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» Danaher Corp. - Shareholder/Analyst Call
The audio portion of this call will be archived on the Investor section of our website later today under the heading Investor Events and will remain available till our next quarterly call. A replay of this call will also be available until Thursday, July 26. Replay number is (888) 203-1112 in the U.S. and (719) 457-0820 internationally, and the access code is 1304801.During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Please refer to the earnings release, Form 10-Q and other materials previously referenced for additional factors that impacted year-over-year performance. In these remarks and accompanying presentation, all references to earnings, revenues and other company specific financial metrics relate only to the continuing operation of Danaher's businesses unless otherwise noted. We will also make some forward-looking statements on today's call, including statements regarding events or developments that we believe or anticipate will or may occur in the future. It's possible that actual results might differ materially from those projected in any forward-looking statements. An additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in our SEC filings. These forward-looking statements speak only as of the date they are made. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events, development or otherwise. With that, I'll turn the call over to Larry. H. Lawrence Culp Matt, thanks, and good morning, everyone. We were pleased by the sequential improvement in our core growth and our strong operating margin and cash flow performance in the quarter. Despite the macro headlines, we grew 3.5% organically in the quarter, and the team did an outstanding job on the execution front with an 80 basis points of year-over-year core operating margin expansion, a 31% year-over-year increase in free cash flow and a 31% growth in EPS.
We continue to focus our efforts on capturing market share, driven by DBS, as well as our investments in innovation. Videojet, ChemTreat, Leica Biosystems, Esko, Kerr, Arbor Networks and Radiometer are among the businesses where we believe we have taken market share during the quarter.Geographically, the U.S. largely continued its strong start to 2012, their Q2 revenues growing mid-single digits, though we did see some pockets of weakness as we exited the quarter. In Western Europe, our sales were flat in the quarter, which, by and large, resonates with the headlines. China was mixed but flat in the quarter. The bright spot in China for us has been healthcare with both our Dental and Life Sciences & Diagnostics businesses growing double digits in the quarter. The rest of the emerging markets remained strong and also grew at a double-digit rate. We remain active and optimistic on the M&A front. Through the first 6 months, we've deployed nearly $1 billion of capital on 8 acquisitions, primarily in our Industrial, Environmental and Test & Measurement segments. Even taking into account the capital we deployed on these transactions, we still expect to have more than $5 billion of M&A capacity over the next 2 years. Turning to details of the quarter. Today, we reported record second quarter diluted net earnings per share of $0.84, a 31% increase as compared to our diluted net EPS last year. The current period includes a $0.03 benefit from a lower-than-anticipated income tax rate and a gain from resolving a contingency related to a prior asset disposal. Revenues for the quarter increased 25% to $4.6 billion, with core revenues up 3.5%. The impact of acquisitions, primarily the addition of Beckman Coulter, increased revenues by 25% while currency translation reduced sales by 3.5%. Our gross margin for the second quarter was 51.7%. Our reported operating margin expanded 100 basis points year-over-year to 17.8%. Read the rest of this transcript for free on seekingalpha.com