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Jan 31, 2024
Donaldson Q2 2024 Earnings Report
Reported record sales and earnings, driven by volume growth and pricing benefits.
Key Takeaways
Donaldson reported a strong second quarter with sales up 5.8% to $876.7 million and EPS of $0.81, a 15.9% increase compared to the previous year. The company is raising its fiscal 2024 operating margin and EPS guidance and is on track to deliver record full-year sales and EPS.
Second quarter sales increased by 5.8% to $876.7 million compared to 2023.
GAAP EPS increased by 15.9% to $0.81 compared to 2023.
Gross margin was 35.2%, up 90 basis points from 34.3% in 2023.
The company is raising fiscal 2024 operating margin and EPS guidance.
Donaldson
Donaldson
Forward Guidance
Full-year EPS is forecast to be between $3.24 and $3.32. Sales are expected to increase between 3% and 7% year over year. Operating margin is expected to improve to between 15.0% and 15.4%.
Positive Outlook
- Full-year EPS is forecast to be between $3.24 and $3.32, up from prior guidance of between $3.14 and $3.30.
- Sales are expected to increase between 3% and 7% year over year, with a pricing benefit of approximately 2% and a currency translation tailwind of roughly 1%.
- Mobile sales are forecast to increase between 1% and 5% versus 2023.
- Industrial sales are expected to increase between 3% and 7% compared with prior year.
- Life Sciences sales are forecast to grow approximately 20% year over year.
Challenges Ahead
- Continued softening end-market conditions, including in the agriculture markets and in China, are expected to drive a low double-digit decrease in Off-Road sales.
- On-Road sales are projected to be flat versus prior year.
- Operating margin is expected to improve to between 15.0% and 15.4%, Year over year gross margin improvement is forecast to offset investments in the Life Sciences segment.
- Interest expense is forecast to be approximately $23 million.
- Donaldson projects a fiscal 2024 effective income tax rate of between 24% and 25%.