Donaldson(US:DCI)2021-12-07 16:00Financial Performance - Net sales for the three months ended October 31, 2021, were $760.9 million, an increase of $124.3 million, or 19.5%, compared to $636.6 million for the same period in 2020[72]. - Gross profit for the three months ended October 31, 2021, was $257.0 million, with a gross margin of 33.8%, down from 35.0% in the prior year due to increased raw material and labor costs[74]. - Net earnings for the three months ended October 31, 2021, were $77.1 million, an increase of $15.2 million, or 24.4%, compared to $61.9 million in the same period in 2020[78]. - The effective tax rate for the three months ended October 31, 2021, was 25.9%, up from 24.7% in the prior year, primarily due to a reduction in net discrete tax benefits[77]. Segment Performance - The Engine Products segment saw a net sales increase of $91.0 million, or 20.9%, while the Industrial Products segment increased by $33.3 million, or 16.6%[80]. - The Engine Products segment's earnings before income taxes were $72.3 million, representing 13.7% of net sales, a slight decrease from 13.9% in the previous year[82]. - The Industrial Products segment reported earnings before income taxes of $38.3 million, a 39.3% increase compared to $27.5 million in the same period last year[82]. - Net sales of Industrial Filtration Solutions (IFS) were $165.5 million, an increase of 22.0% compared to the same period in 2020[84]. - Net sales of Gas Turbine Systems (GTS) were $16.6 million, a decrease of 27.8% compared to the same period in 2020[84]. - Net sales of Special Applications were $51.6 million, an increase of 23.3% compared to the same period in 2020[84]. - Earnings before income taxes for the Industrial Products segment were $38.3 million, or 16.4% of net sales, up from 13.7% in the same period last year[84]. Operating Expenses and Cash Flow - Operating expenses increased by $14.0 million, or 10.4%, totaling $149.5 million, but decreased as a percentage of net sales from 21.3% to 19.7%[75]. - Cash provided by operating activities was $42.9 million, a decrease of $86.0 million compared to $128.9 million for the same period in 2020[86]. - Cash used in investing activities was $18.3 million, a slight decrease from $18.8 million in the same period last year[87]. - Dividends paid were $27.4 million, compared to $26.6 million in the same period last year[88]. - Share repurchases increased significantly to $102.9 million from $15.6 million in the same period last year[88]. Debt and Cash Position - Cash and cash equivalents as of October 31, 2021, were $200.8 million, down from $222.8 million as of July 31, 2021[90]. - Long-term debt outstanding increased to $548.1 million from $461.0 million as of July 31, 2021[90]. Challenges and Expectations - Supply chain disruptions and inflation have negatively impacted production speed and profit margins, with ongoing challenges expected throughout fiscal 2022[71]. - The company expects approximately $8 million in annualized savings from restructuring activities initiated in the second quarter of fiscal 2021[79].