On August 28, 2024, Donaldson Co Inc (DCI, Financial) released its 8-K filing reporting record fourth quarter and fiscal year 2024 sales and earnings. Donaldson, a leading manufacturer of filtration systems and replacement parts, serves diverse markets including construction, mining, agriculture, truck, and industrial. The company operates through three segments: mobile solutions, industrial solutions, and life sciences.
Fiscal 2024 Highlights
Donaldson reported fourth quarter sales of $935 million, a 6.4% increase from the same period last year. GAAP earnings per share (EPS) for the quarter were $0.90, up 20.0%, while adjusted EPS stood at $0.94. For the full fiscal year, sales reached $3.6 billion, a 4.5% increase, with GAAP EPS of $3.38, up 16.6%, and adjusted EPS of $3.42.
The company returned approximately $286 million to shareholders through share repurchases and dividends over the fiscal year. Donaldson also announced plans to optimize its footprint to increase efficiency.
Segment Performance
In the Mobile Solutions segment, sales increased by 6.1%, driven by a 12.6% growth in Aftermarket sales. However, Off-Road and On-Road sales declined by 13.0% and 11.8%, respectively, due to weak agriculture markets and lower equipment production in China and the United States.
The Industrial Solutions segment saw a 3.9% increase in sales, bolstered by a 39.7% rise in Aerospace and Defense sales. However, Industrial Filtration Solutions (IFS) sales declined by 1.5% due to weaker dust collection demand in Europe and Power Generation project timing.
The Life Sciences segment experienced a robust 20.7% increase in sales, driven by volume growth in Disk Drive and Food and Beverage.
Financial Achievements
Donaldson's gross margin improved to 35.8%, up from 34.1% in the previous year, driven by select input cost deflation and leverage on higher sales. Adjusted gross margin was 36.2%, compared to 34.3% last year. Operating margin also saw an increase, reaching 15.6%, up from 13.7% in the previous year, with an adjusted operating margin of 16.3%.
Operating expenses as a percentage of sales improved to 20.2%, down from 20.4% last year. Adjusted operating expenses were 19.9%, compared to 20.0% in the previous year.
Income Statement Highlights
| Metric | Q4 2024 | Q4 2023 | Change | FY 2024 | FY 2023 | Change |
|---|---|---|---|---|---|---|
| Net Sales | $935.4M | $879.5M | 6.4% | $3,586.3M | $3,430.8M | 4.5% |
| Gross Profit | $334.8M | $300.1M | 11.6% | $1,274.4M | $1,160.6M | 9.8% |
| Operating Income | $146.2M | $120.5M | 21.4% | $544.1M | $480.2M | 13.3% |
| Net Earnings | $109.7M | $91.9M | 19.4% | $414.0M | $358.8M | 15.4% |
| EPS (Diluted) | $0.90 | $0.75 | 20.0% | $3.38 | $2.90 | 16.6% |
Balance Sheet and Cash Flow
Donaldson's total assets increased to $2.91 billion from $2.77 billion in the previous year. The company reported cash and cash equivalents of $232.7 million, up from $187.1 million. Total liabilities stood at $1.43 billion, slightly down from $1.45 billion last year.
Net cash provided by operating activities was $492.5 million, compared to $544.5 million in the previous year. Capital expenditures were $85.6 million, down from $118.5 million, while net cash used in investing activities was $86.9 million, compared to $327.3 million last year.
Fiscal 2025 Guidance
Donaldson expects full-year fiscal 2025 sales growth of 2% to 6% and adjusted EPS of $3.56 to $3.72. The company forecasts operating margin to be between 15.3% and 15.9%, driven by sustained gross margin performance.
“In the fourth quarter, we delivered an all-time high level of profitability through solid sales and robust margin expansion while continuing to invest for the future, capping off a record year for Donaldson,” said Tod Carpenter, chairman, president, and chief executive officer.
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