Filtration systems maker Donaldson Company, Inc. (DCI), Wednesday reported a 27% decline in profit for the first quarter, mainly due to a 25% decline in sales across segments, reflecting weaker demand. Earnings for the quarter, however, came in well ahead of Street expectations, as did revenues. Looking ahead, the company lifted its full year outlook, indicated to come in above analysts' estimates. Donaldson shares gained over 7% in after hours trade following the announcement of results.
Donaldson's net income for the quarter declined 27.9% to $34.56 million from $47.96 million year-ago. Earnings per share declined by 26.7% to $0.44 per share from $0.60 per share in the prior year period.
Excluding the impact of restructuring expenses, the company reported net income of $35.4 million or $0.45 per share for the quarter.
Nine analysts polled by Thomson Reuters estimated earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 25.3% to $428.08 million from $573.26 million during the comparable period a year-ago. Six Wall Street analysts estimated revenue of $423.18 million for the quarter.
Segment-wise, net sales from the total Engine Products segment declined to $243.97 million from $308.77 million in the year-ago period.
Net sales from the total Industrial Products segment dropped to $184.10 million from $264.48 million in the year-ago period.
Donaldson said that the impact of foreign currency translation increased reported sales by $6.6 million, or 1.2% and reported net earnings by $0.1 million, or 0.2%.
According to Bill Cook, chairman, president and chief executive officer, said the company's operating margin increased to 12.3% from 12.2% a year-ago, essentially benefiting from savings generated by restructuring actions, ongoing cost reduction activities, and improved distribution efficiencies. These savings helped offset lower absorption of fixed costs in the manufacturing plants. Donaldson's sales mix also helped deliver improved margins as the total replacement filter sales exceeded its first-fit sales for the first time.
Donaldson's cost of sales for the quarter declined to $279.68 million from $386.55 million in the comparable period year-ago.
Operating expenses declined to $95.95 million from $117.01 million in the prior year period. The majority of the decrease was driven by $14.6 million in savings from previous restructuring actions while incurring an additional $0.5 million in restructuring costs in the quarter.
Donaldson's interest expense for the quarter declined to $2.95 million from $4.29 million in the prior year period.
The company said that its cash flow was $62.3 million versus $40.3 million in the first quarter of last year. Also, as part of its ongoing share repurchase program, Donaldson repurchased 219,329 shares for $7.4 million.
Looking ahead to the full year 2010, the company expects earnings in the range of $1.63 - $1.83 per share, compared with the previously issued earnings guidance in the range of $1.32 - $1.52 per share.
Including estimated full year restructuring costs of $12 million - $17 million, the company expects full year earnings in the range of $1.75 - $1.95 per share, compared with a prior range of $1.44 and $1.64 per share.
Donaldson said that it expects full year sales to be approximately $1.8 billion based on the Euro at US$1.49 and 90 Yen to the US$. The company expects Engine Products sales to increase between 1% - 6% and Industrial sales to decline 9% - 13%.
Analysts currently estimate the company to earn $1.45 per share on revenues of $1.71 billion for the full year.
DCI closed Wednesday's trade at $41.46, up $0.09 or 0.22%, on a volume of 0.99 million shares on the New York Stock Exchange. In after hours, the stock gained $3.14 or 7.57%, trading at 44.60.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.