Cover Page
Cover Page - shares | 6 Months Ended | |
Jan. 31, 2020 | Feb. 29, 2020 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-7891 | |
Entity Registrant Name | DONALDSON COMPANY, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 41-0222640 | |
Entity Address, Address Line One | 1400 West 94th Street | |
Entity Address, City or Town | Minneapolis | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55431 | |
City Area Code | 952 | |
Local Phone Number | 887-3131 | |
Title of 12(b) Security | Common Stock, $5.00 par value | |
Trading Symbol | DCI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 126,771,478 | |
Entity Central Index Key | 0000029644 | |
Current Fiscal Year End Date | --07-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 662 | $ 703.7 | $ 1,334.7 | $ 1,405.1 |
Cost of sales | 438.8 | 478.3 | 880.3 | 941.3 |
Gross profit | 223.2 | 225.4 | 454.4 | 463.8 |
Operating expenses | 138.7 | 140.3 | 281.4 | 280 |
Operating income | 84.5 | 85.1 | 173 | 183.8 |
Interest expense | 4.5 | 5.3 | 9 | 9.5 |
Other income, net | (2.8) | (0.7) | (5.5) | (2.6) |
Earnings before income taxes | 82.8 | 80.5 | 169.5 | 176.9 |
Income taxes | 18.4 | 20.4 | 40 | 43 |
Net earnings | $ 64.4 | $ 60.1 | $ 129.5 | $ 133.9 |
Weighted average shares - basic (in shares) | 127.1 | 128.3 | 127 | 128.6 |
Weighted average shares - diluted (in shares) | 128.9 | 130 | 128.8 | 130.6 |
Net earnings per share - basic (in usd per share) | $ 0.51 | $ 0.47 | $ 1.02 | $ 1.04 |
Net earnings per share - diluted (in usd per share) | $ 0.50 | $ 0.46 | $ 1.01 | $ 1.03 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 64.4 | $ 60.1 | $ 129.5 | $ 133.9 |
Other comprehensive income (loss): | ||||
Foreign currency translation income (loss) | 2.4 | 23.7 | 10.5 | (0.5) |
Pension liability adjustment, net of deferred taxes of $(0.4), $(0.2), $(0.3), and $(0.6), respectively | 1.2 | 0.5 | 2 | 2.1 |
Gain on hedging derivatives, net of deferred taxes of $0.5, $0.0, $0.7 and $(0.2), respectively | 0.5 | 0 | 0.8 | 0.5 |
Reclassifications of losses on hedging derivatives to net earnings, net of taxes of $0.0, $0.0, $(0.7), and $0.0, respectively | 0.1 | 0 | 1.3 | 0 |
Total derivatives | 0.6 | 0 | 2.1 | 0.5 |
Net other comprehensive income | 4.2 | 24.2 | 14.6 | 2.1 |
Comprehensive income | $ 68.6 | $ 84.3 | $ 144.1 | $ 136 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Deferred taxes on hedging derivatives | $ 0.5 | $ 0 | $ 0.7 | $ (0.2) |
Taxes on reclassifications of derivatives to net income | 0 | 0 | 0 | 0 |
Deferred taxes on pension liability | $ (0.4) | $ (0.2) | $ (0.3) | $ (0.6) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jan. 31, 2020 | Jul. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 211.1 | $ 177.8 |
Accounts receivable, less allowance of $5.0 and $4.8, respectively | 475.8 | 529.5 |
Inventories, net | 350.1 | 332.8 |
Prepaid expenses and other current assets | 84.2 | 82.5 |
Total current assets | 1,121.2 | 1,122.6 |
Property, plant and equipment, net | 623.1 | 588.9 |
Right-of-use lease assets | 76 | 0 |
Goodwill | 308.5 | 303.1 |
Intangible assets, net | 69.7 | 70.9 |
Deferred income taxes | 15.4 | 14.2 |
Other long-term assets | 48.3 | 42.9 |
Total assets | 2,262.2 | 2,142.6 |
Current liabilities: | ||
Short-term borrowings | 34.7 | 2.1 |
Current maturities of long-term debt | 50 | 50.2 |
Trade accounts payable | 210.1 | 237.5 |
Current lease liabilities | 25.9 | 0 |
Other current liabilities | 177.5 | 193.1 |
Total current liabilities | 498.2 | 482.9 |
Long-term debt | 595.8 | 584.4 |
Non-current income taxes payable | 102.1 | 110.9 |
Deferred income taxes | 19.5 | 13.2 |
Long-term lease liabilities | 50.1 | 0 |
Other long-term liabilities | 45.3 | 48.5 |
Total liabilities | 1,311 | 1,239.9 |
Commitments and contingencies (Note 15) | ||
Redeemable non-controlling interest | 10.8 | 10 |
Shareholders’ equity: | ||
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued | 0 | 0 |
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued | 758.2 | 758.2 |
Retained earnings | 1,354.1 | 1,281.5 |
Non-controlling interest | 5.6 | 5.4 |
Stock-compensation plans | 14.5 | 21.7 |
Accumulated other comprehensive loss | (178.3) | (192.9) |
Treasury stock, 24,876,430 and 24,324,483 shares, respectively, at cost | (1,013.7) | (981.2) |
Total shareholders’ equity | 940.4 | 892.7 |
Total liabilities and shareholders’ equity | $ 2,262.2 | $ 2,142.6 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jan. 31, 2020 | Jul. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 5 | $ 4.8 |
Preferred stock, par value (in usd per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 5 | $ 5 |
Common stock, shares authorized (in shares) | 240,000,000 | 240,000,000 |
Common stock, shares issued (in shares) | 151,643,194 | 151,643,194 |
Treasury stock, shares (in shares) | 24,876,430 | 24,324,483 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Operating Activities | ||
Net earnings | $ 129.5 | $ 133.9 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 42.8 | 39.2 |
Deferred income taxes | 2.5 | 4.9 |
Stock-based compensation expense | 10.2 | 10.6 |
Other, net | 10.5 | (2.1) |
Changes in operating assets and liabilities, excluding effect of acquired business | (18.7) | (43.7) |
Net cash provided by operating activities | 176.8 | 142.8 |
Investing Activities | ||
Net expenditures on property, plant and equipment | (79.7) | (67.1) |
Acquisitions, net of cash acquired | 0 | (96) |
Net cash used in investing activities | (79.7) | (163.1) |
Financing Activities | ||
Proceeds from long-term debt | 122.7 | 145 |
Repayments of long-term debt | (111.1) | (24.6) |
Change in short-term borrowings | 32.2 | 22.6 |
Purchase of treasury stock | (65) | (102) |
Dividends paid | (53.2) | (48.7) |
Tax withholding payments for stock compensation transactions | (6) | (3.6) |
Exercise of stock options | 17.4 | 17.3 |
Net cash (used in) provided by financing activities | (63) | 6 |
Effect of exchange rate changes on cash | (0.8) | 0.8 |
Increase (decrease) in cash and cash equivalents | 33.3 | (13.5) |
Cash and cash equivalents, beginning of period | 177.8 | 204.7 |
Cash and cash equivalents, end of period | 211.1 | 191.2 |
Supplemental Cash Flow Information [Abstract] | ||
Income taxes | 45.3 | 54.4 |
Interest | 9.4 | 8.9 |
Accrued property, plant and equipment additions | $ 12.5 | $ 17.5 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Non- Controlling Interest | Stock Compensation Plans | Accumulated Other Comprehensive Loss | Treasury Stock |
Beginning Balance at Jul. 31, 2018 | $ 857.8 | $ 758.2 | $ 0 | $ 1,122.1 | $ 4.8 | $ 21.3 | $ (149.8) | $ (898.8) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings | 133.9 | 133.9 | ||||||
Other comprehensive income (loss) | 2.1 | 2.1 | ||||||
Treasury stock acquired | (102) | (102) | ||||||
Dividends declared | (48.4) | (48.4) | ||||||
Stock compensation and other activity | 29.2 | (4.9) | 0.4 | (0.2) | 33.9 | |||
Ending Balance at Jan. 31, 2019 | 872.6 | 758.2 | 0 | 1,202.7 | 5.2 | 21.1 | (147.7) | (966.9) |
Beginning Balance at Oct. 31, 2018 | 854.4 | 758.2 | 0 | 1,192.6 | 4.8 | 21.2 | (171.9) | (950.5) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings | 60.1 | 60.1 | ||||||
Other comprehensive income (loss) | 24.2 | 24.2 | ||||||
Treasury stock acquired | (21.1) | (21.1) | ||||||
Dividends declared | (48.6) | (48.6) | ||||||
Stock compensation and other activity | 3.6 | (1.4) | 0.4 | (0.1) | 4.7 | |||
Ending Balance at Jan. 31, 2019 | 872.6 | 758.2 | 0 | 1,202.7 | 5.2 | 21.1 | (147.7) | (966.9) |
Beginning Balance at Jul. 31, 2019 | 892.7 | 758.2 | 0 | 1,281.5 | 5.4 | 21.7 | (192.9) | (981.2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings | 129.5 | 129.5 | ||||||
Other comprehensive income (loss) | 14.6 | 14.6 | ||||||
Treasury stock acquired | (65) | (65) | ||||||
Dividends declared | (53.1) | (53.1) | ||||||
Stock compensation and other activity | 21.7 | (3.8) | 0.2 | (7.2) | 32.5 | |||
Ending Balance at Jan. 31, 2020 | 940.4 | 758.2 | 0 | 1,354.1 | 5.6 | 14.5 | (178.3) | (1,013.7) |
Beginning Balance at Oct. 31, 2019 | 917 | 758.2 | 0 | 1,346 | 5.4 | 15.1 | (182.5) | (1,025.2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings | 64.4 | 64.4 | ||||||
Other comprehensive income (loss) | 4.2 | 4.2 | ||||||
Dividends declared | (53.3) | (53.3) | ||||||
Stock compensation and other activity | 8.1 | (3) | 0.2 | (0.6) | 11.5 | |||
Ending Balance at Jan. 31, 2020 | $ 940.4 | $ 758.2 | $ 0 | $ 1,354.1 | $ 5.6 | $ 14.5 | $ (178.3) | $ (1,013.7) |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends, per share (in dollars per share) | $ 420 | $ 380 | $ 420 | $ 380 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of Donaldson Company, Inc. and its subsidiaries (the Company) have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of earnings, comprehensive income, financial position, cash flows and shareholders’ equity have been included and are of a normal recurring nature. Operating results for the three and six month periods ended January 31, 2020 are not necessarily indicative of the results that may be expected for future periods. The year-end Condensed Consolidated Balance Sheet information was derived from the Company’s Audited Consolidated Financial Statements but does not include all disclosures required by GAAP. For further information, refer to the Audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2019 . New Accounting Standards Recently Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASU 2016-02), which requires lessees to recognize right-of-use assets and lease liabilities for substantially all leases. This accounting guidance was effective for the Company in the beginning of the first quarter of fiscal 2020 and the Company adopted the guidance on a modified retrospective basis. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842) Narrow-Scope Improvements for Lessors (ASU 2018-20), which amends ASU 2016-02, to provide additional guidance on accounting for certain expenses such as property taxes and insurance paid on behalf of the lessor by the lessee. The Company adopted ASU 2016-02 in the first quarter of fiscal 2020, and increased assets and liabilities by $71.5 million , as of August 1, 2019. Refer to Note 17 for further discussion. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The guidance allows a company to elect to reclassify from accumulated other comprehensive income (AOCI) to retained earnings the stranded tax effects from the adoption of the new federal corporate tax rate that became effective January 1, 2018 as a result of the U.S. Tax Cuts and Jobs Act (TCJA). The amount of the reclassification is calculated as the difference between the amount initially charged to other comprehensive income at the previously enacted tax rate that remains in AOCI and the amount that would have been charged using the newly enacted tax rate, excluding any valuation allowance prior to tax reform. The Company adopted ASU 2018-02 in the first quarter of fiscal 2020 and elected to not reclassify tax effects stranded in accumulated other comprehensive loss. As such, there is no impact on the Company’s Condensed Consolidated Financial Statements. New Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13). In November 2018, the FASB issued an update, ASU 2018-19, that clarifies the scope of the standard in the amendments in ASU 2016-13. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Financial instruments impacted include accounts receivable, trade receivables, other financial assets measured at amortized cost and other off-balance sheet credit exposures. The guidance is effective for the Company beginning in the first quarter of fiscal 2021 , with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2016-13 on its Consolidated Financial Statements. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815 Derivatives and Hedging and Topic 825, Financial Instruments (ASU 2019-04). This guidance clarifies the standards on credit losses (Topic 326), derivatives and hedging (Topic 815), and recognition and measurement of financial instruments (Topic 825). The guidance is effective for the Company beginning in the first quarter of fiscal 2021 . The Company is evaluating the impact of the adoption of ASU 2019-04 on its Consolidated Financial Statements. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jan. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures In the first quarter of fiscal 2019, the Company acquired 88% of the shares of BOFA International LTD (BOFA), headquartered in the United Kingdom, for cash consideration of $98.2 million less cash acquired of $2.2 million . In the fourth quarter of fiscal 2019, the Company acquired an additional 3% of the shares, increasing its ownership to 91% . BOFA designs, develops and manufactures fume extraction systems across a wide range of industrial air filtration applications. The acquisition allowed the Company to accelerate its global growth in the fume collection business and add additional filtration technology to the Company’s existing product lines. On February 21, 2020, the Company received a binding offer from Nelson Global Products (Nelson) for the purchase of the Exhaust and Emissions (E&E) business. Previous synergies between air cleaners and exhaust products, including construction and technical knowledge, have dissolved due to changes in regulations and technology. Subsequent to the binding offer, the Company began the consultation process with its employee representative committees in France. Following the Works Council consultation processes, the Company may accept the offer and move ahead with the transaction. The transaction would be subject to customary closing conditions and regulatory approvals. The Company expects the transaction would close during the third quarter of fiscal year 2020. |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 6 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information The components of net inventories are as follows (in millions): January 31, July 31, Raw materials $ 117.1 $ 114.7 Work in process 35.0 33.0 Finished products 198.0 185.1 Inventories, net $ 350.1 $ 332.8 The components of net property, plant and equipment are as follows (in millions): January 31, July 31, Land $ 24.2 $ 24.2 Buildings 347.6 325.3 Machinery and equipment 836.2 813.5 Computer software 144.0 142.8 Construction in progress 135.8 114.3 Less: accumulated depreciation (864.7 ) (831.2 ) Property, plant and equipment, net $ 623.1 $ 588.9 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company’s basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company’s diluted net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options and stock incentive plans. Certain outstanding options were excluded from the diluted net earnings per share calculations because their exercise prices are greater than the average market price of the Company’s common stock during those periods. Options excluded from the diluted net earnings per share calculations were 0.8 million for the three and six months ended January 31, 2020 and were 0.9 million and 0.8 million for the three and six months ended January 31, 2019 , respectively. The following table presents the information necessary to calculate basic and diluted net earnings per share (in millions, except per share amounts): Three Months Ended Six Months Ended 2020 2019 2020 2019 Net earnings for basic and diluted earnings per share computation $ 64.4 $ 60.1 $ 129.5 $ 133.9 Weighted average common shares outstanding: Weighted average common shares – basic 127.1 128.3 127.0 128.6 Dilutive impact of share-based awards 1.8 1.7 1.8 2.0 Weighted average common shares – diluted 128.9 130.0 128.8 130.6 Net earnings per share – basic $ 0.51 $ 0.47 $ 1.02 $ 1.04 Net earnings per share – diluted $ 0.50 $ 0.46 $ 1.01 $ 1.03 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jan. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill is assessed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company performed its annual impairment assessment during the third quarter of fiscal 2019 and did not record any impairment as a result of this assessment. The following is a reconciliation of goodwill by reportable segment for the six months ended January 31, 2020 (in millions): Engine Products Industrial Products Total Balance as of July 31, 2019 $ 84.5 $ 218.6 $ 303.1 Goodwill acquired — — — Currency translation (0.1 ) 5.5 5.4 Balance as of January 31, 2020 $ 84.4 $ 224.1 $ 308.5 The following table summarizes the net intangible asset classes as of January 31, 2020 (in millions): Gross Carrying Amount Accumulated Amortization Total Customer relationships $ 104.0 $ (46.6 ) $ 57.4 Patents, trademarks and technology 22.9 (10.6 ) 12.3 Total intangible assets, net $ 126.9 $ (57.2 ) $ 69.7 The following table summarizes the net intangible asset classes as of July 31, 2019 (in millions): Gross Carrying Amount Accumulated Amortization Total Customer relationships $ 101.5 $ (43.3 ) $ 58.2 Patents, trademarks and technology 22.3 (9.6 ) 12.7 Total intangible assets, net $ 123.8 $ (52.9 ) $ 70.9 Amortization expense was $2.0 million and $4.1 million for the three and six months ended January 31, 2020 , respectively, and was $ 2.1 million and $ 3.5 million for the three and six months ended January 31, 2019 , respectively. |
Revenue
Revenue | 6 Months Ended |
Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company recognizes revenue on a wide range of filtration solutions sold to customers in many industries around the globe. Most of the Company’s performance obligations within customer sales contracts are for manufactured filtration systems and replacement parts. The Company also performs limited services and installation. Customer contracts may include multiple performance obligations and the transaction price is allocated to each distinct performance obligation based on its relative standalone selling price. Revenue Disaggregation Net sales disaggregated by geography based on the location where the customer’s order was placed are as follows (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 United States $ 267.5 $ 289.4 $ 554.4 $ 594.5 Europe, Middle East and Africa 194.1 207.4 388.8 403.7 Asia Pacific 144.4 149.3 278.0 296.6 Latin America 56.0 57.6 113.5 110.3 Total net sales $ 662.0 $ 703.7 $ 1,334.7 $ 1,405.1 See Note 16 for net sales disaggregated by segment. Contract Assets and Liabilities The satisfaction of performance obligations and the resulting recognition of revenue typically corresponds with billing the customer. In limited circumstances, the customer may be billed at a time later than when revenue is recognized, resulting in contract assets, which are reported in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. Contract assets were $11.2 million and $12.4 million as of January 31, 2020 and July 31, 2019 , respectively. In other limited circumstances, the Company will require a down payment from the customer prior to the satisfaction of performance obligations. The circumstances result in contract liabilities, or deferred revenue, which is reported in other current liabilities on the Condensed Consolidated Balance Sheets, depending on when revenue is expected to be recognized. Contract liabilities were $15.4 million and $10.4 million as of January 31, 2020 and July 31, 2019 , respectively. The Company will recognize revenue in future periods related to remaining performance obligations for certain open contracts. Generally, these contracts have terms of one year or less . The amount of revenue related to unsatisfied performance obligations in which the original duration of the contract is greater than one year is not significant. |
Warranty
Warranty | 6 Months Ended |
Jan. 31, 2020 | |
Standard Product Warranty Disclosure [Abstract] | |
Warranty | Warranty The Company estimates warranty expense on certain products at the time of sale. The following is a reconciliation of warranty reserves for the six months ended January 31, 2020 and 2019 (in millions): Six Months Ended 2020 2019 Balance at beginning of period $ 11.2 $ 18.9 Accruals for warranties issued during the reporting period 0.6 0.5 Accruals related to pre-existing warranties (including changes in estimates) (0.5 ) (1.7 ) Less: settlements made during the period (1.4 ) (3.1 ) Balance at end of period $ 9.9 $ 14.6 There were no material specific warranty matters accrued for or significant settlements made in the six months ended January 31, 2020 or 2019 . |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation On November 22, 2019, at the Company’s 2019 Annual Meeting of Stockholders, the Company’s stockholders approved the adoption of the 2019 Master Stock Incentive Plan (2019 Plan). As of November 22, 2019, the 2019 Plan replaced the 2010 Master Stock Incentive Plan (2010 Plan). Consistent with the 2010 Plan, the 2019 Plan allows for granting of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents, and other stock-based awards. Stock Options When options are granted the option exercise price is equivalent to the market price of the Company’s common stock at the date of grant. Options are generally exercisable for up to 10 years from the date of grant and vest in equal increments over three years . The following table summarizes expense associated with stock options during the three and six months ended January 31, 2020 and 2019 (in millions): Three Months Ended January 31, Six Months Ended 2020 2019 2020 2019 Pretax compensation expense associated with stock options $ 2.4 $ 2.0 $ 7.7 $ 6.9 Tax benefits associated with stock options $ 0.5 $ 0.3 $ 1.1 $ 1.4 Stock-based employee compensation expense is recognized using the fair-value method. The Company determines the fair value of stock option awards using the Black-Scholes option pricing model. The following table summarizes stock option activity during the six months ended January 31, 2020 : Options Outstanding Weighted Average Exercise Price Outstanding as of July 31, 2019 6,531,250 $ 39.66 Granted 929,941 51.96 Exercised (610,997 ) 29.06 Canceled (45,894 ) 53.27 Outstanding as of January 31, 2020 6,804,300 $ 42.20 The total intrinsic value of options exercised during the six months ended January 31, 2020 was $14.8 million . The weighted average fair value for options granted during the six months ended January 31, 2020 and 2019 was $10.94 and $ 12.27 per share, respectively. As of January 31, 2020 , the aggregate intrinsic value of options outstanding and exercisable was $71.8 million and $69.5 million , respectively. As of January 31, 2020 , there was $10.2 million of total unrecognized compensation expense related to non-vested stock options and is expected to be recognized over the remaining vesting period. Performance-based awards Consistent with the 2010 Plan, the 2019 Plan allows for the granting of performance-based awards to a limited number of key executives. Administered by the Human Resources Committee of the Company’s Board of Directors, these performance-based awards are payable in common stock and are based on a formula that measures Company performance over a three-year period. These awards are settled or forfeited after three years with payouts ranging from zero to 200% of the target award value depending on achievement. The following table summarizes expense associated with performance-based awards during the three and six months ended January 31, 2020 and 2019 (in millions): Three Months Ended January 31, Six Months Ended 2020 2019 2020 2019 Pretax compensation expense associated with performance-based awards $ 0.9 $ 1.3 $ 1.8 $ 3.0 The following table summarizes performance-based award activity during the six months ended January 31, 2020 : Performance Shares Outstanding Weighted Non-vested at July 31, 2019 174,100 $ 52.87 Granted 100,500 51.61 Vested — — Canceled/forfeited — — Non-vested at January 31, 2020 274,600 $ 52.41 The weighted average fair value for performance-based awards granted during the six months ended January 31, 2020 was $5.2 million . As of January 31, 2020 , there was $5.0 million of total unrecognized compensation expense related to non-vested performance-based awards and is expected to be recognized over the remaining vesting period. |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Jan. 31, 2020 | |
Retirement Benefits, Description [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company and certain of its international subsidiaries have defined benefit pension plans for many of their hourly and salaried employees. There are two types of U.S. plans. The first type of U.S. plan (Hourly Pension Plan) is a traditional defined benefit pension plan primarily for union production employees. The second plan (Salaried Pension Plan) is for some salaried and non-union production employees, and provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit comprised of a percentage of current salary that varies with years of service, interest credits and transition credits. The Company no longer allows entrants into the U.S. Salaried Pension Plan and the employees no longer accrue Company contribution credits under the plan. Instead, eligible employees receive a 3% annual Company retirement contribution to their 401(k) in addition to the Company’s normal 401(k) match. The non-U.S. plans generally provide pension benefits based on years of service and compensation level. Components of net periodic benefit cost other than the service cost component are included in other income, net in the Condensed Consolidated Statements of Earnings. Net periodic benefit costs for the Company’s pension plans include the following components (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Net periodic benefit costs: Service cost $ 1.5 $ 1.5 $ 3.1 $ 3.0 Interest cost 3.4 4.1 6.8 8.2 Expected return on assets (6.5 ) (6.7 ) (13.0 ) (13.3 ) Prior service cost amortization 0.2 0.2 0.3 0.3 Actuarial loss amortization 1.6 1.1 3.2 2.2 Net periodic benefit costs $ 0.2 $ 0.2 $ 0.4 $ 0.4 The Company’s general funding policy is to make at least the minimum required contributions as required by applicable regulations, plus any additional amounts that it determines to be appropriate. The estimated minimum funding requirement for the Company’s qualified U.S. plans for the plan year ending July 31, 2020 is $4.4 million . For the six months ended January 31, 2020 , the Company made required contributions of $2.5 million to its non-qualified U.S. pension plans and $0.5 million to its non-U.S. pension plans. In February 2020, the Company contributed an additional $1.1 million to the qualified U.S. pension plans. The Company estimates it will contribute an additional $0.6 million to its non-U.S. pension plans during the remainder of fiscal 2020 based upon the local government prescribed funding requirements. Future estimates of the Company’s required pension plan contributions may change significantly depending on the actual rate of return on plan assets, discount rates and regulatory requirements. |
Income Taxes
Income Taxes | 6 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2010. The United States Internal Revenue Service has completed examinations of the Company’s U.S. federal income tax returns through 2016. As of January 31, 2020 , gross unrecognized tax benefits were $16.0 million and accrued interest and penalties on these unrecognized tax benefits were $1.9 million . The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense within the Condensed Consolidated Statement of Earnings. With an average statute of limitations of approximately five years, up to $1.8 million of the unrecognized tax benefits could potentially expire in the next 12 months , unless extended by an audit. The Company believes that it is remote that any adjustment necessary to the reserve for income taxes over the next 12 months will be material. However, it is possible the ultimate resolution of audits or disputes may result in a material change to the Company’s reserve for income taxes, although the quantification of such potential adjustments cannot be made at this time. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jan. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value measurements of financial instruments are reported in one of three levels based on the lowest level of significant input used as follows: Level 1 Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities. Level 2 Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 Inputs to the fair value measurement are unobservable inputs or valuation techniques. As of January 31, 2020 , the carrying values of cash and cash equivalents, accounts receivables, short-term borrowings and trade accounts payable approximate fair value because of the short-term nature of these instruments. As of January 31, 2020 , the estimated fair value of long-term debt with fixed interest rates was $290.2 million compared to its carrying value of $275.0 million . The carrying values of long-term debt with variable interest rates of $322.7 million as of January 31, 2020 approximate fair value. The fair value is estimated by discounting the projected cash flows using the rate at which similar amounts of debt could currently be borrowed. Long-term debt is classified as Level 2 in the fair value hierarchy. The fair values of the Company’s financial assets and liabilities listed below reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price). The fair values are based on inputs other than quoted prices that are observable for the asset or liability, and therefore are classified as Level 2 in the fair value hierarchy. These inputs include foreign currency exchange rates and interest rates. The financial assets and liabilities are primarily valued using standard calculations and models that use as their basis readily observable market parameters. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and currency rates. Derivative Fair Value Measurements The Company enters into derivative instrument agreements, including forward foreign currency exchange contracts and net investment hedges, to manage risk in connection with changes in foreign currency. The Company only enters into derivative instruments with counterparties who have highly rated credit. The Company does not enter into derivative contracts for trading or speculative purposes. Forward Foreign Currency Exchange Contracts The Company uses forward currency exchange contracts to manage exposure to fluctuations in foreign currency. The Company enters into certain purchase commitments with foreign suppliers based on the value of its purchasing subsidiaries’ local currency relative to the currency’s requirement of the supplier on the date of the commitment. The Company also sells into foreign countries based on the value of purchaser’s local currency. The Company mitigates risk through using forward currency contracts that generally mature in 12 months or less, which is consistent with the related purchases and sales. Contracts that qualify for hedge accounting are designated as cash flow hedges. Net Investment Hedges The Company uses fixed-to-fixed cross-currency swap agreements, that mature in July 2029, to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe. The Company has elected the spot method for assessing effectiveness of these contracts. The Company determines the fair values of its derivatives based on valuation models which project future cash flows and discount the future amounts to a present value using market based observable inputs including foreign currency rates, interest rate curves, futures and basis spreads, as applicable. The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the Company’s Condensed Consolidated Balance Sheets as of January 31, 2020 and July 31, 2019 (in millions): Fair Values Significant Other Observable Inputs Notional Amounts Assets (1) Liabilities (2) (3) January 31, July 31, January 31, July 31, January 31, July 31, 2020 2019 2020 2019 2020 2019 Forward foreign currency exchange contracts $ 14.0 $ 28.2 $ 2.7 $ 1.6 $ 0.7 $ 1.8 Net investment hedges 55.8 55.8 1.1 1.1 — 1.9 Total $ 69.8 $ 84.0 $ 3.8 $ 2.7 $ 0.7 $ 3.7 (1) Amounts are recorded within prepaid expenses and other current assets in the Company’s Condensed Consolidated Balance Sheets. (2) Forward foreign currency exchange contracts are recorded within other current liabilities in the Company’s Condensed Consolidated Balance Sheets. (3) Net investment hedges are recorded within other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets. Changes in the fair value of the Company’s forward foreign currency exchange contracts are recorded in equity as a component of accumulated other comprehensive loss, and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of sales within the Company’s Condensed Consolidated Statements of Earnings and Condensed Consolidated Statements of Comprehensive Income. The net gain or loss on net investment hedges are reported within foreign currency translation gains and losses as a component of accumulated other comprehensive loss in the Company’s Condensed Consolidated Balance Sheets. The interest earned is reclassified out of accumulated other comprehensive loss and into other income, net on the Company’s Condensed Consolidated Statements of Earnings. Credit Risk Related Contingent Features Contract provisions may require the posting of collateral or settlement of the contracts for various reasons, including if the Company’s credit ratings are downgraded below its investment grade credit rating by any of the major credit agencies or for cross default contractual provisions if there is a failure under other financing arrangements related to payment terms or covenants. As of January 31, 2020 and July 31, 2019 , no collateral has been posted. Counterparty Credit Risk There is risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors. The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts and net investment hedges (in millions): Pre-tax Gains (Losses) Recognized in Accumulated Other Comprehensive Loss Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Forward foreign currency exchange contracts $ (0.6 ) $ 0.1 $ (1.3 ) $ 1.1 Net investment hedges $ 0.6 $ — $ 1.4 $ — Pre-tax (Gains) Losses Reclassified from Accumulated Other Comprehensive Loss Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Forward foreign currency exchange contracts $ 0.1 $ (0.1 ) $ 2.0 $ (0.4 ) Net investment hedges $ — $ — $ — $ — The Company expects that substantially all of the amounts recorded in accumulated other comprehensive loss for its forward foreign currency exchange contracts recorded within the Company’s Condensed Consolidated Balance Sheet will be reclassified into earnings during the next 12 months, based upon the timing of inventory purchases and sales. See also Note 13. The Company holds equity method investments, which are classified in other long-term assets in the accompanying Condensed Consolidated Balance Sheets. The aggregate carrying amount of these investments was $23.1 million and $23.0 million as of January 31, 2020 and July 31, 2019 , respectively. These equity method investments are measured at fair value on a nonrecurring basis. The fair value of the Company’s equity method investments has not been estimated as there have been no identified events or changes in circumstances that would have had an adverse impact on the value of these investments. In the event that these investments were required to be measured, these investments would fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value, as the investments are in privately-held entities. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jan. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity The Company’s Board of Directors authorized the repurchase of up to 13.0 million shares of common stock under the Company’s stock repurchase plan. This repurchase authorization is effective until terminated by the Board of Directors. During the six months ended January 31, 2020 , the Company repurchased 1.4 million shares for $65.0 million . As of January 31, 2020 , the Company had remaining authorization to repurchase 11.4 million shares under this plan. Dividends paid per share were 42.0 cents and 38.0 cents for the six months ended January 31, 2020 and 2019 , respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jan. 31, 2020 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component for the three months ended January 31, 2020 and 2019 are as follows (in millions): Foreign Pension Derivative Total Balance as of October 31, 2019, net of tax $ (84.6 ) $ (98.2 ) $ 0.3 $ (182.5 ) Other comprehensive income before reclassifications and tax 2.4 — — 2.4 Tax benefit — — 0.5 0.5 Other comprehensive income before reclassifications, net of tax 2.4 — 0.5 2.9 Reclassifications, before tax — 1.6 0.1 1.7 Tax expense — (0.4 ) — (0.4 ) Reclassifications, net of tax — 1.2 (1) 0.1 (2) 1.3 Other comprehensive income, net of tax 2.4 1.2 0.6 4.2 Balance as of January 31, 2020, net of tax $ (82.2 ) $ (97.0 ) $ 0.9 $ (178.3 ) Balance as of October 31, 2018, net of tax $ (90.3 ) $ (81.3 ) $ (0.3 ) $ (171.9 ) Other comprehensive income before reclassifications and tax 23.7 — 0.1 23.8 Other comprehensive income before reclassifications, net of tax 23.7 — 0.1 23.8 Reclassifications, before tax — 0.7 (0.1 ) 0.6 Tax expense — (0.2 ) — (0.2 ) Reclassifications, net of tax — 0.5 (1) (0.1 ) (2) 0.4 Other comprehensive income, net of tax 23.7 0.5 — 24.2 Balance as of January 31, 2019, net of tax $ (66.6 ) $ (80.8 ) $ (0.3 ) $ (147.7 ) (1) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 9) that were reclassified from accumulated other comprehensive loss in the Company’s Condensed Consolidated Balance Sheet to operating expenses or cost of sales in the Company’s Condensed Consolidated Statements of Earnings. (2) Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net in the Company’s Condensed Consolidated Statements of Earnings. Changes in accumulated other comprehensive loss by component for the six months ended January 31, 2020 and 2019 are as follows (in millions): Foreign Pension Derivative Total Balance as of July 31, 2019, net of tax $ (92.7 ) $ (99.0 ) $ (1.2 ) $ (192.9 ) Other comprehensive income before reclassifications and tax 10.5 — 0.1 10.6 Tax benefit — — 0.7 0.7 Other comprehensive income before reclassifications, net of tax 10.5 — 0.8 11.3 Reclassifications, before tax — 2.3 2.0 4.3 Tax expense — (0.3 ) (0.7 ) (1.0 ) Reclassifications, net of tax — 2.0 (1) 1.3 (2) 3.3 Other comprehensive income, net of tax 10.5 2.0 2.1 14.6 Balance as of January 31, 2020, net of tax $ (82.2 ) $ (97.0 ) $ 0.9 $ (178.3 ) Balance as of July 31, 2018, net of tax $ (66.1 ) $ (82.9 ) $ (0.8 ) $ (149.8 ) Other comprehensive (loss) income before reclassifications and tax (0.5 ) — 1.1 0.6 Tax expense — — (0.3 ) (0.3 ) Other comprehensive (loss) income before reclassifications, net of tax (0.5 ) — 0.8 0.3 Reclassifications, before tax — 2.7 (0.4 ) 2.3 Tax (expense) benefit — (0.6 ) 0.1 (0.5 ) Reclassifications, net of tax — 2.1 (1) (0.3 ) (2) 1.8 Other comprehensive (loss) income, net of tax (0.5 ) 2.1 0.5 2.1 Balance as of January 31, 2019, net of tax $ (66.6 ) $ (80.8 ) $ (0.3 ) $ (147.7 ) (1) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 9) that were reclassified from accumulated other comprehensive loss in the Company’s Condensed Consolidated Balance Sheet to operating expenses or cost of sales in the Company’s Condensed Consolidated Statements of Earnings. (2) Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net in the Company’s Condensed Consolidated Statements of Earnings. |
Guarantees
Guarantees | 6 Months Ended |
Jan. 31, 2020 | |
Guarantees [Abstract] | |
Guarantees | Guarantees The Company and Caterpillar Inc. equally own the shares of Advanced Filtration Systems Inc. (AFSI), an unconsolidated joint venture, and guarantee certain debt of the joint venture. The Company accounts for this investment as an equity method investment. In the following table, the outstanding debt relates to the joint venture and the contingent liability for standby letters of credit relate to the Company (in millions): January 31, July 31, Outstanding debt (the Company guarantees half) $ 39.5 $ 38.8 Contingent liability for standby letters of credit (1) $ 7.5 $ 11.0 Amounts drawn for letters of credit $ — $ — (1) The letters of credit guarantee payment to third parties in the event the Company is in breach of contract terms as detailed in each letter of credit. The following items relate to the Company’s joint venture (in millions): Three Months Ended January 31, Six Months Ended January 31, 2019 2020 2019 2020 2019 Investment earnings (loss) from AFSI (1) $ 0.3 $ (0.1 ) $ 0.4 $ (0.3 ) Royalty income from AFSI (1) $ 1.7 $ 1.6 $ 3.6 $ 3.3 (1) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company records provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly, and provisions are adjusted to reflect the status of a particular matter. The Company believes the recorded estimated liability in its Condensed Consolidated Financial Statements is adequate considering the probable and estimable outcomes. The recorded liabilities were not material to the Company’s results of operations, liquidity or financial position and the Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jan. 31, 2020 | |
Segment Reporting, Measurement Disclosures [Abstract] | |
Segment Reporting | Segment Reporting The Company has identified two reportable segments: Engine Products and Industrial Products. Segment determination is based on the internal organization structure, management of operations and performance evaluation by management and the Company’s Board of Directors. Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments, such as interest expense. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the earnings before income taxes and other financial information shown below. Segment detail is summarized as follows (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Net sales Engine Products segment $ 435.6 $ 469.0 $ 894.7 $ 949.9 Industrial Products segment 226.4 234.7 440.0 455.2 Total $ 662.0 $ 703.7 $ 1,334.7 $ 1,405.1 Earnings before income taxes Engine Products segment $ 53.3 $ 53.2 $ 115.7 $ 117.1 Industrial Products segment 34.6 32.2 64.1 68.8 Corporate and Unallocated (5.1 ) (4.9 ) (10.3 ) (9.0 ) Total $ 82.8 $ 80.5 $ 169.5 $ 176.9 Net sales by product group within the Engine Products segment and Industrial Products segment is summarized as follows (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Engine Products segment Off-Road $ 67.5 $ 79.0 $ 136.1 $ 155.2 On-Road 33.8 42.8 74.5 88.7 Aftermarket 308.1 321.1 627.5 652.3 Aerospace and Defense 26.2 26.1 56.6 53.7 Engine Products segment net sales 435.6 469.0 894.7 949.9 Industrial Products segment Industrial Filtration Solutions 155.0 164.6 304.1 314.0 Gas Turbine Systems 24.3 27.5 45.0 53.0 Special Applications 47.1 42.6 90.9 88.2 Industrial Products segment net sales 226.4 234.7 440.0 455.2 Total net sales $ 662.0 $ 703.7 $ 1,334.7 $ 1,405.1 There were no customers that accounted for over 10% of net sales for the three and six months ended January 31, 2020 or 2019 , or over 10% of gross accounts receivable as of January 31, 2020 and July 31, 2019 |
Leases
Leases | 6 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company leases certain real estate properties, information technology equipment, manufacturing and warehouse equipment, vehicles and other equipment through operating lease arrangements. The Company determines whether an arrangement that provides control over the use of an asset to the Company is a lease. The Company recognizes a lease liability and corresponding right-of-use asset based on the present value of future lease payments and recognizes lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. The Company has elected to separate payments for lease components from non-lease components for all asset classes. Lease agreements may include extension, termination, or purchase options, all of which are considered in calculating the lease liability and right-of-use assets when it is reasonably certain the Company will exercise the option. Most lease agreements do not explicitly state the discount rate implicit in the lease, therefore, the Company’s incremental borrowing rate on the commencement date is used to calculate the present value of future payments for most leases. The Company has elected to exercise the package of practical expedients and has not elected to exercise hindsight in determining lease term and in assessing impairment of the Company’s right-of-use assets. The Company’s finance leases are not significant and therefore, are not included in the following disclosures. Information for the Company’s operating lease costs is as follows (in millions): Three Months Ended January 31, Six Months Ended January 31, 2020 2020 2020 Operating lease cost $ 7.7 $ 15.2 Short-term lease cost 0.5 1.1 Total lease costs $ 8.2 $ 16.3 Supplemental balance sheet information for the Company is as follows (in millions): January 31, August 1, Right-of-use lease assets $ 76.0 $ 71.5 Current lease liabilities $ 25.9 $ 26.0 Long-term lease liabilities $ 50.1 $ 45.5 Additional information related to operating leases is as follows: January 31, August 1, Weighted average remaining lease term (years) 4.0 3.7 Weighted average discount rates 3.81 % 3.76 % Payments for operating leases having initial terms of more than one year at January 31, 2020 were as follows (in millions): Amounts Due in Fiscal Year Ending January 31, Remainder of 2020 $ 14.5 2021 22.6 2022 14.6 2023 8.6 2024 5.7 Thereafter 17.6 Total future lease payments 83.6 Less imputed interest 7.6 Present value of future lease payments $ 76.0 Payments for operating leases having initial terms of more than one year at July 31, 2019 were as follows (in millions): Amounts Due in Fiscal Year Ending July 31, 2020 $ 24.0 2021 17.5 2022 11.3 2023 6.4 2024 4.6 Thereafter 19.0 Total future lease payments $ 82.8 Right-of-use lease assets obtained in exchange for new lease liabilities were $19.1 million for the six months ended January 31, 2020 . |
Borrowings
Borrowings | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings In October 2019, the Company entered into a term loan agreement of €80.0 million, or $89.2 million , based on the exchange rate in effect on October 28, 2019. The loan is unsecured and matures in October 2024 . As of January 31, 2020 , the Company had borrowed the full capacity of the term loan. The term loan includes customary representations and warranties and covenants for a transaction of this type. The loan has a floating rate based on margin plus EURIBOR. The margin will vary according to a leverage-based pricing grid. The rate as of January 31, 2020 was 0.7% . |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of Donaldson Company, Inc. and its subsidiaries (the Company) have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of earnings, comprehensive income, financial position, cash flows and shareholders’ equity have been included and are of a normal recurring nature. Operating results for the three and six month periods ended January 31, 2020 are not necessarily indicative of the results that may be expected for future periods. The year-end Condensed Consolidated Balance Sheet information was derived from the Company’s Audited Consolidated Financial Statements but does not include all disclosures required by GAAP. For further information, refer to the Audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2019 . |
New Accounting Standards Recently Adopted and New Accounting Standards Not Yet Adopted | New Accounting Standards Recently Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASU 2016-02), which requires lessees to recognize right-of-use assets and lease liabilities for substantially all leases. This accounting guidance was effective for the Company in the beginning of the first quarter of fiscal 2020 and the Company adopted the guidance on a modified retrospective basis. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842) Narrow-Scope Improvements for Lessors (ASU 2018-20), which amends ASU 2016-02, to provide additional guidance on accounting for certain expenses such as property taxes and insurance paid on behalf of the lessor by the lessee. The Company adopted ASU 2016-02 in the first quarter of fiscal 2020, and increased assets and liabilities by $71.5 million , as of August 1, 2019. Refer to Note 17 for further discussion. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The guidance allows a company to elect to reclassify from accumulated other comprehensive income (AOCI) to retained earnings the stranded tax effects from the adoption of the new federal corporate tax rate that became effective January 1, 2018 as a result of the U.S. Tax Cuts and Jobs Act (TCJA). The amount of the reclassification is calculated as the difference between the amount initially charged to other comprehensive income at the previously enacted tax rate that remains in AOCI and the amount that would have been charged using the newly enacted tax rate, excluding any valuation allowance prior to tax reform. The Company adopted ASU 2018-02 in the first quarter of fiscal 2020 and elected to not reclassify tax effects stranded in accumulated other comprehensive loss. As such, there is no impact on the Company’s Condensed Consolidated Financial Statements. New Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13). In November 2018, the FASB issued an update, ASU 2018-19, that clarifies the scope of the standard in the amendments in ASU 2016-13. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Financial instruments impacted include accounts receivable, trade receivables, other financial assets measured at amortized cost and other off-balance sheet credit exposures. The guidance is effective for the Company beginning in the first quarter of fiscal 2021 , with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2016-13 on its Consolidated Financial Statements. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815 Derivatives and Hedging and Topic 825, Financial Instruments (ASU 2019-04). This guidance clarifies the standards on credit losses (Topic 326), derivatives and hedging (Topic 815), and recognition and measurement of financial instruments (Topic 825). The guidance is effective for the Company beginning in the first quarter of fiscal 2021 . The Company is evaluating the impact of the adoption of ASU 2019-04 on its Consolidated Financial Statements. |
Supplemental Balance Sheet In_2
Supplemental Balance Sheet Information (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Components of inventory | The components of net inventories are as follows (in millions): January 31, July 31, Raw materials $ 117.1 $ 114.7 Work in process 35.0 33.0 Finished products 198.0 185.1 Inventories, net $ 350.1 $ 332.8 |
Components of property, plant and equipment | The components of net property, plant and equipment are as follows (in millions): January 31, July 31, Land $ 24.2 $ 24.2 Buildings 347.6 325.3 Machinery and equipment 836.2 813.5 Computer software 144.0 142.8 Construction in progress 135.8 114.3 Less: accumulated depreciation (864.7 ) (831.2 ) Property, plant and equipment, net $ 623.1 $ 588.9 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of information necessary to calculate basic and diluted net earnings per common share | The following table presents the information necessary to calculate basic and diluted net earnings per share (in millions, except per share amounts): Three Months Ended Six Months Ended 2020 2019 2020 2019 Net earnings for basic and diluted earnings per share computation $ 64.4 $ 60.1 $ 129.5 $ 133.9 Weighted average common shares outstanding: Weighted average common shares – basic 127.1 128.3 127.0 128.6 Dilutive impact of share-based awards 1.8 1.7 1.8 2.0 Weighted average common shares – diluted 128.9 130.0 128.8 130.6 Net earnings per share – basic $ 0.51 $ 0.47 $ 1.02 $ 1.04 Net earnings per share – diluted $ 0.50 $ 0.46 $ 1.01 $ 1.03 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Reconciliation of goodwill | The following is a reconciliation of goodwill by reportable segment for the six months ended January 31, 2020 (in millions): Engine Products Industrial Products Total Balance as of July 31, 2019 $ 84.5 $ 218.6 $ 303.1 Goodwill acquired — — — Currency translation (0.1 ) 5.5 5.4 Balance as of January 31, 2020 $ 84.4 $ 224.1 $ 308.5 |
Schedule of finite-lived intangible assets | The following table summarizes the net intangible asset classes as of January 31, 2020 (in millions): Gross Carrying Amount Accumulated Amortization Total Customer relationships $ 104.0 $ (46.6 ) $ 57.4 Patents, trademarks and technology 22.9 (10.6 ) 12.3 Total intangible assets, net $ 126.9 $ (57.2 ) $ 69.7 The following table summarizes the net intangible asset classes as of July 31, 2019 (in millions): Gross Carrying Amount Accumulated Amortization Total Customer relationships $ 101.5 $ (43.3 ) $ 58.2 Patents, trademarks and technology 22.3 (9.6 ) 12.7 Total intangible assets, net $ 123.8 $ (52.9 ) $ 70.9 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Net sales disaggregated by geography based on the location where the customer’s order was placed are as follows (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 United States $ 267.5 $ 289.4 $ 554.4 $ 594.5 Europe, Middle East and Africa 194.1 207.4 388.8 403.7 Asia Pacific 144.4 149.3 278.0 296.6 Latin America 56.0 57.6 113.5 110.3 Total net sales $ 662.0 $ 703.7 $ 1,334.7 $ 1,405.1 See Note 16 for net sales disaggregated by segment. |
Warranty (Tables)
Warranty (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Standard Product Warranty Disclosure [Abstract] | |
Reconciliation of warranty reserves | The following is a reconciliation of warranty reserves for the six months ended January 31, 2020 and 2019 (in millions): Six Months Ended 2020 2019 Balance at beginning of period $ 11.2 $ 18.9 Accruals for warranties issued during the reporting period 0.6 0.5 Accruals related to pre-existing warranties (including changes in estimates) (0.5 ) (1.7 ) Less: settlements made during the period (1.4 ) (3.1 ) Balance at end of period $ 9.9 $ 14.6 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock options expense | The following table summarizes expense associated with stock options during the three and six months ended January 31, 2020 and 2019 (in millions): Three Months Ended January 31, Six Months Ended 2020 2019 2020 2019 Pretax compensation expense associated with stock options $ 2.4 $ 2.0 $ 7.7 $ 6.9 Tax benefits associated with stock options $ 0.5 $ 0.3 $ 1.1 $ 1.4 The following table summarizes expense associated with performance-based awards during the three and six months ended January 31, 2020 and 2019 (in millions): Three Months Ended January 31, Six Months Ended 2020 2019 2020 2019 Pretax compensation expense associated with performance-based awards $ 0.9 $ 1.3 $ 1.8 $ 3.0 |
Summary of stock option activity | The following table summarizes stock option activity during the six months ended January 31, 2020 : Options Outstanding Weighted Average Exercise Price Outstanding as of July 31, 2019 6,531,250 $ 39.66 Granted 929,941 51.96 Exercised (610,997 ) 29.06 Canceled (45,894 ) 53.27 Outstanding as of January 31, 2020 6,804,300 $ 42.20 |
Schedule of performance shares activity | The following table summarizes performance-based award activity during the six months ended January 31, 2020 : Performance Shares Outstanding Weighted Non-vested at July 31, 2019 174,100 $ 52.87 Granted 100,500 51.61 Vested — — Canceled/forfeited — — Non-vested at January 31, 2020 274,600 $ 52.41 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Retirement Benefits, Description [Abstract] | |
Components of net periodic pension costs | Net periodic benefit costs for the Company’s pension plans include the following components (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Net periodic benefit costs: Service cost $ 1.5 $ 1.5 $ 3.1 $ 3.0 Interest cost 3.4 4.1 6.8 8.2 Expected return on assets (6.5 ) (6.7 ) (13.0 ) (13.3 ) Prior service cost amortization 0.2 0.2 0.3 0.3 Actuarial loss amortization 1.6 1.1 3.2 2.2 Net periodic benefit costs $ 0.2 $ 0.2 $ 0.4 $ 0.4 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of derivative on the balance sheet | The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the Company’s Condensed Consolidated Balance Sheets as of January 31, 2020 and July 31, 2019 (in millions): Fair Values Significant Other Observable Inputs Notional Amounts Assets (1) Liabilities (2) (3) January 31, July 31, January 31, July 31, January 31, July 31, 2020 2019 2020 2019 2020 2019 Forward foreign currency exchange contracts $ 14.0 $ 28.2 $ 2.7 $ 1.6 $ 0.7 $ 1.8 Net investment hedges 55.8 55.8 1.1 1.1 — 1.9 Total $ 69.8 $ 84.0 $ 3.8 $ 2.7 $ 0.7 $ 3.7 (1) Amounts are recorded within prepaid expenses and other current assets in the Company’s Condensed Consolidated Balance Sheets. (2) Forward foreign currency exchange contracts are recorded within other current liabilities in the Company’s Condensed Consolidated Balance Sheets. (3) Net investment hedges are recorded within other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets. |
Schedule of cash flow hedges | The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts and net investment hedges (in millions): Pre-tax Gains (Losses) Recognized in Accumulated Other Comprehensive Loss Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Forward foreign currency exchange contracts $ (0.6 ) $ 0.1 $ (1.3 ) $ 1.1 Net investment hedges $ 0.6 $ — $ 1.4 $ — Pre-tax (Gains) Losses Reclassified from Accumulated Other Comprehensive Loss Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Forward foreign currency exchange contracts $ 0.1 $ (0.1 ) $ 2.0 $ (0.4 ) Net investment hedges $ — $ — $ — $ — |
Schedule of net investment hedges | The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts and net investment hedges (in millions): Pre-tax Gains (Losses) Recognized in Accumulated Other Comprehensive Loss Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Forward foreign currency exchange contracts $ (0.6 ) $ 0.1 $ (1.3 ) $ 1.1 Net investment hedges $ 0.6 $ — $ 1.4 $ — Pre-tax (Gains) Losses Reclassified from Accumulated Other Comprehensive Loss Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Forward foreign currency exchange contracts $ 0.1 $ (0.1 ) $ 2.0 $ (0.4 ) Net investment hedges $ — $ — $ — $ — |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of changes in accumulated other comprehensive loss | Changes in accumulated other comprehensive loss by component for the three months ended January 31, 2020 and 2019 are as follows (in millions): Foreign Pension Derivative Total Balance as of October 31, 2019, net of tax $ (84.6 ) $ (98.2 ) $ 0.3 $ (182.5 ) Other comprehensive income before reclassifications and tax 2.4 — — 2.4 Tax benefit — — 0.5 0.5 Other comprehensive income before reclassifications, net of tax 2.4 — 0.5 2.9 Reclassifications, before tax — 1.6 0.1 1.7 Tax expense — (0.4 ) — (0.4 ) Reclassifications, net of tax — 1.2 (1) 0.1 (2) 1.3 Other comprehensive income, net of tax 2.4 1.2 0.6 4.2 Balance as of January 31, 2020, net of tax $ (82.2 ) $ (97.0 ) $ 0.9 $ (178.3 ) Balance as of October 31, 2018, net of tax $ (90.3 ) $ (81.3 ) $ (0.3 ) $ (171.9 ) Other comprehensive income before reclassifications and tax 23.7 — 0.1 23.8 Other comprehensive income before reclassifications, net of tax 23.7 — 0.1 23.8 Reclassifications, before tax — 0.7 (0.1 ) 0.6 Tax expense — (0.2 ) — (0.2 ) Reclassifications, net of tax — 0.5 (1) (0.1 ) (2) 0.4 Other comprehensive income, net of tax 23.7 0.5 — 24.2 Balance as of January 31, 2019, net of tax $ (66.6 ) $ (80.8 ) $ (0.3 ) $ (147.7 ) (1) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 9) that were reclassified from accumulated other comprehensive loss in the Company’s Condensed Consolidated Balance Sheet to operating expenses or cost of sales in the Company’s Condensed Consolidated Statements of Earnings. (2) Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net in the Company’s Condensed Consolidated Statements of Earnings. Changes in accumulated other comprehensive loss by component for the six months ended January 31, 2020 and 2019 are as follows (in millions): Foreign Pension Derivative Total Balance as of July 31, 2019, net of tax $ (92.7 ) $ (99.0 ) $ (1.2 ) $ (192.9 ) Other comprehensive income before reclassifications and tax 10.5 — 0.1 10.6 Tax benefit — — 0.7 0.7 Other comprehensive income before reclassifications, net of tax 10.5 — 0.8 11.3 Reclassifications, before tax — 2.3 2.0 4.3 Tax expense — (0.3 ) (0.7 ) (1.0 ) Reclassifications, net of tax — 2.0 (1) 1.3 (2) 3.3 Other comprehensive income, net of tax 10.5 2.0 2.1 14.6 Balance as of January 31, 2020, net of tax $ (82.2 ) $ (97.0 ) $ 0.9 $ (178.3 ) Balance as of July 31, 2018, net of tax $ (66.1 ) $ (82.9 ) $ (0.8 ) $ (149.8 ) Other comprehensive (loss) income before reclassifications and tax (0.5 ) — 1.1 0.6 Tax expense — — (0.3 ) (0.3 ) Other comprehensive (loss) income before reclassifications, net of tax (0.5 ) — 0.8 0.3 Reclassifications, before tax — 2.7 (0.4 ) 2.3 Tax (expense) benefit — (0.6 ) 0.1 (0.5 ) Reclassifications, net of tax — 2.1 (1) (0.3 ) (2) 1.8 Other comprehensive (loss) income, net of tax (0.5 ) 2.1 0.5 2.1 Balance as of January 31, 2019, net of tax $ (66.6 ) $ (80.8 ) $ (0.3 ) $ (147.7 ) (1) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 9) that were reclassified from accumulated other comprehensive loss in the Company’s Condensed Consolidated Balance Sheet to operating expenses or cost of sales in the Company’s Condensed Consolidated Statements of Earnings. (2) Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net in the Company’s Condensed Consolidated Statements of Earnings. |
Guarantees (Tables)
Guarantees (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Guarantees [Abstract] | |
Guarantor obligations | In the following table, the outstanding debt relates to the joint venture and the contingent liability for standby letters of credit relate to the Company (in millions): January 31, July 31, Outstanding debt (the Company guarantees half) $ 39.5 $ 38.8 Contingent liability for standby letters of credit (1) $ 7.5 $ 11.0 Amounts drawn for letters of credit $ — $ — (1) The letters of credit guarantee payment to third parties in the event the Company is in breach of contract terms as detailed in each letter of credit. |
Joint venture items | The following items relate to the Company’s joint venture (in millions): Three Months Ended January 31, Six Months Ended January 31, 2019 2020 2019 2020 2019 Investment earnings (loss) from AFSI (1) $ 0.3 $ (0.1 ) $ 0.4 $ (0.3 ) Royalty income from AFSI (1) $ 1.7 $ 1.6 $ 3.6 $ 3.3 (1) Recorded in other income, net in the Company’s Condensed Consolidated Statements of Earnings. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Segment Reporting, Measurement Disclosures [Abstract] | |
Summary of segment detail | Segment detail is summarized as follows (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Net sales Engine Products segment $ 435.6 $ 469.0 $ 894.7 $ 949.9 Industrial Products segment 226.4 234.7 440.0 455.2 Total $ 662.0 $ 703.7 $ 1,334.7 $ 1,405.1 Earnings before income taxes Engine Products segment $ 53.3 $ 53.2 $ 115.7 $ 117.1 Industrial Products segment 34.6 32.2 64.1 68.8 Corporate and Unallocated (5.1 ) (4.9 ) (10.3 ) (9.0 ) Total $ 82.8 $ 80.5 $ 169.5 $ 176.9 Net sales by product group within the Engine Products segment and Industrial Products segment is summarized as follows (in millions): Three Months Ended Six Months Ended 2020 2019 2020 2019 Engine Products segment Off-Road $ 67.5 $ 79.0 $ 136.1 $ 155.2 On-Road 33.8 42.8 74.5 88.7 Aftermarket 308.1 321.1 627.5 652.3 Aerospace and Defense 26.2 26.1 56.6 53.7 Engine Products segment net sales 435.6 469.0 894.7 949.9 Industrial Products segment Industrial Filtration Solutions 155.0 164.6 304.1 314.0 Gas Turbine Systems 24.3 27.5 45.0 53.0 Special Applications 47.1 42.6 90.9 88.2 Industrial Products segment net sales 226.4 234.7 440.0 455.2 Total net sales $ 662.0 $ 703.7 $ 1,334.7 $ 1,405.1 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Lease cost | Information for the Company’s operating lease costs is as follows (in millions): Three Months Ended January 31, Six Months Ended January 31, 2020 2020 2020 Operating lease cost $ 7.7 $ 15.2 Short-term lease cost 0.5 1.1 Total lease costs $ 8.2 $ 16.3 |
Supplemental balance sheet information | Supplemental balance sheet information for the Company is as follows (in millions): January 31, August 1, Right-of-use lease assets $ 76.0 $ 71.5 Current lease liabilities $ 25.9 $ 26.0 Long-term lease liabilities $ 50.1 $ 45.5 Additional information related to operating leases is as follows: January 31, August 1, Weighted average remaining lease term (years) 4.0 3.7 Weighted average discount rates 3.81 % 3.76 % |
Operating lease liability schedule | Payments for operating leases having initial terms of more than one year at January 31, 2020 were as follows (in millions): Amounts Due in Fiscal Year Ending January 31, Remainder of 2020 $ 14.5 2021 22.6 2022 14.6 2023 8.6 2024 5.7 Thereafter 17.6 Total future lease payments 83.6 Less imputed interest 7.6 Present value of future lease payments $ 76.0 |
Operating lease liability schedule | ayments for operating leases having initial terms of more than one year at July 31, 2019 were as follows (in millions): Amounts Due in Fiscal Year Ending July 31, 2020 $ 24.0 2021 17.5 2022 11.3 2023 6.4 2024 4.6 Thereafter 19.0 Total future lease payments $ 82.8 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Aug. 01, 2019 | Jul. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Assets | $ 2,262.2 | $ 2,142.6 | |
Liabilities | $ 1,311 | $ 1,239.9 | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Assets | $ 71.5 | ||
Liabilities | $ 71.5 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Details) - BOFA International LTD - USD ($) $ in Millions | 3 Months Ended | |
Jul. 31, 2019 | Oct. 31, 2018 | |
Business Acquisition [Line Items] | ||
Business acquisition, percentage of voting interests acquired | 88.00% | |
Business combination, consideration transferred | $ 98.2 | |
Cash acquired | $ 2.2 | |
Additional voting interest acquired (percentage) | 3.00% | |
Ownership percentage (percentage) | 91.00% |
Supplemental Balance Sheet In_3
Supplemental Balance Sheet Information (Inventory) (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Jul. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 117.1 | $ 114.7 |
Work in process | 35 | 33 |
Finished products | 198 | 185.1 |
Inventories, net | $ 350.1 | $ 332.8 |
Supplemental Balance Sheet In_4
Supplemental Balance Sheet Information (Property, Plant and Equipment) (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Jul. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (864.7) | $ (831.2) |
Property, plant and equipment, net | 623.1 | 588.9 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 24.2 | 24.2 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 347.6 | 325.3 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 836.2 | 813.5 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 144 | 142.8 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 135.8 | $ 114.3 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Earnings Per Share [Abstract] | ||||
Options excluded from the diluted net earnings per share calculation (in shares) | 0.8 | 0.9 | 0.8 | 0.8 |
Earnings Per Share (Information
Earnings Per Share (Information Necessary to Calculate Basic and Diluted Net Earnings Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Earnings Per Share [Abstract] | ||||
Net earnings for basic and diluted earnings per share computation | $ 64.4 | $ 60.1 | $ 129.5 | $ 133.9 |
Weighted average common shares outstanding: | ||||
Weighted average common shares - basic (in shares) | 127.1 | 128.3 | 127 | 128.6 |
Dilutive impact of share based awards (in shares) | 1.8 | 1.7 | 1.8 | 2 |
Weighted average common shares - diluted (in shares) | 128.9 | 130 | 128.8 | 130.6 |
Net earnings per share - basic (in usd per share) | $ 0.51 | $ 0.47 | $ 1.02 | $ 1.04 |
Net earnings per share - diluted (in usd per share) | $ 0.50 | $ 0.46 | $ 1.01 | $ 1.03 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Reconciliation of Goodwill) (Details) $ in Millions | 6 Months Ended |
Jan. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 303.1 |
Goodwill acquired | 0 |
Currency translation | 5.4 |
Ending balance | 308.5 |
Engine Products | |
Goodwill [Roll Forward] | |
Beginning balance | 84.5 |
Goodwill acquired | 0 |
Currency translation | (0.1) |
Ending balance | 84.4 |
Industrial Products | |
Goodwill [Roll Forward] | |
Beginning balance | 218.6 |
Goodwill acquired | 0 |
Currency translation | 5.5 |
Ending balance | $ 224.1 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Reconciliation of Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | Jul. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 126.9 | $ 126.9 | $ 123.8 | ||
Accumulated Amortization | (57.2) | (57.2) | (52.9) | ||
Total | 69.7 | 69.7 | 70.9 | ||
Amortization expense | 2 | $ 2.1 | 4.1 | $ 3.5 | |
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 104 | 104 | 101.5 | ||
Accumulated Amortization | (46.6) | (46.6) | (43.3) | ||
Total | 57.4 | 57.4 | 58.2 | ||
Patents, trademarks and technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 22.9 | 22.9 | 22.3 | ||
Accumulated Amortization | (10.6) | (10.6) | (9.6) | ||
Total | $ 12.3 | $ 12.3 | $ 12.7 |
Revenue (Disaggregation of Reve
Revenue (Disaggregation of Revenue by Geographical Area) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total net sales | $ 662 | $ 703.7 | $ 1,334.7 | $ 1,405.1 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 267.5 | 289.4 | 554.4 | 594.5 |
Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 194.1 | 207.4 | 388.8 | 403.7 |
Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 144.4 | 149.3 | 278 | 296.6 |
Latin America | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | $ 56 | $ 57.6 | $ 113.5 | $ 110.3 |
Revenue (Narrative) (Details)
Revenue (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jan. 31, 2020 | Jul. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 11.2 | $ 12.4 |
Contract liabilities | $ 15.4 | $ 10.4 |
Description of performance obligation timing | Generally, these contracts have terms of one year or less |
Warranty (Details)
Warranty (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of period | $ 11.2 | $ 18.9 |
Accruals for warranties issued during the reporting period | 0.6 | 0.5 |
Accruals related to pre-existing warranties (including changes in estimates) | (0.5) | (1.7) |
Less: settlements made during the period | (1.4) | (3.1) |
Balance at end of period | $ 9.9 | $ 14.6 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total intrinsic value of options exercised | $ 14.8 | |
Options granted, grant date fair value (in usd per share) | $ 10.94 | $ 12.27 |
Aggregate intrinsic value of options outstanding | $ 71.8 | |
Aggregate intrinsic value of options exercisable | 69.5 | |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | 10.2 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | 5 | |
Fair value of awards granted | $ 5.2 | |
2010 Master Stock Incentive Plan | Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options exercisable term (in years) | 10 years | |
Stock option, award vesting period (in years) | 3 years | |
2010 Master Stock Incentive Plan | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance award measurement period (in years) | 3 years | |
Expiration period (in years) | 3 years | |
Minimum | 2010 Master Stock Incentive Plan | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Payout percentage based on target award (percentage) | 0.00% | |
Maximum | 2010 Master Stock Incentive Plan | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Payout percentage based on target award (percentage) | 200.00% |
Stock-Based Compensation (Compe
Stock-Based Compensation (Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Pretax compensation expense | $ 2.4 | $ 2 | $ 7.7 | $ 6.9 |
Tax benefits associated with stock options | 0.5 | 0.3 | 1.1 | 1.4 |
Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Pretax compensation expense | $ 0.9 | $ 1.3 | $ 1.8 | $ 3 |
Stock-Based Compensation (Summa
Stock-Based Compensation (Summary of Stock Option Activity) (Details) | 6 Months Ended |
Jan. 31, 2020$ / sharesshares | |
Options Outstanding | |
Beginning balance (in shares) | shares | 6,531,250 |
Options granted (in shares) | shares | 929,941 |
Options exercised (in shares) | shares | (610,997) |
Options canceled (in shares) | shares | (45,894) |
Ending balance (in shares) | shares | 6,804,300 |
Weighted Average Exercise Price | |
Beginning balance (in usd per share) | $ / shares | $ 39.66 |
Granted (in usd per share) | $ / shares | 51.96 |
Exercised (in usd per share) | $ / shares | 29.06 |
Canceled (in usd per share) | $ / shares | 53.27 |
Ending balance (in usd per share) | $ / shares | $ 42.20 |
Stock-Based Compensation (Sum_2
Stock-Based Compensation (Summary of Performance Award Activity) (Details) - Performance Shares | 6 Months Ended |
Jan. 31, 2020$ / sharesshares | |
Performance Shares Outstanding | |
Non-vested at July 31, 2019 (shares) | shares | 174,100 |
Granted (shares) | shares | 100,500 |
Vested (shares) | shares | 0 |
Canceled/forfeited (shares) | shares | 0 |
Non-vested at January 31, 2020 (shares) | shares | 274,600 |
Weighted Average Grant Date Fair Value | |
Non-vested at July 31, 2019 (in usd per share) | $ / shares | $ 52.87 |
Granted (in usd per share) | $ / shares | 51.61 |
Vested (in usd per share) | $ / shares | 0 |
Canceled/forfeited (in usd per share) | $ / shares | 0 |
Non-vested at January 31, 2020 (in usd per share) | $ / shares | $ 52.41 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | 1 Months Ended | 6 Months Ended |
Feb. 29, 2020USD ($) | Jan. 31, 2020USD ($)plan | |
Defined Benefit Plan Disclosure [Line Items] | ||
Number of U.S. plans | plan | 2 | |
Annual company retirement contribution in addition to 401 (k) match, percent | 3.00% | |
Pension Plan | United States | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated future contributions to pension plans | $ 4.4 | |
Company contributions | 2.5 | |
Pension Plan | Foreign Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated future contributions to pension plans | 0.6 | |
Company contributions | $ 0.5 | |
Subsequent Event | Pension Plan | United States | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Company contributions | $ 1.1 |
Employee Benefit Plans (Compone
Employee Benefit Plans (Components of Net Periodic Pension Costs) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Net periodic benefit costs: | ||||
Service cost | $ 1.5 | $ 1.5 | $ 3.1 | $ 3 |
Interest cost | 3.4 | 4.1 | 6.8 | 8.2 |
Expected return on assets | (6.5) | (6.7) | (13) | (13.3) |
Prior service cost amortization | 0.2 | 0.2 | 0.3 | 0.3 |
Actuarial loss amortization | 1.6 | 1.1 | 3.2 | 2.2 |
Net periodic benefit costs | $ 0.2 | $ 0.2 | $ 0.4 | $ 0.4 |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | Jan. 31, 2020USD ($) |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits | $ 16 |
Accrued interest and penalties on unrecognized tax benefits | 1.9 |
Unrecognized tax benefits that could potentially expire | $ 1.8 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Jul. 31, 2019 |
Fair Value, Inputs, Level 2 | Long-term Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | $ 290.2 | |
Debt carrying value | 275 | |
Fair Value, Inputs, Level 2 | Long-Term Debt, Variable Interest Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | 322.7 | |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity method investments | $ 23.1 | $ 23 |
Fair Value Measurements (Deriva
Fair Value Measurements (Derivatives on the Balance Sheet) (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Jul. 31, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notional amounts | $ 69.8 | $ 84 |
Forward foreign currency exchange contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notional amounts | 14 | 28.2 |
Net investment hedges | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notional amounts | 55.8 | 55.8 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 3.8 | 2.7 |
Derivative liabilities | 0.7 | 3.7 |
Fair Value, Inputs, Level 2 | Forward foreign currency exchange contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 2.7 | 1.6 |
Derivative liabilities | 0.7 | 1.8 |
Fair Value, Inputs, Level 2 | Net investment hedges | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 1.1 | 1.1 |
Derivative liabilities | $ 0 | $ 1.9 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Pre-tax Impact of Derivatives) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Pre-tax gains (losses) recognized in accumulated other comprehensive income (loss) - Net investment hedges | $ 0.6 | $ 0 | $ 1.4 | $ 0 |
Pre-tax (gains) losses reclassified from accumulated other comprehensive income (loss) - Net investment hedges | 0 | 0 | 0 | 0 |
Forward foreign currency exchange contracts | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Pre-tax gains (losses) recognized in accumulated other comprehensive income (loss) | (0.6) | 0.1 | (1.3) | 1.1 |
Pre-tax (gains) losses reclassified from accumulated other comprehensive income (loss) | $ 0.1 | $ (0.1) | $ 2 | $ (0.4) |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Stockholders' Equity Note [Abstract] | ||
Number of shares authorized to be repurchased (in shares) | 13,000,000 | |
Stock repurchased during the period (in shares) | 1,400,000 | |
Stock repurchased during the period | $ 65 | $ 102 |
Shares with remaining authorization for repurchase under stock repurchase plan (in shares) | 11,400,000 | |
Dividends paid per share (in usd per share) | $ 0.420 | $ 0.380 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | $ 917 | $ 854.4 | $ 892.7 | $ 857.8 |
Other comprehensive (loss) income before reclassifications and tax | 2.4 | 23.8 | 10.6 | 0.6 |
Tax benefit (expense) | 0.5 | 0.7 | (0.3) | |
Other comprehensive income (loss) before reclassifications, net of tax | 2.9 | 23.8 | 11.3 | 0.3 |
Reclassifications, before tax | 1.7 | 0.6 | 4.3 | 2.3 |
Tax benefit (expense) | (0.4) | (0.2) | (1) | (0.5) |
Reclassifications, net of tax | 1.3 | 0.4 | 3.3 | 1.8 |
Other comprehensive (loss) income, net of tax | 4.2 | 24.2 | 14.6 | 2.1 |
Ending Balance | 940.4 | 872.6 | 940.4 | 872.6 |
Total | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | (182.5) | (171.9) | (192.9) | (149.8) |
Other comprehensive (loss) income, net of tax | 4.2 | 24.2 | 14.6 | 2.1 |
Ending Balance | (178.3) | (147.7) | (178.3) | (147.7) |
Foreign Currency Translation Adjustment | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | (84.6) | (90.3) | (92.7) | (66.1) |
Other comprehensive (loss) income before reclassifications and tax | 2.4 | 23.7 | 10.5 | (0.5) |
Tax benefit (expense) | 0 | 0 | 0 | |
Other comprehensive income (loss) before reclassifications, net of tax | 2.4 | 23.7 | 10.5 | (0.5) |
Reclassifications, before tax | 0 | 0 | 0 | 0 |
Tax benefit (expense) | 0 | 0 | 0 | 0 |
Reclassifications, net of tax | 0 | 0 | 0 | 0 |
Other comprehensive (loss) income, net of tax | 2.4 | 23.7 | 10.5 | (0.5) |
Ending Balance | (82.2) | (66.6) | (82.2) | (66.6) |
Pension Benefits | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | (98.2) | (81.3) | (99) | (82.9) |
Other comprehensive (loss) income before reclassifications and tax | 0 | 0 | 0 | 0 |
Tax benefit (expense) | 0 | 0 | 0 | |
Other comprehensive income (loss) before reclassifications, net of tax | 0 | 0 | 0 | 0 |
Reclassifications, before tax | 1.6 | 0.7 | 2.3 | 2.7 |
Tax benefit (expense) | (0.4) | (0.2) | (0.3) | (0.6) |
Reclassifications, net of tax | 1.2 | 0.5 | 2 | 2.1 |
Other comprehensive (loss) income, net of tax | 1.2 | 0.5 | 2 | 2.1 |
Ending Balance | (97) | (80.8) | (97) | (80.8) |
Derivative Financial Instruments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | 0.3 | (0.3) | (1.2) | (0.8) |
Other comprehensive (loss) income before reclassifications and tax | 0 | 0.1 | 0.1 | 1.1 |
Tax benefit (expense) | 0.5 | 0.7 | (0.3) | |
Other comprehensive income (loss) before reclassifications, net of tax | 0.5 | 0.1 | 0.8 | 0.8 |
Reclassifications, before tax | 0.1 | (0.1) | 2 | (0.4) |
Tax benefit (expense) | 0 | 0 | (0.7) | 0.1 |
Reclassifications, net of tax | 0.1 | (0.1) | 1.3 | (0.3) |
Other comprehensive (loss) income, net of tax | 0.6 | 0 | 2.1 | 0.5 |
Ending Balance | $ 0.9 | $ (0.3) | $ 0.9 | $ (0.3) |
Guarantees (Details)
Guarantees (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | Jul. 31, 2019 | |
Guarantor Obligations [Line Items] | |||||
Contingent liability for standby letters of credit | $ 7.5 | $ 7.5 | $ 11 | ||
Amounts drawn for letters of credit | 0 | 0 | 0 | ||
Royalty income | 662 | $ 703.7 | 1,334.7 | $ 1,405.1 | |
Advanced Filtration Systems, Inc. | |||||
Guarantor Obligations [Line Items] | |||||
Outstanding debt (the Company guarantees half) | 39.5 | 39.5 | $ 38.8 | ||
Advanced Filtration Systems, Inc. | |||||
Guarantor Obligations [Line Items] | |||||
Investment earnings (loss) | 0.3 | (0.1) | 0.4 | (0.3) | |
Advanced Filtration Systems, Inc. | Royalty | |||||
Guarantor Obligations [Line Items] | |||||
Royalty income | $ 1.7 | $ 1.6 | $ 3.6 | $ 3.3 |
Segment Reporting (Details)
Segment Reporting (Details) | 6 Months Ended |
Jan. 31, 2020segment | |
Segment Reporting, Measurement Disclosures [Abstract] | |
Number of reportable segments | 2 |
Segment Reporting (Summary of S
Segment Reporting (Summary of Segment Detail) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 662 | $ 703.7 | $ 1,334.7 | $ 1,405.1 |
Earnings before income taxes | 82.8 | 80.5 | 169.5 | 176.9 |
Engine Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 435.6 | 469 | 894.7 | 949.9 |
Industrial Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 226.4 | 234.7 | 440 | 455.2 |
Operating Segments | Engine Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before income taxes | 53.3 | 53.2 | 115.7 | 117.1 |
Operating Segments | Industrial Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before income taxes | 34.6 | 32.2 | 64.1 | 68.8 |
Corporate and Unallocated | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before income taxes | (5.1) | (4.9) | (10.3) | (9) |
Off-Road | Engine Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 67.5 | 79 | 136.1 | 155.2 |
On-Road | Engine Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 33.8 | 42.8 | 74.5 | 88.7 |
Aftermarket | Engine Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 308.1 | 321.1 | 627.5 | 652.3 |
Aerospace and Defense | Engine Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 26.2 | 26.1 | 56.6 | 53.7 |
Industrial Filtration Solutions | Industrial Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 155 | 164.6 | 304.1 | 314 |
Gas Turbine Systems | Industrial Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 24.3 | 27.5 | 45 | 53 |
Special Applications | Industrial Products segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 47.1 | $ 42.6 | $ 90.9 | $ 88.2 |
Leases (Lease Cost) (Details)
Leases (Lease Cost) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jan. 31, 2020 | Jan. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 7.7 | $ 15.2 |
Short-term lease cost | 0.5 | 1.1 |
Total lease costs | $ 8.2 | $ 16.3 |
Leases (Supplemental Informatio
Leases (Supplemental Information) (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Aug. 01, 2019 | Jul. 31, 2019 |
Leases [Abstract] | |||
Right-of-use lease assets | $ 76 | $ 71.5 | $ 0 |
Current lease liabilities | 25.9 | 26 | 0 |
Long-term lease liabilities | $ 50.1 | $ 45.5 | $ 0 |
Weighted average remaining lease term (years) | 4 years | 3 years 8 months 12 days | |
Weighted average discount rates (percentage) | 3.81% | 3.76% |
Leases (Maturities) (Details)
Leases (Maturities) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jan. 31, 2020 | Jul. 31, 2019 | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2020 | $ 14.5 | |
2021 | 22.6 | |
2022 | 14.6 | |
2023 | 8.6 | |
2024 | 5.7 | |
Thereafter | 17.6 | |
Total future lease payments | 83.6 | |
Less imputed interest | 7.6 | |
Present value of future lease payments | 76 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2020 | $ 24 | |
2021 | 17.5 | |
2022 | 11.3 | |
2023 | 6.4 | |
2024 | 4.6 | |
Thereafter | 19 | |
Total future lease payments | $ 82.8 | |
Right-of-use lease assets obtained in exchange for new lease liabilities | $ 19.1 |
Borrowings (Details)
Borrowings (Details) - Unsecured Debt € in Millions, $ in Millions | Jan. 31, 2020USD ($) | Jan. 31, 2020EUR (€) |
Debt Instrument [Line Items] | ||
Term loan agreement amount | $ 89.2 | € 80 |
Basis spread on variable rate (percentage) | 0.70% | 0.70% |