Record second quarter sales of $896 million, up 3.0%

GAAP EPS of $0.78, Adjusted EPS of $0.83 on par with prior year second quarter record

Announced margin-accretive Facet acquisition, strengthening core filtration product portfolio

Fiscal 2026 sales, adjusted operating margin and adjusted EPS forecasted at all-time highs

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 26, 2026-- Donaldson Company, Inc. (NYSE: DCI) (Donaldson or the Company), a global leader in technology-led filtration products and solutions, today reported second quarter fiscal 2026 generally accepted accounting principles (GAAP) net earnings of $92.5 million, compared with $95.9 million a year ago. Earnings per share (EPS)¹ were $0.78 compared with second quarter fiscal 2025 EPS of $0.79. Second quarter fiscal 2026 results include $6.7 million of pre-tax, non-recurring net charges versus $6.6 million in the prior year. Excluding these items, adjusted second quarter results^2,3 reflect net earnings of $97.5 million compared with $101.0 million in fiscal 2025, and EPS of $0.83, flat versus a year ago.

“This quarter, the Donaldson team delivered record sales, strengthened the foundation to meet strong customer demand in key, high-margin businesses and made further progress on our footprint optimization initiatives, despite near-term challenges,” said Tod Carpenter, chairman, president and chief executive officer. “We also made investments to drive sustainable growth as evidenced by our agreement to acquire Facet, which expands our core product portfolio with fuel and fluid filtration capabilities in durable end markets including Aerospace and Defense and Power Generation.

“Supported by our strong backlogs and expected improvement in operating performance in the second half of the year, we project record sales, operating margin and earnings in fiscal 2026. The Donaldson team is committed to solving our customers’ challenges through our technology-led solutions, strategically investing for our future, and generating long-term shareholder value.”

Second Quarter Operating Results

Sales of $896.3 million increased 3.0% compared with 2025 driven by favorable foreign currency translation and pricing benefits, partially offset by volume declines.

Mobile Solutions segment (Mobile) sales increased 1.6% as pricing and currency translation more than offset volume declines. Off-Road sales increased 7.8% as a result of improving end-market conditions. On-Road sales decreased 9.2% due to lower global truck production. Aftermarket sales rose 1.1% from solid independent channel sales, partially offset by declines in the OE channel after comparing against strong order volume in the prior year.

Industrial Solutions segment (Industrial) sales rose 2.4% versus prior year as currency translation and pricing were partially offset by volume declines, particularly in Aerospace and Defense. Industrial Filtration Solutions (IFS) sales increased 7.2%, driven by robust growth in Power Generation new equipment sales. Aerospace and Defense sales decreased 19.4% due to sales timing.

Life Sciences segment (Life Sciences) sales increased 16.2% as a result of strong new equipment sales in Food and Beverage and Disk Drive, combined with benefits from currency translation.

Gross margin was 33.5%, down versus 35.2% in 2025. Operating inefficiencies, including those related to production shifts to support higher demand in Power Generation within Industrial Solutions and costs associated with footprint optimization initiatives, were partially offset by higher pricing. Adjusted gross margin, excluding restructuring and other charges, was 33.7%.

Operating expenses as a percentage of sales were 20.2%, favorable by 50 basis points versus 20.7% in 2025, driven by cost optimization initiatives and expense discipline, partially offset by restructuring and other charges. Adjusted operating expenses as a percentage of sales were 19.7% compared with 20.0% a year ago.

Operating income as a percentage of sales (operating margin) was 13.2% versus 14.4% in 2025 as a result of the gross margin decline. Adjusted operating margin was 14.0%.

Interest expense was $7.7 million versus $5.9 million a year ago, primarily due to higher debt levels and higher average interest rates. Other income, net was $5.6 million compared with $5.4 million in 2025. The Company’s effective tax rate was 20.7%, favorable compared to 23.2% a year ago as a result of an increase in discrete tax benefits.

Year to date, Donaldson paid $69.3 million in dividends and repurchased 1.2% of its shares outstanding for $108.6 million.

During the quarter, the Company entered into a definitive agreement to acquire Facet, a provider of fuel and fluid filtration solutions for mission-critical applications, in an all-cash transaction valued at approximately $820 million. The acquisition is expected to close during the second half of fiscal year 2026.

Updated Fiscal 2026 Outlook

Adjusted full-year EPS is expected to be within a range of $3.93 and $4.01, compared with a previous range of $3.95 and $4.11 and excluding a $0.02 per share net charge recognized in the first half of 2026. Fiscal 2025 GAAP and adjusted EPS were $3.05 and $3.68, respectively. Sales are projected to increase 1% to 5% versus prior year, consistent with previous expectations, with currency translation and pricing each contributing one percentage point. Tariff impacts are forecast to be immaterial.

Mobile sales are expected to grow 2% to 6% year over year compared with flat to 4% growth previously, due to favorable currency translation. Off-Road sales are projected to grow mid-single digits as select end-market conditions improve following weakness in the prior year. On-Road sales are forecast to be flat as a result of muted global truck production. Aftermarket sales are expected to increase mid-single digits from continued market share gains and vehicle utilization rates.

Industrial sales are projected to be in a range of between -1% and 3% compared with 2025, below previous guidance of between 2% and 6% as a result of lower volumes. IFS sales are forecast to grow low-single digits with increases across several key businesses, including dust collection and Power Generation. Aerospace and Defense sales are expected to decrease mid-single digits versus 2025 due to project timing and after cycling against record levels in the prior year.

Life Sciences sales are expected to increase between 5% and 9% year over year, above previous guidance of 1% and 5% due to favorable currency translation combined with increased volume. Food and Beverage and Disk Drive sales are forecast to drive the growth versus 2025.

Adjusted 2026 operating margin is expected to be between 16.0% and 16.4%, down from previous guidance of between 16.2% and 16.8%, driven by gross margin. Fiscal 2025 operating margin was 13.4%, or 15.7% on an adjusted basis. The year-over-year improvement in operating margin is driven by gross margin expansion and operating expense leverage.

Interest expense is estimated to be approximately $26 million and other income is forecast to be between $17 million and $19 million. Donaldson projects a fiscal 2026 adjusted effective income tax rate of between 22% and 24%.

Capital expenditures are forecast to be between $60 million and $75 million and adjusted free cash flow conversion is expected to be in a range of 85% and 95%. Related to the anticipated closing of the Facet transaction, Donaldson does not anticipate repurchasing additional shares in the second half of the year. As such, full-year repurchases are expected to remain unchanged from the current year-to-date total of 1.2%.

Miscellaneous

The Company will webcast its second quarter fiscal 2026 earnings conference call today at 9:00 a.m. CT. To listen to the webcast, visit the “Events & Presentations” section of Donaldson’s Investor Relations website (IR.Donaldson.com), and click on the “listen to webcast” option. The webcast replay will be available at approximately 12:00 p.m. CT today. Also available on the website is the Company’s supplemental quarterly earnings presentation.

Statements in this release regarding future events and expectations, such as forecasts, plans, trends and projections relating to the Company’s business and financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are identified by words or phrases such as “will likely result,” “are expected to,” “will continue,” “will allow,” “estimate,” “project,” “believe,” “expect,” “anticipate,” “forecast,” “plan” and similar expressions. These forward-looking statements speak only as of the date such statements are made and are subject to risks and uncertainties that could affect the Company’s performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed. These factors include, but are not limited to, challenges in global operations; impacts of global economic, industrial and political conditions on product demand; impacts from unexpected events; effects of unavailable raw materials, significant demand fluctuations or material cost changes; inability to attract and retain qualified personnel; inability to meet customer demand; inability to maintain competitive advantages; threats from disruptive technologies; effects of highly competitive markets with pricing pressure; exposure to customer concentration in certain cyclical industries; inability to manage productivity improvements; inability to achieve commitments related to sustainability, results of execution of any acquisition, divestiture and other strategic transactions; vulnerabilities associated with information technology systems and security; inability to protect and enforce intellectual property rights; costs associated with governmental laws and regulations; impacts of foreign currency fluctuations; and effects of changes in capital and credit markets. These and other factors are described in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. The results presented herein are preliminary, unaudited and subject to revision until the Company files its results with the United States Securities and Exchange Commission on Form 10-Q.

About Donaldson Company, Inc.

Founded in 1915, Donaldson (NYSE: DCI) is a global leader in technology-led filtration products and solutions, serving a broad range of industries and advanced markets. Diverse, skilled employees at over 150 locations on six continents partner with customers – from small business owners to R&D organizations and the world’s biggest OEM brands. Donaldson solves complex filtration challenges through three primary segments: Mobile Solutions, Industrial Solutions and Life Sciences. Additional information is available at www.Donaldson.com.

2026 Adjusted EPS Guidance

A reconciliation of the Company’s fiscal 2026 adjusted EPS guidance to fiscal 2026 GAAP EPS guidance is not included in this release due to the number of variables in the projected GAAP EPS range and the Company’s current inability to reasonably quantify certain amounts, such as restructuring or other charges, that would be included in the GAAP measure or the individual adjustments for such reconciliation.

Note: Although free cash flow, EBITDA, adjusted EBITDA, adjusted gross profit, adjusted operating expense, adjusted operating income, adjusted net earnings and adjusted diluted EPS are not measures of financial performance under GAAP, the Company believes they are useful in understanding its financial results. Free cash flow is a commonly used measure of a company’s ability to generate cash in excess of its operating needs. EBITDA is a commonly used measure of operating earnings less non-cash expenses. The adjusted basis presentation excludes the impact of certain matters not related to the Company’s ongoing operations. Management believes that the adjusted basis presentation reflects management’s performance in operating the Company and provides a meaningful representation of the performance of the Company’s core business and is useful to understanding its financial results. A shortcoming of these financial measures is that they do not reflect the Company’s actual results under GAAP. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. Amounts may not foot due to rounding.

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For more information, contact:
Sarika Dhadwal (952) 887-3753
Sarika.Dhadwal@Donaldson.com

Source: Donaldson Company, Inc.