Donaldson Company, Inc. (NYSE:DCI) Q4 2019 Earnings Conference Call - Final Transcript

Sep 05, 2019 • 10:00 am ET


Donaldson Company, Inc. (NYSE:DCI) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning. My name is Denise, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Donaldson's Fiscal 2019 Q4 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] Thank you.

Brad Pogalz, Director of Investor Relations, you may begin your conference.

Brad Pogalz

Thanks Denise. Good morning. Thank you for joining Donaldson's fourth quarter and full year 2019 earnings conference call. With me today are Tod Carpenter, Chairman, CEO and President of Donaldson and Scott Robinson, Chief Financial Officer.

This morning, Tod and Scott will provide a summary of our fourth quarter performance and an overview of what we are planning for the new fiscal year. During today's call, we will reference non-GAAP metrics such as adjusted earnings. You can find a reconciliation of GAAP to non-GAAP metrics within the schedule attached to this morning's press release.

I want to remind everyone that any forward-looking statements made during this call are subject to risks and uncertainties, which are described in our press release and SEC filings.

With that, I'll now turn the call over to Tod Carpenter. Tod?

Tod E. Carpenter

Thanks, Brad. Good morning, everyone. We set several new records in fiscal 2019. Sales reached an all-time high of $2.85 billion, adjusted earnings per share of $2.21 were 10.5% above last year's record and we invested $0.25 billion in our future with $150 million of capex expenditures and $100 million for the acquisition of BOFA.

On top of investing for the future, we returned nearly $230 million to shareholders through dividends and share repurchase. By these measures, 2019 was a solid year for Donaldson Company. I want to thank our employees for their contribution and continued commitment to our stated purpose of advancing filtration for a cleaner world.

We have a strong plan for 2020, which Scott and I will talk about later. But first, I'll share some thoughts on fourth quarter sales. Total sales of $727 million were in line with our forecast and slightly up from last year. Pricing added 1%, while gains from BOFA and revenue recognition accounting offset a currency headwind of 2%. Results in the quarter highlighted the uneven demand environment and unit sales were down 1% and slightly ahead of projections while industrial sales were slightly below projections with a 3% increase.

In Engine, the forecast favorability came from Aerospace and Defense. Sales were up 4% last quarter with first guest orders driving the growth. As expected, On-Road growth moderated to 2% last quarter, which followed nearly two years of significant growth in the US and China. While heavy duty truck production in the US is likely at peak, our fourth quarter sales grew at a robust rate of 26%. In China, sales were down as we lapped a 600% increase last year. As we have previously discussed, our new programs in China are with local manufacturers that have more order volatility than