01—Abstract
Summary
Summary of the 10-K filed February 21, 2019. Cited figures are marked; the original filing is the authoritative source.
Danaher Corporation reported solid performance for the fiscal year ending December 31, 2018, with total sales reaching $19.9 billiona, an increase of 8.5% year-over-year.
The company's strategic priorities, including portfolio enhancement, the application of the Danaher Business System (DBS), and talent acquisition, continue to drive value. The Life Sciences and Diagnostics segments were key growth drivers, supported by acquisitions such as Integrated DNA Technologies (IDT) in the Life Sciences segment. A significant strategic move announced was the intention to spin off the Dental business into an independent, publicly-traded company in the second half of 2019.
This separation is expected to be tax-free to shareholders and aims to allow Danaher to better focus on its core Life Sciences, Diagnostics, and Environmental & Applied Solutions segments. The company also reported strong operating profit margins, reflecting effective cost management and operational improvements.
02—Key points
Key Highlights
- Total sales increased by 8.5% to $19.9 billion in 2018.
- The Life Sciences segment experienced strong growth, with core sales up 7.5%, boosted by the acquisition of IDT.
- The company announced its intention to spin off its Dental business in the second half of 2019.
- Operating profit margins improved to 17.1% in 2018 from 16.3% in 2017, driven by sales volume and productivity improvements.
- High-growth markets contributed significantly to sales growth, with core sales increasing at a high-single digit rate.
- Backlog stood at approximately $2.9 billion at the end of 2018, indicating strong near-term revenue visibility.
- Danaher continues to leverage the Danaher Business System (DBS) for continuous improvement across its operations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Danaher Corp kept $0.16.
- Revenue$17.05B100.0%
- Cost of revenue−$7.54B44.2%
- Gross profit$9.51B55.8%
- Operating costs−$6.45B37.8%
- Operating income$3.06B17.9%
- Interest, other & tax−$404.0M2.4%
- Net income$2.65B15.5%
Where FY2018 revenue went
$17.05B- Cost of revenue: $7.54B, 44% of revenue
- SG&A: $5.39B, 32% of revenue
- Net income: $2.65B, 16% of revenue
- R&D: $1.06B, 6.2% of revenue
- Interest, other & tax: $404.0M, 2.4% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 21, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $17.05B$15.52B | +9.9% |
| Cost of Revenue | $7.54B$6.95B | +8.6% |
| Gross Profit | $9.51B$8.57B | +10.9% |
| R&D Expenses | $1.06B$956.40M | +10.7% |
| SG&A Expenses | $5.39B$5.04B | +6.9% |
| Operating Income | $3.06B$2.57B | +18.8% |
| Interest Expense | $137.00M$140.10M | −2.2% |
| Net Income | $2.65B$2.49B | +6.4% |
| EPS (Basic) | $3.78$3.58 | +5.6% |
| EPS (Diluted) | $3.74$3.53 | +5.9% |
| Shares Outstanding (Basic) | 700.60M695.80M | +0.7% |
| Shares Outstanding (Diluted) | 710.20M706.10M | +0.6% |
05—Questions
Frequently Asked Questions
What is the strategic significance of the planned spin-off of the Dental business?
Danaher announced its intention to spin off its Dental business into an independent, publicly-traded company in the second half of 2019. This move is strategic as it allows Danaher to sharpen its focus on its core Life Sciences, Diagnostics, and Environmental & Applied Solutions segments, potentially unlocking greater value and enabling more targeted resource allocation for each entity.
How did acquisitions impact Danaher's performance in 2018?
Acquisitions played a notable role in Danaher's growth in 2018. The company acquired businesses for approximately $2.2 billion, with the acquisition of Integrated DNA Technologies (IDT) being a key contributor to the Life Sciences segment's performance, expanding its product offerings in genomics consumables.
What is the Danaher Business System (DBS) and how does it impact the company's results?
The Danaher Business System (DBS) is a set of lean manufacturing and continuous improvement tools and processes that Danaher applies across its businesses. It is designed to enhance performance in areas such as quality, delivery, cost, growth, and innovation. Investors can see its impact in the company's consistent efforts to improve operating profit margins and drive cost savings, as mentioned in the results of operations.
How did Danaher's geographic sales performance look in 2018?
Danaher experienced growth across its geographic markets in 2018. High-growth markets, which represented 31% of total sales, grew at a high-single digit rate, led by Asia, particularly China. Developed markets, including North America and Western Europe, also contributed to growth, with core sales increasing at a mid-single digit rate.
06—Continue