WASHINGTON, May 6, 2020 /PRNewswire/ -- Danaher Corporation
(NYSE: DHR) (the "Company") today announced results for the quarter
ended April 3, 2020. All
results in this release reflect only continuing operations unless
otherwise noted.
For the first quarter 2020, net earnings were $595.1 million, or $0.81 per diluted common share. Non-GAAP
adjusted diluted net earnings per common share were $1.05.
Revenues increased 3.0% year-over-year to $4.3 billion, with non-GAAP core revenue growth
of 4.5%.
Starting with the second quarter of 2020, the Company intends to
present core revenue growth including Cytiva. For the second
quarter 2020 the Company anticipates that non-GAAP core revenue
growth including Cytiva will be in the range of approximately flat
to down 10%.
Thomas P. Joyce, Jr., President
and Chief Executive Officer, stated, "We are pleased with our first
quarter performance during such an unprecedented time. We
delivered 4.5% core revenue growth driven by positive results in
each of our three reporting segments, with particular strength in
our Cepheid, Radiometer, Pall, and ChemTreat businesses. We
were also excited to close our acquisition of the GE Biopharma
business, now called Cytiva, on March
31."
Joyce continued, "We are incredibly proud of our team's response
to the challenges presented by the COVID-19 pandemic. We are
providing much-needed diagnostic testing capabilities today and
supporting our customers' pursuit of new treatments and vaccines
for the future. Looking ahead, we feel well-positioned to
navigate through this uncertain environment. We believe that
the combination of our strong portfolio, exceptional team, and
disciplined execution driven by the Danaher Business System will
continue to differentiate Danaher in 2020 and beyond."
Danaher will discuss its results during its quarterly investor
conference call on May 7, 2020
starting at 7:30 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 866-503-8675
within the U.S. or by dialing +1 786-815-8792 outside the U.S. a
few minutes before the 7:30 a.m. ET
start and telling the operator that you are dialing in for
Danaher's earnings conference call (access code 3845297). A
replay of the conference call will be available shortly after the
conclusion of the call and until May
21, 2020. 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 "Quarterly 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 the demanding and attractive
health care, environmental and applied end-markets. With more
than 20 operating companies, Danaher's globally diverse team of
approximately 67,000 associates is united by a common culture and
operating system, the Danaher Business System, and its Shared
Purpose, Helping Realize Life's Potential. 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 statements regarding the Company's anticipated second
quarter financial performance, the Company's contributions to the
response to the COVID-19 pandemic, the positioning of the Company's
portfolio, the Company's differentiation 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, the
highly uncertain and unpredictable severity, magnitude and duration
of the COVID-19 pandemic (and the related governmental, business
and community responses thereto) on our business, results of
operations and financial condition, Danaher's ability to
successfully integrate the operations and employees of the
Biopharma business Danaher recently acquired from General Electric
Company (now known as Cytiva) with Danaher's existing business, the
ability to realize anticipated financial, tax and operational
synergies and benefits from such acquisition, Cytiva's performance
and maintenance of important business relationships, the impact of
our debt obligations (including the debt incurred to finance the
acquisition of Cytiva) on our operations and liquidity,
deterioration of or instability in the economy, the markets we
serve and the financial markets (including as a result of the
COVID-19 pandemic), developments and uncertainties in U.S. policy
stemming from the U.S. administration, such as changes in U.S.
trade and tariff policies and the reaction of other countries
thereto, 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), the results of our clinical trials and perceptions
thereof, our ability to effectively address cost reductions and
other changes in the health care industry, our ability to
successfully identify and consummate appropriate acquisitions and
strategic investments and successfully complete divestitures and
other dispositions, our ability to integrate the businesses we
acquire and achieve the anticipated benefits of such acquisitions,
contingent liabilities relating to acquisitions, investments and
divestitures (including tax-related and other contingent
liabilities relating to past and future IPOs, split-offs or
spin-offs), 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, 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
United Kingdom's separation from
the EU and uncertainty relating to the terms of such separation),
disruptions relating to man-made and natural disasters (including
pandemics such as COVID-19) 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 2019 Annual Report
on Form 10-K, our first quarter 2020 Quarterly Report on Form 10-Q
and our Prospectus Supplement filed with the SEC on April 6, 2020 pursuant to Rule 424(b)(5) under
the Securities Act of 1933, as amended. 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 (unaudited)
($ and shares in millions, except
per share amounts)
|
Three-Month Period
Ended
|
|
|
April 3,
2020
|
|
March 29,
2019
|
|
Sales
|
$
|
4,343.1
|
|
|
$
|
4,220.2
|
|
|
Cost of
sales
|
(1,900.3)
|
|
|
(1,865.3)
|
|
|
Gross
profit
|
2,442.8
|
|
|
2,354.9
|
|
|
Operating
costs:
|
|
|
|
|
Selling, general and
administrative expenses
|
(1,458.3)
|
|
|
(1,367.7)
|
|
|
Research and
development expenses
|
(287.0)
|
|
|
(267.5)
|
|
|
Operating
profit
|
697.5
|
|
|
719.7
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
Other (expense)
income, net
|
(1.5)
|
|
|
5.1
|
|
|
Interest
expense
|
(47.4)
|
|
|
(20.5)
|
|
|
Interest
income
|
62.5
|
|
|
15.7
|
|
|
Earnings from
continuing operations before income taxes
|
711.1
|
|
|
720.0
|
|
|
Income
taxes
|
(116.0)
|
|
|
(387.7)
|
|
|
Net earnings from
continuing operations
|
595.1
|
|
|
332.3
|
|
|
Earnings from
discontinued operations, net of income taxes
|
—
|
|
|
1.5
|
|
|
Net
earnings
|
595.1
|
|
|
333.8
|
|
|
Mandatory convertible
preferred stock dividends
|
(19.6)
|
|
|
(6.5)
|
|
|
Net earnings
attributable to common stockholders
|
$
|
575.5
|
|
|
$
|
327.3
|
|
|
Net earnings per
common share from continuing operations:
|
|
|
|
|
Basic
|
$
|
0.83
|
|
|
$
|
0.46
|
|
|
Diluted
|
$
|
0.81
|
|
|
$
|
0.45
|
|
|
Net earnings per
common share from discontinued operations:
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
—
|
|
|
Diluted
|
$
|
—
|
|
|
$
|
—
|
|
|
Net earnings per
common share:
|
|
|
|
|
Basic
|
$
|
0.83
|
|
|
$
|
0.46
|
|
|
Diluted
|
$
|
0.81
|
|
|
$
|
0.46
|
|
*
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
|
Basic
|
697.2
|
|
|
707.6
|
|
|
Diluted
|
707.9
|
|
|
718.5
|
|
|
* Net earnings per common share 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).
Adjusted Diluted Net Earnings Per Common Share from
Continuing Operations 1
|
Three-Month Period
Ended
|
|
April 3,
2020
|
|
March 29,
2019
|
Diluted Net
Earnings Per Common Share from Continuing Operations
(GAAP)
|
$
|
0.81
|
|
|
$
|
0.45
|
|
Pretax amortization
of acquisition-related intangible assets A
|
0.22
|
|
|
0.22
|
|
Pretax transaction
costs deemed significant and integration preparation costs, in each
case related to the acquisition of Cytiva B
|
0.08
|
|
|
0.02
|
|
Pretax impairment
charges related to a facility in the Diagnostics segment and a
trade name and other intangible assets in the Environmental &
Applied Solutions segment C
|
0.01
|
|
|
—
|
|
Pretax fair value
adjustments and losses on the Company's equity and limited
partnership investments D
|
0.01
|
|
|
—
|
|
Tax effect of all
adjustments reflected above E
|
(0.05)
|
|
|
(0.04)
|
|
Discrete tax
adjustments and other tax-related adjustments
F
|
(0.04)
|
|
|
0.34
|
|
Declared dividends on
the MCPS assuming "if-converted" method G
|
0.01
|
|
|
—
|
|
Adjusted Diluted
Net Earnings Per Common Share from Continuing Operations
(Non-GAAP)
|
$
|
1.05
|
|
|
$
|
0.99
|
|
1 Each of the per share amounts
above have been calculated assuming the Mandatory Convertible
Preferred Stock ("MCPS") had been converted into shares of
common stock.
Adjusted Diluted Share Outstanding
|
Three-Month Period
Ended
|
|
April 3,
2020
|
|
March 29,
2019
|
(shares in
millions)
|
|
|
|
Average common stock
and common equivalent shares outstanding - diluted
|
707.9
|
|
|
718.5
|
|
Converted shares
2
|
12.4
|
|
|
4.3
|
|
Adjusted average
common stock and common equivalent shares outstanding -
diluted
|
720.3
|
|
|
722.8
|
|
2 The number of converted shares assumes
the conversion of all MCPS and issuance of the underlying shares
applying the "if-converted" method of accounting and using an
average 20 trading-day trailing volume weighted average price
("VWAP") of $132.64 and $128.09 as of April 3,
2020 and March 29, 2019,
respectively.
See the accompanying Notes to Reconciliation of
GAAP to Non-GAAP Financial Measures
Core Revenue Growth
|
% Change
Three-
Month Period Ended
April 3, 2020 vs.
Comparable 2019
Period
|
Total sales growth
(GAAP)
|
3.0%
|
Impact of:
|
|
Currency exchange
rates
|
1.5%
|
Core revenue growth
(Non-GAAP)
|
4.5%
|
Forecasted Core Revenue Growth and Core Revenue Growth
Including Cytiva
|
% Change
Three-
Month Period
Ending July 3, 2020
vs. Comparable 2019
Period
|
Core revenue growth
(Non-GAAP)
|
(2.0%) to
(12.0%)
|
Impact of:
|
|
Cytiva
|
~2.0%
|
Core revenue growth
including Cytiva (Non-GAAP)
|
Flat to
(10.0%)
|
See the accompanying Notes to Reconciliation of
GAAP to Non-GAAP Financial Measures
Notes to Reconciliation of GAAP to Non-GAAP
Financial Measures
A Amortization of acquisition-related
intangible assets in the following historical periods ($ in
millions) (only the pretax amounts set forth below are reflected in
the amortization line item above):
|
Three-Month Period
Ended
|
|
April 3,
2020
|
|
March 29,
2019
|
Pretax
|
$
|
156.4
|
|
|
$
|
157.4
|
|
After-tax
|
125.9
|
|
|
126.8
|
|
B Pretax costs incurred for transaction costs
deemed significant and integration preparation costs, in each case
related to the acquisition of Cytiva in the three-month periods
ended April 3, 2020 and March 29, 2019 ($59
million pretax as reported in this line item, $53 million after-tax and $15 million pretax as reported in this line item,
$13 million after-tax,
respectively). The Company deems acquisition-related
transaction costs incurred in a given period to be significant
(generally relating to the Company's larger acquisitions) if it
determines that such costs exceed the range of acquisition-related
transaction costs typical for Danaher in a given period.
C Pretax impairment charges related to a
facility in the Diagnostics segment and a trade name and other
intangible assets in the Environmental & Applied Solutions
segment recorded in the three-month period ended April 3, 2020 ($8
million pretax as reported in this line item, $6 million after-tax).
D Pretax fair value adjustments and losses on
the Company's equity and limited partnership investments recorded
in the three-month period ended April 3,
2020 ($7 million pretax as
reported in this line item, $5
million after-tax).
E This line item reflects the aggregate tax
effect of all nontax adjustments reflected in the preceding line
items of the table. In addition, the footnotes above indicate
the after-tax amount of each individual adjustment item.
Danaher estimates the tax effect of each adjustment item 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. The MCPS dividends are not tax
deductible and therefore the tax effect of the adjustments does not
include any tax impact of the MCPS dividends.
F Discrete tax adjustments and other
tax-related adjustments for the three-month period ended
April 3, 2020, include the impact of
net discrete tax gains of $27 million
(or $0.04 per diluted common share)
related primarily to excess tax benefits from stock-based
compensation and the release of reserves for uncertain tax
positions due to the expiration of statutes of limitation.
Discrete tax adjustments and other tax-related adjustments for the
three-month period ended March 29,
2019, include the impact of net discrete tax charges of
$245 million (or $0.34 per diluted common share) related primarily
to changes in estimates associated with prior period uncertain tax
positions and audit settlements, net of the release of valuation
allowances associated with certain foreign tax credits, tax
benefits resulting from a change in tax law and excess tax benefits
from stock-based compensation. The Company anticipates excess
tax benefits from stock compensation of approximately $7 million per quarter and therefore excludes
benefits in excess of this amount in the calculation of Adjusted
Diluted Net Earnings Per Common Share from Continuing
Operations.
G In March 2019,
the Company issued $1.65 billion in
aggregate liquidation preference of 4.75% MCPS. Dividends on
the MCPS are payable on a cumulative basis at an annual rate of
4.75% on the liquidation preference of $1,000 per share. Unless earlier converted,
each share of MCPS will automatically convert on April 15, 2022 into between 6.6542 and 8.1513
shares of Danaher's common stock, subject to further anti-dilution
adjustments. The number of shares of Danaher's common stock
issuable on conversion of the MCPS will be determined based on the
VWAP per share of our common stock over the 20 consecutive trading
day period beginning on, and including, the 21st scheduled trading
day immediately before April 15,
2022. For the purposes of calculating adjusted earnings per
share, the Company has excluded the paid and anticipated MCPS cash
dividends and assumed the "if-converted" method of share dilution
(the incremental shares of common stock deemed outstanding applying
the "if-converted" method of calculating share dilution are
referred to as the "Converted Shares".)
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 Earnings Per Common Share
from Continuing Operations, 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 from continuing operations,
identify underlying growth trends in our business and compare our
revenue performance with prior and future periods and to our
peers.
Beginning with respect to forecasted results for the second
quarter of 2020, we also present core revenue from continuing
operations on a basis that includes revenue attributable to Cytiva
(formerly the Biopharma Business of General Electric Company's
("GE") Life Sciences business), which Danaher acquired from GE on
March 31, 2020. Historically
Danaher has calculated core revenue solely on a basis that excludes
revenues from acquired businesses recorded prior to the first
anniversary of the acquisition. However, given Cytiva's
significant size and historical core revenue growth rate, in each
case compared to Danaher's existing businesses, management believes
it is appropriate to also present core revenue on a basis that
includes Cytiva. Management believes this presentation
provides useful information to investors by demonstrating now the
impact Cytiva has on the Company's growth profile, rather than
waiting to demonstrate such impact twelve months after the
acquisition when Cytiva would normally have been included in
Danaher's core revenue calculation. Danaher calculates
period-to-period core revenue from continuing operations including
Cytiva by adding to the baseline period revenue Cytiva's historical
revenue from such period (when it was owned by GE), net of the
revenues of the product lines Danaher divested to obtain regulatory
approval for the Cytiva acquisition, and also adding Cytiva's net
revenues to the current period.
Management uses these non-GAAP measures to measure the Company's
operating and financial performance, and uses core revenue and
non-GAAP measures similar to Adjusted Diluted Net Earnings Per
Common Share from Continuing Operations 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 Earnings Per Common Share
from Continuing Operations:
-
- 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 to facilitate a more consistent comparison of operating
results over time.
- With respect to the other items excluded, 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 that such items may obscure underlying business trends and
make comparisons of long-term performance difficult.
- Danaher's Mandatory Convertible Preferred Stock ("MCPS") will
mandatorily convert into Danaher common stock on the mandatory
conversion date, which is expected to be April 15, 2022 (unless converted or redeemed
earlier in accordance with the terms of the applicable certificate
of designations). On the prior pages, we present the earnings
per share-related measures on a basis which assumes the MCPS had
already been converted as of the beginning of the applicable period
(and accordingly also exclude the dividends that were actually paid
on the MCPS during such period, since such dividends would no
longer be paid once the MCPS convert). We believe this
presentation provides useful information to investors by helping
them understand what the net impact will be on Danaher's earnings
per share-related measures once the MCPS convert into Danaher
common stock.
- With respect to core revenue from continuing operations and
core revenue from continuing operations including Cytiva, (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 (other than Cytiva, in the case of core revenue from
continuing operations including Cytiva) 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.
Forward-looking estimates of Adjusted Diluted Net Earnings Per
Common Share from Continuing Operations 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, discrete tax
items and legal contingency provisions. With respect to
forecasted core revenue from continuing operations and forecasted
core revenue from continuing operations including Cytiva, we do not
reconcile these measures to the comparable GAAP measure because of
the inherent difficulty in predicting and estimating the future
impact and timing of currency translation, acquisitions and
divested product lines, which would be reflected in any forecasted
GAAP revenue.
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SOURCE Danaher Corporation