Donaldson Company reported third quarter 2016 net earnings of $54.8 million, or 41 cents per share, compared with $47.8 million, or 34 cents per share, in 2015.
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Foreign currency translation reduced net income in the third quarters of fiscal 2016 and 2015 by $0.9 million and $3.1 million, respectively.
Third quarter 2016 adjusted EPS was 43 cents, compared with 37 cents last year.
Third quarter 2016 sales declined 0.7 percent to $571.3 million from $575.6 million in 2015. Foreign currency translation negatively affected third quarter 2016 sales by 1.0 percent, or $5.5 million.
Excluding the impact from currency translation, third quarter 2016 sales increased 0.2 percent from last year, driven by a year-over-year sales increase in the Industrial segment of 4.4 percent that was largely offset by a 2.1 percent sales decline in the Engine segment.
Third quarter 2016 operating margin was 13.1 percent, compared with 11.7 percent last year. Excluding restructuring charges in both current- and prior-year periods, third quarter 2016 adjusted operating margin increased approximately 1.2 percentage points to 13.8 percent from 12.6 percent last year.
Third quarter 2016 gross margin rate was 34.4 percent, compared with 33.7 percent in 2015. The current- and prior-year rates include restructuring charges, which reduced gross margin by approximately 0.2 percentage points and 0.5 percentage points, respectively.
Excluding the impacts from each period, third quarter 2016 gross margin increased to 34.6 percent from 34.2 percent last year, reflecting favorability from volume and mix that was partially offset by lower-margin projects in the Gas Turbine Systems business.
Third quarter 2016 operating expense as a percent of sales (expense rate) declined to 21.3 percent from 22.1 percent in 2015. Restructuring charges increased third quarter expense rates in fiscal 2016 and 2015 by 0.6 percentage points and 0.5 percentage points, respectively.
Excluding these charges, third quarter 2016 adjusted expense rate was 20.7 percent, or approximately 0.9 percentage points below last year.
The lower expense rate was primarily due to disciplined expense management, including benefits from restructuring actions taken in prior quarters, which was partially offset by a charge of approximately $2.2 million related to the reversal of an accrued subsidy benefit in China. ■