Third quarter 2017 sales increased from 2016 by 6.5 percent, or
7.7 percent in local currency
MINNEAPOLIS--(BUSINESS WIRE)--
Donaldson Company, Inc. (NYSE: DCI) today announced third quarter 2017
net earnings of $60.1 million, or $0.45 per share,1 compared
with $54.8 million, or $0.41 per share, in 2016. The prior-year results
included restructuring charges, which reduced GAAP earnings per share
(EPS) by approximately 2 cents. Excluding this impact, third quarter
2016 adjusted EPS2 were $0.43. The tables attached to this
press release include a reconciliation of GAAP to non-GAAP measures.
“Our employees are doing an excellent job executing our strategy while
also supporting our customers as we react to stronger-than-expected
demand in our Engine segment,” said Tod Carpenter, president and chief
executive officer. “We anticipate the strong growth in Engine,
particularly in Off-Road and Aftermarket, carrying through the fourth
quarter, resulting in full-year sales and profit that are both above our
prior guidance.
“While the signs of stabilization in our Engine markets are encouraging,
the variability in our Industrial segment is a reminder that there is
still economic and geopolitical uncertainty. We continue to address the
mixed operating environment by planning cautiously while making targeted
investments. These actions are guided by our strategic priorities, and
our results so far this year are evidence of the progress we have made.
Sales of innovative products and replacement parts are strong, and the
recent acquisition of Hy-Pro Filtration will contribute to our inorganic
growth targets. I am confident that we can leverage this success to meet
our strategic and financial targets for this fiscal year and further
strengthen our foundation for delivering long-term growth.”
|
1 All earnings per share figures refer to diluted
earnings per share.
|
|
2 Adjusted earnings per share, a non-GAAP financial
measure, exclude the impact of certain matters not related to the
Company’s ongoing operations, including one-time charges in fiscal
2016 and the benefit from the Northern Technical, L.L.C. escrow
settlement in first quarter 2017. See the “Accounting
Considerations” section of this release for more information.
|
|
Third Quarter 2017 Financial Results
Donaldson generated third quarter 2017 sales of $608.2 million, an
increase of 6.5 percent from $571.3 million in 2016. Excluding the
negative impact from currency translation, third quarter sales increased
7.7 percent from the prior year, driven by an increase of 14.3 percent
in sales of Engine Products, partially offset by a 3.3 percent decline
in Industrial Products. The table below illustrates year-over-year sales
performance with and without the impact from foreign currency
translation.
|
|
|
|
|
|
|
Three months ended April 30, 2017
|
|
Nine months ended April 30, 2017
|
|
|
Reported % Change
|
|
Constant Currency % Change
|
|
Reported % Change
|
|
Constant Currency % Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road
|
|
27.5
|
|
%
|
|
30.0
|
|
%
|
|
12.3
|
|
%
|
|
13.1
|
|
%
|
On-Road
|
|
1.6
|
|
|
|
2.2
|
|
|
|
(18.6
|
)
|
|
|
(19.4
|
)
|
|
Aftermarket
|
|
11.1
|
|
|
|
11.4
|
|
|
|
12.4
|
|
|
|
12.2
|
|
|
Aerospace & Defense
|
|
22.3
|
|
|
|
24.0
|
|
|
|
12.1
|
|
|
|
13.0
|
|
|
Engine Products
|
|
13.5
|
|
%
|
|
14.3
|
|
%
|
|
9.4
|
|
%
|
|
9.4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Filtration Solutions
|
|
0.3
|
|
%
|
|
2.7
|
|
%
|
|
2.1
|
|
%
|
|
3.4
|
|
%
|
Gas Turbine Systems
|
|
(34.5
|
)
|
|
|
(33.7
|
)
|
|
|
(18.9
|
)
|
|
|
(18.0
|
)
|
|
Special Applications
|
|
12.1
|
|
|
|
14.8
|
|
|
|
0.6
|
|
|
|
2.4
|
|
|
Industrial Products
|
|
(5.3
|
)
|
%
|
|
(3.3
|
)
|
%
|
|
(1.9
|
)
|
%
|
|
(0.5
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
|
6.5
|
|
%
|
|
7.7
|
|
%
|
|
5.2
|
|
%
|
|
5.8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donaldson’s third quarter 2017 operating margin increased to 14.5
percent from 13.1 percent in 2016. The prior-year rate was negatively
impacted by approximately 0.7 percentage points from restructuring
charges.3 Excluding the impact from these charges, third
quarter 2017 GAAP operating margin increased by approximately 0.7
percentage points from the adjusted operating margin in 2016, reflecting
year-over-year improvement in both gross margin and operating expense as
a percent of sales (“expense rate”).
Third quarter 2017 gross margin increased to 34.8 percent from last
year’s GAAP and adjusted gross margin rates of 34.4 percent and 34.6
percent, respectively. Donaldson’s third quarter 2017 expense rate of
20.2 percent was favorable to the prior year GAAP and adjusted rates of
21.3 percent and 20.7 percent, respectively. The expense rate reflects
leverage on higher sales than last year, partially offset by an increase
in variable compensation expense.
|
3 Management believes that comparing fiscal 2017 GAAP
operating profit metrics, which were unaffected by one-time items,
with fiscal 2016 adjusted operating profit metrics is useful in
understanding the Company’s performance given the one-time items
included in prior-year GAAP results. See the Consolidated Rate
Analysis table within the schedules attached to this press release
for a summary of GAAP and non-GAAP gross profit, operating
expenses and operating income as a rate of sales.
|
|
Third quarter 2017 interest expense declined to $4.8 million from $5.3
million last year. Donaldson’s effective income tax rate was 28.7
percent in third quarter 2017, compared with 24.0 percent in 2016. The
prior-year rate included a benefit from favorable settlements of tax
audits, which lowered the rate by approximately 4.2 percentage points.
During third quarter 2017, Donaldson repurchased 1.3 million shares, or
1.0 percent, of its common stock at an average price of $45.07 for a
total investment of $58.6 million. Year to date, the Company has
repurchased 2.7 million shares, or 2.0 percent, of its common stock at
an average price of $41.20 for a total investment of $110.4 million.
Donaldson paid dividends of $23.1 million in third quarter and $69.5
million year-to-date 2017.
Fiscal 2017 Outlook
Donaldson expects full-year 2017 adjusted EPS between $1.67 and $1.71,
compared with prior guidance of $1.60 to $1.68. Fiscal 2017 GAAP EPS
will be approximately 5 cents higher than adjusted EPS, reflecting the
benefit from the Northern Technical, L.L.C. escrow settlement that
occurred in first quarter 2017.
The Company expects fiscal 2017 sales will increase from 2016 by
approximately 6 percent, compared with prior guidance for sales to grow
between 2 percent and 4 percent. The full-year sales guidance includes a
negative impact from currency translation of approximately $8.5 million
and a benefit of $6 million from the recent acquisition of Hy-Pro
Filtration.
Full-year 2017 sales in the Engine Products segment are now expected to
increase from 2016 by 10 percent to 11 percent, compared with prior
guidance of 5 percent to 7 percent. The year-over-year improvement in
Engine is driven by growth in Aftermarket, Off-Road, and Aerospace and
Defense, partially offset by a decline in On-Road. Additionally, the
Engine guidance includes a benefit of approximately $6 million from
Hy-Pro. Full-year 2017 sales of Industrial Products are expected to
decline between 3 percent and 2 percent, compared with a decline between
3 percent and 1 percent in prior guidance. The year-over-year change in
Industrial sales reflects declines in Gas Turbine Systems and Special
Applications, partially offset by growth in Industrial Filtration
Solutions.
Donaldson expects full-year 2017 operating margin between 14.0 percent
and 14.4 percent, an increase of 0.2 percentage points when comparing
the midpoints of the current and prior guidance ranges. The fiscal 2017
effective income tax rate is forecast between 27.7 percent and 28.7
percent, and other income is now expected between $10 million and $15
million.
Full-year 2017 capital expenditures are forecast between $60 million and
$70 million and cash conversion is expected between 100 percent and 110
percent, compared with prior guidance of 105 percent to 115 percent.
Donaldson expects to repurchase between 2 percent and 3 percent of its
outstanding shares during fiscal 2017.
Accounting Considerations
During first quarter 2017, Donaldson recorded income of $6.8 million
related to the settlement of claims against an escrow account that had
been established in connection with the Company’s acquisition of
Northern Technical, L.L.C., which was completed in first quarter 2015.
The income was recorded as other income in Donaldson’s first quarter
2017 consolidated statement of earnings and within the Industrial
Products segment earnings.
During fiscal 2016, pre-tax charges related to restructuring reduced
Donaldson’s third quarter and year-to-date 2016 operating income by
$4.1 million and $12.6 million, respectively. Additionally, the Company
incurred $3.1 million of expenses in fiscal 2016 related to an
independent investigation into its Gas Turbine Systems business. The
restructuring and investigation charges were excluded from fiscal 2016
non-GAAP metrics.
Miscellaneous
The Company will webcast its fiscal 2017 third quarter earnings
conference call today at 9:00 a.m. CDT. To listen to a live webcast of
the call, visit the Events & Presentations section of Donaldson’s
Investor Relations website (IR.Donaldson.com),
and click on the “listen to webcast” option. The webcast replay will be
available within the Events & Presentations section of the Company’s
Investor Relations website beginning at approximately 12:00 p.m. CDT
today.
Statements in this release regarding future events and expectations,
such as forecasts, plans, trends and projections relating to the
Company’s business and financial performance, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and are identified by words or phrases such as “will
likely result,” “are expected to,” “will continue,” “will allow,”
“estimate,” “project,” “believe,” “expect,” “anticipate,” “forecast,”
and similar expressions. These forward-looking statements speak only as
of the date such statements are made and are subject to risks and
uncertainties that could cause the Company’s results to differ
materially from these statements. These factors include, but are not
limited to, world economic and industrial market conditions; the
Company's ability to maintain certain competitive advantages over
competitors; pricing pressures; the Company's ability to protect and
enforce its intellectual property rights; the Company's dependence on
global operations; customer concentration in certain cyclical
industries; commodity availability and pricing; the implementation of
new information technology systems; information security and data
breaches; foreign currency fluctuations; governmental laws and
regulations; changes in tax laws, regulations and results of
examinations; the Company's ability to attract and retain key personnel;
changes in capital and credit markets; execution of the Company's
acquisition strategy; the possibility of goodwill or intangible asset
impairment; execution of restructuring plans; the Company's ability to
maintain an effective system of internal control over financial
reporting. These risks and uncertainties are described in Item 1A of the
Company’s Annual Report on Form 10-K for the year ended July 31, 2016.
The Company makes these statements as of the date of this disclosure,
and undertakes no obligation to update them unless otherwise required by
law. The results presented herein are preliminary, unaudited and subject
to revision until the Company files its results with the United States
Securities and Exchange Commission on Form 10-Q.
About Donaldson Company
Founded in 1915, Donaldson Company is a global leader in the filtration
industry with approximately 160 sales, manufacturing and distribution
locations in 44 countries. Donaldson’s innovative filtration
technologies improve people’s lives, enhance customers’ equipment
performance and protect the environment. For more information, visit www.Donaldson.com.
|
|
|
|
|
|
|
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
608.2
|
|
|
$
|
571.3
|
|
|
6.5
|
|
%
|
|
$
|
1,711.8
|
|
|
$
|
1,626.5
|
|
|
5.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
396.7
|
|
|
|
374.7
|
|
|
5.9
|
|
%
|
|
|
1,118.2
|
|
|
|
1,081.0
|
|
|
3.4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
211.5
|
|
|
|
196.6
|
|
|
7.6
|
|
%
|
|
|
593.6
|
|
|
|
545.5
|
|
|
8.8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
123.0
|
|
|
|
121.7
|
|
|
1.1
|
|
%
|
|
|
359.3
|
|
|
|
361.4
|
|
|
(0.6
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
88.5
|
|
|
|
74.9
|
|
|
18.0
|
|
%
|
|
|
234.3
|
|
|
|
184.1
|
|
|
27.3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
(0.6
|
)
|
|
|
(2.5
|
)
|
|
(70.1
|
)
|
%
|
|
|
(10.4
|
)
|
|
|
(6.6
|
)
|
|
58.0
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
4.8
|
|
|
|
5.3
|
|
|
(6.8
|
)
|
%
|
|
|
14.4
|
|
|
|
15.8
|
|
|
(8.5
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
|
84.3
|
|
|
|
72.1
|
|
|
16.9
|
|
%
|
|
|
230.3
|
|
|
|
174.9
|
|
|
31.7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
24.2
|
|
|
|
17.3
|
|
|
40.0
|
|
%
|
|
|
65.7
|
|
|
|
43.6
|
|
|
50.7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
60.1
|
|
|
$
|
54.8
|
|
|
9.6
|
|
%
|
|
$
|
164.6
|
|
|
$
|
131.3
|
|
|
25.3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - basic
|
|
|
132.5
|
|
|
|
133.9
|
|
|
(1.1
|
)
|
%
|
|
|
133.0
|
|
|
|
133.8
|
|
|
(0.6
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - diluted
|
|
|
134.1
|
|
|
|
134.7
|
|
|
(0.5
|
)
|
%
|
|
|
134.4
|
|
|
|
134.7
|
|
|
(0.3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share - basic
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
9.8
|
|
%
|
|
$
|
1.24
|
|
|
$
|
0.98
|
|
|
26.5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share - diluted
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
9.8
|
|
%
|
|
$
|
1.23
|
|
|
$
|
0.97
|
|
|
26.8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per share
|
|
$
|
0.175
|
|
|
$
|
0.170
|
|
|
2.9
|
|
%
|
|
$
|
0.525
|
|
|
$
|
0.510
|
|
|
2.9
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
April 30,
|
|
July 31,
|
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
295.9
|
|
$
|
243.2
|
Accounts receivable, net
|
|
|
459.2
|
|
|
452.4
|
Inventories, net
|
|
|
272.8
|
|
|
234.1
|
Prepaids and other current assets
|
|
|
56.1
|
|
|
80.0
|
Total current assets
|
|
|
1,084.0
|
|
|
1,009.7
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
462.5
|
|
|
469.8
|
Other assets and deferred taxes
|
|
|
333.8
|
|
|
307.5
|
Total assets
|
|
$
|
1,880.3
|
|
$
|
1,787.0
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
206.3
|
|
$
|
165.5
|
Current maturities of long-term debt
|
|
|
100.6
|
|
|
51.2
|
Trade accounts payable
|
|
|
179.0
|
|
|
143.3
|
Employee compensation and other current liabilities
|
|
|
169.0
|
|
|
183.8
|
Total current liabilities
|
|
|
654.9
|
|
|
543.8
|
|
|
|
|
|
Long-term debt
|
|
|
298.1
|
|
|
350.2
|
Other long-term liabilities
|
|
|
125.3
|
|
|
121.6
|
Total liabilities
|
|
|
1,078.3
|
|
|
1,015.6
|
|
|
|
|
|
Shareholders' equity
|
|
|
802.0
|
|
|
771.4
|
Total liabilities & shareholders' equity
|
|
$
|
1,880.3
|
|
$
|
1,787.0
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
April 30,
|
|
|
2017
|
|
2016
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
164.6
|
|
|
$
|
131.3
|
|
Adjustments to reconcile net earnings to net cash
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
55.8
|
|
|
|
55.9
|
|
Changes in operating assets and liabilities
|
|
|
1.5
|
|
|
|
(0.1
|
)
|
Tax benefit of equity plans
|
|
|
(4.1
|
)
|
|
|
(1.8
|
)
|
Stock compensation plan expense
|
|
|
7.5
|
|
|
|
6.0
|
|
Other, net
|
|
|
(1.2
|
)
|
|
|
10.6
|
|
Net cash provided by operating activities
|
|
|
224.1
|
|
|
|
201.9
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net expenditures on property and equipment
|
|
|
(41.2
|
)
|
|
|
(59.4
|
)
|
Net change in short-term investments
|
|
|
—
|
|
|
|
28.0
|
|
Acquisitions, net of cash acquired
|
|
|
(10.9
|
)
|
|
|
(12.9
|
)
|
Net cash used in investing activities
|
|
|
(52.1
|
)
|
|
|
(44.3
|
)
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
(110.4
|
)
|
|
|
(68.0
|
)
|
Net change in debt and short-term borrowings
|
|
|
40.7
|
|
|
|
23.7
|
|
Dividends paid
|
|
|
(69.5
|
)
|
|
|
(67.9
|
)
|
Tax benefit of equity plans
|
|
|
4.1
|
|
|
|
1.8
|
|
Exercise of stock options
|
|
|
17.4
|
|
|
|
8.9
|
|
Net cash used in financing activities
|
|
|
(117.7
|
)
|
|
|
(101.5
|
)
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
(1.6
|
)
|
|
|
1.4
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
52.7
|
|
|
|
57.5
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
243.2
|
|
|
|
189.9
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
295.9
|
|
|
$
|
247.4
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED RATE ANALYSIS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
34.8%
|
|
34.4%
|
|
34.7%
|
|
33.5%
|
|
|
|
|
|
|
|
|
|
Operating expenses rate
|
|
20.2%
|
|
21.3%
|
|
21.0%
|
|
22.2%
|
|
|
|
|
|
|
|
|
|
Operating income rate
|
|
14.5%
|
|
13.1%
|
|
13.7%
|
|
11.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
ADJUSTED RATES
|
|
|
|
|
|
|
|
|
Gross margin
|
|
34.8%
|
|
34.6%
|
|
34.7%
|
|
33.8%
|
|
|
|
|
|
|
|
|
|
Operating expenses rate
|
|
20.2%
|
|
20.7%
|
|
21.0%
|
|
21.6%
|
|
|
|
|
|
|
|
|
|
Operating income rate
|
|
14.5%
|
|
13.8%
|
|
13.7%
|
|
12.3%
|
|
|
|
|
|
|
|
|
|
Note: Rate analysis metrics are computed by dividing the applicable
amount by net sales.
|
|
Although adjusted gross margin, adjusted operating expenses rate and
adjusted operating income rate are not measures of financial
performance under GAAP, the Company believes they are useful in
understanding its financial results. The Company evaluates its
results of operations both on an as reported and an as adjusted
basis. The adjusted basis presentation, which is a non-GAAP measure,
excludes the impact of certain matters not related to the Company's
ongoing operations. See the "Accounting Considerations" and
"Reconciliation of Non-GAAP Financial Measures" sections of this
release for more information. 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.
|
|
|
SEGMENT DETAIL
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
NET SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine Products segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road
|
|
$
|
68.9
|
|
|
$
|
54.0
|
|
|
27.5
|
|
%
|
|
$
|
181.3
|
|
|
$
|
161.5
|
|
|
12.3
|
|
%
|
On-Road
|
|
|
28.8
|
|
|
|
28.4
|
|
|
1.6
|
|
%
|
|
|
78.7
|
|
|
|
96.6
|
|
|
(18.6
|
)
|
%
|
Aftermarket
|
|
|
279.8
|
|
|
|
251.9
|
|
|
11.1
|
|
%
|
|
|
784.1
|
|
|
|
697.8
|
|
|
12.4
|
|
%
|
Aerospace and Defense
|
|
|
28.1
|
|
|
|
23.0
|
|
|
22.3
|
|
%
|
|
|
77.3
|
|
|
|
68.9
|
|
|
12.1
|
|
%
|
Total Engine Products segment
|
|
$
|
405.6
|
|
|
$
|
357.3
|
|
|
13.5
|
|
%
|
|
$
|
1,121.4
|
|
|
$
|
1,024.8
|
|
|
9.4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Products segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Filtration Solutions
|
|
$
|
129.3
|
|
|
$
|
129.0
|
|
|
0.3
|
|
%
|
|
$
|
383.5
|
|
|
$
|
375.8
|
|
|
2.1
|
|
%
|
Gas Turbine Systems
|
|
|
31.2
|
|
|
|
47.5
|
|
|
(34.5
|
)
|
%
|
|
|
84.8
|
|
|
|
104.6
|
|
|
(18.9
|
)
|
%
|
Special Applications
|
|
|
42.1
|
|
|
|
37.5
|
|
|
12.1
|
|
%
|
|
|
122.1
|
|
|
|
121.3
|
|
|
0.6
|
|
%
|
Total Industrial Products segment
|
|
$
|
202.6
|
|
|
$
|
214.0
|
|
|
(5.3
|
)
|
%
|
|
$
|
590.4
|
|
|
$
|
601.7
|
|
|
(1.9
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
|
$
|
608.2
|
|
|
$
|
571.3
|
|
|
6.5
|
|
%
|
|
$
|
1,711.8
|
|
|
$
|
1,626.5
|
|
|
5.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS BEFORE INCOME TAXES
|
Engine segment
|
|
$
|
63.1
|
|
|
$
|
48.7
|
|
|
29.6
|
|
%
|
|
$
|
157.2
|
|
|
$
|
112.1
|
|
|
40.3
|
|
%
|
Industrial segment
|
|
|
31.9
|
|
|
|
29.9
|
|
|
6.6
|
|
%
|
|
|
94.5
|
|
|
|
81.6
|
|
|
15.8
|
|
%
|
Corp/Unallocated
|
|
|
(10.7
|
)
|
|
|
(6.5
|
)
|
|
65.2
|
|
%
|
|
|
(21.4
|
)
|
|
|
(18.8
|
)
|
|
14.0
|
|
%
|
Total Company
|
|
$
|
84.3
|
|
|
$
|
72.1
|
|
|
16.9
|
|
%
|
|
$
|
230.3
|
|
|
$
|
174.9
|
|
|
31.7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS BEFORE INCOME TAXES %
|
Engine Products segment
|
|
|
15.6
|
%
|
|
|
13.6
|
%
|
|
2.0
|
|
|
14.0
|
%
|
|
|
10.9
|
%
|
|
3.1
|
Industrial Products segment
|
|
|
15.7
|
%
|
|
|
14.0
|
%
|
|
1.7
|
|
|
16.0
|
%
|
|
|
13.6
|
%
|
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Percentage is calculated by dividing earnings before income
taxes by sales.
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
59.8
|
|
|
$
|
92.6
|
|
|
$
|
224.1
|
|
|
$
|
201.9
|
|
Net capital expenditures
|
|
|
(16.2
|
)
|
|
|
(16.6
|
)
|
|
|
(41.2
|
)
|
|
|
(59.4
|
)
|
Free cash flow
|
|
$
|
43.6
|
|
|
$
|
76.0
|
|
|
$
|
182.9
|
|
|
$
|
142.5
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
60.1
|
|
|
$
|
54.8
|
|
|
$
|
164.6
|
|
|
$
|
131.3
|
|
Income taxes
|
|
|
24.2
|
|
|
|
17.3
|
|
|
|
65.7
|
|
|
|
43.6
|
|
Interest expense
|
|
|
4.8
|
|
|
|
5.3
|
|
|
|
14.4
|
|
|
|
15.8
|
|
Depreciation and amortization
|
|
|
18.5
|
|
|
|
19.3
|
|
|
|
55.8
|
|
|
|
55.9
|
|
EBITDA
|
|
$
|
107.6
|
|
|
$
|
96.7
|
|
|
$
|
300.5
|
|
|
$
|
246.6
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
88.5
|
|
|
$
|
74.9
|
|
|
$
|
234.3
|
|
|
$
|
184.1
|
|
Restructuring charges
|
|
|
—
|
|
|
|
4.1
|
|
|
|
—
|
|
|
|
12.6
|
|
Investigation costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3.1
|
|
Adjusted Operating Income
|
|
$
|
88.5
|
|
|
$
|
79.0
|
|
|
$
|
234.3
|
|
|
$
|
199.8
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
60.1
|
|
|
$
|
54.8
|
|
|
$
|
164.6
|
|
|
$
|
131.3
|
|
Restructuring charges, net of tax
|
|
|
—
|
|
|
|
2.9
|
|
|
|
—
|
|
|
|
8.8
|
|
Investigation costs, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.0
|
|
Settlement, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
(6.8
|
)
|
(a)
|
|
—
|
|
Adjusted Net Earnings
|
|
$
|
60.1
|
|
|
$
|
57.7
|
|
|
$
|
157.8
|
|
|
$
|
142.1
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
1.23
|
|
|
$
|
0.97
|
|
Restructuring charges per share
|
|
|
—
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
0.07
|
|
Investigation costs per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
Settlement per share
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.05
|
)
|
(a)
|
|
—
|
|
Adjusted Diluted EPS
|
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
$
|
1.18
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
(a) See accounting considerations for additional information.
|
|
|
|
|
|
|
|
|
|
Although free cash flow, EBITDA, adjusted operating income, adjusted
net earnings, and adjusted diluted EPS 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. The Company evaluates its results
of operations both on an as reported and a constant currency basis.
The constant currency presentation, which is a non-GAAP measure,
excludes the impact of fluctuations in foreign currency exchange
rates. The Company believes providing constant currency information
provides valuable supplemental information regarding its results of
operations. The Company calculates constant currency percentages by
converting its current period local currency financial results using
the prior period exchanges rates and compared these adjusted amounts
to its prior period reported results. 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.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170601005178/en/
Source: Donaldson Company, Inc.