NEWSLETTERFABRIC
FILTER
August, 2012
No. 442
Donaldson Q3 2012 Sales Growth Led by 15 Percent Increase in Gas Turbine Products
Donaldson Company, Inc. announced its financial results for its fiscal 2012 3rd quarter. Summarized financial results are as follows (dollars in millions, except per share data):
|
Three Months Ended April 30 |
Nine Months Ended April 30 |
|||||
|
|
2012 |
2011 |
Change |
2012 |
2011 |
Change |
|
Net sales |
$647 |
$595 |
9 % |
$1,836 |
$1,669 |
20 % |
|
Operating Income |
98 |
83 |
18 % |
264 |
225 |
17 % |
|
Net earnings |
71 |
62 |
15 % |
193 |
160 |
21 % |
“The continued strength in many of our mid-cycle businesses and t6he beginning of the recovery of our late-cycle Gas Turbine System products, combined with ongoing solid execution across our company, helped us set new quarterly records in sales, operating margin, and EPS," said Bill Cook, Chairman, President and CEO. "Led by a 15 percent increase in Gas Turbine Products, sales growth was strong across all three of the product groups within our Industrial Products segment, with overall sales up 11 percent. Sales in our Engine Products segment grew 8 percent as new equipment build rates at our Off-Road and On-Road OEM Customers remained healthy."
"We achieved a record operating margin of 15.2 percent due to the combination of operating leverage in our plants and distribution centers, our focus on effective execution in support of our Customers and the benefits of the many Continuous Improvement initiatives across our company."
"We are forecasting continued growth through our 4th quarter with full year sales expected to be up approximately 9 percent over last year. Forecasted business conditions in our end markets remain consistent with last quarter's outlook through the end of our fiscal year: strong in the Americas, stable in Europe, and slowly improving in China.
Gross margin was 35.3 percent for the quarter and 35.1 percent year-to-date, compared to prior year margins of 35.2 percent for the quarter and year-to-date.
Operating expenses for the quarter were $129.8 million, up 3.2 percent from $125.8 million last year primarily due to the increased sales volume. As a percent of sales, operating expenses were 20.1 percent in the third quarter compared to last year's 21.2 percent. Operating expenses year-to-date were $380.4 million, or 20.7 percent of sales, compared to $361.5 million, or 21.7 percent of sales, last year.
Fiscal Year 2012
Donaldson expects to achieve full year sales, operating margin, and EPS records.
They forecast their fiscal year 2012 sales to be approximately $2.5 billion, or up about 9 percent from the prior year. Their current forecast is based on the Euro at US$1.28 and 80 Yen to the US$. With the recent depreciation of the Euro against the US$, we do see foreign currency translation to be a headwind for the balance of our fiscal year.
Their full year operating margin is forecast to be 14.2 to 14.8 percent.
Engine Products: Donaldson expects full year sales to increase 8 to 10 percent, including the impact of foreign currency translation.
Industrial Products: They forecast full year sales to increase 8 to 10 percent, including the impact of foreign currency translation.
Their Industrial Filtration Solutions' sales are projected to increase 7 to 10 percent and assume a continuing improvement in general manufacturing activity in the U.S., slowly improving conditions in Asia, and forecasted strong 4th quarter project shipments in Europe.
They anticipate their Gas Turbine Products' sales to be up 17 to 20 percent due to the recent improvement in the large turbine power generation market and ongoing strength in the oil and gas market segment. They have a very strong schedule for 4th quarter project shipments to their customers.
Special Applications Products' sales are forecast to be level with the prior year as growth in their membrane and venting product sales should offset the reduction in our disk drive filter sales related to the Thai floods last fall.