Aug 26, 2026 earnings call — Facet acquisition and record sales drive outlook
Record sales of $3.9 billion; FY27 midpoint forecasts over $4.1 billion.
Revenue $1.1B (est $1.0B) · EPS $1.15 (est $1.13)
Key quotes
"Facet and pricing benefits are each expected to account for approximately 2 percentage points of growth."
"All in, our EPS guidance for the full year is between $4.22 and $4.38."
"Consequently, we realized about 40 basis points of gross margin pressure in the quarter."
Analyst Q&A 4
Margins and Facet impact on earnings
Q (Brian Drab · Morgan Stanley): He asked if there are operational headwinds for fiscal 27 margins and what drives the Facet dilution — debt paydown, cost synergies, or purchase accounting step down.
A: Management said margin pressure is concentrated, not broad. They expect industrial and power gen issues early in the year as they clear the Mexico facility and finish plant closures, with volumes improving and a meaningful step up in the second half. They also noted a 22 million incremental amortization to model and said purchase accounting step down plus some debt pay down drive Facet's lower dilution; on a cash basis Facet is accretive in fiscal 27.
"22 million incremental amortization as a function of that transaction that should be modeled through." — Bradley J. Pogalz (CFO)
Aerospace supply constraints and mobile markets
Q (Quinn Peterson · Baird): He asked how management is confident A&D supply chain issues will be resolved and the timing, and also asked about mobile first-fit revenue and how an ag recovery might play out.
A: They said the A&D teams have managed the situation closely and understand the issues. Closure of the California site and move to Illinois means most closure costs are behind them and they are now ramping production; they expect it will take the first half to work through the late position and return to normal. For mobile they see broad strength in mining and construction, a material trucking recovery in the U.S. carrying into next year, and early green shoots in ag at a smaller scale.
"The good news is all of the closure cost associated with that for the most part are behind us, and so now it is really just ramping production in the new site" — Richard Lewis (CEO)
Life sciences growth and power gen mix
Q (Laurence Alexander · Jefferies): He asked for more detail on life sciences trends and whether they can gain share over 3-4 years, and asked about PowerGen first-fit versus replacement dynamics.
A: They said life sciences is led by disk drive and process filtration, with disk demand driven by share gains, pricing and the HAMR technology that has more content per drive plus volume growth; they expect a steady growth trajectory beyond fiscal 27. On PowerGen they said roughly 50 percent is first fit and 50 percent aftermarket, first fit is very strong now which will expand the install base and generate aftermarket revenue in a couple years, and they are booked out with line of sight to fully load capacity through 2028.
"If you think about the disk drive business, it is really a combination of share and pricing the technology shift to HAMR, which is the next generation technology that has significantly more content per drive for us." — Richard Lewis (CEO)
Life sciences margins and dust collection orders
Q (Adam Farley · Stifel): He asked what to expect for margins in life sciences (incremental margins) and for color on dust collection first-fit performance, order trends through the quarter and into August, and customer willingness to spend.
A: They said the traditional life sciences businesses already have margins above company average and they expect the whole life sciences group to be significantly above company average as acquisitions hit product and commercial milestones over the next 18 months. For dust collection and other non-PowerGen IFS businesses they saw muted demand in the first half last year, improvement starting in Q3 and an acceleration of orders in Q4; trends are positive but not at peak, and roughly half the business is recurring revenue which has been holding in.
"The traditional businesses are sort of leading margins for Donaldson, so think above company average." — Richard Lewis (CEO)