WASHINGTON, April 19, 2018 /PRNewswire/ -- Danaher
Corporation (NYSE: DHR) today announced results for the first
quarter 2018. For the quarter ended March
30, 2018, net earnings were $566.6
million, or $0.80 per diluted
share which represents a 16.0% year-over-year increase.
Non-GAAP adjusted diluted net earnings per share were
$0.99. This represents a 16.5%
increase over the comparable 2017 period. For the first quarter
2018, revenues increased 11.5% year-over-year to $4.7 billion, with non-GAAP core revenue growth
of 5.5%.
Operating cash flow for the first quarter 2018 was $828.9 million, representing a 48% increase over
the comparable 2017 period. Non-GAAP free cash flow for the first
quarter 2018 increased 72% year-over-year to $691.4 million, representing a non-GAAP free cash
flow to net income conversion ratio for the first quarter 2018 of
122%.
For the second quarter 2018, the Company anticipates that
diluted net earnings per share will be in the range of $0.88 to $0.91 and
non-GAAP adjusted diluted net earnings per share will be in the
range of $1.07 to $1.10.
For the full year 2018, the Company now anticipates that diluted
net earnings per share will be in the range of $3.62 to $3.69. The
Company now expects its 2018 non-GAAP adjusted diluted net earnings
per share to be in the range of $4.38
to $4.45 versus previous guidance of
$4.25 to $4.35.
Thomas P. Joyce, Jr., President
and Chief Executive Officer, stated, "We are off to an outstanding
start in 2018, with the first quarter coming in ahead of our
initial expectations. We delivered 5.5% core revenue growth,
mid-teens earnings per share growth and free cash flow that
increased more than 70% year-on-year. This strong performance was
broad-based, with four of our five platforms delivering mid-single
digit or better core revenue growth — including 9.5% growth in
Diagnostics, which was led by Cepheid. We also announced the
acquisition of Integrated DNA Technologies, Inc. ("IDT"), a leading
player in the highly attractive genomics consumables segment. We
closed the IDT acquisition last week and are excited to welcome the
IDT team to Danaher."
Joyce continued, "Our great start to 2018 is a testament to the
power of the Danaher Business System, strong execution by the
Danaher team and our focus on long-term value creation. Our
performance in the quarter — combined with significant
opportunities across the portfolio and our solid balance sheet —
positions us well for strong performance in 2018 and beyond."
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 888-882-4478
within the U.S. or by dialing +1 323-794-2149 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 1818726). A
replay of the conference call will be available shortly after the
conclusion of the call and until April
26, 2018. 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 approximately 67,000 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 second quarter and full year 2018,
the anticipated impact of the IDT acquisition, the Company's
opportunities and positioning for 2018 and beyond and any other
statements regarding events or developments that we 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 and consummate
appropriate acquisitions and strategic investments and successfully
complete divestitures and other dispositions, our ability to
integrate the businesses we acquire and achieve the anticipated
benefits of such acquisitions, contingent liabilities relating to
acquisitions, investments 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 United Kingdom's decision to leave the EU and
changes in U.S. policy stemming from the current administration,
such as changes in U.S. trade policies and the reaction of other
countries thereto), 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 2017 Annual Report on Form 10-K and
Quarterly Report on Form 10-Q for the first quarter of 2018.
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
STATEMENTS OF EARNINGS (unaudited)
|
($ and shares in
millions, except per share amounts)
|
|
|
|
Three-Month Period
Ended
|
|
March 30,
2018
|
|
March 31,
2017
|
Sales
|
$
|
4,695.4
|
|
|
$
|
4,205.7
|
|
Cost of
sales
|
(2,051.8)
|
|
|
(1,871.4)
|
|
Gross
profit
|
2,643.6
|
|
|
2,334.3
|
|
Operating
costs:
|
|
|
|
Selling,
general and administrative expenses
|
(1,601.9)
|
|
|
(1,449.9)
|
|
Research and
development expenses
|
(298.7)
|
|
|
(267.4)
|
|
Operating
profit
|
743.0
|
|
|
617.0
|
|
Nonoperating income
(expense):
|
|
|
|
Other income,
net
|
7.8
|
|
|
6.9
|
|
Interest
expense
|
(39.1)
|
|
|
(40.3)
|
|
Interest
income
|
1.4
|
|
|
1.6
|
|
Earnings from
continuing operations before income taxes
|
713.1
|
|
|
585.2
|
|
Income
taxes
|
(146.5)
|
|
|
(101.4)
|
|
Net earnings from
continuing operations
|
566.6
|
|
|
483.8
|
|
Earnings from
discontinued operations, net of income taxes
|
—
|
|
|
22.3
|
|
Net
earnings
|
$
|
566.6
|
|
|
$
|
506.1
|
|
Net earnings per
share from continuing operations:
|
|
|
|
Basic
|
$
|
0.81
|
|
|
$
|
0.70
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.69
|
|
Net earnings per
share from discontinued operations:
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
0.03
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.03
|
|
Net earnings per
share:
|
|
|
|
Basic
|
$
|
0.81
|
|
|
$
|
0.73
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.72
|
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
Basic
|
698.6
|
|
|
694.3
|
|
Diluted
|
709.5
|
|
|
705.7
|
|
|
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
|
|
March 30,
2018
|
|
March 31,
2017
|
Diluted Net
Earnings Per Share from Continuing Operations (GAAP)
|
$
|
0.80
|
|
|
$
|
0.69
|
|
Pretax
amortization of acquisition-related intangible assets
A
|
0.24
|
|
|
0.24
|
|
Tax effect of
all adjustments reflected above B
|
(0.05)
|
|
|
(0.05)
|
|
Discrete tax
adjustments and other tax-related adjustments
C
|
—
|
|
|
(0.03)
|
|
Adjusted Diluted
Net Earnings Per Share from Continuing Operations
(Non-GAAP)
|
$
|
0.99
|
|
|
$
|
0.85
|
|
Forecasted
Adjusted Diluted Net Earnings Per Share from Continuing Operations
1
|
|
|
Three-Month Period
Ending
June 29,
2018
|
|
Year
Ending
December 31,
2018
|
|
Low
End
|
|
High
End
|
|
Low
End
|
|
High
End
|
Forecasted Diluted
Net Earnings Per Share from
Continuing Operations (GAAP)
|
$
|
0.88
|
|
|
$
|
0.91
|
|
|
$
|
3.62
|
|
|
$
|
3.69
|
|
Anticipated
pretax amortization of acquisition-related
intangible assets A
|
0.24
|
|
|
0.24
|
|
|
0.96
|
|
|
0.96
|
|
Tax effect of
all adjustments reflected above B
|
(0.05)
|
|
|
(0.05)
|
|
|
(0.20)
|
|
|
(0.20)
|
|
Forecasted
Adjusted Diluted Net Earnings Per Share
from Continuing Operations (Non-GAAP)
|
$
|
1.07
|
|
|
$
|
1.10
|
|
|
$
|
4.38
|
|
|
$
|
4.45
|
|
1
|
These forward-looking
estimates 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.
|
Revenue
Performance
|
|
|
Three-Month Period
Ended
March 30, 2018 vs. Comparable 2017
Period
|
|
Total
Company
|
|
Diagnostics
Segment
|
Total Revenue
Growth from Continuing Operations (GAAP)
|
11.5
|
%
|
|
14.5
|
%
|
Less the impact
of:
|
|
|
|
Acquisitions
|
(1.0)
|
%
|
|
—
|
%
|
Currency
exchange rates
|
(5.0)
|
%
|
|
(5.0)
|
%
|
Core Revenue
Growth from Continuing Operations (Non-GAAP)
2
|
5.5
|
%
|
|
9.5
|
%
|
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)
|
|
|
Reconciliation of
Operating Cash Flows from Continuing Operations (GAAP) to Free Cash
Flow from Continuing Operations (Non-GAAP)
|
|
|
Three Month Period
Ended
|
|
Year-over-Year
Increase
|
|
March 30,
2018
|
|
March 31,
2017
|
|
Free Cash Flow
from Continuing Operations ($ in millions):
|
|
|
|
|
|
Operating Cash Flows
from Continuing Operations (GAAP)
|
$
|
828.9
|
|
|
$
|
560.2
|
|
|
48%
|
Less: payments
for additions to property, plant & equipment (capital
expenditures) from continuing operations (GAAP)
|
(137.9)
|
|
|
(158.6)
|
|
|
|
Plus: proceeds
from sales of property, plant & equipment (capital
disposals) from continuing operations (GAAP)
|
0.4
|
|
|
0.7
|
|
|
|
Free Cash Flow from
Continuing Operations (Non-GAAP)
|
$
|
691.4
|
|
|
$
|
402.3
|
|
|
72%
|
|
|
|
|
|
|
Ratio of Free Cash
Flow to Net Earnings ($ in millions):
|
|
|
|
|
|
Free Cash Flow from
Continuing Operations from Above (Non-GAAP)
|
$
|
691.4
|
|
|
$
|
402.3
|
|
|
|
Net Earnings from
Continuing Operations (GAAP)
|
566.6
|
|
|
483.8
|
|
|
|
Free Cash Flow from
Continuing Operations to Net Earnings from
Continuing Operations Conversion Ratio (Non-GAAP)
|
1.22
|
|
|
0.83
|
|
|
|
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
|
|
Three-Month
Period Ending
|
|
Year
Ending
|
|
March 30,
2018
|
|
March 31,
2017
|
|
June 29,
2018
|
|
December 31,
2018
|
Pretax
|
$
|
172.3
|
|
|
$
|
166.1
|
|
|
$
|
171.7
|
|
|
$
|
687.6
|
|
After-tax
|
137.0
|
|
|
132.0
|
|
|
136.5
|
|
|
546.6
|
|
B
|
This line item
reflects the aggregate tax effect of all nontax adjustments
reflected in the preceding line items of the table. In
addition, the footnote above indicates the after-tax amount of each
individual adjustment item. Danaher estimates the tax effect
of each adjustment item 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.
|
|
|
C
|
Represents discrete
income tax gains, primarily related to equity compensation-related
excess tax benefits. 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 EPS. In
the first quarter of 2018, we anticipated $10 million of equity
compensation-related excess tax benefits and realized $17 million
of excess tax benefits. The benefit realized in excess of the
amount estimated ($7 million) was offset by discrete income tax
changes during the period and as a result there was no adjustment
required in the calculation of Adjusted Diluted Net EPS for the
first quarter of 2018.
|
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;
- 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; and
- with respect to free cash flow and free cash flow-to-net income
ratio (the "FCF Measures"), understand Danaher's ability to
generate cash without external financings, strengthen its balance
sheet, invest in its business and grow its business through
acquisitions and other strategic opportunities (although a
limitation of free cash flow is that it does not take into account
the Company's debt service requirements and other non-discretionary
expenditures, and as a result the entire free cash flow amount is
not necessarily available for discretionary expenditures).
Management uses these non-GAAP measures to measure the Company's
operating and financial performance, and uses non-GAAP measures
similar to Adjusted Diluted Net EPS and the FCF Measures 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.
- 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 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.
- With respect to the FCF Measures, we exclude payments for
additions to property, plant and equipment (net of the proceeds
from capital disposals) to demonstrate the amount of operating cash
flow for the period that remains after accounting for the Company's
capital expenditure requirements.
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SOURCE Danaher Corporation