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Donaldson Company, Inc (DCI - Free Report) stands to benefit from its strong product portfolio, solid demand, focus on innovation and growth investments. The company’s Mobile Solutions segment is benefiting from high levels of global equipment production in Off-Road and On-Road and accretive pricing. For fiscal 2023, Mobile Solutions’ sales are expected to increase 2-4% from the fiscal 2022 level, driven by growth in On-Road, Off-Road and Aftermarket sales.
Growth in the Industrial Solutions segment is being supported by dust collection and industrial gases’ part sales and the ongoing strength in the commercial aerospace industry. The company expects Industrial Solutions sales to increase 11-13% year over year in fiscal 2023, driven by sales growth in industrial filtration solutions and aerospace and defense.
Amid a steady demand environment, Donaldson’s fiscal 2023 forecast holds promise. The company expects net sales to increase 3-5% year over year. It expects adjusted earnings of $3.00-$3.06 per share. This compares with the year-ago reported figure of $2.68.
Donaldson’s commitment to reward its shareholders through dividends and share buybacks are encouraging. In the first nine months of fiscal 2023, the company paid dividends of $84.1 million and bought back shares worth $119.3 million. For fiscal 2023, the company plans to buy back approximately 2% of its outstanding shares. In May 2023, DCI hiked its dividend by 8.7%. The company has raised its dividend for 27 consecutive years.
Acquisitions have been Donaldson's preferred mode of business expansion to date. In June 2023, the company acquired Univercells Technologies, expanding its growing offering in the life sciences industry. The company acquired Isolere Bio in February 2023, creating the leading separation and filtration solutions for emerging genetic-based drugs.
Industrial companies like Ingersoll Rand (IR - Free Report) and Middleby Corporation (MIDD - Free Report) also focus on expanding operations through inorganic activities. In June 2023, Ingersoll Rand inked a deal to acquire Howden Roots for approximately $300 million. The acquisition will expand IR’s low-pressure compression and vacuum product offerings and add centrifugal compression capabilities. Subject to regulatory approvals, the transaction is expected to close in the third quarter of 2023.
In January 2023, Ingersoll Rand completed the acquisition of SPX FLOW’s Air Treatment business, boosting its core compressor product offering through a complementary product portfolio of energy-efficient compressed air dryers, filters and other consumables. In October 2022, IR acquired Dosatron International, expanding its digital technology portfolio.
Over time, Middleby has expanded its market share, product offerings and customer base through acquisitions. The July 2023 acquisition of Water Treatment Solutions bolstered the company’s commercial foodservice operations. In June 2023, the company acquired Filtration Automation Inc., boosting its food processing portfolio and frying system offerings.
In January 2023, Middleby acquired Flavor Burst complementing its existing product offerings in the beverage group. The acquisition of Marco Beverage Systems in December 2022 complemented MIDD’s existing beverage portfolio and expanded its cold brew dispense, coffee brewers, and a variety of hot, cold and sparkling water dispenser offerings.
Coming back to Donaldson, despite the abovementioned positives, the company is experiencing weakness in its Life Sciences segment due to continued disk drive market weakness. For fiscal 2023, management anticipates Life Sciences sales to decline 10-12%.
High costs of raw material, freight and labor pose a threat to DCI’s bottom line. In the first nine months of fiscal 2023, the company’s cost of sales increased 3.1% year over year, while selling, general and administrative expenses rose 8.2%.
Given Donaldson’s substantial international operations, foreign currency headwinds are weighing on its top line. In third-quarter fiscal 2023, foreign currency translation had a negative impact of 3% on sales. The company anticipates foreign exchange headwinds to have an impact of approximately 4% on its sales in fiscal 2023.
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Donaldson (DCI) Stock Holds Promise Despite Cost Headwinds
Donaldson Company, Inc (DCI - Free Report) stands to benefit from its strong product portfolio, solid demand, focus on innovation and growth investments. The company’s Mobile Solutions segment is benefiting from high levels of global equipment production in Off-Road and On-Road and accretive pricing. For fiscal 2023, Mobile Solutions’ sales are expected to increase 2-4% from the fiscal 2022 level, driven by growth in On-Road, Off-Road and Aftermarket sales.
Growth in the Industrial Solutions segment is being supported by dust collection and industrial gases’ part sales and the ongoing strength in the commercial aerospace industry. The company expects Industrial Solutions sales to increase 11-13% year over year in fiscal 2023, driven by sales growth in industrial filtration solutions and aerospace and defense.
Amid a steady demand environment, Donaldson’s fiscal 2023 forecast holds promise. The company expects net sales to increase 3-5% year over year. It expects adjusted earnings of $3.00-$3.06 per share. This compares with the year-ago reported figure of $2.68.
Donaldson’s commitment to reward its shareholders through dividends and share buybacks are encouraging. In the first nine months of fiscal 2023, the company paid dividends of $84.1 million and bought back shares worth $119.3 million. For fiscal 2023, the company plans to buy back approximately 2% of its outstanding shares. In May 2023, DCI hiked its dividend by 8.7%. The company has raised its dividend for 27 consecutive years.
Acquisitions have been Donaldson's preferred mode of business expansion to date. In June 2023, the company acquired Univercells Technologies, expanding its growing offering in the life sciences industry. The company acquired Isolere Bio in February 2023, creating the leading separation and filtration solutions for emerging genetic-based drugs.
Industrial companies like Ingersoll Rand (IR - Free Report) and Middleby Corporation (MIDD - Free Report) also focus on expanding operations through inorganic activities. In June 2023, Ingersoll Rand inked a deal to acquire Howden Roots for approximately $300 million. The acquisition will expand IR’s low-pressure compression and vacuum product offerings and add centrifugal compression capabilities. Subject to regulatory approvals, the transaction is expected to close in the third quarter of 2023.
In January 2023, Ingersoll Rand completed the acquisition of SPX FLOW’s Air Treatment business, boosting its core compressor product offering through a complementary product portfolio of energy-efficient compressed air dryers, filters and other consumables. In October 2022, IR acquired Dosatron International, expanding its digital technology portfolio.
Over time, Middleby has expanded its market share, product offerings and customer base through acquisitions. The July 2023 acquisition of Water Treatment Solutions bolstered the company’s commercial foodservice operations. In June 2023, the company acquired Filtration Automation Inc., boosting its food processing portfolio and frying system offerings.
In January 2023, Middleby acquired Flavor Burst complementing its existing product offerings in the beverage group. The acquisition of Marco Beverage Systems in December 2022 complemented MIDD’s existing beverage portfolio and expanded its cold brew dispense, coffee brewers, and a variety of hot, cold and sparkling water dispenser offerings.
Coming back to Donaldson, despite the abovementioned positives, the company is experiencing weakness in its Life Sciences segment due to continued disk drive market weakness. For fiscal 2023, management anticipates Life Sciences sales to decline 10-12%.
High costs of raw material, freight and labor pose a threat to DCI’s bottom line. In the first nine months of fiscal 2023, the company’s cost of sales increased 3.1% year over year, while selling, general and administrative expenses rose 8.2%.
Given Donaldson’s substantial international operations, foreign currency headwinds are weighing on its top line. In third-quarter fiscal 2023, foreign currency translation had a negative impact of 3% on sales. The company anticipates foreign exchange headwinds to have an impact of approximately 4% on its sales in fiscal 2023.