Donaldson Q2 Earnings Miss: Aftermarket And Life Sciences Segments Shine Amid Revenue Dip

Donaldson Company, Inc. DCI shares are trading higher after the company reported second-quarter results.

Sales fell 0.8% year over year to $870.0 million, missing the consensus of $908.33 million, due to a 170 basis point negative impact from currency translation.

By Segment, Mobile Solutions sales declined 0.5% Y/Y, with Aftermarket sales climbing 4.0% Y/Y, aided by strong demand in the OEM channel.

Industrial Filtration Solutions sales fell by 7.5% due to slower capital expenditure investments and the timing of Power Generation projects, while Aerospace and Defense sales rose 18.7% Y/Y, led by strong demand in the Defense sector.

Life Sciences segment sales increased 9.2%, led by higher volume growth in Disk Drive.

Gross margin remained flat Y/Y at 35.2% in the quarter. Adjusted EPS of 83 cents missed the consensus of 85 cents.

Year-to-date, Donaldson paid $64.6 million in dividends and repurchased shares worth $81.4 million.

Last month, the Board of Directors declared a cash dividend per share of 27.0 cents, payable on February 28, to shareholders of record as on February 13, 2025.

Tod Carpenter, chairman, president, and chief executive officer, said, “We generated sales growth in Aftermarket, Aerospace and Defense, and Life Sciences, while also diligently managing costs and further optimizing operating expenses.”

”Our diversified portfolio of businesses, once again, provides balance in an uncertain environment, giving us confidence in our ability to drive record earnings in fiscal 2025.”

FY25 Outlook: Donaldson revised its guidance for adjusted EPS to $3.60 – $3.68 (vs. consensus of $3.63) from the previous range of $3.56 – $3.72.

The company now sees sales growth of flat to up 4%, compared to the earlier expectation of a 2% to 6% increase year-over-year.

Donaldson projects mobile sales growth to be down 1% to up 3%, Industrial sales growth of 1% to 5%, and Life Sciences sales to increase in the high single digits.

For the full year, Donaldson anticipates repurchasing approximately 2% to 3% of its shares outstanding.

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

Price Action: DCI shares are down 1.91% at $67.93 at the last check Thursday.

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