Danaher (DHR) Tops on Q4 Earnings, Suffers From Cost Woes

In This Article:

Danaher Corporation DHR has reported impressive results for the fourth quarter of 2021. The company’s earnings surpassed the Zacks Consensus Estimate by 7.6%. Its sales beat in the quarter was 4.38%.

In the reported quarter, the company’s adjusted earnings were $2.69 per share, surpassing the Zacks Consensus Estimate of $2.50. The bottom line increased 29.3% from the year-ago quarter’s figure of $2.08, mainly on sales growth and an improved margin profile. High costs and expenses played spoilsports in the quarter.

For 2021, the company’s adjusted earnings were $10.05 per share, increasing 59.3% from the previous year’s figure of $6.31. Also, the bottom line surpassed the Zacks Consensus estimate of $9.86.

Revenue Details

In the quarter under review, the company’s net sales were $8,148 million, reflecting year-over-year growth of 20.5%. Results were driven by solid segmental performances. Organic sales in the quarter increased 19.5% and acquisitions/divestments boosted sales by 2%. Foreign-currency translations left an adverse impact of 1% on the quarterly sales.

The pandemic-induced demand for products boosted sales by 9.5% and base business core sales (excludes the impacts of COVID-19 testing revenues) growth was 10% in the quarter. The company’s top line surpassed the Zacks Consensus Estimate of $7,806 million.

It reports net sales under three segments, namely Life Sciences, Diagnostics and Environmental & Applied Solutions. The segmental information is briefly discussed below:

Revenues for the Life Sciences segment totaled $4,046 million, rising 20.5% year over year. Acquisitions/divestments contributed 4.5% to sales growth, while foreign-currency translations lowered sales by 1%. Core sales grew 17% year over year.

Revenues in the Diagnostics segment grossed $2,881 million, increasing 29.4% year over year. The improvement came on the back of a 29% rise in core sales and a 1% gain from acquisitions. Foreign currency translation had an adverse impact of 0.5%.

Revenues in the Environmental & Applied Solutions segment totaled $1,221 million, up 4.2% year over year. Core sales expanded 7.5% and foreign currency translation had a negative impact of 0.5%. Acquisitions lowered sales by 3%.

For 2021, the company’s revenues totaled $29.5 billion, reflecting an increase of 32.2% from the previous year. Also, the top line surpassed the Zacks Consensus Estimate of $29.1 billion.

Margin Profile

In the quarter under review, Danaher’s cost of sales increased 14.2% year over year to $3,205 million. It represented 39.3% of net sales compared with 41.5% in the year-ago quarter. The gross profit of $4,943 million grew 25% year over year, while the margin increased 220 basis points (bps) year over year to 60.7%.

Selling, general and administrative expenses of $2,294 million witnessed a year-over-year increase of 17.2%. As a percentage of net sales, it represented 28.2% compared with 29% in the year-ago quarter. Research and development expenses were $495 million, which increased 25% year over year. It represented 6.1% of net sales compared with 5.9% in the year-ago quarter.

Operating income in the quarter under review increased 34.3% year over year to $2,154 million. The operating margin increased 270 bps to 26.4% in the quarter. Interest expenses in the quarter totaled $56 million, down 22.2% from the year-ago quarter.