10-QPeriod: Q3 FY2013

DANAHER CORP /DE/ Quarterly Report for Q3 Ended Sep 27, 2013

Filed October 17, 2013For Securities:DHR

Summary

Danaher Corporation (DHR) reported third-quarter 2013 results showing a 5.5% increase in consolidated sales compared to the prior year, driven by a 3.0% growth from existing businesses and contributions from recent acquisitions. High-growth markets led the sales expansion, representing approximately 26% of total sales. The company successfully divested its stake in Apex Tool Group for $797 million, recognizing a significant after-tax gain. Operating profit margins showed a slight improvement year-over-year, benefiting from sales volume increases and cost savings from restructuring actions, though partially offset by acquisition dilution and the Apex divestiture impact. For the first nine months of 2013, consolidated sales grew 4.0%, with existing businesses contributing 2.0% and acquisitions adding 2.5%. Despite a decrease in operating cash flow, primarily due to timing of tax and customer payments, the company maintained a strong liquidity position with $2.0 billion in cash and cash equivalents as of September 27, 2013. Danaher continued its strategic acquisition approach, investing $869 million in eleven businesses that complement its existing segments. The company outlook remains cautiously optimistic, expecting continued sales growth in the fourth quarter, albeit in a challenging macroeconomic environment.

Financial Highlights

50 data points
Beta

Revenue

$4.67B

51.9% Gross Margin

Net Income

$597.00M

12.8% Net Margin

EPS (Diluted)

$0.84

Total Assets

$33.72B

Cash & Equivalents

$2.00B

Free Cash Flow

$832.10M

Financial Statements
Beta
Revenue$4.67B
Cost of Revenue$2.24B
Gross Profit$2.42B
R&D Expenses$309.10M
SG&A Expenses$1.30B
Operating Income$812.40M
Interest Expense$35.00M
Net Income$597.00M
EPS (Basic)$0.86
EPS (Diluted)$0.84
Shares Outstanding (Basic)697.70M
Shares Outstanding (Diluted)711.90M

Key Highlights

  • 1Consolidated sales increased by 5.5% in Q3 2013 compared to Q3 2012, with 3.0% growth from existing businesses.
  • 2High-growth markets were a key driver, contributing approximately 26% of total sales and showing mid-single digit growth rates.
  • 3Danaher completed the sale of its investment in Apex Tool Group for $797 million in cash, recognizing a $144 million after-tax gain.
  • 4The company made strategic acquisitions, investing $869 million in eleven businesses during the first nine months of 2013.
  • 5Operating profit margins improved slightly to 17.4% in Q3 2013 from 17.1% in Q3 2012, driven by higher sales volumes and cost savings.
  • 6Operating cash flow from continuing operations was $2.5 billion for the first nine months of 2013, a decrease of 6% year-over-year, mainly due to tax and customer payment timing.
  • 7The company maintained a strong liquidity position with $2.0 billion in cash and cash equivalents as of September 27, 2013.

Frequently Asked Questions

Sales growth in the third quarter of 2013 was driven by a combination of increased demand in high-growth markets, which saw mid-single digit growth, and contributions from eleven businesses acquired during the first nine months of the year. Existing businesses contributed 3.0% to the overall 5.5% consolidated sales increase.

The divestiture of Danaher's stake in Apex Tool Group in February 2013 resulted in aggregate cash proceeds of $797 million and an after-tax gain of $144 million, or $0.20 per diluted share, recognized in the first quarter of 2013. However, this divestiture adversely impacted year-over-year operating profit margin comparisons by 40 basis points in both the three-month and nine-month periods.

Danaher expects overall market conditions to remain challenging due to macro-economic uncertainties, including potential impacts from U.S. Federal government spending reductions and shutdowns. Despite these challenges, the company anticipates that overall year-over-year sales growth from existing businesses in the fourth quarter of 2013 will continue at a level consistent with that experienced in the first nine months of the year.

As of September 27, 2013, Danaher held $2.0 billion in cash and cash equivalents. The company generated $2.5 billion in operating cash flows from continuing operations in the first nine months of 2013 and believes its liquidity is sufficient for its operating, investing, and financing activities. Significant cash uses included $869 million for acquisitions and repayment of $967 million in long-term debt that matured.