Welcome!

Microsoft Cloud Authors: Stackify Blog, Liz McMillan, David H Deans, Automic Blog, Pat Romanski

News Feed Item

Donaldson Reports First Quarter Results

Donaldson Company, Inc. (NYSE: DCI) announced its financial results for its fiscal 2013 first quarter. Summarized financial results are as follows (dollars in millions, except per share data):

   
Three Months Ended
October 31

2012

   

2011

   

Change

Net sales $589 $608 (3 )%
Operating income 74 90 (19 )%
Net earnings 54 69 (21 )%
Diluted EPS (*) $0.36 $0.45 (20 )%
 

(*) The prior year EPS amounts reflect the impact of last year’s two-for-one stock split.

“Our first quarter sales and EPS were consistent with the updated outlook we announced in late October,” said Bill Cook, Chairman, President and CEO. “While we finished FY12 very strong, we saw conditions at many of our Customers decelerate in September and October. Incoming orders from our Engine OEM and Disk Drive Customers decreased as they lowered their production schedules to deal with declining end market demand and to also reduce their inventory levels. Utilization of on-road and off-road equipment also weakened during this period, resulting in lower order rates for our replacement filters. Fortunately, our Gas Turbine Products business helped offset these weaker conditions with a 33 percent year-over-year sales increase. We expect our Gas Turbine project shipments to continue increasing in our second and third quarters. Finally, foreign currency translation decreased our sales by almost 3 percent due to the stronger US dollar versus last year. Excluding the foreign exchange impact, sales decreased less than 1 percent in the quarter.”

“Our operating margin was 12.5 percent due to lower fixed cost absorption and a mix shift to large Gas Turbine project shipments. We were able to partially offset these with our Continuous Improvement initiatives. Looking forward, we have initiated actions which will better align our manufacturing and operating expenses with our expected Customer demand.”

“We see the current downturn as short-term primarily due to high levels of global uncertainty. We expect to return to year-over-year growth in our second quarter. A continuing benefit of our diversified portfolio of filtration businesses around the world is that regions including Latin America, South Africa, and Australia, and product groups like Gas Turbine and Integrated Venting Solutions, are all projecting strong growth. As a result, we are forecasting our Company’s full-year sales to increase 0 to 4 percent, and our FY13 EPS forecast is between $1.68 and $1.88 per share.”

Financial Statement Discussion

The impact of foreign currency translation decreased sales by $16.9 million, or 2.8 percent, during the first quarter compared to the same period last year. The impact of foreign currency translation decreased reported net earnings by $1.3 million, or 1.9 percent, compared to the prior year.

Gross margin was 33.7 percent, compared to 35.3 percent in last year’s first quarter. The year-over-year decrease is primarily attributable to lower fixed cost absorption due to the decrease in our production volumes and the mix impact due to large Gas Turbine project shipments. These were partially offset by the benefits from our ongoing Continuous Improvement initiatives.

Operating expenses for the quarter were $124.8 million, approximately even with last year’s $124.6 million. As a percent of sales, operating expenses were 21.2 percent compared to last year’s 20.5 percent. Our cost containment actions helped offset higher pension expense and incremental expenses related to our strategic business systems projects.

Our effective tax rate for the quarter was 29.4 percent, compared to a prior year rate of 25.5 percent. The prior year’s quarter included tax benefits primarily due to favorable settlements of tax audits of $4.3 million.

As part of our ongoing share repurchase program we repurchased 1,500,000 shares, or 1.0 percent of our diluted outstanding shares, for $50.7 million during the quarter.

FY13 Outlook

We continue to forecast full-year sales growth as strong Gas Turbine project shipments in the next two quarters and improving demand for replacement filters are anticipated to offset weaker demand from our Engine OEM and Disk Drive Customers.

  • We are projecting our full-year sales to be between $2.5 and $2.6 billion, or up 0 to 4 percent over last year’s record. Our forecast is based on the Euro at US$1.27. We expect foreign currency translation to have a negative impact on our sales for most of our fiscal year.
  • Our full-year operating margin forecast is 14.2 to 15.0 percent.
  • Our FY13 tax rate is anticipated to be between 28 and 31 percent.
  • We forecast our FY13 EPS to be between $1.68 and $1.88.
  • Cash generated by operating activities is projected to be between $235 and $265 million. Our capital spending is estimated to be approximately $100 million.

Engine Products: We forecast FY13 sales to be equal to FY12, including the negative impact of foreign currency.

  • Our on-road OEM Customers are planning to build fewer heavy- and medium-duty trucks. Demand from our off-road OEM Customers is anticipated to be mixed: build rates of agriculture equipment are forecasted to remain good, build rates of construction equipment are expected to slowly improve in North America, but remain weak in Europe and China, and build rates of mining equipment are expected to decrease globally.
  • We are anticipating low single-digit sales growth of our Aftermarket Products. Current utilization rates for off-road equipment and on-road heavy trucks have softened. We should offset much of this through our continued expansion into emerging economies, from the increasing number of systems installed in the field with our proprietary filters, and from our increasing sales of liquid filtration products.
  • We forecast our Aerospace and Defense Products’ sales to be equal to the prior year as the continued slowdown in military spending is anticipated to be offset by increased commercial aerospace sales.

Industrial Products: We forecast sales to increase 4 to 10 percent over FY12, including the negative impact of foreign currency.

  • Our Industrial Filtration Solutions Products’ sales are projected to increase 0 to 5 percent. We assume manufacturing activity will remain strong in the Americas, slowly improve in Asia, and continue to be weak in Europe.
  • We anticipate our Gas Turbine Products’ sales to be up 21 to 27 percent due to continued strength in both the large turbine power generation and the oil and gas markets.
  • Special Applications Products’ sales are forecast to increase 1 to 7 percent, with growth expected from membranes products and integrated venting products.

About Donaldson Company

Donaldson is a leading worldwide provider of filtration systems that improve people’s lives, enhance our Customers’ equipment performance, and protect our environment. We are a technology-driven Company committed to satisfying our Customers’ needs for filtration solutions through innovative research and development, application expertise, and global presence. Our approximately 13,000 employees contribute to the Company’s success by supporting our Customers at our more than 100 sales, manufacturing, and distribution locations around the world.

Donaldson is a member of the S&P MidCap 400 and Russell 1000 indices, and our shares trade on the NYSE under the symbol DCI. Additional information is available at www.donaldson.com.

SAFE HARBOR STATEMENT UNDER THE SECURITIES REFORM ACT OF 1995

The Company desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”) and is making this cautionary statement in connection with such safe harbor legislation. This announcement contains forward-looking statements, including forecasts, plans, and projections relating to our business and financial performance and global economic conditions, which involve uncertainties that could materially impact results.

The Company wishes to caution investors that any forward-looking statements are subject to uncertainties and other risk factors that could cause actual results to differ materially from such statements, including but not limited to risks associated with: world economic factors and the ongoing economic uncertainty, the reduced demand for hard disk drive products with the increased use of flash memory, the potential for some Customers to increase their reliance on their own filtration capabilities, currency fluctuations, commodity prices, political factors, the Company’s international operations, highly competitive markets, governmental laws and regulations, including the impact of the various economic stimulus and financial reform measures, the implementation of our new information technology systems, potential global events resulting in market instability including financial bailouts and defaults of sovereign nations, military and terrorist activities, health outbreaks, natural disasters, and other factors included in our Annual and Quarterly Reports. We undertake no obligation to publicly update or revise any forward-looking statements.

 
 
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
DONALDSON COMPANY, INC. AND SUBSIDIARIES
(Thousands of dollars, except share and per share amounts)
(Unaudited)
       
Three Months Ended
October 31
2012 2011
Net sales $588,947 $608,295
 
Cost of sales 390,654 393,361
 
Gross margin 198,293 214,934
 
Operating expenses 124,756 124,607
 
Operating income 73,537 90,327
 
Other income, net (5,812) (4,860)
 
Interest expense 2,671 3,170
 
Earnings before income taxes 76,678 92,017
 
Income taxes 22,565 23,464
 
Net earnings $54,113 $68,553
 
Weighted average shares
Outstanding (*) 149,149,429 150,513,892
 
Diluted shares outstanding (*) 151,524,125 153,047,198
 
Net earnings per share (*) $0.36 $0.46
 
Net earnings per share
assuming dilution (*) $0.36 $0.45
 
Dividends paid per share (*) $0.090 $0.075
 

(*) Prior year shares and per share amounts reflect the impact of the Company’s two-for-one stock split that occurred during the third quarter of Fiscal 2012.

 
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
 
    October 31     July 31
2012 2012
ASSETS
 
Cash, cash equivalents and short-term investments $289,010 $318,151
Accounts receivable – net 415,059 438,796
Inventories – net 272,396 256,116
Prepaids and other current assets 71,948 72,599
 
Total current assets 1,048,413 1,085,662
 
Other assets and deferred taxes 265,187 259,511
Property, plant and equipment – net 398,898 384,909
 
Total assets $1,712,498 $1,730,082
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Trade accounts payable $185,721 $199,182
Employee compensation and other liabilities 189,341 201,848
Short-term borrowings 67,506 95,147
Current maturity long-term debt 2,361 2,346
 
Total current liabilities 444,929 498,523
 
Long-term debt 202,473 203,483
Other long-term liabilities 109,914 118,062
 
Total liabilities 757,316 820,068
 
Equity 955,182 910,014
 
Total liabilities and equity $1,712,498 $1,730,082
 
 
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 
    Three Months Ended
October 31
2012     2011
OPERATING ACTIVITIES
 
Net earnings $54,113 $68,553

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 16,026 15,574
Changes in operating assets and liabilities 1,910 (21,932)
Tax benefit of equity plans (5,527) (2,171)
Stock compensation plan expense 1,476 1,690
Other, net (3,935) (4,028)
Net cash provided by operating activities 64,063 57,686
 
INVESTING ACTIVITIES
 
Net expenditures on property and equipment (21,404) (18,491)
Net change in short-term investments 12,868 -
Net cash used in investing activities (8,536) (18,491)
 
FINANCING ACTIVITIES
 
Purchase of treasury stock (50,731) (73,558)
Net change in debt and short-term borrowings (28,703) 78,763
Dividends paid (13,292) (11,193)
Tax benefit of equity plans 5,527 2,171
Exercise of stock options 5,576 2,961
Net cash used in financing activities (81,623) (856)
 

Effect of exchange rate changes on cash

5,077

(9,620)

 

Increase/(Decrease) in cash and cash equivalents

(21,019)

28,719

 

Cash and cash equivalents – beginning of year

225,789

273,494

 

Cash and cash equivalents – end of period

$204,770

$302,213

 
 

SEGMENT DETAIL

(Thousands of dollars)
(Unaudited)
             
Engine Industrial Corporate & Total
Products Products Unallocated Company
3 Months Ended October 31, 2012:
Net sales $370,660 $218,287 --- $588,947
Earnings before income taxes 47,424 32,562 (3,308) 76,678
 
3 Months Ended October 31, 2011:
Net sales $393,725 $214,570 --- $608,295
Earnings before income taxes 59,878 34,299 (2,160) 92,017
 
 
NET SALES BY PRODUCT
(Thousands of dollars)
(Unaudited)
 
Three Months Ended
October 31
2012 2011
Engine Products segment:
Off-Road Products $90,997 $94,108
On-Road Products 34,756 42,625
Aftermarket Products 218,396 226,897
Retrofit Emissions Products 2,897 4,637
Aerospace and Defense Products 23,614 25,458
Total Engine Products segment $370,660 $393,725
 
Industrial Products segment:
Industrial Filtration Solutions Products $128,576 $133,399
Gas Turbine Products 47,243 35,581
Special Applications Products 42,468 45,590
Total Industrial Products segment $218,287 $214,570
 
Total Company $588,947 $608,295
 
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Thousands of dollars, except per share amounts)
(Unaudited)
   
Three Months Ended
October 31
2012     2011
 
Net cash provided by $64,063 $57,686
operating activities
Net capital expenditures (21,404) (18,491)
Free cash flow $42,659 $39,195
 
Net earnings $54,113 $68,553
Income taxes 22,565 23,464
Interest expense (net) 1,754 2,371
Depreciation and amortization 16,026 15,574
EBITDA $94,458 $109,962
 
Prior year net sales $608,295 $536,909
Change in net sales, excluding foreign currency translation (2,489) 57,966
Foreign currency translation (16,859) 13,420
Current year net sales $588,947 $608,295
 
Prior year net earnings $68,553 $53,134
Change in net earnings, excluding foreign currency translation (13,119) 14,088
Foreign currency translation (1,321) 1,331
Current year net earnings $54,113 $68,553
 

Although free cash flow, EBITDA, net sales excluding foreign currency translation, and net earnings excluding foreign currency translation are not measures of financial performance under GAAP, the Company believes they are useful in understanding its financial results. Free cash flow is a commonly used measure of a company’s ability to generate cash in excess of its operating needs. EBITDA is a commonly used measure of operating earnings less non-cash expenses. Both net sales and net earnings excluding foreign currency translation provide a comparable measure for understanding the operating results of the company’s foreign entities excluding the impact of foreign exchange. A shortcoming of these financial measures is that they do not reflect the company’s actual results under GAAP. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
SYS-CON Events announced today that Grape Up will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company specializing in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the U.S. and Europe, Grape Up works with a variety of customers from emergi...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/...
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
Judith Hurwitz is president and CEO of Hurwitz & Associates, a Needham, Mass., research and consulting firm focused on emerging technology, including big data, cognitive computing and governance. She is co-author of the book Cognitive Computing and Big Data Analytics, published in 2015. Her Cloud Expo session, "What Is the Business Imperative for Cognitive Computing?" is scheduled for Wednesday, June 8, at 8:40 a.m. In it, she puts cognitive computing into perspective with its value to the busin...
SYS-CON Events announced today that Hitachi, the leading provider the Internet of Things and Digital Transformation, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Hitachi Data Systems, a wholly owned subsidiary of Hitachi, Ltd., offers an integrated portfolio of services and solutions that enable digital transformation through enhanced data management, governance, mobility and analytics. We help globa...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Financial Technology has become a topic of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 20th Cloud Expo at the Javits Center in New York, June 6-8, 2017, will find fresh new content in a new track called FinTech.
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
The age of Digital Disruption is evolving into the next era – Digital Cohesion, an age in which applications securely self-assemble and deliver predictive services that continuously adapt to user behavior. Information from devices, sensors and applications around us will drive services seamlessly across mobile and fixed devices/infrastructure. This evolution is happening now in software defined services and secure networking. Four key drivers – Performance, Economics, Interoperability and Trust ...
Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the USA and Europe, we work with a variety of customers from emerging startups to Fortune 1000 companies.
Cybersecurity is a critical component of software development in many industries including medical devices. However, code is not always written to be robust or secure from the unknown or the unexpected. This gap can make medical devices susceptible to cybersecurity attacks ranging from compromised personal health information to life-sustaining treatment. In his session at @ThingsExpo, Clark Fortney, Software Engineer at Battelle, will discuss how programming oversight using key methods can incre...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
@ThingsExpo has been named the Most Influential ‘Smart Cities - IIoT' Account and @BigDataExpo has been named fourteenth by Right Relevance (RR), which provides curated information and intelligence on approximately 50,000 topics. In addition, Right Relevance provides an Insights offering that combines the above Topics and Influencers information with real time conversations to provide actionable intelligence with visualizations to enable decision making. The Insights service is applicable to eve...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/...