Donaldson Company Inc (NYSE:DCI) stock fell 2% (As on December 5, 11:18:52 AM UTC-4, Source: Google Finance) after the company reported better-than-expected first quarter fiscal 2026 results and raised its full-year guidance, driven by strong replacement parts sales and improved operating margins. Donaldson’s Mobile Solutions segment, its largest business unit, saw sales increase 4.5%, with Aftermarket sales rising 6.5% due to share gains in the independent channel. The Life Sciences segment delivered the strongest growth, with sales up 13.1% YoY. The company improved its adjusted operating margin to 15.5%, up 60 basis points from the previous year, benefiting from operating expense leverage and cost optimization initiatives. This margin expansion helped convert 3.9% sales growth into 13.3% adjusted EPS growth.
Moreover, the aftermarket results are robust. The company continues to gain share in the independent channel, where sales grew nearly double digits. The company have expanded partnerships with customers like NAPA. The distribution centers are performing well. While cyclical headwinds continue, our largest first-fit business, Off-Road, grew for the second consecutive quarter with supportive end market conditions in construction more than offsetting muted conditions in agriculture. In Industrial Solutions, our power generation business is robust, supported by the current electricity demand supercycle, including data center and AI infrastructure buildouts.
DCI in the third quarter of FY25 has reported the adjusted earnings per share of 94 cents, beating the analysts’ estimates for the adjusted earnings per share of 92 cents. The company had reported the adjusted revenue growth of 3.9 percent to $935.4 million in the third quarter of FY25, beating the analysts’ estimates for revenue of $922.62 million. First quarter sales growth was supported by pricing benefits, favorable currency translation, and higher volumes, particularly in the Aftermarket business.
Based on the strong first quarter performance, Donaldson raised its full-year adjusted operating margin guidance to between 16.2% and 16.8%, up from previous guidance of 16.1% to 16.7%. The company also increased its adjusted EPS forecast to a range of $3.95 to $4.11, compared to its earlier projection of $3.92 to $4.08. Donaldson maintained its full-year sales growth forecast of 1% to 5%, which includes approximately one percentage point benefit from pricing.
In addition, Mobile Solutions sales are expected to be flat to up 4%. Within Mobile Solutions, On-Road sales are now expected to be flat versus 2025. Off-Road sales are forecast to be up mid-single digits. In Industrial Solutions, sales are forecast to grow between 2% and 6%. Aerospace and Defense sales are projected to be flat.