Revenue Growth
from Continuing Operations (Non-GAAP) 2
|
3.0
|
%
|
|
2.5
|
%
|
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 businesses or 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
|
|
September 29,
2017
|
|
September 30,
2016
|
|
September 29,
2017
|
|
September 30,
2016
|
|
December 31,
2017
|
|
December 31,
2017
|
Pretax
|
$
|
166.4
|
|
|
$
|
143.2
|
|
|
$
|
492.9
|
|
|
$
|
426.6
|
|
|
$
|
164.3
|
|
|
$
|
657.2
|
|
After-tax
|
131.5
|
|
|
113.1
|
|
|
391.0
|
|
|
332.8
|
|
|
129.8
|
|
|
520.8
|
|
B
|
Gain on sale of
investments in nine-month period ended September 30, 2016 ($223
million pretax as presented in this line item, $140 million
after-tax).
|
|
|
C
|
Charge for early
extinguishment of borrowings for the nine-month period ended
September 30, 2016 ($179 million pretax as presented in this line
item, $112 million after-tax).
|
|
|
D
|
Gain on resolution of
acquisition-related matters for the nine-month period ended
September 30, 2016 ($18 million pretax as presented in this
line item, $14 million after-tax).
|
|
|
E
|
During the nine-month
period ended September 29, 2017, the Company recorded $76 million
of pretax restructuring, impairment and other related charges ($51
million after-tax) primarily related to the Company's strategic
decision to discontinue a molecular diagnostic product line in its
Diagnostics segment. As a result, the Company incurred
noncash charges for the impairment of certain technology-related
intangibles as well as related inventory and plant, property and
equipment with no further use totaling $49 million. In
addition, the Company incurred cash restructuring costs primarily
related to employee severance and related charges totaling $27
million. This is addressed in more detail in the "Statement
Regarding Non-GAAP Measures."
|
|
|
F
|
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.
|
|
|
G
|
Represents (1)
discrete income tax gains, primarily related to expiration of
statute of limitations ($35 million in the nine-month period ended
September 29, 2017), (2) equity compensation-related excess tax
benefits ($16 million in the nine-month period ended September 29,
2017) and (3) Fortive separation-related tax costs related to
repatriation of earnings, legal entity realignments and other
discrete matters ($99 million in the nine-month period ended
September 30, 2016). On January 1, 2017, Danaher adopted the
updated accounting guidance required by ASU 2016-09,
Compensation—Stock Compensation, which requires income
statement recognition of all excess tax benefits and deficiencies
related to equity compensation. We exclude from Adjusted
Diluted Net EPS any excess tax benefits that exceed the levels we
believe are representative of historical experience. In the
first quarter of 2017, we anticipated $10 million of equity
compensation-related excess tax benefits and realized $26 million
of excess tax benefits, and therefore we have excluded $16 million
of these benefits in the calculation of Adjusted Diluted Net
Earnings per Share. In the second and third quarters of 2017,
realized equity compensation-related excess tax benefits
approximated the anticipated benefit and no adjustments were
required.
|
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 Adjusted Diluted Net EPS, 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 core revenue, identify underlying growth trends
in our business and compare our revenue performance with prior and
future periods and to our peers.
Management uses these non-GAAP measures to measure the Company's
operating and financial performance, and uses a non-GAAP measure
similar to Adjusted Diluted Net EPS in the Company's executive
compensation program.
The items excluded from the non-GAAP measures set forth above
have been excluded for the following reasons:
- With respect to Adjusted Diluted Net EPS:
-
- 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.
- We exclude costs incurred pursuant to discrete restructuring
plans that are fundamentally different (in terms of the size,
strategic nature and planning requirements, as well as the
inconsistent frequency, of such plans) from the ongoing
productivity improvements that result from application of the
Danaher Business System. Because these restructuring plans
are incremental to the core activities that arise in the ordinary
course of our business and we believe are not indicative of
Danaher's ongoing operating costs in a given period, we exclude
these costs from the calculation of Adjusted Diluted Net EPS to
facilitate a more consistent comparison of operating results over
time.
- With respect to the other items excluded from Adjusted Diluted
Net EPS, 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; we believe that such
items may obscure underlying business trends and make comparisons
of long-term performance difficult.
- With respect to core revenue, (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 timing, size, number and nature of such
transactions can vary significantly 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.
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SOURCE Danaher Corporation