Donaldson Company, Inc. (NYSE: DCI) announced its financial results for
its fiscal 2014 third quarter. Summarized financial results are as
follows (dollars in millions, except per share data):
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Nine Months Ended |
|
|
| April 30 |
|
| April 30 |
|
|
| 2014 |
|
| 2013 |
|
| Change |
|
| 2014 |
|
| 2013 |
|
| Change |
Net sales
|
|
|
$624
|
|
|
$619
|
|
|
1
|
%
|
|
|
$1,805
|
|
|
$1,804
|
|
|
---
|
%
|
Operating income
|
|
|
93
|
|
|
99
|
|
|
(6
|
)%
|
|
|
257
|
|
|
243
|
|
|
5
|
%
|
Net earnings
|
|
|
67
|
|
|
70
|
|
|
(4
|
)%
|
|
|
187
|
|
|
175
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
$0.46
|
|
|
$0.46
|
|
|
---
|
%
|
|
|
$1.26
|
|
|
$1.16
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"We are proud of our execution during the quarter while we remain
aggressively focused on additional growth opportunities," said Bill
Cook, Donaldson's CEO. "Our end market conditions remain mixed as demand
for our replacement filters continues to improve in both our Engine and
Industrial segments, while conditions for new first-fit systems in our
OEM markets are recovering slower than we had anticipated. Our Engine
Products' sales increased 5 percent in local currency from last year,
driven by increases in Engine Aftermarket and On-Road sales of 11
percent and 13 percent, respectively. However, our Industrial Products'
sales decreased 7 percent in local currency as a result of a 40 percent
decline in our Gas Turbine shipments from last year's record third
quarter. As previously discussed, we had a surge in our gas turbine
shipments last year, and the overall industry is now installing that new
electrical generation capacity. Partially offsetting our Gas Turbine
sales decrease were our Industrial Filtration Solutions and Special
Applications businesses, which grew 8 percent and 4 percent,
respectively. Internationally, excluding our Gas Turbine sales, our
local currency sales were strong with Europe up 7 percent, Asia Pacific
up 10 percent, and Latin America up 23 percent."
"As we begin our fourth quarter, we have narrowed our guidance ranges.
We reduced our Industrial Products' sales outlook due to a couple of
factors. First, the continued geopolitical uncertainty continues to
negatively impact the recovery for general industrial capital investment
and, as a result, the demand for our new Industrial Filtration Solutions
systems. Second, several of our large gas turbine projects that were
scheduled for shipment in our fourth quarter have been rescheduled by
our Customers to be delivered in our FY15. As a result, we are now
forecasting our full-year Company sales to be a slight increase over
last year. The midpoint of our operating margin forecast is 14.3
percent, a 20 basis point improvement over the prior year. The
combination of our updated outlook for sales and operational performance
results in our FY14 EPS forecast of between $1.69 and $1.77 per share."
Financial Statement Discussion
The impact of foreign currency translation decreased sales by $0.6
million, or 0.1 percent, during the quarter and decreased sales by $16.2
million, or 0.9 percent, year-to-date. The foreign currency translation
impact decreased net earnings by $0.2 million, or 0.3 percent, during
the quarter and decreased net earnings by $1.4 million, or 0.8 percent,
for the year.
Gross margin was 35.8 percent for the quarter, consistent with last
year. During the quarter, we realized positive mix impact from a higher
percentage of replacement filter sales. We also benefitted from our Continuous
Improvement initiatives. These offset higher compensation expenses.
Year-to-date, our gross margin is 35.4 percent versus 34.3 percent last
year.
Operating expenses for the quarter were $130.7 million, up 6.4 percent
from last year. As a percent of sales, operating expenses were 20.9
percent compared to last year's 19.8 percent. Higher expenses from our
Global ERP project and incentive compensation were partially offset by
lower pension, insurance, and warranty expenses. Operating expenses
year-to-date were $382.9 million, or 21.2 percent of sales, compared to
$375.5 million, or 20.8 percent of sales, last year.
Our operating margin for the quarter was 14.9 percent, down 100 basis
points from the prior year. Year-to-date operating margin was 14.2
percent, up 70 basis points from last year.
Our effective tax rate for the quarter was 28.5 percent, compared to the
prior year rate of 29.8 percent. This decrease compared to the prior
year was primarily due to changes in the mix of earnings between tax
jurisdictions. The year-to-date effective tax rate was 27.9 percent,
compared to the prior year rate of 29.2 percent.
As part of our ongoing share repurchase program we repurchased 2,400,000
shares for $99.5 million during the quarter. Year-to-date we have
repurchased 4,039,000 shares, or 2.7 percent of our diluted outstanding
shares, for $165.9 million.
FY14 Outlook
-
We project our Company's sales to be between $2.44 and $2.48 billion,
or a slight increase over the prior year including the negative impact
of foreign currency exchange rates. Our forecast is based on the Euro
at US$1.35 and 102 Yen to the US$.
-
Our full-year operating margin forecast is 14.1 to 14.5 percent.
Included in this forecast is approximately $22 million in operating
expense increases for our Global ERP project and incentive
compensation.
-
Our FY14 tax rate is anticipated to be between 28 and 29 percent.
-
We forecast our full-year FY14 EPS to be between $1.69 and $1.77.
-
Cash generated by operating activities is projected to be between $310
and $330 million. Our capital spending is estimated to be
approximately $90 million. Our share repurchase target remains at 4
percent of our diluted outstanding shares in FY14.
Engine Products: We now
forecast our FY14 sales to increase 3 to 7 percent, including the
negative impact of foreign currency.
-
Our On-Road OEM Customers are planning to build more heavy- and
medium-duty trucks in 2014.
-
Demand from our Off-Road OEM Customers is anticipated to continue to
be mixed: build rates of construction equipment are expected to
improve in North America and Europe but remain soft in Asia, build
rates of agriculture equipment are forecasted to decrease, and the
build rates of mining equipment are expected to remain weak.
-
We are anticipating continued growth for our Engine Aftermarket
business. Utilization rates for off-road equipment and on-road heavy
truck fleets are expected to continue improving. We should also
benefit from our continued expansion into emerging economies, the
increasing number of first-fit systems installed in the field with our
proprietary filters, and through continued expansion of our product
portfolio.
-
We forecast sales to decline slightly for our Aerospace and Defense
business compared to last year as the continued slowdown in U.S.
military activity should be mostly offset by growth from our
commercial aerospace sales.
Industrial Products: We now
forecast sales to decrease 4 to 7 percent, including the negative impact
of foreign currency.
-
Our Industrial Filtration Solutions' sales are projected to increase 2
to 5 percent. We assume our replacement filter sales will remain at
record levels due to improving general manufacturing conditions, while
our new filtration system sales will remain flat in the near-term due
to continuing low levels of new equipment investment by manufacturers.
-
We anticipate our Gas Turbine sales will decrease 29 to 32 percent
from our record sales last year due to the current slowdown in large
turbine power generation projects by our Customers.
-
We now forecast our Special Applications' sales to increase 2 to 5
percent due to improved market demand for our semiconductor and
venting products.
About Donaldson Company
Donaldson is a leading worldwide provider of filtration systems that
improve people's lives, enhance our Customers' equipment performance,
and protect our environment. We are a technology-driven Company
committed to satisfying our Customers' needs for filtration solutions
through innovative research and development, application expertise, and
global presence. Our approximately 12,300 employees contribute to the
Company's success by supporting our Customers at our more than 140
sales, manufacturing, and distribution locations around the world.
Donaldson is a member of the S&P MidCap 400 and Russell 1000 indices,
and our shares trade on the NYSE under the symbol DCI. Additional
information is available at www.donaldson.com.
SAFE HARBOR STATEMENT UNDER THE SECURITIES REFORM ACT OF 1995
The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 (the "Act") and is
making this cautionary statement in connection with such safe harbor
legislation. This announcement contains forward-looking statements,
including, without limitation, forecasts, plans, trends, and projections
relating to our business and financial performance and global economic
conditions, which involve uncertainties that could materially impact
results. All statements other than statements of historical fact are
forward-looking statements. These statements do not guarantee future
performance.
The Company wishes to caution investors that any forward-looking
statements are subject to uncertainties and other risk factors that
could cause actual results to differ materially from such statements,
including but not limited to risks associated with: world economic
factors and the ongoing global economic uncertainty, the reduced demand
for hard disk drive products with the increased use of flash memory, the
potential for some Customers to increase their reliance on their own
filtration capabilities, currency fluctuations, commodity prices,
political factors, the Company's international operations, highly
competitive markets, governmental laws and regulations, including the
impact of the various economic stimulus and financial reform measures,
the implementation of our new information technology systems, potential
global events resulting in market instability including financial
bailouts and defaults of sovereign nations, military and terrorist
activities, health outbreaks, natural disasters, and all of the other
risk factors included in our Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q. We undertake no obligation to publicly update or
revise any forward-looking statements.
|
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
|
DONALDSON COMPANY, INC. AND SUBSIDIARIES
|
(Thousands of dollars, except share and per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
April 30
|
|
|
April 30
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Net sales
|
|
|
$624,234
|
|
|
|
$619,371
|
|
|
|
$1,805,240
|
|
|
|
$1,804,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
400,773
|
|
|
|
397,870
|
|
|
|
1,165,737
|
|
|
|
1,185,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
223,461
|
|
|
|
221,501
|
|
|
|
639,503
|
|
|
|
618,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
130,727
|
|
|
|
122,914
|
|
|
|
382,914
|
|
|
|
375,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
92,734
|
|
|
|
98,587
|
|
|
|
256,589
|
|
|
|
243,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
(3,822
|
)
|
|
|
(3,608
|
)
|
|
|
(10,249
|
)
|
|
|
(11,962
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
2,374
|
|
|
|
2,719
|
|
|
|
6,987
|
|
|
|
8,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
|
94,182
|
|
|
|
99,476
|
|
|
|
259,851
|
|
|
|
247,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
26,846
|
|
|
|
29,634
|
|
|
|
72,583
|
|
|
|
72,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
$67,336
|
|
|
|
$69,842
|
|
|
|
$187,268
|
|
|
|
$174,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
145,310,710
|
|
|
|
148,136,620
|
|
|
|
146,543,727
|
|
|
|
148,404,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding
|
|
|
147,339,425
|
|
|
|
150,234,445
|
|
|
|
148,608,748
|
|
|
|
150,591,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
|
|
|
$0.46
|
|
|
|
$0.47
|
|
|
|
$1.28
|
|
|
|
$1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share assuming dilution
|
|
|
$0.46
|
|
|
|
$0.46
|
|
|
|
$1.26
|
|
|
|
$1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per share
|
|
|
$0.14
|
|
|
|
$0.10
|
|
|
|
$0.41
|
|
|
|
$0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DONALDSON COMPANY, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Thousands of dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
April 30
|
|
|
July 31
|
|
|
|
2014
|
|
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$238,222
|
|
$224,138
|
Short-term investments
|
|
|
152,544
|
|
99,750
|
Accounts receivable, net
|
|
|
453,151
|
|
430,766
|
Inventories, net
|
|
|
254,213
|
|
234,820
|
Prepaids and other current assets
|
|
|
69,465
|
|
66,188
|
|
|
|
|
|
|
Total current assets
|
|
|
1,167,595
|
|
1,055,662
|
|
|
|
|
|
|
Other assets and deferred taxes
|
|
|
289,409
|
|
268,614
|
Property, plant, and equipment, net
|
|
|
440,997
|
|
419,280
|
|
|
|
|
|
|
Total assets
|
|
|
$1,898,001
|
|
|
$1,743,556
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
$192,631
|
|
|
$186,460
|
Employee compensation and other liabilities
|
|
|
183,155
|
|
182,121
|
Short-term borrowings
|
|
|
65,557
|
|
9,190
|
Current maturity long-term debt
|
|
|
17,729
|
|
98,664
|
|
|
|
|
|
|
Total current liabilities
|
|
|
459,072
|
|
476,435
|
|
|
|
|
|
|
Long-term debt
|
|
|
227,751
|
|
102,774
|
Other long-term liabilities
|
|
|
85,015
|
|
79,160
|
|
|
|
|
|
|
Total liabilities
|
|
|
771,838
|
|
658,369
|
|
|
|
|
|
|
|
Equity
|
|
|
1,126,163
|
|
|
1,085,187
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
$1,898,001
|
|
|
$1,743,556
|
|
|
|
|
|
|
|
|
DONALDSON COMPANY, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Thousands of dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
April 30
|
|
|
|
2014
|
|
|
2013
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
$187,268
|
|
|
$174,768
|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
50,245
|
|
|
48,527
|
|
Changes in operating assets and liabilities
|
|
|
(5,764
|
)
|
|
(8,346
|
)
|
Tax benefit of equity plans
|
|
|
(8,119
|
)
|
|
(9,483
|
)
|
Stock compensation plan expense
|
|
|
9,474
|
|
|
7,363
|
|
Loss on sale of business
|
|
|
905
|
|
|
-
|
|
Other, net
|
|
|
(3,903
|
)
|
|
4,560
|
|
Net cash provided by operating activities
|
|
|
230,106
|
|
|
217,389
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenditures on property and equipment
|
|
|
(66,046
|
)
|
|
(69,425
|
)
|
Net change in short-term investments
|
|
|
(47,685
|
)
|
|
30,781
|
|
Net cash used in investing activities
|
|
|
(113,731
|
)
|
|
(38,644
|
)
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
(165,871
|
)
|
|
(60,975
|
)
|
Net change in debt and short-term borrowings
|
|
|
98,107
|
|
|
(67,623
|
)
|
Dividends paid
|
|
|
(59,675
|
)
|
|
(41,184
|
)
|
Tax benefit of equity plans
|
|
|
8,119
|
|
|
9,483
|
|
Exercise of stock options
|
|
|
13,035
|
|
|
|
12,131
|
|
Net cash used in financing activities
|
|
|
(106,285
|
)
|
|
|
(148,168
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
3,994
|
|
|
|
7,622
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
14,084
|
|
|
|
38,199
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents – beginning of year
|
|
|
224,138
|
|
|
|
225,789
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents – end of period
|
|
|
$238,222
|
|
|
|
$263,988
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT DETAIL
|
(Thousands of dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine
|
|
|
Industrial
|
|
|
Corporate &
|
|
|
Total
|
|
|
|
Products
|
|
|
Products
|
|
|
Unallocated
|
|
|
Company
|
3 Months Ended April 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$402,157
|
|
|
$222,077
|
|
|
---
|
|
|
|
$624,234
|
Earnings before income taxes
|
|
|
61,432
|
|
|
32,507
|
|
|
243
|
|
|
|
94,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended April 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$383,314
|
|
|
$236,057
|
|
|
---
|
|
|
|
$619,371
|
Earnings before income taxes
|
|
|
65,680
|
|
|
37,555
|
|
|
(3,759
|
)
|
|
|
99,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 Months Ended April 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$1,160,948
|
|
|
$644,292
|
|
|
---
|
|
|
|
$1,805,240
|
Earnings before income taxes
|
|
|
170,799
|
|
|
91,682
|
|
|
(2,630
|
)
|
|
|
259,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 Months Ended April 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$1,107,814
|
|
|
$696,540
|
|
|
---
|
|
|
|
$1,804,354
|
Earnings before income taxes
|
|
|
152,129
|
|
|
102,709
|
|
|
(7,835
|
)
|
|
|
247,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES BY PRODUCT
|
(Thousands of dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
April 30
|
|
|
April 30
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Engine Products segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road Products
|
|
|
$88,791
|
|
|
$93,797
|
|
|
$260,302
|
|
|
$268,056
|
On-Road Products
|
|
|
33,081
|
|
|
30,288
|
|
|
95,398
|
|
|
96,207
|
Aftermarket Products
|
|
|
255,818
|
|
|
231,747
|
|
|
729,052
|
|
|
668,264
|
Aerospace and Defense Products
|
|
|
24,467
|
|
|
27,482
|
|
|
76,196
|
|
|
75,287
|
Total Engine Products segment
|
|
|
$402,157
|
|
|
$383,314
|
|
|
$1,160,948
|
|
|
$1,107,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Products segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Filtration Solutions Products
|
|
|
$137,364
|
|
|
$125,447
|
|
|
$401,642
|
|
|
$386,475
|
Gas Turbine Products
|
|
|
42,005
|
|
|
68,733
|
|
|
110,106
|
|
|
182,295
|
Special Applications Products
|
|
|
42,708
|
|
|
41,877
|
|
|
132,544
|
|
|
127,770
|
Total Industrial Products segment
|
|
|
$222,077
|
|
|
$236,057
|
|
|
$644,292
|
|
|
$696,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
|
|
$624,234
|
|
|
$619,371
|
|
|
$1,805,240
|
|
|
$1,804,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
(Thousands of dollars, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
April 30
|
|
|
April 30
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Net cash provided by operating activities
|
|
|
$78,501
|
|
|
|
$108,209
|
|
|
|
$230,106
|
|
|
|
$217,389
|
|
Net capital expenditures
|
|
|
(23,198
|
)
|
|
|
(17,672
|
)
|
|
|
(66,046
|
)
|
|
|
(69,425
|
)
|
Free cash flow
|
|
|
$55,303
|
|
|
|
$90,537
|
|
|
|
$164,060
|
|
|
|
$147,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
$67,336
|
|
|
|
$69,842
|
|
|
|
$187,268
|
|
|
|
$174,768
|
|
Income taxes
|
|
|
26,846
|
|
|
|
29,634
|
|
|
|
72,583
|
|
|
|
72,235
|
|
Interest expense, net
|
|
|
1,824
|
|
|
|
2,269
|
|
|
|
5,337
|
|
|
|
6,110
|
|
Depreciation and amortization
|
|
|
17,078
|
|
|
|
15,631
|
|
|
|
50,245
|
|
|
|
48,527
|
|
EBITDA
|
|
|
$113,084
|
|
|
|
$117,376
|
|
|
|
$315,433
|
|
|
|
$301,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year net sales
|
|
|
$619,371
|
|
|
|
$647,237
|
|
|
|
$1,804,354
|
|
|
|
$1,836,415
|
|
Change in net sales, excluding foreign currency translation
|
|
|
5,497
|
|
|
|
(17,843
|
)
|
|
|
17,094
|
|
|
|
(3,434
|
)
|
Foreign currency translation
|
|
|
(634
|
)
|
|
|
(10,023
|
)
|
|
|
(16,208
|
)
|
|
|
(28,627
|
)
|
Current year net sales
|
|
|
$624,234
|
|
|
|
$619,371
|
|
|
|
$1,805,240
|
|
|
|
$1,804,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year net earnings
|
|
|
$69,842
|
|
|
|
$70,946
|
|
|
|
$174,768
|
|
|
|
$193,320
|
|
Change in net earnings, excluding foreign currency translation
|
|
|
(2,303
|
)
|
|
|
(413
|
)
|
|
|
13,886
|
|
|
|
(16,698
|
)
|
Foreign currency translation
|
|
|
(203
|
)
|
|
|
(691
|
)
|
|
|
(1,386
|
)
|
|
|
(1,854
|
)
|
Current year net earnings
|
|
|
$67,336
|
|
|
|
$69,842
|
|
|
|
$187,268
|
|
|
|
$174,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (CONTINUED)
|
(Thousands of dollars, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
April 30
|
|
|
April 30
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Net earnings
|
|
|
$67,336
|
|
|
$69,842
|
|
|
$187,268
|
|
|
$174,768
|
Restructuring charges, net of tax
|
|
|
160
|
|
|
911
|
|
|
2,021
|
|
|
2,098
|
Net earnings, excluding special items
|
|
|
$67,496
|
|
|
$70,753
|
|
|
$189,289
|
|
|
$176,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share assuming dilution
|
|
|
$0.46
|
|
|
$0.46
|
|
|
$1.26
|
|
|
$1.16
|
Restructuring charges per share, net of tax
|
|
|
---
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
Net earnings per share assuming dilution, excluding special items
|
|
|
$0.46
|
|
|
$0.47
|
|
|
$1.27
|
|
|
$1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Although free cash flow, EBITDA, net sales excluding foreign currency
translation, and net earnings excluding foreign currency translation are
not measures of financial performance under GAAP, the Company believes
they are useful in understanding its financial results. Free cash flow
is a commonly used measure of a company's ability to generate cash in
excess of its operating needs. EBITDA is a commonly used measure of
operating earnings less non-cash expenses. Both net sales and net
earnings excluding foreign currency translation provide a comparable
measure for understanding the operating results of the company's foreign
entities excluding the impact of foreign exchange. A shortcoming of
these financial measures is that they do not reflect the company's
actual results under GAAP. Management does not intend these items to be
considered in isolation or as a substitute for the related GAAP measures.

Donaldson Company, Inc.
Rich Sheffer, 952-887-3753
May 20, 2014