Donaldson Company, Inc. ver: 2

Q3 2021 Earnings Conference Call

6/2/2021

spk_1: Good day and thank you for standing by. Welcome to the Donaldson third quarter 2021 earnings conference call and they find all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session to ask a question. During this session, you will need to press as far one or not. At least the advice of today's conference is being recorded. If you require further assistance, please press star zero. I would not like to hand the conference over two years earlier today, charlie brady director and breast relations he made again.
spk_0: Good morning. Thank you for joining thousands. Third quarter 2021 earnings conference call with me today are Todd Carpenter, Chairman Ceo and president and scott Robinson, Chief financial officer. This morning. Todd scott will provide a summary of our third quarter performance along with an update on key considerations. A fiscal 2021. During today's call, we will reference non gap metrics. A reconciliation of gap to non gap metrics is provided within the schedules attached to this morning's press release. Finally, please keep in mind 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 pod carpenter Todd. Good morning everyone. I'm very pleased with our third quarter results, which exceeded our expectations and was the highest sales quarter in our company's history. Third quarter highlights include sales increased 22% year over year and 13% sequentially from second quarter, the largest, second to third quarter increase in over 10 years. Gross margin improved 50 basis points year over year And earnings per share grew 32%. This could not have been accomplished without our dedicated Donaldson employees who come to work every day, whether at home or in the office to ensure we are meeting our goals in serving our customers. Thank you to all of my fellow teammates for the work you do. Now let me provide some insights on our third quarter sales. Total company sales increased 22% and third quarter from prior year in local currency sales rose 17%. While we acknowledge this is a soft comparison to last year. When the pandemic slowed things, we also note this result is 7% above the strong pre pandemic. Third quarter of fiscal 2019. We are pleased with this level of growth and believe our momentum will continue. engine sales recorded strong year. Earlier growth of 26%,, 22% in local currency, Our 51% off road business growth was widespread, with all regions experiencing an increase in sales. In particular. Local currency sales in Europe and Asia Pacific were up 78 And 42% respectively. China sales increased almost 50%. Several factors give us confidence in the outlook for off road. Global demand for construction and agricultural equipment remains high and mining is also seeing increased demand. Power core continues to gain traction in china and we are on track to deliver two times as many power core air cleaners in 2021 compared to 2020. And our backlogs continued to build as we exited third quarter On road sales experienced a sharp rebound from the 1% year over year decline in second quarter, increasing 58 from 2020 Order and bill rates for Class eight trucks in the US. have risen significantly over the past few months and are projected by external data sources to remain at a high level over the next several quarters in china. Our on load sales more than doubled, driven by increased heavy duty truck production and market share gains with a favorable economic backdrop, are strong market position in north America and the significant opportunity to grow in china. We are optimistic on the outlook for our on road business. Aftermarket sales increased 23% and third quarters, including a 4% currency benefit. Utilization rates for construction and agriculture equipment, and heavy duty trucks remain at a high level, which is driving increased demand.
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