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- **Revenue Growth**: Q1 sales up 4% to $935M, driven by Mobile Solutions (5%) and Life Sciences (13%).
- **Profitability Expansion**: Operating margin 15.5% (vs. 14.9% prior year), EPS $0.94 (+13% YoY).
- **Tariff Mitigation**: Annualized impact reduced to $25M, down from $35M, with pricing and supply chain offsets.
- **Strategic Growth**: Disk Drive business up 20% with HAMR tech investments; Life Sciences margin recovery to 9.2% from loss in prior year.
- **Full Year Guidance**: Sales $3.4-3.8B, operating margin 16.2-16.8%, EPS $3.95-4.11 (midpoint +10% YoY).
- **Key Drivers**: Aftermarket share gains (Mobile Solutions aftermarket +7%), power gen order backlog, and Food & Beverage growth.
- **Risks**: Aerospace & Defense decline (7%), On-Road sales flat vs. prior year high-single-digit growth estimate.


**【Management Opening Remarks】**
- Sarika Dhadwal introduced the call, noting the exclusion of a $9.3 million gain and $5 million restructuring charge from non-GAAP metrics. She emphasized forward-looking statements' risks.

**【CEO Summary Section】**
- **Revenue Growth**: Q1 sales reached $935 million, a 4% YoY increase, driven by Mobile Solutions (5%), Industrial Solutions (flat), and Life Sciences (13%).
- **Profitability**: Operating margin expanded to 15.5%, up 60 bps YoY, with EPS of $0.94, 13% higher than prior year.
- **Segment Highlights**: 
  - *Mobile Solutions*: Aftermarket sales grew 7%, China sales up 15%, and Off-Road sales increased 6%.
  - *Industrial Solutions*: Power generation order books full, but Aerospace & Defense declined 7%.
  - *Life Sciences*: Food & Beverage and Disk Drive sales grew over 20%, offsetting prior year losses.
- **Strategic Initiatives**: Tariff impact reduced to $25M annually; footprint optimization nearing completion.

**【CFO Financial Commentary】**
- **Q1 Financials**: 
  - Sales: $935M (+4% YoY)
  - Operating Margin: 15.5% (vs. 14.9% prior year)
  - EPS: $0.94 (+13% YoY)
  - Cash Conversion: 101% (improved working capital)
- **Full Year Guidance**: 
  - Sales: $3.8-3.8B (1-5% growth)
  - Operating Margin: 16.2-16.8% (up 80 bps YoY)
  - EPS: $3.95-4.11 (midpoint +10% YoY)
- **Key Drivers**: Gross margin expansion (20 bps YoY), expense leverage, and Life Sciences margin recovery.

**【Q&A Key Highlights】**
- **Mobile Aftermarket**: Independent channel growth over 10%, OE muted due to typical Q2 balance sheet management.
- **Industrial Outlook**: Power gen projects delayed, but IFS expected to grow mid-single digits with services-driven replacement parts.
- **Tariff Impact**: Annualized $25M, down from $35M, with pricing and supply chain offsets.
- **Disk Drive Business**: 20%+ growth, HAMR tech investments for future growth, ~2% of total revenue.
- **Data Center Opportunities**: Cross-segment growth in power gen, filtration, and cooling solutions.
- **Share Gains**: Low single-digit in mature markets, lumpy project-based growth in power gen.
- **Capacity Planning**: Existing facilities positioned for recovery, no immediate rush for new capacity.


Donaldson Company, Inc. (DCI) Q1 2026 Earnings Call Transcript

- **Record Year Achievements**: $3.7 billion revenue, 15.7% operating margin, and $3.68 EPS in FY25.
- **2026 Outlook**: $3.8 billion sales, 16.4% operating margin, and $4 EPS, driven by all-segment growth.
- **Strategic Wins**: 14% China Mobile sales growth, 30%+ connected machines expansion, and Purexa bioprocessing product launches.
- **Financial Resilience**: 123% cash conversion, tariff-neutral pricing, and 2-3% share buybacks.
- **Key Risks**: Bioprocessing delays, China market uncertainty, and OE margin pressure.

**【Management Opening Remarks】**
- Sarika Dhadwal introduced the call, noting the exclusion of $9.5 million in restructuring charges from non-GAAP results and emphasizing forward-looking statements' risks.

**【CEO Summary Section】**
- **Record Fiscal 2025 Performance**: Total sales of $3.7 billion, 15.7% operating margin, $3.68 EPS, and $465 million returned to shareholders.
- **Segment Highlights**: 
  - *Mobile Solutions*: Aftermarket sales up 3%, Off-Road sales recover 5% YoY; China Mobile sales grow 14%.
  - *Industrial Solutions*: 8% sales growth driven by dust collection and power gen projects; connected machines up 30% YoY.
  - *Life Sciences*: 14% sales growth, food/beverage and disk drive segments strong.
- **2026 Outlook**: $3.8 billion sales, 16.4% operating margin, $4 EPS.
- **Strategic Initiatives**: Footprint optimization, R&D investments in filtration technologies, and service acquisitions.

**【CFO Financial Commentary】**
- **Q4 2025 Results**: 
  - Sales: $981 million (+5% YoY), EPS: $1.03 (+10% YoY).
  - Gross margin: 34.8% (impacted by LIFO inflation); operating margin: 16.4% (record high).
- **2026 Guidance**: 
  - Sales: 1-5% growth; operating margin: 16.1-16.7%; EPS: $3.92-4.08.
  - Tariff-neutral pricing strategy; 2-3% share buybacks; $65-85 million CapEx.
- **Financial Strength**: 123% cash conversion; low leverage for M&A flexibility.

**【Q&A Key Highlights】**
- **Agriculture Recovery**: Off-Road sales bottomed in Q4 2025, with low single-digit growth expected in 2026.
- **Bioprocessing Growth**: Purexa products launched, but full commercialization delayed to 2027.
- **Connected Solutions**: 50% of industrial sales from aftermarket; 30%+ connected machines growth in 2026.
- **China Market**: Mobile sales growth continues, but cautious outlook on overall market.
- **Power Gen Super Cycle**: Backlog sustained; capacity constraints limit growth.
- **Margin Trends**: 40% incremental margin in 2026; long-term 20%+ operating margin potential.


Donaldson Company, Inc. (DCI) Q4 2025 Earnings Conference Call Transcript

- **Record Q3 Performance**: $940M sales (+1% YoY), $0.99 EPS (+8% YoY), despite macro challenges.
- **Aftermarket Resilience**: Mobile Solutions aftermarket up 3%, China Mobile sales +27%.
- **Aerospace Growth**: Record $52M in Aerospace & Defense, projects booked through 2028.
- **Dividend & Buyback**: 11% dividend hike, $192M shares repurchased in Q3.
- **Tariff Mitigation**: $35M annualized impact offset via USMCA qualifications and pricing.

**【CEO Opening Remarks】**
- Q3 2025 sales reached $940 million, up 1% YoY, driven by pricing and volume growth, despite currency headwinds.
- Adjusted EPS of $0.99, up 8% YoY, supported by expense leverage and margin expansion.
- Key initiatives: 11% dividend increase, $192M share repurchases in Q3, and strategic investments in R&D and capacity expansion.

**【Segment Highlights】**
- **Mobile Solutions**: Aftermarket sales grew 3%, offsetting first-fit declines in On-Road (-25%) and Off-Road (-8%). China Mobile Solutions sales surged 27%.
- **Industrial Solutions**: Aerospace & Defense sales hit record $52M, up 20% YoY. Connected services and replacement parts drove IFS growth.
- **Life Sciences**: Disc Drive and Food & Beverage businesses grew double digits, offsetting bioprocessing delays.

**【CFO Financial Details】**
- Gross margin 34.5% (-110bps YoY) due to manufacturing costs and footprint optimization.
- Operating expenses as % of sales improved to 18.2% (20.1% YoY), driven by cost discipline.
- FY25 outlook: Sales +1-3%, operating margin 15.6-16%, adjusted EPS $3.64-3.70.

**【Key Takeaways from Q&A】**
- **Gross Margin Pressure**: 75% of production is region-to-region, mitigating tariff impact ($35M annualized). Footprint optimization costs (~$62M Q3) expected to taper in H2.
- **Tariff Mitigation**: 85% of Mexico-US shipments qualify for USMCA, enabling price pass-through.
- **Aerospace & Defense Visibility**: Projects booked through FY28, offsetting near-term supply chain delays.
- **CapEx Adjustments**: FY25 CapEx reduced to $75-90M due to supply chain prioritization.
- **FX Impact**: Euro (~20% of revenue) volatility remains key risk, but hedging strategies in place.

Donaldson Company, Inc. (DCI) Q3 2025 Earnings Conference Call Transcript

- **Q2 Growth Drivers**: 1% constant currency sales growth, 3% EPS beat, and 40bps operating margin expansion. Mobile aftermarket up 4%, aerospace/defense +19%.
- **China Success**: Tech-led filtration wins in agriculture and liquid filtration, signaling structural market shift.
- **Life Sciences Turnaround**: Cost cuts reduce pretax loss to $0.5M, with breakeven expected for FY25. Bioprocessing pipeline projects delayed.
- **Margin Expansion**: FY25 operating margin guidance raised to 15.8% midpoint, up 40bps YoY. Free cash flow conversion >85%.
- **Risk Mitigation**: Regional production hedging 75% of goods. Proactive tariff mitigation plans in place.

**【CEO Summary Section】**
- **Q2 Sales Growth**: Total sales of $870 million, flat year-over-year, with 1% growth in constant currency. Adjusted EPS of $0.83, up 3% YoY. Mobile Solutions aftermarket sales grew 4% driven by OE channel strength.
- **Key Business Wins**: China mobile solutions sales up 1% with aftermarket offsetting first-fit weakness. Aerospace & defense sales up 19%, supported by strong end-market demand. Life Sciences sales grew 9% on disk drive strength.
- **Strategic Investments**: $85-100M capital expenditures for R&D, capacity expansion, and M&A. Free cash flow conversion expected at 85-95%.

**【CFO Financial Commentary】**
- **Profitability**: Operating margin expanded 40bps to 15.2%, driven by expense control. Mobile Solutions pretax margin 17.4%, down 60bps YoY due to sales mix. Life Sciences pretax loss improved to $0.5M vs prior year's $1.2M.
- **Updated FY25 Guidance**: Full year sales flat to +4% (vs prior 2-6% range). Mobile Solutions sales down 1% to +3%, Industrial Solutions +1% to +5%, Life Sciences +8%.
- **Margin Outlook**: Operating margin guidance raised to 15.6-16.0% (midpoint +40bps YoY). Adjusted EPS $3.60-$3.68, up 6% YoY.

**【Q&A Highlights】**
- **China Market**: Structural shift to larger, sophisticated equipment driving tech-led filtration wins. Recent liquid filtration win in agriculture.
- **Life Sciences**: Bioprocessing pipeline projects delayed, but cost restructuring improved margins. Disk drive and food/beverage businesses offset weakness.
- **Tariff Mitigation**: 75% of goods produced regionally consumed locally. Plans to apply surcharges if tariffs enacted.
- **Connected Solutions**: 30% YTD growth in connected machines, 29% in facilities. Drives parts sales and customer engagement.


Donaldson Company, Inc. (DCI) Q2 2025 Earnings Call Transcript

Donaldson (DCI)-3 Dec 24-2025 Q1 Earnings call transcript

Donaldson (DCI)-28 Aug 24-2024 Q4 Earnings call transcript

Donaldson (DCI)-4 Jun 24-2024 Q3 Earnings call transcript

Donaldson (DCI)-28 Feb 24-2024 Q2 Earnings call transcript

- **Record Gross Margin**: Q1 gross margin of 35.6% (170 bps YoY expansion) driven by pricing, deflation, and operational excellence.
- **Life Sciences Turnaround**: 20%+ FY24 sales growth expected, with breakeven pretax margin after FY24 investments.
- **Mobile Aftermarket Recovery**: Mid-single-digit growth forecast for FY24 as OE destocking ends and independent channel share gains accelerate.
- **Strong Cash Flow**: 125% Q1 cash conversion, $84M returned to shareholders, and $12M buyback program announced.
- **China Challenges**: Off-road sales expected to decline mid-single digits, but long-term opportunities remain in Asia's largest filtration market.

**【CEO Summary Section】**
- **Revenue Performance**: Total sales of $846 million were flat year-over-year, with pricing contributing a 3% benefit. Mobile Solutions sales declined 3% due to off-road market weakness, while Industrial Solutions grew 7% driven by filtration and aerospace demand. Life Sciences sales fell 4% due to disk drive market weakness but are expected to recover sequentially.
- **Gross Margin Strength**: Consolidated gross margin reached 35.6%, a 170 basis point improvement year-over-year, driven by strategic pricing, input cost deflation, and operational efficiency. Mobile Solutions margin expanded 260 basis points to 17.1%.
- **Strategic Initiatives**: Continued investment in Life Sciences (20%+ growth expected in FY24) and R&D (over 20% increase in FY24). China remains challenging but long-term opportunities are viewed positively.
- **Outlook**: Full-year sales growth of 3-7% (pricing 2%, currency 1%), with operating margin targeting 14.7-15.3% (up 40 basis points year-over-year). Gross margin expected to moderate sequentially but remain elevated.

**【CFO Financial Commentary】**
- **Earnings Performance**: GAAP EPS of $0.75 flat year-over-year, with non-GAAP metrics reflecting strong operational execution. Operating expenses as a percentage of sales rose to 20.8% due to Life Sciences investments.
- **Cash Flow & Capital Allocation**: Q1 cash conversion of 125%, with $84 million returned to shareholders (dividends and buybacks). New $12M share repurchase program announced. Net debt-to-EBITDA ratio of 0.7x.
- **Segment Profitability**: Industrial Solutions margin expanded 120 basis points to 17.6%. Life Sciences pretax loss narrowed to $4 million (from $11 million prior year), with breakeven expected for FY24.

**【Q&A Highlights】**
- **Mobile Aftermarket Trends**: OEM destocking largely complete; independent channel growth and market share gains to drive mid-single-digit sales growth. Sequential stabilization in OE orders noted.
- **Gross Margin Sustainability**: Q1 35.6% margin unlikely to repeat, but year-over-year expansion expected through FY24. Sequential moderation in Q2 due to seasonality and moderating pricing benefits.
- **Life Sciences Growth**: 20%+ FY24 sales growth driven by bioprocessing equipment, food/beverage expansion, and disk drive recovery. Bioprocessing pipeline exceeds $200 million.
- **China Risks**: Off-road sales expected to decline mid-single digits due to agriculture and construction weakness. Europe monitored for potential cautiousness.
- **Turbine Projects**: Disciplined approach to large projects ensures margin discipline; $30M+ in FY24 wins on favorable terms.

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