Donaldson(US:DCI)2025-12-03 22:53Financial 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]