Industrial filtration company Donaldson reported decreased quarterly sales and earnings on Thursday, although they were better than expected.
“We are pleased with our first quarter results, which reflect the durability of our business model combined with our ability to gain market share, increase gross margin and manage expenses during an uneven macroeconomic environment,” said Donaldson Chief Executive Tod Carpenter.
Carpenter told analysts on the company’s earnings conference call that he believes the worst effects from the pandemic may be behind the company.
The Bloomington company reported fiscal first quarter revenue of $636.6 million, down 5.4% from the same period a year ago. Net earnings were down about 4.5% to $61.9 million, or 48 cents per share.
Analysts covering the company expected EPS of 45 cents per share on revenue of $615 million.
The company said it expects sales trends to continue to improve and that it could see growth in the second half of its fiscal year.
The company increased its gross margin in the quarter to 35%, up from the 34.4% in the first quarter last year, on lower inventory costs and strong expense management particularly among discretionary items.
The company’s replacement parts business across both its engine products and industrial products segment offset the pandemic-related cautiousness some customers had investing in capital improvement projects that would have resulted in more first-fit and new equipment sales.
Sales in the company’s engine sales segment were $436.2 million, down 5% in the quarter.
The steepest decline came from the smallest portion of the portfolio, its aerospace and defense unit. Revenue was $22.4 million, down 26.5% from the first quarter last year, as commercial aerospace faces industrywide pressure from the coronavirus pandemic.
The industrial products segment declined 5.4% to $200.4 million in the quarter.
Donaldson, like many other companies, is not providing detailed financial guidance for future quarters because of the uncertainty caused by the pandemic.
Shares of Donaldson were trading at $54 per share, up more than 2% in early trading Thursday.