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Apr 30, 2022
Donaldson Q3 2022 Earnings Report
Reported record third quarter sales driven by pricing actions and high demand, but net earnings decreased slightly due to inflation and supply chain constraints.
Key Takeaways
Donaldson Company reported record third quarter sales of $853.2 million, an 11.5% increase from the previous year. EPS increased to $0.67 from $0.66. However, net earnings decreased slightly by 1.8% to $83.0 million due to persistent inflation and supply chain challenges.
Third quarter sales increased 11.5% to a record $853.2 million.
GAAP EPS increased to $0.67 from $0.66.
Operating margin decreased to 13.0% from 14.3% due to inflation.
Fiscal year 2022 sales guidance increased, and EPS range narrowed.
Donaldson
Donaldson
Forward Guidance
Fiscal 2022 sales are expected to increase 14.5% to 16.5% over prior year. GAAP EPS is now expected to be between $2.67 and $2.73.
Positive Outlook
- Fiscal 2022 sales are expected to increase 14.5% to 16.5%.
- Engine sales are projected to increase between 16% and 18%.
- Industrial sales are expected to increase between 10% and 12%.
- Share repurchase expectation increased to between 2.0% and 2.5% of shares outstanding.
- Better-than-expected third quarter performance in Off-Road and Aftermarket.
Challenges Ahead
- Currency translation is forecast to negatively impact sales by approximately 3%.
- Fiscal 2022 gross margin is expected to be down between 1.5 and 2.0 percentage points.
- Fiscal 2022 operating margin is forecast to be between 13.5% and 13.9%.
- Free cash flow conversion is expected to be between 50% and 60%.
- Weaker-than-expected third quarter gross margin results drove the revised full-year outlook.