Danaher Conference Call - Q3 2024
Danaher Conference Call - Q3 2024
Main Takes and Thoughts
Hello, reader!
Danaher just released its Q3 2024 earnings. I listened to their Conference call and noted down some interesting takes and thoughts.
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Financial Performance
Danaher reported $5.8B in revenue, with core revenue growth eking out a modest 0.5%. EPS stood at $1.71, flat Y/Y. 🟡
Despite this, company’s ability to generate cash is worth noting—$1.2B in FCF for Q3 and a total of $3.8b YTD, and a 135% cash conversion rate. They continue to keep its financial engine running strong, even with challenges in certain areas 🟢
Biotechnology
Segment had its ups and downs. Core revenue remained flat y/y, with bioprocessing up only by low single digits and other areas like discovery and medical business down in the high single digits. But there's light at the end of the tunnel: Danaher has seen five straight quarters of sequential order growth, with bioprocessing orders climbing at a high single-digit rate. 🟡
China remains a sore spot, with orders declining as businesses play it safe and conserve capital. This isn’t a quick fix, but they are optimistic, expecting core revenue to grow in high single digits by Q4. If momentum holds, the company is well-positioned for a gradual recovery 🟠
Life Sciences
Segment took a hit, with core revs -2%. But Consumables and services keeping it together, while capital equipment sales lagged, particularly in China. 🟠
BUT they are heavily investing in innovation, introducing products like the Cydem VT, an automated cell culture system designed to streamline complex lab processes. So, pushing to stay competitive in the long-term. 🟢
Plus, they’ve completed acquisition of Genedata, which develops enterprise software for drug discovery. They are betting on it to fast-track R&D for its customers and further differentiate itself. 🟢
On the genomics side, revs slipped a bit. But launch of Rapid Genes looking pretty good —it allows to conduct high-throughput experiments more quickly and less costs.
Diagnostics
Shining here. Core revs +5%, led by Cepheid. Demand for respiratory diagnostics— for COVID-19, Flu A, Flu B, and RSV—doubling the initial forecasted revenue. 🟢
Non-respiratory assays also showing strength, with Group A Strep and sexual health diagnostics. 🟢
Geographical Performance
North America and Western Europe, saw low single-digit growth as markets stabilized. 🟡
But in China, the company continues to struggle. Core revs dipped by mid-single digits. Government stimulus measures have yet to deliver some boost. Many companies still waiting for clarity. 🟠
🧠 Outlook and Thoughts
For the rest of 2024, they’re sticking to the previous guidance of a low single-digit revenue decline and an adjusted operating margin of 29%.
As for Q4, core revenue is expected to dip slightly, but with good operating margin of 30%.
They are playing the long game. Despite some near-term struggles, especially in China and bioprocessing, the company remains positive on its long-term growth prospects —with innovative products, steady R&D investments, and a strategic focus on key segments like diagnostics gives them the confidence to ride out the storm.
Where do I think we go from here?
China still looms, especially in life sciences and equipment. The delayed impact of stimulus programs could drag into next year.
On the bioprocessing front, there’s a clearer path forward. Large pharma and biopharma customers are finding their footing again, but smaller biotech firms are still cautious with their spending. It’s a game of patience, but Danaher is banking on gradual recovery here too.
They are innovating which is key long-term. With Cydem VT, Rapid Genes and Genedata acquisition, they’re proving themselves and to their customer. And With continued R&D investments, it’s not just about surviving but thriving in the long run to maintain their leading position, and expanding it in some segments.
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