Danaher Corporation (DHR) reported that net earnings for the quarter ended October 2, 2009 were $351 million, or $1.05 per share, a 5.5% decrease as compared to the company’s 2008 third quarter net earnings of $372 million, or $1.11 per share. This was higher than the Zacks Consensus Estimate of 86 cents per share.
Sales for the 2009 third quarter were $2.75 billion, 14.5% less than the $3.21 billion reported for the 2008 third quarter. Core revenues declined 14% in the quarter, compared to the third quarter of 2008. Core revenue refers to GAAP revenue from existing businesses and acquired businesses starting from and after the first anniversary of the acquisition.
The increase in gross profit margin in the three months ended October 2, 2009 was largely due to year-over-year cost savings generated from the fourth quarter 2008 and 2009 restructuring activities in addition to lower year-over-year commodity costs, as costs for many commodities had reached historic highs in the third quarter of 2008.
Operating profit margins for the Company were 16.9% for the three months ended October 2, 2009 compared to 16.3% in the comparable period of 2008. The third quarter 2009 operating profit margins reflect a 310 basis point year-over-year increase resulting from the settlement of litigation between the Company and Align as described above, and also benefited from year-over-year cost savings attributable to the Company’s fourth quarter 2008 restructuring activities as well as 2009 restructuring activities and ongoing efforts to reduce material costs and other operating expenses.
Free cash flow was $472 million in the quarter, with a free cash flow to net income conversion ratio of 134%.
Cash and equivalents were $1.6 billion with long-term debt at $2.9 billion and shareowners’ equity at $11.2 billion.
During the third quarter of 2009, the Company signed a definitive agreement with MDS Inc. to acquire the Analytical Technologies division of MDS, which includes a 50% ownership position in Applied Biosystems/MDS Sciex joint venture (“AB SCIEX”) and a 100% ownership position in the former Molecular Devices Corporation.
In a separate, but related transaction, the Company also signed a definitive agreement with Life Technologies Corporation to acquire the remaining 50% ownership position in AB SCIEX. AB SCIEX is a leading designer and manufacturer of mass spectrometers, highly sensitive and sophisticated instruments used by researchers and clinicians to identify and quantify specific molecules in complex samples.
Danaher Corporation, together with its subsidiaries, designs, manufactures, and markets professional, medical, industrial, commercial, and consumer products, primarily in the United States, Europe, and Asia. Driven by a foundation provided by the Danaher Business System, it has 50,000 associates serving customers in more than 125 countries. Major competitors are Emerson Electric Company (EMR) and Johnson Controls Inc (JCI).
We currently have a Neutral recommendation on DHR.
Read the full analyst report on “DHR”
Read the full analyst report on “EMR. JCI”
Zacks Investment Research
