01—Abstract
Summary
Summary of the 10-K filed February 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Danaher Corporation reported robust performance for the fiscal year ending December 31, 2014, demonstrating sales growth driven by both existing businesses and strategic acquisitions.
The company's diversified five-segment structure, encompassing Test & Measurement, Environmental, Life Sciences & Diagnostics, Dental, and Industrial Technologies, contributed to its stable global performance. Danaher's commitment to its "Danaher Business System" (DBS) continues to be a key driver for operational efficiency and innovation across its diverse product and service offerings. Financially, the company saw an increase in consolidated sales of 4.0%a compared to the prior year.
Management highlighted a strategic acquisition of Nobel Biocare in the Dental segment, alongside sixteen other acquisitions across various segments, reinforcing its growth-through-acquisition strategy. The company also announced plans to spin off or split off its communications business from the Test & Measurement segment and merge it with NetScout Systems, Inc., a significant strategic move expected to be completed in 2015. Danaher's financial health appears solid, with substantial cash from operations and manageable debt levels.
02—Key points
Key Highlights
- Danaher reported a 4.0% increase in consolidated sales for 2014, reaching $19.9 billion, with existing businesses contributing 3.5% growth.
- The company completed a significant acquisition of Nobel Biocare in the Dental segment for approximately $1.9 billion, alongside sixteen other acquisitions totaling $1.3 billion.
- A major strategic initiative was announced to combine the majority of Danaher's Test & Measurement segment's communications business with NetScout Systems, Inc., expected to be completed in 2015.
- The Life Sciences & Diagnostics segment continued to be the largest revenue contributor, showing mid-single digit growth from existing businesses.
- The company maintained strong operating profit margins, with the Industrial Technologies segment showing the highest operating profit margin at 22.7%.
- Danaher's R&D expenditures increased to $1.314 billion, reflecting a commitment to innovation across its segments.
- The company generated substantial operating cash flow of $3.76 billion, supporting its investing activities, including acquisitions and capital expenditures.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Danaher Corp kept $0.20.
- Revenue$12.87B100.0%
- Cost of revenue−$6.02B46.8%
- Gross profit$6.85B53.2%
- Operating costs−$4.80B37.3%
- Operating income$2.04B15.9%
- Interest, other & tax$553.4M4.3%
- Net income$2.60B20.2%
Where FY2014 revenue went
$12.87B- Cost of revenue: $6.02B, 47% of revenue
- SG&A: $4.04B, 31% of revenue
- Operating income: $2.04B, 16% of revenue
- R&D: $769.4M, 6.0% of revenue
Kept 16% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 25, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $12.87B$18.28B | −29.6% |
| Cost of Revenue | $6.02B$8.94B | −32.7% |
| Gross Profit | $6.85B$9.34B | −26.7% |
| R&D Expenses | $769.40M$1.10B | −30.3% |
| SG&A Expenses | $4.04B$5.12B | −21.1% |
| Operating Income | $2.04B$3.12B | −34.5% |
| Interest Expense | $94.70M$141.20M | −32.9% |
| Net Income | $2.60B$2.69B | −3.6% |
| EPS (Basic) | $3.70$3.87 | −4.4% |
| EPS (Diluted) | $3.63$3.80 | −4.5% |
| Shares Outstanding (Basic) | 702.20M696.00M | +0.9% |
| Shares Outstanding (Diluted) | 716.10M711.00M | +0.7% |
05—Questions
Frequently Asked Questions
What was Danaher's overall sales performance in 2014?
Danaher reported consolidated sales of $19.91 billion for the year ended December 31, 2014, representing a 4.0% increase compared to 2013. This growth was attributed to a 3.5% increase from existing businesses and a 1.5% contribution from acquired businesses, partially offset by a 1.0% negative impact from currency translation.
What were the significant acquisitions and divestitures in 2014?
In 2014, Danaher acquired Nobel Biocare for approximately $1.9 billion, significantly bolstering its Dental segment. Additionally, the company acquired sixteen other businesses for approximately $1.3 billion, complementing its existing segments. Danaher also divested its electric vehicle systems/hybrid product line for $87 million. A major strategic move was the agreement to combine its communications business with NetScout Systems, Inc., expected to close in 2015.
How did the different business segments perform in 2014?
Danaher's five segments showed varied performance: Test & Measurement sales increased slightly due to its instruments business, though communications business sales declined. Environmental saw a 7.0% sales increase, driven by water quality and retail petroleum businesses. Life Sciences & Diagnostics reported a 5.0% sales increase, with both diagnostics and life sciences businesses performing well. The Dental segment grew 4.5%, with the Nobel Biocare acquisition expected to enhance future performance. Industrial Technologies achieved a 2.5% sales increase, with strong performance in product identification and other businesses.
What is the outlook for Danaher's growth in 2015?
The company expects overall sales growth to continue in 2015, with sales from existing businesses projected to grow at a level consistent with 2014. However, management expressed caution regarding macro-economic and geopolitical uncertainties. Growth is expected to be driven by ongoing investments in sales initiatives and strategic acquisitions, as well as positive contributions from high-growth markets.
06—Continue