Record Earnings and Growth
Donaldson Reports Record 2026 Results and Boosts 2027 Outlook Following Facet Acquisition
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Key Points
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Donaldson's adjusted gross margin expanded by 190 basis points in Q4 to 36.7%, up from 34.8% a year earlier.
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Industrial Solutions delivered a meaningful margin improvement, with sequential EBT margin up about 300 basis points in the quarter.
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Within Industrial Solutions, Aerospace & Defense rose about 61% in the quarter, including contributions from the Facet acquisition.
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Facet Filtration contributed roughly $30 million to Q4 sales and is expected to contribute about 2% to Donaldson's fiscal 2027 sales guidance.
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Donaldson's fourth-quarter net sales rose about 8% to roughly $1.06 billion, topping Wall Street expectations.
Donaldson reported record fourth-quarter results with sales of $1,058.8 million and adjusted earnings of $1.15 per share, beating Wall Street expectations Yahoo Finance. The filtration company's full-year 2026 sales reached $3.8856 billion with adjusted EPS of $3.98, driven by strong organic growth across all three business segments and the Facet Filtration acquisition.
For fiscal 2027, Donaldson guided for sales growth of 5.5% to 9.5% and adjusted EPS of $4.22 to $4.38, though the guidance includes about $0.12 per share of dilution from Facet Seeking Alpha. The company highlighted margin expansion and disciplined capital returns, including $250 million returned to shareholders in 2026 and $102 million in debt paydown.
All Three Segments Post Double-Digit Growth
Mobile Solutions rose 7.9% while Industrial Solutions climbed 7.7% and Life Sciences jumped 9.7% MarketScreener. Within Industrial Solutions, Aerospace & Defense surged about 61% in the quarter, fueled partly by the Facet acquisition. The Facet addition contributed roughly $30 million to Q4 sales and is projected to add about 2% to full-year 2027 revenue.
Gross Margin Expands Nearly 200 Basis Points
Donaldson's adjusted gross margin expanded by 190 basis points in Q4 to 36.7%, up from 34.8% a year earlier Seeking Alpha. Industrial Solutions showed even stronger momentum, with sequential EBT margin up about 300 basis points in the quarter. Management expects continued margin improvement despite costs tied to integrating the Facet acquisition.
2027 EPS Guidance Below Wall Street Consensus
The company's fiscal 2027 adjusted EPS guidance of $4.22 to $4.38 falls short of Wall Street consensus near $4.39 to $4.41 per share MarketScreener. The midpoint of $4.30 reflects the $0.12 per share dilution from Facet, which Donaldson is still integrating. Despite the lower EPS outlook, the company targets operating margins of 16.6% to 17.2% for the year ahead.
Strong Q4 Performance Lifts Stock in Premarket Trading
Donaldson's stock jumped 6% after the company topped fourth-quarter expectations on both earnings and sales Yahoo Finance. The beat and upbeat outlook signaled investor confidence in the company's growth trajectory and acquisition strategy. The Facet deal, though dilutive near-term, positions Donaldson for longer-term margin gains and exposure to high-growth aerospace and defense markets.
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