Donaldson (DCI) Q3 2026 Earnings Transcript

President and Chief Executive Officer — Richard Lewis Chief Financial Officer — Bradley J. Pogalz Vice President, Investor Relations — Sarika Dhadwal Need a quote from a Motley Fool analyst? Email pr@fool.com Sarika Dhadwal: Good morning. Thank you for joining Donaldson s third quarter fiscal 26 earnings conference call. With me today are Richard Lewis, President and CEO and Bradley J. Pogalz, Chief Financial Officer. This morning, we will provide a summary of our third quarter performance and our outlook for fiscal 26. During today s call, we will discuss non-GAAP or adjusted results. For third quarter 26, GAAP results, exclude pretax charges of $9.8 million including $9 million of restructuring and other, and 800 thousand of business development charges. This compares to prior year pretax charges of 65.8 million, including 4.2 million of restructuring and other 800 thousand of business development charges, 62 million for the impairment of intangible assets and a $1.2 million gain on the sale of fixed assets. A reconciliation of GAAP to non-GAAP metrics is provided within the schedules attached to this morning s press release. Before I turn it over to Richard, a quick note on our recently completed acquisition of Facet Filtration. Facet performance will be included in our consolidated fourth quarter earnings results reported in the aerospace and defense business unit within industrial solutions. With that, please keep in mind that any forward looking statements made during this call are subject to risks and uncertainties, which are described in our press release and SEC filings. Will now turn the call over to Richard. Richard Lewis: Thanks, Sarika. Good morning, everyone. Third quarter was a strong quarter for Donaldson Company and, as expected, marked a significant step up in performance from our second quarter results. I am proud of our team, whose hard work resulted in the company s strongest quarter to date with respect to sales, adjusted operating margin, and adjusted EPS. We successfully navigated macro uncertainty including uneven cyclical dynamics and the ongoing conflict in The Middle East. To that end, I specifically want to thank our team in Abu Dhabi whose dedication and resolve have been on display over the last several months. Our leaders have ensured employees feel as safe as possible and that our local operations continue. Globally, this quarter, we continue to serve our customers through our expanded product portfolio and high on time delivery rates, including in the higher margin mobile solutions aftermarket business, food and beverage, and our disk drive business. We made further progress on optimizing our cost structure as we close the last 2 plants identified within our footprint optimization initiative. We are now focused on ramping up production in the receiving sites, puts us on the path to delivering incremental efficiencies in the future. Lastly, subsequent to quarter end, we closed our acquisition of Facet Filtration. Adding high performance fuel and fluid capabilities to our expanding industrial solutions product portfolio. Facet increases our exposure to durable, growing end markets, including aerospace and power generation, and strengthens our aftermarket position with approximately 70% of revenues driven by recurring, regulated replacement part sales with highly accretive margins. We welcome the Facet team to the Donaldson integration efforts are underway. As demonstrated this quarter, Donaldson is committed to delivering for all our stakeholders. Including our customers, shareholders, and employees. We continually do this through our leadership position and filtration, which was built on decades of solving our customers most difficult filtration problems. Our best in class technology, uniquely powerful because we focus on capabilities and then leverage these technologies across multiple end markets. Our ability to help customers meet evolving environmental and operational goals by helping to protect equipment, processes, and people, and our clear strategic and balanced growth strategy. is how we have and continue to win. Now I will cover some third quarter highlights. Bradley will discuss the quarterly financials and full year guidance in more detail. And then I will return for some closing remarks. At a high level, sales were a record 995 million, 6% above prior year driven by currency translation net pricing benefits, and volume growth. Operating margin was 16.6%, up 30 basis points over prior year and an increase of 260 basis points from second quarter. Expense leverage on higher sales was partially offset by gross margin pressure from production shifts to support customer specific requirements in power generation within industrial solutions. Adjusted earnings per share were $1.06, 7% above 2025. Now I will cover some highlights by segment. In mobile solutions, sales were 630 million. Up 8% inclusive of strong volume growth Aftermarket sales were 498 million, u

Donaldson (DCI) Q3 2026 Earnings Transcript

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Donaldson (DCI) Q3 2026 Earnings Transcript

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