Donaldson’s results for Q2 reflected positive momentum, driven by broad-based demand across its filtration solutions portfolio. Management pointed to volume growth, effective pricing, and new customer wins in both mobile and industrial segments as major factors behind the quarter’s performance. CEO Todd Carpenter cited ongoing strength in aftermarket sales, particularly within the independent channel, and highlighted partnerships such as the new agreement with Mighty Distributing System of America as contributors to share gains. The company also noted significant progress in industrial dust collection and power generation applications, benefiting from what Carpenter described as a “power gen super cycle.” In life sciences, double-digit growth in food and beverage offset continued bioprocessing delays, and operational discipline helped mitigate macroeconomic and inflationary pressures.
Is now the time to buy DCI? Find out in our full research report (it’s free).
Donaldson (DCI) Q2 CY2025 Highlights:
- Revenue: $980.6 million vs analyst estimates of $953.5 million (4.8% year-on-year growth, 2.8% beat)
- Adjusted EPS: $1.03 vs analyst estimates of $1.02 (1.3% beat)
- Adjusted EBITDA: $190.7 million vs analyst estimates of $189.1 million (19.4% margin, 0.8% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $4 at the midpoint, beating analyst estimates by 2.8%
- Operating Margin: 15.5%, in line with the same quarter last year
- Constant Currency Revenue rose 2.9% year on year (7.6% in the same quarter last year)
- Market Capitalization: $9.28 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Donaldson’s Q2 Earnings Call
- Brian Blair (Oppenheimer) questioned the timing of recovery in agricultural demand. CEO Todd Carpenter confirmed ag demand bottomed in the quarter with only low single-digit improvement, noting, “It has stopped falling.”
- Nathan Jones (Stifel) asked about commercialization timelines for bioprocessing solutions. Carpenter responded that most significant revenue from new products would likely occur “more in the '27 time frame,” with some impact possible later next year.
- Laurence Alexander (Jefferies) probed whether margins could reach the low twenties if end markets improve. CFO Brad Pogalz noted margins would benefit from structural cost efforts but cited potential mix pressure from lower-margin OE sales.
- Angel Castillo (Morgan Stanley) requested more detail on CapEx trends and M&A appetite. Pogalz explained CapEx would remain disciplined, focused on high-priority projects, while M&A remains a strategic priority with an active pipeline.
- Tim Fine (Raymond James) inquired about aftermarket channel dynamics and the impact of new distribution partnerships. Carpenter said independent channel share gains and new agreements like Mighty are expected to drive growth, especially in North America.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will watch closely for (1) the pace of adoption and monetization of connected filtration solutions across industrial and mobile segments, (2) sustained aftermarket share gains through expanded distribution, and (3) the progression of new product launches in bioprocessing and other life sciences applications. Execution on cost optimization and discipline in capital deployment will remain key indicators of Donaldson’s ability to deliver its margin targets.
Donaldson currently trades at $79.66, up from $75.69 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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