OREANDA-NEWS. Danaher Corporation (NYSE: DHR) today announced results for the first quarter of 2017. All results in this release reflect only continuing operations unless otherwise noted. For the quarter ended March 31, 2017, net earnings were $483.8 million, or $0.69 per diluted share which represents an 18.0% year-over-year decrease.

Non-GAAP adjusted diluted net earnings per share was $0.85 per share. This represents an 8.0% increase over the comparable 2016 period. For the first quarter 2017, revenues increased 7.0% year-over-year to $4.2 billion, with core revenue growth of 2.5% (non-GAAP).

For the second quarter of 2017, the Company anticipates that diluted net earnings per share will be in the range of $0.77 to $0.80 and non-GAAP adjusted diluted net earnings per share will be in the range of $0.95 to $0.98.

For the full year 2017, the Company anticipates that diluted net earnings per share will be in the range of $3.13 to $3.23, and continues to expect its non-GAAP adjusted diluted net earnings per share to be in the range of $3.85 to $3.95.

Thomas P. Joyce, Jr., President and Chief Executive Officer, stated, "We are off to a good start in 2017. During the first quarter, our two most recent large acquisitions, Pall and Cepheid, performed very well. We drove share gains in a number of our operating companies and achieved high-single-digit adjusted earnings per share growth. We also continued to reinvest in our businesses to enhance our long-term growth trajectory, and we feel well-positioned to benefit from a number of compelling market drivers across the portfolio."

Joyce continued, "Through focused execution across the portfolio, and with the Danaher Business System continuing to serve as our foundation, we see tremendous opportunities to deliver long-term value creation for shareholders."

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 877-675-4753 within the U.S. or by dialing +1-719-325-4806 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 7663249). A replay of the conference call will be available shortly after the conclusion of the call and until Thursday, April 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."

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. 

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.

 

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

($ and shares in millions, except per share amounts)

(unaudited)
   
 

Three-Month Period Ended
 

March 31, 2017

  

April 1, 2016

Sales

$

4,205.7

    

$

3,924.1

  

Cost of sales

(1,871.4)

    

(1,756.8)

  

Gross profit

2,334.3

    

2,167.3

  

Operating costs:

      

Selling, general and administrative expenses

(1,443.0)

    

(1,328.1)

  

Research and development expenses

(267.4)

    

(226.1)

  

Operating profit

623.9

    

613.1

  

Nonoperating income (expense):

      

Other income

—

    

223.4

  

Interest expense

(40.3)

    

(52.9)

  

Interest income

1.6

    

—

  

Earnings from continuing operations before income taxes

585.2

    

783.6

  

Income taxes

(101.4)

    

(197.8)

  

Net earnings from continuing operations

483.8

    

585.8

  

Earnings from discontinued operations, net of income taxes

22.3

    

172.6

  

Net earnings

$

506.1

    

$

758.4

  

Net earnings per share from continuing operations:

      

Basic

$

0.70

    

$

0.85

  

Diluted

$

0.69

    

$

0.84

  

Net earnings per share from discontinued operations:

      

Basic

$

0.03

    

$

0.25

  

Diluted

$

0.03

    

$

0.25

  

Net earnings per share:

      

Basic

$

0.73

    

$

1.10

  

Diluted

$

0.72

    

$

1.09

  

Average common stock and common equivalent shares outstanding:

      

Basic

694.3

    

688.6

  

Diluted

705.7

    

697.1

  
           

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 .

DANAHER CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 

Adjusted Diluted Net Earnings Per Share from Continuing Operations
     
 

Three-Month Period Ended

  
 

March 31, 2017

  

April 1, 2016

  

Diluted Net Earnings Per Share from Continuing Operations (GAAP)

$

0.69

    

$

0.84

    

Pretax gain on sale of investments A

—

    

(0.32)

  

A

Pretax amortization of acquisition-related intangible assets B

0.24

  

B

0.20

  

B

Tax effect of all adjustments reflected above C

(0.05)

  

C

0.07

  

C

Discrete and other tax-related adjustments D

(0.03)

  

D

—

    

Adjusted Diluted Net Earnings Per Share from Continuing Operations (Non-
GAAP)

$

0.85

    

$

0.79

    

Forecasted Adjusted Diluted Net Earnings Per Share from Continuing Operations
         
 

Three-Month Period Ending June 30,
2017

  

Year Ending

December 31, 2017

  
 

Low End

  

High End

  

Low End

  

High End

  

Forecasted Diluted Net Earnings Per Share from
Continuing Operations (GAAP) 1

$

0.77

    

$

0.80

    

$

3.13

    

$

3.23

    

Anticipated pretax amortization of acquisition-
related intangible assets B

0.23

    

0.23

  

B

0.94

    

0.94

  

B

Tax effect of all adjustments reflected above C

(0.05)

    

(0.05)

  

C

(0.19)

    

(0.19)

  

C

Discrete and other tax-related adjustments D

—

    

—

    

(0.03)

    

(0.03)

  

D

Forecasted Adjusted Diluted Net Earnings Per
Share from Continuing Operations (Non-GAAP) 1

$

0.95

    

$

0.98

    

$

3.85

    

$

3.95

    
 

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
Ended March 31,
2017 vs.
Comparable 2016
Period

Total Revenue Growth from Continuing Operations (GAAP)

7.0

%
   

Components of Revenue Growth

  

Core (non-GAAP) 2

2.5

%

Acquisitions (non-GAAP)

6.0

%

Impact of currency translation (non-GAAP)

(1.5)

%

Total Revenue Growth from Continuing Operations (GAAP)

7.0

%
 

2

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 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

  

Three-Month
Period Ending

  

Year Ending
     

March 31, 2017

  

April 1, 2016

  

June 30, 2017

  

December 31, 2017
   

Pretax

$

166.1

    

$

139.2

    

$

166.0

    

$

664.0

  
   

After-tax

132.0

    

107.2

    

132.0

    

527.9

  
     

C

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.
   

D

Represents discrete income tax gains, primarily related to equity compensation related excess tax benefits.  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 EPS.  For the year ending December 31, 2017, excluding this first quarter 2017 $16 million benefit, we anticipate $40 million of equity compensation-related excess tax benefits which are reflected in Forecasted Adjusted Diluted Net Earnings per Share.

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. 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 nature, size and number 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.

SOURCE Danaher Corporation

For further information: Matthew E. Gugino, Vice President, Investor Relations, Danaher Corporation, 2200 Pennsylvania Avenue, N.W., Suite 800W, Washington, D.C. 20037, Telephone: (202) 828-0850, Fax: (202) 828-0860