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Donaldson Company Reports First Quarter 2020 Earnings

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First quarter 2020 gross margin increased 0.4 percentage points from the prior year

Donaldson maintains its prior guidance for fiscal 2020 sales, operating margin and EPS

MINNEAPOLIS–(BUSINESS WIRE)–$DCI #earnings–Donaldson Company, Inc. (NYSE: DCI) today reported first quarter 2020 net earnings of $65.0 million, or $0.51 per share,1 compared with $73.8 million, or $0.56 per share, in first quarter 2019.

“We are pleased with first quarter’s gross margin performance, and we remain on track to deliver another consecutive year of record profit,” said Tod Carpenter, chairman, president and chief executive officer. “As expected, demand in the first quarter was uneven. The market for new equipment was soft, sales of replacement parts were more stable, and growth businesses like Process Filtration were up notably from last year.

“We expect growth in our ‘Advance and Accelerate’2 portfolio will continue to outpace the company average, supported by further investments to gain share, while customer cautiousness combined with peaking levels of equipment production will likely pressure our ‘Critical Core’3 portfolio. Increasing gross margin remains our top operational priority, and we are making progress bringing new capacity online and optimizing our supply chain. We are also making progress on our initiatives to drive innovation, including our new Materials Research Center and recently announced commercial launches of connected solutions offerings. We are excited about our opportunities, and I am confident that we are well-positioned to navigate near-term unevenness while strengthening our foundation for long-term, profitable growth.”

1 All earnings per share figures refer to diluted earnings per share.

2 Advance and Accelerate includes Industrial Air Filtration (“IAF”) replacement parts, Engine Aftermarket, Venting Solutions, Process Filtration, Semiconductor and Industrial Hydraulics.

3 Critical Core includes Off-Road first-fit, On-Road first-fit, IAF new equipment, Compressed Air Filtration and Aerospace.

Operating Results

First quarter 2020 sales declined 4.1 percent to $672.7 million from $701.4 million in 2019. Factors affecting the year-over-year sales change include:

  • Currency translation negatively impacted sales by approximately 1.4 percent,
  • The acquisition of BOFA International LTD (“BOFA”), which was completed in first quarter 2019, contributed an increase of approximately 1.1 percent, and
  • Price increases added approximately 0.6 percent.

 

 

Three Months Ended

 

October 31, 2019

 

Reported

% Change

 

Constant

Currency

% Change

Off-Road

(10.0

)

%

 

(8.5

)

%

On-Road

(11.4

)

 

 

(11.4

)

 

Aftermarket

(3.6

)

 

 

(2.0

)

 

Aerospace and Defense

10.6

 

 

 

12.5

 

 

Total Engine Products segment

(4.5

)

%

 

(3.1

)

%

Industrial Filtration Solutions

(0.3

)

%

 

1.8

 

%

Gas Turbine Systems

(18.8

)

 

 

(17.8

)

 

Special Applications

(4.0

)

 

 

(5.3

)

 

Total Industrial Products segment

(3.2

)

%

 

(2.0

)

%

Total Company

(4.1

)

%

 

(2.7

)

%

First quarter 2020 sales of Engine Products (“Engine”) decreased 4.5 percent, or 3.1 percent excluding the impact from currency translation. Engine realized benefits from price increases of approximately 0.8 percent. The sales increase in Aerospace and Defense was driven by new equipment in both commercial aerospace and ground defense. The declines in Off-Road and On-Road reflect lower levels of equipment production, with continued variability by geography. The Aftermarket decline reflects lower levels of equipment utilization, primarily in off-road markets.

First quarter sales of Industrial Products (“Industrial”) declined 3.2 percent, or 2.0 percent excluding the impact from currency translation. Industrial realized benefits of approximately 3.6 percent from BOFA and 0.2 percent from pricing. Sales of Industrial Filtration Solutions (“IFS”) reflect benefits from BOFA and strong growth in sales of Process Filtration products, partially offset by lower sales of new equipment. The Gas Turbine Systems (“GTS”) sales decline was primarily driven by lower sales of new equipment, and the decline in sales of Special Applications (“SA”) was primarily driven by Disk Drive filters.

Donaldson’s first quarter 2020 earnings before interest, taxes, depreciation and amortization (“EBITDA”)4 rate of sales was 16.7 percent, compared with 17.1 percent in 2019. Including the 0.4 percentage point impact from higher depreciation and amortization expense, which relate to Donaldson’s capacity expansion and supply chain optimization efforts, first quarter 2020 operating income as a rate of sales (“operating margin”) was 13.2 percent, compared with 14.1 percent in 2019. The year-over change in operating margin reflects higher operating expenses as a rate of sales (“expense rate”), partially offset by higher gross margin.

First quarter 2020 gross margin increased 0.4 percentage points to 34.4 percent from 34.0 percent in 2019. The gross margin increase reflects lower raw materials costs, combined with benefits from the Company’s efforts related to pricing initiatives and optimizing its supply chain, partially offset by loss of leverage on lower sales. Donaldson’s first quarter operating expense rate was 21.2 percent, compared with 19.9 percent last year. The increase reflects loss of leverage on lower sales, combined with higher personnel expense related to investments in support of Donaldson’s strategic growth initiatives.

First quarter 2020 interest expense was $4.7 million, compared with $4.2 million in 2019. Other income was $2.6 million in first quarter 2020, compared with $1.9 million in 2019. Donaldson’s first quarter 2020 tax rate was 24.9 percent, compared with 23.5 percent in 2019. Included within the prior year rate is a tax reform-related benefit of $0.9 million, which lowered the first quarter 2019 rate by approximately 0.8 percentage points.5

During first quarter, Donaldson repurchased 1.4 million shares, or 1.0 percent, of its common stock at an average price of $47.95 for a total investment of $65.0 million. The Company paid $26.6 million of dividends in the quarter.

Fiscal 2020 Outlook

Donaldson’s current guidance for fiscal 2020 sales, operating profit, EPS and capital deployment is consistent with prior guidance and is summarized below.

Donaldson expects fiscal 2020 GAAP EPS between $2.21 and $2.37, compared with fiscal 2019 GAAP and adjusted EPS of $2.05 and $2.21, respectively.

Compared with 2019, fiscal 2020 sales are projected in a range between a 2 percent decline and a 4 percent increase, including a negative impact from currency translation of 1 to 2 percent that is partially offset by price benefits of approximately 1 percent. Compared with 2019, fiscal 2020 Engine sales are projected in a range between a 4 percent decline and a 2 percent increase, reflecting growth in Aerospace and Defense and Aftermarket, combined with lower year-over-year sales in the Company’s first-fit On-Road and Off-Road businesses. Industrial sales are expected to increase from fiscal 2019 between 2 and 8 percent, reflecting growth in IFS and GTS, partially offset by declining sales in SA. Within Industrial, growth in IFS is due in part to one quarter of incremental benefits from the acquisition of BOFA. Currency translation is expected to negatively impact both segments by 1 to 2 percent.

4 EBITDA is a non-GAAP measure that the Company believes is useful in understanding its financial results. See the schedules attached to this press release for more information and a reconciliation of GAAP to non-GAAP measures.

5 See the “Accounting Considerations” section of this press release for more information.

Donaldson expects fiscal 2020 operating margin between 13.9 and 14.5 percent, compared with 13.6 percent in 2019. The year-over-year improvement is projected to come from higher gross margin, partially offset by a higher operating expense rate.

The Company expects full-year 2020 interest expense between $18 million and $20 million, and other income is forecast between $4 million and $8 million. Donaldson’s fiscal 2020 effective income tax rate is forecast between 25.0 and 27.0 percent.

The Company expects fiscal 2020 capital expenditures between $110 million and $130 million, and cash conversion is forecast between 80 and 95 percent. Donaldson expects to repurchase approximately 2 percent of its outstanding shares during fiscal 2020.

Accounting Considerations

Following the enactment of the Federal Tax Cuts and Jobs Act (TCJA) in December 2017, the Company engaged in additional efforts related to optimizing its global cash. Changes implemented during first quarter 2019 resulted in a discrete tax benefit of $0.9 million, which is excluded from the Company’s calculation of adjusted earnings. Adjusted earnings are a non-GAAP financial measure that exclude the impact of certain items not related to ongoing operations. A reconciliation of GAAP to non-GAAP measures is attached to this press release.

Miscellaneous

The Company will webcast its first quarter 2020 earnings conference call today at 9:00 a.m. CST. To listen to the webcast, visit the “Events & Presentations” section of Donaldson’s Investor Relations website (IR.Donaldson.com), and click on the “listen to webcast” option. The webcast replay will be available at approximately 12:00 p.m. CST today.

Statements in this release regarding future events and expectations, such as forecasts, plans, trends and projections relating to the Company’s business and financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are identified by words or phrases such as “will likely result,” “are expected to,” “will continue,” “will allow,” “estimate,” “project,” “believe,” “expect,” “anticipate,” “forecast,” “plan,” and similar expressions. These forward-looking statements speak only as of the date such statements are made and are subject to risks and uncertainties that could cause the Company’s results to differ materially from these statements. These factors include, but are not limited to, economic and industrial conditions worldwide; the Company’s ability to maintain competitive advantages; threats from disruptive innovation; highly competitive markets with pricing pressure; the Company’s ability to protect and enforce its intellectual property; the difficulties in operating globally; customer concentration in certain cyclical industries; significant demand fluctuations; unavailable raw materials or material cost inflation; inability of operations to meet customer demand; difficulties with information technology systems and security; foreign currency fluctuations; governmental laws and regulations; litigation; changes in tax laws and tax rates, regulations and results of examinations; the Company’s ability to attract and retain qualified personnel; changes in capital and credit markets; execution of the Company’s acquisition strategy; the possibility of intangible asset impairment; the Company’s ability to manage productivity improvements; unexpected events and the disruption on operations; the Company’s ability to maintain an effective system of internal control over financial reporting; and the United Kingdom’s decision to end its membership in the European Union. These and other risks and uncertainties are described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended July 31, 2019. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. The results presented herein are preliminary, unaudited and subject to revision until the Company files its results with the United States Securities and Exchange Commission on Form 10-Q.

About Donaldson Company

Founded in 1915, Donaldson Company is a global leader in the filtration industry with sales, manufacturing and distribution locations around the world. Donaldson’s innovative technologies are designed to solve complex filtration challenges and enhance customers’ equipment performance. For more information, visit www.Donaldson.com.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

October 31,

 

 

 

 

 

 

 

 

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

Net sales

$

672.7

 

 

$

701.4

 

 

(4.1

)

%

Cost of sales

441.4

 

 

463.0

 

 

(4.7

)

 

Gross profit

231.3

 

 

238.4

 

 

(3.0

)

 

Operating expenses

142.6

 

 

139.7

 

 

2.1

 

 

Operating income

88.7

 

 

98.7

 

 

(10.2

)

 

Interest expense

4.7

 

 

4.2

 

 

11.9

 

 

Other income, net

(2.6

)

 

(1.9

)

 

36.7

 

 

Earnings before income taxes

86.6

 

 

96.4

 

 

(10.2

)

 

Income taxes

21.6

 

 

22.6

 

 

(4.6

)

 

Net earnings

$

65.0

 

 

$

73.8

 

 

(11.9

)

%

 

 

 

 

 

 

 

Weighted average shares – basic

126.9

 

 

128.8

 

 

(1.5

)

%

Weighted average shares – diluted

128.6

 

 

131.0

 

 

(1.9

)

%

Net earnings per share – basic

$

0.51

 

 

$

0.57

 

 

(10.5

)

%

Net earnings per share – diluted

$

0.51

 

 

$

0.56

 

 

(8.9

)

%

 

 

 

 

 

 

 

Dividends paid per share

$

0.21

 

 

$

0.19

 

 

10.5

 

%

 

Note: Amounts may not foot due to rounding.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

 

 

 

 

October 31,

 

July 31,

 

2019

 

2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

210.0

 

$

177.8

Accounts receivable, net

 

501.5

 

 

529.5

Inventories, net

 

361.5

 

 

332.8

Prepaid expenses and other current assets

 

86.1

 

 

82.5

Total current assets

 

1,159.1

 

 

1,122.6

Property, plant and equipment, net

 

606.2

 

 

588.9

Right-of-use lease assets

 

79.3

 

Goodwill

 

307.9

 

 

303.1

Intangible assets, net

 

71.2

 

 

70.9

Deferred income taxes

 

14.0

 

 

14.2

Other long-term assets

 

45.6

 

 

42.9

Total assets

$

2,283.3

 

$

2,142.6

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Short-term borrowings

$

60.9

 

$

2.1

Current maturities of long-term debt

 

50.0

 

 

50.2

Trade accounts payable

 

229.1

 

 

237.5

Current lease liabilities

 

24.8

 

Other current liabilities

 

166.3

 

 

193.1

Total current liabilities

 

531.1

 

 

482.9

Long-term debt

 

596.8

 

 

584.4

Non-current income taxes payable

 

111.4

 

 

110.9

Deferred income taxes

 

17.0

 

 

13.2

Long-term lease liabilities

 

54.4

 

Other long-term liabilities

 

44.9

 

 

48.5

Total liabilities

 

1,355.6

 

 

1,239.9

 

 

 

 

Redeemable non-controlling interest

 

10.7

 

 

10.0

 

 

 

 

Total shareholders’ equity

 

917.0

 

 

892.7

Total liabilities & shareholders’ equity

$

2,283.3

 

$

2,142.6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

 

 

Three Months Ended

 

October 31,

 

2019

 

2018

Operating Activities

 

 

 

Net earnings

$

65.0

 

 

$

73.8

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

21.2

 

 

 

19.3

 

Deferred income taxes

 

3.1

 

 

 

(0.4

)

Stock-based compensation expense

 

6.6

 

 

 

6.9

 

Other, net

 

7.1

 

 

 

(1.0

)

Changes in operating assets and liabilities, excluding effect of acquired business

 

(16.9

)

 

 

(35.3

)

Net cash provided by operating activities

 

86.1

 

 

 

63.3

 

 

 

 

 

Investing Activities

 

 

 

Net expenditures on property, plant and equipment

 

(37.1

)

 

 

(28.2

)

Acquisitions, net of cash acquired

 

 

(96.0

)

Net cash used in investing activities

 

(37.1

)

 

 

(124.2

)

 

 

 

 

Financing Activities

 

 

 

Proceeds from long-term debt

 

122.9

 

 

 

135.0

 

Repayments of long-term debt

 

(111.1

)

 

 

(14.5

)

Change in short-term borrowings

 

58.2

 

 

 

32.1

 

Purchase of treasury stock

 

(65.0

)

 

 

(80.9

)

Dividends paid

 

(26.6

)

 

 

(24.4

)

Tax withholding for stock compensation transactions

 

(4.1

)

 

 

(2.2

)

Exercise of stock options

 

11.0

 

 

 

16.2

 

Net cash used in financing activities

 

(14.7

)

 

 

61.3

 

Effect of exchange rate changes on cash

 

(2.1

)

 

 

(5.2

)

(Decrease) increase in cash and cash equivalents

 

32.2

 

 

 

(4.8

)

Cash and cash equivalents, beginning of period

 

177.8

 

 

 

204.7

 

Cash and cash equivalents, end of period

$

210.0

 

 

$

199.9

 

CONSOLIDATED RATE ANALYSIS

(Unaudited)

 

 

 

 

 

Three Months Ended

 

October 31,

 

2019

 

2018

 

 

 

 

Gross margin

34.4

%

 

34.0

%

 

 

 

 

Operating expenses rate

21.2

%

 

19.9

%

 

 

 

 

Operating income rate (operating margin)

13.2

%

 

14.1

%

 

 

 

 

Other (income) expense, net rate

(0.4

)%

 

(0.3

)%

 

 

 

 

Depreciation and amortization rate

3.2

%

 

2.8

%

 

 

 

 

EBITDA rate

16.7

%

 

17.1

%

 

 

 

 

Effective tax rate

24.9

%

 

23.5

%

 

 

 

 

Cash conversion ratio

75.4

%

 

47.6

%

 

 

 

 

 

Three Months Ended

 

October 31,

 

2019

 

2018

ADJUSTED RATES

 

 

 

Gross margin

34.4

%

 

34.0

%

 

 

 

 

Operating expenses rate

21.2

%

 

19.9

%

 

 

 

 

Operating income rate (operating margin)

13.2

%

 

14.1

%

 

 

 

 

Other (income) expense, net rate

(0.4

)%

 

(0.3

)%

 

 

 

 

Depreciation and amortization rate

3.2

%

 

2.8

%

 

 

 

 

EBITDA rate

16.7

%

 

17.1

%

 

 

 

 

Effective tax rate

24.9

%

 

24.3

%

 

 

 

 

Cash conversion ratio

75.4

%

 

48.2

Note: Rate analysis metrics are computed by dividing the applicable amount by net sales, cash conversion ratio reflects free cash flow divided by net income. Adjusted rates are non-GAAP measures; see Reconciliation of Non-GAAP Financial Measures schedule for additional information. Amounts may not foot due to rounding.

SEGMENT DETAIL

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended October 31,

 

2019

 

2018

 

Change

NET SALES

 

 

 

 

 

 

Engine Products segment

 

 

 

 

 

 

Off-Road

$

68.6

 

 

$

76.2

 

 

(10.0

)

%

On-Road

40.7

 

 

45.9

 

 

(11.4

)

 

Aftermarket

319.4

 

 

331.2

 

 

(3.6

)

 

Aerospace and Defense

30.5

 

 

27.6

 

 

10.6

 

 

Total Engine Products segment

459.2

 

 

480.9

 

 

(4.5

)

 

 

 

 

 

 

 

 

Industrial Products segment

 

 

 

 

 

 

Industrial Filtration Solutions

149.0

 

 

149.4

 

 

(0.3

)

 

Gas Turbine Systems

20.7

 

 

25.5

 

 

(18.8

)

 

Special Applications

43.8

 

 

45.6

 

 

(4.0

)

 

Total Industrial Products segment

213.5

 

 

220.5

 

 

(3.2

)

 

 

 

 

 

 

 

 

Total Company

$

672.7

 

 

$

701.4

 

 

(4.1

)

%

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES

 

 

 

 

 

Engine Products segment

$

62.4

 

 

$

63.9

 

 

(2.3

)

%

Industrial Products segment

29.5

 

 

36.6

 

 

(19.4

)

 

Corporate and Unallocated

(5.3

)

 

(4.1

)

 

(29.3

)

 

Total Company

$

86.6

 

 

$

96.4

 

 

(10.2

)

%

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES %

 

 

 

 

 

Engine Products segment

13.6

 

%

13.3

 

%

0.3

 

 

Industrial Products segment

13.8

 

%

16.6

 

%

(2.8

)

 

Note: Percentage is calculated by dividing earnings before income taxes by sales. Amounts may not foot due to rounding.

SEGMENT SALES PERCENT CHANGE FROM PRIOR PERIODS BY GEOGRAPHY, AS REPORTED

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended October 31, 2019

Engine Products segment

TOTAL

 

US/CA

 

EMEA

 

APAC

 

LATAM

 

Off-Road

(10.0

)

%

2.1

 

%

(18.1

)

%

(17.0

)

%

22.4

 

%

On-Road

(11.4

)

 

(0.1

)

 

(20.3

)

 

(30.2

)

 

(44.6

)

 

Aftermarket

(3.6

)

 

(9.8

)

 

(0.2

)

 

(2.1

)

 

10.8

 

 

Aerospace and Defense

10.6

 

 

5.7

 

 

18.9

 

 

74.6

 

 

 

 

Total Engine Products segment

(4.5

)

 

(6.0

)

 

(4.1

)

 

(9.0

)

 

9.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Products segment

 

 

 

 

 

 

 

 

 

 

Industrial Filtration Solutions

(0.3

)

 

(1.2

)

 

4.5

 

 

(9.3

)

 

5.0

 

 

Gas Turbine Systems

(18.8

)

 

(34.4

)

 

(2.0

)

 

(10.4

)

 

5.9

 

 

Special Applications

(4.0

)

 

9.7

 

 

16.8

 

 

(10.3

)

 

(32.0

)

 

Total Industrial Products segment

(3.2

)

 

(6.0

)

 

4.8

 

 

(9.9

)

 

4.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(4.1

)

%

(6.0

)

%

(0.8

)

%

(9.4

)

%

9.1

 

%

 

 

 

 

 

 

 

 

 

 

 

SEGMENT SALES PERCENT CHANGE FROM PRIOR PERIODS BY GEOGRAPHY, CONSTANT CURRENCY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended October 31, 2019

 

Engine Products segment

TOTAL

 

US/CA

 

EMEA

 

APAC

 

LATAM

 

Off-Road

(8.5

)

%

2.1

 

%

(14.2

)

%

(17.3

)

%

25.6

 

%

On-Road

(11.4

)

 

(0.1

)

 

(16.6

)

 

(31.8

)

 

(43.9

)

 

Aftermarket

(2.0

)

 

(9.8

)

 

4.4

 

 

(0.5

)

 

12.6

 

 

Aerospace and Defense

12.5

 

 

5.7

 

 

24.4

 

 

72.6

 

 

 

 

Total Engine Products segment

(3.1

)

 

(6.0

)

 

0.3

 

 

(8.3

)

 

11.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Products segment

 

 

 

 

 

 

 

 

 

 

Industrial Filtration Solutions

1.8

 

 

(1.2

)

 

9.3

 

 

(8.5

)

 

6.1

 

 

Gas Turbine Systems

(17.8

)

 

(34.4

)

 

0.2

 

 

(9.2

)

 

5.9

 

 

Special Applications

(5.3

)

 

9.7

 

 

22.3

 

 

(13.1

)

 

(32.0

)

 

Total Industrial Products segment

(2.0

)

 

(6.0

)

 

9.4

 

 

(11.0

)

 

5.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(2.7

)

%

(6.0

)

%

3.7

 

%

(9.4

)

%

10.9

 

%

Note: The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing constant currency information provides valuable supplemental information regarding its results of operations. The Company calculates constant currency percentages by converting its current period local currency financial results using the prior period exchanges rates and compared these adjusted amounts to its prior period reported results. Amounts may not foot due to rounding.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

October 31,

 

 

2019

 

2018

 

 

 

 

 

 

Net cash provided by operating activities

$

86.1

 

 

$

63.3

 

 

Net capital expenditures

(37.1

)

 

(28.2

)

 

Free cash flow

$

49.0

 

 

$

35.1

 

 

 

 

 

 

 

Net earnings

$

65.0

 

 

$

73.8

 

 

Income taxes

21.6

 

 

22.6

 

 

Interest expense

4.7

 

 

4.2

 

 

Depreciation and amortization

21.2

 

 

19.3

 

 

EBITDA

$

112.5

 

 

$

119.9

 

 

 

 

 

 

 

Net earnings

$

65.0

 

 

$

73.8

 

 

Tax expense (benefit) for Federal Tax Cuts and Jobs Act

 

 

(0.9

)

(a)

Adjusted net earnings

$

65.0

 

 

$

72.9

 

 

 

 

 

 

 

Diluted EPS

$

0.51

 

 

$

0.56

 

 

Tax expense (benefit) for Federal Tax Cuts and Jobs Act

 

 

0.00

 

(a)

Adjusted diluted EPS

$

0.51

 

 

$

0.56

 

 

(a) See the “Accounting Considerations” section for additional information.

Note: Although free cash flow, adjusted free cash flow, EBITDA, adjusted net earnings, adjusted diluted EPS and adjusted effective tax rate are not measures of financial performance under GAAP, the Company believes they are useful in understanding its financial results. Free cash flow is a commonly used measure of a company’s ability to generate cash in excess of its operating needs. EBITDA is a commonly used measure of operating earnings less non-cash expenses. The Company evaluates its results of operations both on an as reported and a constant currency basis. The adjusted basis presentation excludes the impact of certain matters not related to the Company’s ongoing operations. A shortcoming of these financial measures is that they do not reflect the Company’s actual results under GAAP. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. Amounts may not foot due to rounding.

Contacts

Brad Pogalz (952) 887-3753

 

For more than 50 years, Business Wire has been the global leader in press release distribution and regulatory disclosure.

For the last half century, thousands of communications professionals have turned to us to deliver their news to the audiences most important to their business through the sources they trust most. Over that time, we've gone from a single office with one full time employee to more than 500 employees in 32 bureaus.

Business Wire

Shortages of Low-Skill, Middle-Skill, and High-Skill Workers Causing Revenue Declines and Other Headaches for Employers, TrueBlue’s Latest Study Finds

Business Wire

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TACOMA, Wash.–(BUSINESS WIRE)–While there has been a lot of discourse around the shortage of high-skill workers in the U.S., a new study by staffing giant TrueBlue shows a significant percentage of employers are also struggling with deficits in low-skill and middle-skill workers – and dealing with a host of business challenges as a result.

According to TrueBlue’s nationwide survey, which included nearly 1,500 managers (HR, operational, and business), skills shortages are widening across skills categories:

  • 32% of managers can’t find workers to fill low-skill positions (generally classified as those that may or may not require a high school diploma and require little to no experience)
  • 46% can’t find workers for middle-skill jobs (typically require some experience and continuing education such as college courses, an apprenticeship or certification, but don’t necessarily require a four-year college degree)
  • 35% can’t find workers for high-skill jobs (typically require a four-year degree or higher and specialized experience)

Low unemployment coupled with globalization, accelerated technology advancement, and evolving work models are creating talent deficits across all skill levels within organizations,” said Patrick Beharelle, CEO of TrueBlue. “The skills supply is not keeping up with demand, which is fueling a greater intensity in an already competitive labor market and adversely impacting productivity, service quality, and revenue growth for businesses.”

Impact of Talent Shortages on Businesses

The top three business challenges managers are experiencing due to prolonged job vacancies within their organizations include:

  • Quality – More than a third of managers (35%) reported that extended job vacancies have caused lower product or service quality.
  • Turnover – 25% have seen higher employee turnover.
  • Revenue – 23% said their companies experienced a decline in revenue.

To address talent shortages and minimize associated business impact, 2 in 5 companies (41 percent) reported that they plan to raise compensation for entry-level workers and nearly half (46 percent) plan to train and hire the long-term unemployed in the coming year.

Survey Methodology

This SurveyMonkey survey was conducted online in the U.S. by TrueBlue between September 23 and October 15, 2019. It included 1,499 managers (HR, operations and general). The survey was across regions, industries, and company sizes.

About TrueBlue

TrueBlue (NYSE: TBI) is a global leader in specialized workforce solutions that help clients achieve business growth and improve productivity. In 2018, the company connected approximately 730,000 people with work. TrueBlue’s PeopleReady segment offers on-demand industrial staffing services, PeopleManagement offers contingent and productivity-based, on-site industrial staffing and driver staffing services, and PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions to a wide variety of industries. Learn more at www.trueblue.com.

Contacts

Jennifer Grasz

Vice President, Corporate Communications

jgrasz@trueblue.com
(312) 840-6327

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Business Wire

Law Firm of Estey & Bomberger Reports: Uber Says Nearly 6,000 Rapes, Sexual Assaults Occurred in Two-year Period

Business Wire

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SAN DIEGO–(BUSINESS WIRE)–The law firm of Estey & Bomberger reported today that Uber’s long-awaited sexual assault report was released Dec. 5, with the ride-hailing company admitting that 5,981* passengers and drivers were raped or sexually assaulted between 2017-2018.

“I applaud Uber for releasing the data that acknowledges there is a problem with sexual assaults occurring in rideshare. While we believe these assaults were preventable, Uber’s report represents a tremendous step for ride-hailing safety,” said Estey & Bomberger attorney Mike Bomberger. “I think there are many positive measures Uber is taking. However, Uber still has an obligation to help the victims who have been raped and assaulted and facing a lifetime of emotional pain. They will need ongoing therapy.”

Estey & Bomberger represents more than 100 ride-hailing sexual assault victims.

“It’s important to remember when reading this report that only one in three women report their sexual assault,” Bomberger said. “Therefore, the number of women who have been sexually assaulted is certainly much higher than reported here.”

Bomberger reiterated his call for all ride-hailing trips to be digitally recorded.

“We’re pleased that Uber is now testing cameras in Texas. That’s the real solution to this problem – if drivers know they’re being recorded they won’t rape and assault,” Bomberger said.

Estey & Bomberger is asking Lyft and Uber sexual assault victims, along with former employees of the ride-sharing firms, to contact its office by calling 866-964-1708 or emailing info@lyftsexualassaultlawyers.com.

*statistic courtesy NPR “Uber Received Nearly 6,000 U.S. Sexual Assault Claims in Past 2 Years,” Dec. 5, 2019.

Contacts

for Estey & Bomberger

Ed Vasquez, 408-420-6558

ed@ejvcommunications.com

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Business Wire

Best’s Market Segment Report: AM Best Maintains Global Reinsurance Market Outlook at Stable

Business Wire

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OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has maintained a market segment outlook of stable on the global reinsurance industry for 2020, citing a stabilized pricing environment — albeit at levels below long-term adequacy — the continuing alignment between traditional and third-party capital and ongoing stability in the global life reinsurance segment.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Global Reinsurance,” states that although rates in the non-life reinsurance market have improved modestly, pricing has not kept adequate pace with the changing risk dynamics, as illustrated by loss development from events such as hurricanes Irma and Maria and Typhoon Jebi, and potential losses from more-recent events (e.g., Hurricane Dorian). Property catastrophe pricing still is being driven by the availability of third-party capital; however, the increasing interdependence between traditional capacity and third-party capital through joint ventures, retrocession and direct ownership should serve to more closely align return objectives for the market overall. Third-party capital also represents a benefit in the form of stabilized earnings of rated balance sheets, due to tail risk being assumed by this capital.

Overall market conditions are improving, but AM Best remains concerned about insufficient rate adequacy relating to certain U.S. casualty lines, a steady decline in the benefit of favorable reserve releases and the pervasive low interest rate environment. The collective effect of these factors requires underwriting discipline, and failure to react to these pressures could adversely affect the segment.

The report outlines other factors that are driving the stable market segment outlook, including:

  • AM Best believes alternative third-party capital will hold the line on future return expectations following the recent heavy catastrophe loss years;
  • A decline in capital consumption and earnings volatility, due in part to the increased utilization of third-party capital in retrocessionaire programs;
  • Greater emphasis on underwriting discipline due to pressure on interest rates and potential slower economic growth globally;
  • Improving pricing momentum driven by higher loss costs, coupled with lower loss reserve redundancies;
  • Increased demand for non-life reinsurance due to primary companies’ recent loss experience, as well as new risk transfer opportunities and mergers and acquisitions;
  • Stable operating performance among life reinsurers, which continue to maintain defensible market positions and offer services beyond risk transfer that create hurdles for new entrants.

To access the full copy of the overall global reinsurance briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=292334.

Separate briefings on the non-life and life reinsurance segments can be viewed at:

To view a video with AM Best Associate Director Scott Mangan about the global reinsurance market segment outlook, please visit http://www.ambest.com/v.asp?v=globalreoutlook1219.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2019 by A.M. Best Company, Inc. and/or its affiliates.

ALL RIGHTS RESERVED.

Contacts

Robert DeRose
Senior Director
+1 908 439 2200, ext. 5435
robert.derose@ambest.com

Greg Carter
Managing Director
+44 20 7397 0288
greg.carter@ambest.com

Michael Porcelli, FSA
Director
+1 908 439 2200, ext. 5548
michael.porcelli@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

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