Financial Performance - Net sales for the three months ended October 31, 2025, were $935.4 million, an increase of $35.3 million, or 3.9%, compared to $900.1 million for the same period in 2024[103] - Gross profit for the three months ended October 31, 2025, was $328.8 million, representing a gross margin of 35.2%, down from 35.5% in the prior year[103][108] - Net earnings for the three months ended October 31, 2025, were $113.9 million, an increase of $14.9 million, or 15.1%, compared to $99.0 million for the same period in 2024[115] Segment Performance - The Mobile Solutions segment reported net sales of $598.3 million for the three months ended October 31, 2025, an increase of $25.9 million, or 4.5%, from $572.4 million in 2024[120] - The Industrial Solutions segment achieved net sales of $257.8 million, slightly up from $257.6 million in the prior year[116] - The Life Sciences segment reported net sales of $79.3 million, an increase of $9.2 million, or 13.1%, compared to $70.1 million in 2024[116] - Aftermarket net sales increased by $29.1 million due to market share gains, while On-Road net sales decreased by $8.7 million due to a decline in global truck production[121] - Mobile Solutions segment earnings before income taxes for the three months ended October 31, 2025 were $111.3 million, or 18.6% of net sales, an increase from 18.3% in the same period of 2024[122] - Industrial Solutions segment net sales for the three months ended October 31, 2025 were $257.8 million, a slight increase of $0.2 million or 0.1% compared to $257.6 million in 2024[126] - Life Sciences segment net sales increased by $9.2 million, or 13.1%, reaching $79.3 million for the three months ended October 31, 2025, driven by strong sales in Food and Beverage and Disk Drive[131] Expenses and Taxation - Research and development expenses decreased to $19.2 million, or 2.1% of net sales, down from $22.7 million, or 2.5% of net sales, in the prior year[111] - Selling, general and administrative expenses were $169.6 million, or 18.1% of net sales, compared to $166.1 million, or 18.5% of net sales, in the previous year[109] - The effective tax rate for the three months ended October 31, 2025, was 22.8%, down from 24.2% in the same period of 2024[114] Cash Flow and Debt - Cash provided by operating activities for the three months ended October 31, 2025 was $125.4 million, an increase of $52.5 million from $72.9 million in 2024[135] - Cash used in investing activities decreased significantly to $3.4 million in the three months ended October 31, 2025, down from $96.0 million in 2024, primarily due to reduced equity investments[136] - Cash used in financing activities was $93.1 million for the three months ended October 31, 2025, a decrease of $102.9 million compared to cash provided of $9.8 million in 2024[137] - Total debt as of October 31, 2025 represented 31.0% of total capitalization, a slight decrease from 31.5% as of July 31, 2025[141] - Cash and cash equivalents increased to $210.7 million as of October 31, 2025, compared to $180.4 million as of July 31, 2025[139] Foreign Currency and Interest Rates - The estimated impact of foreign currency translation for the three months ended October 31, 2025 resulted in an increase in reported net sales of $11.9 million and an increase in reported net earnings of $1.7 million[152] - The total notional amount of foreign currency forward contracts designated as hedges was $55.5 million as of October 31, 2025, up from $35.7 million on July 31, 2025[154] - The total notional amount of foreign currency forward contracts not designated as hedges was $199.5 million as of October 31, 2025, compared to $189.6 million on July 31, 2025[154] - The total notional amount of net investment hedges was €80 million (approximately $88.8 million) as of October 31, 2025[155] - A 10% appreciation of the U.S. dollar compared to the Euro would result in a net gain of $8.7 million in the fair value of net investment hedges[156] - A hypothetical 0.5 percentage point increase in short-term interest rates would increase interest expense by approximately $0.5 million for the three months ended October 31, 2025[157] - The estimated fair values of fixed interest rate long-term debt were $252.5 million compared to carrying values of $275.0 million as of October 31, 2025[157] Commodity Price Exposure - The Company is exposed to fluctuating prices of commodity raw materials, which could result in lower gross profit if prices increase[159] - The Company strives to recover material cost increases through price adjustments to customers and cost reduction initiatives[159]

Financial Data and Key Metrics Changes - First quarter sales reached an all-time high of $935 million, a 4% year-over-year increase [5][12] - Operating profit margin expanded to a record 15.5%, up 60 basis points from the prior year [13][14] - Earnings per share (EPS) was $0.94, reflecting a 13% increase compared to the previous year [6][12] - The company returned $127 million to shareholders through share repurchases and dividends [6] Business Line Data and Key Metrics Changes - **Mobile Solutions**: Total sales were $598 million, up 5% year-over-year; aftermarket sales grew 7% [10] - **Industrial Solutions**: Total sales were $258 million, flat compared to the prior year; Industrial Filtration Solutions (IFS) sales grew 2% [11] - **Life Sciences**: Sales increased by 13% to $79 million, driven by strong growth in food and beverage and disk drive segments [11] Market Data and Key Metrics Changes - The power generation business is robust, supported by high electricity demand, particularly in data centers and AI infrastructure [7][8] - The company experienced solid growth in China, with overall sales up 15% [10] - Tariff impacts are estimated at $25 million annually, down from $35 million previously [9] Company Strategy and Development Direction - The company focuses on a balanced growth strategy and continues to invest in R&D and capital expenditures in high-growth areas [10][22] - The strategic capital allocation priorities include reinvestment in the company, disciplined M&A, dividends, and share repurchase [22][23] - The company aims to maintain its leadership position in technology-led filtration [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering on financial and strategic objectives for the remainder of the year, increasing operating margin and EPS outlook [12][20] - The company anticipates record sales of $3.8 billion and operating margin expansion of 80 basis points to a record 16.5% [12][20] - Management noted that while there are cyclical headwinds, the overall demand remains strong, particularly in the power generation and aftermarket segments [7][8] Other Important Information - The company is on track to complete current footprint optimization initiatives by the second half of the fiscal year [9] - Cash conversion is projected to be in the range of 85%-95%, indicating improved working capital management [21] Q&A Session Summary Question: What was IFS' first-fit in aftermarket revenue in fiscal Q1? - Both first-fit and replacement were up, with power generation performing well due to ongoing projects [30] Question: Can you discuss pricing trends? - The company is in a normalized pricing cycle, managing costs well while remaining competitive [37] Question: What are the regional performance trends? - Europe is strengthening, while the U.S. and Latin America show more caution; China has seen growth but remains uncertain [39] Question: What are the primary drivers of decrementals in the industrial segment? - The decrementals were due to higher operating costs and timing issues in the Aerospace and Defense sector [50] Question: Can you elaborate on the disk drive business outlook? - The disk drive business is driven by technological evolution and demand from AI and cloud storage, with expectations for continued strength [56] Question: How does the company plan to grow in the power generation sector? - Growth is expected to be mid-single digits, with challenges related to capacity utilization and project timing [87]

Financial Data and Key Metrics Changes - First quarter sales reached an all-time high of $935 million, representing a 4% year-over-year increase [5] - Operating profit margin expanded to a record 15.5%, up 60 basis points from the prior year [12] - Earnings per share (EPS) was a record $0.94, reflecting a 13% increase compared to the previous year [5][12] - The company returned $127 million to shareholders through share repurchases and dividends [5] Business Line Data and Key Metrics Changes - **Mobile Solutions**: Total sales were $598 million, up 5% year-over-year; aftermarket sales grew 7% [9] - **Industrial Solutions**: Total sales were $258 million, flat compared to the prior year; Industrial Filtration Solutions (IFS) sales grew 2% [10] - **Life Sciences**: Sales increased by 13% to $79 million, driven by over 20% growth in food and beverage and disk drive segments [10] Market Data and Key Metrics Changes - The power generation business is robust, supported by high electricity demand, particularly in data centers and AI infrastructure [6] - The company experienced solid growth in the independent aftermarket channel, with sales growing nearly double digits [6] - The China business showed strength with overall sales up 15%, particularly in Off-Road and aftermarket segments [9] Company Strategy and Development Direction - The company focuses on a balanced growth strategy, leveraging its leadership in filtration technology and optimizing costs [4] - Continued investments in R&D and capital expenditures are aimed at growth areas such as solvent recovery and air filtration [9][22] - The company is committed to maintaining high on-time delivery rates and optimizing its supply chain to mitigate tariff impacts [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record sales of $3.8 billion and EPS of $4.03 for fiscal 2026 [11] - The company anticipates gross margin expansion in the second half of the fiscal year as footprint optimization projects are completed [14] - Management noted that while there are cyclical headwinds, the overall demand remains strong, particularly in Europe and China [40] Other Important Information - The company expects to complete its current footprint optimization initiatives by the second half of the fiscal year [8] - The annualized estimate for the impact of tariffs has decreased to approximately $25 million, down from $35 million [8] Q&A Session Summary Question: What was IFS' first-fit in aftermarket revenue in fiscal Q1? - Both first-fit and replacement were up, with power generation performing well due to ongoing projects [30] Question: What structural benefits have been realized from footprint optimization? - Limited structural efficiencies have been realized to date, with more benefits expected in the latter part of the fiscal year [32] Question: Can you discuss pricing trends and market dynamics? - The company is in a normalized pricing cycle, managing costs well while maintaining competitive pricing [36] Question: How is the company performing in different regions? - Europe is strengthening, while the U.S. and Latin America show more caution; China has seen growth but remains uncertain [40] Question: What are the primary drivers of decrementals in the industrial segment? - Pressure on gross margin from higher operating costs and timing issues in project deliveries [51] Question: Can you elaborate on the disk drive business outlook? - The disk drive business is driven by technological evolution and demand from AI and cloud storage [57] Question: How does the company plan to grow in the power generation sector? - Growth is expected to be mid-single digits, with challenges related to capacity utilization and project timing [88]

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Financial Performance - First quarter sales increased by 4% year-over-year to $935 million[7] - Adjusted diluted EPS increased by 13% year-over-year to $0.94[7] - Adjusted operating margin increased by 60 bps year-over-year[7] - Adjusted free cash flow conversion was 101%[7] Segment Results - Mobile Solutions segment sales increased by 5% year-over-year to $598 million[12] - Life Sciences segment sales increased by 13% year-over-year to $79 million[20] - Industrial Solutions segment sales remained flat year-over-year at $258 million[16] Fiscal Year 2026 Guidance - Sales outlook projects growth of 1% to 5%[7] - Adjusted operating margin is expected to be between 16.2% and 16.8%[7] - Adjusted EPS guidance is within a range of $3.95 to $4.11[7] Balance Sheet and Cash Flow - The company returned $127 million to shareholders through dividends and share repurchases in the first quarter[7] - Net debt to adjusted EBITDA ratio is 0.7x[25]

Core Insights - Donaldson (DCI) reported quarterly earnings of $0.94 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and up from $0.83 per share a year ago, representing an earnings surprise of +1.08% [1] - The company achieved revenues of $935.4 million for the quarter ended October 2025, surpassing the Zacks Consensus Estimate by 1.26% and increasing from $900.1 million year-over-year [2] - Donaldson's stock has increased approximately 30.1% since the beginning of the year, outperforming the S&P 500's gain of 16.5% [3] Earnings Outlook - The company's earnings outlook is crucial for assessing future stock performance, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.91 on revenues of $901.28 million, and for the current fiscal year, it is $4.02 on revenues of $3.81 billion [7] Industry Context - The Pollution Control industry, to which Donaldson belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

MINNEAPOLIS--(BUSINESS WIRE)--Donaldson Company, Inc. (NYSE: DCI) (Donaldson or the Company), a global leader in technology-led filtration products and solutions, today reported first quarter fiscal 2026 generally accepted accounting principles (GAAP) net earnings of $113.9 million, compared with $99.0 million a year ago. Earnings per share (EPS)1 were $0.97 compared with first quarter fiscal 2025 EPS of $0.81. First quarter fiscal 2026 results include a $4.3 million pre-tax, non-recurring net. ...

Donaldson Company, Inc. (NYSE: DCI) is a leading figure in the filtration industry, known for its innovative products and solutions worldwide. The company is on the verge of releasing its earnings report next week, with Wall Street forecasting growth in earnings. However, opinions among analysts vary, as evidenced by Nathan Jones from Stifel Nicolaus setting a lower price target of $51, indicating mixed expectations.Over the past year, the consensus price target for DCI has seen intriguing shifts. Last mont ...

Financial Performance - First quarter sales increased by 3.9% to $935.4 million, driven by pricing benefits, favorable foreign currency translation, and volume growth[2] - GAAP net earnings for the first quarter were $113.9 million, a 15.1% increase from $99.0 million in the prior year, with diluted EPS rising 19.0% to $0.97[1][19] - Adjusted first quarter net earnings were $110.7 million, reflecting a 9.1% increase year-over-year, with adjusted EPS up 13.3% to $0.94[1][19] - Net earnings for the first quarter of fiscal 2026 were $113.9 million, an increase of 15.4% compared to $99.0 million in the same period last year[25] - The effective tax rate decreased to 22.8% from 24.2% year-over-year, contributing to higher net earnings[27] - Diluted EPS increased to $0.97, up from $0.81 in the previous year, reflecting strong earnings growth[40] Segment Performance - Sales in the Life Sciences segment grew by 13.1%, attributed to strong new equipment sales in Food and Beverage and Disk Drive[5] - The Mobile Solutions segment reported a total of $598.3 million in sales, a 4.5% increase from $572.4 million in the previous year[29] - The Life Sciences segment experienced a significant growth of 13.1%, with total sales reaching $79.3 million compared to $70.1 million last year[29] Operating Metrics - The operating margin improved to 16.0%, up from 14.5% in the previous year, driven by operating expense leverage[7] - The operating margin improved to 16.0%, up from 14.5% in the same quarter last year[27] - The adjusted operating margin for fiscal 2026 is expected to be between 16.2% and 16.8%, an increase from the previous guidance of 16.1% to 16.7%[13] Cash Flow and Expenses - Net cash provided by operating activities rose to $125.4 million, up from $72.9 million year-over-year[40] - Free cash flow for the quarter was $122.0 million, significantly higher than $47.9 million in the prior year[40] - The cash conversion ratio improved to 107.1%, compared to 48.4% in the same quarter last year[27] - Interest expense increased to $7.1 million from $5.5 million due to higher debt levels[8] - Capital expenditures are forecasted to be between $65 million and $85 million, with adjusted free cash flow conversion expected to be in the range of 85% to 95%[14] Guidance and Shareholder Returns - The company raised its full-year adjusted EPS guidance to a range of $3.95 to $4.11, up from the previous range of $3.92 to $4.08[9] - The company plans to repurchase between 2.0% and 3.0% of its shares outstanding during the fiscal year[14] Non-GAAP Measures - The Company has provided adjusted EPS guidance for fiscal 2026, but a reconciliation to GAAP EPS guidance is not included due to the inability to quantify certain variables[41] - The Company emphasizes the usefulness of non-GAAP measures such as free cash flow, EBITDA, and adjusted diluted EPS in understanding financial results, despite these not being measures under GAAP[42] - Management believes that adjusted financial measures provide a meaningful representation of the Company's core business performance[42]

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