Earnings call transcript Q1 2023

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Operator

My name is Ashley and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation’s First Quarter 2023 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. your begin may you conference. Bedford,

John Bedford

Executive Good Thank and joining Blair, Chief and McGrew, Chief for Financial Officer. everyone on you, our Executive the President and Rainer Ashley. us are call. thanks today Matt morning, With Vice and Officer; President our us

heading are I’d like any SEC by call earnings our Investors during Regulation of relating to that out our this financial the our call. release, supplementing measures presentation the A archived website required be be will The X, will slide to the Events other available Quarterly of and under next on call quarterly information point non-GAAP section XXXX. provided also today www.danaher.com, today’s website, the and Earnings. our until on the heading all reconciliations the audio and this G call call of under available archived of later section replay until and portion the May Investors Presentations will remain

describe year-over-year During impacted that and pending markets. or in to materials metrics that the and factors these certain references only XXXX presentation, we references and noted, of describe additional in We to The quarter company-specific certain of year-over-year all first materials regulatory performance. the impacted financial available to relate decreases period-to-period remarks approvals more Unless supplemental are otherwise certain factors performance. supplemental significant metrics also certain for all the have financial products submitted will which applications increases describe in or may year-over-year. are and devices

uncertainties believe anticipate subject forward-looking those future. including securities set in occur developments meaning will will of and statements, During they statements are or or including to of of within These any federal or statements in make materially may we that events regarding filings we we the risks do not law. only number the that are made the call, that statements obligation statements a statements speak as laws, results to make as SEC forward-looking the forward-looking and might forward-looking forth from any required date assume our any except These by forward-looking we actual differ and today. update the

that, the With to Rainer. turn to call over I’d like

Rainer Blair

appreciate good today. the on and morning John us everyone. We you, you joining Thank call

to we a year. had So good start the

team flow. environment deliver a navigated Our successfully to revenue dynamic better-than-expected and operating earnings cash

We are grew first of which quarter. base X% especially with pleased the strength in the business, our

Now across the the progressed largely portfolio, we as quarter anticipated.

global of to availability disciplined inflationary Our helped chain growth Strong cadence offset improved and supply price continue component pressures our investments. us and enabled management has realization stabilized sequentially. cost

believe execution of share So paired investments DBS-driven this we these with contributed quarter. again many businesses market gains to our in

weeks of of levels the to A XX senior With X our prime which Danaher companies. continuous most DBS we of ago. Kaizen, kicked example improvement our of off as over event, our power this commitment are leaders at at joining CEO associates the and all XXX operating

group. lead DBS. improving We significant our The change the and filter are to CEO biotechnology in throughput including across advantage lasting come opportunity competitive at for further for is transformative focusing Aldevron terrific drive and opportunities best-in-class our reducing our resin on together another the Kaizen just and through teams most times businesses,

team to these we I contribute be to here in wrap will joining resin Cytiva once fact, up In facility Sweden, today, the our Uppsala, efforts. at

exceptional attractive positioning drivers. serving leading unique Danaher’s of group have franchises end We secular results our Now also an markets growth with durable of portfolio. just reflect the

differentiates long-term businesses strong to our strength financial talented and enhance disciplined of with and M&A. team, us competitive powerful both our the reinforces and leading the optionality our Danaher provides This sustainable balance our Additionally, combination position, organically through sheet of advantage. portfolio

first to that, turn quarter billion the were Sales declined in quarter X%. results. with $X.X revenue first our let’s and So core

X% delivered in in with we earlier, high quarter. our the of base better up four mentioned core I single-digits three reporting or as business revenue segments, our growth So

of approximately low single-digit lower with revenues life markets driven than Results in markets were core by revenues. single-digits, decline testing a environment. favorable were COVID-XX XX%. in China better research COVID-XX revenues low Geographically, single-digits, a primarily headwind High-growth in a a expected quicker-than-anticipated a as science up developed were declined diagnostic China. in funding result more of mid recovery and

positive these the through as year. trends continue expect we move We to

for first margin quarter the profit XX%. gross was Our

the common basis diagnostics points share the Our and of operating our of cash net $X.X XX% volume we earnings Adjusted $X.XX and billion was margin per free were to COVID of generated lower impact primarily XXX in biotechnology quarter. down due businesses. in diluted flow

single-digits some let’s in Biotechnology look down portfolio seeing the color customers, therapies steadily Reported a demand the large on end quarter. clinical in segment our growth are XX% later-stage Flying revenue and robust primarily are our our closer remains commercial XX%. our and they take In was you low give of we through and built inventory responsible what they pandemic. were our with first across and the in at markets at production Now, line core core trials base in today. was working revenue results business for revenue declined in expectations during bioprocessing,

normalization we through recent year. the inventory continue most second customer expect Based of to the on conversations, process now half our the

at and funding softer During pronounced the project more delays cancellations. biotech many also efforts demand leading to globally their as capital quarter, accelerated conserve emerging our to customers liquidity of saw on pressures we and

and said pandemic-related first development In year changed ahead core our quarter not of genomic The is of these the for consideration and in quarter. largely higher we in bioprocessing opportunity be have factors, growth history. any business franchise. number medicines market second anticipate base the with biologic bioprocessing at will tremendous biologics dislocations of in in leading assessment and these short-term That our than full meaningfully point consistent the

there fact, in trials. under development, clinical biologic XXX including than X thousands are In of currently therapies more Phase

strides addressing significant in population. of making diseases are that segments customers large our therapies, these affect With the

and in the treatment are field diabetes improving monoclonal and blockbuster also of outcomes approval. conjugates are research meaningfully developments GLP-Xs promising cancer. are for antibody novel many we obesity nearing of have for Alzheimer’s antibodies And seeing treatment where several regulatory drug types For example, become

Now last more customers over our VL’s and they innovation to best years. customers improve accelerating and market breakthroughs, antibodies Cytiva is efficiently. reduced recently finding MabSelect new been several ligand capacity aimed pipeline biotechnology just the and to pursue improved more these from investments the efficient, faster life-changing therapies solutions The industrial stability scale team’s alkaline VL, and team the biotechnology costs. more as resin of project life-saving best-in-class for and support decrease our bispecific a purification our This customers manufacturing innovative yields, and has bioburden antibody fragments. helping introduced makes bring at MabSelect helping one

to Turning and base business. X.X% Life our segment, was revenue Sciences core revenue X%, up reported in growth our including single-digit grew high

growth, collectively Leica for Sciences SCIEX markets. such delivered and remains and core revenue consistent our advanced remained strong, most single-digit funnels major sales mid with Mica. Life Microsystems, notably Funding The geographies instruments expectations. Our the ZenoTOFXXXX and as businesses for levels innovations demand solutions end our healthy across recent

in business sequencing editing quarter Our for genomics had proteins plasmids, declines next-generation research. writing another solutions Robust and offset growth. and by demand consumables of gene core double-digit basic base revenue partially and was business

be streamlined brought mRNA new drug and the value drug release Aldevron across to are from example later is to even customers quarter, from offering This offerings and development, customers. available this for we great of capabilities to offering create our integrating product. a greater differentiated year how solutions of Precision deliver Danaher create Cytiva the During and substance a and together production to and will Nanosystems

declined reported growth lower core declined by at segment, in base Diagnostics with X.X% Moving CES. to COVID-related revenue XX% business, our revenue volumes and testing our offset respiratory double-digit

collectively growth healthy and core globally. revenue Our single-digit clinical delivered saw market diagnostics mid volumes businesses

strong mid staining core Leica Radiometer, China growth. blood developed and testing single-digit gas and digital At Diagnostics Beckman deliver across exceed in Strength advanced drove markets for Coulter single-digits, and pathology. core enabled grew led demand mid expectations Biosystems China growth. to double-digit by

strength Molecular testing. test across broad-based Cepheid’s core non-respiratory more XX% menu On drove growth in Diagnostics, than

leading the the menu. by customers workflow testing growth GeneXpert quarter. infectious in increased advantages, ways than disease first As the our are delivered Cepheid look market helped for capitalize menu increasingly additional utilization XX% customers testing, COVID-related our our in test for more to drive they from adding assays This on

which We momentum for good to testing. also nearly MVP, recently health growth sexual saw contributed XX% our in Xpress introduced panel, the Xpert vaginitis

the PCO respiratory COVID-related their to In testing, onto customers transitioning throughput point high testing consolidating of and GeneXpert. the testing platforms continued care point-of-care

and testing of both X-in-X for the respiratory A and and in our $XXX test expectation revenue approximately RSV. higher result, was a driven million. $XXX our million Flu preference B the This volumes Cepheid’s of quarter COVID-XX, by for As exceeded

for revenue $XX We respiratory continue expect the year. approximately $X.X of million and full tests billion to

accurate strong combination lab significant results value testament the are a and fast, quality and the results workflow best-in-class unique Cepheid’s to provides clinicians. of

base growing help years for come. meet global and adoption positioned leading molecular market we share the to their Given and gaining to Cepheid’s of the diagnostic on well testing test menu customers needs are continue market, installed broadest

In Moving growth, segment, was grew high-margin This low grew provide industrial core double-digits consumables, the business revenue recurring solutions for to product fourth both our Environmental revenue of up quarter was Hach markets. X% ChemTreat was model quality the make X.X%. equipment water consecutive mission-critical operations. of day-to-day identification revenue and quarter. the consecutive and Strength support performance single-digits. water the up up double-digits eighth water double-digit and & low our broad-based Solutions quality in our up Applied reported revenue their of highlights value was across delivered and significant particularly quality, Water and customers’ resilience in that end core

difficult management single-digits marking packaging grew up year. At essentially high comparison up in QX while last despite color was Videojet flat, as low coding single-digits was and was Product single-digits. Identification, business a low and the year-over-year

Videojet. Our of healthy driving growth are new innovation at investments a product cadence

pigmented released ADC degradation helping soft solution. the fact, in ADC XX reduce industry’s inks first consistent the quality, team March, avoid contrast runs, strong the continuous with pigmented soft downtime. printer fading and print durability dedicated inkjet excellent production to uses The codes during customers In and to XX production

is customers. the product year has So impactful of first a example teams several are bringing the Videojet to great new is introductions how solutions planned this our and for of our

they team, And are be public February, fourth that forward our in to becoming is track will towards Massachusetts. our segment named in and will applied headquartered separately coming progress an separation the as company look Waltham, we and launched on XXXX This stand-alone we months. for a is quarter details for and exciting making remain it when the a traded company. more announced environmental and it that be considerable sharing In milestone Veralto,

up the mid-single second revenue full year. expect look the to briefly and quarter in the let’s now be core digits. So business In our base ahead we second expectations our to for quarter,

also total vaccine lower We result decline as of single a revenue demand to expect digits COVID-XX core for high therapeutics. testing, and

capacity Additionally, to operating which state, a approximately and efforts second Diagnostics cost businesses. particularly margin response an to and adjusted quarter Biotechnology COVID our adjust profit transitioning endemic our and structure we in to within expect of XX% reflects

XXXX. near-term Now challenges mid-single-digit the year and core in we turning our Despite bioprocessing, base anticipate to temporary growth the full within business.

We demand total lower of revenue testing single also year therapeutics. to result and digits high decline for expect vaccines core for the COVID-XX as a

Additionally, we reflects to cost approximately efforts year transitioning in our endemic an which capacity mentioned margin the XX% adjusted operating full expect response of structure state. to a and to and COVID-XX adjust profit previously

up. wrap to So

results. our first We’re quarter strong with pleased

of team’s with positioning is the balanced our to executing well-rounded and Business and and portfolio System. Danaher Our performance testament our a commitment the to leading durability

better, COVID-XX While near-term shake endemic disruption, past company. an years the stronger from causing the Danaher that have a pandemic doubt X state there helped is of a to no is into transition

of We’ve our bioprocessing increased the of significantly group with strategically of the competitive the changed innovation through acquisition cadence advantage. Cytiva accelerate to trajectory. biotechnology their and our scale Cepheid’s installed meaningfully of improved and base of addition growth We the Aldevron deployed expanded capital and future the including business, creation M&A, that also our

the by provide our value for differentiated talented future of many foundation balance create portfolio Business all us years of strong bright ahead team, businesses a is the to Danaher, combination Danaher there sheet, strong and with to a come. for System powered So

And with I’ll the call that, turn back to so over John.

John Bedford

comments. Thank you, concludes our formal Rainer. That

now are for questions. we Ashley, ready

Operator

will go We first our from Please Michael Instructions] with Bank America. question [Operator take ahead. of Ryskin

John Bedford

Michael. morning, Good

Michael Ryskin

the questions, Thanks for morning. taking guys. Good

want First, to challenges. the inventory I bioprocessing on start

for Why not this is single how issue times. year now a the had full year the further dealing almost with is right visibility the of fiscal there cuts And road? revise inventory challenging? that so been do is a view you’ve latest number and know you outlook You’ve going this is plus view digits the lower for and to low ‘XX down for there year your into of

Rainer Blair

way solid. COVID choppy to tailwinds I has soft we And on very a me to drive that’s Thanks, factors tell has in normally, Michael. the growth. fueled last of up has the more to Look, the months visibility impacted. you try our And as here let lay you XX like some number X it But been so visibility been to that been undoubtedly, And of factors. those is quarters, probably have we related X would now months here, as Michael. of X out for visibility that landing that

starting of the with first Sort quarter.

at production unpack growing later-stage digits. about growth points, in our there, business So in mid-single the are And and for that commercial XXX quarter, bioprocessing the grew accounts trials first clinical if base large are basis you X%. responsible

come So and that trial they those have in business of emerging then to down And earlier-stage to involved you XX% inventory. back I’ll are are about represent companies discovery clinical XX% mid-teens. they are that. phases, And biotech which burning our and sort of and more off

this view growth the single-digit for us is sort what overall, to So of low this gets year.

some the larger conserve come well expected. that own is that for We second. for pharma the back fact, off, And let and companies slower start cash. that replan to a accounts is just larger than in demand to And it working starting see in but that, see plans we biopharma capital also inventory their me saw larger of CDMOs back is Now the large burning is as they the reason we’re and there, XXXX. here as to production recalibrate as in

you those well. starting to inventories their So also if we’re at as will, seeing look bring larger down own to goods, customers adjust and plans in their production finished order

for, emerging that and the second So it, of But over There again, significantly those discovery pronounced working prior year. first biotech, became to, more we here observing headwinds in earlier call companies are if stage. have since you been the – the then so in transition funding headwinds funding the half quarter. more

And accounts segment. and to layoffs prioritizing see so just of a seeing that’s in in with expenditures, the U.S. see not conserve projects. these lower also particular CapEx cash happening we’re that We looking number And OpEx by happening that

that We China. happening also see in

worse, of that out for And so we’re assuming get this doesn’t that but to of that here, barring it any continues other sort year. play significantly remainder the wildcards the

Matt McGrew

a Mike, Maybe to it, in context we think little the mentioned bit around where buckets. of kind we kind the it’s Rainer important Matt. kind think know of January about of up. to you give but of could of to January sort guide I it’s I two it in ended

Phase or those larger be market. got, So is that call of, that that, growth we’ve most biotech we’ve the from – high going got kind was their of on our sort to it, larger In the stuff of clinical customers. assumption January, X single-digit was customers

thought January, kind sort growing at referring other that kind technically we and have customers in about our of of year. everything growth. see growth piece XX% is of all XX%, high the we’re kind to X%, there so customers you for single-digit double biotech, in of been we as were that customers, of of going that of X%. we remaining add not to emerging digits would probably but low the to or up emerging, which that XX% low the was the thought of the teens going be that here So And to And kind then

QX think the and that we what of of be types build saw QX of about those that QX not need frankly, as we to to Like what year. just, was Rainer in would numbers hit full able we for in kind said, ramp supportive

cash. being emerging think so of change of up about And seeing with is have as kind projects, entered I’d looking nicely, April, about mid-single right? And as And being X%, if And and happened now the still you now And XX%. here those more are the saw say China XX%, those they the what mid-teens, in of but instead pronounced that big reprioritizing comes large we’re as both down actually think more at and through and move headwinds to we mid-teens they another it been conserving well. talked really people the probably instead in this in are U.S. it we saw customers we Rainer that everything growing just biotech, digits, back X%, modest That year. I we quarter.

So – just Reiner maybe what as a put said. some to to numbers

Rainer Blair

a second second that just just support to now that. significant see seeing the degree and to the activity would And increasing And not to then level ramp, start that half we’re to we it support reiterate, quarter. would in

Michael Ryskin

on as to in across emerging And biotech, really maybe life Thanks. in seeing the that on well? Are question that softness I just then a hope you bioprocessing the to specifically the clarify. or instrument. transition could Okay. segment sciences And

expectation You instruments saw first call mid-single-digit in quarter. the can of you What’s particular or for strength your rest Any or growth weakness in of year? out? the pockets the X% growth

Matt McGrew

comment on The bioprocessing seeing tools. is the broadly speaking, what we’re I’ll let talk in and Yes, maybe about answer yes. Rainer

space have both. it area. seeing in biotech seen say revenue. I say funding we’re sciences of say the would as the obviously, that well. is I definitely lesser portion, bioprocessing would in pressures We’re or that it here I we in in emerging would the a life tool seeing our

seeing on customers say an OpEx. spaces and yes, as big are cash quite those seeing would we of conserving not impact. CapEx – it’s we both in I So But are

Michael Ryskin

thanks. Okay,

Rainer Blair

So first the here Life on generally Sciences Michael, your question. more to

at sciences growth those the previously over we expected the elevated years. for after life the last single based we X digits thought low we’ve of normalization X after finished last double-digit that rates if growth years. about here at And having seen talked business the growth QX, So high average look as

that’s So right our within expectations.

environment, saw and in and bit you Europe a the still little from was America China, look in digits fact, smaller that market And current was of buying they impacted North spending dots in starting some if commentary given quite back perspective, end Matt’s pharma double healthy segments, but higher biotech at places, differentiated the and you will, levels by moderate And so Life we If R&D just on look than and just see six, there. instruments four are very to the rather impacted Western funding comps. connecting you the here, are emerging large less stimulus other softer. to geographically, is now purchases, in strength let’s we say. Sciences, an if the up at really

are we then exposed business sciences. up So science at life is see our academic to globally in seeing life segment life margin. in the we as own it but that And is research do not holding and for well sciences

continue not expectations. growth our to to what ‘XX, we believe reflects. And that’s in moderate So historical a our and to rates change any previous value the levels that’s

Michael Ryskin

will queue. the Okay, in thanks. get back I

Rainer Blair

Thank you.

Operator

you. Thank

from Kumar Please We ahead. go will with question take next ISI. Evercore our Vijay

Vijay Kumar

question. guys. congrats on… for taking And Thanks Hey, my

Rainer Blair

Hi, Vijay.

Vijay Kumar

Rainer. And guidance Hi, congrats here, question on I start high-level year. guess, on the a the a good to Rainer. just

I point with were a are the risk line dearest for the Is X it perspective? So QX we changes. of guidance us perhaps process mean, here? this now on – in be at from looking some a was industry. behind is year? back confident half that’s Are guidance where assuming just your I QX. – And color bioprocessing All half assuming ago, in here comments on emerging give low now thought this we’re given the months go that normalization the us back small biotech, we because back if

Rainer Blair

levels said reasons. market our just we’re which the in half. on guide So would in Vijay, about those will first need softer, Also minute order see second a And we doing book. half, are have margin, say play any biotech QX. us like here based case quite ago, bit the larger the down And environment, is other as market I a inventory, that has. we view quarter significant we of on current that’s taking and on although higher unless different to well time talked second accounts what two nicely. factors One, basing QX I seeing just in order out for about. to the little through together is the not they year activity burn And talked significantly a support then for that as mid-teens our to And mean, I the disruption emerging sort are there as much the believe the more as we’re

Vijay Kumar

just Cepheid – was one Understood. on XX% here, a And bright then growth. spot

on you I during think that seeing really comments you new related being into that think one Danaher some growth is on that this color infectious customers just Cepheid disease, lens should the XX% getting to bought be that – Are us I us made on M&A, and some some about here test Danaher how in the the M&A interested remind give of trying in pipeline? customers sort just testing a processes criteria on Can Danaher pandemic, M&A am sustainable Would services? strong. side. ramp? different Or chatter are about these the maybe how system

Rainer Blair

Sure.

infectious usage the menu. seeing broad-based So disease we’re question, Vijay, really on of Cepheid a the

both general, as with to menu. been as full COVID our for there our some fact, take that’s at start transitioning they menu in that have newer they broader capacity of installed that base existing as In that testing well customers our time advantage

expanded good see see of that transitioning from the the environment how high see of of testing here. marker workflow one usage into use hand. two One, people on menu. the point accuracy other hand, XX% the care throughput seeing on we we the And of Remember, a we’re the as the our test platform. we appreciate and advantages, here factors of So ease

Matt McGrew

– to to just I to example maybe put think. Vijay, of a that, Yes, real-life kind

as goes got of both those now And use Xx sort moving And today also COVID kind example, is the if seeing, installed what we’ve we sort one of from growth to Group ways, well. customers got which about X last A that, So the got will right? Strep. to customers we’ve kind other you customers over over four or we’re years. of – here existing for that think you’ve of existing everything then way, to going customers the So are today, base

have what years. You doing right for many they new is primarily menu And many, now which in systems now, have around are they got disease A starting Strep. these used infectious that people largely to were are has bring and menu Group been first, is who new

So, you are kind of having somebody four-and-one, are who used COVID they the A for as box bringing on throughout COVID and Group testing, using Strep it on now And well. stand-alone.

that’s base. and are lower why base off forward, growth year numbers. some go we longer that the about of and then through was able that important helpful still lower because term. have to so as we go talked of are yet, move here. sort the and Early that’s the also And installed forward. seeing installed forward, you But talked next And that’s always pull these menu of larger on assay, of kind there exactly to think going days menu thing be we we That’s got new mean But other it play I being base, the we in are menu, we out I base of be COVID additions is sort of as larger go what anchor type disease, – opportunities now into an encouraging. installed other be to with as will assay we about pull infectious only so the have anchor

Rainer Blair

positioned. I Vijay, like So, we we don’t on But obviously is are on really tell you comment would we what the way chatter. M&A,

one ignore. specifically, there but realism and in just the discussions to as past Our great something And on as customers balance always. of tag is we we the this that’s services, that more board help other have But once have and that one to our many that’s are opportunities. not our the we again, several the perhaps Board on do continue said sheet quite should we see not Valuations in shape. yet, or across in the is moderate, going

our It’s the the market. think execute. are be end lights got model deviate and be remember target to is flip it’s going right green got we the that to not thing that when I approach. those to has from It’s the most important to to three we disciplined work. And right

Matt McGrew

Yes.

kind well. valuation line I we of three as little are like company up, sheet too, is all be having to balance how little go. here, being got as Vijay, think that I get perspective job market we and get think Rainer need ready see here able because are here we here, I ‘XX, I but do think the a not to right flexible, And it’s might this – times things But of all a when in is I now think to mean as like they we as I a think these we ‘XX, have set kind sit those. saying a said, choppier important of as up really I from balance sheet

Vijay Kumar

Thanks Matt.

Rainer Blair

Thanks Vijay.

Operator

our go Melius question take Research. will Please with from next ahead. We Scott Davis

Rainer Blair

Good morning Scott.

Scott Davis

made you your morning. Hey. John and prepared a Rainer, you Good Matt, kind incremental morning to remarks have good Rainer, guys. said cost-out. reference – of in

that this a asked granularity just last you I can of before? COVID gone kind structural attempt that came those have you of after you or now are quarter. us actual out to think in costs an little a temporary couldn’t color or taking during give some there costs more the are of least question some structural perhaps that bit after of about? go – talking of what unnecessary, it on But probably of that some cost-out? I Is at Is there is

Matt McGrew

the the most and – that’s from it. talked is about of that of would going more said, the going an It’s endemic then that to in like and way we is sort making that of known have Yes. And sort as activities of to to into in the we XX. Yes, we be to I that it Cepheid capacity need into moved an some reduction be I bring have crack sort is phase, capacity that you going to all But an is Like importantly, probably Like bioprocessing. places. two – just point sort half of call get half a to twofold, down. volume, Scott, to that think of at always we were we to we were at guide about biotechnology XX and in will moved importantly, have Cepheid. take inflection say endemic prepared the of right. margins going where are once other of previous costs. it been going running point we operating some we the of maybe at adjusted think in our an phase. at And I adjusted were remarks, OP we here

is think we will QX we into of last have now have that and off as months million need. tests, think that clear year, just entered volumes But a couple was months. three think I in really phase so you of the new we of did team I a that And And pretty ago. here respiratory are our XX entering tail only reminder, last seen as I we kind a

the closing what think it’s after to and are I getting that got. that does consolidating going that. of And plants talking we so some And we have some of look about like, be

in term pandemic. those locations of meet quickly trying ideal needs the not we up put were longer to the were of a Some frankly that are for because

to going those a of So, after couple we are get sites.

and overhead we costs then to some reduce after are going etcetera, the indirect shifts, to reducing well, going as of etcetera. fixed go and are headcount We

sort roll are those quarter is be through. here. the see be going going quarter when second the are That’s types in and costs to are going So, things to largely to going we of third you of after the

kind So, little bit. in of XX% then in see do was some through to here, the quarters, they going the sense the XX% two OP said that business, of a and sort capacity of that in with what into we to pandemic those ‘XX, to next to side, peak then what’s heading in in like it you we the QX look probably just going we are Scott, XX%. once are pop XXXX will was margin into during quarters XX% as starting that done kind reduction I to to XX% – a Cepheid head couple back ‘XX, and and we after of on give And in right. in margin, of be maybe the of of like QX you And get I have north think are

what up a it’s leverage, we a meaningfully that now, much a the volume and we we given was trying where where we are So, I peak from have do where going but the sense bigger quite side. after, that to but other at volumes not lot up getting business, we are on what of gives you pandemic of were the end

Scott Davis

what the you is – just I pre-COVID, in That’s super have somewhere, but a helpful, installed where remind versus make Cepheid today Matt. to base I having of know – sure I little us your Can just am easier guys size the their – on...? note

Matt McGrew

like XXXX. about Yes. today. we XX,XXX Xx, Started Scott, probably are

Scott Davis

guys. you, Thank pass will luck Good it on. this year. I Perfect. Alright.

Matt McGrew

Yes.

Rainer Blair

Thanks Scott.

Operator

next from question We our Cowen. go Dan TD ahead. Please with take Brennan will

Rainer Blair

morning Good Dan.

Dan Brennan

Thank guess could I kind to for bioprocess baked gave destock start quick know that you. bio, earlier you we that’s guys. of there And of Good the group you kind up just of low through that, or to certainly Great. the year. we help it’s single to XX% than single bigger guidance? in a and grew that then of assuming get out, magnitude I – color get think you is as a because one what low questions don’t like it Q&A. color just the in Thanks us the if down that thought on the we related for Maybe some to drag math emerging XX%, what morning. think of of segment. a lot it’s improvement kept If for are kind would ‘XX Any in I percentage year? revenues, to of the

Matt McGrew

Yes.

we bit are we digits, and change. really So, way sort that inventory of X% the thought where of would are initially sort seeing maybe X%, – high-single it, it, we was X%, in the the that Dan, lower and a think call little the That again, now, customers that to maybe that’s is drag. about larger – see call it,

expecting and slightly is inventory a in the in think And are lower seeing and full for larger at year. flowing the to through rate it them are the customers, we that QX so I destocking see you growth we saw

that’s the teens So, thought rest low we I type actually is about. that the like frame mid-teens, of biotech XX% be we with and really, that’s The year. we emerging would the all see high-single we here earlier, what That the our that, of is how a would sort get digits. the how larger, is. with would the I destocking that inventory talked talked thought to we rate about sort in customers, of low other negative for Combine right, pressures that teens X% growth

that say year. saw we high-single just the QX, we ability or we book would of have for of of for that to sort will can that I more rest limited rate And mid-single we the the are in at say year digit kind least, frankly, just back being think entirely customer that larger are – to of minds, we in assuming growth the talked we on we going of base the type with customers of, not That’s supportive, about. what our and of that the to sort being assuming order visibility, visibility limited are that for QX be have So, more not I get in the what supportive the like able in digits. based

year, were high you we which mid there to customers year. last saw with in remember, That think line business last of question asked what XXs. I was is you as a those entire what largely up

folks, group So, at sort to on very kind look but mid-teens, sort of of are you with we what basis, of mid X-year seeing now solid a high-XXs still down are now. they that growth a right is of it

Dan Brennan

then somewhere $XXX earnings, for And be the Matt. $XXX may coming on then million the margins are and so year. And thanks of kind million, it. out the we Got

higher put actions ‘XX of the taking – cost what the yourself the top of you comes you kind that in up depending of year, for at? guys in you this line rates leverage, normal wondering than does if And set code? Just are operating potentially the like on kind pieces together. given Is that

Matt McGrew

math Yes. going No, XX% sort adjusted are if at the year, think I OP I the itself. is think of what mean margins, of you I around it that through is full takes care

of and going Cepheid be XX% as through Biotech pre-pandemic, little Again, XXs as I roughly sort kind have what will biotech where mean profile peaked they of at of sort do through high low-XXs. change. we XX% I we think there, sort to more to other think same bit going be. going we look after other XX% the get the math was it are XX% call I XX% like to mean we there and at one of gets far to margin think what XX%. around, up side are plus frame are that about call And pandemic. after to was I was, a peaked probably like the if The to some these it, use is prior it, of we get in I of we costs. diagnostics, that you this. what the get to talked As we sort you of probably

think been get A bit. been kind in a quite ‘XX, not bit margin can slide like. life better COVID be of ‘XX again might a you moved are And business. margins kind plus That a as sciences, So, sense there. minus those were than are fact But have the little pieces, we think they stuff what and ‘XX or then of two that bigger I around what I a that’s we of but the has given they of where look into pre-pandemic should here. that you can had

view. So, just other are probably But with high-level back stuff of for you maybe kind you obviously sort assume LS. low-XXs a that in to Cepheid, very the later, we diagnostics, framework, of early than a pretty in can probably give low-XXs just seeing level what biotech, but high-XXs, to come some ‘XX, you we it’s are high will still

Dan Brennan

guys. Great. Thanks Thanks Matt.

Rainer Blair

Thanks Dan.

Operator

Jack take Nephron. we And Please our ahead. will Meehan from next question with go

Rainer Blair

morning Good Jack.

Jack Meehan

Thanks. morning. Good

your the total share you what Can weakened things was quarter? around bioprocessing. quarter on order out? Is in throughout you rate how share can quarter. the question Have just played any there Another color the

Just curious are how things trending. about

Rainer Blair

Jack. Sure,

So, orders first sequentially. were down once our modestly again, quarter,

But So, the year-over-year, they down okay. XX%, relative quarter, declined fourth to modestly.

of and the first burn the throughout have level book we first down that we here for And in and had as the is progression a that laid talking we see quarters quarter. again, so about what why we of our then the quarter. we sort current occurring, have supports have that been And is out similar the year believe we activity Matt inventory seeing been here in myself, order the

Jack Meehan

follow-up, Great. direct place curious but I business? are from if what I have as customers across Thank did you. see how any didn’t of in which to And just then reacting the exposure you that, a impact, probably quarter. took understand sort your crisis, the was banking you any, the

Rainer Blair

Right.

material any in not of So, direct was exposure sense the word.

sciences, in here in As to additional that, inflection in liquidity particularly tightening emerging provides in for here lesser working emerging projects. that life it segment, to up seeing think on that relates stage do bioprocessing, much on companies those we a biotech, call businesses, our impact the extent it point the are and we quarter once prioritization that earlier and again, the first that biotech

out that’s pronounced as of growth periods. of and seen prior versus mid-teens So, opposed plays contraction mid-teens we a where about and can that cash OpEx, we sort out and more a have with you conservation that how talked to in CapEx – played

Jack Meehan

Rainer. you, Thank

Rainer Blair

Thanks Jack.

Operator

go final with take our Please ahead. we And from question Rachel will Vatnsdal JPMorgan.

Rainer Blair

Rachel. morning Good

Rachel Vatnsdal

the taking morning. Thank questions for you Good you guys. Great.

all appreciate comments bioprocessing emerging biotech with And that XQ. in have softness so given in on really I that customer the you mid-teens down set

mid-teen that the point you talk can bioprocessing assumptions at expect clarifying a long-term you And more say emerging of for to expect when to then year? term, can about for issue emerging longer growth outlook biotech remain question. And to at first, declines you you shifting growth? Did So funding the return just market? that kind really around biotech pressure the your this what

Rainer Blair

as our assumption and guide first that played emerging it biotech, of in topic emerging level for is the to the of the the just the our remainder quarter. stays reflects activity biotech in on out confirm year So,

are it that any including we get worse. significantly change So, not there assuming doesn’t

progresses segment normality capital return where that that in in the for are we the go, predict. degree the today, for an view, how segment have from improvement and of markets to availability a to liquidity of relates that’s visibility the yes, it we need to today’s and here, to point as year. remainder stabilization some expecting of sector. Now, banking not see that hard We But

Rachel Vatnsdal

Got then few on China a it. maybe questions here. And

signed that China So, you mentioned answers your question. think to one one recently in peers earlier bioprocessing, of also I your of

China? how about can us for some talk you And are you for during those expectations. the around specifically year. orders for Looking to trending just well is how within then low-single bioprocessing in And XQ did growth manufacturers. Danaher? can performed of give bioprocessing you forward, of So, just big China above context question, some XQ stepping guided last localized for China had China, previously the back, digit was how

So, co-outlook for what’s total China? Thanks. the

Rainer Blair

in a for And helped in Emerging to build biologics. seen an capacity China China, also capital and have order good China it and impacted years. for like And Well, in in Biotech constraints. significantly as the bioprocessing business for of is had biopharma by what build see other quite we China’s which that strong very in the efforts to is relates is vaccines there we to important part a local today, much we have industry segment, U.S. it the

on seen the play and of expected, In which quarter, fact, were on stronger. impact primarily the patient numbers volumes diagnostic we have the as that what our well. is first So, the being than whole the in China in because better primary here. And China businesses out that’s

Danaher relates normalization to COVID as, based market full in on overall recovery, the it up expect as our in the exiting we for year China, you the bioprocessing. as full to China be low-single in a of if digits level will, Now, well activity year

Rachel Vatnsdal

Great. Thank you.

Rainer Blair

Rachel. you, Thank

Operator

Thank for speakers And over the it remarks. I turn to will closing you.

John Bedford

I everyone the call us appreciate on Ashley. today. you, joining Thank for

rest around the We day for will and be follow-ups. of all week the

Rainer Blair

everyone. Thanks

Operator

you program. today’s conclude does This Thank you. for Thank your participation.

You may time. disconnect at any

Danaher (DHR) 25 Apr 232023 Q1 Earnings call transcript