UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________
FORM 10-Q
_____________________________________________________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2026
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO _________________.
Commission File Number 1-7891
DONALDSON COMPANY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 41-0222640 | |||||||
| (State or other jurisdiction of | (I.R.S. Employer | |||||||
| incorporation or organization) | Identification No.) | |||||||
1400 West 94th Street
Minneapolis, Minnesota 55431
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (952) 887-3131
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, $5.00 par value | DCI | New York Stock Exchange | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
| Emerging growth company | ☐ | |||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of February 18, 2026, 115,814,243 shares of the registrant’s common stock, par value $5.00 per share, were outstanding.
PART I. FINANCIAL INFORMATION
| Item 1. Financial Statements | ||
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share amounts)
(Unaudited)
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | $ | 896.3 | $ | 870.0 | $ | 1,831.7 | $ | 1,770.1 | |||||||||||||||
| Cost of sales | 596.5 | 564.1 | 1,203.1 | 1,144.6 | |||||||||||||||||||
| Gross profit | 299.8 | 305.9 | 628.6 | 625.5 | |||||||||||||||||||
| Selling, general and administrative | 162.5 | 159.2 | 332.1 | 325.3 | |||||||||||||||||||
Gain on sale of fixed assets | — | — | (9.3) | — | |||||||||||||||||||
| Research and development | 18.6 | 21.2 | 37.8 | 43.9 | |||||||||||||||||||
| Operating expenses | 181.1 | 180.4 | 360.6 | 369.2 | |||||||||||||||||||
| Operating income | 118.7 | 125.5 | 268.0 | 256.3 | |||||||||||||||||||
| Interest expense | 7.7 | 5.9 | 14.8 | 11.4 | |||||||||||||||||||
| Other income, net | (5.6) | (5.4) | (10.9) | (10.6) | |||||||||||||||||||
| Earnings before income taxes | 116.6 | 125.0 | 264.1 | 255.5 | |||||||||||||||||||
| Income taxes | 24.1 | 29.1 | 57.7 | 60.6 | |||||||||||||||||||
| Net earnings | $ | 92.5 | $ | 95.9 | $ | 206.4 | $ | 194.9 | |||||||||||||||
| Weighted average shares – basic | 115.6 | 119.6 | 115.8 | 119.8 | |||||||||||||||||||
| Weighted average shares – diluted | 117.9 | 121.4 | 117.8 | 121.7 | |||||||||||||||||||
| Net earnings per share – basic | $ | 0.80 | $ | 0.80 | $ | 1.78 | $ | 1.63 | |||||||||||||||
| Net earnings per share – diluted | $ | 0.78 | $ | 0.79 | $ | 1.75 | $ | 1.60 | |||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
2
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net earnings | $ | 92.5 | $ | 95.9 | $ | 206.4 | $ | 194.9 | |||||||||||||||
| Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation gain (loss) | 32.3 | (33.9) | 39.8 | (29.0) | |||||||||||||||||||
Pension liability adjustment, net of deferred taxes of $0.0, $(0.5), $0.0, and $(0.5), respectively | (0.7) | 1.1 | (0.2) | 1.5 | |||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||
(Loss) gain on hedging derivatives, net of deferred taxes of $0.6,$(0.8), $0.6, and $(0.5), respectively | (1.8) | 2.1 | (2.2) | 1.0 | |||||||||||||||||||
Reclassification of hedging derivatives to net earnings, net of taxes of $0.2, $(0.3), $0.2, and $(0.7), respectively | (0.9) | 0.7 | (0.5) | 2.4 | |||||||||||||||||||
| Total derivatives | (2.7) | 2.8 | (2.7) | 3.4 | |||||||||||||||||||
Net other comprehensive income (loss) | 28.9 | (30.0) | 36.9 | (24.1) | |||||||||||||||||||
| Comprehensive income | $ | 121.4 | $ | 65.9 | $ | 243.3 | $ | 170.8 | |||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
3
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share amounts)
(Unaudited)
| January 31, 2026 | July 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 194.4 | $ | 180.4 | |||||||
Accounts receivable, less allowances of $3.5 and $2.9, respectively | 647.9 | 662.2 | |||||||||
| Inventories, net | 555.8 | 513.6 | |||||||||
| Prepaid expenses and other current assets | 128.9 | 105.5 | |||||||||
| Total current assets | 1,527.0 | 1,461.7 | |||||||||
| Property, plant and equipment, net | 645.3 | 644.5 | |||||||||
| Goodwill | 504.1 | 493.6 | |||||||||
| Intangible assets, net | 95.0 | 97.4 | |||||||||
| Other long-term assets | 289.0 | 280.0 | |||||||||
| Total assets | $ | 3,060.4 | $ | 2,977.2 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Short-term borrowings | $ | — | $ | 31.2 | |||||||
| Current maturities of long-term debt | 6.5 | 6.7 | |||||||||
| Accounts payable | 348.8 | 368.6 | |||||||||
| Accrued employee compensation and related taxes | 122.9 | 144.3 | |||||||||
| Income taxes payable | 13.3 | 43.9 | |||||||||
| Other current liabilities | 174.4 | 162.5 | |||||||||
| Total current liabilities | 665.9 | 757.2 | |||||||||
| Long-term debt | 674.3 | 630.4 | |||||||||
| Non-current income taxes payable | 19.7 | 19.0 | |||||||||
| Deferred income taxes | 10.9 | 10.5 | |||||||||
| Other long-term liabilities | 114.5 | 106.6 | |||||||||
| Total liabilities | 1,485.3 | 1,523.7 | |||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued | — | — | |||||||||
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued | 758.2 | 758.2 | |||||||||
| Additional paid-in capital | 38.1 | 35.8 | |||||||||
| Retained earnings | 2,747.2 | 2,610.1 | |||||||||
| Accumulated other comprehensive loss | (143.8) | (180.7) | |||||||||
Treasury stock, 35,887,771 and 35,600,740 shares, respectively, at cost | (1,824.6) | (1,769.9) | |||||||||
| Total stockholders’ equity | 1,575.1 | 1,453.5 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,060.4 | $ | 2,977.2 | |||||||
See Notes to Condensed Consolidated Financial Statements.
4
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Six Months Ended January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating Activities | |||||||||||
| Net earnings | $ | 206.4 | $ | 194.9 | |||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 48.9 | 50.5 | |||||||||
| Deferred income taxes | 0.8 | (13.3) | |||||||||
| Stock-based compensation expense | 16.0 | 16.4 | |||||||||
| Gain on sale of fixed assets | (9.3) | — | |||||||||
| Other, net | 0.8 | 0.6 | |||||||||
| Changes in operating assets and liabilities | (105.2) | (85.8) | |||||||||
| Net cash provided by operating activities | 158.4 | 163.3 | |||||||||
| Investing Activities | |||||||||||
| Purchases of property, plant and equipment | (29.2) | (44.0) | |||||||||
| Proceeds from sale of property, plant and equipment | 10.8 | 0.1 | |||||||||
Equity investment | — | (71.2) | |||||||||
| Net cash used in investing activities | (18.4) | (115.1) | |||||||||
| Financing Activities | |||||||||||
| Proceeds from long-term debt | 40.0 | 55.0 | |||||||||
| Repayments of long-term debt | — | (20.0) | |||||||||
| Change in short-term borrowings | (31.1) | 10.7 | |||||||||
| Purchase of treasury stock | (111.2) | (81.6) | |||||||||
Payment of contingent consideration | — | (1.8) | |||||||||
| Dividends paid | (69.3) | (64.6) | |||||||||
| Exercise of stock options and other | 40.1 | 13.8 | |||||||||
Net cash used in financing activities | (131.5) | (88.5) | |||||||||
| Effect of exchange rate changes on cash | 5.5 | (3.3) | |||||||||
| Increase (decrease) in cash and cash equivalents | 14.0 | (43.6) | |||||||||
| Cash and cash equivalents, beginning of period | 180.4 | 232.7 | |||||||||
| Cash and cash equivalents, end of period | $ | 194.4 | $ | 189.1 | |||||||
| Supplemental Cash Flow Information | |||||||||||
| Income taxes paid | $ | 99.6 | $ | 83.5 | |||||||
| Interest paid | $ | 11.7 | $ | 11.1 | |||||||
| Supplemental Disclosure of Non-Cash Operating and Investing Transactions | |||||||||||
| Accrued property, plant and equipment additions | $ | 14.4 | $ | 12.6 | |||||||
| Leased assets obtained in exchange for new operating lease liabilities | $ | 13.3 | $ | 17.1 | |||||||
See Notes to Condensed Consolidated Financial Statements.
5
DONALDSON COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions, except per share amounts)
(Unaudited)
Three Months Ended January 31, 2026 and 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total | ||||||||||||||||||||||||||||||
| Balance as of October 31, 2025 | $ | 758.2 | $ | 37.0 | $ | 2,724.1 | $ | (172.7) | $ | (1,830.0) | $ | 1,516.6 | |||||||||||||||||||||||
| Net earnings | 92.5 | 92.5 | |||||||||||||||||||||||||||||||||
| Other comprehensive income | 28.9 | 28.9 | |||||||||||||||||||||||||||||||||
| Treasury stock acquired | (16.7) | (16.7) | |||||||||||||||||||||||||||||||||
Dividends declared ($0.60 per share) | (69.4) | (69.4) | |||||||||||||||||||||||||||||||||
| Stock compensation and other activity | 1.1 | 22.1 | 23.2 | ||||||||||||||||||||||||||||||||
| Balance as of January 31, 2026 | $ | 758.2 | $ | 38.1 | $ | 2,747.2 | $ | (143.8) | $ | (1,824.6) | $ | 1,575.1 | |||||||||||||||||||||||
| Balance as of October 31, 2024 | $ | 758.2 | $ | 32.6 | $ | 2,476.4 | $ | (193.0) | $ | (1,531.2) | $ | 1,543.0 | |||||||||||||||||||||||
| Net earnings | 95.9 | 95.9 | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | (30.0) | (30.0) | |||||||||||||||||||||||||||||||||
| Treasury stock acquired | (6.5) | (6.5) | |||||||||||||||||||||||||||||||||
Dividends declared ($0.54 per share) | (64.6) | (64.6) | |||||||||||||||||||||||||||||||||
| Stock compensation and other activity | 0.7 | 0.1 | 5.8 | 6.6 | |||||||||||||||||||||||||||||||
Balance as of January 31, 2025 | $ | 758.2 | $ | 33.3 | $ | 2,507.8 | $ | (223.0) | $ | (1,531.9) | $ | 1,544.4 | |||||||||||||||||||||||
Six Months Ended January 31, 2026 and 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total | ||||||||||||||||||||||||||||||
| Balance as of July 31, 2025 | $ | 758.2 | $ | 35.8 | $ | 2,610.1 | $ | (180.7) | $ | (1,769.9) | $ | 1,453.5 | |||||||||||||||||||||||
| Net earnings | 206.4 | 206.4 | |||||||||||||||||||||||||||||||||
Other comprehensive income | 36.9 | 36.9 | |||||||||||||||||||||||||||||||||
| Treasury stock acquired | (108.6) | (108.6) | |||||||||||||||||||||||||||||||||
Dividends declared ($0.60 per share) | (69.3) | (69.3) | |||||||||||||||||||||||||||||||||
| Stock compensation and other activity | 2.3 | 53.9 | 56.2 | ||||||||||||||||||||||||||||||||
| Balance as of January 31, 2026 | $ | 758.2 | $ | 38.1 | $ | 2,747.2 | $ | (143.8) | $ | (1,824.6) | $ | 1,575.1 | |||||||||||||||||||||||
| Balance as of July 31, 2024 | $ | 758.2 | $ | 26.8 | $ | 2,377.5 | $ | (198.9) | $ | (1,474.5) | $ | 1,489.1 | |||||||||||||||||||||||
| Net earnings | 194.9 | 194.9 | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | (24.1) | (24.1) | |||||||||||||||||||||||||||||||||
| Treasury stock acquired | (81.4) | (81.4) | |||||||||||||||||||||||||||||||||
Dividends declared ($0.54 per share) | (64.5) | (64.5) | |||||||||||||||||||||||||||||||||
| Stock compensation and other activity | 6.5 | (0.1) | 24.0 | 30.4 | |||||||||||||||||||||||||||||||
| Balance as of January 31, 2025 | $ | 758.2 | $ | 33.3 | $ | 2,507.8 | $ | (223.0) | $ | (1,531.9) | $ | 1,544.4 | |||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
6
DONALDSON COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of Donaldson Company, Inc. and its subsidiaries (the Company) have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of earnings, comprehensive income, financial position, cash flows and changes in stockholders’ equity have been included and are of a normal recurring nature. Operating results for the three and six months ended January 31, 2026 are not necessarily indicative of the results that may be expected for future periods. The year-end Condensed Consolidated Balance Sheet information was derived from the Company’s Audited Consolidated Financial Statements but does not include all disclosures required by GAAP. For further information, refer to the Audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.
Principles of Consolidation
The Condensed Consolidated Financial Statements include the accounts of the Company and all its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
The Company’s joint ventures are not majority-owned and are accounted for under the equity method. The Company is party to joint ventures in Advanced Filtration Systems Inc. (AFSI) with a 50% ownership and PT Panata Jaya Mandiri (PTPJM) with a 30% ownership and also holds a 49% stake in Medica S.p.A. (Medica), all of which are considered related parties. The financial impact from the joint ventures and non-controlling interest are not material.
Use of Estimates
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets and liabilities and the disclosures regarding contingent assets and liabilities at period end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
New Significant Accounting Standard Recently Adopted
In November 2023, FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), “Improvements to Reportable Segment Disclosures,” which improves the segment disclosures to include reportable segment’s expenses. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. This ASU was applicable beginning with annual reporting for the Company’s fiscal 2025 and interim reporting for the first quarter of the Company’s fiscal 2026. The Company adopted ASU 2023-07 in the fourth quarter of fiscal 2025 for its fiscal year ended July 31, 2025 and all interim periods thereafter.
New Significant Accounting Standards Not Yet Adopted
The Company considers the applicability and impact of the FASB’s ASUs issued but not yet adopted.
In November 2024, FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40), “Disaggregation of Income Statement Expenses,” which improves disclosures about a company’s expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. This ASU is applicable to annual reporting for the Company’s fiscal 2028 and interim reporting for the first quarter of the Company’s fiscal 2029. The Company will adopt ASU 2024-03 for the annual reporting period ending July 31, 2028 and for interim reporting periods thereafter. The Company is in the process of evaluating the impact of the ASU on its related disclosures.
In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740), “Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU is applicable to annual reporting for the Company’s fiscal 2026 and interim reporting for the first quarter of the Company’s fiscal 2027. The Company will adopt ASU 2023-09 for the annual reporting period ending July 31, 2026 and for interim reporting periods thereafter. The Company does not expect adoption of this standard will have a material impact on the Consolidated Financial Statements or Condensed Consolidated Financial Statements and is in the process of evaluating the effects of this guidance on its related disclosures.
7
In October 2023, FASB issued ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative," which modifies the disclosure or presentation requirements of various FASB topics in the Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-K becomes effective, with early adoption prohibited. The Company is in the process of evaluating the impact of the ASU on its related disclosures.
Note 2. Equity Method Investments and Acquisitions
During the second quarter of fiscal 2026, the Company entered into a definitive agreement to acquire Filtration Group’s Facet Filtration business (Facet), consisting of Facet (Oklahoma) LLC and Facet Netherlands B.V., in an all-cash transaction valued at approximately $820 million. Facet offers fuel and fluid filtration solutions for mission-critical applications primarily in aerospace and defense, as well as power generation. Headquartered in Tulsa, Oklahoma, Facet has approximately 250 employees across the U.S. and Europe with key manufacturing locations in Oklahoma and Spain. The transaction is expected to close in approximately six months and is subject to customary closing conditions, including receipt of applicable regulatory approvals.
On August 9, 2024, the Company acquired a 49% non-controlling stake in Medica, headquartered in Medolla, Italy, for cash consideration of approximately €62.1 million, or $67.9 million, and capitalized transaction costs of approximately €5.1 million, or $5.8 million. Medica is a leader in hollow fiber membrane filtration technology for medical applications and water purification. The Company has the option to acquire the remaining 51% stake in three years. The investment is accounted for under the equity method of accounting. The earnings from the investment were not material for the three and six months ended January 31, 2026 or 2025.
Note 3. Revenue
The Company recognizes revenue on a wide range of filtration solutions sold to customers in many industries around the globe. Most of the Company’s performance obligations within customer sales contracts are for manufactured filtration systems and replacement parts. The Company also performs limited services and installation. Customer contracts may include multiple performance obligations and the transaction price is allocated to each distinct performance obligation based on its relative standalone selling price.
Revenue Disaggregation
Net sales, generally disaggregated by location where the customer’s order was placed, were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| U.S. and Canada | $ | 372.7 | $ | 391.0 | $ | 780.1 | $ | 800.8 | |||||||||||||||
| Europe, Middle East and Africa (EMEA) | 264.8 | 228.3 | 527.6 | 469.3 | |||||||||||||||||||
| Asia Pacific (APAC) | 165.1 | 151.9 | 330.5 | 307.0 | |||||||||||||||||||
| Latin America (LATAM) | 93.7 | 98.8 | 193.5 | 193.0 | |||||||||||||||||||
| Total net sales | $ | 896.3 | $ | 870.0 | $ | 1,831.7 | $ | 1,770.1 | |||||||||||||||
See Note 18 for net sales disaggregated by segment and business unit.
Contract Assets and Liabilities
The satisfaction of performance obligations and the resulting recognition of revenue typically correspond with billing of the customer. In limited circumstances, the customer may be billed at a time later than when revenue is recognized, resulting in contract assets, which are reported in other current assets on the Condensed Consolidated Balance Sheets. Contract assets were $32.0 million and $24.3 million as of January 31, 2026 and July 31, 2025, respectively. In other limited circumstances, the customer may make a payment at a time earlier than when revenue is recognized and prior to the satisfaction of performance obligations, resulting in contract liabilities, which are reported in deferred revenue on the Condensed Consolidated Balance Sheets. Contract liabilities were $25.4 million and $20.8 million as of January 31, 2026 and July 31, 2025, respectively.
The Company will recognize revenue in future periods related to remaining performance obligations for certain open contracts. Generally, these contracts have terms of one year or less. The amount of revenue related to unsatisfied performance obligations in which the original duration of the contract is greater than one year is not significant. None of the Company’s contracts contained a significant financing component.
8
Note 4. Inventories, Net
The components of inventories, net were as follows (in millions):
| January 31, 2026 | July 31, 2025 | ||||||||||
| Raw materials | $ | 177.4 | $ | 175.5 | |||||||
| Work in process | 72.1 | 69.6 | |||||||||
| Finished products | 306.3 | 268.5 | |||||||||
| Total inventories, net | $ | 555.8 | $ | 513.6 | |||||||
Note 5. Property, Plant and Equipment, Net
The components of property, plant and equipment, net were as follows (in millions):
| January 31, 2026 | July 31, 2025 | ||||||||||
| Land | $ | 30.2 | $ | 29.5 | |||||||
| Buildings | 514.6 | 493.8 | |||||||||
| Machinery and equipment | 1,148.2 | 1,118.6 | |||||||||
| Computer software | 132.0 | 129.5 | |||||||||
| Construction in progress | 35.5 | 31.5 | |||||||||
| Less accumulated depreciation | (1,215.2) | (1,158.4) | |||||||||
| Total property, plant and equipment, net | $ | 645.3 | $ | 644.5 | |||||||
Note 6. Goodwill and Intangible Assets
Goodwill
The Company allocates goodwill to reporting units within its Mobile Solutions, Industrial Solutions and Life Sciences segments. There were no dispositions or impairment charges recorded during the three and six months ended January 31, 2026 and 2025. Goodwill is assessed for impairment annually during the third quarter of the fiscal year, or more frequently if events or changes in circumstances indicate the asset may be impaired. The Company performed its annual impairment assessment during the third quarter of fiscal 2025 and did not record any impairment as a result of this assessment.
Goodwill by reportable segment was as follows (in millions):
| Mobile Solutions Segment | Industrial Solutions Segment | Life Sciences Segment | Total | ||||||||||||||||||||
Balance as of July 31, 2025 | $ | 25.4 | $ | 298.2 | $ | 170.0 | $ | 493.6 | |||||||||||||||
| Foreign currency translation | 0.2 | 5.1 | 5.2 | 10.5 | |||||||||||||||||||
| Balance as of January 31, 2026 | $ | 25.6 | $ | 303.3 | $ | 175.2 | $ | 504.1 | |||||||||||||||
Intangible Assets
Intangible asset classes were as follows (in millions):
| January 31, 2026 | |||||||||||||||||||||||
| Weighted Amortizable Life (in Years) | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
| Customer relationships | 8.2 | $ | 76.2 | $ | (44.8) | $ | 31.4 | ||||||||||||||||
| Trademarks | 6.1 | 4.5 | (2.9) | 1.6 | |||||||||||||||||||
Technology and patents | 16.2 | 82.9 | (21.4) | 61.5 | |||||||||||||||||||
| Non-compete agreements | 3.5 | 2.5 | (2.0) | 0.5 | |||||||||||||||||||
| Total intangible assets | $ | 166.1 | $ | (71.1) | $ | 95.0 | |||||||||||||||||
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| July 31, 2025 | |||||||||||||||||||||||
| Weighted Amortizable Life (in Years) | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
| Customer relationships | 8.5 | $ | 74.7 | $ | (43.7) | $ | 31.0 | ||||||||||||||||
| Trademarks | 6.7 | 3.8 | (2.0) | 1.8 | |||||||||||||||||||
Technology and patents | 16.6 | 82.9 | (19.1) | 63.8 | |||||||||||||||||||
| Non-compete agreements | 2.9 | 2.5 | (1.7) | 0.8 | |||||||||||||||||||
| Total intangible assets | $ | 163.9 | $ | (66.5) | $ | 97.4 | |||||||||||||||||
Intangible asset amortization expense was $2.5 million and $5.0 million for the three and six months ended January 31, 2026, respectively, and was $3.9 million and $7.9 million for the three and six months ended January 31, 2025, respectively. Amortization expense is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings.
There were foreign currency translation gains of $1.1 million and $1.0 million for the three and six months ended January 31, 2026, respectively, and foreign currency translation losses of $3.6 million and $3.2 million for the three and six months ended January 31, 2025, respectively.
Note 7. Long-Term Debt
As of January 31, 2026, there was $491.6 million available and $100.0 million outstanding on the Company’s $600.0 million unsecured revolving credit facility that expires on June 12, 2030.
Certain debt agreements contain financial covenants related to interest coverage and leverage ratios, as well as other non-financial covenants. As of January 31, 2026, the Company was in compliance with all such covenants.
Note 8. Income Taxes
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into U.S. law, which primarily modified tax provisions from the 2017 Tax Cuts and Jobs Act. The provisions within the OBBBA have staggered effective dates to be phased in between fiscal years 2025 and 2027, and the Company continues to evaluate the impact of these provisions on our Consolidated Financial Statements and Condensed Consolidated Financial Statements.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The U.S. Internal Revenue Service has completed examinations of the Company’s U.S. federal income tax returns through fiscal 2021. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before fiscal 2020.
As of January 31, 2026, gross unrecognized tax benefits were $22.6 million and accrued interest and penalties on these unrecognized tax benefits were $3.0 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income taxes in the Condensed Consolidated Statements of Earnings. The statutes of limitation periods for the Company’s various tax jurisdictions range from two years to 10 years.
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Note 9. Earnings Per Share
Basic net earnings per share (EPS) is computed by dividing net earnings by the weighted average number of outstanding common shares. Diluted net EPS is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options and other stock incentive plans.
Basic and diluted net EPS calculations were as follows (in millions, except per share amounts):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net earnings | $ | 92.5 | $ | 95.9 | $ | 206.4 | $ | 194.9 | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Weighted average common shares – basic | 115.6 | 119.6 | 115.8 | 119.8 | |||||||||||||||||||
| Dilutive impact of stock-based awards | 2.3 | 1.8 | 2.0 | 1.9 | |||||||||||||||||||
| Weighted average common shares – diluted | 117.9 | 121.4 | 117.8 | 121.7 | |||||||||||||||||||
| Net EPS – basic | $ | 0.80 | $ | 0.80 | $ | 1.78 | $ | 1.63 | |||||||||||||||
| Net EPS – diluted | $ | 0.78 | $ | 0.79 | $ | 1.75 | $ | 1.60 | |||||||||||||||
Stock options excluded from net EPS calculation | 0.0 | 0.8 | 0.0 | 0.8 | |||||||||||||||||||
Note 10. Stockholders’ Equity
Share Repurchases
In November 2023, the Board of Directors authorized the repurchase of up to 12.0 million shares of common stock under the Company’s stock repurchase plan. This repurchase authorization is effective until terminated by the Board of Directors. During the six months ended January 31, 2026, the Company repurchased 1.4 million shares for $108.6 million. During the six months ended January 31, 2025, the Company repurchased 1.1 million shares for $81.4 million. As of January 31, 2026, the Company had remaining authorization to repurchase 4.5 million shares under the November 2023 stock repurchase plan.
Dividends
Dividends paid were 30.0 cents and 60.0 cents per common share for the three and six months ended January 31, 2026, respectively, and were 27.0 cents and 54.0 cents per common share for the three and six months ended January 31, 2025.
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Note 11. Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss for the three months ended January 31, 2026 and 2025 were as follows (in millions):
| Foreign Currency Translation Adjustment | Pension Benefits | Derivative Financial Instruments | Total | ||||||||||||||||||||
| Balance as of October 31, 2025, net of tax | $ | (96.7) | $ | (76.1) | $ | 0.1 | $ | (172.7) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications and tax | 32.3 | — | (2.4) | 29.9 | |||||||||||||||||||
Tax benefit | — | — | 0.6 | 0.6 | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications, net of tax | 32.3 | — | (1.8) | 30.5 | |||||||||||||||||||
| Reclassifications, before tax | — | (0.7) | (1) | (1.1) | (1.8) | ||||||||||||||||||
Tax benefit | — | — | 0.2 | 0.2 | |||||||||||||||||||
| Reclassifications, net of tax | — | (0.7) | (0.9) | (2) | (1.6) | ||||||||||||||||||
Other comprehensive income (loss), net of tax | 32.3 | (0.7) | (2.7) | 28.9 | |||||||||||||||||||
| Balance as of January 31, 2026, net of tax | $ | (64.4) | $ | (76.8) | $ | (2.6) | $ | (143.8) | |||||||||||||||
| Balance as of October 31, 2024, net of tax | $ | (128.9) | $ | (68.7) | $ | 4.6 | $ | (193.0) | |||||||||||||||
Other comprehensive (loss) income before reclassifications and tax | (33.9) | — | 2.9 | (31.0) | |||||||||||||||||||
Tax expense | — | — | (0.8) | (0.8) | |||||||||||||||||||
Other comprehensive (loss) income before reclassifications, net of tax | (33.9) | — | 2.1 | (31.8) | |||||||||||||||||||
| Reclassifications, before tax | — | 1.6 | (1) | 1.0 | 2.6 | ||||||||||||||||||
Tax expense | — | (0.5) | (0.3) | (0.8) | |||||||||||||||||||
| Reclassifications, net of tax | — | 1.1 | 0.7 | (2) | 1.8 | ||||||||||||||||||
Other comprehensive (loss) income, net of tax | (33.9) | 1.1 | 2.8 | (30.0) | |||||||||||||||||||
| Balance as of January 31, 2025, net of tax | $ | (162.8) | $ | (67.6) | $ | 7.4 | $ | (223.0) | |||||||||||||||
(1)Amounts include foreign currency translation gain of $1.1 million and foreign currency translation loss of $1.0 million, net amortization of prior service costs and actuarial losses of $0.4 million and $0.6 million in fiscal 2026 and 2025, respectively, included in other income, net in the Condensed Consolidated Statements of Earnings, see Note 13.
(2)Relates to designated foreign currency forward contracts that were reclassified from accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets to net sales, cost of sales and selling, general and administrative expenses or other income, net in the Condensed Consolidated Statements of Earnings, see Note 14.
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Changes in accumulated other comprehensive loss for the six months ended January 31, 2026 and 2025 were as follows (in millions):
| Foreign Currency Translation Adjustment | Pension Benefits | Derivative Financial Instruments | Total | ||||||||||||||||||||
| Balance as of July 31, 2025, net of tax | $ | (104.2) | $ | (76.6) | $ | 0.1 | $ | (180.7) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications and tax | 39.8 | — | (2.8) | 37.0 | |||||||||||||||||||
| Tax benefit | — | — | 0.6 | 0.6 | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications, net of tax | 39.8 | — | (2.2) | 37.6 | |||||||||||||||||||
| Reclassifications, before tax | — | (0.2) | (1) | (0.7) | (0.9) | ||||||||||||||||||
Tax benefit | — | — | 0.2 | 0.2 | |||||||||||||||||||
| Reclassifications, net of tax | — | (0.2) | (0.5) | (2) | (0.7) | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | 39.8 | (0.2) | (2.7) | 36.9 | |||||||||||||||||||
| Balance at January 31, 2026, net of tax | $ | (64.4) | $ | (76.8) | $ | (2.6) | $ | (143.8) | |||||||||||||||
| Balance as of July 31, 2024, net of tax | $ | (133.8) | $ | (69.1) | $ | 4.0 | $ | (198.9) | |||||||||||||||
Other comprehensive (loss) income before reclassifications and tax | (29.0) | — | 1.5 | (27.5) | |||||||||||||||||||
| Tax expense | — | — | (0.5) | (0.5) | |||||||||||||||||||
Other comprehensive (loss) income before reclassifications, net of tax | (29.0) | — | 1.0 | (28.0) | |||||||||||||||||||
| Reclassifications, before tax | — | 2.0 | (1) | 3.1 | 5.1 | ||||||||||||||||||
Tax expense | — | (0.5) | (0.7) | (1.2) | |||||||||||||||||||
| Reclassifications, net of tax | — | 1.5 | 2.4 | (2) | 3.9 | ||||||||||||||||||
| Other comprehensive (loss) income, net of tax | (29.0) | 1.5 | 3.4 | (24.1) | |||||||||||||||||||
| Balance at January 31, 2025, net of tax | $ | (162.8) | $ | (67.6) | $ | 7.4 | $ | (223.0) | |||||||||||||||
(1)Amounts include foreign currency translation gain of $1.1 million and loss of $0.8 million, net amortization of prior service costs and actuarial losses of $0.9 million and $1.2 million and no reclassifications due to settlement charges in fiscal 2026 and 2025, respectively, included in other income, net in the Condensed Consolidated Statements of Earnings, see Note 13.
(2)Relates to designated foreign currency forward contracts that were reclassified from accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets to net sales, cost of sales and selling, general and administrative expenses or other income, net in the Condensed Consolidated Statements of Earnings, see Note 14.
Note 12. Stock-Based Compensation
The Company recognizes compensation expense for all stock-based awards based on the grant date fair value of the award. Stock-based awards consist primarily of non-qualified stock options, performance-based awards, restricted stock awards and restricted stock units. Grants related to restricted stock awards and restricted stock units are immaterial. The Company issues treasury shares for stock options and performance-based awards.
Stock Options
The exercise price of options granted is equal to the market price of the Company’s common stock at the date of the grant. Options are generally exercisable for up to 10 years from the date of grant and vest in equal annual increments over three years.
Pretax stock-based compensation expense associated with options was $3.0 million and $13.3 million for the three and six months ended January 31, 2026, respectively, and was $2.2 million and $12.0 million for the three and six months ended January 31, 2025, respectively.
Fair value is calculated using the Black-Scholes option pricing model. The weighted average fair value for options granted was $25.76 and $21.67 per share during the six months ended January 31, 2026 and 2025, respectively.
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Option activity was as follows:
| Options | Weighted Average Exercise Price | ||||||||||
| Balance outstanding as of July 31, 2025 | 6,223,080 | $ | 54.24 | ||||||||
| Granted | 666,312 | 82.42 | |||||||||
| Exercised | (996,830) | 45.65 | |||||||||
| Expired/forfeited | (10,636) | 63.85 | |||||||||
| Balance outstanding as of January 31, 2026 | 5,881,926 | $ | 58.87 | ||||||||
Performance-Based Awards
Performance-based awards are payable in common stock and are based on a formula that measures Company performance over a three-year period. These awards are settled after three years with payouts ranging from 0% to 200% of the target award depending on achievement.
Pretax performance-based awards expense was $1.1 million and $2.0 million for the three and six months ended January 31, 2026, respectively, and was $1.3 million and $3.2 million for the three and six months ended January 31, 2025, respectively.
Performance-based awards for non-vested activity were as follows:
| Performance Shares | Weighted Average Grant Date Fair Value | |||||||||||||
| Balance outstanding as of July 31, 2025 | 197,684 | $ | 66.19 | |||||||||||
| Granted | 102,900 | 82.08 | ||||||||||||
| Vested | — | — | ||||||||||||
| Forfeited | (16,700) | 66.89 | ||||||||||||
| Balance outstanding as of January 31, 2026 | 283,884 | $ | 71.91 | |||||||||||
Note 13. Employee Benefit Plans
The Company has defined benefit pension plans for certain hourly and salaried employees. They consist of plans in the U.S., Belgium, Germany, Mexico and the United Kingdom. These plans generally provide pension benefits based on years of service and compensation level. Components of net periodic pension costs other than the service cost component are included in other income, net in the Condensed Consolidated Statements of Earnings.
Net periodic pension costs for the Company’s pension plans were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Service cost | $ | 1.3 | $ | 1.2 | $ | 2.6 | $ | 2.4 | |||||||||||||||
| 4.8 | 4.8 | 9.9 | 9.7 | ||||||||||||||||||||
| (6.3) | (6.4) | (12.6) | (12.8) | ||||||||||||||||||||
| 0.4 | 0.6 | 0.9 | 1.2 | ||||||||||||||||||||
| Net periodic pension costs | $ | 0.2 | $ | 0.2 | $ | 0.8 | $ | 0.5 | |||||||||||||||
The Company’s general funding policy is to make at least the minimum required contributions under applicable regulations, plus any additional amounts it determines to be appropriate. Future required pension plan contributions may change significantly depending on the actual rate of return on plan assets, discount rates and regulatory requirements.
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Note 14. Derivative Instruments and Hedging
Derivative Fair Value Measurements
The Company enters into derivative instrument agreements, including foreign currency forward contracts and net investment hedges, to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit. There is risk the counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors.
Contract provisions may require the posting of collateral or settlement of the contracts for various reasons, including if the Company’s credit ratings are downgraded below its investment grade credit rating by any of the major credit agencies, or for cross default contractual provisions, if there is a failure under other financing arrangements related to payment terms or covenants. As of January 31, 2026 and July 31, 2025, no collateral was posted.
The Company does not enter into derivative instrument agreements for trading or speculative purposes. For discussion on the fair value of the Company’s derivatives, see Note 15.
Foreign Currency Forward Contracts - Cash Flow Hedges and Derivatives Not Designated as Hedging Instruments
The Company buys materials from foreign suppliers. Those transactions can be denominated in those suppliers’ local currency. The Company also sells to customers in foreign countries. Those transactions can be denominated in those customers’ local currency. Both of these transaction types can create volatility in the Company’s financial statements. The Company uses foreign currency forward contracts to manage those exposures and fluctuations. These contracts generally mature in 15 months or less, which is consistent with the forecasts of the related purchases and sales. Certain contracts are designated as cash flow hedges, whereas the remaining contracts, most of which are related to certain intercompany transactions which offset balance sheet exposure, are not designated as hedging instruments. The total notional amount of the foreign currency forward contracts designated as hedges was $43.3 million and $35.7 million as of January 31, 2026 and July 31, 2025, respectively. The total notional amount of the foreign currency forward contracts not designated as hedges was $181.7 million and $189.6 million as of January 31, 2026 and July 31, 2025, respectively.
Changes in the fair value of the Company’s designated hedges are reported in accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets until the related transaction occurs, see Note 11. Designated hedges are recognized as a component of either net sales, cost of sales, selling, general and administrative expenses or other income, net in the Condensed Consolidated Statements of Earnings upon occurrence of the related hedged transaction.
Hedges and subsequent changes in the fair value of hedges that are not designated are recognized in other income, net in the Condensed Consolidated Statements of Earnings along with the related hedged transactions.
Amounts related to foreign currency forward contracts designated as hedges are expected to be reclassified into earnings during the next 15 months based upon the timing of inventory purchases and sales.
Net Investment Hedges
The Company uses fixed-to-fixed cross-currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe. The Company has elected the spot method for designating these contracts as net investment hedges.
The total notional amount of net investment hedges as of January 31, 2026 and July 31, 2025 was €80 million, or $88.8 million. The maturity dates range from 2027 to 2029.
Gains and losses resulting from a change in fair value of the net investment hedge are offset by gains and losses on the underlying foreign currency exposure and are included in accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets. Amounts related to excluded components associated with the net investment hedge are expected to be reclassified into earnings in interest expense in the Condensed Consolidated Statements of Earnings through their maturity.
Cash Flows
Cash flows from derivative transactions are recorded in operating activities in the Condensed Consolidated Statements of Cash Flows.
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Note 15. Fair Value Measurements
Fair value measurements of financial instruments are reported in one of three levels based on the lowest level of significant input used. For Level 1, inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities. For Level 2, inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. For Level 3, inputs to the fair value measurement are unobservable inputs or are based on valuation techniques.
Short-Term Financial Instruments
As of January 31, 2026 and July 31, 2025, the carrying values of cash and cash equivalents, accounts receivable, short-term borrowings and accounts payable approximate fair value because of the short-term nature of these instruments. Short-term financial instruments are classified as Level 1 in the fair value hierarchy.
Long-Term Debt
As of January 31, 2026, the estimated fair values of fixed interest rate long-term debt were $254.6 million compared to the carrying values of $275.0 million. As of July 31, 2025, the estimated fair values of fixed interest rate long-term debt were $247.5 million compared to the carrying values of $275.0 million. The fair values are estimated by discounting the projected cash flows using the interest rates at which similar amounts of debt could currently be borrowed. The carrying values of total variable interest rate long-term debt were $408.3 million and $364.9 million as of January 31, 2026 and July 31, 2025, respectively, and approximate their fair values. Long-term debt is classified as Level 2 in the fair value hierarchy.
Investment in Joint Ventures and a Non-Controlling Interest
The Company holds investments in joint ventures and a non-controlling interest, which are accounted for as equity method investments at fair value and are included in other long-term assets on the Consolidated Balance Sheets. The aggregate carrying amount of these investments was $105.2 million and $103.6 million as of January 31, 2026 and July 31, 2025, respectively. These equity method investments are measured at fair value on a non-recurring basis. The fair value of the Company’s equity method investments has not been adjusted as there have been no triggering events or changes in circumstance that would have had an adverse impact on the value of these investments. In the event these investments are required to be measured, they would fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value, as the investments are in privately-held entities.
Derivative Fair Value Measurements
The fair values of the Company’s foreign currency forward contracts, net investment hedges and interest rate swaps reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price). The fair values are based on inputs other than quoted prices that are observable for the asset or liability and are determined by standard calculations and models that use readily observable market parameters. These inputs include foreign currency exchange rates. Industry standard data providers are the primary source for forward and spot rate information for foreign currency exchange rates. The fair values of the Company’s foreign currency forward contracts, net investment hedges, and interest rate swaps are classified as Level 2 in the fair value hierarchy. For discussion of the Company’s derivatives and hedging, see Note 14.
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Fair Value of Derivatives Contracts
The fair value of the Company’s derivative contracts, recorded on the Condensed Consolidated Balance Sheets, was as follows (in millions):
| Assets | Liabilities | |||||||||||||||||||||||||||||||
| Balance Sheet Location | January 31, 2026 | July 31, 2025 | January 31, 2026 | July 31, 2025 | ||||||||||||||||||||||||||||
| Designated as hedging instruments | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | Other current assets, other current liabilities | $ | 0.1 | $ | 0.4 | $ | 0.6 | $ | 0.3 | |||||||||||||||||||||||
| Net investment hedges | Other current assets, other long-term liabilities | 1.6 | 1.6 | 5.7 | 2.9 | |||||||||||||||||||||||||||
| Total designated | 1.7 | 2.0 | 6.3 | 3.2 | ||||||||||||||||||||||||||||
| Not designated as hedging instruments | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | Other current assets, other current liabilities | 0.5 | 0.9 | 1.4 | 0.4 | |||||||||||||||||||||||||||
| Total not designated | 0.5 | 0.9 | 1.4 | 0.4 | ||||||||||||||||||||||||||||
| Total | $ | 2.2 | $ | 2.9 | $ | 7.7 | $ | 3.6 | ||||||||||||||||||||||||
Amounts related to excluded components, such as forward points, are excluded from the assessment of hedge effectiveness of net investment hedges and are expected to be reclassified into earnings throughout their maturity dates. See Note 11 for additional information on accumulated other comprehensive loss.
Fair Value of Contingent Consideration
The fair value of the contingent consideration liability is determined using a probability-weighted discounted cash flow method. This fair value measurement is based on unobservable inputs in the market and thus, represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreement (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due) and utilizes assumptions with regard to future financial and operational milestones, probabilities of achieving such milestones and a discount rate. Depending on the contractual terms of the purchase agreement, the probability of achieving such milestones generally represents the only significant unobservable input. The contingent consideration liability is measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.
The fair value of the Company’s contingent consideration liability that uses unobservable inputs was $11.4 million and $11.3 million as of January 31, 2026 and July 31, 2025, respectively. The maximum potential payout of the contingent consideration was $22.5 million as of January 31, 2026 and July 31, 2025, see Note 17.
Note 16. Guarantees
Letters of Credit
The Company has letters of credit which guarantee payment to third parties in the event the Company is in breach of contract terms as detailed in each letter of credit. The outstanding contingent liability for standby letters of credit was as follows (in millions):
| January 31, 2026 | July 31, 2025 | |||||||||||||
Contingent liability for standby letters of credit issued under the Company’s revolving credit facility | $ | 8.4 | $ | 7.9 | ||||||||||
Amounts drawn for letters of credit under the Company’s revolving credit facility | $ | — | $ | — | ||||||||||
Advanced Filtration Systems Inc.
The Company has an unconsolidated joint venture, AFSI, established by the Company and Caterpillar Inc. (Caterpillar) in 1986. AFSI designs and manufactures high-efficiency fluid filters used in Caterpillar’s machinery worldwide. The Company and Caterpillar equally own the shares of AFSI and both companies guarantee certain debt and banking services, including credit and debit cards, merchant processing and treasury management services, of the joint venture. The Company accounts for AFSI as an equity method investment.
17
The outstanding debt relating to AFSI, which the Company guarantees half, was $36.7 million and $43.9 million as of January 31, 2026 and July 31, 2025, respectively. AFSI has a $63.0 million revolving credit facility, which expires July 31, 2027 and $17.0 million in an additional multi-currency revolving credit facility which terminates upon notification of either party.
Earnings from AFSI, which are recorded in other income, net in the Condensed Consolidated Statements of Earnings, were $2.6 million and $5.6 million for the three and six months ended January 31, 2026, respectively, and were $3.3 million and $6.2 million for the three and six months ended January 31, 2025, respectively.
Note 17. Commitments and Contingencies
The Company records provisions when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and litigation are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the estimated liability in its Condensed Consolidated Financial Statements for claims or litigation is adequate and appropriate for the probable and estimable outcomes. Liabilities recorded were not material to the Company’s financial position, results of operations or liquidity. The Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued.
The Company is party to agreements that include deferred payment provisions representing potential milestone payments for former owners of acquired businesses. The provisions are made up of two general types of arrangements, contingent compensation and contingent consideration. A contingent compensation arrangement is contingent on the former owner’s future employment with the Company and the related amounts are recognized over the required employment period. A contingent consideration agreement is contingent on the achievement of certain revenue and manufacturing milestones, regardless of the former owner's employment status. Contingent consideration was recorded as purchase consideration in both other current and other long-term liabilities on the Condensed Consolidated Balance Sheets at the time of the initial acquisition based on the fair value of the estimated liability. The Company primarily determines the contingent consideration liability based on the forecasted probability of achieving the certain milestones.
The arrangement liabilities, recorded on the Condensed Consolidated Balance Sheets, were as follows (in millions):
| Arrangement Liability | Maximum Payout (1) | |||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | January 31, 2026 | July 31, 2025 | January 31, 2026 | July 31, 2025 | Expires in | |||||||||||||||||||||||||||||||||
| Contingent compensation arrangements | ||||||||||||||||||||||||||||||||||||||
Other (2) | Accrued employee compensation and related taxes | $ | 0.2 | $ | 0.2 | $ | 0.2 | $ | 0.2 | FY27 | ||||||||||||||||||||||||||||
| Contingent consideration liability | ||||||||||||||||||||||||||||||||||||||
Purilogics (3) | Other current and other long-term liabilities | $ | 9.9 | $ | 9.8 | $ | 21.0 | $ | 21.0 | FY27 | ||||||||||||||||||||||||||||
Other | Other current liabilities | $ | 1.5 | $ | 1.5 | $ | 1.5 | $ | 1.5 | FY26 | ||||||||||||||||||||||||||||
(1)The maximum payout values are inclusive of the respective arrangement liability balance.
(2)The total contingent compensation paid as of January 31, 2026 was $0.1 million, which was paid during fiscal 2026.
(3)The increase in the Purilogics’ contingent consideration liability in fiscal 2026 was primarily driven by a $0.1 million increase of the fair value based on the probability of achieving certain milestones. The total contingent consideration paid as of January 31, 2026 was $5.0 million, which was paid during fiscal 2025 and 2024.
For additional discussion regarding the fair value of the Company’s contingent consideration liability, see Note 15.
18
Note 18. Segment Reporting
The Company’s reportable segments are: Mobile Solutions, Industrial Solutions and Life Sciences. The organizational structure also includes Corporate and Unallocated, which includes interest expense and certain corporate expenses determined to be non-allocable to the segments, such as restructuring charges and business development expenses. The Company determines its operating segments consistent with the manner in which the chief operating decision maker (CODM) manages its operations and evaluates performance for internal review and decision-making. The CODM evaluates trends in earnings (loss) before income taxes to assess performance of the segments. The CODM considers variances in reported results to budget and variances to prior periods to make decisions about allocating resources to each segment. The Company’s CODM is the Chief Executive Officer. For the three months ended January 31, 2026, Corporate and Unallocated included charges of $6.7 million, primarily related to business development and restructuring and related charges. For the six months ended January 31, 2026, Corporate and Unallocated included charges of $2.4 million, primarily related to business development and restructuring and related charges, partially offset by a gain on the sale of fixed assets.
The Mobile Solutions segment is organized based on a combination of customers and products and consists of the Off-Road, On-Road and Aftermarket business units. Within these business units, products consist of replacement filters for both air and liquid filtration applications and filtration housings for new equipment production and systems related to exhaust and emissions. Applications include air filtration systems, fuel, lube and hydraulic systems, emissions systems and sensors, indicators and monitoring systems. Mobile Solutions sells to original equipment manufacturers (OEMs) in the construction, mining, agriculture and transportation end markets and to independent distributors and OEM dealer networks.
The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration, Industrial Gases, Industrial Hydraulics, Power Generation and Aerospace and Defense products. These products are further organized by the Industrial Filtration Solutions and Aerospace and Defense business units. Within our industrial portfolio, the Company provides a wide product offering in the market to industrial customers consisting of equipment, ancillary components, replacement parts, performance monitoring and service globally, that cost-effectively enhances productivity and manufacturing efficiency. Industrial Air Filtration, Industrial Gases and Industrial Hydraulics products consist of dust, fume and mist collectors, compressed air and industrial gases purification systems, hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes. Power Generation products consist of air inlet systems and filtration sold to gas compression, power generation and natural gas liquification industries. Aerospace and Defense products consist of air, fuel, lubrication and hydraulic filtration for fixed-wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms. Industrial Solutions businesses sell through multiple channels which include OEMs, distributors and direct-to-consumer in some markets.
The Life Sciences segment is organized by end market and consists of the Food and Beverage, Disk Drive, Vehicle Electrification and Medical Device, Microelectronics and Bioprocessing Equipment and Consumables markets. Within these markets, products consist of micro-environment gas and liquid filtration for food and beverage and industrial processes, bioprocessing equipment, including bioreactors and fermenters, bioprocessing consumables including chromatography devices, reagents and filters, polytetrafluoroethylene membrane-based products, as well as specialized air and gas filtration systems for applications including hard disk drives, semiconductor manufacturing, sensors, battery systems and powertrain components. Life Sciences primarily sells to large OEMs and directly to various end users requiring cell growth, separation, purification, high purity filtration and device protection.
The Company does not report total assets by segment for internal or external reporting purposes as the Company’s CODM does not assess performance, make strategic decisions, or allocate resources based on assets.
The Company has manufacturing facilities that serve multiple reportable segments. As such, capital expenditure information by reportable segment has not been provided because the Company does not produce or utilize such information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s operating results, it is not discretely identifiable as a result of the shared manufacturing facilities.
The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report earnings before income taxes and other financial information as stated below.
19
Segment details were as follows (in millions):
| Mobile Solutions Segment | Industrial Solutions Segment | Life Sciences Segment | Total Segment | Corporate and Unallocated (1) | Total Company | |||||||||||||||||||||||||||||||||
| Three Months Ended January 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 556.6 | $ | 259.7 | $ | 80.0 | $ | 896.3 | $ | — | $ | 896.3 | ||||||||||||||||||||||||||
| Cost of sales | 381.3 | 165.9 | 45.2 | |||||||||||||||||||||||||||||||||||
Other segment items (2) | 81.6 | 62.8 | 27.4 | |||||||||||||||||||||||||||||||||||
Earnings (loss) before income taxes | $ | 93.7 | $ | 31.0 | $ | 7.4 | $ | 132.1 | $ | (15.5) | $ | 116.6 | ||||||||||||||||||||||||||
| Equity earnings in unconsolidated affiliates | $ | 1.7 | $ | 0.1 | $ | — | $ | 1.8 | ||||||||||||||||||||||||||||||
| Six Months Ended January 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,154.9 | $ | 517.5 | $ | 159.3 | $ | 1,831.7 | $ | — | $ | 1,831.7 | ||||||||||||||||||||||||||
| Cost of sales | 780.1 | 323.8 | 91.2 | |||||||||||||||||||||||||||||||||||
Other segment items (2) | 169.8 | 130.5 | 53.4 | |||||||||||||||||||||||||||||||||||
Earnings (loss) before income taxes | $ | 205.0 | $ | 63.2 | $ | 14.7 | $ | 282.9 | $ | (18.8) | $ | 264.1 | ||||||||||||||||||||||||||
| Equity earnings in unconsolidated affiliates | $ | 3.6 | $ | 0.1 | $ | — | $ | 3.7 | ||||||||||||||||||||||||||||||
| January 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Equity investments in unconsolidated affiliates | $ | 35.3 | $ | 0.7 | $ | — | $ | 36.0 | ||||||||||||||||||||||||||||||
| Three Months Ended January 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 547.5 | $ | 253.7 | $ | 68.8 | $ | 870.0 | $ | — | $ | 870.0 | ||||||||||||||||||||||||||
| Cost of sales | 371.4 | 151.5 | 40.0 | |||||||||||||||||||||||||||||||||||
Other segment items (2) | 80.6 | 61.3 | 29.3 | |||||||||||||||||||||||||||||||||||
Earnings (loss) before income taxes | $ | 95.5 | $ | 40.9 | $ | (0.5) | $ | 135.9 | $ | (10.9) | $ | 125.0 | ||||||||||||||||||||||||||
| Equity earnings in unconsolidated affiliates | $ | 2.1 | $ | — | $ | — | $ | 2.1 | ||||||||||||||||||||||||||||||
| Six Months Ended January 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,119.9 | $ | 511.3 | $ | 138.9 | $ | 1,770.1 | $ | — | $ | 1,770.1 | ||||||||||||||||||||||||||
| Cost of sales | 753.5 | 303.0 | 83.6 | |||||||||||||||||||||||||||||||||||
Other segment items (2) | 166.2 | 126.4 | 61.1 | |||||||||||||||||||||||||||||||||||
Earnings (loss) before income taxes | $ | 200.2 | $ | 81.9 | $ | (5.8) | $ | 276.3 | $ | (20.8) | $ | 255.5 | ||||||||||||||||||||||||||
| Equity earnings in unconsolidated affiliates | $ | 4.0 | $ | 0.1 | $ | — | $ | 4.1 | ||||||||||||||||||||||||||||||
| July 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Equity investments in unconsolidated affiliates | $ | 33.5 | $ | 0.5 | $ | — | $ | 34.0 | ||||||||||||||||||||||||||||||
(1) Corporate and unallocated includes interest expense and certain corporate expenses determined to be non-allocable to the segments, such as gain on sale of fixed assets, business development charges, restructuring and related charges and portions of incentive compensation.
(2) Other segment items consist primarily of selling, general and administrative expenses, research and development expense and other income (expense).
20
Net sales by business unit were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Mobile Solutions segment | |||||||||||||||||||||||
| Off-Road | $ | 86.5 | $ | 80.2 | $ | 181.1 | $ | 169.3 | |||||||||||||||
| On-Road | 23.0 | 25.3 | 46.4 | 57.4 | |||||||||||||||||||
| Aftermarket | 447.1 | 442.0 | 927.4 | 893.2 | |||||||||||||||||||
| Total Mobile Solutions segment | 556.6 | 547.5 | 1,154.9 | 1,119.9 | |||||||||||||||||||
| Industrial Solutions segment | |||||||||||||||||||||||
| Industrial Filtration Solutions | 222.6 | 207.5 | 438.3 | 419.9 | |||||||||||||||||||
| Aerospace and Defense | 37.1 | 46.2 | 79.2 | 91.4 | |||||||||||||||||||
| Total Industrial Solutions segment | 259.7 | 253.7 | 517.5 | 511.3 | |||||||||||||||||||
| Life Sciences segment | |||||||||||||||||||||||
| Total Life Sciences segment | 80.0 | 68.8 | 159.3 | 138.9 | |||||||||||||||||||
| Total Company | $ | 896.3 | $ | 870.0 | $ | 1,831.7 | $ | 1,770.1 | |||||||||||||||
Net sales, generally disaggregated by location where the customer’s order was received were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| U.S. and Canada | $ | 372.7 | $ | 391.0 | $ | 780.1 | $ | 800.8 | ||||||||||||||||||
| EMEA | 264.8 | 228.3 | 527.6 | 469.3 | ||||||||||||||||||||||
| APAC | 165.1 | 151.9 | 330.5 | 307.0 | ||||||||||||||||||||||
| LATAM | 93.7 | 98.8 | 193.5 | 193.0 | ||||||||||||||||||||||
| Total | $ | 896.3 | $ | 870.0 | $ | 1,831.7 | $ | 1,770.1 | ||||||||||||||||||
Property, plant and equipment, net and right-of-use asset by geographic region were as follows (in millions):
| Property, Plant and Equipment, Net | Right-Of-Use Asset | |||||||||||||||||||||||||
| January 31, 2026 | July 31, 2025 | January 31, 2026 | July 31, 2025 | |||||||||||||||||||||||
| U.S. and Canada | $ | 229.4 | $ | 225.7 | $ | 24.1 | $ | 26.8 | ||||||||||||||||||
| EMEA | 196.2 | 195.2 | 19.9 | 16.5 | ||||||||||||||||||||||
| APAC | 75.9 | 76.2 | 12.2 | 11.0 | ||||||||||||||||||||||
| LATAM | 143.8 | 147.4 | 5.8 | 6.2 | ||||||||||||||||||||||
| Total | $ | 645.3 | $ | 644.5 | $ | 62.0 | $ | 60.5 | ||||||||||||||||||
There were no customers that accounted for over 10% of net sales for the three and six months ended January 31, 2026 or 2025. There were no customers that accounted for over 10% of gross accounts receivable as of January 31, 2026 or July 31, 2025.
21
Note 19. Restructuring and Other Charges
During the first two quarters of fiscal 2026, the Company continued the global footprint and cost optimization actions to further improve the operating and manufacturing cost structure, which began in fiscal 2024. These activities resulted in restructuring and related expenses of $1.7 million and $5.1 million for the three and six months ended January 31, 2026, respectively, and $2.2 million and $5.5 million for the three and six months ended January 31, 2025, respectively. Charges of $2.2 million and $4.2 million were included in cost of sales, and a benefit of $0.4 million and charges of $0.9 million were included in operating expense in the Condensed Consolidated Statement of Earnings for the three and six months ended January 31, 2026, respectively, and charges of $0.6 million and $1.7 million were included in cost of sales and $1.6 million and $3.8 million were included in operating expense in the Condensed Consolidated Statements of Earnings for the three and six months ended January 31, 2025, respectively. The estimated range of future costs associated with actions related to this restructuring through fiscal 2026 is $10.0 million to $15.0 million.
As of January 31, 2026 and July 31, 2025, $2.9 million and $7.1 million, respectively, of accrued expenses were included in accrued employee compensation and related taxes in the Condensed Consolidated Balance Sheets.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Founded in 1915, Donaldson Company, Inc. is a global leader in technology-led filtration products and solutions, serving a broad range of industries and advanced markets. Donaldson’s diverse and skilled employees at more than 150 locations on six continents, 77 of which are manufacturing and/or distribution centers, partner with customers - from small business owners to the world’s largest original equipment manufacturer (OEM) brands - to solve complex filtration challenges. Customers choose Donaldson’s filtration solutions due to their stringent technical and performance requirements, the need for reliability and the value proposition of Donaldson’s solutions and/or services.
The Company’s operating segments are Mobile Solutions, Industrial Solutions and Life Sciences. The Mobile Solutions segment is organized based on a combination of customers and products and consists of the Off-Road, On-Road and Aftermarket business units. Within these business units, products consist of replacement filters for both air and liquid filtration applications and filtration housings for new equipment production and systems related to exhaust and emissions. Applications include air filtration systems, fuel, lube and hydraulic systems, emissions systems and sensors, indicators and monitoring systems. Mobile Solutions sells to OEMs in the construction, mining, agriculture and transportation end markets and to independent distributors and OEM dealer networks.
The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration, Industrial Gases, Industrial Hydraulics, Power Generation and Aerospace and Defense products. These products are further organized by the Industrial Filtration Solutions and Aerospace and Defense business units. Within our industrial portfolio, the Company provides a wide product offering in the market to industrial customers consisting of equipment, ancillary components, replacement parts, performance monitoring and service globally, that cost-effectively enhances productivity and manufacturing efficiency. Industrial Air Filtration, Industrial Gases and Industrial Hydraulics products consist of dust, fume and mist collectors, compressed air and industrial gases purification systems, hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes. Power Generation products consist of air inlet systems and filtration sold to gas compression, power generation and natural gas liquification industries. Aerospace and Defense products consist of air, fuel, lubrication and hydraulic filtration for fixed-wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms. Industrial Solutions businesses sell through multiple channels which include OEMs, distributors and direct-to-consumer in some markets.
The Life Sciences segment is organized by end market and consists of the Food and Beverage, Disk Drive, Vehicle Electrification and Medical Device, Microelectronics and Bioprocessing Equipment and Consumables markets. Within these markets, products consist of micro-environment gas and liquid filtration for food and beverage and industrial processes, bioprocessing equipment, including bioreactors and fermenters, bioprocessing consumables including chromatography devices, reagents and filters, polytetrafluoroethylene membrane-based products, as well as specialized air and gas filtration systems for applications including hard disk drives, semiconductor manufacturing, sensors, battery systems and powertrain components. Life Sciences primarily sells to large OEMs and directly to various end users requiring cell growth, separation, purification, high purity filtration and device protection.
The Company’s results of operations are affected by conditions in the global economic and geopolitical environment. Under most economic conditions, the Company’s diversification between its diesel engine end markets, its global end markets, its diversification through technology and its OEM and replacement parts customers has helped to limit the impact of weakness in any one product line, market or geography on the consolidated operating results of the Company.
22
Operating Environment
Tariffs
The U.S. imposed tariffs on a wide range of imports, with the potential for further tariff actions, which resulted in retaliatory tariffs. These trade measures, along with updates to export controls and sanctions regimes, pose ongoing risks to global supply chains, potentially increasing the cost of goods, straining procurement cycles and impacting customer demand. On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act does not provide authority for the President to impose tariffs. Certain tariffs that affected us were imposed under this statute pursuant to presidential executive order. The extent and timing of any potential recoveries of tariffs previously paid remain subject to further legal interpretation and administrative processes. We will continue to monitor developments and will evaluate the effect of the ruling on future reporting periods as additional information becomes available. The Company is closely monitoring the evolving trade landscape, as well as its ability to mitigate the impact of tariffs and its analysis of the potential impact. The Company will continue to utilize its global manufacturing footprint and supply chain to mitigate the cost impact of tariffs.
Any additional tariffs in the U.S. or retaliatory tariffs imposed by other governments could exacerbate the impact. Any new, substantial tariff increases on imports to the U.S. from Mexico, China and the European Union (EU) should they be implemented and sustained for an extended period of time, could have a significant adverse effect on the Company and its supply chain.
For additional information regarding the impact and potential impact of trade policy and tariffs on the Company, refer to the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025 which outlines the risks and uncertainties the Company believes are the most material to its business.
Consolidated Results of Operations
Three months ended January 31, 2026 compared with three months ended January 31, 2025
Operating Results
Operating results were as follows (in millions, except per share amounts):
| Three Months Ended January 31, | |||||||||||||||||||||||
| 2026 | % of net sales | 2025 | % of net sales | ||||||||||||||||||||
| Net sales | $ | 896.3 | $ | 870.0 | |||||||||||||||||||
| Cost of sales | 596.5 | 66.5 | % | 564.1 | 64.8 | % | |||||||||||||||||
| Gross profit | 299.8 | 33.5 | 305.9 | 35.2 | |||||||||||||||||||
| Selling, general and administrative | 162.5 | 18.1 | 159.2 | 18.3 | |||||||||||||||||||
| Research and development | 18.6 | 2.2 | 21.2 | 2.4 | |||||||||||||||||||
| Operating expenses | 181.1 | 20.2 | 180.4 | 20.7 | |||||||||||||||||||
| Operating income | 118.7 | 13.2 | 125.5 | 14.4 | |||||||||||||||||||
| Interest expense | 7.7 | 0.8 | 5.9 | 0.7 | |||||||||||||||||||
| Other income, net | (5.6) | (0.6) | (5.4) | (0.6) | |||||||||||||||||||
| Earnings before income taxes | 116.6 | 13.0 | 125.0 | 14.4 | |||||||||||||||||||
| Income taxes | 24.1 | 2.7 | 29.1 | 3.3 | |||||||||||||||||||
| Net earnings | $ | 92.5 | 10.3 | % | $ | 95.9 | 11.0 | % | |||||||||||||||
| Net earnings per share (EPS) - diluted | $ | 0.78 | $ | 0.79 | |||||||||||||||||||
Geographic Net Sales by Origination
Net sales, disaggregated by location where the customer’s order was received, were as follows (in millions):
| Three Months Ended January 31, | ||||||||||||||||||||||||||
| 2026 | % of net sales | 2025 | % of net sales | |||||||||||||||||||||||
| U.S. and Canada | $ | 372.7 | 41.6 | % | $ | 391.0 | 44.9 | % | ||||||||||||||||||
Europe, Middle East and Africa (EMEA) | 264.8 | 29.5 | 228.3 | 26.2 | ||||||||||||||||||||||
| Asia Pacific (APAC) | 165.1 | 18.4 | 151.9 | 17.5 | ||||||||||||||||||||||
Latin America (LATAM) | 93.7 | 10.5 | 98.8 | 11.4 | ||||||||||||||||||||||
| Total Company | $ | 896.3 | 100.0 | % | $ | 870.0 | 100.0 | % | ||||||||||||||||||
23
Net Sales
(1) The impact of foreign currency translation was calculated by translating the second quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the second quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales by segment (in millions):
| January 31, 2025 | Sales volume | Pricing | Currency translation | January 31, 2026 | ||||||||||||||||||||||||||||
Mobile Solutions segment | $ | 547.5 | $ | (16.6) | $ | 9.1 | $ | 16.6 | $ | 556.6 | ||||||||||||||||||||||
Industrial Solutions segment | 253.7 | (7.8) | 6.9 | 6.9 | 259.7 | |||||||||||||||||||||||||||
Life Sciences segment | 68.8 | 7.0 | (0.2) | 4.4 | 80.0 | |||||||||||||||||||||||||||
Total Company | $ | 870.0 | $ | (17.4) | $ | 15.8 | $ | 27.9 | $ | 896.3 | ||||||||||||||||||||||
Net sales for the three months ended January 31, 2026 increased $26.3 million, or 3.0%, from the three months ended January 31, 2025, reflecting higher sales in the Mobile Solutions segment of $9.1 million, or 1.6% growth, the Industrial Solutions segment of $6.0 million, or 2.4% growth, and the Life Sciences segment of $11.2 million, or 16.2% growth. Foreign currency translation increased net sales by $27.9 million compared to the three months ended January 31, 2025, reflecting an increase in the Mobile Solutions segment of $16.6 million, an increase in the Industrial Solutions segment of $6.9 million, and an increase in the Life Sciences segment of $4.4 million. During the three months ended January 31, 2026, the Company’s net sales increase was driven by favorable foreign currency impacts and pricing benefits, partially offset by volume decline.
Gross Margin
Gross margin as a percentage of net sales for the three months ended January 31, 2026 was 33.5% compared with 35.2% for the three months ended January 31, 2025. The decrease in gross margin as a percentage of net sales was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support higher customer demand in Industrial Solutions and costs associated with footprint optimization efforts, partially offset by benefits from pricing actions.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended January 31, 2026 were $162.5 million, or 18.1% of net sales, compared with $159.2 million, or 18.3% of net sales, for the three months ended January 31, 2025, an increase of $3.3 million, or 2.1%. The decrease in selling, general and administrative expenses as a percentage of net sales was primarily due to ongoing disciplined expense management, partially offset by restructuring and other charges.
Research and Development Expenses
Research and development expenses for the three months ended January 31, 2026 were $18.6 million, or 2.2% of net sales, compared with $21.2 million, or 2.4% of net sales, for the three months ended January 31, 2025, a decrease of $2.6 million, or 11.7%, driven by focused project prioritization.
24
Non-Operating Items
Interest expense for the three months ended January 31, 2026 was $7.7 million, compared with $5.9 million for the three months ended January 31, 2025, an increase of $1.8 million, or 29.0%. The increase reflected a combination of higher proportion of variable interest rate debt and higher overall level of debt.
Other income, net for the three months ended January 31, 2026 was $5.6 million, compared with other income, net of $5.4 million for the three months ended January 31, 2025, an increase of $0.2 million, which was relatively consistent with the prior year.
Income Taxes
The effective tax rate was 20.7% and 23.2% for the three months ended January 31, 2026 and 2025, respectively. The lower effective tax rate was primarily due to an increase in excess tax benefits on stock-based compensation.
Net Earnings
Net earnings for the three months ended January 31, 2026 were $92.5 million, compared with $95.9 million for the three months ended January 31, 2025, a decrease of $3.4 million, or 3.6%. Diluted EPS were $0.78 for the three months ended January 31, 2026, compared with $0.79 for the three months ended January 31, 2025, a decrease of $0.01, or 0.7%.
Six months ended January 31, 2026 compared with six months ended January 31, 2025
Operating Results
Operating results were as follows (in millions, except per share amounts):
| Six Months Ended January 31, | |||||||||||||||||||||||
| 2026 | % of net sales | 2025 | % of net sales | ||||||||||||||||||||
| Net sales | $ | 1,831.7 | $ | 1,770.1 | |||||||||||||||||||
| Cost of sales | 1,203.1 | 65.7 | % | 1,144.6 | 64.7 | % | |||||||||||||||||
| Gross profit | 628.6 | 34.3 | 625.5 | 35.3 | |||||||||||||||||||
| Selling, general and administrative | 332.1 | 18.1 | 325.3 | 18.4 | |||||||||||||||||||
Gain on sale of fixed assets | (9.3) | (0.5) | — | — | |||||||||||||||||||
| Research and development | 37.8 | 2.1 | 43.9 | 2.5 | |||||||||||||||||||
| Operating expenses | 360.6 | 19.7 | 369.2 | 20.9 | |||||||||||||||||||
| Operating income | 268.0 | 14.6 | 256.3 | 14.5 | |||||||||||||||||||
| Interest expense | 14.8 | 0.8 | 11.4 | 0.6 | |||||||||||||||||||
| Other income, net | (10.9) | (0.6) | (10.6) | (0.6) | |||||||||||||||||||
| Earnings before income taxes | 264.1 | 14.4 | 255.5 | 14.4 | |||||||||||||||||||
| Income taxes | 57.7 | 3.1 | 60.6 | 3.4 | |||||||||||||||||||
| Net earnings | $ | 206.4 | 11.3 | % | $ | 194.9 | 11.0 | % | |||||||||||||||
| Net EPS - diluted | $ | 1.75 | $ | 1.60 | |||||||||||||||||||
Geographic Net Sales by Origination
Net sales, disaggregated by location where the customer’s order was received, were as follows (in millions):
| Six Months Ended January 31, | ||||||||||||||||||||||||||
| 2026 | % of net sales | 2025 | % of net sales | |||||||||||||||||||||||
| U.S. and Canada | $ | 780.1 | 42.6 | % | $ | 800.8 | 45.3 | % | ||||||||||||||||||
EMEA | 527.6 | 28.8 | 469.3 | 26.5 | ||||||||||||||||||||||
| APAC | 330.5 | 18.0 | 307.0 | 17.3 | ||||||||||||||||||||||
LATAM | 193.5 | 10.6 | 193.0 | 10.9 | ||||||||||||||||||||||
| Total Company | $ | 1,831.7 | 100.0 | % | $ | 1,770.1 | 100.0 | % | ||||||||||||||||||
25
Net Sales
(1) The impact of foreign currency translation was calculated by translating the year-to-date fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the year-to-date net sales of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales by segment (in millions):
| January 31, 2025 | Sales volume | Pricing | Currency translation | January 31, 2026 | ||||||||||||||||||||||||||||
| Mobile Solutions segment | $ | 1,119.9 | $ | (7.2) | $ | 18.9 | $ | 23.3 | $ | 1,154.9 | ||||||||||||||||||||||
| Industrial Solutions segment | 511.3 | (17.0) | 13.3 | 9.9 | 517.5 | |||||||||||||||||||||||||||
| Life Sciences segment | 138.9 | 14.3 | (0.5) | 6.6 | 159.3 | |||||||||||||||||||||||||||
| Total Company | $ | 1,770.1 | $ | (9.9) | $ | 31.7 | $ | 39.8 | $ | 1,831.7 | ||||||||||||||||||||||
Net sales for the six months ended January 31, 2026 increased $61.6 million, or 3.5%, from the six months ended January 31, 2025, reflecting higher sales in the Mobile Solutions segment of $35.0 million, or 3.1% growth, the Industrial Solutions segment of $6.2 million, or 1.2% growth, and the Life Sciences segment of $20.4 million, or 14.6% growth. Foreign currency translation increased net sales by $39.8 million compared to the six months ended January 31, 2025, reflecting an increase in the Mobile Solutions segment of $23.3 million, an increase in the Industrial Solutions segment of $9.9 million, and an increase in the Life Sciences segment of $6.6 million. During the six months ended January 31, 2026, the Company’s net sales increased due to favorable foreign currency impacts and pricing benefits, partially offset by volume decline.
Gross Margin
Gross margin as a percentage of net sales for the six months ended January 31, 2026 was 34.3% compared with 35.3% for the six months ended January 31, 2025. The decrease in gross margin as a percentage of net sales was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support higher customer demand in Industrial Solutions and costs associated with footprint optimization efforts, partially offset by benefits from pricing actions.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the six months ended January 31, 2026 were $332.1 million, or 18.1% of net sales, compared with $325.3 million, or 18.4% of net sales, for the six months ended January 31, 2025, an increase of $6.8 million, or 2.1%. The decrease in selling, general and administrative expenses as a percentage of net sales was primarily due to ongoing disciplined expense management and leverage on higher sales.
Gain on Sale of Fixed Assets
Gain on sale of fixed assets for the six months ended January 31, 2026 was $9.3 million, or 0.5% of net sales, compared to no gain on sale of fixed assets for the six months ended January 31, 2025. The gain on sale of fixed assets was driven by the sale of land and a building associated with footprint optimization initiatives.
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Research and Development Expenses
Research and development expenses for the six months ended January 31, 2026 were $37.8 million, or 2.1% of net sales, compared with $43.9 million, or 2.5% of net sales, for the six months ended January 31, 2025, a decrease of $6.1 million, or 13.7%, driven by focused project prioritization.
Non-Operating Items
Interest expense for the six months ended January 31, 2026 was $14.8 million, compared with $11.4 million for the six months ended January 31, 2025, an increase of $3.4 million, or 30.4%. The increase reflected a combination of higher proportion of variable interest rate debt and higher overall level of debt.
Other income, net for the six months ended January 31, 2026 was $10.9 million, compared with other income, net of $10.6 million for the six months ended January 31, 2025, an increase of $0.3 million, which was relatively consistent with the prior year.
Income Taxes
The effective tax rate was 21.8% and 23.7% for the six months ended January 31, 2026 and 2025, respectively. The lower effective tax rate was primarily due to an increase in excess tax benefits on stock-based compensation.
Net Earnings
Net earnings for the six months ended January 31, 2026 were $206.4 million, compared with $194.9 million for the six months ended January 31, 2025, an increase of $11.5 million, or 5.9%. Diluted EPS were $1.75 for the six months ended January 31, 2026, compared with $1.60 for the six months ended January 31, 2025, an increase of $0.15, or 9.3%.
Segment Results of Operations
Net sales and earnings (loss) before income taxes were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
| Mobile Solutions | $ | 556.6 | $ | 547.5 | $ | 1,154.9 | $ | 1,119.9 | |||||||||||||||
| Industrial Solutions | 259.7 | 253.7 | 517.5 | 511.3 | |||||||||||||||||||
| Life Sciences | 80.0 | 68.8 | 159.3 | 138.9 | |||||||||||||||||||
| Total Company | $ | 896.3 | $ | 870.0 | $ | 1,831.7 | $ | 1,770.1 | |||||||||||||||
| Earnings (loss) before income taxes | |||||||||||||||||||||||
| Mobile Solutions | $ | 93.7 | $ | 95.5 | $ | 205.0 | $ | 200.2 | |||||||||||||||
| Industrial Solutions | 31.0 | 40.9 | 63.2 | 81.9 | |||||||||||||||||||
| Life Sciences | 7.4 | (0.5) | 14.7 | (5.8) | |||||||||||||||||||
Total segment | 132.1 | 135.9 | 282.9 | 276.3 | |||||||||||||||||||
Corporate and unallocated(1) | (15.5) | (10.9) | (18.8) | (20.8) | |||||||||||||||||||
| Total Company | $ | 116.6 | $ | 125.0 | $ | 264.1 | $ | 255.5 | |||||||||||||||
(1)Corporate and unallocated includes interest expense and certain corporate expenses determined to be non-allocable to the segments, such as a gain on the sale of fixed assets, restructuring and related charges, business development charges and portions of incentive compensation.
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Mobile Solutions Segment
Net sales and earnings before income taxes were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Off-Road | $ | 86.5 | $ | 80.2 | $ | 181.1 | $ | 169.3 | |||||||||||||||
| On-Road | 23.0 | 25.3 | 46.4 | 57.4 | |||||||||||||||||||
| Aftermarket | 447.1 | 442.0 | 927.4 | 893.2 | |||||||||||||||||||
| Total Mobile Solutions segment | $ | 556.6 | $ | 547.5 | $ | 1,154.9 | $ | 1,119.9 | |||||||||||||||
| Mobile Solutions segment earnings before income taxes | $ | 93.7 | $ | 95.5 | $ | 205.0 | $ | 200.2 | |||||||||||||||
| Mobile Solutions segment earnings before income taxes % of net sales | 16.8 | % | 17.4 | % | 17.8 | % | 17.9 | % | |||||||||||||||
Three months ended January 31, 2026 compared with three months ended January 31, 2025
(1) The impact of foreign currency translation was calculated by translating the second quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the second quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales for the Mobile Solutions segment for the three months ended January 31, 2026 were $556.6 million, compared with $547.5 million for the three months ended January 31, 2025, an increase of $9.1 million, or 1.6%. Foreign currency translation favorably impacted net sales for the Mobile Solutions segment by 3.0%. All business units were positively impacted by foreign currency translation.
Net sales of Aftermarket increased $5.1 million primarily driven by higher vehicle utilization rates in EMEA and APAC. Net sales of Off-Road increased $6.3 million, reflecting a modest rebound following declines in the prior year. Net sales of On-Road decreased $2.3 million primarily due to a continuing decline in global truck production.
Earnings before income taxes for the Mobile Solutions segment for the three months ended January 31, 2026 were $93.7 million, or 16.8% of net sales, a decrease from 17.4% of net sales for the three months ended January 31, 2025. The decrease was driven primarily by higher operational costs from footprint optimization efforts and deleverage from lower volume.
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Six months ended January 31, 2026 compared with six months ended January 31, 2025
(1) The impact of foreign currency translation was calculated by translating the year-to-date fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the year-to-date net sales of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales for the Mobile Solutions segment for the six months ended January 31, 2026 were $1,154.9 million, compared with $1,119.9 million for the six months ended January 31, 2025, an increase of $35.0 million, or 3.1%. Foreign currency translation favorably impacted net sales for the Mobile Solutions segment by 2.1%. All business units were positively impacted by foreign currency translation.
Net sales of Aftermarket increased $34.2 million due to market share gains and higher vehicle utilization rates, primarily in EMEA and APAC. Net sales of Off-Road increased $11.8 million, reflecting a modest rebound following declines in the prior year. Net sales of On-Road decreased $11.0 million primarily due to a continuing decline in global truck production.
Earnings before income taxes for the Mobile Solutions segment for the six months ended January 31, 2026 were $205.0 million, or 17.8% of net sales, consistent with 17.9% of net sales for the six months ended January 31, 2025.
Industrial Solutions Segment
Net sales and earnings before income taxes were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Industrial Filtration Solutions (IFS) | $ | 222.6 | $ | 207.5 | $ | 438.3 | $ | 419.9 | |||||||||||||||
| Aerospace and Defense | 37.1 | 46.2 | 79.2 | 91.4 | |||||||||||||||||||
| Total Industrial Solutions segment | $ | 259.7 | $ | 253.7 | $ | 517.5 | $ | 511.3 | |||||||||||||||
| Industrial Solutions segment earnings before income taxes | $ | 31.0 | $ | 40.9 | $ | 63.2 | $ | 81.9 | |||||||||||||||
Industrial Solutions segment earnings before income taxes % of net sales | 11.9 | % | 16.1 | % | 12.2 | % | 16.0 | % | |||||||||||||||
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Three months ended January 31, 2026 compared with three months ended January 31, 2025
(1) The impact of foreign currency translation was calculated by translating the second quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the second quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales for the Industrial Solutions segment for the three months ended January 31, 2026 were $259.7 million, compared with $253.7 million for the three months ended January 31, 2025, an increase of $6.0 million, or 2.4%. Foreign currency translation favorably impacted net sales for the Industrial Solutions segment by 2.2%. Both business units were positively impacted by foreign currency translation.
Net sales of IFS increased $15.1 million, driven by First Fit project timing and strong Aftermarket demand in Power Generation, as well as strong global demand in Industrial Gases. Net sales of Aerospace and Defense decreased by $9.1 million primarily due to project timing.
Earnings before income taxes for the Industrial Solutions segment for the three months ended January 31, 2026 were $31.0 million, or 11.9% of net sales, a decrease from 16.1% of net sales for the three months ended January 31, 2025. The decrease was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support higher customer demand and costs associated with footprint optimization efforts, as well as unfavorable mix in business unit sales.
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Six months ended January 31, 2026 compared with six months ended January 31, 2025
(1) The impact of foreign currency translation was calculated by translating the year-to-date fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the year-to-date net sales of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales for the Industrial Solutions segment for the six months ended January 31, 2026 were $517.5 million, compared with $511.3 million for the six months ended January 31, 2025, an increase of $6.2 million, or 1.2%. Foreign currency translation favorably impacted net sales for the Industrial Solutions segment by 1.6%. Both business units were positively impacted by foreign currency translation.
Net sales of IFS increased $18.4 million, driven by First Fit project timing and strong Aftermarket demand in Power Generation, as well as strong global demand in Industrial Gases. Net sales of Aerospace and Defense decreased by $12.2 million primarily due to project timing.
Earnings before income taxes for the Industrial Solutions segment for the six months ended January 31, 2026 were $63.2 million, or 12.2% of net sales, a decrease from 16.0% of net sales for the six months ended January 31, 2025 driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support higher customer demand, costs associated with footprint optimization efforts and unfavorable mix in business unit sales.
Life Sciences Segment
Net sales and earnings (losses) before income taxes were as follows (in millions):
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Life Sciences segment net sales | $ | 80.0 | $ | 68.8 | $ | 159.3 | $ | 138.9 | |||||||||||||||
| Life Sciences segment earnings (losses) before income taxes | $ | 7.4 | $ | (0.5) | $ | 14.7 | $ | (5.8) | |||||||||||||||
| Life Sciences segment earnings (losses) before income taxes % of net sales | 9.3 | % | (0.7) | % | 9.2 | % | (4.2) | % | |||||||||||||||
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Three months ended January 31, 2026 compared with three months ended January 31, 2025
(1) The impact of foreign currency translation was calculated by translating the second quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the second quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales for the Life Sciences segment for the three months ended January 31, 2026 were $80.0 million, compared with $68.8 million for the three months ended January 31, 2025, an increase of $11.2 million, or 16.2%. Foreign currency translation favorably impacted net sales for the Life Sciences segment by 6.4%. The increase in net sales was driven by strong global sales in Food and Beverage and Disk Drive.
Earnings before income taxes for the Life Sciences segment for the three months ended January 31, 2026 were $7.4 million, or 9.3% of net sales, an increase from losses before income taxes of $0.5 million, or 0.7% of net sales, for the three months ended January 31, 2025. The improvement was driven by leverage from higher volume and disciplined expense management.
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Six months ended January 31, 2026 compared with six months ended January 31, 2025
(1) The impact of foreign currency translation was calculated by translating the year-to-date fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the year-to-date net sales of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.
Net sales for the Life Sciences segment for the six months ended January 31, 2026 were $159.3 million, compared with $138.9 million for the six months ended January 31, 2025, an increase of $20.4 million, or 14.6%. Foreign currency translation favorably impacted net sales for the Life Sciences segment by 4.8%. The increase in net sales was driven by strong global sales in Food and Beverage and Disk Drive.
Earnings before income taxes for the Life Sciences segment for the six months ended January 31, 2026 were $14.7 million, or 9.2% of net sales, an improvement from losses before income taxes of $5.8 million, or 4.2% of net sales, for the six months ended January 31, 2025. The improvement was driven by leverage on higher volume and benefits from restructuring activities that occurred during fiscal 2025.
Liquidity, Capital Resources and Financial Condition
Liquidity
Liquidity is assessed in terms of the Company’s ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting liquidity are cash flows generated from operating activities, capital expenditures, acquisitions, dividends, repurchases of outstanding shares, adequacy of available credit facilities and the ability to attract long-term capital with satisfactory terms. The Company generates substantial cash from the operation of its businesses as its primary source of liquidity, with sufficient liquidity available to fund growth through reinvestment in existing businesses and strategic acquisitions.
Cash Flow Summary
Cash flows were as follows (in millions):
| Six Months Ended January 31, | ||||||||||||||||||||
| 2026 | 2025 | $ Change | ||||||||||||||||||
| Net cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 158.4 | $ | 163.3 | $ | (4.9) | ||||||||||||||
| Investing activities | (18.4) | (115.1) | 96.7 | |||||||||||||||||
| Financing activities | (131.5) | (88.5) | (43.0) | |||||||||||||||||
| Effect of exchange rate changes on cash | 5.5 | (3.3) | 8.8 | |||||||||||||||||
| Increase (decrease) in cash and cash equivalents | $ | 14.0 | $ | (43.6) | $ | 57.6 | ||||||||||||||
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Operating Activities
Cash provided by operating activities for the six months ended January 31, 2026 was $158.4 million, compared with $163.3 million for the six months ended January 31, 2025, a decrease of $4.9 million. The decrease in cash provided by operating activities was primarily driven by higher income taxes paid in the current fiscal year, partially offset by higher earnings.
Investing Activities
Cash used in investing activities for the six months ended January 31, 2026 was $18.4 million, compared with $115.1 million for the six months ended January 31, 2025, a decrease of $96.7 million. The decrease in cash used in investing activities was primarily due to the $71.2 million equity method investment in Medica during the six months ended January 31, 2025, as well as $10.8 million received from the sale of property, plant and equipment in the first six months ended January 31, 2026.
Financing Activities
Cash used in financing activities generally relates to the use of cash for payment of dividends and repurchases of the Company’s common stock, net of borrowing activity and proceeds from the exercise of stock options. Cash used in financing activities for the six months ended January 31, 2026 was $131.5 million, compared with cash used in financing activities of $88.5 million for the six months ended January 31, 2025, an increase of $43.0 million. The increase in cash used in financing activities was primarily driven by a decrease in short-term borrowings of $41.8 million and an increase in the repurchases of the Company’s common stock of $29.6 million, partially offset by an increase of $26.3 million in exercise of stock options.
To determine the level of dividend and share repurchases, the Company considers recent and projected performance across key financial metrics, including earnings, cash flow from operations and total debt. Dividends paid for the six months ended January 31, 2026 and 2025 were $69.3 million and $64.6 million, respectively. Share repurchases for the six months ended January 31, 2026 and 2025 were $111.2 million and $81.6 million, respectively.
Capital Resources
Additional sources of liquidity are existing cash and available credit facilities. Cash and cash equivalents as of January 31, 2026 was $194.4 million, compared with $180.4 million as of July 31, 2025. The Company has capacity of $755.3 million available for further borrowing under existing credit facilities as of January 31, 2026.
The Company believes the liquidity available from the combination of expected cash generated by operating activities, existing cash and available credit under existing credit facilities will be sufficient to meet its cash requirements for the next 12 months and beyond, including working capital needs, debt service obligations, capital expenditures, payment of dividends, share repurchase activity and potential acquisitions, including the additional debt we expect to incur to fund the Facet acquisition.
Financial Condition
Short-Term Borrowings and Long-Term Debt
As of January 31, 2026, total debt, including short-term borrowings and long-term debt, represented 30.2% of total capitalization, defined as total debt plus total stockholders’ equity, compared with 31.5% as of July 31, 2025. As of January 31, 2026, the Company was in compliance with its financial covenants.
Long-term debt outstanding was $680.8 million as of January 31, 2026, compared with $637.1 million as of July 31, 2025, an increase of $43.7 million, primarily due to share repurchases during the six months ended January 31, 2026. As of January 31, 2026, there was $491.6 million available and $100.0 million outstanding on the Company’s $600.0 million unsecured revolving credit facility that expires on June 12, 2030. We expect to finance the Facet acquisition with a combination of cash on hand and proceeds from new debt.
Working Capital
In order to help measure and analyze the impact of working capital management, the Company calculates days sales outstanding as the average accounts receivable, net for the quarter, divided by net sales for the quarter multiplied by the number of days in the quarter. The Company calculates days inventory outstanding as the average inventories, net for the quarter, divided by cost of sales for the quarter multiplied by the number of days in the quarter. The Company calculates days payable outstanding as the average accounts payable for the quarter, divided by cost of sales for the quarter multiplied by the number of days in the quarter. The Company calculates net cash cycle as the sum of days sales outstanding and days inventory outstanding, less days payables outstanding.
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| January 31, 2026 | July 31, 2025 | Change | ||||||||||||||||||
Accounts receivable, net | $ | 647.9 | $ | 662.2 | $ | (14.3) | ||||||||||||||
Days sales outstanding | 67 | 62 | 5 | |||||||||||||||||
Inventories, net | $ | 555.8 | $ | 513.6 | $ | 42.2 | ||||||||||||||
Days inventory outstanding | 84 | 75 | 9 | |||||||||||||||||
Accounts payable | $ | 348.8 | $ | 368.6 | $ | (19.8) | ||||||||||||||
Days payable outstanding | 56 | 52 | 4 | |||||||||||||||||
Net cash cycle | 95 | 85 | 10 | |||||||||||||||||
Off-Balance Sheet Arrangements
The Company guarantees 50% of certain debts of its joint venture, AFSI, as discussed in Note 16 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report.
Critical Accounting Estimates
There have been no material changes to the Company’s critical accounting estimates as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.
New Accounting Standards Not Yet Adopted
For new accounting standards not yet adopted, refer to Note 1 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
The Company, through its management, may make forward-looking statements reflecting the Company’s current views with respect to future events and expectations, such as forecasts, plans, trends and projections relating to the Company’s business and financial performance. These forward-looking statements, which may be included in reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), in press releases and in other documents and materials as well as in written or oral statements made by or on behalf of the Company, are subject to certain risks and uncertainties, including those discussed in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025, which could cause actual results to differ materially from historical results or those anticipated. The words or phrases such as “will likely result,” “are expected to,” “will continue,” “will allow,” “estimate,” “project,” “believe,” “expect,” “anticipate,” “forecast,” “plan” and similar expressions are intended to identify forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended, as enacted by the Private Securities Litigation Reform Act of 1995 (PSLRA). In particular, the Company desires to take advantage of the protections of the PSLRA in connection with the forward-looking statements made in this Quarterly Report on Form 10-Q. All statements other than statements of historical fact are forward-looking statements. These statements do not guarantee future performance.
These forward-looking statements speak only as of the date such statements are made and are subject to risks and uncertainties that could affect the Company’s performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed. These factors include, but are not limited to, challenges in global operations; changes in international trade policy; impacts of global economic, industrial and political conditions on product demand, impacts from unexpected events, effects of unavailable raw materials, significant demand fluctuations or material cost changes; inability to attract and retain qualified personnel; inability to meet customer demand; inability to maintain competitive advantages; threats from disruptive technologies; effects of highly competitive markets with pricing pressure; exposure to customer concentration in certain cyclical industries; inability to manage productivity improvements; inability to achieve commitments related to sustainability; results of execution of any acquisition, divestiture and other strategic transactions; vulnerabilities associated with information technology systems and security; inability to protect and enforce intellectual property rights; costs associated with governmental laws and regulations; impacts of foreign currency fluctuations; and effects of changes in capital and credit markets. These and other factors are described in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company’s market risk includes the potential loss arising from adverse changes in foreign currency exchange rates, interest rates and commodity prices. To manage these risks, the Company employs certain strategies to mitigate the effect of these fluctuations. The Company does not enter into any of these strategies for trading or speculative purposes.
The Company maintains significant assets and operations outside the U.S., resulting in exposure to foreign currency gains and losses. A portion of the Company’s foreign currency exposure is naturally hedged by incurring liabilities, including bank debt, denominated in the local currency in which the Company’s foreign subsidiaries are located.
During the six months ended January 31, 2026, the U.S. dollar was generally weaker than in the six months ended January 31, 2025 compared with many of the currencies of the foreign countries in which the Company operates. The overall weaker U.S. dollar had a positive impact on the Company’s international net sales and net earnings because the foreign denominated revenues translated into more U.S. dollars in many regions around the world. The estimated impact of foreign currency translation for the six months ended January 31, 2026 resulted in an overall increase in reported net sales of $39.8 million and an increase in reported net earnings of $2.4 million.
Derivative Fair Value Measurements
The Company enters into derivative instrument agreements, including foreign currency forward contracts and net investment hedges, to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit. See Notes 11, 14 and 15 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report.
Foreign Currency Forward Contracts - Cash Flow Hedges and Derivatives Not Designated as Hedging Instruments
The Company buys materials from foreign suppliers. Those transactions can be denominated in those suppliers’ local currency. The Company also sells to customers in foreign countries. Those transactions can be denominated in those customers’ local currency. Both of these transaction types can create volatility in the Company’s financial statements. The Company uses foreign currency forward contracts to manage those exposures and fluctuations. These contracts generally mature in 15 months or less, which is consistent with the forecasts of the related purchases and sales. Certain contracts are designated as cash flow hedges, whereas the remaining contracts, most of which are related to certain intercompany transactions which offset balance sheet exposure, are not designated as hedging instruments. The total notional amount of the foreign currency forward contracts designated as hedges was $43.3 million and $35.7 million as of January 31, 2026 and July 31, 2025, respectively. The total notional amount of the foreign currency forward contracts not designated as hedges was $181.7 million and $189.6 million as of January 31, 2026 and July 31, 2025, respectively.
Net Investment Hedges
The Company uses fixed-to-fixed cross-currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe. The Company has elected the spot method for designating these contracts as net investment hedges.
The total notional amount of net investment hedges as of January 31, 2026 and July 31, 2025 was €80 million, or $88.8 million. The maturity dates range from 2027 to 2029.
Based on the net investment hedges outstanding as of January 31, 2026, a 10% appreciation of the U.S. dollar compared to the Euro would result in a net gain of $9.0 million in the fair value of these contracts.
Interest Rates
The Company’s exposure to market risk for changes in interest rates primarily relates to debt obligations that are at variable rates, as well as the potential increase in the fair value of long-term debt resulting from a potential decrease in interest rates. As of January 31, 2026, the Company’s financial liabilities with exposure to changes in interest rates consisted mainly of $100.0 million outstanding on the Company’s unsecured revolving credit facility, €80 million, or $95.3 million, of a variable rate term loan, $200.0 million of a variable rate term loan and ¥2 billion, or $13.0 million, of variable rate senior notes. As of January 31, 2026, there were no variable short-term borrowings outstanding. Assuming a hypothetical 0.5 percentage point increase in short-term interest rates, with all other variables remaining constant, interest expense would have increased approximately $1.0 million in the six months ended January 31, 2026. The Company has no interest rate hedging agreements. Interest rate changes would also affect the fair market value of fixed-rate debt. As of January 31, 2026, the estimated fair values of fixed interest rate long-term debt were $254.6 million compared to the carrying values of $275.0 million. The fair values are estimated by discounting the projected cash flows using the interest rates at which similar amounts of debt could currently be borrowed.
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The interest on cash and cash equivalents will vary as short-term yields change. Assuming a hypothetical 0.5 percentage point increase in yields, with all other variables remaining constant, interest income would have increased approximately $0.5 million in the six months ended January 31, 2026.
Commodity Prices
The Company is exposed to market risk from fluctuating prices of purchased commodity raw materials, including steel, filter media and petrochemical-based products including plastics, rubber and adhesives. On an ongoing basis, the Company enters into selective supply arrangements that allow the Company to reduce volatility in its costs. The Company strives to recover or offset all material cost increases through price increases to its customers and the Company’s cost reduction initiatives, which include material substitution, process improvement and product redesigns. However, an increase in commodity prices could result in lower gross profit.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management of the Company, with the participation of its Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period. Based on their evaluation, as of the end of the period covered, the Company’s Chief Executive Officer and Chief Financial Officer concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective. The Company’s disclosure controls and procedures are designed so information required to be disclosed by the issuer in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (SEC) rules and forms and such information is accumulated and communicated to management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
No change in the Company’s internal control over financial reporting (as defined by Rule 13a-15(f) under the Exchange Act) occurred during the fiscal quarter ended January 31, 2026, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company records provisions when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and litigation are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the estimated liability in its Condensed Consolidated Financial Statements for claims or litigation is adequate and appropriate for the probable and estimable outcomes. Liabilities recorded were not material to the Company’s financial position, results of operations or liquidity. The Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued.
Item 1A. Risk Factors
There are inherent risks and uncertainties associated with the Company’s global operations that involve the manufacturing and sale of products for highly demanding customer applications throughout the world. These risks and uncertainties could adversely affect the Company’s business, reputation, financial condition or results of operations. In addition to the risk factor below, the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025 outlines the risks and uncertainties the Company believes are the most material to its business.
Facet Filtration Acquisition - we could be subject to new risks, known and unknown, relating to the Facet acquisition.
We may experience risks, losses and damages associated with the Facet acquisition. The risks we could face include the following:
•The Facet acquisition integration activities may involve complex operational, financial, and cultural alignment efforts. If management is unable to effectively balance integration activities with ongoing business needs, we may experience increased operating costs, reduced financial performance, or disruptions to our day‑to‑day operations. Any of these outcomes could materially and adversely affect our business, financial condition, or results of operations.
•The Facet acquisition involves the inherent risk of liabilities, and these liabilities may prove more costly or produce more adverse effects than we anticipate, such as actual or potential litigation and regulatory matters. In addition, in the course of the due diligence review of Facet, we may not have discovered, or may have been unable to quantify, undisclosed liabilities of Facet, and we may not be indemnified or have insurance for any of these liabilities. Any such liabilities could have an adverse effect on our business, results of operations, financial condition and cash flows following the completion of the Facet acquisition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Equity Securities
Information in connection with purchases made by, or on behalf of, the Company or any affiliated purchaser of the Company, of shares of the Company’s common stock during the three months ended January 31, 2026 was as follows:
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| November 1 - November 30, 2025 | 199,844 | $ | 85.12 | 199,844 | 4,500,831 | |||||||||||||||||||||
| December 1 - December 31, 2025 | — | — | — | 4,500,831 | ||||||||||||||||||||||
| January 1 - January 31, 2026 | — | — | — | 4,500,831 | ||||||||||||||||||||||
| Total | 199,844 | $ | 85.12 | 199,844 | 4,500,831 | |||||||||||||||||||||
In November 2023, the Board of Directors authorized the repurchase of up to 12.0 million shares of the Company’s common stock under the Company’s stock repurchase plan. This repurchase authorization is effective until terminated by the Board of Directors. The Company has remaining authorization to repurchase 4.5 million shares under this plan. There were no repurchases of common stock made outside of the Company’s current repurchase authorization during the three months ended January 31, 2026. While not considered repurchases of shares, the Company does at times withhold shares that would otherwise be issued under stock-based awards to cover the withholding of taxes due as a result of exercising stock options or payment of stock-based awards.
Item 3. Defaults Upon Senior Securities
Not applicable.
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Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended January 31, 2026, no director or officer of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits
3-A* | |||||
| 101 | The following financial information from the Donaldson Company, Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2026, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Changes in Stockholders’ Equity and (vi) the Notes to Condensed Consolidated Financial Statements | ||||
| 104 | The cover page from the Donaldson Company Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2026, formatted in iXBRL (included as Exhibit 101) | ||||
| * | Exhibit has previously been filed with the Securities and Exchange Commission and is incorporated herein by reference as an exhibit. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DONALDSON COMPANY, INC. | ||||||||
| (Registrant) | ||||||||
| Date: February 26, 2026 | By: | /s/ Tod E. Carpenter | ||||||
Tod E. Carpenter Chairman, President and Chief Executive Officer (Principal Executive Officer) | ||||||||
| Date: February 26, 2026 | By: | /s/ Bradley J. Pogalz | ||||||
Bradley J. Pogalz Chief Financial Officer (Principal Financial Officer) | ||||||||
| Date: February 26, 2026 | By: | /s/ Andrew J. Cebulla | ||||||
Andrew J. Cebulla Vice President and Corporate Controller (Principal Accounting Officer) | ||||||||
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