Donaldson Company, Inc. (DCI) Q3 2026: Record Sales and Earnings Growth — Positive Outlook

Donaldson Company, Inc. (NYSE: DCI) reported a strong performance in its third quarter of fiscal 2026, achieving record sales and earnings. The company generated sales of $995.1 million, reflecting an increase of $54.7 million or 5.8% compared to the same quarter last year. This growth was driven by favorable foreign currency translation, net pricing benefits, and higher volume across its segments.

Key Financial Metrics:

• Sales: $995.1 million, up $54.7 million or +5.8% YoY
• GAAP EPS: $1.00, compared to $0.48 in Q3 2025
• Adjusted EPS: $1.06, up 7.1% from $0.99 in Q3 2025
• Operating Margin: 15.6%, up from 9.3% YoY; adjusted operating margin at 16.6%
• Net Earnings: $118.1 million, compared to $57.8 million a year ago

Analyst View:

This quarter is a significant win for shareholders, showcasing Donaldson's ability to drive growth even amidst challenges in certain segments. The increase in both GAAP and adjusted EPS indicates robust operational performance and effective cost management. The adjusted operating margin of 16.6% is an all-time high, reflecting the company's focus on expense discipline and operational efficiency.

The acquisition of Facet Filtration, completed on May 4, 2026, for $829 million, is expected to enhance Donaldson's Industrial Solutions product portfolio. This strategic move is anticipated to contribute between $25 million and $30 million in sales for the fiscal year, albeit with a projected net EPS dilution of approximately $0.03.

Additional Highlights:

• Gross Margin: 33.5%, down from 34.2% YoY; adjusted gross margin at 34.4%
• Operating Expenses: 17.9% of sales, down from 24.9% in Q3 2025
• Interest Expense: $6.5 million, compared to $5.7 million a year ago
• Dividends Paid: $104.0 million year-to-date
• Share Repurchases: 1.2% of shares outstanding for $108.5 million

Guidance Update:

Donaldson has narrowed its fiscal 2026 guidance, projecting organic adjusted full-year EPS to be between $3.94 and $4.01, reflecting an increase of 7% to 9% compared to fiscal 2025 adjusted EPS of $3.68. The company expects organic sales growth of 3% to 5%, an improvement from previous guidance of 1% to 5%.

Forward Catalysts:

Investors should keep an eye on the upcoming fourth quarter, where Donaldson anticipates another step-up in operating margin. The company’s heightened backlogs and robust order volume suggest a strong finish to the fiscal year. Additionally, the integration of the Facet acquisition will be crucial to watch, as it could provide further growth opportunities in the Industrial Solutions segment.

In summary, Donaldson's third quarter results reflect a strong operational performance and strategic growth initiatives, positioning the company favorably for the remainder of fiscal 2026.

Note: All amounts in the following tables are in millions.

	Third Quarter 2026	Third Quarter 2025	Change	Nine Months Ended 2026	Nine Months Ended 2025	Change
Revenue	$995.1	$940.8	5.8%	$2,913.0	$2,727.9	6.8%
Gross margin	33.5%	34.2%	-0.7%	34.0%	35.0%	-1.0%
Operating income	155.3	87.4	77.5%	423.3	343.0	23.4%
Net earnings	118.1	57.8	104.4%	324.5	252.7	28.4%
EPS	$1.00	$0.48	108.3%	$2.75	$2.09	31.6%
Adjusted EPS	$1.06	$0.99	7.1%	$2.83	$2.65	6.8%

Assets	April 30, 2026	July 31, 2025
Cash and cash equivalents	$204.1	$180.4
Accounts receivable, net	702.1	662.2
Inventories, net	535.9	513.6
Prepaid expenses and other current assets	130.7	105.5
Total current assets	1,572.8	1,461.7
Property, plant and equipment, net	637.2	644.5
Goodwill	499.4	493.6
Intangible assets, net	92.3	97.4
Other long-term assets	285.8	280.0
Total assets	$3,087.5	$2,977.2
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings	$10.3	$31.2
Current maturities of long-term debt	6.4	6.7
Accounts payable	353.4	368.6
Accrued employee compensation and related taxes	139.5	144.3
Income taxes payable	14.0	43.9
Other current liabilities	144.9	162.5
Total current liabilities	668.5	757.2
Long-term debt	591.6	630.4
Non-current income taxes payable	20.3	19.0
Deferred income taxes	10.2	10.5
Other long-term liabilities	101.6	106.6
Total liabilities	1,392.2	1,523.7
Total stockholders’ equity	1,695.3	1,453.5
Total liabilities and stockholders’ equity	$3,087.5	$2,977.2

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