Slowing demand in September and October led to a decrease in Donaldson Co. first-quarter sales of 3 percent. On Wednesday, the Bloomington-based provider of filtration systems reported sales of $589 million, down from $608 million in the first quarter last year.
The company, which makes filtration systems for factories, airplanes, agricultural equipment and massive trucks, also reported a 21 percent decrease in net earnings and a 20 percent drop in earnings per share during the quarter.
"We had started our new fiscal year in August with excellent operating momentum and a good open order backlog. However, we then began to see conditions at many of our customers start to quickly decelerate," CEO Bill Cook told analysts during a conference call.
Customer confidence dropped as many engine suppliers saw orders fall and "higher-than-desired inventory levels," Cook said. Donaldson customer Caterpillar, for example, recently announced it was cutting production of construction and mining equipment and closing its tree harvester plant in Owatonna.
Donaldson's net earnings for the quarter ended Oct. 31 were $54 million, 36 cents per share, compared with $69 million, 45 cents per share, for the same period last year.
Still, Donaldson's results were consistent with its adjusted expectations, Cook said. The company had reduced its outlook for its full-year sales and earnings in October. It said then that it expected first-quarter sales for fiscal 2013 to be down 2 to 6 percent compared to last year.
The company expects the slowdown to be temporary.
"We see the current downturn as short-term, primarily due to high levels of global uncertainty," Cook told analysts. "We expect to return to year-over-year growth in our second quarter."
Donaldson forecasts full-year sales for 2013 to range from flat to increasing 4 percent, Cook noted. The company forecasts full-year earnings per share to be between $1.68 and $1.88.
Cook said some expansions and projects will be delayed, including a new campus planned for China. In addition, the company doesn't plan any acquisitions in the near future, officials said. "We ... will remain an organic growth story," Cook said.
Donaldson's stock fell 47 cents a share Wednesday to close at $33.37.
Dee DePass 612-673-7725 Patrick Kennedy 612-673-7926