Donaldson Company Reports Third-Quarter Results, Beating Expectations

Donaldson Company, Inc. (NYSE: DCI) has released its third quarter fiscal year 2025 results, showcasing notable growth in sales and earnings. Despite some challenges, the company has outperformed expectations and provided an optimistic outlook for the remainder of the fiscal year.

Donaldson Company Reports Robust Results for Third-Quarter FY’25

In the third quarter of fiscal year 2025, Donaldson Company reported robust financial results, with sales reaching $940.1 million, a 1.3% increase compared to the same period in 2024. This growth was driven by pricing benefits and volume growth across various segments.

The company’s earnings per share (EPS) stood at $0.48, down from $0.92 in the previous year. However, when adjusted for non-recurring charges, the EPS was $0.99, surpassing the market expectation of $0.95. This demonstrates the company’s ability to navigate challenges and deliver strong performance.

Donaldson’s Mobile Solutions segment experienced a slight decline in sales by 0.4%, attributed to decreases in On-Road and Off-Road sales. However, Aftermarket sales showed a positive trend, increasing by 3.3%. The Industrial Solutions segment saw a 5.3% sales growth, driven by Aerospace and Defense, which surged by 27.1%. The Life Sciences segment also contributed to the overall growth, with a 0.7% increase in sales.

Despite the impressive sales figures, Donaldson faced challenges with its gross margin, which decreased to 34.2% from 35.6% in 2024 due to higher manufacturing costs. The adjusted gross margin, excluding restructuring charges, was slightly better at 34.5%. Operating expenses also rose to 24.9% of sales, primarily due to impairment charges and restructuring costs. Nevertheless, the adjusted operating margin improved to 16.3%, reflecting effective expense management and operational efficiency.

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Donaldson Company Revises Full-Year Fiscal 2025 Guidance

Looking ahead, Donaldson Company has revised its full-year fiscal 2025 guidance, projecting adjusted EPS to be between $3.64 and $3.70, an increase from the previous guidance. The company anticipates a 1% to 3% rise in sales year-over-year, with pricing expected to contribute a significant portion of this growth. The company remains optimistic about its future prospects, driven by disciplined execution and strategic investments across its segments.

For the Mobile Solutions segment, sales are expected to remain flat or grow by up to 2%, with Aftermarket sales showing low-single-digit growth. The Industrial Solutions segment is projected to increase sales by 2% to 4%, supported by strong demand in Aerospace and Defense. Life Sciences is expected to see high-single-digit growth, buoyed by healthy market demand.

Donaldson’s commitment to returning cash to shareholders is evident, with plans to repurchase between 3.5% and 4.0% of its outstanding shares by the end of the fiscal year. The company also forecasts capital expenditures to be between $75 million and $90 million, with adjusted free cash flow conversion expected to range from 80% to 90%. Overall, Donaldson’s strategic focus and operational discipline position it well for sustained growth and shareholder value creation.

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.