01—Abstract
Summary
Summary of the 10-K filed February 22, 2023. Cited figures are marked; the original filing is the authoritative source.
Danaher Corporation reported solid performance for the fiscal year ending December 31, 2022, demonstrating resilience amidst economic uncertainties and supply chain challenges.
The company achieved total sales growth of 7.0%, driven by a 9.5% increase in core sales, indicating strong underlying business performance. Net earnings from continuing operations rose to $7.2 billiona, up from $6.3 billion in the prior year. The company's diverse segment structure, encompassing Biotechnology, Life Sciences, Diagnostics, and Environmental & Applied Solutions, contributed to this growth, with strong performance noted across several key areas, including molecular diagnostics and bioprocessing.
Danaher also reaffirmed its commitment to strategic capital allocation and operational excellence through the Danaher Business System (DBS). Looking ahead, Danaher announced its intention to separate its Environmental & Applied Solutions (EAS) segment into a standalone publicly traded company in the fourth quarter of 2023, a move expected to unlock further value.
Despite facing headwinds such as supply chain disruptions and inflation, which were largely mitigated through DBS, the company's strategic focus on innovation, customer service, and attracting top talent positions it well for continued growth and value creation. Investors should note the ongoing management of global operations and adaptation to market dynamics, including the impact of foreign currency fluctuations.
02—Key points
Key Highlights
- Total sales increased by 7.0% to $31.5 billion, with core sales growing by 9.5%, demonstrating strong organic growth.
- Net earnings from continuing operations increased to $7.2 billion, up from $6.3 billion in the prior year.
- The company announced its intention to spin off its Environmental & Applied Solutions (EAS) segment in Q4 2023, aiming to create a focused, independent entity.
- Danaher managed to largely mitigate the impact of supply chain disruptions, cost inflation, and labor cost increases through its Danaher Business System (DBS), although these pressures continue to varying degrees.
- The Biotechnology segment saw sales grow by 2.0%, driven by core sales growth in bioprocessing and discovery/medical businesses, despite a decline in COVID-19 related product demand.
- The Diagnostics segment reported a 10.0% increase in total sales, primarily driven by strong demand for molecular diagnostics, including COVID-19 tests, and growth in clinical and pathology diagnostics.
- The company ended the year with a strong liquidity position, with $6.0 billion in cash and cash equivalents.
- Danaher reiterated its strategic priorities of strengthening competitive advantage via DBS, enhancing its portfolio through strategic capital allocation, and attracting exceptional talent.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Danaher Corp kept $0.27.
- Revenue$26.64B100.0%
- Cost of revenue−$10.46B39.2%
- Gross profit$16.19B60.8%
- Operating costs−$8.65B32.5%
- Operating income$7.54B28.3%
- Interest, other & tax−$433.0M1.6%
- Net income$7.10B26.7%
Where FY2022 revenue went
$26.64B- Cost of revenue: $10.46B, 39% of revenue
- SG&A: $7.12B, 27% of revenue
- Net income: $7.10B, 27% of revenue
- R&D: $1.53B, 5.7% of revenue
- Interest, other & tax: $433.0M, 1.6% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 22, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $26.64B$24.80B | +7.4% |
| Cost of Revenue | $10.46B$9.56B | +9.3% |
| Gross Profit | $16.19B$15.24B | +6.2% |
| R&D Expenses | $1.53B$1.50B | +2.0% |
| SG&A Expenses | $7.12B$6.82B | +4.5% |
| Operating Income | $7.54B$6.38B | +18.2% |
| Interest Expense | $204.00M$231.00M | −11.7% |
| Net Income | $7.10B$6.43B | +10.4% |
| EPS (Basic) | $9.80$8.77 | +11.7% |
| EPS (Diluted) | $9.66$8.61 | +12.2% |
| Shares Outstanding (Basic) | 725.10M714.60M | +1.5% |
| Shares Outstanding (Diluted) | 737.10M736.80M | 0.0% |
05—Questions
Frequently Asked Questions
What is the company's outlook regarding the spin-off of the Environmental & Applied Solutions (EAS) segment?
Danaher announced its intention to separate its Environmental & Applied Solutions (EAS) segment into a publicly traded company in the fourth quarter of 2023. This separation is subject to customary conditions, including board approval, satisfactory financing, tax opinions, and regulatory approvals. The company anticipates this move will unlock value by creating a more focused entity.
How did supply chain issues and inflation impact Danaher in 2022?
Danaher experienced supply chain disruptions, cost inflation, and shipping delays in 2022, similar to the previous year. However, the company largely mitigated these impacts on its profitability through the application of its Danaher Business System (DBS) tools and processes, including implementing price increases. While the impact was managed, these pressures continue to varying degrees.
How did COVID-19 related products perform in 2022?
Demand for Danaher's products supporting COVID-19 related vaccines and therapeutics decreased in 2022 compared to 2021, and this trend is expected to continue in 2023. Demand for COVID-19 testing products fluctuated, but the company expects this to decrease in 2023 as the pandemic evolves towards endemic status.
What is the company's financial health like, particularly regarding debt and liquidity?
As of December 31, 2022, Danaher had approximately $19.7 billion in outstanding indebtedness. The company's liquidity position was strong, with $6.0 billion in cash and cash equivalents. Management believes its operating cash flow, cash on hand, and other liquidity sources are sufficient to fund its operations, investments, and debt obligations.
06—Continue