Donaldson (DCI) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 sales of $896 million, up 3% year-over-year, with growth across all segments, driven by favorable currency and pricing, partially offset by volume declines.

• Announced the acquisition of Facet/Facet Filtration for $820 million, the largest in company history, expanding the filtration portfolio in aerospace, defense, and power generation, expected to close in the second half of fiscal 2026.

• Leadership transition: COO Richard Lewis named as incoming President and CEO, succeeding Tod Carpenter.

• Returned $51 million to shareholders via dividends and share repurchases in Q2.

• Net earnings for Q2 were $92.5 million, down 3.6% from the prior year; adjusted net earnings were $97.5 million, flat year-over-year.

Financial highlights

• Adjusted EPS was $0.83, flat year-over-year; diluted EPS was $0.78, down from $0.79.

• Gross margin declined to 33.5% from 35.2% last year; adjusted gross margin was 33.7%, impacted by operational inefficiencies and footprint optimization costs.

• Adjusted operating margin was 14.0%, down from 15.2% last year.

• Free cash flow for Q2 was $18 million, down from $71.5 million a year ago, impacted by increased working capital.

• Paid $69.3 million in dividends and repurchased 1.2% of shares for $108.6 million year-to-date.

Outlook and guidance

• Fiscal 2026 sales expected to reach $3.8 billion, with 1%–5% growth across all segments.

• Adjusted operating margin guidance revised to 16.0%–16.4%; adjusted EPS forecasted at $3.93–$4.01, up from $3.68 in 2025.

• Free cash flow conversion projected at 85%–95%; capital expenditures expected between $60 million and $75 million.

• Life Sciences segment expected to grow 5%–9% for FY26; Mobile sales expected to grow 2%–6%.

• No additional share repurchases planned in the second half due to Facet acquisition.