Donaldson Co. Inc. has announced first quarter 2018 net earnings of $60.9 million, or 46 cents per share, compared with 2017 net earnings of $58 million, or 43 cents per share. The prior year results included a one-time gain of approximately 5 cents per share related to the settlement of claims in an escrow account that had been established with Donaldson’s acquisition of Northern Technical LLC. in 2015. Excluding the impact from the settlement in the prior year, Donaldson’s first quarter 2018 earnings per share (EPS) increased 21.1 percent from 2017.
“We delivered record first quarter revenue and are now forecasting full-year sales, operating margin and earnings above our initial projections,” said Tod Carpenter, chairman, president and CEO. “The Engine segment continues to gain momentum, with sales of both first-fit products and replacement parts up significantly from last year. We also are seeing market conditions improve in the Industrial segment, particularly in our Industrial Filtration Solutions business.
“We expect favorable market conditions to extend through the balance of our fiscal year, giving us confidence that we can deliver strong earnings growth while investing back into our company. As we outlined last quarter, we plan to spend an incremental $10 million to $15 million of expense this year on capacity expansion, customer engagement through e-commerce and technology development. These investments directly align with our strategic priorities, and I am confident that they will create long-term value for our shareholders.”
First Quarter 2018 Performance
First quarter 2018 sales increased 16.6 percent to $644.8 million from $553 million last year. The year-over-year increase includes a benefit of approximately 1.7 percent from currency translation and 1.6 percent from acquisitions completed by the company during fiscal 2017.
Compared with the prior year, first quarter 2018 sales increased 24.9 percent in the Engine Products segment and 1.8 percent in the Industrial Products segment, or 23.2 percent and 0.1 percent, respectively, excluding the benefit from currency translation.
During first quarter 2018, Donaldson repurchased 933 thousand shares, or 0.7 percent, of its common stock at an average price of $45.72 for a total investment of $42.6 million. Donaldson paid dividends of $23.4 million in first quarter 2018.
Fiscal 2018 Outlook
Donaldson expects fiscal 2018 GAAP EPS between $1.90 and $2.04, an increase of approximately 6 percent from prior guidance of $1.79 to $1.93. The midpoint of the revised guidance range reflects an increase from prior year GAAP and adjusted EPS of 13.2 percent and 16.6 percent, respectively.
The company is now forecasting full-year sales to increase 10 percent to 14 percent, compared with the prior forecast of 4 percent to 8 percent. The favorable impact from currency translation and benefit from acquisitions Donaldson completed during fiscal 2017 is now expected to contribute approximately 4 percent to the year-over-year growth, compared with 2 percent in prior guidance. The change reflects an increased benefit from currency translation.