WASHINGTON, July 22, 2021 /PRNewswire/ -- Danaher Corporation
(NYSE: DHR) (the "Company") today announced results for the second
quarter 2021. All results in this release reflect only
continuing operations unless otherwise noted.
For the quarter ended July 2,
2021, net earnings were $1.7
billion, or $2.28 per diluted
common share which represents an 84.0% year-over-year increase from
the comparable 2020 period. Non-GAAP adjusted diluted net earnings
per common share were $2.46 which
represents a 71.0% increase over the comparable 2020
period.
Revenues increased 36.5% year-over-year to $7.2 billion, with 31.5% non-GAAP core revenue
growth.
Operating cash flow for the second quarter was $2.1 billion, representing a 46.5% increase
year-over-year, and non-GAAP free cash flow was $1.8 billion, representing a 41.0% increase
year-over-year.
For the third quarter 2021, the Company anticipates that
non-GAAP core revenue growth will be in the mid- to high-teens
percent range.
For the full year 2021, the Company now anticipates that the
non-GAAP core revenue growth rate including Cytiva will be
approximately 20%.
Rainer M. Blair, President and
Chief Executive Officer, stated, "Broad-based strength across the
portfolio helped us deliver over 30% core revenue growth and
outstanding earnings per share growth and cash flow generation. We
continued to make significant growth investments during the
quarter, strengthening our organic growth trajectory and enhancing
our portfolio with the announcement of our pending acquisition of
Aldevron."
Blair continued, "We believe the combination of our leading
portfolio and DBS-driven execution differentiates Danaher today and
provides a strong foundation for sustainable, long-term
outperformance."
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 866-503-8675
within the U.S. or by dialing +1-786-815-8792 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 earnings conference call (access code 5932469). A
replay of the conference call will be available shortly after the
conclusion of the call and until August
5, 2021. 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."
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 the demanding and attractive health
care, environmental and applied end-markets. With more than 20
operating companies, Danaher's globally diverse team of
approximately 69,000 associates is united by a common culture and
operating system, the Danaher Business System, and its Shared
Purpose, Helping Realize Life's Potential. 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, as applicable, 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 expected financial
performance for the third quarter and full year 2021, the Company's
anticipated acquisition of Aldevron, L.L.C., Danaher's positioning
for sustainable, long-term performance 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, the uncertainty of regulatory
approvals for our acquisition of Aldevron and the timing or
conditionality thereof, the ability of Danaher and Aldevron to
satisfy the acquisition agreement conditions and consummate the
transaction, the highly uncertain and unpredictable severity,
magnitude and duration of the COVID-19 pandemic (and the related
governmental, business and community responses thereto) on our
business, results of operations and financial condition, the impact
of our debt obligations (including the debt incurred to finance the
acquisition of Cytiva and any debt we may incur to finance the
acquisition of Aldevron) on our operations and liquidity,
deterioration of or instability in the economy, the markets we or
Aldevron serve and the financial markets (including as a result of
the COVID-19 pandemic), uncertainties relating to U.S. laws or
policies, including potential changes in U.S. trade policies and
tariffs and the reaction of other countries thereto, 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 rules
relating to off-label marketing and other regulations relating to
medical devices and the health care industry), the results of our
clinical trials and perceptions thereof, 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 (including with respect to our
anticipated acquisition of Aldevron), our ability to realize
anticipated growth, synergies and other benefits of the Aldevron
acquisition, Aldevron's performance and maintenance of important
business relationships, contingent liabilities and other risks
relating to acquisitions, investments, strategic relationships and
divestitures (including tax-related and other contingent
liabilities relating to past and future IPOs, split-offs or
spin-offs), 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, 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, social and business factors (including the impact of
the United Kingdom's separation
from the EU and uncertainties relating to such separation),
disruptions relating to man-made and natural disasters (including
pandemics such as COVID-19) 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 2020 Annual Report
on Form 10-K and Quarterly Report on Form 10-Q for the second
quarter of 2021. 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
|
|
Six-Month Period
Ended
|
|
|
July 2,
2021
|
|
July 3,
2020
|
|
July 2,
2021
|
|
July 3,
2020
|
|
Sales
|
$
|
7,218
|
|
|
$
|
5,297
|
|
|
$
|
14,076
|
|
|
$
|
9,640
|
|
|
Cost of
sales
|
(2,821)
|
|
|
(2,445)
|
|
|
(5,426)
|
|
|
(4,345)
|
|
|
Gross
profit
|
4,397
|
|
|
2,852
|
|
|
8,650
|
|
|
5,295
|
|
|
Operating
costs:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(1,966)
|
|
|
(1,685)
|
|
|
(3,842)
|
|
|
(3,143)
|
|
|
Research and
development expenses
|
(426)
|
|
|
(323)
|
|
|
(806)
|
|
|
(610)
|
|
|
Operating
profit
|
2,005
|
|
|
844
|
|
|
4,002
|
|
|
1,542
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
97
|
|
|
454
|
|
|
237
|
|
|
452
|
|
|
Interest
expense
|
(62)
|
|
|
(78)
|
|
|
(120)
|
|
|
(125)
|
|
|
Interest
income
|
3
|
|
|
1
|
|
|
7
|
|
|
63
|
|
|
Earnings from
continuing operations before income taxes
|
2,043
|
|
|
1,221
|
|
|
4,126
|
|
|
1,932
|
|
|
Income
taxes
|
(344)
|
|
|
(294)
|
|
|
(725)
|
|
|
(410)
|
|
|
Net earnings from
continuing operations
|
1,699
|
|
|
927
|
|
|
3,401
|
|
|
1,522
|
|
|
Earnings from
discontinued operations, net of income taxes
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
Net
earnings
|
1,785
|
|
|
927
|
|
|
3,487
|
|
|
1,522
|
|
|
Mandatory convertible
preferred stock dividends
|
(41)
|
|
|
(35)
|
|
|
(82)
|
|
|
(54)
|
|
|
Net earnings
attributable to common stockholders
|
$
|
1,744
|
|
|
$
|
892
|
|
|
$
|
3,405
|
|
|
$
|
1,468
|
|
|
Net earnings per
common share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.32
|
|
|
$
|
1.27
|
|
|
$
|
4.65
|
|
|
$
|
2.09
|
|
(a)
|
Diluted
|
$
|
2.28
|
|
|
$
|
1.24
|
|
|
$
|
4.57
|
|
|
$
|
2.06
|
|
(a)
|
Net earnings per
common share from discontinued operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.12
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Diluted
|
$
|
0.12
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Net earnings per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.44
|
|
|
$
|
1.27
|
|
|
$
|
4.77
|
|
|
$
|
2.09
|
|
(a)
|
Diluted
|
$
|
2.40
|
|
|
$
|
1.24
|
|
|
$
|
4.68
|
|
(a)(b)
|
$
|
2.06
|
|
(a)
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
714.5
|
|
|
705.1
|
|
|
713.9
|
|
|
701.1
|
|
|
Diluted
|
736.0
|
|
|
718.2
|
|
|
735.6
|
|
|
713.1
|
|
|
|
|
(a)
|
Net earnings per
common share amounts for the relevant three-month periods do not
add to the six-month period amounts due to rounding.
|
(b)
|
Net earnings per
common share amounts do 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).
Adjusted Diluted
Net Earnings Per Common Share from Continuing
Operations 1
|
|
|
Three-Month Period
Ended
|
|
Six-Month Period
Ended
|
|
July 2,
2021
|
|
July 3,
2020
|
|
July 2,
2021
|
|
July 3,
2020
|
Diluted Net
Earnings Per Common Share From Continuing Operations
(GAAP)
|
$
|
2.28
|
|
|
$
|
1.24
|
|
|
$
|
4.57
|
|
|
$
|
2.06
|
|
Pretax amortization of
acquisition-related intangible assets A
|
0.47
|
|
|
0.43
|
|
|
0.93
|
|
|
0.65
|
|
Pretax
acquisition-related fair value adjustments to inventory and
deferred revenue, incremental transaction costs deemed significant
and integration preparation costs, in each case related to the
acquisition of Cytiva B
|
—
|
|
|
0.31
|
|
|
0.06
|
|
|
0.39
|
|
Pretax impairment
charges related to a trade name in the Diagnostics segment in the
first quarter of 2021 and a facility in the Diagnostics segment and
a trade name and other intangible assets in the Environmental &
Applied Solutions segment in the first quarter of 2020
C
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
Pretax fair value
(gains) and losses on the Company's equity and limited partnership
investments D
|
(0.12)
|
|
|
0.01
|
|
|
(0.27)
|
|
|
0.02
|
|
Pretax gain on
disposition of certain product lines E
|
—
|
|
|
(0.62)
|
|
|
(0.02)
|
|
|
(0.62)
|
|
Tax effect of all
adjustments reflected above F
|
(0.07)
|
|
|
0.05
|
|
|
(0.15)
|
|
|
—
|
|
Discrete tax
adjustments G
|
(0.10)
|
|
|
—
|
|
|
(0.16)
|
|
|
(0.04)
|
|
Declared dividends on
the MCPS assuming "if-converted" method
H
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.03
|
|
Rounding
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Adjusted Diluted
Net Earnings Per Common Share From Continuing Operations
(Non-GAAP)
|
$
|
2.46
|
|
|
$
|
1.44
|
|
|
$
|
4.98
|
|
|
$
|
2.50
|
|
|
|
1
|
Each of the per share
adjustment amounts above have been calculated assuming the
Mandatory Convertible Preferred Stock ("MCPS") had been converted
into shares of common stock.
|
See the accompanying Notes to Reconciliation of
GAAP to Non-GAAP Financial Measures
Adjusted Average
Common Stock and Common Equivalent Diluted Shares
Outstanding
|
(shares in
millions)
|
|
|
Three-Month Period
Ended
|
|
Six-Month Period
Ended
|
|
July 2,
2021
|
|
July 3,
2020
|
|
July 2,
2021
|
|
July 3,
2020
|
Average common stock
and common equivalent shares outstanding - diluted (GAAP)
2
|
736.0
|
|
|
718.2
|
|
|
735.6
|
|
|
713.1
|
|
Converted shares
3
|
8.6
|
|
|
16.8
|
|
|
8.6
|
|
|
14.6
|
|
Adjusted average
common stock and common equivalent shares outstanding - diluted
(non-GAAP)
|
744.6
|
|
|
735.0
|
|
|
744.2
|
|
|
727.7
|
|
|
|
2
|
The impact of the
MCPS Series A calculated under the if-converted method was dilutive
for the three and six-month periods ended July 2, 2021, and as
such 11.0 million shares underlying the MCPS Series A were
included in the calculation of diluted EPS for both periods and the
related MCPS Series A dividends of $20 million and
$40 million were excluded from the calculation of net earnings
for diluted EPS for the respective periods.
|
|
|
|
The impact of the
MCPS Series B calculated under the if-converted method was
anti-dilutive for the three and six-month periods ended
July 2, 2021, and as such 8.6 million shares underlying the
MCPS Series B were excluded in the calculation of diluted EPS for
both periods and the related MCPS Series B dividends of
$21 million and $42 million were included in the
calculation of net earnings for diluted EPS for the respective
periods.
|
|
|
|
The impact of the
MCPS Series A and MCPS Series B calculated under the if-converted
method was anti-dilutive for the three and six-month periods ended
July 3, 2020, and as such 16.8 million and 14.6 million
shares, respectively, underlying the MCPS Series A and MCPS Series
B were excluded from the diluted EPS calculation and the related
MCPS Series A and MCPS Series B dividends were included in the
calculation of net earnings for diluted EPS from continuing
operations for the three and six-month periods ended July 3,
2020.
|
|
|
3
|
The number of
converted shares assumes the conversion of all MCPS and issuance of
the underlying shares applying the "if-converted" method of
accounting and using an average 20 trading-day trailing volume
weighted average price ("VWAP") of $258.03 and $172.83 as of
July 2, 2021 and July 3, 2020, respectively.
|
See the accompanying Notes to Reconciliation of
GAAP to Non-GAAP Financial Measures
Core Sales Growth,
Core Sales Growth Including Cytiva and Base Business Core Sales
Growth
|
|
|
% Change
Three-Month Period Ended July 2, 2021 vs. Comparable 2020
Period
|
|
% Change Six-Month
Period Ended July 2, 2021 vs. Comparable 2020 Period
|
Total sales growth
(GAAP)
|
36.5
|
%
|
|
46.0
|
%
|
Impact of:
|
|
|
|
Acquisitions/divestitures
|
(1.0)
|
%
|
|
(16.0)
|
%
|
Currency exchange
rates
|
(4.0)
|
%
|
|
(3.5)
|
%
|
Core sales growth
(non-GAAP)
|
31.5
|
%
|
|
26.5
|
%
|
Impact of Cytiva
sales growth (net of divested product lines)
|
|
|
4.5
|
%
|
Core sales growth
including Cytiva (non-GAAP)
|
|
|
31.0
|
%
|
|
|
|
|
Impact of
COVID-related tailwinds
|
(14.0)
|
%
|
|
(17.0)
|
%
|
Base business core
sales growth (non-GAAP)
|
17.5
|
%
|
|
14.0
|
%
|
Forecasted Core
Sales Growth, Core Sales Growth Including Cytiva and Base Business
Core Sales Growth 4
|
|
|
% Change
Three-Month Period Ending October 1, 2021 vs. Comparable 2020
Period
|
|
% Change Year
Ending December 31, 2021 vs. Comparable 2020 Period
|
Core sales growth
(non-GAAP)
|
+Mid to
high-teens
|
|
+High-teens
|
Impact of Cytiva
sales growth (net of divested product lines)
|
|
|
+Low
single-digit
|
Core sales growth
including Cytiva (non-GAAP)
|
|
|
~+20 %
|
|
|
|
|
Impact of
COVID-related tailwinds
|
(High
single-digit)
|
|
~(10) %
|
Base business core
sales growth (non-GAAP)
|
+High
single-digit
|
|
~+10 %
|
|
|
4
|
We do not reconcile
these measures to the comparable GAAP measure because of the
inherent difficulty in predicting and estimating the future impact
and timing of currency translation, acquisitions and divested
product lines, which would be reflected in any forecasted GAAP
revenue.
|
|
|
Note: Danaher calculates period-to-period core sales growth
including Cytiva by adding Cytiva sales to core sales for both the
baseline and current periods. Beginning in the second quarter
of 2021, Cytiva sales are included in core sales, and therefore we
no longer provide the measure "core sales including Cytiva" for
quarterly periods beginning with the second quarter of
2021.
|
See the accompanying Notes to Reconciliation of
GAAP to Non-GAAP Financial Measures
Free Cash Flow
from Continuing Operations and Free Cash Flow from Continuing
Operations to Net Earnings from Continuing Operations Conversion
Ratio
|
($ in
millions)
|
|
|
Three-Month Period
Ended
|
|
Year-over-Year
Change
|
|
July 2,
2021
|
|
July 3,
2020
|
|
Total Cash Flows
from Continuing Operations:
|
|
|
|
|
|
Total cash provided
by operating activities from continuing operations
(GAAP)
|
$
|
2,120
|
|
|
$
|
1,445
|
|
|
|
Total cash (used in)
from investing activities from continuing operations
(GAAP)
|
$
|
(1,067)
|
|
|
$
|
539
|
|
|
|
Total cash used in
financing activities from continuing operations (GAAP)
|
$
|
(139)
|
|
|
$
|
(889)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
from Continuing Operations:
|
|
|
|
|
|
Total cash provided
by operating activities from continuing operations
(GAAP)
|
$
|
2,120
|
|
|
$
|
1,445
|
|
|
~ 46.5%
|
Less: payments for
additions to property, plant & equipment (capital expenditures)
from continuing operations (GAAP)
|
(305)
|
|
|
(155)
|
|
|
|
Plus: proceeds from
sales of property, plant & equipment (capital disposals) from
continuing operations (GAAP)
|
1
|
|
|
—
|
|
|
|
Free cash flow from
continuing operations (non-GAAP)
|
$
|
1,816
|
|
|
$
|
1,290
|
|
|
~ 41.0%
|
|
|
|
|
|
|
Free Cash Flow
from Continuing Operations to Net Earnings from Continuing
Operations Conversion Ratio:
|
|
|
|
|
|
Free cash flow from
continuing operations from above (non-GAAP)
|
$
|
1,816
|
|
|
$
|
1,290
|
|
|
|
Net earnings from
continuing operations (GAAP)
|
1,699
|
|
|
927
|
|
|
|
Free cash flow from
continuing operations to net earnings from continuing operations
conversion ratio (non-GAAP)
|
1.07
|
|
1.39
|
|
|
|
We define free cash
flow as operating cash flows from continuing operations, less
payments for additions to property, plant and equipment from
continuing operations ("capital expenditures") plus the proceeds
from sales of plant, property and equipment from continuing
operations ("capital disposals"). All amounts presented above
reflect only continuing operations.
|
See the accompanying Notes to Reconciliation of
GAAP to Non-GAAP Financial Measures
Notes to
Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
|
A
|
Amortization of
acquisition-related intangible assets in the following historical
periods ($ in millions) (only the pretax amounts set forth below
are reflected in the amortization line item above):
|
|
Three-Month Period
Ended
|
|
Six-Month Period
Ended
|
|
July 2,
2021
|
|
July 3,
2020
|
|
July 2,
2021
|
|
July 3,
2020
|
Pretax
|
$
|
347
|
|
|
$
|
315
|
|
|
$
|
691
|
|
|
$
|
471
|
|
After-tax
|
275
|
|
|
253
|
|
|
549
|
|
|
379
|
|
B
|
Pretax costs incurred
for fair value adjustments to inventory and deferred revenue
related to the acquisition of Cytiva in the six-month period ended
July 2, 2021, ($46 million pretax as reported in this line
item, $36 million after-tax). Pretax costs incurred for fair
value adjustments to inventory and deferred revenue in the three
and six-month periods and transaction costs deemed significant and
integration preparation costs in the six-month period ended July 3,
2020, related to the acquisition of Cytiva, ($228 million pretax as
reported in this line item, $178 million after-tax and $288 million
pretax as reported in this line item, $231 million after-tax),
respectively. 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 Danaher in a given period.
|
C
|
Pretax impairment
charges related to a trade name in the Diagnostics segment recorded
in the first quarter of 2021 ($10 million pretax as reported in
this line item, $8 million after-tax). Pretax impairment
charges related to a facility in the Diagnostics segment and a
trade name and other intangible assets in the Environmental &
Applied Solutions segment recorded in the first quarter of 2020 ($8
million pretax as reported in this line item, $6 million
after-tax).
|
D
|
Pretax fair value
gains on the Company's equity and limited partnership investments
recorded in the three and six-month periods ended July 2,
2021, ($86 million pretax as reported in this line item, $67
million after-tax and $202 million pretax as reported in this line
item, $161 million after-tax, respectively) and pretax fair value
losses on the Company's equity and limited partnership investments
recorded in the three and six-month periods ended July 3,
2020, ($6 million pretax as reported in this line item, $4 million
after-tax, and $13 million pretax as reported in this line item,
$10 million after-tax, respectively).
|
E
|
Pretax gain on
disposition of certain product lines in the six-month period ended
July 2, 2021, ($13 million pretax as reported in this line item,
$10 million after-tax). Pretax gain on disposition of certain
product lines in both the three and six-month periods ended July 3,
2020, ($455 million pretax as reported in this line item, $305
million after-tax).
|
F
|
This line item
reflects the aggregate tax effect of all nontax adjustments
reflected in the preceding line items of the table. In
addition, the footnotes above indicate 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. The MCPS
dividends are not tax deductible and therefore the tax effect of
the adjustments does not include any tax impact of the MCPS
dividends.
|
G
|
Discrete tax
adjustments and other tax-related adjustments for the three-month
period ended July 2, 2021, include the impact of net discrete
tax gains of $76 million (or $0.10 per diluted common share)
related primarily to release of reserves for uncertain tax
positions due to the expiration of statutes of limitation, audit
settlements and excess tax benefits from stock-based compensation,
net of changes in estimates associated with prior period uncertain
tax positions. Discrete tax adjustments and other tax-related
adjustments for the six-month period ended July 2, 2021,
include the impact of net discrete tax gains of $120 million (or
$0.16 per diluted common share) related primarily to stock-based
compensation, the release of reserves for uncertain tax positions
due to the expiration of statutes of limitation and other
items. Discrete tax adjustments and other tax-related
adjustments for the six-month period ended July 3, 2020,
include the impact of net discrete tax gains of $27 million (or
$0.04 per diluted common share) related primarily to excess tax
benefits from stock-based compensation and the release of reserves
for uncertain tax positions due to the expiration of statutes of
limitation. The Company anticipates excess tax benefits from
stock compensation of approximately $7 million per quarter and
therefore excludes benefits in excess of this amount in the
calculation of adjusted diluted net earnings from continuing
operations per common share.
|
H
|
In March 2019, the
Company issued $1.65 billion in aggregate liquidation preference of
4.75% MCPS Series A. In May 2020, the Company issued $1.72
billion in aggregate liquidation preference of 5.0% MCPS Series
B. Dividends on the MCPS Series A and Series B are payable on
a cumulative basis at an annual rate of 4.75% and 5.0%,
respectively, on the liquidation preference of $1,000 per
share. Unless earlier converted, each share of MCPS Series A
will automatically convert on April 15, 2022 into between 6.6590
and 8.1572 shares of Danaher's common stock, subject to further
anti-dilution adjustments. Unless earlier converted, each
share of MCPS Series B will automatically convert on April 15, 2023
into between 5.0094 and 6.1364 shares of Danaher's common
stock, subject to further anti-dilution adjustments. The
number of shares of Danaher's common stock issuable on conversion
of the MCPS will be determined based on the VWAP per share of the
Company's common stock over the 20 consecutive trading day period
beginning on, and including, the 21st scheduled trading day
immediately before April 15, 2022 and April 15, 2023 for the MCPS
Series A and Series B, respectively. For the calculation of
net earnings per common share from continuing operations, the
impact of the dilutive MCPS are calculated under the if-converted
method and the related MCPS dividends are excluded. For the
purposes of calculating adjusted earnings per common share from
continuing operations, the Company has excluded the paid and
anticipated MCPS cash dividends and assumed the "if-converted"
method of share dilution (the incremental shares of common stock
deemed outstanding applying the "if-converted" method of
calculating share dilution only with respect to any MCPS the
conversion of which would be dilutive in the particular period are
referred to as the "Converted Shares") for any MCPS that were
anti-dilutive for the given period. For additional
information about the impact of the MCPS on the calculation of
diluted EPS, see note 2 in the Adjusted Average Common Stock and
Common Equivalent Diluted Shares Outstanding table
above.
|
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 Earnings Per Common Share
from Continuing Operations, 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 sales and related sales measures, identify
underlying growth trends in our business and compare our sales
performance with prior and future periods and to our peers;
and
- with respect to free cash flow from continuing operations and
related cash flow measures (the "FCF Measure"), 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).
We also present core sales on a basis that includes sales
attributable to Cytiva (formerly the Biopharma Business of General
Electric Company's ("GE") Life Sciences business), which Danaher
acquired from GE on March 31,
2020. Historically Danaher has calculated core sales solely
on a basis that excludes sales from acquired businesses recorded
prior to the first anniversary of the acquisition. However,
given Cytiva's significant size and historical core sales growth
rate, in each case compared to Danaher's existing businesses,
management believes it is appropriate to also present core sales on
a basis that includes Cytiva sales. Management believes this
presentation provides useful information to investors by
demonstrating the impact Cytiva has on the Company's current growth
profile, rather than waiting to demonstrate such impact 12 months
after the acquisition when Cytiva would normally have been included
in Danaher's core sales calculation. Danaher calculates
period-to-period core sales growth including Cytiva by adding to
the baseline period sales Cytiva's historical sales from such
period (when it was owned by GE), net of the sales of the Company
product lines divested in 2020 to obtain regulatory approval to
acquire Cytiva ("Cytiva sales") and also adding the Cytiva sales to
the current period. Beginning in the second quarter of 2021,
Cytiva sales are included in core sales, and therefore we no longer
provide the measure "core sales including Cytiva" for quarterly
periods beginning with the second quarter of 2021. We also
present "base business" core revenue growth to demonstrate our core
revenue growth and our core revenue growth including Cytiva
excluding the impact of core sales growth directly attributable to
COVID-19 and its impact.
Management uses these non-GAAP measures to measure the Company's
operating and financial performance, and uses core sales and
non-GAAP measures similar to Adjusted Diluted Net Earnings Per
Common Share from Continuing Operations and the FCF Measure 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 Earnings Per Common Share
from Continuing Operations:
-
- Amortization of Intangible Assets. 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
sales generation and that intangible asset amortization related to
past acquisitions will recur in future periods until such
intangible assets have been fully amortized.
- Restructuring Charges. 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 to facilitate a more consistent comparison of operating
results over time.
- Other Adjustments. With respect to the other items excluded
from Adjusted Diluted Net Earnings Per Common Share from Continuing
Operations, 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 adjusted average common stock and common
equivalent shares outstanding, Danaher's Mandatory Convertible
Preferred Stock ("MCPS") will mandatorily convert into Danaher
common stock on the mandatory conversion date, which is expected to
be April 15, 2022 and April 15, 2023 for the Series A and Series B
MCPS, respectively, (unless converted or redeemed earlier in
accordance with the terms of the applicable certificate of
designations). With respect to the calculation of Adjusted Diluted
Net Earnings Per Common Share from Continuing Operations, we apply
the "if converted" method of share dilution to the MCPS Series A
and B in all applicable periods irrespective of whether such
preferred shares would be dilutive or anti-dilutive in the period.
We believe this presentation provides useful information to
investors by helping them understand what the net impact will be on
Danaher's earnings per share-related measures once the MCPS convert
into Danaher common stock.
- With respect to core sales related 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
(other than Cytiva, in the case of core sales including Cytiva and
base business core sales) 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 Measure, 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.
With respect to forecasted core sales related measures, we do
not reconcile these measures to the comparable GAAP measure because
of the inherent difficulty in predicting and estimating the future
impact and timing of currency translation, acquisitions and
divested product lines, which would be reflected in any forecasted
GAAP revenue.
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SOURCE Danaher Corporation