Donaldson Co. Inc.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 4 December 2025: press release. Guidance figures: 3 raised, 1 lowered, 11 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Adjusted EPS rose 13.3% to $0.94: Adjusted net earnings were $110.7 million, up 9.1% from the prior year. Adjusted diluted EPS was $0.94. Source
• Aftermarket led with 6.5% growth: Aftermarket, the largest Mobile line at $480.3 million, rose 6.5% on independent-channel share gains and OE demand. Source
• On-Road sales fell 27.1%: On-Road sales fell to $23.4 million from $32.1 million, attributed to lower global truck production. Source
• Adjusted operating margin up 60 basis points: Adjusted operating margin was 15.5% against 14.9% a year ago. GAAP operating margin was 16.0% against 14.5%. Source
• Free cash flow rose to $122.0 million: Free cash flow was $122.0 million against $47.9 million, on operating cash flow of $125.4 million versus $72.9 million. Source

“Our first quarter results represent a strong start to fiscal 2026, driven by solid sales growth, leverage on higher sales and benefits from cost optimization initiatives,”

Tod Carpenter, chairman, president and chief executive officer

Guidance

What changed from last quarter

• Guidance raised: Adjusted EPS range raised to $3.95 to $4.11 from $3.92 to $4.08. Source
• Guidance raised: Adjusted operating margin range raised to 16.2% to 16.8% from 16.1% to 16.7%. Source
• Guidance lowered: On-Road sales now expected flat, previously a high-single digit increase. Source
• Guidance raised: Interest expense estimate raised to about $24 million from $22 million to $23 million. Source
• New: Adjusted EPS now excludes a $0.03 per share net gain recognized in the first quarter. Source

Results and growth drivers

• Sales rose 3.9% on price, currency and volume: Sales reached $935.4 million, up 3.9% from $900.1 million. Constant-currency growth was 2.6%, according to the release tables. Source
• GAAP EPS rose 19.0% to $0.97: Diluted GAAP EPS was $0.97 against $0.81. GAAP net earnings were $113.9 million compared with $99.0 million a year ago. Source
• Adjusted EPS rose 13.3% to $0.94: Adjusted net earnings were $110.7 million, up 9.1% from the prior year. Adjusted diluted EPS was $0.94. Source
• Net one-time items were a small benefit: A $9.3 million gain on fixed-asset sales and $5.0 million of restructuring and other charges netted to a $4.3 million pre-tax benefit. The prior year had $3.3 million of charges. Source
• Share gains and replacement parts: Management said the company gained market share in key businesses and grew replacement part sales under its razor-to-sell-razorblades model. Source
• Results set against macro conditions: Management framed the quarter against a dynamic macro environment and cited the value of its portfolio of businesses and product offerings. Source

Segments and regional sales

• Aftermarket led with 6.5% growth: Aftermarket, the largest Mobile line at $480.3 million, rose 6.5% on independent-channel share gains and OE demand. Source
• On-Road sales fell 27.1%: On-Road sales fell to $23.4 million from $32.1 million, attributed to lower global truck production. Source
• IFS grew on power and dust collection: Industrial Filtration Solutions sales rose 1.6% to $215.7 million, led by new Power Generation systems and dust collection replacement parts, while Industrial Hydraulics declined. Source
• Aerospace and Defense fell 7.1%: Aerospace and Defense sales were $42.1 million, down from $45.2 million, reflecting soft Defense sales. Source
• Life Sciences grew 13.1%: Life Sciences sales reached $79.3 million, with new equipment sales in Food and Beverage and Disk Drive. Source
• Sales by region as reported: U.S. and Canada fell 0.6%, EMEA rose 9.1%, APAC rose 6.6% and LATAM rose 5.9%, per the geography table. Source

“Combined with ongoing expense management, we converted sales growth of 4% into 13% adjusted EPS growth.”

Tod Carpenter, chairman, president and chief executive officer

Margins, costs and tax

• Operating expenses fell to 19.2% of sales: Operating expenses were 19.2% of sales against 21.0%, a 180-basis-point improvement management credited to sales leverage, cost optimization and expense discipline. Source
• Adjusted operating margin up 60 basis points: Adjusted operating margin was 15.5% against 14.9% a year ago. GAAP operating margin was 16.0% against 14.5%. Source
• Gross margin edged down: Gross margin was 35.2% against 35.5%, and adjusted gross margin was 35.4% against 35.6%. Increased operating costs were partly offset by pricing. Source
• Effective tax rate fell to 22.8%: The effective tax rate was 22.8% against 24.2%, reflecting higher discrete tax benefits. The adjusted rate was 22.7%. Source

Cash flow and balance sheet

• Free cash flow rose to $122.0 million: Free cash flow was $122.0 million against $47.9 million, on operating cash flow of $125.4 million versus $72.9 million. Source
• Capital spending fell: Purchases of property, plant and equipment were $14.2 million against $25.1 million. Asset sale proceeds were $10.8 million. Source
• Cash rose as long-term debt increased: Cash reached $210.7 million from $180.4 million at July 31, 2025. Long-term debt was $671.5 million against $630.4 million. Source

“We remain on track to deliver a record fiscal 2026, with the midpoint of our expectations including sales of $3.8 billion, incremental margin of more than 40%, and high-single digit adjusted earnings growth.”

Tod Carpenter, chairman, president and chief executive officer

Shareholder returns

• Dividends and buybacks in the quarter: Dividends paid were $34.7 million. Repurchases took 1.0% of shares outstanding for $91.9 million. Source
• Dividend per share up 11.1%: Dividends paid per share were $0.30 against $0.27 a year ago. Source
• Diluted share count down 3.3%: Weighted average diluted shares were 117.8 million against 121.9 million a year ago. Source

Coming up, as management said on 4 December 2025

• Results pending Form 10-Q filing: The figures are preliminary and unaudited until the company files its results with the SEC on Form 10-Q. Source

Risks management discussed

• Demand: Agriculture headwinds continued to weigh on Off-Road sales, offset by construction market strength. Source
• Demand: Industrial sales were offset by volume declines, particularly in the Defense business. Source
• Financial: Interest expense rose year over year, attributed to higher debt levels. Source

Earlier plans management reported on

• On track: Management said it remains on track to deliver a record fiscal 2026. Source
• On track: Mobile sales range described as in line with previous guidance. Source
• On track: Sales growth range described as consistent with prior expectations. Source
• On track: Life Sciences sales range described as consistent with prior guidance. Source

Other quarters

• Q4 FY2026 earnings call
• Q3 FY2026 earnings call
• Q2 FY2026 earnings call
• Q4 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.