Donaldson (DCI) Q3 2026 earnings summary

Executive summary

• Achieved record third quarter sales of $995.1 million, up 5.8% year-over-year, with all-time high adjusted operating margin and EPS, driven by strong Mobile Solutions and Life Sciences growth, and disciplined expense management.

• Net earnings more than doubled to $118.1 million, with diluted EPS rising to $1.00; adjusted EPS increased 7.1% to $1.06.

• Successfully closed the Facet Filtration acquisition for $828.7 million, expanding high-margin recurring revenue and the Industrial Solutions portfolio.

• Completed final plant closures under footprint optimization, shifting focus to ramping up productivity at new sites for future efficiencies.

• Returned $35 million to shareholders via dividends in Q3; year-to-date dividends paid totaled $104.0 million, with share repurchases of $108.5 million.

Financial highlights

• Q3 sales reached $995.1 million, up 5.8% year-over-year, with a 2% benefit from pricing.

• Adjusted EPS was $1.06, up 7% year-over-year; operating margin reached 16.6%, up 30 basis points from prior year.

• Gross margin was 33.5%, down from 34.2% last year; adjusted gross margin was 34.4%, down 10 basis points year-over-year due to temporary inefficiencies.

• Adjusted operating income rose 8% year-over-year; adjusted EBITDA for the quarter was $195.2 million, up from $183.0 million last year.

• Adjusted free cash flow for the quarter was $111.6 million, with a cash conversion ratio of 89.0%.

Outlook and guidance

• Fiscal 2026 organic sales expected to grow 3%–5%, with pricing and currency each contributing over 1%.

• Adjusted EPS guidance set at $3.94–$4.01, up 7–9% year-over-year; Facet acquisition to dilute EPS by ~$0.03.

• Adjusted operating margin forecast at 15.8%–16.2%; capital expenditures expected at $60–$75 million; free cash flow conversion 85%–95%.

• Life Sciences segment sales outlook raised to 9%–11% for FY26.

• Management expects sufficient liquidity to fund operations, debt service, dividends, share repurchases, and acquisitions.