Danaher Corporation DHR reported adjusted earnings of 93 cents a share for first-quarter 2015, in line with the Zacks Consensus Estimate. However, adjusted earnings increased 2.2% over the prior-year figure of 91 cents per share.
On a GAAP basis, the company’s first-quarter 2015 earnings came in at 79 cents per share, down 2.5% year over year.
Inside the Headlines
Danaher reported total sales of $4,873.3 million, an increase of 4.5% year over year. Also, revenues surpassed the Zacks Consensus Estimate of $4,847 million.
This was largely attributable to increases of 5% and 6% in core and inorganic revenues, respectively, on a year-over-year basis. This was, however, partially offset by an unfavorable currency translation effect of 6.5%.
On the other hand, Danaher’s operating margin dipped to 15.9% from 16.9% in the comparable quarter a year ago.
Revenues in the Test & Measurement segment declined 1.5% year over year to $858 million. Operating margin for the segment fell 220 basis points (bps) to 19.9%. Fall in operating margin could be mainly attributed to falling core revenue that was partially offset by acquisition charges.
Revenues in the Environmental segment were up 7% to $823 million. The segment reported an operating margin of 19.5%, up 60 bps from the prior-year quarter. Strong growth in core revenue mainly attributed to the improvement of operating margin.
Life Sciences and Diagnostics revenues were up 2% year over year to $1,696 million. Operating margin for the quarter decreased 50 bps to 12.7%. Fall in operating margin was mainly attributable to acquisition related charges.
Revenues from the Dental segment grew 30% year over year to $662 million. However, the operating margin dropped 570 bps to 9.1%. Acquisition related charges particularly in relation to the Nobel Biocare acquisition had mainly exacerbated the fall in operating margin.
In the Industrial Technologies segment, revenues slipped 2.5% to $835 million, while the operating margin rose 210 bps to 24.6% on a year-over-year basis. Strong rise in core revenue growth mainly supplemented the operating margin growth.
Liquidity
Danaher exited the quarter with cash and equivalents of $2,511.0 million versus $3,005.6 million as on Dec 31, 2014. The company had long-term debt of $ $3,053.8 million on Apr 03, 2015, compared with $3,401.5 million as on Dec 31, 2014.
Guidance
Danaher expects second-quarter 2015 adjusted earnings per share in the range of $1.01 to $1.05. The Zacks Consensus Estimate for the same, which stands at $1.08, is well above this range and may witness a downward revision.
Also, Danaher expects 2015 adjusted earnings per share within $4.23 to $4.33. This also stands below the Zacks Consensus Estimate for the same, which is pegged at $4.36.
Our View
Danaher’s business model remains its strength, despite major headwinds like currency fluctuations and uncertain macroeconomic environment. We believe strategic acquisitions and impressive performance of the dental markets will continue to act as key drivers of growth, going forward.
Danaher currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Carlisle Companies Inc. CSL, Compass Diversified Holdings CODI and Icahn Enterprises, L.P. IEP, all carrying a Zacks Rank #2 (Buy).
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