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Donaldson Q4 Earnings Top Estimates, Revenues Miss, Stock Down
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Donaldson Company, Inc. (DCI - Free Report) reported fourth-quarter fiscal 2024 (ended July 31, 2024) adjusted earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 88 cents. The bottom line increased 20% year over year.
The company’s shares lost 3.5% yesterday to eventually close the trading session at $71.79.
Donaldson Company, Inc. Price, Consensus and EPS Surprise
Total revenues of $935.4 million missed the Zacks Consensus Estimate of $941 million. The top line increased 6.4% year over year (up 7.6% at constant currency), driven by volume growth and the benefits of pricing actions.
Region-wise, Donaldson’s net sales in the United States/Canada increased 11.5% year over year. The metric fell 2.8% year over year in Europe, the Middle East and Africa but increased 19.5% in Latin America. Also, net sales in the Asia Pacific improved 3.1%.
Donaldson reports revenues under three segments, namely Mobile Solutions, Industrial Solutions and Life Sciences.
A brief snapshot of segmental sales is provided below.
The Mobile Solutions segment’s (accounting for 61.5% of net sales) sales were $575.3 million, indicating a year-over-year rise of 6.1%. Results benefited from a 12.6% improvement in aftermarket sales. However, sales fell 13% in Off-Road and 11.8% in On-Road businesses during the quarter.
Revenues generated from the Industrial Solutions segment (30.8%) were $287.8 million, up 3.9% year over year. Results benefited from sales growth of 39.7% in Aerospace and Defense businesses.
Revenues generated from the Life Sciences segment (7.7%) were $72.3 million, up 20.7% year over year. The results benefited from volume growth in Disk Drive and Food and Beverage businesses.
Donaldson’s Margin Profile
In the fiscal fourth quarter, Donaldson’s cost of sales inched up 3.7% year over year to $600.6 million. Gross profit jumped 11.6% to $334.8 million. The gross margin increased 170 basis points (bps) to 35.8% on the back of higher sales and deflation in input costs.
Operating expenses rose 5% year over year to $188.6 million. Operating profit increased 21.4% to $146.2 million. The operating margin was 15.6%, up 190 bps year over year.
The effective tax rate was 21.3% compared with 21.7% in the year-ago quarter.
Balance Sheet & Cash Flow of DCI
Exiting the fiscal fourth quarter, Donaldson’s cash and cash equivalents were $232.7 million compared with $187.1 million in the fourth quarter of fiscal 2023. Long-term debt was $483.4 million compared with $496.6 million in the fourth quarter of fiscal 2023.
In fiscal 2024, the company generated net cash of $492.5 million from operating activities, indicating a decrease of 9.6% year over year. Capital expenditure (net) totaled $85.6 million compared with $118.5 million in the year-ago fiscal period. Free cash flow decreased 4.3% to $407.6 million. In the same time frame, management repaid its long-term debt of $228.8 million.
It also used $162.7 million to repurchase stocks and $122.8 million to pay out dividends during fiscal 2024.
Donaldson’s FY24 Outlook
For fiscal 2025 (ending July 2025), Donaldson expects adjusted earnings per share to be in the range of $3.56-$3.72 compared with $3.42 in fiscal 2024. Sales are anticipated to increase in the 2-6% band from the fiscal 2024 level. Positive pricing is projected to have an accretive impact of 1%.
On a segmental basis, Mobile Solutions’ sales are expected to be flat to increase 4% from the fiscal 2024 level. Industrial Solutions’ sales are envisioned to jump in the range of 4-8% from the fiscal 2024 figure. The company forecasts its Life Sciences segment’s sales to increase in the low-double-digit range.
Interest expenses are predicted to be approximately $21 million while other income is projected to be in the range of $16-$20 million. The effective tax rate is anticipated to be between 23% and 25%.
Capital expenditure is expected to be between $85 million and $105 million. Free cash flow conversion is anticipated to be in the range of 85-95%. Share buybacks are expected to account for 2-3% of the outstanding shares.
Some better-ranked companies from the same space are discussed below.
Tetra Tech, Inc. (TTEK - Free Report) presently has a Zacks Rank #2 (Buy). It delivered a trailing four-quarter average earnings surprise of 9.5%.
In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has risen 0.7%.
Atmus Filtration Technologies Inc. (ATMU - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.4%.
The consensus estimate for ATMU’s 2024 earnings has increased 3.1% in the past 60 days.
Crane Company (CR - Free Report) presently has a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has risen 2%.
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Donaldson Q4 Earnings Top Estimates, Revenues Miss, Stock Down
Donaldson Company, Inc. (DCI - Free Report) reported fourth-quarter fiscal 2024 (ended July 31, 2024) adjusted earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 88 cents. The bottom line increased 20% year over year.
The company’s shares lost 3.5% yesterday to eventually close the trading session at $71.79.
Donaldson Company, Inc. Price, Consensus and EPS Surprise
Donaldson Company, Inc. price-consensus-eps-surprise-chart | Donaldson Company, Inc. Quote
DCI’s Revenue Results
Total revenues of $935.4 million missed the Zacks Consensus Estimate of $941 million. The top line increased 6.4% year over year (up 7.6% at constant currency), driven by volume growth and the benefits of pricing actions.
Region-wise, Donaldson’s net sales in the United States/Canada increased 11.5% year over year. The metric fell 2.8% year over year in Europe, the Middle East and Africa but increased 19.5% in Latin America. Also, net sales in the Asia Pacific improved 3.1%.
Donaldson reports revenues under three segments, namely Mobile Solutions, Industrial Solutions and Life Sciences.
A brief snapshot of segmental sales is provided below.
The Mobile Solutions segment’s (accounting for 61.5% of net sales) sales were $575.3 million, indicating a year-over-year rise of 6.1%. Results benefited from a 12.6% improvement in aftermarket sales. However, sales fell 13% in Off-Road and 11.8% in On-Road businesses during the quarter.
Revenues generated from the Industrial Solutions segment (30.8%) were $287.8 million, up 3.9% year over year. Results benefited from sales growth of 39.7% in Aerospace and Defense businesses.
Revenues generated from the Life Sciences segment (7.7%) were $72.3 million, up 20.7% year over year. The results benefited from volume growth in Disk Drive and Food and Beverage businesses.
Donaldson’s Margin Profile
In the fiscal fourth quarter, Donaldson’s cost of sales inched up 3.7% year over year to $600.6 million. Gross profit jumped 11.6% to $334.8 million. The gross margin increased 170 basis points (bps) to 35.8% on the back of higher sales and deflation in input costs.
Operating expenses rose 5% year over year to $188.6 million. Operating profit increased 21.4% to $146.2 million. The operating margin was 15.6%, up 190 bps year over year.
The effective tax rate was 21.3% compared with 21.7% in the year-ago quarter.
Balance Sheet & Cash Flow of DCI
Exiting the fiscal fourth quarter, Donaldson’s cash and cash equivalents were $232.7 million compared with $187.1 million in the fourth quarter of fiscal 2023. Long-term debt was $483.4 million compared with $496.6 million in the fourth quarter of fiscal 2023.
In fiscal 2024, the company generated net cash of $492.5 million from operating activities, indicating a decrease of 9.6% year over year. Capital expenditure (net) totaled $85.6 million compared with $118.5 million in the year-ago fiscal period. Free cash flow decreased 4.3% to $407.6 million. In the same time frame, management repaid its long-term debt of $228.8 million.
It also used $162.7 million to repurchase stocks and $122.8 million to pay out dividends during fiscal 2024.
Donaldson’s FY24 Outlook
For fiscal 2025 (ending July 2025), Donaldson expects adjusted earnings per share to be in the range of $3.56-$3.72 compared with $3.42 in fiscal 2024. Sales are anticipated to increase in the 2-6% band from the fiscal 2024 level. Positive pricing is projected to have an accretive impact of 1%.
On a segmental basis, Mobile Solutions’ sales are expected to be flat to increase 4% from the fiscal 2024 level. Industrial Solutions’ sales are envisioned to jump in the range of 4-8% from the fiscal 2024 figure. The company forecasts its Life Sciences segment’s sales to increase in the low-double-digit range.
Interest expenses are predicted to be approximately $21 million while other income is projected to be in the range of $16-$20 million. The effective tax rate is anticipated to be between 23% and 25%.
Capital expenditure is expected to be between $85 million and $105 million. Free cash flow conversion is anticipated to be in the range of 85-95%. Share buybacks are expected to account for 2-3% of the outstanding shares.
DCI’s Zacks Rank & Stocks to Consider
DCI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked companies from the same space are discussed below.
Tetra Tech, Inc. (TTEK - Free Report) presently has a Zacks Rank #2 (Buy). It delivered a trailing four-quarter average earnings surprise of 9.5%.
In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has risen 0.7%.
Atmus Filtration Technologies Inc. (ATMU - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.4%.
The consensus estimate for ATMU’s 2024 earnings has increased 3.1% in the past 60 days.
Crane Company (CR - Free Report) presently has a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has risen 2%.