Danaher Beats; Lowers Outlook (DHR)

Danaher Corporation (DHR) reported its second-quarter fiscal 2012 results with GAAP earnings of 84 cents a share, which was 5% above the Zacks Consensus Estimate of 80 cents. GAAP earnings were also up 31.3% year over year compared to 64 cents a share reported during the second quarter of fiscal 2011.

On a non-GAAP basis earnings were 81 cents (excluding a $0.03 benefit from lower than anticipated income tax rate as well as a gain from resolving a contingency related to a prior asset disposal) which was just a penny above the Zacks Consensus Estimate. Non-GAAP earnings were up 27% year over year.

Profits were primarily driven by improved shipments and strong orders during the quarter.

Revenue

For the second quarter, the company generated sales of $4.6 billion, an increase of 25.0% year over year. Core revenue for the quarter was up 3.5%. The acquisition of Beckman Coulter increased revenues by 25.0% for the quarter, while the unfavorable impact of acquisitions reduced sales by 3.5%. Danaher continues to benefit from product innovations and its go-to-market initiatives. Revenues were in line with the Zacks Consensus Estimate.

Margin

For the second quarter, gross margin contracted 20 basis points to 51.72% on a year over year basis, while the Operating margin in the quarter expanded 103 basis points to 17.8% year over year.

Outlook

Concurrent with the earnings release, management lowered its guidance for fiscal 2012 driven by weak economic outlook. The Company expects annual earnings to be in the range of $3.19 to $3.26 from a previous range of $3.25 to $3.35. The lowered guidance also reflects the expected negative currency impact from the recent strengthening of the U.S. dollar and the company's plan to accelerate its restructuring activities. Restructuring activities are expected to result in a full year cost of approximately $100 million.

For the third quarter of 2012, the company expects earnings to be in the range of $0.74 to $0.79 a share.

Danaher currently has a Zacks Rank #3 which implies short term ‘Hold’ rating on the stock

(The company provided limited information in the press release, so details for the quarter will not be available until it has its conference call later today.)

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