Donaldson Co. reported first-quarter results that largely met analysts' expectations and set the company on target for record results in fiscal 2019.
The Bloomington-based company recorded earnings of $73.8 million, or 56 cents per share, an increase over the $60.9 million, or 46 cents per share, in the first quarter last year and a penny below expectations.
"We had a strong start to the fiscal year, with benefits from consistent execution of our strategic priorities and significant expense leverage contributing to record first quarter sales and earnings," said Tod Carpenter, president and chief executive. "Strength from program wins and further penetration into existing and adjacent markets built on favorable market conditions, and we are on track to deliver record sales and profit in 2019."
The maker of industrial filtration products and equipment had sales of $701.4 million, up 8.8 percent over sales of $644.8 million in the first quarter a year ago. Analysts tracked by Thomson Reuters expected revenue of $700.4 million.
Sales in the Engine Products and Industrial Products segments both increased 8.8 percent in the quarter.
The company made some gains in raising prices to offset raw material costs but gross margins dipped as transportation and other supply-chain costs also increased. The first quarter 2019 gross margin was 34.0 percent, down from 34.8 percent in the first quarter last year.
During the quarter, the company completed the acquisition of BOFA International, a maker of fume extraction equipment that will fit within Donaldson's Industrial segment. BOFA made a small contribution to overall results in the quarter and Donaldson raised overall expectations for the rest of the year.
BOFA is expected to add 1 percent to overall sales for fiscal 2019 and 2 cents of EPS. Donaldson expects fiscal 2019 sales to increase 7 to 11 percent overall and in both operating segments.
Shares of Donaldson closed at $51.28, down nearly 10 percent. Year-to-date shares are up 2.6 percent.