Donaldson CEO Says Tariff Impact Is Immaterial, Raises Annual Profit Outlook

Donaldson Company, Inc. DCI announced its third-quarter results on Tuesday. Sales rose 1.3% year over year (Y/Y) to $940.1 million, led by favorable pricing and volume growth. It missed the consensus estimate of $943.02 million.

GAAP net earnings significantly decreased to $57.8 million (or 48 cents per share) from $113.5 million (or 92 cents per share) in the prior year. This drop was primarily due to $65.8 million in pre-tax, non-recurring net charges, including a substantial $62.0 million impairment of intangible assets for two upstream bioprocessing businesses.

The company reported adjusted EPS of 99 cents in line with the consensus.

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By Segment, Mobile Solutions sales declined 0.4% Y/Y due to lower volumes, and aftermarket sales rose 3.3% Y/Y, aided by strong OE channel demand and independent channel market share gains.

Industrial Filtration Solutions sales upped 5.3% Y/Y on strong volume and pricing growth, while Aerospace and Defense sales rose 27.1% Y/Y, led by strong Aerospace end-market conditions.

Life Sciences segment sales increased 0.7% Y/Y, led by continued strength in Disk Drive market and higher Food and Beverage replacement part sales.

Gross margin stood at 34.2% in the quarter compared to 35.6% a year ago quarter owing to higher manufacturing costs, including footprint optimization initiatives. 

Year-to-date, Donaldson paid $96.9 million in dividends and repurchased shares worth $273.8 million.

Last month, the Board of Directors increased cash dividend per share by 11.1% from the prior quarterly dividend to 30 cents, payable on June 30, 2025, to shareholders of record as on June 16, 2025.

Donaldson revised its FY25 guidance for adjusted EPS to $3.64-$3.70 (vs. consensus of $3.60) from the previous range of $3.60-$3.68.

The company revised sales growth to be up 1% to 3% (vs. earlier guidance of flat to up 4%), with pricing expected to contribute one percentage point of the increase and impacts from currency translation and tariffs to be immaterial.

Donaldson projects mobile sales growth to be flat to up 2% (vs. down 1% to up 3% prior), Industrial sales growth of 2% and 4% (vs. 1% to 5% earlier), and Life Sciences sales to increase in the high single digits.

For the full year, Donaldson anticipates repurchasing approximately 3.5% and 4.0% of its shares outstanding.

Tod Carpenter, chairman, president, and chief executive officer, said, “For the full year, we expect to generate record sales and adjusted earnings. Importantly, our region-for-region footprint combined with the speed of decision making following our organizational redesign contribute to our expectation that the net impact on earnings from current tariffs will be immaterial.”

Investors can gain exposure to the stock via VanEck Green Infrastructure ETF RNEW and VanEck Environmental Services ETF EVX.

Price Action: DCI shares are trading higher by 6.98% to $74.00 premarket at last check Tuesday.

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