{"id":392464,"date":"2020-12-03T07:03:36","date_gmt":"2020-12-03T12:03:36","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=392464"},"modified":"2020-12-03T07:03:36","modified_gmt":"2020-12-03T12:03:36","slug":"donaldson-company-reports-first-quarter-2021-earnings","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/donaldson-company-reports-first-quarter-2021-earnings\/","title":{"rendered":"Donaldson Company Reports First Quarter 2021 Earnings"},"content":{"rendered":"

<\/p>\n

Donaldson Company Reports First Quarter 2021 Earnings<\/b><\/p>\n

Total first quarter 2021 sales of replacement parts significantly outperformed new equipment <\/i><\/b><\/p>\n

Operating margin grew 0.5 percentage points from prior year, driven by gross margin<\/i><\/b><\/p>\n

Sales trends improving, with year-over-year growth anticipated in the second half of fiscal 2021<\/i><\/b><\/p>\n

Fiscal 2021 operating margin expected to be up from the prior year, due to higher gross margin<\/i><\/b><\/p>\n

MINNEAPOLIS–(BUSINESS WIRE<\/a>)–
\nDonaldson Company, Inc. (NYSE: DCI) today reported first quarter 2021 net earnings of $61.9 million, compared with $65.0 million in 2020. First quarter 2021 earnings per share (EPS)1<\/sup> declined 4.4 percent to $0.48 from $0.51 in 2020.\n<\/p>\n

\n\u201cWe are pleased with our first quarter results, which reflect the durability of our business model combined with our ability to gain market share, increase gross margin and manage expenses during an uneven macro-economic environment,\u201d said Tod Carpenter, chairman, president and chief executive officer. \u201cAs expected, our sizable base of replacement parts sales mitigated the impact from the pandemic-related cautiousness pressuring our first-fit and new equipment businesses, and newly established customer relationships in China contributed to strong growth in that country.\n<\/p>\n

\n\u201cFor the balance of fiscal 2021, we anticipate overall sales trends will improve, including year-over-year growth in the second half of the year. Our Advance and Accelerate portfolio2<\/sup> continues to outperform the company average, and we plan to drive further investments into those businesses. While we expect the economic environment will remain uncertain, we also feel confident in our plans to grow our profit margin. We expect higher gross margin from further progress on our optimization initiatives, which leverage our recently completed capacity expansion projects. At the same time, we will maintain disciplined control of our discretionary expenses while pursuing continuous improvement opportunities, which we have done throughout our 105-year history. I believe we have a strong foundation for executing our strategic priorities, and I want to thank our valued customers and suppliers for their continued engagement, as well as our global team for their commitment to advancing filtration for a cleaner world.\u201d\n<\/p>\n\n\n\n
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1<\/sup><\/p>\n<\/td>\n

\n\n

\nAll earnings per share figures refer to diluted earnings per share.\n<\/p>\n<\/td>\n<\/tr>\n

\n

2<\/sup><\/p>\n<\/td>\n

\n\n

\nAdvance and Accelerate includes Industrial Air Filtration replacement parts, Engine Aftermarket, Venting Solutions, Process Filtration, Semiconductor and Industrial Hydraulics.\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

Operating Results<\/span><\/b><\/p>\n

\nFirst quarter 2021 sales declined 5.4 percent to $636.6 million from $672.7 million in 2020. Currency translation had a favorable impact of approximately 1.0 percent on total sales, reflecting benefits in the Engine Products (\u201cEngine\u201d) and Industrial Products (\u201cIndustrial\u201d) segments of approximately 0.7 percent and 2.0 percent, respectively.\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\nThree Months Ended\n<\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\nOctober 31, 2020\n<\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\nReported
\n
% Change\n<\/p>\n<\/td>\n

\n\n

\nConstant
\n
Currency
\n
% Change\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nEngine Products segment\n<\/p>\n<\/td>\n

\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nOff-Road\n<\/p>\n<\/td>\n

\n\n

\n(5.6\n<\/p>\n<\/td>\n

\n

\n)%\n<\/p>\n<\/td>\n

\n\n

\n(7.4\n<\/p>\n<\/td>\n

\n

\n)%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nOn-Road\n<\/p>\n<\/td>\n

\n\n

\n(21.4\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(21.9\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAftermarket\n<\/p>\n<\/td>\n

\n\n

\n(0.7\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(1.2\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nAerospace and Defense\n<\/p>\n<\/td>\n

\n\n

\n(26.5\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(27.5\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal Engine Products segment\n<\/p>\n<\/td>\n

\n\n

\n(5.0\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(5.7\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIndustrial Products segment\n<\/p>\n<\/td>\n

\n\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIndustrial Filtration Solutions\n<\/p>\n<\/td>\n

\n\n

\n(9.0\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(11.3\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nGas Turbine Systems\n<\/p>\n<\/td>\n

\n\n

\n11.0\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n\n

\n9.9\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nSpecial Applications\n<\/p>\n<\/td>\n

\n\n

\n(4.4\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(5.5\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal Industrial Products segment\n<\/p>\n<\/td>\n

\n\n

\n(6.1\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n

\n\n

\n(8.1\n<\/p>\n<\/td>\n

\n

\n)\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal Company\n<\/p>\n<\/td>\n

\n\n

\n(5.4\n<\/p>\n<\/td>\n

\n

\n)%\n<\/p>\n<\/td>\n

\n\n

\n(6.4\n<\/p>\n<\/td>\n

\n

\n)%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nFirst quarter 2021 Engine sales declined 5.0 percent, reflecting uneven conditions across markets and geographies. The Aerospace and Defense sales decline was due primarily to commercial aerospace, reflecting industry-wide pressure from the COVID-19 pandemic. The sales decline in the remaining Engine businesses was due primarily to conditions in the Americas where pandemic-related uncertainty contributed to lower levels of equipment production and utilization. Sales in the Asia-Pacific region increased from the prior year, led by China where market share gains and improving economic conditions drove strong sales growth in Donaldson\u2019s On-Road and Off-Road first-fit businesses, and within both Aftermarket channels.\n<\/p>\n

\nFirst quarter 2021 Industrial sales declined 6.1 percent, driven primarily by performance of Industrial Filtration Solutions. In most geographies, the COVID-19 pandemic\u2019s impact on industrial production and customers\u2019 willingness to make capital investments is driving lower demand for dust collection products. Conditions are more favorable in China, where sales of dust collection products increased as benefits from market share gains were complemented by recovery from the COVID-19 pandemic. Sales of Process Filtration products to the food and beverage industry are steadier, as lower sales of new equipment were partially offset by higher sales of replacement parts. Gas Turbine Systems benefited from strong replacement parts sales in every major region. Within Special Applications, lower sales of disk drive filters and membrane products were partially offset by strong growth in sales of Integrated Venting Solutions.\n<\/p>\n

\nFirst quarter 2021 operating income as a rate of sales increased to 13.7 percent from 13.2 percent in 2020, despite a negative impact of approximately 0.5 percentage points from higher depreciation and amortization expense related to Donaldson\u2019s capacity expansion projects.\n<\/p>\n

\nFirst quarter 2021 gross margin increased to 35.0 percent from 34.4 percent in 2020, reflecting lower raw material costs, due in part to the Company\u2019s procurement initiatives, and a favorable mix of sales. These benefits were partially offset by a loss of leverage on lower sales, including an impact from higher depreciation expense related to the Company\u2019s capacity expansion projects. Donaldson reduced its first quarter 2021 operating expense by 5.0 percent from 2020. As a rate of sales, operating expense was 21.3 percent, compared with 21.2 percent in the prior year, reflecting a loss of leverage on lower sales that was almost entirely offset by disciplined expense management and lower expenses following the COVID-19 pandemic.\n<\/p>\n

\nFirst quarter 2021 interest expense declined to $3.5 million from $4.7 million in 2020, reflecting interest rate favorability and a lower debt level. Other expense was $1.5 million in first quarter 2021, compared with income of $2.6 million in 2020. The year-over-year change was driven primarily by charges related to Donaldson\u2019s support of its communities and local efforts to combat the pandemic, including a donation of face masks, combined with a pension-related impact. Donaldson\u2019s first quarter 2021 effective income tax rate was 24.7 percent, compared with 24.9 percent in 2020. Donaldson paid first quarter 2021 dividends of $26.6 million and repurchased approximately 0.3 percent of its outstanding shares for $15.6 million.\n<\/p>\n

Fiscal 2021 Expectations<\/span><\/b><\/p>\n

\nDue to continued uncertainty related to the COVID-19 pandemic, Donaldson is not issuing detailed guidance for full-year 2021 at this time; however, the Company has identified several factors that are expected to impact its full-year 2021 results, including:\n<\/p>\n