DANAHER CORPORATION WASHINGTON, July 20, 2017 /PRNewswire/ -- Danaher Corporation (NYSE: DHR) today announced results for the second quarter of 2017. For the quarter ended June 30, 2017, net earnings were $557.3 million, or $0.79 per diluted share which represents a 31.5% year-over-year increase.
Non-GAAP adjusted diluted net earnings per share were $0.99. This represents a 10.0% increase over the comparable 2016 period. For the second quarter 2017, revenues increased 6.5% year-over-year to $4.5 billion, with core revenue growth of 2.0% (non-GAAP).
For the third quarter of 2017, the Company anticipates that diluted net earnings per share will be in the range of $0.74 to $0.78 and non-GAAP adjusted diluted net earnings per share will be in the range of $0.92 to $0.96.
For the full year 2017, the Company anticipates that diluted net earnings per share will be in the range of $3.16 to $3.23. The Company is raising its 2017 non-GAAP adjusted diluted net earnings per share guidance, and now expects a range of $3.90 to $3.97.
Thomas P. Joyce, Jr., President and Chief Executive Officer, stated, "During the second quarter, we delivered double-digit adjusted earnings per share growth, generated strong cash flow, and our two most recent large acquisitions - Pall and Cepheid - continued to perform very well."
Joyce continued, "As we look to the second half of the year, we expect our core growth rate to accelerate compared to first half levels off of improving order trends and as recent acquisitions become part of our core revenue. We believe that the power of the Danaher Business System, significant opportunities across our portfolio, and a strengthening balance sheet position us well for the remainder of 2017 and beyond."
Danaher will discuss its results during its quarterly investor conference call today starting at 8:00 a.m. ET. The call and an accompanying slide presentation will be webcast on the "Investors" section of Danaher's website, www.danaher.com, under the subheading "Events & Presentations." A replay of the webcast will be available in the same section of Danaher's website shortly after the conclusion of the presentation and will remain available until the next quarterly earnings call.
The conference call can be accessed by dialing 888-516-2447 within the U.S. or by dialing +1-719-325-2440 outside the U.S. a few minutes before the 8:00 a.m. ET start and telling the operator that you are dialing in for Danaher's investor conference call (access code 8019601). A replay of the conference call will be available shortly after the conclusion of the call and until Thursday, July 27, 2017. You can access the replay dial-in information on the "Investors" section of Danaher's website under the subheading "Events & Presentations." In addition, presentation materials relating to Danaher's results have been posted to the "Investors" section of Danaher's website under the subheading "Financial Reports & Earnings."
All results in this release reflect only continuing operations unless otherwise noted.
ABOUT DANAHER
Danaher is a global science and technology innovator committed to helping its customers solve complex challenges and improving quality of life around the world. Its family of world class brands has leadership positions in some of the most demanding and attractive industries, including health care, environmental and industrial. With more than 20 operating companies, Danaher's globally diverse team of over 62,000 associates is united by a common culture and operating system, the Danaher Business System. For more information, please visit www.danaher.com.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. Calculations of these measures, the reasons why we believe these measures provide useful information to investors, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these non-GAAP measures are included in the supplemental reconciliation schedule attached.
FORWARD-LOOKING STATEMENTS
Statements in this release that are not strictly historical, including the statements regarding the Company's anticipated financial performance for the third quarter and full year 2017, the Company's opportunities and positioning for 2017 and beyond and any other statements regarding events or developments that we believe or anticipate will or may occur in the future are "forward-looking" statements within the meaning of the federal securities laws. There are a number of important factors that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors include, among other things, deterioration of or instability in the economy, the markets we serve and the financial markets, contractions or growth rates and cyclicality of markets we serve, competition, our ability to develop and successfully market new products and technologies and expand into new markets, the potential for improper conduct by our employees, agents or business partners, our compliance with applicable laws and regulations (including regulations relating to medical devices and the health care industry), our ability to effectively address cost reductions and other changes in the health care industry, our ability to successfully identify, consummate and integrate appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to integrate the recent acquisitions of Pall Corporation and Cepheid and achieve the anticipated benefits of such transactions, contingent liabilities relating to acquisitions and divestitures (including tax-related and other contingent liabilities relating to the distributions of each of Fortive Corporation and our communications business), security breaches or other disruptions of our information technology systems or violations of data privacy laws, the impact of our restructuring activities on our ability to grow, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, changes in tax laws applicable to multinational companies, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, the rights of the United States government to use, disclose and license certain intellectual property we license if we fail to commercialize it, risks relating to product, service or software defects, product liability and recalls, risks relating to product manufacturing, the impact of our debt obligations on our operations and liquidity, our relationships with and the performance of our channel partners, uncertainties relating to collaboration arrangements with third parties, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, the impact of deregulation on demand for our products and services, labor matters, international economic, political, legal, compliance and business factors (including the impact of the UK's decision to leave the EU), disruptions relating to man-made and natural disasters, and pension plan costs. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our 2016 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter of 2017. These forward-looking statements speak only as of the date of this release and except to the extent required by applicable law, the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
($ and shares in millions, except per share amounts)
(unaudited)
Three-Month Period Ended Six-Month Period Ended
June 30, 2017 July 1, 2016 June 30, 2017 July 1, 2016
------------- ------------ ------------- ------------
Sales $4,510.1 $4,241.9 $8,715.8 $8,166.0
Cost of sales (2,027.8) (1,860.6) (3,899.2) (3,617.4)
-------- -------- -------- --------
Gross profit 2,482.3 2,381.3 4,816.6 4,548.6
Operating costs:
Selling, general and administrative expenses (1,515.3) (1,431.3) (2,958.3) (2,759.4)
Research and development expenses (283.3) (239.9) (550.7) (466.0)
------ ------ ------ ------
Operating profit 683.7 710.1 1,307.6 1,323.2
Nonoperating income (expense):
Other income - - - 223.4
Interest expense (40.7) (55.5) (81.0) (108.4)
Interest income 1.8 - 3.4 -
--- --- --- ---
Earnings from continuing operations before income 644.8 654.6 1,230.0 1,438.2
taxes
Income taxes (87.5) (236.6) (188.9) (434.4)
----- ------ ------ ------
Net earnings from continuing operations 557.3 418.0 1,041.1 1,003.8
Earnings from discontinued operations, net of income - 238.7 22.3 411.3
taxes
Net earnings $557.3 $656.7 $1,063.4 $1,415.1
====== ====== ======== ========
Net earnings per share from continuing operations:
Basic $0.80 $0.60 $1.50 $1.46
Diluted $0.79 $0.60 $1.48 $1.44
Net earnings per share from discontinued operations:
Basic $ - $0.35 $0.03 $0.60
Diluted $ - $0.34 $0.03 $0.59
Net earnings per share:
Basic $0.80 $0.95 $1.53 $2.05 *
Diluted $0.79 $0.94 $1.51 $2.03
Average common stock and common equivalent shares
outstanding:
Basic 695.4 690.9 694.9 689.8
Diluted 705.4 698.9 705.5 698.0
* Net earnings per share amount does not add due to rounding.
This information is presented for reference only. A complete copy of Danaher's Form 10-Q financial statements is available on the Company's website (www.danaher.com).
DANAHER CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
Adjusted Diluted Net Earnings Per Share from Continuing Operations
------------------------------------------------------------------
Three-Month Period Ended Six-Month Period Ended
June 30, 2017 July 1, 2016 June 30, 2017 July 1, 2016
------------- ------------ ------------- ------------
Diluted Net Earnings Per Share from $0.79 $0.60 $1.48 $1.44
Continuing Operations (GAAP)
Pretax gain on sale of investments A - - - (0.32) A
Pretax amortization of acquisition-related 0.22 B 0.21 B 0.46 B 0.41 B
intangible assets B
Pretax restructuring, impairment and other 0.11 C - 0.11 C -
related charges recorded in the second quarter of
2017 C
Tax effect of all adjustments reflected above D (0.08) D (0.05) D (0.13) D 0.02 D
Discrete and other tax-related adjustments E (0.05) E 0.14 E (0.08) E 0.14 E
--- ---
Adjusted Diluted Net Earnings Per Share from $0.99 $0.90 $1.84 $1.69
Continuing Operations (Non-GAAP)
Forecasted Adjusted Diluted Net Earnings Per Share from Continuing Operations
-----------------------------------------------------------------------------
Three-Month Period Ending Year Ending
September 29, 2017 December 31, 2017
Low End High End Low End High End
------- -------- ------- --------
Forecasted Diluted Net Earnings Per Share from $0.74 $0.78 $3.16 $3.23
Continuing Operations (GAAP) (1)
Anticipated pretax amortization of acquisition- 0.23 B 0.23 B 0.93 B 0.93 B
related intangible assets B
Pretax restructuring, impairment and other - - 0.11 C 0.11 C
related charges recorded in the second quarter of
2017 C
Tax effect of all adjustments reflected above D (0.05) D (0.05) D (0.22) D (0.22) D
Discrete and other tax-related adjustments E - - (0.08) E (0.08) E
Forecasted Adjusted Diluted Net Earnings Per $0.92 $0.96 $3.90 $3.97
Share from Continuing Operations (Non-GAAP)
(1)
1 The forward-looking estimates
set forth above do not reflect
future gains and charges that
are inherently difficult to
predict and estimate due to
their unknown timing, effect
and/or significance, such as
certain future gains or losses
on the sale of investments,
acquisition or divestiture-
related gains or charges and
other discrete tax items
(including excess tax benefits
that exceed or fall below
anticipated levels).
Core Revenue Growth
-------------------
Three-Month Period Six-Month Period
Ended Ended
June 30, 2017 vs. June 30, 2017 vs.
Comparable 2016 Comparable 2016
Period Period
Total Revenue Growth from Continuing Operations (GAAP) 6.5% 6.5%
=== ===
Components of Revenue Growth
----------------------------
Core (non-GAAP) (2) 2.0% 2.5%
Acquisitions (non-GAAP) 6.0% 5.5%
Impact of currency translation (non-GAAP) (1.5)% (1.5)%
Total Revenue Growth from Continuing Operations (GAAP) 6.5% 6.5%
=== ===
We use the term "core revenue" to
refer to GAAP revenue from
continuing operations excluding
(1) sales from acquired
businesses recorded prior to the
first anniversary of the
acquisition less the amount of
sales attributable to divested
businesses or product lines not
considered discontinued
operations ("acquisition sales")
and (2) the impact of currency
translation. The portion of GAAP
revenue from continuing
operations attributable to
currency translation is
calculated as the difference
between (a) the period-to-
period change in revenue
(excluding acquisition sales) and
(b) the period-to-period change
in revenue (excluding acquisition
sales) after applying current
period foreign exchange rates to
the prior year period. We use the
term "core revenue growth" to
refer to the measure of comparing
current period core revenue with
the corresponding period of the
2 prior year.
DANAHER CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
(continued)
A Gain on sale of investments in the three-
month period ended April 1, 2016 ($223
million pretax as presented in this line
item, $140 million after-tax).
B Amortization of acquisition-related
intangible assets in the following
historical and forecasted periods ($ in
millions) (only the pretax amounts set
forth below are reflected in the
amortization line item above):
Forecasted
Three-Month Period Ended Six-Month Period Ended Three-Month Year Ending
Period Ending
-------------
June 30, 2017 July 1, 2016 June 30, 2017 July 1, 2016 September 29, December 31, 2017
2017
----
Pretax $160.3 $144.2 $326.4 $283.4 $164.2 $654.8
After-tax 127.4 112.5 259.5 219.7 130.5 520.6
C During the three-month period ended
June 30, 2017, the Company recorded
$76 million of pretax restructuring,
impairment and other related charges
($51 million after-tax) primarily
related to the Company's strategic
decision to discontinue certain
product development efforts in its
Diagnostics segment. As a result, the
Company incurred noncash charges for
the impairment of certain technology-
related intangibles as well as related
inventory and plant, property, and
equipment with no further use totaling
$49 million. In addition, the Company
incurred cash restructuring costs
primarily related to employee
severance and related charges totaling
$27 million. This is addressed in
more detail in the "Statement
Regarding Non-GAAP Measures."
D This line item reflects the aggregate
tax effect of all nontax adjustments
reflected in the table above. In
addition, the footnotes above indicate
the after-tax amount of each
individual adjustment item. Danaher
estimates the tax effect of the
adjustment items identified in the
reconciliation schedule above by
applying Danaher's overall estimated
effective tax rate to the pretax
amount, unless the nature of the item
and/or the tax jurisdiction in which
the item has been recorded requires
application of a specific tax rate or
tax treatment, in which case the tax
effect of such item is estimated by
applying such specific tax rate or tax
treatment.
E Represents (1) discrete income tax
gains, primarily related to expiration
of statute of limitations ($35 million
in the three and six months ended June
30, 2017, respectively) (2) equity
compensation-related excess tax
benefits ($16 million in the six-month
period ended June 30, 2017) and (3)
Separation-related tax costs related
to repatriation of earnings, legal
entity realignments and other discrete
matters ($99 million in the three and
six-month periods ended July 1, 2016,
respectively). On January 1, 2017,
Danaher adopted the updated accounting
guidance required by ASU 2016-09,
Compensation-Stock Compensation, which
requires income statement recognition
of all excess tax benefits and
deficiencies related to equity
compensation. We exclude from Adjusted
Diluted Net EPS any excess tax benefits
that exceed the levels we believe are
representative of historical
experience. In the first quarter of
2017, we anticipated $10 million of
equity compensation-related excess tax
benefits and realized $26 million of
excess tax benefits, and therefore we
have excluded $16 million of these
benefits in the calculation of Adjusted
Diluted Net Earnings per Share. In the
second quarter of 2017, realized equity
compensation-related excess tax
benefits approximated the anticipated
$10 million benefit and no adjustment
was required.
Statement Regarding Non-GAAP Measures
Each of the non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing Danaher Corporation's ("Danaher" or the "Company") results that, when reconciled to the corresponding GAAP measure, help our investors to:
-- with respect to Adjusted Diluted Net EPS, understand the long-term
profitability trends of our business and compare our profitability to
prior and future periods and to our peers; and
-- with respect to core revenue, identify underlying growth trends in our
business and compare our revenue performance with prior and future
periods and to our peers.
Management uses these non-GAAP measures to measure the Company's operating and financial performance, and uses a non-GAAP measure similar to Adjusted Diluted Net EPS in the Company's executive compensation program.
The items excluded from the non-GAAP measures set forth above have been excluded for the following reasons:
-- With respect to Adjusted Diluted Net EPS:
-- We exclude the amortization of acquisition-related intangible assets
because the amount and timing of such charges are significantly
impacted by the timing, size, number and nature of the acquisitions
we consummate. While we have a history of significant acquisition
activity we do not acquire businesses on a predictable cycle, and
the amount of an acquisition's purchase price allocated to
intangible assets and related amortization term are unique to each
acquisition and can vary significantly from acquisition to
acquisition. Exclusion of this amortization expense facilitates
more consistent comparisons of operating results over time between
our newly acquired and long-held businesses, and with both
acquisitive and non-acquisitive peer companies. We believe however
that it is important for investors to understand that such
intangible assets contribute to revenue generation and that
intangible asset amortization related to past acquisitions will
recur in future periods until such intangible assets have been fully
amortized.
-- We exclude costs incurred pursuant to discrete restructuring plans
that are fundamentally different (in terms of the size, strategic
nature and planning requirements, as well as the inconsistent
frequency, of such plans) from the ongoing productivity improvements
that result from application of the Danaher Business System.
Because these restructuring plans are incremental to the core
activities that arise in the ordinary course of our business and we
believe are not indicative of Danaher's ongoing operating costs in a
given period, we exclude these costs from the calculation of
Adjusted Diluted Net EPS to facilitate a more consistent comparison
of operating results over time.
-- With respect to the other items excluded from Adjusted Diluted Net
EPS, we exclude these items because they are of a nature and/or size
that occur with inconsistent frequency, occur for reasons that may
be unrelated to Danaher's commercial performance during the period
and/or we believe are not indicative of Danaher's ongoing operating
costs or gains in a given period; we believe that such items may
obscure underlying business trends and make comparisons of long-term
performance difficult.
-- With respect to core revenue, (1) we exclude the impact of currency
translation because it is not under management's control, is subject to
volatility and can obscure underlying business trends, and (2) we
exclude the effect of acquisitions and divested product lines because
the timing, size, number and nature of such transactions can vary
significantly from period-to-period and between us and our peers, which
we believe may obscure underlying business trends and make comparisons
of long-term performance difficult.
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SOURCE Danaher Corporation
