Danaher Corporation’s second-quarter 2024 adjusted earnings, excluding non-recurring items of 50 cents, were $1.72 per share, beating the Zacks Consensus Estimate of $1.57. Bottom line earnings declined 0.6% year over year.
Danaher’s net sales were $5.7 billion, beating the consensus estimate of $5.6 billion, but the metric was down 3% from a year ago due to lower core sales in its biotechnology division.
Organic sales decreased 3.5%. Acquisitions positively impacted quarterly sales by 2%, while the unfavorable impact of foreign currency translation reduced sales by 1.5%.
Segment Discussion
On September 30, 2023, Danaher completed the separation of its Environmental and Applied Solutions division and currently operates through the following business segments:
Life Sciences revenue was $1.8 billion, down 1.5% year over year. We expected Life Sciences revenue to be $1.8 billion. Core sales were down 5.5% year over year. Acquisitions/divestments increased sales 6%. Operating income was $233 million, down 31.5% year over year.
Diagnostics segment revenues totaled $2.3 billion, up 1.5% year over year. Quarterly revenues were expected to be $2.2 billion. Core sales increased 3% year over year. Foreign exchange had a negative impact of 1.5%. Operating income was $556 million, up 31.1% year over year.
Biotechnology segment revenues totaled $1.7 billion, down 7% year over year. The quarterly outlook was $1.6 billion. Core sales for the segment were down 9%. Operating income was $462 million, down 3.8% year over year.
Danaher Stock Price, Consensus, and EPS Surprise
Danaher Corporation Consensus EPS Surprise Chart | Danaher Corporation Stock Price
Margin Profile
Danaher’s cost of sales increased 10.8% year over year to $2.3 billion in the second quarter. Gross profit was $3.4 billion, up 3.3% year over year. Gross margin was 59.7% in the second quarter, up from 56.1% in the same period last year.
Selling, general and administrative expenses were $1.9 billion, up 4.2% from 2016. Research and development expenses were $391 million, up 8.3% from 2016.
Danaher’s operating profit increased 0.4% to $1.2 billion compared to the same period last year. Operating margin improved to 20.3% from 19.7% in the same period last year.
Balance Sheet and Cash Flow
As of the end of the second quarter, DHR had cash and cash equivalents of $2.4 billion, down compared to $5.9 billion at the end of 2023. Long-term debt was $16.3 billion at the end of the quarter, down compared to $16.7 billion at the end of December 2023.
Danaher generated net cash from operations of $3.2 billion in the first half of 2024, down compared to $3.9 billion in the same period last year. Capital expenditures in the same period were $578 million, down 2.9% year over year. Adjusted free cash flow for the first half of 2024 was $1.1 billion.
In the first half of 2024, DHR paid out dividends of $377 million, up about 10.7% year over year.
The story continues
Outlook
Danaher expects its adjusted core earnings from continuing operations in the third quarter of 2024 to decline low single digits compared to the prior year.
A similar low single-digit decrease is expected in 2024 compared to the previous year.
Zacks Rank and Stocks to Consider
Danaher currently has a Zacks Rank #4 (Sell).
Some of the top-ranked companies in the conglomerates sector are listed below.
PDD Holdings Inc. PDD currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The average earnings estimate for the past four quarters has been 45.6%. Over the past 60 days, the Zacks Consensus Estimate for PDD’s earnings for fiscal 2024 has increased 1.2%. PDD Holdings shares have risen 70.3% over the past year.
Carlisle Companies Incorporated CSL currently has a Zacks Rank #2 (Buy) and its average earnings surprise over the past four quarters is 17%.
The consensus estimate for CSL’s 2024 earnings has increased 0.5% over the past 60 days. Carlyle’s shares have risen 60.2% over the past year.
Gryphon Corporation GFF currently sports a Zacks Rank #1. Over the past four quarters, the average earnings surprise has been 33.5%.
Over the past 60 days, the Zacks Consensus Estimate for GFF’s earnings in 2024 has increased 4.2%. Shares have risen 70.6% over the past year.
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