Donaldson's Q2 Earnings Miss Estimates, Revenues Decline Y/Y

Donaldson Company, Inc. DCI reported second-quarter fiscal 2025 (ended Jan. 31, 2025) adjusted earnings of 83 cents per share, which missed the Zacks Consensus Estimate of 85 cents. The bottom line increased 2.5% year over year.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.DCI’s Revenue ResultsTotal revenues of $870.0 million missed the Zacks Consensus Estimate of $909 million. The top line decreased 0.8% year over year (up 1% at constant currency).Region-wise, Donaldson’s net sales in the United States/Canada increased 3.8% year over year. The metric decreased 9.2% year over year in Europe, the Middle East and Africa and increased 1.7% in Latin America. Also, net sales in the Asia Pacific improved 0.5%.Donaldson reports revenues under three segments, namely Mobile Solutions, Industrial Solutions and Life Sciences.A brief snapshot of segmental sales is provided below.The Mobile Solutions segment’s (accounting for 62.9% of net sales) sales were $547.5 million, indicating a year-over-year decline of 0.5%. Sales fell 12.8% in Off-Road and 24.4% in On-Road businesses during the quarter. Aftermarket sales improved 4% year over year.Revenues generated from the Industrial Solutions segment (29.2%) were $253.7 million, down 3.7% year over year. Industrial Filtration Solutions sales declined 7.5% year over year. Sales growth of 18.7% in the Aerospace and Defense businesses partially aided the results.Revenues generated from the Life Sciences segment (7.9%) were $68.8 million, up 9.2% year over year. The results benefited from volume growth in the Disk Drive business.Donaldson Company, Inc. Price, Consensus and EPS Surprise Donaldson Company, Inc. price-consensus-eps-surprise-chart | Donaldson Company, Inc. QuoteDonaldson’s Margin ProfileIn the fiscal second quarter, Donaldson’s cost of sales inched down 0.7% year over year to $564.1 million. Gross profit declined 0.9% to $305.9 million. The gross margin of 35.2% was flat year over year, due to input cost deflation.Operating expenses rose 0.8% year over year to $180.4 million. Operating profit decreased 3.1% to $125.5 million. The operating margin was 14.4%, down 40 bps year over year.The effective tax rate was 23.2% compared with 23.5% in the year-ago quarter.Balance Sheet & Cash Flow of DCIExiting the fiscal second quarter, Donaldson’s cash and cash equivalents were $189.1 million compared with $232.7 million in the fourth quarter of fiscal 2024. Long-term debt was $514.7 million compared with $483.4 million in the fourth quarter of fiscal 2024.In the first six months of fiscal 2025, the company generated net cash of $163.3 million from operating activities, indicating a decrease of 27.4% year over year. Capital expenditure (net) totaled $43.9 million compared with $44.5 million in the year-ago fiscal period. Free cash flow decreased 33.9% to $119.4 million. In the same time frame, management repaid a long-term debt of $20 million.It used $81.4 million to repurchase stocks and $64.6 million to pay out dividends during the first six months of fiscal 2025.Donaldson’s FY25 OutlookFor fiscal 2025 (ending July 2025), Donaldson expects adjusted earnings per share to be in the range of $3.60-$3.68 compared with $3.42 in fiscal 2024. Sales are anticipated to be flat to increase 4% from the fiscal 2024 level. Positive pricing is projected to have an accretive impact of 1%.On a segmental basis, Mobile Solutions’ sales are expected to decrease 1% to increase 3% from the fiscal 2024 level. Industrial Solutions’ sales are envisioned to jump in the range of 1-5% from the year-ago figure. The company forecasts its Life Sciences segment’s sales to increase in the high single-digit range.Interest expenses are predicted to be approximately $21 million while other income is projected to be in the range of $18-$20 million. The effective tax rate is anticipated to be between 23% and 25%.Capital expenditure is expected to be between $85 million and $100 million. Free cash flow conversion is anticipated to be in the range of 85-95%.DCI’s Zacks RankThe company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other CompaniesTetra Tech, Inc. TTEK reported earnings of 35 cents per share in the first quarter of fiscal 2025 (ended December 2024), which beat the Zacks Consensus Estimate of 34 cents. This compares with earnings of 28 cents per share a year ago.Tetra posted revenues of $1.2 billion for the quarter ended December 2024, surpassing the consensus estimate by 8.85%. This compares with year-ago revenues of $1.02 billion. The company topped the consensus estimate for revenues in each of the last four quarters.Waste Management, Inc. WM reported earnings of $1.70 per share in the fourth quarter of 2024, which missed the Zacks Consensus Estimate of $1.79. This compares with earnings of $1.74 per share a year ago.WM reported revenues of $5.89 billion for the quarter ended December 2024, surpassing the consensus estimate by 0.18%. This compares with year-ago revenues of $5.22 billion. The company topped the consensus estimate for revenues two times in the last four quarters.Packaging Corporation of America PKG reported adjusted earnings per share of $2.47 in the fourth quarter of 2024, which missed the Zacks Consensus Estimate of $2.51 by a margin of 2%. The bottom line matched PKG’s guidance and grew 16% year over year.Sales in the fourth quarter rose 10.7% year over year to $2.15 billion due to higher volumes and price/mix in both segments. The top line beat the consensus estimate of $2.13 billion.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tetra Tech, Inc. (TTEK): Free Stock Analysis Report Waste Management, Inc. (WM): Free Stock Analysis Report Packaging Corporation of America (PKG): Free Stock Analysis Report Donaldson Company, Inc. (DCI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks