Earnings Review and Free Research Report: Donaldson’s Revenue Jumped 11.2%; EPS Climbed 16%

LONDON, UK / ACCESSWIRE / September 28, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Donaldson Co., Inc. (NYSE: DCI), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=DCI, following the Company’s posting of its fourth quarter and fiscal 2017 financial results on September 07, 2017. The maker of filtration systems exceeded revenue estimates and provided guidance for the fiscal year 2018. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

For the three months ended July 31, 2017, Donaldson’s sales increased 11.2% to $660.1 million from $593.8 million in Q4 FY16, reflecting increases in the Engine Products and Industrial Products segments of 17.8% and 0.4%, respectively. The Company’s revenue numbers topped analysts’ estimates of $634.4 million.

Donaldson’s fiscal 2017 sales increased 6.8% to $2.37 billion from $2.22 billion in FY16. Excluding the negative impact from foreign currency translation, the Company’s fiscal 2017 sales increased 7.2%, reflecting an increase of 11.6% in sales of Engine Products, partially offset by a 0.2% decline in Industrial Products.

For Q4 FY17, Donaldson’s GAAP operating income rate was 14.3% compared to 2016 GAAP and adjusted rates of 15.2% and 15.8%, respectively. The Company’s GAAP gross margin was 34.8% in the reported quarter compared to GAAP and adjusted gross margin rates of 35.2% and 35.4%, respectively, in the year-ago same period.

In Q4 FY17, Donaldson’s gross margin was negatively impacted by an unfavorable sales mix of products, higher raw materials costs, and incremental freight charges. These pressures were partially offset by improved absorption of fixed costs on increasing volume. The Company’s GAAP operating expense as a rate of sales was 20.5% in Q4 FY17 compared to the prior year’s GAAP and adjusted rates of 20.1% and 19.6%, respectively. The increase from the prior year was primarily driven by higher variable compensation expense.

Donaldson reported net earnings of $68.2 million, or $0.51 per share, in Q4 FY17 compared to earnings of $59.5 million, or $0.44 per share. The Company’s earnings lagged behind Wall Street’s estimates of $0.53 per share.

For FY17, Donaldson posted net earnings of $232.8 million, or $1.74 per share, compared to $190.8 million, or $1.42 per share, in FY16.

Capital Return

During Q4 FY17, Donaldson repurchased 650,000 shares, or 0.5%, of its common stock at an average price of $46.02 for a total investment of $29.9 million. For FY17, the Company repurchased 3.3 million shares, or 2.5%, of its common stock at an average price of $42.14 for a total investment of $140.4 million. Donaldson paid the fourth quarter and full-year dividends of $22.9 million and $92.4 million, respectively.

Fiscal 2018 Outlook

For FY18, Donaldson is forecasting GAAP EPS between $1.79 and $1.93 compared to GAAP EPS of $1.74 and adjusted EPS of $1.69 in fiscal 2017. The Company is expecting FY18 sales to increase between 4% and 8% on a y-o-y basis, including approximately 2% related to a favorable impact from currency translation and benefits from the acquisitions completed during FY17.

Donaldson’s sales of Engine Products are expected to increase 6% to 10% y-o-y, reflecting growing sales of Aftermarket, Off-Road, and On-Road, partially offset by declining sales of Aerospace and Defense. Fiscal 2018 Industrial Products segment’s sales are expected to be in the range of flat to up 4% from the prior year, reflecting growth in Industrial Filtration Solutions, flat sales of Special Applications, and declining sales of Gas Turbine Systems.

Donaldson expects operating margin in the band of 14.0% and 14.4% in FY18 compared to FY17 operating margin of 13.9%. The Company expects 2018 interest expense of approximately $21 million and other income in the range of $5 million and $9 million.

Donaldson is anticipating FY18 capital expenditures in the range of $80 million to $100 million and cash conversion between 75% and 90%.

The Company plans to repurchase approximately 2% of its outstanding shares in fiscal 2018.

Stock Performance

Donaldson’s share price finished yesterday’s trading session at $45.74, slightly advancing 0.22%. A total volume of 516.98 thousand shares have exchanged hands, which was higher than the 3-month average volume of 415.10 thousand shares. The Company’s stock price surged 0.55% in the last three months, 1.02% in the past six months, and 23.79% in the previous twelve months. Additionally, the stock gained 8.70% since the start of the year. Shares of the Company have a PE ratio of 26.33 and have a dividend yield of 1.57%. The stock currently has a market cap of $5.96 billion.

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