Donaldson Stock Slides As FY22 EPS Outlook Lags Consensus; Plans 2% Stock Buyback

  • Donaldson Company, Inc DCI reported fourth-quarter sales growth of 25.2% year-over-year to $773.1 million, beating the consensus of $770.69 million.
  • Sales by segments: Engine Products $528.1 million (+28.1% Y/Y) and Industrial Products $245 million (+19.5% Y/Y).
  • EPS improved to $0.66 from $0.50 in 4Q20, in line with the consensus.
  • The gross margin expanded by 70 bps to 34.4%.
  • The operating income increased 35.7%Y/Y to $112 million, and the margin expanded by 110 bps to 14.5%.
  • Donaldson generated cash from operating activities in the entire year of $401.9 million, compared to $387 million a year ago. 
  • Adjusted EBITDA increased to $141.9 million from $108.2 million last year, and margin expanded by 90 bps to 18.4%.
  • The company repurchased ~0.8% of its outstanding shares for $63.5 million during Q4.
  • FY22 Outlook: Donaldson expects EPS of $2.50 - $2.66 vs. consensus of $2.68.
  • It expects net sales to increase 5% - 10% year-over-year.
  • Donaldson anticipates gross margin to be flat to down slightly compared to FY21, primarily due to increased raw material costs. Operating margin of 14.1% - 14.7%.
  • Donaldson expects to repurchase about 2% of its outstanding shares during FY22.
  • Price Action: DCI shares are trading lower by 2.68% at $65.45 during the premarket session on Thursday.
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