Donaldson Reports Record $1 Billion Quarter but Faces Rising Costs from Facet Acquisition
Donaldson Company (NYSE:DCI) reported its first quarterly revenue exceeding $1 billion, marking a record fiscal year with total sales of $3.9 billion and an adjusted EPS increase to $1.15. The filtration company also raised guidance for fiscal 2027, anticipating another strong performance despite challenges ahead. However, the outlook includes rising interest costs due to debt from its largest acquisition ever—the Facet deal—which is expected to dilute earnings by approximately $0.12 in fiscal 2027 and increase annual interest expenses to between $55 million and $60 million. Operational inefficiencies from production shifts and supply chain issues also impacted the quarter, with Aerospace sales declining due to ongoing constraints. Despite these headwinds, Donaldson has reduced debt tied to the Facet acquisition, improved its net debt-to-EBITDA ratio, and resumed share buybacks. Institutional interest in DCI is growing, as evidenced by increased hedge fund ownership.
Topics: acquisition earnings guidance