Donaldson Delivers Strong Q1 Results, Raises Outlook for Fiscal 2026

Donaldson Company, Inc. (NYSE: DCI) has released its first quarter fiscal 2026 results, showcasing a robust performance with record sales and earnings. The company’s performance exceeded expectations, prompting an upward revision of its full-year guidance.

Q1 Revenue and EPS Beat Driven by Mobile Solutions and Life Sciences

Donaldson Company, Inc. (NYSE: DCI) has announced its first quarter fiscal 2026 results, demonstrating a robust performance with sales reaching $935.4 million, a 3.9% increase compared to the same period last year. This growth was driven by a combination of pricing benefits, favorable foreign currency translation, and volume growth. The company’s adjusted earnings per share (EPS) came in at $0.94, surpassing the expected EPS of $0.92, marking a 13.3% increase from the previous year’s adjusted EPS of $0.83. Meanwhile, the reported revenue also exceeded the anticipated $922.62 million, reflecting a positive start to the fiscal year.

Donaldson’s performance in the first quarter was bolstered by significant contributions from its Mobile Solutions and Life Sciences segments. Mobile Solutions saw a 4.5% increase in sales, driven by aftermarket sales which rose by 6.5% due to continued market share gains and solid demand in the original equipment (OE) channel. The Life Sciences segment experienced a 13.1% surge in sales, attributed to strong new equipment sales in the Food and Beverage and Disk Drive sectors. Despite a decline in the Aerospace and Defense segment, Donaldson’s overall growth trajectory remains positive, supported by strategic pricing and cost optimization initiatives.

Operating margins also improved, with an operating margin of 16.0%, up from 14.5% in the previous year. This improvement was achieved through effective cost management and leverage on higher sales. The company’s gross margin was slightly down at 35.2%, compared to 35.5% last year, due to increased operating costs. However, adjusted gross margin remained stable at 35.4%. Donaldson’s ability to convert sales growth into significant EPS growth highlights its strong operational execution and strategic focus on high-margin segments.

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Donaldson Raises Full-Year EPS Outlook and Projects Broad Segment Growth

In light of the strong first-quarter performance, Donaldson has revised its full-year fiscal 2026 guidance, reflecting confidence in continued growth. The company now expects adjusted EPS to be in the range of $3.95 to $4.11, up from the previous range of $3.92 to $4.08. This revision is supported by anticipated sales growth of 1% to 5% year-over-year, with pricing benefits contributing approximately one percentage point to this growth. The company also expects its adjusted operating margin to be between 16.2% and 16.8%, an increase from the previous forecast of 16.1% to 16.7%.

Donaldson’s outlook for its Mobile Solutions segment remains positive, with sales projected to be flat to up 4% compared to the previous year. Off-Road sales are expected to increase mid-single digits as market conditions improve, while On-Road sales are anticipated to remain flat due to muted global truck production. Aftermarket sales are forecast to grow in low-single digits, driven by ongoing market share gains and increased vehicle utilization rates. The Industrial Solutions segment is expected to see sales growth between 2% and 6%, supported by mid-single-digit growth in Industrial Filtration Solutions and stable Aerospace and Defense sales.

For the Life Sciences segment, Donaldson forecasts sales growth of 1% to 5% compared to the previous year, driven by strength in the Food and Beverage and Disk Drive sectors. The company also plans to invest between $65 million and $85 million in capital expenditures, with a focus on sustaining its competitive edge and supporting long-term growth. Additionally, Donaldson aims to repurchase 2.0% to 3.0% of its shares outstanding, reflecting its commitment to delivering value to shareholders. Overall, the updated guidance underscores Donaldson’s confidence in its strategic initiatives and ability to navigate the current economic environment effectively.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.