Donaldson Company Inc. reported fourth-quarter adjusted earnings per share of $1.15, up 12% year-over-year and ahead of analyst expectations of $1.13, as revenue rose 8% to $1.1 billion. The industrial filtration specialist also posted a full-year fiscal 2026 adjusted EPS of $3.98, an all-time record, on sales of $3.9 billion, up 5% from the prior year.
The company achieved record operating margins of 17.5% in the quarter, a 110-basis-point improvement from a year earlier, while gross margin expanded to 36.7%, up 190 basis points year-over-year. Full-year fiscal 2026 operating margin reached 16%, another company record. Shareholder returns totaled $250 million through dividends and buybacks during the year.
Mobile Solutions revenue rose 8% to $635 million, with aftermarket sales up 9% and China revenue surging 27% on strong OE replacement demand. Industrial Solutions sales increased 8% to $334 million, aided by the $30 million contribution from the May 2026 acquisition of Facet Filtration. Life Sciences revenue climbed 10% to $90 million, driven by growth in disk drives and food and beverage filtration.
For fiscal 2027, Donaldson raised its sales growth guidance to a range of 5.5% to 9.5%, implying revenue of more than $4.1 billion at the midpoint. Adjusted EPS is forecast at $4.22 to $4.38, up from $3.98 in fiscal 2026, with operating margin expected to expand to 16.9%. The company expects free cash flow conversion of 95% to 105% and capital spending of $70 million to $90 million.
The Facet acquisition, which added about 3 percentage points of sales growth in the quarter, is projected to dilute EPS by approximately $0.12 in fiscal 2027 but is accretive on a cash basis after interest expense. Management has already reduced Facet-related debt by more than $100 million.
Shares rose 2.79% in premarket trading to $95.86 following the results, valuing the company at $11.17 billion. Donaldson has increased its dividend for 30 consecutive years and maintained payments for 56 years, with a current yield of 1.37%.
