10-QPeriod: Q1 FY2018

DANAHER CORP /DE/ Quarterly Report for Q1 Ended Mar 30, 2018

Filed April 19, 2018For Securities:DHR

Summary

Danaher Corporation reported strong top-line growth in the first quarter of 2018, with total revenues increasing by 11.5% year-over-year, driven by a 5.5% increase in core sales. This growth was observed across both high-growth and developed markets, with high-growth markets, particularly China, showing a double-digit rate increase. The company also saw a significant improvement in its operating profit margin, which increased by 110 basis points, reflecting higher core sales volumes and ongoing productivity initiatives, partially offset by integration costs from recent acquisitions. Financially, Danaher demonstrated robust operating cash flow generation, up 48% year-over-year, indicating effective working capital management. The company also announced a significant acquisition in April 2018: IDT, a custom DNA and RNA oligonucleotide manufacturer, for approximately $2.0 billion, which is expected to bolster its Life Sciences segment. Despite global economic uncertainties, Danaher maintains a positive outlook for the remainder of 2018, supported by its diversified business model and strategic investments.

Financial Highlights

49 data points
Beta

Revenue

$4.02B

56.4% Gross Margin

Net Income

$566.60M

14.1% Net Margin

EPS (Diluted)

$0.80

Total Assets

$47.15B

Cash & Equivalents

$1.05B

Free Cash Flow

$691.00M

Financial Statements
Beta
Revenue$4.02B
Cost of Revenue$2.05B
Gross Profit$2.27B
R&D Expenses$298.70M
SG&A Expenses$1.60B
Operating Income$687.50M
Interest Expense$39.10M
Net Income$566.60M
EPS (Basic)$0.81
EPS (Diluted)$0.80
Shares Outstanding (Basic)698.60M
Shares Outstanding (Diluted)709.50M

Key Highlights

  • 1Total revenues grew 11.5% year-over-year to $4.695 billion for the first quarter of 2018.
  • 2Core sales (excluding acquisitions and currency impacts) increased by 5.5%, indicating strong underlying business performance.
  • 3Operating profit margins improved by 110 basis points, driven by higher sales volumes and cost efficiencies.
  • 4The Life Sciences and Diagnostics segments showed significant revenue growth, up 13.0% and 14.5% respectively.
  • 5Operating cash flow from continuing operations surged by 48% to $828.9 million.
  • 6Danaher acquired IDT in April 2018 for approximately $2.0 billion to expand its Life Sciences segment's offerings.
  • 7The company updated its tax strategy and is analyzing the impact of the Tax Cuts and Jobs Act (TCJA) enacted in late 2017.

Frequently Asked Questions

Danaher's revenue growth in Q1 2018 was primarily driven by a 5.5% increase in core sales, indicating strong organic growth across its diverse business segments. This was complemented by favorable currency exchange rates, which positively impacted reported sales by approximately 5.0%.

The acquisition of IDT in April 2018 for $2.0 billion is a significant strategic move to enhance Danaher's Life Sciences segment. It expands the segment's product line diversity, particularly in genomics consumables, and is expected to provide additional sales and earnings growth opportunities.

Danaher expects overall year-over-year sales growth to continue for the remainder of 2018. However, the company remains cautious due to global macroeconomic and geopolitical uncertainties, including trade policies and monetary/fiscal policies.

The TCJA, enacted in late 2017, has led to a lower U.S. corporate income tax rate (21.0%) which benefits Danaher. However, it also introduced a 'Transition Tax' on unremitted foreign earnings, resulting in a provisional tax liability of approximately $1.2 billion in 2017. The company is still analyzing the full implications, especially regarding GILTI provisions, and may adjust its provisional accounting in the future.