The Quarter that Was
Danaher delivered a fourth quarter that was solid, though not spectacular. Revenue rose 15% as reported, with "core revenue" (Danaher's word for organic) up 13%. Revenue growth was led by the test and measurement segment, which delivered 24%, while the industrial segment was hardly pokey at over 15% growth. Dental and environmental were the laggards this time around, with growth a bit above 7% and 8%, respectively.
Margins were something more of a good news/bad news story. Gross margin jumped about 500 basis points from last year, but there was a general expectation among analysts that this would be good. Operating performance was where things were arguably a bit disappointing. Though the company did report good year-on-year operating income growth (and margin expansion), profitability contracted a bit on a sequential basis. The contraction does not seem to be significant enough to be a real source of worry (quarter-to-quarter volatility in restructuring charges can move this number), but it is something for investors to watch. (For more, see The Bottom Line On Margins.)
The Road Ahead
Danaher would seem to be holding a good hand for this phase of the economy, as some slowdowns in industrial might create better growth in life sciences and/or environmental. Thinking more broadly, while there is some argument about which industries are "early phase," "mid phase" or "late phase," Danaher nevertheless looks to have a good spread across these categories.
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