ENP Newswire -
Release date- 21022014 -
'We delivered record net earnings in our second quarter,' said
As we have discussed previously, we had a surge in our gas turbine shipments last year, and the overall industry is now installing that new electrical generation capacity. We do see our Gas Turbine sales improving during the balance of our FY14 and into FY15. Partially offsetting Gas Turbine sales in the quarter was our Special Applications business, which grew 7 percent. Geographically, excluding our Gas Turbine sales, our local currency sales were strong with
'Our business is operating very well and our operations are positioned to deliver strong performances as volumes are forecast to increase in the second half of our FY14.'
'We have adjusted our Industrial Products' sales outlook for FY14 as the recovery for business investment for industrial filtration systems has been slow to develop and several of our gas turbine projects that were scheduled for shipment this year have been rescheduled by our Customers for early in our FY15. Including this change, we have maintained our full-year Company sales forecast to be a 1 to 5 percent increase in FY14.
We will maintain our focus on operational excellence through our Continuous Improvement initiatives and continue to invest in our Global ERP project. The combination of our sales and operational performance should deliver FY14 EPS of between
Financial Statement Discussion
The impact of foreign currency translation decreased sales by
Gross margin was 34.7 percent for the quarter and 35.2 percent year-to-date, compared to prior year margins of 33.4 percent and 33.5 percent, respectively. The year-over-year increase is primarily attributable to the positive mix impacts from the reduction in large Gas Turbine projects and better absorption of our fixed costs due to higher volumes in most of our other businesses. We also benefitted from our ongoing Continuous Improvement initiatives.
Operating expenses for the quarter were
Operating margin for the quarter was 12.4 percent, up 50 basis points from the prior year. Year-to-date operating margin was 13.9 percent, up 170 basis points from FY13.
Our effective tax rate for the quarter was 22.1 percent, compared to a prior year rate of 28.3 percent. The current quarter included
As part of our ongoing share repurchase program we repurchased 1,300,000 shares, or 0.9 percent of our diluted outstanding shares, for
We project our Company's sales to be between
Our full-year operating margin forecast is 14.2 to 14.8 percent. Included in this forecast is approximately
Our FY14 tax rate is anticipated to be between 28 and 30 percent.
We forecast our full-year FY14 EPS to be between
Cash generated by operating activities is projected to be between
Engine Products: We now forecast FY14 sales to increase 3 to 9 percent, including the impact of foreign currency.
Our On-Road OEM Customers are planning to build more heavy- and medium-duty trucks in 2014. Demand from our Off-Road OEM Customers is anticipated to be mixed: build rates of construction equipment are expected to improve in
We are anticipating growth for our Engine Aftermarket business. Utilization rates for off-road equipment and on-road heavy truck fleets in the field are expected to improve. We should also benefit from our continued expansion into emerging economies, the increasing number of first-fit systems installed in the field with our innovative proprietary filters, and through expansion of our product portfolio.
We forecast steady sales for our Aerospace and Defense business compared to last year as the continued slowdown in U.S. military activity should be offset by growth from our commercial aerospace sales.
Industrial Products: We now forecast sales to decrease slightly compared to FY13, including the impact of foreign currency.
Our Industrial Filtration Solutions' sales are projected to increase 2 to 8 percent. We assume replacement filter sales will remain at record levels due to improving general manufacturing activity, and for new filtration equipment sales to remain soft due to continuing low levels of investment in new equipment by manufacturers.
We anticipate our Gas Turbine sales will decrease 24 to 30 percent from our record sales in FY13 due to the current slowdown in large turbine power generation projects by our Customers.
We are maintaining our Special Applications' forecast for sales to increase 3 to 9 percent due to improved market demand for our semiconductor and venting products.
Donaldson is a leading worldwide provider of filtration systems that improve people's lives, enhance our Customers' equipment performance, and protect our environment. We are a technology-driven Company committed to satisfying our Customers' needs for filtration solutions through innovative research and development, application expertise, and global presence. Our approximately 12,200 employees contribute to the Company's success by supporting our Customers at our more than 140 sales, manufacturing, and distribution locations around the world.
Donaldson is a member of the S&P MidCap 400 and Russell 1000 indices, and our shares trade on the
SAFE HARBOR STATEMENT UNDER THE SECURITIES REFORM ACT OF 1995
The Company desires to take advantage of the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995 (the 'Act') and is making this cautionary statement in connection with such safe harbor legislation.
This announcement contains forward-looking statements, including, without limitation, forecasts, plans, trends, and projections relating to our business and financial performance and global economic conditions, which involve uncertainties that could materially impact results. All statements other than statements of historical fact are forward-looking statements. These statements do not guarantee future performance.
The Company wishes to caution investors that any forward-looking statements are subject to uncertainties and other risk factors that could cause actual results to differ materially from such statements, including but not limited to risks associated with: world economic factors and the ongoing global economic uncertainty, the reduced demand for hard disk drive products with the increased use of flash memory, the potential for some Customers to increase their reliance on their own filtration capabilities, currency fluctuations, commodity prices, political factors, the Company's international operations, highly competitive markets, governmental laws and regulations, including the impact of the various economic stimulus and financial reform measures, the implementation of our new information technology systems, potential global events resulting in market instability including financial bailouts and defaults of sovereign nations, military and terrorist activities, health outbreaks, natural disasters, and all of the other risk factors included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
We undertake no obligation to publicly update or revise any forward-looking statements.
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