Donaldson(DCI) - 2025 Q3 - Quarterly Results

Financial Performance - Third quarter fiscal 2025 net earnings were $57.8 million, down 49.1% from$ 113.5 million a year ago, with diluted EPS of $0.48 compared to$ 0.92 in 2024[1][23] - Net earnings for the nine months ended April 30, 2025, were $252.7 million, a decrease from$ 304.3 million in the same period of 2024[28] - The diluted EPS for the nine months ended April 30, 2025, was $2.09, down from$ 2.48 in the previous year[44] - Adjusted net earnings for the nine months ended April 30, 2025, were $321.4 million, compared to$ 304.3 million in the prior year[44] Sales and Revenue - Total sales for the third quarter reached $940.1 million, a 1.3% increase compared to$ 927.9 million in the same period last year, driven by pricing benefits and volume growth[3][23] - Total net sales for the company increased by 1.3% to $940.1 million in the three months ended April 30, 2025, compared to$ 927.9 million in the same period of 2024[33] - Life Sciences sales are projected to grow high-single digits versus 2024, driven by strong demand in Disk Drive and Food & Beverage replacement parts[17] - The Mobile Solutions segment reported a decline in net sales by 0.4% to $582.6 million, with the Off-Road and On-Road categories decreasing by 8.3% and 24.5% respectively[33] - The Industrial Solutions segment saw an increase in net sales by 5.3% to$ 283.3 million, driven by a 27.1% increase in the Aerospace and Defense category[33] - Life Sciences segment net sales increased by 0.7% to $74.2 million, reflecting a growth of 8.3% for the nine months ended April 30, 2025[33] - Total company revenue increased by 2.2% for the nine months ended April 30, 2025, with a notable growth of 5.4% in the APAC region[37] - The Aerospace and Defense segment saw a significant revenue increase of 24.2% for the nine months ended April 30, 2025, driven by strong demand[40] - The Industrial Solutions segment experienced a total revenue increase of 2.1% for the nine months ended April 30, 2025, despite a decline in EMEA[40] Margins and Expenses - Gross margin decreased to 34.2% from 35.6% in 2024, attributed to higher manufacturing costs[7] - Operating expenses as a percentage of sales rose to 24.9%, up from 20.1% in the prior year, driven by impairment charges and restructuring costs[8] - Operating margin fell to 9.3% for the three months ended April 30, 2025, compared to 15.5% in the prior year[30] - The company reported a gross profit of$ 947.4 million for the nine months ended April 30, 2025, compared to $939.6 million in the prior year[43] - The adjusted EBITDA for the nine months ended April 30, 2025, was$ 510.3 million, an increase from $485.5 million in the previous year[43] Cash Flow and Capital Expenditures - Free cash flow for the nine months ended April 30, 2025, was$ 192.4 million, down from $300.7 million in the same period last year[43] - Capital expenditures for fiscal 2025 are forecasted to be between$ 75 million and $90 million, with adjusted free cash flow conversion expected to be between 80% and 90%[18] - The company reported a cash conversion ratio of 126.2% for the three months ended April 30, 2025, up from 105.9% in the prior year[30] Shareholder Actions and Debt - The company repurchased 2.4% of its outstanding shares for$ 192.4 million during the third quarter, with a year-to-date total of 3.3% repurchased for $273.8 million[11] - Long-term debt increased to$ 638.8 million as of April 30, 2025, compared to $483.4 million as of July 31, 2024[26] Guidance and Future Outlook - Adjusted full-year EPS guidance for fiscal 2025 is narrowed to between$ 3.64 and $3.70, reflecting an increase from prior guidance[13] - The company anticipates continued growth in adjusted EPS for fiscal 2025, although specific guidance is not provided due to variable factors[45] - The effective tax rate for the nine months ended April 30, 2025, was 26.2%, an increase from 23.1% in the same period of 2024[30]