Donaldson Q4 Earnings Top Estimates, Revenues Miss, Stock Down

Core Viewpoint - Donaldson Company, Inc. reported strong adjusted earnings for Q4 fiscal 2024, exceeding estimates, but total revenues fell short of expectations despite year-over-year growth [1][2]. Financial Performance - Adjusted earnings per share for Q4 fiscal 2024 were 94 cents, surpassing the Zacks Consensus Estimate of 88 cents, marking a 20% increase year over year [1]. - Total revenues reached $935.4 million, missing the Zacks Consensus Estimate of $941 million, but reflecting a 6.4% year-over-year increase (7.6% at constant currency) [2]. - The cost of sales increased by 3.7% year over year to $600.6 million, while gross profit rose by 11.6% to $334.8 million, resulting in a gross margin of 35.8%, up 170 basis points [5]. Segment Performance - Mobile Solutions segment, accounting for 61.5% of net sales, reported sales of $575.3 million, a 6.1% year-over-year increase, driven by a 12.6% rise in aftermarket sales [3]. - Industrial Solutions segment generated revenues of $287.8 million, up 3.9% year over year, with a notable 39.7% growth in Aerospace and Defense [4]. - Life Sciences segment revenues were $72.3 million, reflecting a 20.7% year-over-year increase, benefiting from volume growth in Disk Drive and Food and Beverage businesses [4]. Balance Sheet and Cash Flow - Cash and cash equivalents at the end of Q4 fiscal 2024 were $232.7 million, up from $187.1 million in the same quarter of fiscal 2023, while long-term debt decreased to $483.4 million from $496.6 million [7]. - The company generated net cash of $492.5 million from operating activities, a decrease of 9.6% year over year, with free cash flow down 4.3% to $407.6 million [8]. Fiscal 2025 Outlook - For fiscal 2025, adjusted earnings per share are expected to be in the range of $3.56-$3.72, with sales anticipated to increase by 2-6% from fiscal 2024 levels [10]. - Segment-wise, Mobile Solutions sales are expected to be flat to increase by 4%, while Industrial Solutions sales are projected to rise by 4-8% [11]. - Capital expenditure is forecasted to be between $85 million and $105 million, with free cash flow conversion expected to be in the range of 85-95% [12].