Donaldson Company (DCI) Tops Q3 EPS by 4c; Updates FY09 Guidance

May 26, 2009 4:36 PM EDT

Donaldson Company, Inc. (NYSE: DCI) reports Q3 EPS of $0.34, 4 cents better than estimates. Revenues were $413.4 million vs. $435.31 million consensus.

We forecast total FY09 Company sales to be between $1.8 and $1.9 billion, or down 15 to 20 percent from the prior year. Foreign currency translation is expected to account for about 25 percent of this decrease. (Consensus is $1.93B)

Due to our lower sales outlook, we believe that lower absorption of fixed costs will continue and, as a result, we are considering additional restructuring actions that could result in an additional $10 to $12 million in additional costs in our fourth quarter. Including these costs, we have updated our full year operating margin guidance to between 8.0 to 9.0 percent.

With the reduction in our outlook due to the combination of exchange rates, weaker Customer demand, and including our estimated full year restructuring costs of $21-23 million, we now forecast our full year FY09 EPS to be between $1.55 and $1.70. (Consensus is $1.72)

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