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Danaher Corporation’s (DHR - Free Report) third-quarter 2023 adjusted earnings (excluding 51 cents from non-recurring items) of $2.02 per share surpassed the Zacks Consensus Estimate of $1.83. However, the bottom line declined 21.1% year over year.
Danaher’s net sales of $6,873 million outperformed the consensus estimate of $6,611.7 million. However, it declined 10.3% year over year due to a decrease in the sale of COVID-related products and weak demand in the Life Sciences segment.
Organic sales in the quarter decreased 11.5%. Foreign-currency translations had a positive impact of 0.5% on quarterly sales. Base business core sales (adjusted) declined 3% in the quarter.
Danaher Corporation Price, Consensus and EPS Surprise
Revenues from the Life Sciences segment totaled $1,706 million, down 1% year over year. Core sales dipped 2.5% year over year. Acquisitions/divestitures led to a 1% increase in sales. Operating profit was $313 million for the quarter, down 11.6% year over year. We expected the Life Sciences segment operating profit to be $309.7 million. 2
Revenues from the Diagnostics segment grossed $2,254 million, down 15.9% year over year. Our estimate for the quarter was $2,230.9 million. The downside was due to a 15.5% decline in core sales. Foreign-currency woes affected sales by 0.5%. Operating profit was $539 million for the quarter, down 29.2% on a year-over-year basis.
Revenues from the Environmental & Applied Solutions segment totaled $1,249 million, up 3.5% year over year. Our estimate for the quarter was $1,226.1 million. Core sales expanded 1%. Acquisitions/divestitures boosted sales by 0.5%. Operating profit was $286 million for the quarter, flat year over year. Our estimate for the quarter was $210 million.
Revenues from the Biotechnology segment totaled $1,664 million, down 19% year over year. Our estimate for the quarter was $1,635.6 million. Core sales dropped 21% for the segment. Operating profit was $417 million for the quarter, down 39.6% year over year. Our estimate for the quarter was $459.4 million.
Margin Profile
In the third quarter, Danaher’s cost of sales decreased 6.7% year over year to $2.87 billion. Gross profit of $4 billion fell 12.7% year over year. Gross margin in the quarter was 58.2% compared with 59.8% in the year-ago quarter.
Selling, general and administrative expenses of $2,145 million were flat on a year-over-year basis. Research and development expenses were $417 million, down nearly 1% year over year.
Danaher’s operating profit in the quarter under review dropped 28.6% year over year to $1,438 million. Operating margin decreased to 20.9% from 26.3% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the third quarter, Danaher had cash and equivalents of $12,277 million compared with $5,995 million at 2022-end. Long-term debt was $19,513 million at the end of the reported quarter compared with $19,086 million at the end of December 2022.
Danaher generated net cash of $5,545 million from operating activities at the end of the third quarter compared with $5,978 million in the year-ago period. Capital expenditures totaled $981 million in the same period, up 19.2% year over year. Adjusted free cash flow was $4,572 million at the end of the third quarter compared with $5,164 million at the end of the year-ago period.
In the first nine months of 2023, DHR paid out dividends of $621 million, up around 1% on a year-over-year basis.
Outlook
For the fourth quarter of 2023, Danaher expects adjusted base business core revenues from continuing operations to decline in mid-single digits on a year-over-year basis. The same is anticipated to decrease slightly on a year-over-year basis in 2023.
Applied Industrial has an estimated earnings growth rate of 4.3% for the current fiscal year. The stock has gained 33.4% in a year.
Axon Enterprise (AXON - Free Report) carries a Zacks Rank #2 (Buy) at present. The company pulled off a trailing four-quarter earnings surprise of 60.2%, on average.
Axon has an estimated earnings growth rate of 62.1% for the current year. The stock has surged around 52.4% in a year.
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Danaher's (DHR) Q3 Earnings & Revenues Beat, Decline Y/Y
Danaher Corporation’s (DHR - Free Report) third-quarter 2023 adjusted earnings (excluding 51 cents from non-recurring items) of $2.02 per share surpassed the Zacks Consensus Estimate of $1.83. However, the bottom line declined 21.1% year over year.
Danaher’s net sales of $6,873 million outperformed the consensus estimate of $6,611.7 million. However, it declined 10.3% year over year due to a decrease in the sale of COVID-related products and weak demand in the Life Sciences segment.
Organic sales in the quarter decreased 11.5%. Foreign-currency translations had a positive impact of 0.5% on quarterly sales. Base business core sales (adjusted) declined 3% 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 $1,706 million, down 1% year over year. Core sales dipped 2.5% year over year. Acquisitions/divestitures led to a 1% increase in sales. Operating profit was $313 million for the quarter, down 11.6% year over year. We expected the Life Sciences segment operating profit to be $309.7 million. 2
Revenues from the Diagnostics segment grossed $2,254 million, down 15.9% year over year. Our estimate for the quarter was $2,230.9 million. The downside was due to a 15.5% decline in core sales. Foreign-currency woes affected sales by 0.5%. Operating profit was $539 million for the quarter, down 29.2% on a year-over-year basis.
Revenues from the Environmental & Applied Solutions segment totaled $1,249 million, up 3.5% year over year. Our estimate for the quarter was $1,226.1 million. Core sales expanded 1%. Acquisitions/divestitures boosted sales by 0.5%. Operating profit was $286 million for the quarter, flat year over year. Our estimate for the quarter was $210 million.
Revenues from the Biotechnology segment totaled $1,664 million, down 19% year over year. Our estimate for the quarter was $1,635.6 million. Core sales dropped 21% for the segment. Operating profit was $417 million for the quarter, down 39.6% year over year. Our estimate for the quarter was $459.4 million.
Margin Profile
In the third quarter, Danaher’s cost of sales decreased 6.7% year over year to $2.87 billion. Gross profit of $4 billion fell 12.7% year over year. Gross margin in the quarter was 58.2% compared with 59.8% in the year-ago quarter.
Selling, general and administrative expenses of $2,145 million were flat on a year-over-year basis. Research and development expenses were $417 million, down nearly 1% year over year.
Danaher’s operating profit in the quarter under review dropped 28.6% year over year to $1,438 million. Operating margin decreased to 20.9% from 26.3% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the third quarter, Danaher had cash and equivalents of $12,277 million compared with $5,995 million at 2022-end. Long-term debt was $19,513 million at the end of the reported quarter compared with $19,086 million at the end of December 2022.
Danaher generated net cash of $5,545 million from operating activities at the end of the third quarter compared with $5,978 million in the year-ago period. Capital expenditures totaled $981 million in the same period, up 19.2% year over year. Adjusted free cash flow was $4,572 million at the end of the third quarter compared with $5,164 million at the end of the year-ago period.
In the first nine months of 2023, DHR paid out dividends of $621 million, up around 1% on a year-over-year basis.
Outlook
For the fourth quarter of 2023, Danaher expects adjusted base business core revenues from continuing operations to decline in mid-single digits on a year-over-year basis. The same is anticipated to decrease slightly on a year-over-year basis in 2023.
Zacks Rank & Stocks to Consider
Danaher presently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Industrial Products sector:
Applied Industrial Technologies (AIT - Free Report) flaunts a Zacks Rank #1 (Strong Buy) at present. The company delivered a trailing four-quarter earnings surprise of 15%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Applied Industrial has an estimated earnings growth rate of 4.3% for the current fiscal year. The stock has gained 33.4% in a year.
Axon Enterprise (AXON - Free Report) carries a Zacks Rank #2 (Buy) at present. The company pulled off a trailing four-quarter earnings surprise of 60.2%, on average.
Axon has an estimated earnings growth rate of 62.1% for the current year. The stock has surged around 52.4% in a year.