Donaldson records strong fourth quarter across segments

Donaldson Co. saw sales momentum and an improved profit margin as it reported solid fourth-quarter results across all geographies and segments.

The "strong finish to fiscal 2018" came despite inflationary pressure, said Tod Carpenter, the Bloomington-based company's chairman and CEO.

The company's earnings grew 50 percent to $102.4 million, or 78 cents per share, compared with the same period a year ago. Sales increased 9.8 percent to $724.7 million, including a 1.3 percent benefit from currency translations.

Adjusted for the impact of federal corporate tax cuts, acquisition-related and other cuts, earnings were 58 cents a share, matching analysts' expectations. Sales came in slightly lower than expected.

For the fiscal year ended July 31, Donaldson reported record sales of $2.7 billion, up 15.3 percent year over year, and record adjusted earnings of $2 per share, up 18.3 percent.

The biggest gain for the year was in the company's engine-products segment, which saw annual sales increase 19 percent; industrial products saw an 8.1 percent gain.

Sales from Donaldson's gas-turbine system business, within the industrial-products segment, were down 36.5 percent during the quarter, but the company had anticipated a decline.

The company is taking momentum gained in the fourth quarter to head into fiscal 2019, when it expects another year of record sales and earnings. Carpenter told analysts on the company's conference call that Donaldson expects local currency sales growth in the new fiscal year to grow 8 to 12 percent and earnings per share to increase from the midteens to low 20 percent range.

"Although there is a global uncertainty related to trade, and we still expect inflationary pressure on raw materials and freight, our plan reflects new sales and profit records in 2019," Carpenter told analysts.

Shares of Donaldson closed at $53.77 per share, up 6.6 percent on Thursday. Over the last 52 weeks, shares have traded in the range of $42.59 to $53.88 per share.

Patrick Kennedy • 612-673-7926