Donaldson Q3 Profit Tops Estimates, Lowers FY16 Guidance - Quick Facts

(RTTNews) - Donaldson Company, Inc. (DCI) reported first-quarter adjusted earnings per share of $0.34, compared to $0.40, last year. On average, ten analysts polled by Thomson Reuters expected the company to report profit per share of $0.33 for the quarter. Analysts' estimates typically exclude special items.

First-quarter net earnings decreased 31.2 percent to $38.5 million from $55.9 million, a year ago. Earnings per share was $0.29 compared to $0.40. The company noted that its GAAP EPS for the quarter reflects restructuring charges of $7.5 million, or 4 cents per share, and investigation-related costs of $2.6 million, or 1 cent per share.

First-quarter sales declined 9.8 percent to $538.0 million from $596.5 million, prior year, which includes a negative impact from foreign currency translation of 6.3 percent, or $37.4 million. Excluding the impact of currency translation, first-quarter sales decreased 3.6 percent, primarily due to a 5.4 percent decline in Engine Products. Analysts expected revenue of $551.60 million for the quarter.

Gross margin decreased 1.9 percentage points in first quarter to 33.1 percent from 35.0 percent last year, reflecting an impact of 0.6 percentage points related to restructuring charges and a 0.6 percentage point transactional impact from foreign currency exchange rates.

Donaldson now expects fiscal 2016 adjusted EPS between $1.49 and $1.69, compared with prior adjusted EPS guidance of $1.57 to $1.77. Fiscal 2016 GAAP EPS is expected to be approximately 6 cents lower than adjusted EPS, reflecting the full-year impact from restructuring charges and investigation-related costs of 5 cents and 1 cent, respectively.

For fiscal 2016, Donaldson now expects sales between $2.2 billion and $2.3 billion, or 3 percent to 7 percent below last year, compared with prior guidance for sales to be approximately equal to last year. In local currency, sales are now expected in a range between flat and a decline of 4 percent compared with fiscal 2015.

"We have also revised full-year 2016 sales and earnings guidance, reflecting slowing conditions primarily in our Off-Road, Engine Aftermarket and Industrial Filtration Solutions businesses. Despite the reduction of our sales guidance, the midpoint of our adjusted EPS guidance is slightly above last year, reflecting the benefits from recent and previous restructuring actions, our Continuous Improvement initiatives and expense controls," said Tod Carpenter, president and CEO of Donaldson.