Donaldson (DCI 8.34%), the global filtration technology specialist, posted its latest earnings results on August 26, 2025. The key headline: it delivered record sales and adjusted profitability for both the quarter and the full year. Revenue for the quarter totaled $980.7 million, up 4.8% from the prior-year quarter. Non-GAAP earnings per share (EPS) reached $1.03, up 9.6% year-over-year (adjusted, non-GAAP), though not significantly above average Wall Street expectations. While disciplined expense management steadied operating margins, gross margin (GAAP) slipped due to tariff-related pressures, making overall profitability growth an area to watch moving forward.
| Metric | Q4 2025 | Q4 2024 | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $1.03 | $0.94 | 9.6 % |
| Revenue (GAAP) | $980.7 million | $935.4 million | 4.8 % |
| Operating Margin (Non-GAAP) | 16.4 % | N/A | N/A |
| Free Cash Flow (Non-GAAP) | $149.7 million | $106.9 million | 40.0 % |
| Net Earnings (GAAP) | $114.3 million | $109.7 million | 4.2 % |
Company Overview and Strategic Approach
Donaldson is a leading manufacturer of filtration solutions for industrial, mobile, and life-sciences applications. Its products help remove impurities from air, liquids, and gases used in various equipment and production processes, serving industries ranging from truck manufacturing to food and beverage processing.
The company’s business is structured across three main segments: Mobile Solutions (filters for vehicles and equipment), Industrial Solutions (primarily air and dust filtration for commercial environments and factories), and Life Sciences (filtration for food, beverage, and biotechnology). Donaldson’s recent strategic focus has been on expanding market reach, investing in new technology such as their proprietary PowerCore and Ultra-Web platforms, and targeting high-growth niches like life sciences filtration.
Quarter Highlights: Sales, Margins, and Segment Performance
Sales for the quarter reached a record level, up 4.8% compared to the same quarter last year. EPS on an adjusted basis rose 9.6%, supported by effective cost control even as certain input costs increased. Adjusted operating margin edged up by 0.1 percentage points, though gross margin (GAAP) slipped to 34.5% from 35.8%. The slip in gross margin was driven mainly by higher tariff costs and changes in inventory values.
Segment results displayed notable contrasts. Mobile Solutions, which covers air and liquid filtration for vehicles and equipment, grew 2.3% to $588.4 million. Growth in Aftermarket filters—replacement products used in service and repairs—as well as Off-Road filters in the agriculture and construction equipment space, balanced out weakness in On-Road filters, where sales to truck and bus manufacturers in the United States fell significantly. Industrial Solutions, which includes equipment for factory air filtration and power generation, was up 7.7% to $309.8 million, helped by double-digit gains in dust collector equipment. Aerospace & Defense, a sub-segment, dipped compared to a high-activity period in Q4 FY2024 but remained historically robust.
The Life Sciences segment, which provides filtration for sensitive applications like food, beverage, and biotechnology, delivered a standout 14.1% sales gain. Management highlighted strong performance in food and beverage filtration and in disk drive filters.
From a geographic standpoint, Donaldson’s broad footprint was an advantage. Growth in Off-Road and Life Sciences solutions appeared strongest in Europe, Asia Pacific, Latin America, and the United States. Mobile Solutions Aftermarket sales, which make up the bulk of the segment, showed resilience across both equipment manufacturer and independent distribution channels. Currency fluctuations provided a modest boost to total reported revenue. Higher inventories pressured margins, a dynamic the company has previously said was manageable but is now flagged as a headwind.
Shareholder returns were brisk this quarter. Donaldson bought back 4.0% of its shares over the fiscal year and paid an increased quarterly dividend, marking an 8.8% year-on-year rise to $1.11 per share compared to FY2024. Free cash flow grew 40.0% compared to Q4 FY2024. Net debt rose, as the company continued investing, particularly in its Life Sciences division and through a notable $71.2 million equity investment. A previously announced $62.0 million impairment in bioprocessing technology affected annual net earnings but has now cycled through results.
Looking Ahead: Management Outlook and Investor Considerations
Looking ahead, management is guiding for sales growth of 1–5% in FY2026, with a midpoint of $3.8 billion. EPS is projected in the range of $3.92 to $4.08. Management expects operating margins to expand to 16.1–16.7%.
By segment, expectations are for Mobile Solutions sales to be flat to up 2%, with Off-Road filters up 5.1%. Aftermarket filter sales are expected to grow low-single digits, a pattern that’s important for revenue stability. Life Sciences sales are forecast to grow between 1% and 5%, led by food and beverage filtration. Capital spending is slated between $75–90 million, and share repurchases and dividends are set to continue. Management’s tone is measured, noting ongoing cost, tariff, and working capital pressures, but emphasizing operational discipline and efficiency actions to support profit gains in the coming year.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
