LONDON, UK / ACCESSWIRE / October 28, 2016 / Active Wall St. announces its post-earnings coverage on Danaher Corp. (NYSE: DHR). The company reported its financial results for the third quarter fiscal 2016 (Q3 FY16) on October 20, 2016. The Washington, DC-based company reported a 17.5% and 22.5% y-o-y growth in its sales and adjusted net earnings per share, respectively. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
In Q3 FY16, Danaher reported sales of $4.13 billion, up from $3.51 billion recorded at the end of Q3 FY15. However, sales numbers for the reported quarter came in marginally short of market expectations of $4.15 billion. Furthermore, the company’s core revenue improved 3% y-o-y in Q3 FY16. The company stated that its core sales growth was consistent across segments, as each of them achieved at least 3% core revenue growth in the quarter.
The global science and technology innovator reported Q3 FY16 GAAP net income of $402.6 million, or $0.57 per diluted share, compared to $379.9 million, or $0.54 per diluted share, in Q3 FY15. Furthermore, the company’s non-GAAP net income for Q3 FY16 came in at $0.87 per diluted share compared to $0.71 per diluted share in Q3 FY15. Market analysts had forecasted non-GAAP diluted earnings of $0.83 per share for Q3 FY16.
Operating Metrics
For the three months ended on October 01, 2016, the computer chip maker reported gross margin of $2.29 billion, or 55.3% of sales, compared to $1.89 billion, or 53.9% of sales, in the prior year’s quarter. The company’s operating margin for Q3 FY16 came in at $699.1 million, or 16.9% of sales, versus $480.0 million, or 13.7% of sales, in Q3 FY15. The company’s strong margin expansion drove the double-digit adjusted net earnings growth in the quarter.
Segment Performance
During Q3 FY16, the company’s Life Sciences segment’s sales surged 64.5% y-o-y to $1.33 billion. The segment core revenues improved 3% y-o-y during the quarter, while acquisition contributed 61.0% to sales growth. The segment reported operating income of $204.7 million, or 15.4% of segment revenues, for Q3 FY16 compared to $51.5 billion, or 6.4% of segment sales, in Q3 FY15.
Danaher’s Diagnostics segment generated sales of $1.21 billion, which was 3% more than the last year’s recorded sales numbers of $1.18 billion. The segment’s operating income improved to $193.9 million, 16.0% of segment revenues in Q3 FY16 from $159.2 million, 13.5% of segment revenues, in Q3 FY15.
The company’s Dental sales for Q3 FY16 were up 3.5% y-o-y to $675.6 million. Furthermore, operating margin for the reported quarter came in at $101.3 million, or 15.0% of segment sales, versus $96.8 million, or 14.8% of segment sales, in Q3 FY15.
Environmental & Applied Solutions segment reported sales of $918.4 million in Q3 FY16, up by 4.5% on y-o-y basis. The segment had an operating income of $223.4 million, or 24.3% segment sales, in Q3 FY16 compared to $215.6 million, or 24.5% of segment sales, in the last year’s quarter.
Cash Matters
For the three months ended on September 30, 2016, Danaher generated $850 million in cash from operations compared to $669 million in the prior year’s quarter. The company reported free cash flow of $701 million in Q3 FY16 compared to $518 million in the last year’s comparable quarter. Furthermore, the company had cash and cash equivalents balance of $971.4 million, as on September 30, 2016 compared to $790.8 million, at the close of books on December 31, 2015.
Acquisition Spree
On September 06, 2016, Danaher announced that it had entered into a definitive merger agreement with Cepheid and will acquire all of the outstanding shares of Cepheid for $53.00 per share in cash, costing approximately $4 billion including net debt and cash. Furthermore, Danaher also announced its interest in acquiring Phenomenex Inc. on October 12, 2016. Both the acquisitions are expected to close by end of 2016, subject to customary closing conditions and regulatory approvals.
Earlier in August 2015, the company had completed the acquisition of Pall Corp. for $13.8 billion, resulting in a significant improvement of its Q3 FY16 results.
Outlook
For Q4 FY16, Danaher expects diluted net earnings to be in the range of $2.86 per share to $2.90 per share along with non-GAAP diluted net earnings in the range of $1.01 per share to $1.05 per share.
The company’s management also forecasts diluted net earnings for full year FY16 to lie between $2.86 per share and $2.90 per share with non-GAAP diluted net earnings in the range of $3.57 per share to $3.61 per share.
Stock Performance
Danaher’s share price finished yesterday’s trading session at $78.33, marginally advancing 0.76%. A total volume of 4.2 million shares exchanged hands, which was higher than the 3 months average volume of 2.88 million shares. The stock has advanced 7.13% and 12.29% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the company have gained 11.79%. The stock is trading at a PE ratio of 19.95 and has a dividend yield of 0.64%.
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