Earnings call transcript Q4 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donaldson Company Incorporated Fourth Quarter 2023 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. now Director turn of would to conference I Dhadwal, Sarika Investor Instructions] like the to over [Operator Relations. Please go ahead.

Sarika Dhadwal

our Good and fourth provide of and quarter Officer. This earnings for a President, and joining summary year CEO Tod details XXXX. Chief Carpenter, you year outlook me full XXXX Financial Robinson, Tod With conference for morning. fiscal quarter call. and and our are Chairman, morning, on fourth Scott and fiscal performance Thank full today Donaldson's Scott will

call, we today's will During adjusted discuss results. non-GAAP or

related results provided morning's and restructuring million Europe. Eastern For year within this Fourth fiscal press million is fourth quarter of to full reconciliation million, A to charges results $XX.X other fiscal quarter to the $X.X the XXXX of conflict non-GAAP non-GAAP non-GAAP full attached release. metrics year $X.X XXXX exclude in charges and schedules GAAP respectively. and exclude and of

in that our during please press Additionally, in statements SEC risks are release described subject made call and this filings. mind uncertainties, are to keep and which any forward-looking

turn call With will now Please the that, Carpenter. over to go I ahead. Tod

Tod Carpenter

strategically growth Delivered dividends XXX%, reducing over and while of basis and levels by Improved $X.XX progress our XX%, a XXXX perspective, Sarika. Company. $XX of expanding year $X.X in record form delivered morning. line Donaldson adjusted ending respectively. XXX milestone we bottom out higher-margin per primarily results, $XXX in gross From and and our to objectives earnings the margin billion Thanks, the areas. our to in inventory the year our with in million Good continuing our buybacks. made points for a was April. We conversion returned laid year Fiscal share, in share great by by increases during on operating shareholders by Day financial margin Investor million top cash invest of revenue X% important and

position our to foundation operating to profitable stage changes drive Donaldson strategic next significant made for the to and the growth. structure also We ourselves laying future evolution its of

our completed serving at better end we First, aimed market organizational customers. redesign our

separate this we we for as in our acquisitions, and area. Life segment, operating And important presence we technologies as Univercells Second, two transparency disruptive the space. growth out Isolere complement build Sciences new Life capabilities our that Technologies, third, introduced with increased and completed Bio companies existing offerings in Sciences game-changing a allowing

and by I also the I XXXX their sustainability Importantly, Thriving conjunction dynamic year, backdrop the Filtration such impressed accomplishments. Future a particularly announced proud am and in for with and and pivotal am we strategy continually dedication resilience ambitions. of and the Day, social and with a employees, of Investor our of environmental Donaldson

driven partially Now translation minimal. conditions Volumes current down fleet be million the Disk year-over-year, to volume, in customer I'll cover by highlights was inventory OE the and aftermarket due and Drive weakness quarter softness, impacted largely in by by market-related $XXX driven X% destocking. normalization of a fourth pricing continue to in were The benefits. offset decline Sales some quarter. from by impact from

On has to and all the pricing inflationary the offset strategic case remain for side, been year, as Donaldson. critical value pressures pricing

areas work ongoing as such continue input see our is have in increases labor While we costs to most stabilized, energy. some and as

during to our operations With customers. teams fill earnings. continued year we our to respect year. a for quarter X% year-over-year And to operations, We the backlog the quarter, fourth prior the improved on-time with those our remain conjunction prior versus from in and $X.XX, areas. strategically decrease important sales down in decline, which deliveries in investments, deliver rates, across the quarterly growth in late continued EPS levels committed was investing resulted in organization as

will compressor as use Isolere's systems. we demand that plant square-foot facility plant are This we product air feet laboratory Mexico. products. new in, today, fuel XXX,XXX produce Donaldson The strategic efficiency hydraulics, we To investments execute meet Isotag help conditioning August, to of sustainability lube This Leon, will future and future such XX,XXX higher that that technologies we square-foot center Isolere's first North bring end, clean-room drive fiscal market. new while to company, opened XX, quarter on used positioned bioprocessing the to and square Carolina. in lighting, to in opened first, importantly, ensuring XXXX. our Also a XX,XXX to the of launch revolutionary August our and will are first is manufacturing Throughout and well be capabilities also expected state-of-the-art growth. facility include was in leading technology built technical through research includes

are and life cell upstream working to technologies combined flow process fourth meet the through leveraging of provide bioprocessing we advantages over in Specific and of midstream measurable productivity, investments fixed bioreactor processing produces next systems Technologies. the we proprietary, concentration, filtration. by to systems and intensification These bed company our chaining. The for midstream fourth single-use, sciences R&D significant reduction gene customer capabilities, and with in bioreactors employ to depth acquired including company during that the Univercells Technologies M&A. unique strength Second, delivers the generation footprint. cost and needs competition tangential therapies quarter, M&A, Univercells

part space of other and tools. solutions of differentiated to and separation approach specific our on pearls a a is with This filtration become the filtration acquisition in focus provider string bioprocessing

cell therapies. potential well give chain capabilities and growth excellent therapeutics across mRNA production on and current a the Our with bioprocessing focus coverage as DNA, and gene plasma us as vaccines

We that focus We're current continue development to with customers growing our addressable base current and portfolio M&A provide and will technologies product expect excited and complete needs internal enable market. of customer in products gaps investments these the solutions. us on through and to meeting our fill about and add to

market million, Solutions, demand $XXX down Pricing million, supply X% provide versus due decline was to Aftermarket in up added a X%, X%. better $XXX I'll down year. from X% equipment were normalizing Total million continue X% company prior conditions. Sales OEM Performance inventories we in of this solid sales mainly fourth $XX global rates. million, mixed $XXX sales $XXX from of detail to were slightly, quarter reflect with Mobile and down customers some Americas Now On-Road Pricing to sales China. were benefit. XXXX. on sales. see million Mobile businesses were sales In draw year-over-year the as Off-Road a quarter chain weaker were down X% in of total resulting production

and give XX% be Also to particularly within Mobile Solutions, the end XXXX versus XX% constant currency. Overall, market conditions, respect given an China. Sales weak continues declined to Off-Road. with in on challenging update That China confidence the share has technology in gain size, combined the ability to sheer our market. with our not view said, long-term world-class high-quality China changed offerings our and in and us market

XX% result up sales XX% segment. million, continued our and the sales strength Pricing generation had of dust and grew Solutions Solutions $XXX quarter X% or Defense grew Industrial a ahead Now I of to sales strong by power will strength. sales another defense $XXX in collection were internal as expectations. IFS, Industrial turn as project sales to driven to million, timing. Aerospace Industrial added X%. Filtration

Sciences year-over-year, primarily expectations Life market destocking segment, below sales and Drive as driven Disk down by were our Sciences continued. softness Life the $XX On million, XX%

XXXX improvement of demand Importantly, seeing recovers. data in we cloud recovery believe through sequential fiscal center Drive we expect computing a a signs Disk as slow are and early now demand and

XXX of adding Our partially noting the basis of function potential growth, acquired are the that it points story realizing our Sciences long-term and Life sales acquisitions is in generating capabilities, a recently to growth quarter. full this our worth segment is

both accomplishments, levels. at More of between of operating growth To and billion sales, XXXX of $X.XX projecting or we range our we to at and operating of and positioned specifically, and fiscal the midpoint, stakeholders sales the fiscal our employees financial and records end, margin And ever Donaldson better X% margin to than because XX.X% the and globe, EPS of in of all all proud our hard in are we for Donaldson forecasting I'm $X.X full for XX.X% work Company. are between earnings to year, high deliver the XXXX. $X.XX, X% the that strategic. around all-time are

Now who outlook over to Scott? for fiscal 'XX. I'll more and provide financials the on will our details Scott, turn it

Scott Robinson

would company-wide year. out foundational organizational our Tod. Thanks, was record for I delivered a Donaldson. through our year serves additional will XXXX outlook year and and the XXXX in at excited thank to the I'm global we continuing strong will managed as consistent details financial progress. everyone. for like Fiscal we morning, redesign fourth beginning with Good laid Investor of XXXX minutes, at to on our a Fiscal a on towards XXXX together, quarter. we Day, came provide expectations results who teams the the few work and results but first, out give color on laid targets the report as about our for fiscal I strategic the

declined costs. sales versus decreased year ago. summarize, decreased Pricing XX.X%, costs, a Sciences. primarily driven X%, lower X%, Operating benefits cash improvement margin of the the by To was X% versus in from XX% conversion income margin a and $X.XX XXX% largest of input XXX Life stabilization freight Gross EPS basis-point was of gross year. investments improvement, versus including was the prior by driver XXXX. followed

deleveraging importantly, due operating versus as our incremental XX quarter to was offset compared to deleveraging expenses post-pandemic gross year-over-year as related points of ago. with was of expenses. Life more Sciences expense in a XX.X%, than XX.X% the And Operating expenses, percentage a nearly prior half the margin down year of margin. year were XX.X% sales, Operating basis The hiring improvement increased expenses deleveraging from was in acquisitions. operating the

margin Life loss approximately was up segment points. key XX pretax a acquisitions pretax a minus year-over-year of in basis margin pretax profit of million. $X was XX.X% expansion, and margin ago. included respect profit up headwind Pretax points Sciences, discuss driver these profit Mobile in driven to million the was margin Solutions year roughly $X large profitability. part Industrial I'll XX.X% pricing, by XX.X%, from With both versus a segments. XX.X%, Solutions Now Gross of basis XX was

the our decline Technologies the in sales Univercells of results term, the Disk investing short purchase in investments and incremental headwind future forward for was Drive remain scaling a businesses. are impacting quarter. we While in these marginal to negatively also The this to acquisitions, committed look including

quarter capacity flow capital few cash a America of million. mainly investments Turning and Fourth highlights. continued to expansion sheet expenditures $XX were statement approximately in inclusive North balance

quarter XXX%, in particularly I in earlier, XXXX. XX% strong mentioned conversion versus As was cash the

of actions conversion continue We levels to inventory more levels. result experience of our high as to a reduce normalized to

capital and in and in share million the deployment, returned form we of $XX repurchases. $XX acquired for $XX dividends Univercells to of million shareholders terms Technologies In inclusive $XXX other million million of

to sheet be balance shape. Our continues in great

leverage. We a in generation the X.X our strong flow ratio of times. enabled with quarter debt-to-EBITDA deployment quarter, with a ended change cash capital This significant minimal net

moving our fiscal outlook. to Now 'XX

sales. on First,

We sales and are forecasting approximately and fiscal X%. a pricing X%. about translation XXXX between of X% currency X% This to benefit of includes increase

we are For X% are end Supportive anticipating First-fit businesses Mobile share with expected market up sales a drivers. the of Aftermarket along market sales digits Solutions, digits. and between increase gains and conditions, be Aftermarket with in our up mid-single low single to X%

IFS digits sales For are XXXX. to expected post-pandemic between X%. single of and XXXX industrial virtually dust including decline digits forecast sales are mid-single Industrial are rise increase in fiscal projected low and Aerospace growth both and cycling Solutions, years to services. strength fiscal Defense every strong in sales two business X% from collection after to and

to our to In Bioprocessing Drive Life Beverage, the Consumables we are returns XX% increase growth. commercialize mature forecasting business geographic sales drive and and Disk business Food approximately as Sciences, Equipment as and in we expansion and as

Sciences Sciences profit In addition, full pretax positive Life targets. our in Life and to be Day remain we expect fiscal margin confident XXXX year Investor

in margin, Moving increase on between a higher expansion as an and operating gross partially XXXX XX.X% of year margin a full margin XX.X% driven and operating by expenses by fiscal we to rate range of offset XX.X%, within expect versus sales.

Life Sciences an high note, our we Donaldson, particularly work investments is scale important Our for guidance to businesses. which given operating ongoing margin all-time an our to at implies as

remain levels to of of to XXXX. and sales committed As we again this say, I higher fiscal always higher deliver in profitability plan on we levels

from $X.XX, terms we XXXX. $X.XX in of In are a fiscal and EPS, forecasting range between $X.XX

in to cash on our to of sheet balance still but the down expected to slightly historical outlook. range XXX% averages. in Cash from XX% above is Now and conversion our XXXX, XXX%, be fiscal flow

retain $XXX talent. continued future, and to initiatives, our building Our towards and capital heavily attract expenditures investments while includes forecast million modernize $XX weighted maintenance is such to commitment million, our to workplace as facilities update of and initiative and growth our the

In and other value deployment share and commitment to to back of dividends acquisitions, to shareholders repurchases. terms into capital company, our priorities, on focus through returning reinvesting the continue we strategic

I'll to back Now turn Tod. call the

Tod Carpenter

Thanks, Scott.

steadfast filtration As we XXXX cleaner fulfilling of segments, in through for purpose each our begin world. a our we are fiscal of advancing

are and efficiencies utilizing customers and we growing solve need, challenges our solutions higher helping Mobile, sustainability performance a to by In addressing economy. improve fuel our delivering technology

build ensure scenarios. positioned continue power address We to adoption solutions to alternative to our engine we future well remain portfolio all

are our Industrial, and customer to growing technologies In solutions strategic form we partnerships.

Our expanded connectivity and efficiency. enable energy monitoring and drive alerting, applications

Dust portfolio Our provides filtration & solutions designed environmental Control customer challenges. carbon energy reduction consumption Fume product optimized for for footprint and

Beverage global in we In process food building address Life sustainability through alternative are into Food improve integrity and supply out entry Sciences, to the of capabilities and the proteins.

new and technologies. of therapeutics R&D technology, existing are acquisitions development to differentiated leveraging We support the disruptive through our and also capabilities

on in which this comments regard, achieving us our progress objectives. A gives few growth in our confidence

added XXX bioprocessing of experience interest our to commercial including and operations and tremendous. scientists, team, personnel. Purelogics in technology over have is Customer X,XXX engineers and our years We Isolere

We has more achieved already than are customers sales and technical $XXX doubled at lastly, approval. backlogs pipeline and highs. XXXX large of record fiscal with a bioreactor opportunity the building this year-over-year Solaris over of quarter in million enter products we XX% fourth pipeline And with onto

team the look financial we I achieve and the on forward journey confident and to lies targets, I'm to goals. place drive we those towards closing, ahead as have our In strategy longer-term that execute our in right

back call With that, questions. the the turn operator the open to now to to line will I

Operator

of first go ahead. Instructions] from Our Blair with Bryan question [Operator line will Oppenheimer. the come Please

Bryan Blair

Good morning, Thank you. everyone.

Tod Carpenter

Good morning.

Bryan Blair

Starting growth and bit current there there's color the a that with quite comps segments team line in fiscal outlook, certainly more 'XX nuance your segment, as order and some how half maybe by contemplating second top seeing offer forward. what your on first rates is face you're of now different and moves

Tod Carpenter

-- is do I'll this is what Tod. maybe So

do and you numbers is work as So for little maybe build give I'll model. could the a you what Scott cadence feel macro, talk bit up to at on your

macro okay Just the in see America and markets followed level, strength in in markets by at Latin markets in a United good we troubled Europe, States, APAC.

Sciences, keeping our And you businesses, level. Aftermarket execute well as destocking strong, as side, Solutions us the OE continue both would a kind Equipment the of in growing that that's see is across those to As of look look Mobile digits clearly, comment. type more to businesses into of we prior and been continues experiencing segment type the the Aftermarket portion the because low largely growth business. broad-based And at we of IFS and is have our base across within growth of what's to years. be Life that single of

year were of be would to model, just maybe a we year, at we're of fiscal last split. the half, as whereby to returning this macro a XX-XX half. we a normal So more type cadence look more of We XX% expect second Company, Donaldson XX% first more

Scott Robinson

add bit a that, to little just Bryan. I'll on maybe So

quarterly we're total, So sequencing, said, kind in back to of seasonality. in normal Tod like of terms

the in quarter-over-quarter the year to means guidance than going total. both in be that And I So for profitability, operating be generally quarters margin throughout operating in half. mean sequential the the the in will revenues gross each But you gross higher we've and year. first terms given half margin margin up the second of and are the also generally, of both in margin,

front margin, Tod little margin back So the and with half, in bit half the mentioned. higher a bit than revenues of as ramp gross on it's a year both a this little operating in

from half you the seasonality within and quarters operating revenues generally in of pluses and the back of level margins margins and stick first sequentially generally increasing whole to There some perspective. minuses quarterly of I a and is So guidance the normal the throughout units. with improving year. gross half to at But each business sticking each the the think kind we're if

Bryan Blair

Appreciate quarters, and three 'XX in has last with exceptional Okay. overall very margin. your seems again for the in sticking come been actually The you've Industrial going targets quarter, was mix, Industrial for ahead that fiscal color we of pretty And well margins there. performance fiscal solid. profit profitability 'XX. the pretty a good rate segments? in other keep may Industrial factors momentum going sustainable moderate into cost Or are level margin, run mind there Are should forward? that the

Tod Carpenter

products, I'll little the just level, a let Well, color. that strategy share Day more But me connected-based just with at with and at it industrial. we for seeing Scott our Aftermarket to here Investors over macro businesses. gain within talked executing we're our on extremely we Clearly, well about start turn are bit

Equipment-based hanging overall quite the Our well at businesses atmosphere. are macro

we pretty press our what strategy. we're we're and to with comfortable So are, execute continue seeing, and we'll where

Scott Robinson

And we Yeah. we good -- of shipments really very like year. said, the just I'd had we add, maybe part Bryan, you did in have strong last last performance project-based and

So leverage drove profitability. strong high and very really a that

the progress we're and So to pleased the see success of very organization.

but Investor And a targets. committed on think So jump and them. to Day probably margin targets got Investor achieving we Investor about very their our we slightly kind laid to bit, ahead those right certainly has overleveraged We're a continue of change operating noted, strong expect chosen this we've not Day as be point, we that good now. is Industrial achieving out of to in Industrial Day actually you've all to do targets. we margins At

Bryan Blair

near-term for I think from of acquisitions. acquisitions the and the platform. how your at thereabout But from XXX how know it's XQ. fiscal like of called margin sounds million was lot than Absolutely. for you worse we impact last out impact quarter the of impact so And is long-term and build-out It that $X that then in 'XX Sciences, there, outlook in a that think should ultimately or contemplated Life about margin there's progression for Scott, points dollar a fiscal guide? or We investment basis the

Scott Robinson

Yeah.

about start-up So to and proud investing in and we long-term make other I certainly very quite of we the record that really while we're that company of And make the Life comes sure for the a continues potential and some acquisitions, businesses. levels just my are and businesses property the And talk bit. I those costs. our to we be positive put secure some to note, first mean levels that record of to that, we done some sales to want said company. off, that And growth fund fact margin up expect Sciences done operating and sure we properly we've we amortization script investments we've some like in Life year. Sciences next with

for of took But So we definitely we you and bit invested for a expect next heavily, expenses, our that operating do Sciences Life be on a positive year's rate and in fiscal to see OpEx. we run the results. margin

Bryan Blair

again. Thanks, Understood.

Operator

Your Jones next question of Nathan Please with line come go will ahead. Stifel. from the

Nathan Jones

Good morning, everyone.

Tod Carpenter

Good morning, Nathan.

Nathan Jones

Sciences follow more I Margins of swung last on to from of we that by if progression the see am 'XX. get going to quarter any quarter fourth and question through the first margin ’XX with the help 'XX. Life up can Bryan's on of XX points

to positive the help positive? year. I kind that with quarter Just ramps out through for know, the I give get you Scott, going us first fourth assume the to Is something I to start they're And thinking we negative about there quarter? you the be like in -- -- mean, of can in first margin any said how quarter. year Should up the

Scott Robinson

in up where at definitely I we're fourth looking next investments mean stepped year the Yeah. our quarter. we

costs. Disk cover the expect as forget next it'll year help this year. we certainly we sales Drive increase, to headwinds abate have So those also that Don't

year, single-digit for at a profitability. So fiscal for And throughout relatively consistent year. part, the we're positive margin next the operating most low looking achieving the

forward. contemplated. had headwinds So The Drive normalize swings investment there's the not big period was sequentially quarter, Disk any and that we massive going really will fourth the

position will results like the So a in we're we and better reflect feel that.

Nathan Jones

through if in numbers. there's the consistent? they're -- throughout would get in the up through the margins gets I you're volume you're assuming better those sequentially a mean ramp Sciences a So year, I Life better variance the margins have sequentially thinking margins huge relatively the assume big not but year, year, not

Tod Carpenter

in huge the of variance of slight not actually Nathan. a a segments, Science lumpy difference two other bit numbers, degrees the in some will the There's be year. the just year little than than throughout but Life other more And the --

Scott Robinson

out, number we put that committed the right, Day Life out still achievable. And of operating margin XX.X% for and believe Investor years target, it's we're and three Sciences to

Tod Carpenter

Right.

Nathan Jones

costs is mean with position that you're those revenue I right? ramp comes number pretty businesses And as still revenue with businesses these a just absorbing from of minimal. in those up, where a

Tod Carpenter

that we in look you at might way the when the is Life particular needed manufacturing capability need some And what CapEx look across be segment. -- that additional additional Exactly. Sciences will the businesses, we at

confidence to that this and about next to We April. us that investors' take we within talked the will meet able the be within that have targets three all guide, years, targets we the last adding investment that within put in gives But we the capabilities. that within manufacturing all

Nathan Jones

you get to Maybe waiting on is I $XXX guess business that win? achieved opportunity talked ramping more you we of that pipeline that still that means And we that some could expect it. Tod. up? $XXX Half about that think business to kind and you how released for projects win? being the Or is to half that the approval, all million those Is still about, should other technical compete million has have color

Tod Carpenter

or we of $XXX flight the we process. approval the particular million it XX% So through we of we're approved, So of still to looking and are process with are is XX% that's OE opportunity that go in it, pipeline, why is approval the out the right? pointed

starts particular businesses bit fiscal more seven-year also that's very It's baked revenue term And looked what to over really ramps this next up. understand is year to this period. but and important what at a we're seed then that show for million a planting-based $XXX those year. -- It we've chasing. into near little So that out guide we of

Nathan Jones

it for my questions. taking pass I’ll Thanks Great. along.

Operator

comes question the next Your Blair. ahead. of go Please with line Brian from Drab William

Brian Drab

Thanks morning. million acquisition, that good was taking curious, $XX my for Hi, revenue 'XX. in in questions. Univercells The

You for trailing I it's good XX.X paid a sales. think like multiple that, times

roughly the, $XX I I that's something we like business should range So model rapidly. must for that 'XX? What million guess, fiscal assume for It thereabouts? or in growing be in

Tod Carpenter

Yeah. to We all what particular business. in into baked that execute gave very on gave that into in that to expect we also be digits have But with that able that to guide side to do revenue have that, expectations grow as business we well current we the remembering on not guide that we the put you, we some long. are. owned on pieces which have We our obviously, order double as cost within it just place you, any this put in that

be year. we'll throughout it So integrating this

Brian Drab

Yeah.

to of in Okay. wondering listed of it -- of probably just Got those just which I'm 'XX, those segment, order Sciences in most revenue like Food so discern then model going sense. I organic expected drivers I'm -- the organic the Makes XX% XX% growth. fiscal maybe wondering And to Disk it. of with you that of in the growth terms Beverage, three and segments... Drives? I'm is Sciences because guess the revenue release Bioprocessing from which anything incremental you contribute press I Life -- like forecast the the like can And should Life for

Tod Carpenter

for We've number digits Food going the double of be a business but you're grown and Beverage broad-based, it's to Yes, years. Brian, right.

we And Drive coming We quite low to Disk expect that again we type good a have we're have that indicator of easier course, We rate. a that to our then Solaris that. year. just highs. well. to then, happen is of would growth off all-time this backlogs you expect expected at comps executing a are noted And would That double-digit

you that's us all pack confidence -- numbers the we're together, really that what in giving. that's how So gives

Brian Drab

within Life Thanks. just acquisition customer one And with you're one. the last talk within like then making progress Sciences that the segment? Okay. Can How customers it -- project Thanks. development about many that Solaris backlog, you helpful. Got on for Or customer? customers do that you color be have The many different big really is would Any across is customers? one now? one it.

Tod Carpenter

Brian. Thanks, Yeah.

not to. one type bioreactors small remember into Their more bit makes very referring it's It well as so elephant, more speak. backlog of is than that of the type larger type would And broad-based project. go that as a bioreactors desktop big one the that So project laboratory of broad-based. big use Solaris you're to is

So we're working with opportunities. have then with are newer particular the happy also of and products the there. number very, we we're progress acceptance acquisitions, the that customer with with broad-based happy very those And of a

Brian Drab

Okay. Thanks, Tod.

Operator

Your next Jefferies. from comes go Laurence question the of Please ahead. line Alexander with

Unidentified Analyst

Hi, Kevin This is for on Laurence. morning. good

that And see APAC related So But my so, next said risk that and in questions -- guys have your is any in seeing? top you largely to issues areas recession you guess be of guess, of there you when China? if to troubled Or you're already most just XX? asked. which been I I And elsewhere do risk? year, line denoted expect that the a region impacting any your markets have end are

Tod Carpenter

Yeah.

sit, where recession, the we're We're tailwind. very the with China that the knows troubled -- world. should we really it's we really when That happy time. are But there. position all you where China when about that us know we happy economy out. give it upon based with talk for to So us that's comes over in a with Everybody

outcomes. able We give us have of over positive be gains to some share different should market number that there a

currently of than then 'XX ago. six months it's baked that we believe or was, However, that a into type of bit guidance. let's any more F not We have protracted lift will say, seen little just be

rest projecting not really of about the geographies. of seen careful type early behavior recessionary very other world, of the for any we're have So China. of But any we in indicators the

that this not have time. And contemplated so at we

Unidentified Analyst

Okay, thank you.

Operator

line Your Mason Rob question from of with Baird. go ahead. the comes Please next

Rob Mason

of results, disconnect Maybe, us guess Is your good? the Yes, do kind impact, It which there indices. follow baked of see what very that to good macro any to seem Tod, there's like morning. versus we some have I to just you Or some seems just not gain-oriented I share help PMIs that out given side? you've in comment. results. those the how wanted given last Europe just your reconcile on the mean, more be up of historically would expected recessionary that extent I we versus that on

Tod Carpenter

Sure.

portfolio So of we've said diverse company. our that across long we're a businesses

that. see particular sectors strength that, as starting you You're some broad Company is read particularly, than Donaldson to more the having of about headwinds.

Investor Some extremely of have about part the Day gains based in well. replacement businesses. share the going execution actually is within of We we at strategies talked clearly some that our

this we at that point seeing so we'll the good across And have and continue a time, in we're of for execution invest look solid press, our to and company. continuation to continue momentum

Rob Mason

anticipating on you And the To that around been on Mobile I low curious longer speaking destocking said it going weigh just may growth low in rate. the Aftermarket to do for to are think Aftermarket that business, that's the the was it single and digit implied you think, extent could I It's the or particularly several single-digit destocking if -- impact the extent much that business? case, you continue. was commentary quarters. heavy thought Mobile that I the quarter. your Yep. fourth business headwinds influence How --

Tod Carpenter

Thanks, Rob. Yeah.

me specific just more bit little Let give that. on a color

is our that If in the our business XX% Mobile Solutions revenue. you of business, aftermarket OE of recall portion

XX% Our revenue. of independent the channel is

fourth just the channel roughly the and we year-over-year down mid-teens. channel flat at that OE tell our If quarter, you was you was would look independent

across Aftermarket. specific the now to that distributor It created a OE one has So multiple broadened but that independent It suggests end has headwind really across you destocking it's channel, the channels. to to and is not our more customers. the not market,

that looking the would to quarters in just not the we've expect pick In up seen appreciably. here two little forward, behaviors fact, from destocking but all a first looking from we OE forward the bit,

the in year second lot then estimation pick would the in quarter across destocking because the our first and So a sector year. our second management and therefore, Q second the the the the go of is in quarter of half OE balance we OE side end the at up likely as that there's calendar sheet

Rob Mason

First the Yeah. that, And of maybe just other Fit side Mobile. the to side in take

come largely have How do the OE times the production same their as shortened still customers chains down. supply of giving level the of schedules? visibility? lead you about has up feel on visibility Are Or your level normalized, Now well? have you that

Tod Carpenter

So computers about our are the nothing’s Yeah, nothing's we where and way changed. things between linked. OEs our the models changed Donaldson Company. operate do We with

tighter. They And look so production build a the we their get a at build may rates rates. little longer firm

across rather XXX So very say, days, at but all Mobile we're with comfortable the like what end we're in more Solutions. seeing of XX days than markets the still

On-Road, with showing So construction, than likely others. On-Road more that's agriculture, and mining a bit resiliency the

Rob Mason

Very Thank back hop queue. good. you. in I’ll the

Operator

turn questions for no Tod remarks. back time. at have I'll this [Operator closing any Carpenter we And Instructions] further the to over call

Tod Carpenter

the results everyone concludes I a today. who That fiscal day. Have XXXX November. reporting to call Thanks to participated, quarter look our in forward and first Goodbye. great

Operator

joining. for call. will you We conclude That thank today's all

now disconnect. You may

Donaldson (DCI) 29 Aug 232023 Q4 Earnings call transcript