Pall Corp Earnings Cheat Sheet: Margins Shrink as Net Income Drops

Rising costs hurt S&P 500 (NYSE:SPY) component Pall Corporation (NYSE:PLL) in the first quarter as profit dropped from a year earlier. Pall supplies filtration, separation, and purification technologies for the removal of contaminants from a variety of liquids and gases.

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Pall Earnings Cheat Sheet for the First Quarter

Results: Net income for the diversified machinery company fell to $69.5 million (59 cents per share) vs. $71.4 million (61 cents per share) a year earlier. This is a decline of 2.7% from the year earlier quarter.

Revenue: Rose 16.5% to $705.6 million from the year earlier quarter.

Actual vs. Wall St. Expectations: PLL reported adjusted net income of 74 cents per share. By that measure, the company beat the mean estimate of 65 cents per share. It beat the average revenue estimate of $648 million.

Quoting Management: Larry Kingsley, CEO and president, said, “We are encouraged by the strength of orders in the quarter, an indication of continued growth in a mixed environment. Orders in all three global regions grew double digits. Importantly, we saw continued commitment to capital spending with systems orders up over 25% in both businesses, including Europe’s growth of systems orders of over 50%.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 14.5%, with the biggest boost coming in the most recent quarter when revenue rose 16.5% from the year earlier quarter.

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the fourth quarter of the last fiscal year, net income rose 77.2% from the year earlier, while the figure increased 2% in the third quarter of the last fiscal year, 52.5% in the second quarter of the last fiscal year and 6.6% in the first quarter of the last fiscal year.

Gross margin shrank 0.5 percentage point to 50.5%. The contraction appeared to be driven by increased costs, which rose 17.7% from the year earlier quarter while revenue rose 16.5%.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with net income of 76 cents versus a mean estimate of net income of 88 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 77 cents a share to 73 cents over the last ninety days. The average estimate for the fiscal year is $3.13 per share, down from $3.34 ninety days ago.

Competitors to Watch: Nordson Corporation (NASDAQ:NDSN), General Electric Company (NYSE:GE), CLARCOR Inc. (NYSE:CLC), 3M Company (NYSE:MMM), Donaldson Company, Inc. (NYSE:DCI), Thermo Fisher Scientific Inc. (NYSE:TMO), Danaher Corporation (NYSE:DHR), Parker-Hannifin Corp. (NYSE:PH), Teleflex Incorporated (NYSE:TFX), and Flow International Corp. (NASDAQ:FLOW).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)