Donaldson had reported third quarter 2022 net earnings of $83.0 million, a decrease of 1.8 percent from $84.4 million in 2021, but Q3 2022 sales increased 11.5 percent to $853.2 million from $765.0 million in 2021.
“Our record third quarter sales were driven by pricing actions offsetting persistent inflation, as well as continued high levels of demand,” said Tod Carpenter, chairman, president and CEO. “Undeterred by the macro challenges, our team maintained a strong commitment to providing technology-led filtration to customers as global demand for our products and services remained at record highs.
“Looking ahead, we anticipate ongoing inflation and supply chain constraints," Carpenter said. "However, the successful execution of pricing actions by the Donaldson team throughout this fiscal year is expected to drive fourth quarter sequential sales and gross margin improvement. As we close out the year, we remain focused on delivering on our customer commitments, implementing pricing actions to offset cost pressures and investing for the future.”
Third quarter 2022 sales in the Engine Products segment (Engine) increased 13.2 percent, as robust sales in Aerospace and Defense, Aftermarket, and Off-Road were partially offset by a decrease in On-Road. Aerospace and Defense sales increased 29.2 percent compared with 2021 with stronger end-market conditions in the commercial aerospace industry driving results. Aftermarket sales rose 14.5 percent as strong levels of overall end-market demand continued.
Off-Road sales increased 13.0 percent versus the prior year with equipment production remaining high in all regions except China. Exhaust and Emissions program wins in Europe also contributed to Off-Road sales growth. Third quarter 2022 On-Road sales decreased 9 percent year over year, as global supply chain challenges, including chip shortages, and the discontinuation of a low margin product line in the U.S. negatively impacted results.
Third quarter Industrial Products segment (Industrial) sales rose 7.8 percent, led by Gas Turbine Systems (GTS) and Industrial Filtration Solutions (IFS). GTS sales increased 19.4 percent versus the prior year due to higher new equipment sales in EMEA and the U.S. IFS sales growth of 9.1 percent was the result of overall strength in the industrial dust collection business and double-digit growth in Process Filtration sales. Special Applications sales declined 3.6 percent compared with 2021. Within Special Applications, Disk Drive sales were negatively impacted by the Covid-19 shutdown in China.
Third quarter 2022 operating income as a percentage of sales (operating margin) decreased to 13.0 percent from 14.3 percent in 2021. Gross margin decreased to 31.5 percent from 33.7 percent in the prior year as inflation headwinds from raw materials, freight, energy and labor costs persisted.
Third quarter 2022 operating expenses as a percentage of sales were 18.5 percent, an improvement from 19.4 percent in 2021 due to leverage on higher sales.
Source: Donaldson
