Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Kevin Maczka - BB&T Capital Markets.
Kevin Maczka - BB&T Capital Markets
First, on the restructuring, you talked about consolidating a couple of distribution centers in the U.S., one in the U.K. and of course the headcount reduction. I am just wondering with your guidance for another down year in fiscal 2010 if there is other maybe even larger restructurings or other cost initiatives of any type you are contemplating or if there some trigger point where you are ready to move forward in 2010 with more than just what you didn’t finish in 2009?
Thomas VerHage
You are right. We did announce another $12-17 million of restructuring costs in F10. We think that should take us through where we are today on the global economy. We don’t have any other plans at this point but I think very importantly if you think back to Bill’s comments he mentioned many efforts we have going on in the company from cost productivity efforts, cost controls, return on investment efforts that should continue to pay dividends. We are going to continue to work those plans but there are not any additional restructuring actions other than the ones I referred to.
Kevin Maczka - BB&T Capital Markets
In terms of some of the end markets it is good to hear the talk about stabilization. I think a couple sound like they are not stabilizing; gas turbine, the guidance suggests that 2010 will be another leg down even from the Q4 run rate. Aerospace and defense I think with the Blackhawk and other programs it seemed like you were doing better in Q3 than your outlook for 2010. Can you talk a little bit more about those two end markets?
William Cook
I just wanted to add something to Tom’s comment on the restructuring. As we noted, some of the things we planned to do in the fourth quarter we didn’t for a variety of reasons complete. So some of this is stuff that we have contemplated in the fourth quarter that is carrying over into the new fiscal year.
On the end markets, it is a mixture. One of the strengths of the Donaldson Company is our diversification we have with our end markets. We do have some end markets that are sort of later cycle decline. I think we alluded to that. Gas turbine is one of those. We sort of look at as an indicator what GE talks about and they are talking about their orders through their second quarter being about half what they were in the previous year and their shipments being down. We see the gas turbine market as being one of those later cycles.
- To read the full transcript on Seeking Alpha, click here »
