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Danaher Reports In-Line in 4Q

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Danaher Corporation (DHR) reported earnings of 87 cents a share in the fourth quarter of 2012, in line with the Zacks Consensus Estimate. Despite the macroeconomic challenges, Danaher posted year-over-earnings growth of 10.1%.

On a GAAP basis, Danaher reported earnings of 89 cents a share, up 12.1% from the prior-year earnings of 79 cents per share.    


The company generated total sales of $4.97 billion in the quarter, up 5.5% year over year. Core revenues for the quarter were up 3.5%. The increase in revenues was primarily attributable to currency fluctuations and the prevailing macroeconomic headwinds. However, the company continues to benefit from product innovations and go-to-market initiatives.


Revenues in the Test & Measurement segment edged up 0.9% to $863.7 million. Revenue growth was driven by overall improvement in the segment’s business. The segment recorded an operating income of $161.8 million, reflecting a decline of 11.9% year over year with an operating margin of 18.7%.  

Environmental revenues grew 5.5% during the quarter to $850.6 million. The segment reported an operating profit of $196.0 million with an operating margin of 23.0%. The company’s waters business is gaining good momentum with the acquisition of Dingli. In addition, the company’s retail and commercial petroleum business was also been strong.  

Life Sciences and Diagnostics reported a revenue increase of 6.3% year over year to $1.8 million. The operating profit for the quarter was up 16.2% year over year while the operating margin was 14.2%. The company’s diagnostics division has been performing impressively based on the increasing demand for its instruments.

The company completed the acquisition of Aperio Technologies during the quarter, which has a portfolio of products covering scanning, managing, viewing and analyzing images. In addition, the Beckman Coulter acquisition is also showing good progress.  

Revenues from the Dental segment grew 3.6% year over year to $570.5 million with operating profit growing 44.1% and operating margin of 15.2%. The company witnessed strong sales of its general dentistry consumables and orthodontic solution across all major end markets.  

In the Industrial Technologies segment, revenues grew 9.9% to $852.7 million with operating income growth of 9.6% and operating margin of 18.1%. Strong growth in the packaging design needs the synergies from the X-Rite acquisition boosted the segment sales during the quarter.      


For the fourth quarter, gross margin expanded 123 basis points year over year to 51.2%, while operating margin in the quarter expanded 80 basis points year over year to 17.3%. Despite the currency fluctuations and macroeconomic pressures, Danaher Business System led to the margin increase.  


Concurrent with the earnings release, management provided its guidance for 2013.  Danaher expects to close the pending acquisition of Apex Tool Group in 2013 and expects full year 2013 earnings to be in the range of $3.32 to $3.47 a share. For the first quarter of 2013, the company expects earnings in the range of 72 cents to 77 cents a share.   

Danaher currently carries Zacks Rank #3 (Hold) while some of its peers worth considering, like Idex Corp. (IEX), Broadcom Corp. (BRCM) and Geospace Technology (GEOS) have Zacks Rank #2 (Buy).

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