10-QPeriod: Q1 FY2013

DANAHER CORP /DE/ Quarterly Report for Q1 Ended Mar 29, 2013

Filed April 18, 2013For Securities:DHR

Summary

Danaher Corporation's (DHR) first quarter 2013 results showed modest overall sales growth driven by strength in high-growth markets, which now represent 24% of total sales. While developed markets experienced slight declines, the company's diversification strategy helped mitigate these headwinds. A significant event during the quarter was the profitable sale of the Apex joint venture, contributing $144 million after-tax gain, or $0.20 per diluted share, to earnings. This sale significantly boosted investing cash flows. The company also completed a small acquisition for $12 million within its Industrial Technologies segment and announced a larger acquisition for $300 million in Life Sciences & Diagnostics that closed post-quarter. Operationally, consolidated sales increased by 3.0% year-over-year, with existing businesses contributing 1.0% and acquisitions adding 3.0%, partially offset by a 1.0% negative impact from currency exchange rates. Profitability saw a slight decrease in operating profit margins, down to 16.4% from 17.0% in the prior year, attributed to the dilutive effects of acquisitions and the Apex divestiture, though cost savings from prior restructuring actions and higher sales volumes provided some offset. The company maintains a strong liquidity position with $2.1 billion in cash and cash equivalents.

Financial Highlights

50 data points
Beta

Revenue

$4.44B

52.3% Gross Margin

Net Income

$691.90M

15.6% Net Margin

EPS (Diluted)

$0.98

Total Assets

$32.47B

Cash & Equivalents

$2.15B

Free Cash Flow

$520.20M

Financial Statements
Beta
Revenue$4.44B
Cost of Revenue$2.12B
Gross Profit$2.33B
R&D Expenses$296.40M
SG&A Expenses$1.30B
Operating Income$730.90M
Interest Expense$39.20M
Net Income$691.90M
EPS (Basic)$1.00
EPS (Diluted)$0.98
Shares Outstanding (Basic)692.00M
Shares Outstanding (Diluted)708.40M

Key Highlights

  • 1Consolidated sales increased by 3.0% to $4,444.7 million compared to the prior year's first quarter.
  • 2Sales from existing businesses grew 1.0%, while acquisitions contributed 3.0% to sales growth; currency exchange rates had a negative impact of 1.0%.
  • 3Significant gain of $144 million ($0.20 per diluted share) recognized from the sale of the Apex joint venture.
  • 4Acquired one business for $12 million in the Industrial Technologies segment and announced a $300 million acquisition in Life Sciences & Diagnostics.
  • 5Operating profit margin slightly decreased to 16.4% from 17.0% year-over-year, impacted by acquisitions and divestitures.
  • 6High-growth markets continue to be a key driver, with sales growing at a high-single digit rate and representing 24% of total sales.
  • 7The company ended the quarter with $2.1 billion in cash and cash equivalents, maintaining a strong liquidity position.

Frequently Asked Questions

Danaher recognized an after-tax gain of $144 million, or $0.20 per diluted share, from the sale of its joint venture, Apex Tool Group, LLC, in February 2013. The company received $759 million in cash proceeds from this transaction during the first quarter.

The strengthening of the U.S. dollar negatively impacted reported sales by approximately 1.0% year-over-year during the first three months of 2013. Management estimates that if current exchange rates persist, it could reduce full-year 2013 revenues by about 0.5%.

Danaher expects overall market conditions to remain challenging due to macroeconomic issues in Western Europe and the United States. However, the company anticipates that its growing exposure to high-growth markets will mitigate these negative trends. Year-over-year sales from existing businesses are expected to grow in the second quarter of 2013, in line with the overall growth rates experienced in 2012 and the first quarter of 2013.

As of March 29, 2013, Danaher held $2.1 billion in cash and cash equivalents. The company generates substantial cash from operations and believes its liquidity is sufficient for ongoing investments, acquisitions, debt servicing, and other corporate needs. Short-term liquidity needs are primarily met through commercial paper issuances, supported by a $2.5 billion revolving credit facility.