Danaher Corporation · NYSE:DHR
Danaher — Investor Day (September 2018)
76 slides from Danaher's investor day presentation, Sep 18, 2018
Slide 1: 2018 Pall Investor & Analyst Day
2018 PALL INVESTOR & ANALYST DAY September 18, 2018
Slide 2: Forward Looking Statements
Forward Looking Statements Statements in this presentation that are not strictly historical, including any statements regarding events or developments that we believe or anticipate will or may occur in the future are "forward-looking" statements within the meaning of the federal securities laws. The
Slide 3: Agenda
Agenda 12:00 PM Welcome Matt Gugino 12:05 PM Life Sciences Platform Overview Rainer Blair 12:25 PM Pall Overview Jennifer Honeycutt DBS at Pall John Dion Innovation at Pall Martin Smith Pall Industrial Hermes Gonzalez Pall Biotech Mario Philips 1:55 PM Q&A Blair, Honeycutt 2:10 PM Break & gather int
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Slide 5: Life Sciences
LIFE SCIENCES Rainer Blair, Executive Vice President 2018 PALL INVESTOR & ANALYST DAY
Slide 6: Danaher Today
Danaher Today LIFE ~$5.7B DIAGNOSTICS ~$5.8B ENVIRONMENTAL & APPLIED SOLUTIONS ~$4.0B DENTAL ~$2.8B SCIENCES WATER QUALITY PRODUCT ID All financial metrics reflect FY 2017 revenue unless otherwise indicated Including the IDT acquisition (closed April 2018) with ~$0.3B FY 2017 revenue, Life Sciences
Slide 7: Life Sciences revenue overview
Revenue By Mix LIFE SCIENCES Equipment ~$6.0B 35% TOTAL Consumables REVENUE (incl. IDT) 65% By Geography +MSD CORE ROW REVENUE 9% GROWTH NA HGM 36% 27% EU >25% 28% EBITDA MARGIN By End-Market Research Applied Industrial Strong global brands with All financial metrics on this slide reflect FY 2017 re
Slide 8: Life Sciences Platform Evolution
Life Sciences Platform Evolution 5 YEARS AGO Revenue By TODAY* Revenue By End-Market End-Market ~$2.3B REVENUE ~$6.0B REVENUE Other Ind. +LSD CORE GROWTH +MSD CORE GROWTH Research Research Biopharma Industrial ~35% CONSUMABLES ~65% CONSUMABLES Applied Pharma ~52% GROSS MARGIN ~55% GROSS MARGIN Clini
Slide 9: How We Win in Life Sciences
How We Win in Life Sciences OUR STRATEGIC FOCUS HIGH GROWTH SEGMENTS Indexing our portfolio to high-growth end-markets in terms of applications (i.e. biologics, genomics, applied, gene therapy) ~$1.5B REVENUE EXPOSURE TO BIOLOGICS Best-in-Class analytical technologies & high level of innovation INNO
Slide 10: Leading Global Brands Serving Attractive Markets
Leading Global Brands Serving Attractive Markets RESEARCH & APPLIED BIOLOGICS INDUSTRIAL (FOOD, ENV., FORENSICS) ACADEMIC CLINICAL % OF LS SEGMENT REVENUE ~25% ~25% ~15% ~15% ~15% Strong secular drivers underpinning growth opportunities 10
Slide 11: Our Biologics Business
Our Biologics Business Lead Generation Cell Line Pre-Clinical / Process Drug Production WORKFLOW (Process Development / / Optimization Development Clinical Development Clinical & Commercial) MARKET +DD GROWTH +DD +HSD +HSD +DD DHR OPCO DHR REVENUE ~$500M ~$1B ~$1.5B business well-positioned across b
Slide 12: How We Win With Innovation: Beckman Life Sciences
How We Win With Innovation: Beckman Life Sciences RESULTS OVER THE Number of ~20 LAST 5 YEARS New Product Launches BIOMEK I-SERIES AUTOMATED S&M* +200BPS LDT WORKSTATIONS 1 ~3 R&D* +50BPS 3 Years Last 3 Pre-Acq. Years * As a % of sales CYTOFLEX LX Flat +MSD CORE GROWTH CORE REVENUE AT THE TIME OF GR
Slide 13: Recent Acquisitions: a Tailored DBS Approach for Each
Recent Acquisitions: a Tailored DBS Approach for Each >95% >95% ~85% CONSUMABLES CONSUMABLES CONSUMABLES Added attractive genomics Added attractive SCIEX adjacency Strong franchise in attractive, consumables adjacency in chromatography consumables fast-growing markets INITIAL PRIORITIES / KEY AREAS
Slide 14: Five Year Financial Summary
Five Year Financial Summary RESULTS: LAST 5 YEARS LIFE SCIENCES PLATFORM Total Revenue ~$5.4B ~$6.0B* +MSD CORE REVENUE CAGR ~$3.3B +300BPS GROSS MARGIN EXPANSION ~$2.3B ~$2.4B ~$2.5B ~850BPS OPM EXPANSION 2012 2013 2014 * Reflects FY 2017 revenue plus IDT’s FY 2017 revenue of $0.3B 2015 2016 2017 >
Slide 15: Summary
Summary Life Sciences portfolio evolution has increased our recurring revenue & exposure to the most attractive parts of the market Better commercial and innovation execution through DBS — along with M&A — enhances our growth and earnings trajectory Today you’ll hear from Pall leaders about the tail
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Slide 17: Pall
PALL Jennifer Honeycutt, President 2018 PALL INVESTOR & ANALYST DAY IR GET HIGHER RES IMAGE
Slide 18: Pall overview
Revenue By Mix Equipment ~$3B 15% TOTAL REVENUE Consumables 85% PALL LIFE SCIENCES PALL INDUSTRIAL • Biotech (incl. Biopharma & SUT) • Microelectronics +MSD By Geography • Medical • Aerospace CORE REVENUE GROWTH* • Lab, Food & Beverage • Process & Industrial ROW NA HGM STRONG GLOBAL GROWTH DRIVERS >
Slide 19: Danaher Business System (DBS)
Danaher Business System (DBS) Leadership Lean Growth DBS is our competitive advantage: it’s who we are, and how we do what we do 19
Slide 20: Key Priorities at Acquisition
Key Priorities at Acquisition ACCELERATE Accelerating innovation through reinvestment Leadership INNOVATION and focused R&D processes Lean Growth IMPROVE DBS commercial initiatives driving better go- EXECUTION to-market capabilities; meaningful gains in quality & delivery REDUCE Leadership COSTS Red
Slide 21: Accelerating Innovation
Accelerating Innovation SITUATION AT ACQUISTION • Strong innovative foundation RESULTS SINCE • Long development cycle times ACQUISITION • Lack of project focus & prioritization On-Time To ~80% Market +MSD (Projects) DBS ACTIONS • Accelerated Product Development <65% CORE REVENUE GROWTH • Speed Desig
Slide 22: Improving Execution: Commercial
Improving Execution: Commercial SITUATION AT ACQUISTION RESULTS SINCE ACQUISITION • Limited market visibility & contacts • • Little to no digital marketing capabilities Obsolete web platform with limited lead generation capability +80% CONTACTS/ VISIBILITY • No repeatable process for generating / nu
Slide 23: Improving Execution: On-Time-Delivery
Improving Execution: On-Time-Delivery SITUATION AT ACQUISTION RESULTS SINCE ACQUISITION • Complicated supply chain & production set-up >2,000BPS IMPROVEMENT • Long manufacturing lead-times IN ON-TIME DELIVERY (OTD) • Low on-time delivery DBS ACTIONS Average Manufacturing 2015 • Developed DBS leaders
Slide 24: Reducing Costs
Reducing Costs SITUATION AT ACQUISTION RESULTS SINCE ACQUISITION • High inventory, scrap & logistics costs >$250M TOTAL ANNUAL COST • High indirect/non-customer-facing costs SAVINGS ACHIEVED TO DATE DBS ACTIONS • Inventory Management to improve OTD and linked costs Reduced Indirect Costs 2015 • Lean
Slide 25: M&A Update
M&A Update RECENT ACQUISITIONS AT POROMEMBRANE SENSIQ ACTIONS SINCE DANAHER LIFE SCIENCES ACQUIRED PALL • Produces & designs hollow • Provides label free detection fiber filtration membranes instrumentation • Focused our strategic approach to M&A • Serves various industry • Part of ForteBio • Additi
Slide 26: Putting It All Together
Putting It All Together RESULTS SINCE ACQUISITION +2X AT ACQ. TODAY ACCELERATE % OF REVENUE ACHIEVEMENT FROM INNOVATION NEW PRODUCTS Core Growth LSD MSD* >2,000BPS IMPROVE ON-TIME Gross Margin ~50% ~55% EXECUTION DELIVERY IMPROVEMENT OP Margin High-teens >25% >$250M REDUCE ANNUAL COST COSTS SAVINGS
Slide 27: The Best Team Wins
The Best Team Wins SENIOR LEADERSHIP TEAM 100% PALL’S LEADERSHIP TEAMS ARE COMPRISED OF A MIX OF: INTERNAL FILL RATE FOR THE “L1” TEAM • Infused Danaher leaders President Jennifer Honeycutt • Retained Pall Leaders • Promoted Pall talent Chief Financial Officer SVP of Global Chief Technology • Added
Slide 28: What You'll Hear Today: Examples of Executing Key Priorities
What You’ll Hear Today: Examples of Executing Key Priorities PALL DBS INNOVATION INDUSTRIAL PALL BIOTECH John Dion Martin Smith Hermes Gonzalez Mario Philips ACCELERATE INNOVATION IMPROVE EXECUTION REDUCE COSTS 28
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Slide 30: DBS at Pall
DBS AT PALL John Dion, SVP Customer Service, Service & DBS 2018 PALL INVESTOR & ANALYST DAY
Slide 31: What You'll Hear Today
What You’ll Hear Today PALL DBS INNOVATION INDUSTRIAL PALL BIOTECH John Dion Martin Smith Hermes Gonzalez Mario Philips ACCELERATE INNOVATION IMPROVE EXECUTION REDUCE COSTS 31
Slide 32: Danaher Business System (DBS)
Danaher Business System (DBS) Leadership Lean Growth DBS is our competitive advantage: it’s who we are, and how we do what we do 32
Slide 33: What Differentiates DBS
What Differentiates DBS It is a mindset and it is our culture – DBS is who we are, and how we do what we do DBS is constantly evolving: in the spirit of continuous improvement, we are always “DBSing” DBS DBS is broadly applicable across functions, adaptable to unique business opportunities “Common s
Slide 34: Transition Leadership at Pall
Transition Leadership at Pall Transition Lead John Dion Finance Ops & Procuremt. Strategy TRANSITION TEAM PALL + DHR PALL + DHR PALL + DHR • Cross-functional workstreams each led by a Pall leader + DHR leader Lean / DBS Quality & Regulat. Growth / Commrcl. PALL + DHR PALL + DHR PALL + DHR • Early DB
Slide 35: Pall's DBS Integration
Pall’s DBS Integration INTEGRATION PROCESS Number of Kaizens & DBS Focus Areas >50 DHR associates facilitated DBS post close 2015 DBS Focus 1. Daily Mgmt. 2015 50 2. Lean Conversion >300 kaizen events in year one post close >70% of associates completed DBS training in 2016 470 the first 90 days 2017
Slide 36: Meaningful Cost Savings Since Acquisition
Meaningful Cost Savings Since Acquisition BREAKDOWN OF Gross Margin ~55% COST SAVINGS Productivity ~50% Manuf- Initiatives acturing >$250M OpEx ANNUAL COST SAVINGS ACHIEVED SINCE ACQUISITION At Acq. Today Operating Profit Margin >25% EXAMPLES High- teens >$40M >$20M SAVINGS FROM SAVINGS FROM FACILIT
Slide 37: Working Capital Improvement
Working Capital Improvement SITUATION AT ACQUISITION RESULTS SINCE ACQUISITION • Limited Standard Work across complex and A/P Inventory decentralized collections teams (Days Reduction • Inventory planning based on recent demand Payable) +20 DAYS -30% • Large and under-utilized supplier base DBS ACTI
Slide 38: Lean in Action: OTD & Productivity Example
Lean in Action: OTD & Productivity Example INTRAVENOUS FILTER OUTPUT IN NEWQUAY SITUATION AT ACQUISTION • Large backlog, demand spikes, and poor OTD • 3 shifts + weekend overtime DBS ACTIONS • 5 kaizen weeks, 16 improvement areas Before After • Lean Conversion, Standard Work, Variation Reduction Kai
Slide 39: Lean in Action: Scrap Reduction Example
Lean in Action: Scrap Reduction Example CORRUGATOR SCRAP IN DELAND RESULTS SITUATION AT ACQUISTION Material 2016 • High scrap levels & material losses Loss Reduction • Excessive change-over time 2017 -$250K impacting OTD Before DBS ACTIONS After Reduced • Variation Reduction Kaizen (VRK) Changeover
Slide 40: Summary
Summary DBS is our competitive advantage: it’s who we are, and how we do what we do DBS enables a comprehensive and tailored approach for acquisition integration & leadership readiness We are driving meaningful, sustainable improvements across Pall using DBS 40
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Slide 42: Innovation at Pall
INNOVATION AT PALL Martin Smith, Chief Technology Officer 2018 PALL INVESTOR & ANALYST DAY
Slide 43: What You'll Hear Today
What You’ll Hear Today PALL DBS INNOVATION INDUSTRIAL PALL BIOTECH John Dion Martin Smith Hermes Gonzalez Mario Philips ACCELERATE INNOVATION IMPROVE EXECUTION REDUCE COSTS 43
Slide 44: Innovation Improvement Priorities at Acquisition
Innovation Improvement Priorities at Acquisition Better allocating resources to & prioritizing >80% NEW PRODUCT REVENUE FOCUS ACHIEVEMENT high-impact projects VS. ~45% AT ACQUISITION TIMING Driving better on-time-to-market for new products -25% AVERAGE REDUCTION IN PROJECT TIMELINES Using DBS to enh
Slide 45: Impact of Innovation Initiatives: Recent New Product Launches
Impact of Innovation Initiatives: Recent New Product Launches Cadence ILDF mPath™ Control Tower Fully SUT Bioreactor automation & controls continuous bio- molecule In Line Diafiltration (ILDF)* conditioning BIOPHARMA ~50% Continuous bioprocessing reducing process steps PROCESS & Crixus™*— fluid heal
Slide 46: Summary
Summary Innovation leadership in material science, filter design and customer workflow intimacy are Pall’s sustainable competitive advantages R&D structure driving cross-application technology leverage to deliver higher-impact new products to customers faster Continuously improving innovation focus
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Slide 48: Pall Industrial
PALL INDUSTRIAL Hermes Gonzalez, President 2018 PALL INVESTOR & ANALYST DAY IR TO GET HIGHER RES VERSION
Slide 49: What You'll Hear Today
What You’ll Hear Today PALL DBS INNOVATION INDUSTRIAL PALL BIOTECH John Dion Martin Smith Hermes Gonzalez Mario Philips ACCELERATE INNOVATION IMPROVE EXECUTION REDUCE COSTS 49
Slide 50: Pall Industrial overview
Revenue By Mix PALL INDUSTRIAL Equipment 25% PROCESS & INDUSTRIAL AEROSPACE MICRO- ELECTRONICS Consumables 75% >$1B TOTAL REVENUE By Geography ROW NA +MSD CORE REVENUE GROWTH* HGM EU OUR SOLUTIONS HELP CUSTOMERS OPTIMIZE PROCESSES AND ENSURE HEALTH & SAFETY • Filter & purify valuable process fluids
Slide 51: Strong Secular Growth Drivers
Strong Secular Growth Drivers HIGH GROWTH REFINING & MICROELECTRONICS AEROSPACE MARKETS PETROCHEMICALS +$1T ~600 +2X >40% CHINA INFRASTRUCTURE SPEND DATA SENSOR CHIPS IN NUMBER OF COMMERCIAL GLOBAL ETHYLENE OVER NEXT DECADE AS PART OF FUTURE CARS AIRCRAFT MANUFACTURED CAPACITY INCREASE “ONE BELT, ON
Slide 52: How We Win at Pall Industrial
How We Win at Pall Industrial MICRO- PROCESS & ELECTRONICS INDUSTRIAL AEROSPACE • Innovation leader helping customers • Product portfolio focused on critical • Quality: 70+ years providing reliable, achieve most critical workflow value-added process applications highest quality products & services c
Slide 53: Actions & Results Since Acquisition
Actions & Results Since Acquisition Enhancing NPD processes & >2,000BPS ACCELERATE INCREASE IN NPD REVENUE INNOVATION cadence ACHIEVEMENT IMPROVE EXECUTION Focusing go-to-market approach, driving better HGM penetration +2X GLOBAL KEY ACCOUNTS REVENUE OPERATIONAL IMPROVEMENTS Meaningful gains in prod
Slide 54: Microelectronics: Winning With Innovation
Microelectronics: Winning With Innovation DBS ACTIONS • Voice of the Customer (VOC): “I need to commercialize “Customers Talk, We Listen” Nodes 10 and 7…we need help achieving attractive IC Highly Withstands yields.” asymmetric aggressive membrane solvents & • Accelerated Product Development: “I nee
Slide 55: Process & Industrial: Better Execution With DBS
Process & Industrial: Better Execution With DBS SITUATION AT ACQUISITION RESULTS SINCE ACQUISITION • Highly fragmented operational and logistical footprint • • Inconsistent, regionally-driven GTM strategy Limited focus on & development of global key accounts >1,000BPS OTD IMPROVEMENT DBS ACTIONS • S
Slide 56: Aerospace: Improving Commercial Processes
Aerospace: Improving Commercial Processes SITUATION AT ACQUISITION RESULTS SINCE • Relationship-based selling, mostly via OEM’s, ACQUISITION with limited end-user intimacy • Functionally-based strategic priorities lacked cohesive business-wide vision and direction +45% SALES FUNNEL GROWTH DBS ACTION
Slide 57: Summary
Summary High quality product portfolio strategically aligned to address critical customer challenges Broad exposure to strong secular drivers across attractive, fast- growing end-markets DBS initiatives driving meaningful, sustainable process improvements and contributing to share gains 57
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Slide 59: Pall Biotech
PALL BIOTECH Mario Philips, VP & General Manager 2018 PALL INVESTOR & ANALYST DAY
Slide 60: What You'll Hear Today
What You’ll Hear Today PALL DBS INNOVATION INDUSTRIAL PALL BIOTECH John Dion Martin Smith Hermes Gonzalez Mario Philips ACCELERATE INNOVATION IMPROVE EXECUTION REDUCE COSTS 60
Slide 61: Pall Biotech
PALL BIOTECH EXCEPTIONAL PROCESS SOLUTIONS FOR BIOTECH & BIOLOGICS – including mAbs, gene >$1B TOTAL REVENUE therapy, vaccines, plasma, etc. – and small molecule pharmaceuticals RELIABLE INDUSTRY PARTNER HELPING TO IMPROVE GLOBAL HEALTH +HSD/LDD CORE REVENUE GROWTH* • Provides complete solutions fro
Slide 62: Strong Secular Growth Drivers
Strong Secular Growth Drivers EVOLUTION OF BIOLOGICS HIGH GROWTH LIFE SCIENCE GENE THERAPY BIOSIMILARS PIPELINE MARKETS RESEARCH >2K ~40% ~20% >30% >20% NUMBER OF BIOLOGICS OF ALL DRUGS IN THE BIOPHARMA CAGR IN CAGR EXPECTED EXPECTED INCREASE CURRENTLY IN THE DEVELOPMENT PIPELINE CHINA EXPECTED GLOB
Slide 63: How We Win at Pall Biotech
How We Win at Pall Biotech OUR STRATEGIC FOCUS TOUCHES EVERY STEP OF BIOPRODUCTION HIGH GROWTH Global technology leader in Continuous SEGMENTS Bioprocessing and SUT; expanding gene therapy offering Streamlining scientific and bioprocess INNOVATION development while delivering cost & time savings for
Slide 64: Innovation Leadership in the Evolution of Bioprocessing
Innovation Leadership in the Evolution of Bioprocessing 10 YEARS AGO TODAY FUTURE CONTRIBUTION • Stainless-steel • Leader in driving SUT filtration in • “End-to-end” supplier with PDS at scale infrastructure under-penetrated market and modular manufacturing suites • Equipment supplier • Continuous B
Slide 65: Single-Use Technologies
Single-Use Technologies DELIVERING MEANINGFUL IMPROVEMENTS iCellis Bioreactor Pall SUT Revenue CAGR FOR CUSTOMER PROCESSES ~$300M • Reduce cleaning & validation requirements and costs • Higher flexibility and faster turnaround • Fully validated solutions with extensive support options • Guarantee su
Slide 66: Commercial Execution Driving Growth
Commercial Execution Driving Growth SITUATION AT ACQUISTION 2017 RESULTS • Limited process for improving market visibility • Little to no digital marketing capabilities CONTACTS / VISIBILITY • No repeatable process for generating / nurturing high-quality +50% MARKETING FUNNEL sales leads LEADS DBS A
Slide 67: Pall as a Partner: Technical Service & Support
Pall as a Partner: Technical Service & Support Providing value beyond our products, across BIOTECH SERVICES our customers’ entire biologics workflow – from R&D through to commercialization Facility Modelling Site Acceptance Process Test & Start-up Economics SCIENTIFIC & LAB SERVICES (SLS) >20% • Cen
Slide 68: Summary
Summary Well-positioned and differentiated product portfolio in the most attractive, fastest growing parts of the biopharma market Innovation leader solving customers’ most critical bioprocessing challenges DBS commercial initiatives driving better go-to-market capabilities and accelerating growth 6
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Slide 70: Summary
SUMMARY Jennifer Honeycutt, President of Pall 2018 PALL INVESTOR & ANALYST DAY
Slide 71: What You Heard Today: Key Priorities at Acquisition
What You Heard Today: Key Priorities at Acquisition ACCELERATE Accelerating innovation through reinvestment Leadership INNOVATION and focused R&D processes Lean Growth DBS commercial initiatives driving better go- IMPROVE EXECUTION to-market capabilities; meaningful gains in quality & delivery Leade
Slide 72: Putting It All Together
Putting It All Together RUNNING THE DANAHER PLAYBOOK RESULTS SINCE ACQUISITION AT ACQ. TODAY IMPROVE COST Gross G&A Margins STRUCTURE Core Growth LSD MSD* REINVEST Gross Margin ~50% ~55% R&D S&M FOR GROWTH OP Margin High-teens >25% ACCELERATE Core G&A** R&D** S&M** MARGINS & OMX Growth >25% ~5%
Slide 73: DBS Is Our Competitive Advantage
DBS Is Our Competitive Advantage Leadership Lean Growth DBS is who we are, and how we do what we do 73
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Slide 75: Non-GAAP Reconciliation
Non-GAAP Reconciliation Danaher Corporation Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures ($ in Millions) Year Ended December 31, 2017 Life Sciences Operating Profit (GAAP) $ 1,004.3 Other Income - Depreciation 119.0 Amortization 309.0 Segment EBITDA (Non-GAAP) $ 1,432.3 N
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