Q4 2024 Donaldson Company Inc Earnings Call Transcript
Key Points
- Donaldson Co Inc (DCI) achieved record sales, margins, and EPS for fiscal 2024, with sales surpassing $3.5 billion and an operating margin of 15.4%.
- The company returned $286 million to shareholders through dividends and share buybacks, demonstrating strong shareholder value.
- Sales increased 6% year-over-year in Q4, driven by higher volumes across all three operating segments.
- The acquisition of a 49% stake in Medica S.p.A. positions Donaldson Co Inc (DCI) for future growth in bioprocessing and food and beverage applications.
- R&D investment increased by approximately 16% over 2023, focusing on product development initiatives in both legacy and newly acquired businesses.
- Donaldson Co Inc (DCI) faced continued declines in its first-fit businesses, with off-road sales decreasing by 13% and on-road sales declining by 12% in Q4.
- The macro environment in China remains difficult, with sales decreasing 19% year-over-year due to declines in first-fit businesses.
- Life sciences segment profitability was negatively impacted by a slower acquisition-related sales ramp and investments for growth, resulting in a pretax loss of approximately 1%.
- The fiscal 2026 sales growth expectation was lowered to a 3% to 7% CAGR from the previous 4% to 8% projection, driven by a slower-than-expected sales ramp-up in life sciences.
- The company anticipates a reduction in discrete tax benefits, leading to an increased tax rate forecast of 23% to 25% for fiscal 2025, up from 22.7% in fiscal 2024.
Thank you for standing by and welcome to the Donaldson Company fourth quarter and full year 2024 earnings conference call. (Operator Instructions)
I'd now like to turn the call over to Sarika Dhadwal, Senior Director of Investor Relations and ESG. You may begin.
Good morning. Thank you for joining Donaldson's fourth quarter and full-year fiscal 2024 earnings conference call. With me today are Tod Carpenter, Chairman, CEO and President; and Scott Robinson, Chief Financial Officer.
This morning, Tod and Scott will provide a summary of our fourth-quarter and full-year performance and details on our outlook for fiscal 2025. We will also provide an update on our fiscal 2026 financial targets.
During today's call, we will discuss non-GAAP or adjusted results. For fourth-quarter and full-year fiscal 2024 non-GAAP results exclude pretax restructuring and other charges of $6.4 million related to footprint optimization and cost reduction initiatives. This compares to $4.9 million and
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