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Danaher Corporation’s (DHR - Free Report) fourth-quarter 2022 adjusted earnings (excluding 12 cents from non-recurring items) of $2.87 per share surpassed the Zacks Consensus Estimate of $2.46. Our estimate for fourth-quarter adjusted earnings was $2.40. The bottom line increased 6.7% from the year-ago quarter, primarily on sales growth.
Danaher’s net sales of $8,369 million outperformed the Zacks Consensus Estimate of $7,638 million and increased 2.7% year over year. Our estimate for net sales in the reported quarter was $7,578.1 million. Results were driven by solid segmental performances. Organic sales in the quarter increased 7.5%. Foreign-currency translations had an adverse impact of 5% on quarterly sales. Base business core sales (adjusted) growth was 7.5% in the quarter.
Segmental Discussion
Revenues from the Life Sciences segment totaled $1,946 million, rising 7.9% year over year. Unfavorable foreign-currency translations lowered sales by 5%. Core sales grew 13% year over year.
Revenues from the Diagnostics segment grossed $2,965 million, increasing 3% year over year. The improvement came on the back of a 7.5% rise in core sales. Foreign-currency woes affected sales by 4.5%.
Danaher Corporation Price, Consensus and EPS Surprise
Revenues from the Environmental & Applied Solutions segment totaled $1,235 million, up 1% year over year. Core sales expanded by 5.5%, while foreign-currency translation had a negative impact of 5%. Acquisitions/divestitures boosted sales by 0.5%.
Revenues from the Biotechnology segment totaled $2,223 million, down nearly 1% year over year. Unfavorable foreign currency movements reduced sales by 5%. Core sales growth was 4% for the segment.
Margin Profile
In the fourth quarter, Danaher’s cost of sales increased 7% year over year to $3,430 million. Gross profit of $4,939 million dipped marginally year over year. Gross margin deteriorated to 59% in the reported quarter from 60.7% in the year-ago period.
Selling, general and administrative expenses of $2,190 million witnessed a year-over-year decrease of 4.5%. Research and development expenses were $453 million, down 8.5%.
Operating profit in the quarter under review jumped 6.6% year over year to $2,296 million. Operating margin increased 100 basis points to 27.4% in the quarter.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Danaher had cash and cash equivalents of $5,995 million compared with $2,586 million at the end of 2021. Long-term debt was $19,086 million at the end of the reported quarter compared with $22,168 million at the end of December 2021.
Danaher used net cash of $2,570 million from operating activities (continuing operations) at the end of 2022 compared with $1,295 million of cash generated from operating activities. Capital expenditures totaled $1,152 million in the same period, down 11% year over year. Adjusted free cash flow (continuing operations) was $7,376 million at the end of 2022 compared with $7,077 million in 2021.
DHR paid out dividends worth $818 million to its shareholders in 2022, up 10.2% on a year-over-year basis.
Outlook
For the first quarter of 2023, Danaher expects adjusted base business core revenue growth in mid single digits. For 2023, the company expects the same to be up in high single digits. Organic sales growth is estimated to increase in mid single digits in the first quarter and the full year.
Zacks Rank & Key Picks
Danaher presently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks worth considering are as follows:
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Danaher (DHR) Q4 Earnings & Revenues Beat, Increase Y/Y
Danaher Corporation’s (DHR - Free Report) fourth-quarter 2022 adjusted earnings (excluding 12 cents from non-recurring items) of $2.87 per share surpassed the Zacks Consensus Estimate of $2.46. Our estimate for fourth-quarter adjusted earnings was $2.40. The bottom line increased 6.7% from the year-ago quarter, primarily on sales growth.
Danaher’s net sales of $8,369 million outperformed the Zacks Consensus Estimate of $7,638 million and increased 2.7% year over year. Our estimate for net sales in the reported quarter was $7,578.1 million. Results were driven by solid segmental performances. Organic sales in the quarter increased 7.5%. Foreign-currency translations had an adverse impact of 5% on quarterly sales. Base business core sales (adjusted) growth was 7.5% in the quarter.
Segmental Discussion
Revenues from the Life Sciences segment totaled $1,946 million, rising 7.9% year over year. Unfavorable foreign-currency translations lowered sales by 5%. Core sales grew 13% year over year.
Revenues from the Diagnostics segment grossed $2,965 million, increasing 3% year over year. The improvement came on the back of a 7.5% rise in core sales. Foreign-currency woes affected sales by 4.5%.
Danaher Corporation Price, Consensus and EPS Surprise
Danaher Corporation price-consensus-eps-surprise-chart | Danaher Corporation Quote
Revenues from the Environmental & Applied Solutions segment totaled $1,235 million, up 1% year over year. Core sales expanded by 5.5%, while foreign-currency translation had a negative impact of 5%. Acquisitions/divestitures boosted sales by 0.5%.
Revenues from the Biotechnology segment totaled $2,223 million, down nearly 1% year over year. Unfavorable foreign currency movements reduced sales by 5%. Core sales growth was 4% for the segment.
Margin Profile
In the fourth quarter, Danaher’s cost of sales increased 7% year over year to $3,430 million. Gross profit of $4,939 million dipped marginally year over year. Gross margin deteriorated to 59% in the reported quarter from 60.7% in the year-ago period.
Selling, general and administrative expenses of $2,190 million witnessed a year-over-year decrease of 4.5%. Research and development expenses were $453 million, down 8.5%.
Operating profit in the quarter under review jumped 6.6% year over year to $2,296 million. Operating margin increased 100 basis points to 27.4% in the quarter.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Danaher had cash and cash equivalents of $5,995 million compared with $2,586 million at the end of 2021. Long-term debt was $19,086 million at the end of the reported quarter compared with $22,168 million at the end of December 2021.
Danaher used net cash of $2,570 million from operating activities (continuing operations) at the end of 2022 compared with $1,295 million of cash generated from operating activities. Capital expenditures totaled $1,152 million in the same period, down 11% year over year. Adjusted free cash flow (continuing operations) was $7,376 million at the end of 2022 compared with $7,077 million in 2021.
DHR paid out dividends worth $818 million to its shareholders in 2022, up 10.2% on a year-over-year basis.
Outlook
For the first quarter of 2023, Danaher expects adjusted base business core revenue growth in mid single digits. For 2023, the company expects the same to be up in high single digits. Organic sales growth is estimated to increase in mid single digits in the first quarter and the full year.
Zacks Rank & Key Picks
Danaher presently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks worth considering are as follows:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE pulled off a trailing four-quarter earnings surprise of 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
The Zacks Consensus Estimate for Allegion’s 2022 earnings has remained steady in the past 60 days. The stock has gained 8.8% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI delivered a trailing four-quarter earnings surprise of 12.5%, on average.
The Zacks Consensus Estimate for Valmont’s 2022 earnings estimate has been revised upward by a penny in the past 60 days. The stock has rallied 27.8% in the past six months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank of 2. IEX pulled off a trailing four-quarter earnings surprise of 5.7%, on average.
The Zacks Consensus Estimate for IDEX’s 2022 earnings has been revised upward by a penny in the past 60 days. The stock has rallied 19.7% in the past six months.