Donaldson Company (DCI) has reported 22.37 percent rise in profit for the quarter ended Jan. 31, 2017. The company has earned $46.50 million, or $0.35 a share in the quarter, compared with $38 million, or $0.28 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $46.50 million, or $0.35 a share compared with $39 million or $0.29 a share, a year ago. 

Revenue during the quarter grew 6.46 percent to $550.60 million from $517.20 million in the previous year period. Gross margin for the quarter expanded 110 basis points over the previous year period to 34.13 percent. Total expenses were 87.40 percent of quarterly revenues, down from 89.62 percent for the same period last year. This has led to an improvement of 222 basis points in operating margin to 12.60 percent.

Operating income for the quarter was $69.40 million, compared with $53.70 million in the previous year period.

However, the adjusted operating income for the quarter stood at $69.40 million compared to $55.20 million in the prior year period. At the same time, adjusted operating margin improved 193 basis points in the quarter to 12.60 percent from 10.67 percent in the last year period.

"We are pleased with our year-to-date results, which reflect strong execution of our strategic priorities complemented by further stabilization in overall market conditions," said Tod Carpenter, president and chief executive officer. "Engine sales were particularly strong during second quarter, due in part to restocking at many customers, and we now expect to deliver full-year sales and profit results above our prior guidance.

For financial year 2017, Donaldson Company forecasts revenue to grow in the range of 2 percent to 4 percent.  The company forecasts operating income to grow in the range of 13.70 percent to 14.30 percent, the company expects diluted earnings per share to be in the range of $1.68 to $1.76 the company expects diluted earnings per share to be in the range of $1.60 to $1.68 on adjusted basis.

The company has spent $35.90 million cash to meet investing activities during the first six months as against cash outgo of $37.70 million in the last year period.

The company has spent $71.50 million cash to carry out financing activities during the first six months as against cash outgo of $34 million in the last year period.

Cash and cash equivalents stood at $296.30 million as on Jan. 31, 2017, up 33.41 percent or $74.20 million from $222.10 million on Jan. 31, 2016.

Working capital decreases marginally
Donaldson Company has witnessed a decline in the working capital over the last year. It stood at $409.70 million as at Jan. 31, 2017, down 2.27 percent or $9.50 million from $419.20 million on Jan. 31, 2016. Current ratio was at 1.67 as on Jan. 31, 2017, down from 1.71 on Jan. 31, 2016.

Cash conversion cycle (CCC) has decreased to 62 days for the quarter from 107 days for the last year period. Days sales outstanding went down to 70 days for the quarter compared with 74 days for the same period last year.

Days inventory outstanding has decreased to 33 days for the quarter compared with 74 days for the previous year period. At the same time, days payable outstanding was almost stable at 41 days for the quarter, when compared with the previous year period.