Donaldson(DCI) - 2025 Q4 - Annual Report

PART I Business Overview 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] 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][14] 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] 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][54] Risk Factors 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][73][74] - 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][77][78][79][80] - 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][87][88] - 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][93] Unresolved Staff Comments The Company has no unresolved staff comments from the SEC - There are no unresolved staff comments[94] Cybersecurity 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] - 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][97][98][99] - 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][103] - 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] Properties 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] Legal Proceedings 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] - The estimated liability for claims or litigation is considered adequate, and it is remote that settlements will materially exceed accrued amounts[105] Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[106] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 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] - 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] 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 This item is reserved and contains no information - Item 6 is reserved[117] [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