Donaldson Co., a maker of industrial filtration products, saw sales increase 21.5% to $765 million this spring and increased sales guidance for the remainder of the year.
The Bloomington-based company's fiscal third quarter results are similar to many manufacturing firms that have seen a sharp increase in activity in recent months as many of the world's business hubs see lower COVID-19 rates.
The company also said its results would have been better if it had not been hit with supply problems, as both raw materials and shipping issues hit factories all over the country.
Donaldson made $84.4 million, or 66 cents per share, during the quarter, up from the $63.4 million, or 50 cents per share, in the same period last year. Analysts were expecting 58 cents a share.
"Donaldson's third quarter sales were the highest quarterly sales in our 106-year history and reflected strength in the economy as seen in our engine segment and the beginning of recovery in our industrial segment," said Tod Carpenter, the company's chief executive, in a news release. "Additionally, although we faced pressures from our supply chain, raw material costs and sales mix, we were able to offset this with volume leverage and recorded a year-over-year increase in gross margin of 50 basis points to 33.7%."
Quarterly growth benefited from a soft comparison to the third quarter a year ago when the coronavirus pandemic hit the industrial world, but Carpenter noted in a conference call with analysts that third quarter sales were 7% over the pre-pandemic third quarter of 2019.
Revenue for the company's engine segment was up 26.3% to $531 million, with gains in both the on-road and off-road businesses. Carpenter attributed the growth in off-road to strong demand globally for construction and agricultural equipment, plus an increase in mining activity.
The company's aftermarket segment grew 23% to $371.4 million. Total revenue of the industrial products segment rose 11.8% to $234 million.
"With one quarter left in our fiscal year and customer demand at a high level for most of our businesses, we are confident the sales momentum we experienced in the third quarter will carry through our fiscal year-end," Carpenter said.
The company now expects revenue to increase between 9% and 11% for the fiscal year ending July 31, up from the previous guidance of 5% to 8% growth.
Donaldson's chief financial officer, Scott Robinson, said in the earnings call that detailed guidance for the next full fiscal year will be made when Donaldson releases its fourth quarter results. However, he expects sales momentum will continue at least through the first half of fiscal 2022 and also noted that the company expects to continue to pay more for raw material and transportation costs as well.
Operating expenses in the first half of fiscal 2022 will likely increase, particularly customer engagement costs, as sales and engineering professionals can again make more in-person visits to customers and trade shows will be in-person again.
On the conference call, Carpenter also said that the Donaldson Foundation had donated $1 million in the third quarter to help rebuild areas in the Twin Cities that were damaged during the rioting last year.
Shares of Donaldson closed on Tuesday at $62.86, up 43 cents. Over the past 52 weeks, the shares have ranged between $42.59 and $65.47.