On 24 April 2020, Donaldson Company, Inc. (NYSE: DCI) spotted trading -28.84% off 52-week high price. On the other end, the stock has been noted 33.53% away from the low price over the last 52-weeks. The stock changed 0.24% to recent value of $41.50. The stock transacted 74,698 shares during most recent day however it has an average volume of 578.67K shares.
Donaldson Company, Inc. (DCI) recently stated second quarter 2020 net earnings of $64.4M, a raise of 7.2 percent from the previous year net earnings of $60.1M. Second quarter 2020 GAAP EPS increased 8.7 percent to $0.50 from $0.46 in the previous year.
“Strong gross margin performance and disciplined expense management contributed to record second quarter net income, despite a softer-than-predictable demand environment,” stated Tod Carpenter, chairman, president and chief executive officer. “Our margin expansion initiatives mitigated the profit impact from lower sales of new equipment and replacement parts, and favorability in non-operating income, and we delivered a second quarter EPS increase of nearly 9 percent.
“Our revised 2020 forecast anticipates additional sales pressure from a consumer base that is increasingly cautious, due in part to the recent coronavirus outbreak. As we navigate the complexities created by the outbreak, we have an unwavering focus on the health and safety of our employees, and teams across the world are showing an incredible level of coordination and collaboration. While broad-based geopolitical and economic uncertainty creates short-term headwinds, we remain focused on executing our long-term planned priorities.
Second quarter 2020 sales of Industrial Products (“Industrial”) declined 3.5 percent, or 3.4 percent not including the impact from currency translation. The decline was driven primarily by lower unit volume, partially offset by pricing benefits of about 0.2 percent. Industrial Filtration Solutions (“IFS”) sales declined Because of lower sales of new equipment and replacement parts for dust collectors, due in part to a strong comparison in the previous year. This decline was partially offset by strong growth in sales of Process Filtration. The Gas Turbine Systems (“GTS”) sales decline was driven by lower sales of new equipment and replacement parts, primarily in the U.S. and Europe. The sales increase in Special Applications (“SA”) was driven primarily by higher sales of Disk Drive filters, and sales of Integrated Venting Solutions also had a strong increase.
Donaldson’s second quarter 2020 earnings before interest, taxes, depreciation and amortization (“EBITDA”)4 rate of sales increased 1.5 percentage points to 16.5 percent, contrast with 15.0 percent in 2019. Including the 0.5 percentage point impact from higher depreciation and amortization expense, which relate to Donaldson’s capacity expansion and supply chain optimization efforts, second quarter 2020 operating income as a rate of sales (“operating margin”) increased to 12.8 percent from 12.1 percent in 2019.
Second quarter 2020 gross margin increased 1.7 percentage points to 33.7 percent from 32.0 percent in 2019. The gross margin increase was primarily driven by the Company’s initiatives related to production, supply chain, procurement and pricing optimization. Gross margin also benefited from a favorable mix of sales and lower raw materials costs, partially offset by a loss of leverage on lower sales. Donaldson’s second quarter operating expense as a rate of sales (“expense rate”) increased to 21.0 percent from 19.9 percent last year, reflecting loss of leverage on lower sales and continued investments in support of Donaldson’s planned growth initiatives.
Second quarter 2020 interest expense was $4.5M, contrast with $5.3M in 2019. Other income increased to $2.8M in second quarter 2020, contrast with $0.7M in 2019, primarily driven by a lower loss on foreign exchange. Donaldson’s second quarter 2020 effective tax rate declined to 22.2 percent from 25.3 percent in 2019, driven primarily by benefits from stock option activity and a favorable mix of earnings between tax jurisdictions.
Donaldson paid second quarter and fiscal year-to-date 2020 dividends of $26.6M and $53.2M, respectively. The Company did not repurchase any shares of its ordinary stock during second quarter 2020. Donaldson has invested $65.0M year-to-date to repurchase 1.4M shares, or 1.0 percent, of its ordinary stock.
Fiscal 2020 Outlook
Donaldson updated its full-year 2020 sales forecast to reflect softer-than-predictable market conditions, primarily in the Engine Aftermarket and IFS businesses, which contributed to the revised forecasts for operating margin and EPS. The updated fiscal 2020 guidance does not reflect the divestiture of Exhaust and Emissions.
Donaldson now expects fiscal 2020 GAAP EPS between $2.05 and $2.19, contrast with previous year GAAP and adjusted EPS of $2.05 and $2.21, respectively.
Contrast with 2019, fiscal 2020 sales are now projected to decline between 7 and 3 percent. Consistent with previous guidance, the Company expects a negative impact from currency translation of 1 to 2 percent and pricing benefits of about 1 percent.
Contrast with 2019, fiscal 2020 Engine sales are now projected to decline between 9 and 5 percent. The updated forecast reflects a lower projection for full-year Aftermarket sales, which are now predictable to be down from the previous year. The Company continues to expect full-year sales of its first-fit On-Road and Off-Road businesses will be down from the previous year, while sales of Aerospace and Defense are still projected to increase.
Contrast with 2019, fiscal 2020 Industrial sales are now projected in a range between a 3 percent decline and a 1 percent increase. The forecast update was primarilyBecause of a lower projection for full-year IFS sales, which are now predictable to be down from the previous year. The Company also updated its GTS forecast, with sales now predictable to be about flat with the previous year. Sales of SA are still predictable to be down from the previous year.
Donaldson now expects fiscal 2020 operating margin between 13.5 and 13.9 percent, contrast with 13.6 percent in the previous year. The Company continues to expect year-over-year gross margin improvement Because of benefits from production and supply chain optimization, procurement savings and pricing initiatives. Donaldson also expects to mitigate the loss of leverage on lower sales with disciplined expense management and lower incentive compensation.
Its earnings per share (EPS) expected to touch remained 9.70% for this year while earning per share for the next 5-years is expected to reach at 8.00%. DCI has a gross margin of 33.80% and an operating margin of 13.60% while its profit margin remained 9.50% for the last 12 months. The price moved ahead of 4.53% from the mean of 20 days, -30.42% from mean of 50 days SMA and performed -17.21% from mean of 200 days price.
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