Donaldson (DCI) Q4 2026 earnings summary

Executive summary

• Achieved record annual and fourth quarter sales and earnings, with FY26 sales reaching $3.9 billion (up 5.3%) and Q4 sales exceeding $1.1 billion (up 8%), driven by volume, pricing, and the Facet acquisition.

• Adjusted EPS for FY26 was $3.98 (up 8.2%), with Q4 adjusted EPS at $1.15 (up 12%).

• Operating margin reached a record 16% for the year and 17.5% in Q4, with gross margin at an all-time high of 36.7%.

• Returned $250 million to shareholders via dividends and share repurchases in FY26; paid down $102 million of Facet-related debt in Q4.

Financial highlights

• Q4 sales reached $1.1 billion, up 8% year-over-year, with a 2% pricing benefit and 3% contribution from Facet.

• Adjusted Q4 EPS was $1.15, up 12% year-over-year; adjusted gross margin increased 190 bps to 36.7%.

• FY26 adjusted operating income increased 7% year-over-year; adjusted operating margin improved 30 bps to 16.0%.

• Free cash flow for FY26 was $426.5 million, with a cash conversion ratio of 96.3%.

• Interest expense increased to $14.7 million in Q4 due to higher debt from the Facet acquisition.

Outlook and guidance

• Fiscal 2027 sales expected to reach $4.2 billion, representing 5.5%–9.5% growth, with operating margin projected at 16.6%–17.2%.

• EPS guidance for FY27 is $4.22–$4.38, up 8% at midpoint, including $0.12 dilution from Facet.

• Free cash flow conversion targeted at 95%–105%; capital expenditures forecast at $70–$90 million.

• Segment guidance: Mobile Solutions +2–6%, Industrial Solutions +mid-teens, Life Sciences +7–11%, Aerospace & Defense up over 50%.

• Pricing and Facet each expected to contribute ~2% to sales growth.