Donaldson (DCI) investor relations material

Key business highlights

• Focuses exclusively on filtration, leveraging over a century of expertise and more than 3,000 patents across three segments: Mobile Solutions, Industrial Solutions, and Life Sciences.

• 66% of revenue comes from high-margin, durable replacement consumables, supporting a resilient, global business model.

• Maintains a global footprint with local teams, enabling sensitivity to regional market needs and operational excellence.

• Achieved record sales, adjusted operating profit, and EPS in Q3, with expectations for continued record performance in fiscal 2026.

• Recently completed its largest acquisition, Facet, expanding into high-margin, regulated filtration markets.

Financial performance and outlook

• Fiscal 2026 is projected to close with record sales, adjusted operating profit, and EPS, with sales up ~4% and EPS up ~8% year-over-year.

• Q3 saw a sequential step-up in performance, with record backlogs and strong sales, despite lingering margin pressures from operational transitions.

• Industrial Solutions margins are expected to expand into next year, with further recovery anticipated in Q4.

• Long-term operating margin potential is seen above 20%, driven by mix, pricing, and growth in higher-margin segments.

• Maintains a 30-year record of increasing dividends and continues to prioritize organic investment, disciplined M&A, and shareholder returns.

Strategic initiatives and growth drivers

• Growth algorithm combines macro tailwinds, market share gains, operational excellence, and pricing across multiple end markets.

• Expanding into high-purity membrane filtration and Life Sciences, opening new addressable markets and supporting long-term growth.

• Capital deployment focuses on organic growth, strategic acquisitions, and returning value to shareholders through dividends and buybacks.

• Pricing culture shifted during the pandemic, with a more precise, accountable approach leading to durable price increases and margin expansion.

• Plans for further pricing and margin improvements, with a new operating model to be detailed at the next investor day.