Donaldson Company, Inc.

What they do

Donaldson designs and manufactures filtration systems and replacement parts across three segments: Mobile Solutions (62.1% of FY2025 sales), Industrial Solutions (29.9%), and Life Sciences (8.0%). Products include air and liquid filters for off-road and on-road vehicles, dust collectors, gas purification systems, aerospace and defense filtration, and bioprocessing equipment and consumables. The company sells to OEMs, distributors, and directly to end users across more than 150 locations worldwide.

Revenue drivers

• Mobile Solutions — Largest segment (62.1% of FY2025 sales) with Off-Road, On-Road, and Aftermarket units; sells replacement filters and housings to construction, mining, agriculture, and transportation OEMs and dealers.
• Industrial Solutions — 29.9% of FY2025 sales, includes Industrial Filtration Solutions (dust collectors, compressed air purification) and Aerospace and Defense (air, fuel, hydraulic filtration for aircraft and ground defense).
• Life Sciences — Smallest segment at 8.0% of FY2025 sales, serving food and beverage, disk drive, medical device, microelectronics, and bioprocessing markets with gas/liquid filtration and bioreactors.

Recent performance

In Q3 FY2026 (quarter ended April 30, 2026), Donaldson reported record sales of $995.1 million, up 5.8% year-over-year (3.1% constant currency). GAAP diluted EPS was $1.00, up from $0.48, driven by lower non-recurring charges; adjusted EPS was $1.06, up 7.1%. Mobile Solutions sales grew 8.1%, Life Sciences grew 12.7%, but Industrial Solutions declined 0.6% due to lower Aerospace and Defense volumes. For the first nine months of FY2026, sales rose 4.3% to $2.83 billion (from $2.71 billion in the prior-year period).

Strategy

Management's stated priorities are to extend market access into bioprocessing and alternative power, expand technology and service offerings (including connected industrial services), and pursue margin-accretive acquisitions. In 2026, the company closed the Facet acquisition to enhance the Industrial Solutions portfolio. The company also emphasizes leveraging its global manufacturing footprint to mitigate tariff impacts. These initiatives aim to drive profitable growth and higher operating margins.

Risks

• Tariff and trade policy uncertainty — The Supreme Court ruled that IEEPA does not authorize presidential tariffs; as of April 30, 2026, no refund asset has been recorded, and ongoing tariff actions could raise costs and disrupt supply chains.
• Aerospace and Defense softness — Aerospace and Defense sales declined 13.4% in the first nine months of FY2026, reflecting lower volumes that could persist.
• Global economic and geopolitical conditions — Demand in key end markets (construction, mining, agriculture, transportation) is sensitive to economic cycles, and downturns could reduce OEM and aftermarket sales.
• Restructuring and impairment charges — The company recorded $9.0 million in restructuring charges in Q3 FY2026 and $62.0 million in intangible asset impairment in Q3 FY2025, indicating potential for future non-recurring costs.

Outlook

Management narrowed fiscal 2026 guidance, expecting record sales, record adjusted operating margin, and record adjusted EPS. They cite strong backlogs from robust order volume and disciplined cost management, with a sequential step-up in operating margin expected in the fourth quarter. The company remains focused on delivering profitable growth while managing tariff-related uncertainties.