Q3 2026 Donaldson Company Inc Earnings Call Transcript
Key Points
- Donaldson Co Inc (DCI) reported record sales of $995 million for the third quarter, a 6% increase over the prior year, driven by currency translation, net pricing benefits, and volume growth.
- The company achieved an operating margin of 16.6%, marking a 30 basis point increase from the previous year and a 260 basis point improvement from the second quarter.
- The acquisition of Facet Filtration is expected to enhance DCI's Industrial Solutions product portfolio, particularly in aerospace and power generation, with approximately 70% of revenues driven by recurring regulated replacement part sales.
- Mobile Solutions segment sales increased by 8%, with strong volume growth and a significant competitive win with a major North American fleet operator.
- Life Sciences sales grew by 13%, driven by robust new equipment volume in Food and Beverage and ongoing strength in the Disk Drive business.
- Industrial Solutions sales declined by 1% due to volume declines, despite net pricing and currency benefits.
- Aerospace and Defense sales decreased by 14% compared to 2025, impacted by weaker new equipment sales and ongoing supply chain constraints.
- The Industrial segment faced about 100 basis points of headwinds from short-term operating inefficiencies, particularly in the Power Generation business.
- Footprint optimization initiatives added pressure due to costs associated with plant closures and transfers of production, impacting gross margins.
- The company expects a net dilution to EPS of about $0.03 in the fourth quarter due to interest expenses related to the Facet acquisition.
Hello, everyone. Thank you for joining us, and welcome to the Donaldson Company third quarter fiscal year 2026 earnings webcast and conference call. (Operator Instructions)
I will now hand the conference over to Sarika Dhadwal, Head of Investor Relations. Please go ahead.
Good morning. Thank you for joining Donaldson's third quarter fiscal 2026 earnings conference call. With me today are Rich Lewis, President and CEO; and Brad Pogalz, Chief Financial Officer. This morning, we will provide a summary of our third quarter performance and our outlook for fiscal 2026.
During today's call, we will discuss non-GAAP or adjusted results. For third quarter 2026, non-GAAP results exclude pretax charges of $9.8 million, including $9 million of restructuring and other and $800,000 of business development charges. This compares to prior year pretax charges of $65.8 million, including $4.2 million of restructuring and other, $800,000 of business development charges, $62 million for the impairment of
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