Group 1 - Donaldson Company, Inc. (NYSE:DCI) is recognized as one of the 11 Best Value Dividend Stocks to buy currently [1] - The company is a significant producer of filtration systems for industrial, mobile, and life sciences applications, focusing on contaminant removal from air, liquids, and gases [2] - Donaldson operates through three main divisions: Mobile Solutions, Industrial Solutions, and Life Sciences, with a recent emphasis on market expansion and proprietary technology advancements [3] Group 2 - Donaldson has a strong dividend history, rewarding shareholders with increasing dividends for 29 consecutive years, currently offering a quarterly dividend of $0.30 per share and a dividend yield of 1.48% as of September 26 [4]

Core Viewpoint - Donaldson (DCI) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Donaldson suggest an improvement in the company's underlying business, likely leading to increased stock prices [5][10]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7][9]. - Only the top 20% of Zacks-covered stocks receive a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [10]. Recent Earnings Estimate Revisions - Donaldson is expected to earn $4.02 per share for the fiscal year ending July 2026, with no year-over-year change, but the Zacks Consensus Estimate has increased by 4% over the past three months [8].

Key Takeaways Donaldson's Mobile Solutions unit is boosted by aftermarket growth and recovery in agriculture markets.Industrial Solutions gains from U.S. and Europe demand for dust collection gear and aerospace momentum.Life Sciences expansion via Medica and Univercells deals diversifies into medical devices and water sectors.Donaldson Company, Inc. (DCI) has been benefiting from strength across all segments. Benefits from acquired assets are likely to drive its performance in the quarters ahead.DCI current ...

A month has gone by since the last earnings report for Donaldson (DCI) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Donaldson due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Donaldson Company, Inc. before we dive into how investors and analysts have react ...

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) Donaldson is a global leader in technology-led filtration products and solutions, operating across Mobile, Industrial, and Life Sciences segments with strategic priorities for profitable growth - Donaldson Company, Inc., founded in 1915, is a global leader in technology-led filtration products and solutions, operating in over 150 locations across six continents, including **77 manufacturing and/or distribution centers**[10](index=10&type=chunk) Fiscal Year 2025 Revenue by Region | Region | Share of Fiscal Year 2025 Revenue | | :--------------- | :-------------------------------- | | U.S. and Canada | 44.2% | | EMEA | 27.8% | | APAC | 17.2% | | LATAM | 10.8% | - The Company's three primary strategic priorities are to Extend Market Access, Expand Technologies and Solutions, and Pursue Strategic Acquisitions in high-margin areas[13](index=13&type=chunk)[14](index=14&type=chunk) Fiscal Year 2025 Net Sales by Segment | Segment | Net Sales Share (Fiscal 2025) | | :----------------- | :---------------------------- | | Mobile Solutions | 62.1% | | Industrial Solutions | 29.9% | | Life Sciences | 8.0% | - Key growth drivers include providing solutions for higher performance requirements, utilizing technology for efficiencies and fuel economies, increasing new equipment production, complementing automation trends, addressing operational efficiency needs, and focusing on energy consumption and carbon footprint reduction[41](index=41&type=chunk) Research and Development Expenses (in millions) | Year | R&D Expenses | % of Net Sales | | :---- | :----------- | :------------- | | 2025 | $87.8 | 2.4% | | 2024 | $93.6 | 2.6% | | 2023 | $78.1 | 2.3% | - As of July 31, 2025, the Company had approximately **15,000 full-time employees**, with **58% in production-related roles**, guided by core values focused on integrity, employee empowerment, customer delivery, innovation, safety, sustainability, and community enrichment[53](index=53&type=chunk)[54](index=54&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The Company faces diverse risks including global operations, tariffs, supply chain disruptions, cybersecurity threats, and financial market volatility - Global operations expose the Company to risks including complex commercial and trade laws, tariffs, and potential business disruptions from unexpected events like natural disasters or pandemics[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Operational risks include reliance on third-party suppliers for raw materials, challenges in attracting and retaining qualified personnel, difficulties in adjusting manufacturing capacity to meet demand, the need for consistent investment in R&D to maintain competitive advantage, and threats from disruptive technologies[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - Cybersecurity risks involve the vulnerability of information technology systems, compliance with data privacy laws (e.g., GDPR, CCPA), and the increasing frequency and sophistication of security threats, which could lead to reputational damage, litigation, and increased costs[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Financial risks include transactional and translational exposures from foreign currency exchange rate fluctuations, and potential impacts on liquidity and financing access due to changes in capital and credit markets[92](index=92&type=chunk)[93](index=93&type=chunk) [Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The Company has no unresolved staff comments from the SEC - There are no unresolved staff comments[94](index=94&type=chunk) [Cybersecurity](index=18&type=section&id=Item%201C.%20Cybersecurity) Donaldson's comprehensive cybersecurity program, integrated into enterprise risk management and overseen by the board, adheres to NIST and ISO 27001 standards, and has identified no material incidents - Donaldson's cybersecurity program is integrated within its enterprise risk management, based on NIST Cyber Security Framework and ISO 27001 standards, covering IT and operational technology environments[95](index=95&type=chunk) - Key cybersecurity processes include technical safeguards, a 24x7 security monitoring and incident response plan, annual employee training with monthly phishing exercises, and holistic risk assessments for third-party managed IT systems[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - The board of directors provides oversight of overall risk management, including cybersecurity, primarily through its audit committee, which receives regular reports from the Chief Information Officer (CIO)[102](index=102&type=chunk)[103](index=103&type=chunk) - As of the Form 10-K filing date, the Company is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[101](index=101&type=chunk) [Properties](index=19&type=section&id=Item%202.%20Properties) The Company's corporate headquarters and primary research facilities are in Minneapolis, Minnesota, with additional administrative, engineering, and research facilities globally - The Company's corporate headquarters and primary research facilities are located in Minneapolis, Minnesota, with additional administrative, engineering, and research facilities in EMEA, APAC, and LATAM regions[104](index=104&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) The Company records provisions for probable and estimable liabilities from claims and litigation, reviewing them quarterly, with current estimated liability deemed adequate - The Company records provisions for claims and litigation when a liability is probable and estimable, reviewing them quarterly[105](index=105&type=chunk) - The estimated liability for claims or litigation is considered adequate, and it is remote that settlements will materially exceed accrued amounts[105](index=105&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[106](index=106&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=19&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Donaldson's common stock trades on the NYSE under 'DCI', with a new stock repurchase plan authorized in November 2023, and its cumulative total stockholder return is compared against market indices - Donaldson's common stock is traded on the New York Stock Exchange under the symbol 'DCI', with **1,065 registered stockholders** as of September 12, 2025[108](index=108&type=chunk) - In November 2023, the Board authorized the repurchase of up to **12.0 million shares**, replacing a previous plan; as of July 31, 2025, **5.9 million shares** remain authorized for repurchase[110](index=110&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended July 31, 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | :--------------------- | :--------------------- | :--------------------------- | :------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | May 1 - May 31, 2025 | 251,865 | $66.72 | 251,865 | 6,479,783 | | June 1 - June 30, 2025 | 399,922 | $69.40 | 394,755 | 6,085,028 | | July 1 - July 31, 2025 | 214,353 | $70.66 | 214,353 | 5,870,675 | | **Total** | **866,140** | **$68.93** | **860,973** | **5,870,675** | Five-Year Cumulative Total Return Comparison (Investment of $100) | Company/Index | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | :------------------------- | :------ | :------- | :------- | :------- | :------- | :------- | | Donaldson Company, Inc. | $100.00 | $138.97 | $116.02 | $136.09 | $164.58 | $160.80 | | S&P 500 Stock Index | $100.00 | $136.45 | $130.12 | $147.05 | $179.62 | $208.96 | | S&P Industrial Machinery Index | $100.00 | $144.36 | $124.40 | $155.41 | $177.54 | $183.50 | [Reserved](index=21&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is reserved[117](index=117&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%2

PresentationAngel Castillo MalpicaVice President All right. Good afternoon, everyone, and thank you for joining me. For those who don't know me, name is Angel Castillo. I'm the U.S. machinery and construction analyst here at Morgan Stanley. And before we get started, I just want to read a quick disclaimer. So for important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley represe ...

Company Overview - Donaldson recently reported record results and record sales despite a challenging macroeconomic environment [3] Leadership - The company has recently appointed Rich Lewis as COO, alongside Brad Pogalz as CFO and Sarika Dhadwal as Senior Director of IR and ESG [2]

Summary of Donaldson Company Conference Call Company Overview - Donaldson Company is a 110-year-old filtration company based in Minnesota, with a diverse range of products and applications across global markets, supported by a strong R&D function [3][2]. Financial Performance - The company reported record top-line and bottom-line results for the recent fiscal year, with expectations for another record year in fiscal year 2026 [3][2]. - Historically, Donaldson has grown profits faster than revenues, achieving growth in nine out of the last ten years [4][3]. Aftermarket Business - The aftermarket segment, particularly mobile aftermarket solutions, has shown low single-digit growth driven by intellectual property and market share gains [7][5]. - Donaldson has a strong position in the OEM equipment side, which has allowed it to secure more market share through technology and availability [9][10]. - The company has invested in demand planning and inventory management to address supply chain challenges, contributing to reliability and share gains [10][9]. Market Dynamics - The mobile solutions market is cyclical, with expectations for high single-digit growth in on-road and mid-single-digit growth in off-road segments for fiscal year 2026 [14][15]. - The company anticipates a rebound in equipment demand, with historical patterns indicating significant recovery potential [15][16]. - Donaldson's content per vehicle varies by technology, with higher content in fuel cell applications compared to diesel engines [20][19]. Regulatory Environment - Regulatory changes, such as emissions regulations, have historically benefited Donaldson by increasing the demand for advanced filtration technologies [24][25]. - The company remains committed to technology development despite delays in regulatory timelines [22][23]. Industrial Solutions - The power generation segment is benefiting from increased demand for natural gas-powered solutions, particularly in data centers [26][27]. - Donaldson's utilization rates are high, with a solid backlog in production [26][27]. Life Sciences Segment - The life sciences business includes various units, with differing levels of maturity. The distrive segment is mature, while bioprocessing is still developing [35][36]. - The company expects steady growth in the distrive business and high single-digit growth in food and beverage segments [40][39]. Capital Allocation and M&A Strategy - Donaldson has a disciplined approach to capital allocation, focusing on internal investments and selective M&A opportunities, particularly in life sciences and industrial sectors [49][50]. - The company has a longstanding dividend policy and has increased dividends annually for 30 years [50][51]. Market Share and Growth Outlook - Donaldson is positioned as a leader in most of its markets, with expectations to continue outpacing market growth through strategic operational moves [62][63]. - The company sees potential for consolidation in fragmented markets, particularly in mobile solutions [63][64]. - Overall, Donaldson anticipates mid-single-digit growth and the ability to set new earnings records despite economic challenges [64][63]. Conclusion - Donaldson Company is well-positioned for future growth, leveraging its strong market position, technological advancements, and strategic investments to navigate challenges and capitalize on opportunities in various sectors [64][63].

Company Overview - Donaldson Company is a leader in filtration across various end markets, with a history of solving complex customer problems through best-in-class technology [4] - The company was founded in 1915 and has approximately 14,000 employees [5] Revenue Breakdown - The company's revenue model consists of two segments: First-Fit, which accounts for 32% of revenue, and aftermarket, which constitutes 68% [5] Strategic Focus - Donaldson is committed to helping customers meet their environmental expectations through its solutions [4] - The company has a clear strategic and balanced growth strategy, with ongoing progress in the Life Sciences market segment [4]

Summary of Donaldson Company Conference Call Company Overview - Donaldson Company is a leader in filtration across various end markets, with a history of solving complex customer problems through best-in-class technology [2][3] - Founded in 1915, the company has approximately 14,000 employees and operates with a revenue model where 32% comes from first fit and 68% from aftermarket sales [3][4] - The company reported a record revenue of nearly $3.7 billion and adjusted EPS of $3.68 for fiscal 2025 [3][4] Financial Performance - The company expects to grow to $3.8 billion in sales with an adjusted operating margin projected at a record 16.4% [5][19] - Over the past four years, the adjusted operating margin has improved from approximately 14.5% to 16.5% [5] - The company maintains a strong balance sheet with a net debt/EBITDA ratio of about 0.7 and free cash flow around 85% [13] Market Segments - Donaldson operates in three segments: mobile solutions (60% of revenue), industrial solutions (30%), and life sciences (8-10%) [3][9] - The mobile solutions segment has seen growth in aftermarket products, particularly in alternative fuel applications [9][10] - The industrial solutions segment is focused on connecting products with sensors to enhance customer maintenance and efficiency [10][11] - Life sciences have faced challenges but are expected to grow mid-single digits in the coming year [12] Strategic Initiatives - The company has over 3,000 active patents and continues to invest in R&D to maintain its technology leadership [4][6] - 75% of manufacturing occurs in the region where products are consumed, providing a buffer against tariffs [5] - The company prioritizes organic investment and M&A for growth, having invested $1.6 billion over the last three years [13][14] Market Dynamics - The U.S. market is mixed, with declines in construction, mining, and agriculture, but some recovery in agriculture noted recently [16] - Europe is the most stable region with broad-based aftermarket growth, while Latin America is struggling [16][17] - The Asia Pacific region shows signs of recovery, particularly in China, but caution is advised regarding the sustainability of this trend [17] Challenges and Opportunities - Aerospace and defense present a complex landscape due to supply chain issues, leading to variability in forecasts [20][22] - The company is focused on optimizing its cost structure and improving operational efficiency through footprint optimization and organizational redesign [23][24] - The transition away from annual price-downs has been facilitated by providing customers with reliable technology and support [26][27] Innovation and Future Outlook - The company is committed to continuous innovation, with a focus on developing new technologies that meet market needs [31][42] - The expectation is that the company will continue to achieve record sales and margins, even in the face of cyclical market conditions [39][40] - The potential for significant growth exists if key markets rebound, with historical trends suggesting a return could be substantial [18] Conclusion - Donaldson Company is well-positioned for future growth with a strong focus on technology, customer relationships, and operational efficiency, despite facing challenges in certain markets [14][15]