Q4 2024 Earnings Summary
Reported on Jan 8, 2025 (Before Market Open)
Pre-Earnings Price$74.42Last close (Aug 27, 2024)
Post-Earnings Price$70.40Open (Aug 28, 2024)
Price Change
$-4.02(-5.40%)
- Strong share gains in the Mobile Solutions aftermarket business are expanding operating margins, with the independent channel (60% of the aftermarket business) up high single digits and the OE channel (40% of the aftermarket business) up high teens in the quarter. This demonstrates the power of the mix and the company's ability to gain market share despite headwinds in first-fit production.
- Healthy backlog and growth prospects in Industrial Solutions support a positive outlook, particularly in Industrial Filtration Solutions (IFS). The company expects Power Generation sales to be up year-over-year due to a robust backlog. Additionally, their connected base products are gaining momentum, with about 1,000 units set up in the last fiscal year, helping to drive aftermarket sales and market share gains, especially in the United States.
- Improved gross margins and cost efficiency efforts are supporting profitability. The company achieved a gross margin of 36.2% in Q4 and 35.6% for the year , attributed to efficiency improvements and effective cost management. They have initiated a footprint and cost optimization program, which, while not providing immediate benefits, is expected to enhance margins in the longer term. The company expects to maintain current levels of gross margin going forward.
- The Life Sciences segment is experiencing delays in growth expectations, particularly in bioprocessing, where programs are slipping by 1 to 2 years, leading to a reduction in sales and margin expectations for fiscal 2026 compared to previous targets.
- The company is exiting certain non-strategic product lines in their On-Road business, which will cause a revenue headwind in fiscal 2025 and contribute to a low double-digit decrease in On-Road sales.
- Benefits from the company's footprint optimization and cost reduction initiatives will take time to materialize, with returns expected in year 2 or year 3, meaning these initiatives will not significantly impact fiscal 2025 results.