10-KPeriod: FY2017

DANAHER CORP /DE/ Annual Report, Year Ended Dec 31, 2017

Filed February 21, 2018For Securities:DHR

Summary

Danaher Corporation's 2017 10-K filing reveals a year of robust sales growth driven by its Life Sciences and Diagnostics segments, which together represented over 60% of total revenue. The company's strategic focus on portfolio enhancement through acquisitions, operational improvements via the Danaher Business System (DBS), and talent management continues to be a core driver of its performance. Despite a challenging macroeconomic environment and increased competition in some markets, Danaher demonstrated resilience with core sales growth, indicating underlying strength in its diverse business units. The company's commitment to innovation and customer-centricity is evident in its continued investment in research and development across all segments. Financially, Danaher reported strong sales growth, supported by strategic acquisitions and organic growth initiatives. The company managed its debt effectively, with a focus on maintaining a healthy balance sheet. Investors should note the impact of the Tax Cuts and Jobs Act of 2017, which introduced significant changes to the U.S. tax landscape, including a one-time Transition Tax. Danaher provided a provisional estimate for its impact, aiming for a future effective tax rate between 20-21%. The company's diversified business model, global reach, and consistent application of DBS provide a solid foundation for continued value creation.

Financial Highlights

53 data points
Beta

Revenue

$15.52B

55.2% Gross Margin

Net Income

$2.49B

16.1% Net Margin

EPS (Diluted)

$3.53

Total Assets

$46.65B

Cash & Equivalents

$630.30M

Free Cash Flow

$2.91B

Financial Statements
Beta
Revenue$15.52B
Cost of Revenue$6.95B
Gross Profit$8.57B
R&D Expenses$956.40M
SG&A Expenses$5.04B
Operating Income$2.57B
Interest Expense$140.10M
Net Income$2.49B
EPS (Basic)$3.58
EPS (Diluted)$3.53
Shares Outstanding (Basic)695.80M
Shares Outstanding (Diluted)706.10M

Key Highlights

  • 1Consolidated sales increased by 8.5% to $18.3 billion in 2017, driven by strong performance in Life Sciences and Diagnostics segments.
  • 2Core sales, excluding acquisitions and currency impacts, grew by 3.5%, showcasing underlying business momentum.
  • 3Life Sciences segment revenue grew 6.5% to $5.7 billion, with core sales up 4.0%, led by mass spectrometry and filtration technologies.
  • 4Diagnostics segment revenue increased significantly by 16.0% to $5.8 billion, with core sales up 4.0%, bolstered by the acquisition of Cepheid.
  • 5The company reported a substantial increase in R&D expenditures to $1.13 billion, highlighting a commitment to innovation.
  • 6Danaher successfully managed its debt, with total debt decreasing to $10.5 billion from $12.3 billion in the prior year.
  • 7The company provided a provisional estimate for the Tax Cuts and Jobs Act impact, anticipating an effective tax rate of 20-21% for 2018.

Frequently Asked Questions

Danaher's sales growth in 2017 was primarily driven by its Life Sciences and Diagnostics segments. The Life Sciences segment benefited from strong demand in mass spectrometry and filtration technologies, while the Diagnostics segment saw significant growth, partly due to the acquisition of Cepheid. Organic growth across various product lines also contributed to the overall increase.

Danaher continued its strategy of acquiring complementary businesses in 2017, completing ten acquisitions for a total of $386 million. These acquisitions were integrated into existing segments, contributing to overall revenue growth. The company's ability to identify and integrate strategic acquisitions remains a key element of its growth strategy.

The Danaher Business System (DBS) is a set of tools and processes designed to drive continuous improvement in areas such as quality, delivery, cost, growth, and innovation. It is central to Danaher's strategy for strengthening competitive advantage and improving business performance across all its segments. Investors should view DBS as a key differentiator for Danaher's operational efficiency and profitability.

The TCJA, enacted in December 2017, significantly changed the U.S. tax system. For 2017, Danaher recognized a provisional tax liability for the 'Transition Tax' on unremitted foreign earnings and remeasured its deferred tax assets and liabilities based on the new lower corporate tax rate, resulting in a significant tax benefit. The company is continuing to analyze the full impact and anticipates an effective tax rate of 20-21% in 2018.