Donaldson Company, Inc. revenue decreased on 9.2% and EBITDA Margin showed almost no change
09/03/2020 • About Donaldson Company, Inc. (
$DCI) • By InTwits
Donaldson Company, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is relatively stable: 16.6% in FY2020 vs. 16.5% in FY2019 vs. 15.7% in FY2016
- Donaldson Company, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's in pair with industry average of 5.0%
- CAPEX is quite volatile: $124m in FY2020, $151m in FY2019, $98m in FY2018, $66m in FY2017, $73m in FY2016
- The company has highly profitable business model: ROIC is 20.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 9.2%. Revenue decline showed acceleration in FY20Q4 - it was 15.1% YoY. During FY2016-FY2020 Revenue growth topped in FY2018 at 15.3% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.4 pp from 3.3% to 12.7% in FY2020.
Gross Margin showed almost no change in FY2020. SG&A as a % of Revenue increased slightly on 0.72 pp from 17.5% to 18.2% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 17.5%.
Net Income margin increased slightly on 0.56 pp from 9.4% to 10.0% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 4.8%. CAPEX/Revenue increased on 2.0 pp from 2.8% in FY2017 to 4.8% in FY2020. Average CAPEX/Revenue for the last three years was 4.6%.
Return on investment
The company operates at high and attractive ROIC (20.9%) and ROE (27.4%). ROIC decreased on 5.5 pp from 26.4% to 20.9% in FY2020. ROE decreased on 3.3 pp from 30.7% to 27.4% in FY2020. During the last 5 years ROIC topped in FY2018 at 26.5% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.6x. Net Debt / EBITDA surged on 0.1x from 1.0x to 1.1x in FY2020. Debt jumped on 10.1% while cash surged on 33.1%. During the last 5 years Net Debt/EBITDA bottomed in FY2018 at 0.7x and was growing since that time.
Donaldson Company, Inc. has no short term refinancing risk: cash is higher than short term debt (672.2%).
Valuation and dividends
Donaldson Company, Inc.'s trades at EV/EBITDA 15.2x and P/E 23.4x.
Management team
The company's CEO is Tod E Carpenter. Tod E Carpenter has 5 years tenure with the company.
Financial and operational results
FY ended 07/31/2020
Donaldson Company, Inc. ($DCI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,220 | 2,372 | 2,734 | 2,845 | 2,582 | -9.2% |
| Gross Profit | 755 | 823 | 936 | 948 | 872 | -8.1% |
| SG&A | 425 | 440 | 499 | 498 | 470 | -5.5% |
| EBITDA | 349 | 404 | 454 | 469 | 428 | -8.9% |
| Net Income | 191 | 233 | 180 | 267 | 257 | -3.8% |
Balance Sheet
|
|---|
| Cash | 243 | 308 | 205 | 178 | 237 | 33.1% |
| Short Term Debt | 217 | 74 | 44 | 52 | 35 | -32.7% |
| Long Term Debt | 350 | 537 | 500 | 584 | 666 | 13.9% |
Cash flow
|
|---|
| Capex | 73 | 66 | 98 | 151 | 124 | -17.5% |
Ratios
|
|---|
| Revenue growth | -6.4% | 6.8% | 15.3% | 4.0% | -9.2% | |
| EBITDA growth | -3.7% | 15.7% | 12.4% | 3.4% | -8.9% | |
|
|---|
| Gross Margin | 34.0% | 34.7% | 34.2% | 33.3% | 33.8% | 0.4% |
| EBITDA Margin | 15.7% | 17.0% | 16.6% | 16.5% | 16.6% | 0.1% |
| SG&A, % of revenue | 19.1% | 18.5% | 18.2% | 17.5% | 18.2% | 0.7% |
| Net Income Margin | 8.6% | 9.8% | 6.6% | 9.4% | 10.0% | 0.6% |
| CAPEX, % of revenue | 3.3% | 2.8% | 3.6% | 5.3% | 4.8% | -0.5% |
|
|---|
| ROIC | 20.4% | 23.6% | 26.5% | 26.4% | 20.9% | -5.5% |
| ROE | 24.7% | 28.8% | 21.2% | 30.7% | 27.4% | -3.3% |
| Net Debt/EBITDA | 0.9x | 0.7x | 0.7x | 1.0x | 1.1x | 0.1x |
Donaldson Company, Inc. ($DCI) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 673 | 662 | 630 | 617 | | -4.1% | -5.9% | -11.7% | -15.1% |
| EBITDA | 110 | 114 | 106 | 106 | | -6.9% | 8.4% | -13.4% | -16.1% |
| Net Income | 65 | 64 | 63 | 64 | | -11.9% | 7.2% | -15.7% | 10.7% |
Balance Sheet
|
|---|
| Cash | 210 | 211 | 327 | 237 | | 5.1% | 10.4% | 60.2% | 33.1% |
| Short Term Debt | 136 | 111 | 82 | 35 | | 83.4% | 67.6% | 62.3% | -32.7% |
| Long Term Debt | 651 | 646 | 783 | 666 | | 3.3% | 2.1% | 21.4% | 13.9% |
Ratios
|
|---|
| Gross Margin | 34.4% | 33.7% | 33.2% | 33.7% | | 0.4% | 1.7% | -0.5% | 0.1% |
| EBITDA Margin | 16.3% | 17.2% | 16.9% | 17.1% | | -0.5% | 2.3% | -0.3% | -0.2% |
| Net Income Margin | 9.7% | 9.7% | 10.1% | 10.4% | | -0.9% | 1.2% | -0.5% | 2.4% |
Peers in Industrial Machinery
Below we provide Donaldson Company, Inc. benchmarking against other companies in Industrial Machinery industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| L.S. Starrett Company (The) ($SCX) | - | -1.3% | 4.5% | 5.4% | -11.7% |
| |
|---|
| Median (1 company) | - | -1.3% | 4.5% | 5.4% | -11.7% |
|---|
| Donaldson Company, Inc. ($DCI) | - | 6.8% | 15.3% | 4.0% | -9.2% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| L.S. Starrett Company (The) ($SCX) | 22.4% | 29.9% | 31.9% | 32.9% | 30.9% |
| |
|---|
| Median (1 company) | 22.4% | 29.9% | 31.9% | 32.9% | 30.9% |
|---|
| Donaldson Company, Inc. ($DCI) | 34.0% | 34.7% | 34.2% | 33.3% | 33.8% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| L.S. Starrett Company (The) ($SCX) | -6.3% | 2.9% | 5.7% | 8.1% | 1.1% |
| |
|---|
| Median (1 company) | -6.3% | 2.9% | 5.7% | 8.1% | 1.1% |
|---|
| Donaldson Company, Inc. ($DCI) | 15.7% | 17.0% | 16.6% | 16.5% | 16.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| L.S. Starrett Company (The) ($SCX) | 3.9% | 2.8% | 2.7% | 3.2% | 5.3% |
| |
|---|
| Median (1 company) | 3.9% | 2.8% | 2.7% | 3.2% | 5.3% |
|---|
| Donaldson Company, Inc. ($DCI) | 3.3% | 2.8% | 3.6% | 5.3% | 4.8% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| L.S. Starrett Company (The) ($SCX) | -20.1% | -1.2% | 5.3% | 12.4% | -6.8% |
| |
|---|
| Median (1 company) | -20.1% | -1.2% | 5.3% | 12.4% | -6.8% |
|---|
| Donaldson Company, Inc. ($DCI) | 20.4% | 23.6% | 26.5% | 26.4% | 20.9% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| L.S. Starrett Company (The) ($SCX) | - | 0.5x | 0.5x | 0.3x | 10.0x |
| |
|---|
| Median (1 company) | - | 0.5x | 0.5x | 0.3x | 10.0x |
|---|
| Donaldson Company, Inc. ($DCI) | 0.9x | 0.7x | 0.7x | 1.0x | 1.1x |
