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Danaher Corporation’s (DHR - Free Report) first-quarter 2023 adjusted earnings (excluding 42 cents from non-recurring items) of $2.36 per share surpassed the Zacks Consensus Estimate of $2.26. Our estimate for first-quarter adjusted earnings was $2.25. The bottom line decreased 14.5% year over year with a decline in sales.
Danaher’s net sales of $7,167 million outperformed the Zacks Consensus Estimate of $7,028.5 million. However, it declined 7% year over year due to a decrease in the sale of COVID-related products. Our estimate for net sales in the reported quarter was $7,000 million. Despite the earnings and revenues beat, shares of DHR declined in early trading, perhaps due to the year-over-year decline in earnings and revenues.
Organic sales in the quarter decreased 4%. Foreign-currency translations had an adverse impact of 3% on quarterly sales. Base business core sales (adjusted) growth was 6% in the quarter.
Danaher Corporation Price, Consensus and EPS Surprise
Revenues from the Life Sciences segment totaled $1,709 million, rising 2.5% year over year. Unfavorable foreign-currency translations lowered sales by 3.5%. Core sales grew 5% year over year. Acquisitions/divestitures led to a 1% increase in sales.
Revenues from the Diagnostics segment grossed $2,376 million, down 10% year over year. The downside was due to a 7.5% decline in core sales. Foreign-currency woes affected sales by 2.5%.
Revenues from the Environmental & Applied Solutions segment totaled $1,218 million, up 5% year over year. Core sales expanded 6.5%, while foreign-currency translation had a negative impact of 2%. Acquisitions/divestitures boosted sales by 0.5%.
Revenues from the Biotechnology segment totaled $1,864 million, down 16% year over year. Unfavorable foreign currency movements reduced sales by 3%. Core sales dropped 13% for the segment.
Margin Profile
In the first quarter, Danaher’s cost of sales decreased 6.2% year over year to $2,797 million. Gross profit of $4,370 million fell 7.1% year over year. Gross margin was nearly flat year over year at 61%.
Selling, general and administrative expenses of $2,147 million witnessed a year-over-year increase of 2.6%. Research and development expenses were $429 million, down 2.7%.
The operating profit in the quarter under review dropped 17.4% year over year to $1,794 million. Operating margin decreased to 25% from 28.3% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Danaher had cash and equivalents of $7,379 million compared with $5,995 million at 2022-end. Long-term debt was $18,261 million at the end of the reported quarter compared with $19,086 million at the end of December 2022.
Danaher generated net cash of $1,947 million from operating activities (continuing operations) at the end of first-quarter 2023 compared with $1,968 million in the year-ago period. Capital expenditures totaled $275 million in the same period, up 10% year over year. Adjusted free cash flow was $1,672 million at the end of the first quarter compared with $1,720 million at the end of the year-ago period.
DHR paid out dividends worth $204 million to its shareholders in the first quarter, up 6.8% on a year-over-year basis.
Outlook
For the second quarter of 2023, Danaher expects adjusted base business core revenue growth in mid-single digits. The company also expects mid-single-digit growth in the metric for 2023. Organic sales are estimated to increase in high single digits in the second quarter and the full year.
Zacks Rank & Other Key Picks
Danaher presently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks within the Conglomerates sector are as follows:
The Zacks Consensus Estimate for General Electric’s current-year earnings has been revised upward by 3.1% in the past 60 days. The stock has rallied 11.4% in a year.
Honeywell International (HON - Free Report) currently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 2.9%, on average.
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Danaher (DHR) Q1 Earnings Beat, Revenues Decline 7% Y/Y
Danaher Corporation’s (DHR - Free Report) first-quarter 2023 adjusted earnings (excluding 42 cents from non-recurring items) of $2.36 per share surpassed the Zacks Consensus Estimate of $2.26. Our estimate for first-quarter adjusted earnings was $2.25. The bottom line decreased 14.5% year over year with a decline in sales.
Danaher’s net sales of $7,167 million outperformed the Zacks Consensus Estimate of $7,028.5 million. However, it declined 7% year over year due to a decrease in the sale of COVID-related products. Our estimate for net sales in the reported quarter was $7,000 million. Despite the earnings and revenues beat, shares of DHR declined in early trading, perhaps due to the year-over-year decline in earnings and revenues.
Organic sales in the quarter decreased 4%. Foreign-currency translations had an adverse impact of 3% on quarterly sales. Base business core sales (adjusted) growth was 6% in the quarter.
Danaher Corporation Price, Consensus and EPS Surprise
Danaher Corporation price-consensus-eps-surprise-chart | Danaher Corporation Quote
Segmental Discussion
Revenues from the Life Sciences segment totaled $1,709 million, rising 2.5% year over year. Unfavorable foreign-currency translations lowered sales by 3.5%. Core sales grew 5% year over year. Acquisitions/divestitures led to a 1% increase in sales.
Revenues from the Diagnostics segment grossed $2,376 million, down 10% year over year. The downside was due to a 7.5% decline in core sales. Foreign-currency woes affected sales by 2.5%.
Revenues from the Environmental & Applied Solutions segment totaled $1,218 million, up 5% year over year. Core sales expanded 6.5%, while foreign-currency translation had a negative impact of 2%. Acquisitions/divestitures boosted sales by 0.5%.
Revenues from the Biotechnology segment totaled $1,864 million, down 16% year over year. Unfavorable foreign currency movements reduced sales by 3%. Core sales dropped 13% for the segment.
Margin Profile
In the first quarter, Danaher’s cost of sales decreased 6.2% year over year to $2,797 million. Gross profit of $4,370 million fell 7.1% year over year. Gross margin was nearly flat year over year at 61%.
Selling, general and administrative expenses of $2,147 million witnessed a year-over-year increase of 2.6%. Research and development expenses were $429 million, down 2.7%.
The operating profit in the quarter under review dropped 17.4% year over year to $1,794 million. Operating margin decreased to 25% from 28.3% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Danaher had cash and equivalents of $7,379 million compared with $5,995 million at 2022-end. Long-term debt was $18,261 million at the end of the reported quarter compared with $19,086 million at the end of December 2022.
Danaher generated net cash of $1,947 million from operating activities (continuing operations) at the end of first-quarter 2023 compared with $1,968 million in the year-ago period. Capital expenditures totaled $275 million in the same period, up 10% year over year. Adjusted free cash flow was $1,672 million at the end of the first quarter compared with $1,720 million at the end of the year-ago period.
DHR paid out dividends worth $204 million to its shareholders in the first quarter, up 6.8% on a year-over-year basis.
Outlook
For the second quarter of 2023, Danaher expects adjusted base business core revenue growth in mid-single digits. The company also expects mid-single-digit growth in the metric for 2023. Organic sales are estimated to increase in high single digits in the second quarter and the full year.
Zacks Rank & Other Key Picks
Danaher presently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks within the Conglomerates sector are as follows:
General Electric (GE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 27.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
The Zacks Consensus Estimate for General Electric’s current-year earnings has been revised upward by 3.1% in the past 60 days. The stock has rallied 11.4% in a year.
Honeywell International (HON - Free Report) currently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 2.9%, on average.
The Zacks Consensus Estimate for Honeywell’s current-year earnings has remained steady in the past 60 days. The stock has gained 2.6% in the past year.