Donaldson (NYSE: DCI) reported Q3 EPS of $0.92, $0.08 better than the analyst estimate of $0.84. Revenue for the quarter came in at $927.9 million versus the consensus estimate of $915.84 million.

GUIDANCE:

Donaldson sees FY2024 EPS of $3.33-$3.39, versus the consensus of $3.27.

Mobile sales are forecast to increase between 2% and 4% versus 2023. Off-Road sales and On-Road sales are expected to decrease low double-digits and low single-digits, respectively due to softening end-market demand and related reductions in global equipment production. Aftermarket sales are forecast to grow mid-single digits, benefitting from market share gains and destocking in the prior year period.

Industrial sales are expected to increase between 6% and 8% compared with prior year. IFS sales are expected to increase mid-single digits as a result of sales momentum in dust collection and Power Generation. Aerospace and Defense sales, driven by strong end-market conditions, are expected to grow low double-digits.

Life Sciences sales are forecast to grow mid-teens year over year supported by growth across all businesses including Food & Beverage, Bioprocessing Equipment and Consumables, and Disk Drive.

Operating margin is expected to be between 15.0% and 15.4% versus 14.0%, or 14.6% on an adjusted basis, in 2023. Year-over-year gross margin improvement is forecast to offset an increase in operating expenses, driven primarily by investments in the Life Sciences segment.

Interest expense is forecast to be approximately $22 million and other income is expected to be between $15 million and $17 million. Donaldson projects a fiscal 2024 effective income tax rate of between 23% and 24%.

Capital expenditures are forecast to be between $90 million and $105 million and free cash flow conversion is expected to be between 95% and 105%. For the full year, Donaldson anticipates repurchasing approximately 2% of its shares outstanding.

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