Donaldson Company (NYSE:DCI) shares climbed 6.07% in premarket trading on Wednesday after the filtration products manufacturer delivered fourth-quarter earnings and revenue above Wall Street expectations.
Adjusted earnings came in at $1.15 per share, ahead of the analyst consensus of $1.13, while quarterly revenue reached $1.1 billion, exceeding forecasts of $1.04 billion.
Sales increased 8.0% from $980.7 million in the same quarter a year earlier, supported by higher volumes, pricing improvements and approximately $30 million of additional revenue from the Facet acquisition.
Record quarterly performance supported by Facet acquisition
Donaldson achieved record fourth-quarter sales and earnings as organic growth combined with the contribution from its recently acquired Facet Filtration business.
“Donaldson’s fourth quarter sales and earnings reached an all-time high, driven by strong organic volume growth, augmented by the acquisition of Facet Filtration, and supported by robust execution across all three of our segments,” said Rich Lewis, president and chief executive officer.
Profitability also improved during the quarter. Adjusted gross margin expanded by 190 basis points to 36.7%, compared with 34.8% a year earlier.
Adjusted operating margin increased by 110 basis points to 17.5%.
Growth recorded across all three business segments
Donaldson reported higher sales across each of its main operating divisions during the fourth quarter.
Mobile Solutions revenue increased 7.9%, with Aftermarket sales rising 9.4% and On-Road sales advancing 8.7%.
Industrial Solutions delivered sales growth of 7.7%. The Facet acquisition contributed 980 basis points to the division’s growth during the period.
Life Sciences also recorded a solid quarter, with sales increasing 9.7% from the previous year.
Fiscal 2027 earnings guidance falls below expectations
Despite the stronger fourth-quarter performance, Donaldson’s fiscal 2027 earnings forecast came in below Wall Street expectations.
The company expects full-year earnings per share of between $4.22 and $4.38. The midpoint of $4.30 compares with the analyst consensus estimate of $4.41.
Donaldson noted that the guidance includes approximately $0.12 per share of dilution associated with the Facet acquisition.
Full-year sales are forecast to increase between 5.5% and 9.5%.
Donaldson targets further margin improvement
For fiscal 2027, Donaldson expects operating margin of between 16.6% and 17.2%, compared with an adjusted 16.0% in fiscal 2026.
Mobile Solutions sales are forecast to grow between 2% and 6%, while Industrial Solutions revenue is expected to increase at a mid-teens percentage rate.
The company also plans to repurchase approximately 1% of its outstanding shares during the year.
While the fiscal 2027 earnings outlook was softer than analysts had anticipated, the positive premarket reaction reflected Donaldson’s record fourth-quarter performance, improving margins and continued sales growth across its businesses.
Donaldson Company stock price
