Donaldson(US:DCI)2026-02-26 16:03Financial Performance - Net sales for the three months ended January 31, 2026, were $896.3 million, a 3.0% increase from $870.0 million in the same period of 2025[106] - Net earnings for the three months ended January 31, 2026, were $92.5 million, a decrease of 3.6% from $95.9 million in the same period of 2025[117] - For the six months ended January 31, 2026, net sales were $1,831.7 million, an increase from $1,770.1 million in the same period of 2025[118] - Net sales for the six months ended January 31, 2026 increased by $61.6 million, or 3.5%, to $1,831.7 million compared to the same period in 2025, driven by growth in all segments[122] - Net earnings for the six months ended January 31, 2026 were $206.4 million, an increase of $11.5 million, or 5.9%, with diluted EPS rising to $1.75, up 9.3%[130] Segment Performance - The Life Sciences segment saw a significant growth of 16.2%, contributing $80.0 million in net sales for the three months ended January 31, 2026[110] - Mobile Solutions segment net sales for the six months ended January 31, 2026 were $1,154.9 million, an increase of $35.0 million, or 3.1%, with foreign currency translation contributing $23.3 million[141] - Industrial Solutions segment net sales for the six months ended January 31, 2026 were $517.5 million, an increase of $6.2 million, or 1.2%, with foreign currency translation contributing $9.9 million[155] - Life Sciences segment net sales for the six months ended January 31, 2026 were $159.3 million, an increase of $20.4 million, or 14.6%[122] - Net sales of the Life Sciences segment for the three months ended January 31, 2026 were $80.0 million, an increase of $11.2 million, or 16.2%, compared to $68.8 million for the same period in 2025[162] Expenses and Margins - Gross profit margin decreased to 33.5% for the three months ended January 31, 2026, compared to 35.2% for the same period in 2025, primarily due to operational inefficiencies[111] - Selling, general and administrative expenses increased by $6.8 million, or 2.1%, to $332.1 million, representing 18.1% of net sales, down from 18.4%[124] - Research and development expenses decreased by 11.7% to $18.6 million, or 2.2% of net sales, for the three months ended January 31, 2026, down from $21.2 million, or 2.4% of net sales, in 2025[113] - Gross margin as a percentage of net sales decreased to 34.3% for the six months ended January 31, 2026, down from 35.3% in the prior year, primarily due to operational inefficiencies[123] - Research and development expenses decreased by $6.1 million, or 13.7%, to $37.8 million, representing 2.1% of net sales[126] Tax and Interest - The effective tax rate improved to 20.7% for the three months ended January 31, 2026, down from 23.2% in 2025, due to increased excess tax benefits on stock-based compensation[116] - The effective tax rate decreased to 21.8% for the six months ended January 31, 2026, down from 23.7% in the prior year, primarily due to increased excess tax benefits on stock-based compensation[129] - Interest expense increased by 29.0% to $7.7 million for the three months ended January 31, 2026, compared to $5.9 million in the same period of 2025[114] - Interest expense increased by $3.4 million, or 30.4%, to $14.8 million due to a higher proportion of variable interest rate debt[127] Cash Flow and Debt - Cash provided by operating activities for the six months ended January 31, 2026 was $158.4 million, a decrease of $4.9 million compared to $163.3 million for the same period in 2025[172] - Cash used in investing activities for the six months ended January 31, 2026 was $18.4 million, significantly lower than $115.1 million for the same period in 2025, a decrease of $96.7 million[173] - Cash used in financing activities for the six months ended January 31, 2026 was $131.5 million, an increase of $43.0 million compared to $88.5 million for the same period in 2025[174] - As of January 31, 2026, total debt represented 30.2% of total capitalization, a decrease from 31.5% as of July 31, 2025[178] - Long-term debt outstanding was $680.8 million as of January 31, 2026, an increase of $43.7 million from $637.1 million as of July 31, 2025[179] Foreign Currency and Commodities - The estimated impact of foreign currency translation for the six months ended January 31, 2026 resulted in an increase in reported net sales of $39.8 million and an increase in reported net earnings of $2.4 million[189] - The total notional amount of foreign currency forward contracts designated as hedges was $43.3 million as of January 31, 2026, compared to $35.7 million as of July 31, 2025[191] - The total notional amount of foreign currency forward contracts not designated as hedges was $181.7 million as of January 31, 2026, down from $189.6 million as of July 31, 2025[191] - The Company is exposed to fluctuating prices of commodity raw materials, including steel and petrochemical-based products, which could impact gross profit[196] - The Company aims to recover material cost increases through price adjustments to customers and cost reduction initiatives[196]