Donaldson (DCI) Stock Charges Higher as Buybacks Gobble Up 3.3% of Float

Earnings momentum kicks into overdrive—just as management opens the shareholder candy store with aggressive repurchases.

Buyback bonanza hits warp speed: Donaldson’s 2025 stock repurchase program now devours 3.3% of outstanding shares. Street cheers the capital return strategy while quietly wondering if this is just financial engineering to mask slowing organic growth.

Another quarter, another earnings beat—because why break the habit when Wall Street’s addiction to raised guidance pays so well? The industrial filtration play keeps filtering profits straight to investors’ pockets.

TLDR

• DCI soared to $73.44 as adjusted EPS hit $0.99 and share repurchases fueled investor confidence.

• Adjusted net income climbed 4.8% to $118.9M, overcoming $62M in asset impairments.

• DCI raised full-year guidance as Q3 margins improved and 3.3% of shares were bought back YTD.

• Aerospace & Defense surged 27.1%, offsetting declines in Mobile Solutions and bioprocessing delays.

• Q3 saw $192M in buybacks, a dividend hike, and stronger guidance, reinforcing bullish sentiment.

Donaldson Company, Inc. (NYSE: DCI) stock climbed on June 3 following its fiscal Q3 earnings report and capital return updates. The stock touched an intraday high of $73.44 after opening below $69, before closing at $71.21. Strong adjusted earnings and a 3.3% year-to-date share repurchase supported bullish momentum.

Donaldson Company, Inc. (DCI)

Adjusted Earnings Show Strength Amid Intangible Asset Impairments

Donaldson reported GAAP net income of $57.8 million for the third quarter, impacted by $65.8 million in non-recurring charges. These charges included a $62 million impairment of intangible assets from bioprocessing subsidiaries Univercells Technologies and Solaris. However, adjusted net income reached $118.9 million, showing a 4.8% year-over-year increase.

The company posted adjusted earnings per share (EPS) of $0.99, up 7.6% compared to the prior year’s $0.92. It reported total sales of $940.1 million, supported by pricing gains and modest volume growth across key markets. Donaldson’s adjusted operating margin ROSE to 16.3%, driven by improved cost control and reduced warranty expenses.

Donaldson Company, $DCI, Q3-25. Results:

📊 Adj. EPS: $0.99 🟢
💰 Revenue: $940.1M 🟢
🔎 Record sales and adjusted EPS despite impairment charges; strong aftermarket and Aerospace & Defense demand boosted results. pic.twitter.com/XNdiJrbefA

— EarningsTime (@Earnings_Time) June 3, 2025

Gross margin fell to 34.2% from 35.6% due to higher production costs, though adjusted gross margin stood at 34.5%. Operating expenses jumped to 24.9% of sales, but excluding charges, adjusted operating expenses improved to 18.2%. The firm also raised its adjusted EPS guidance midpoint by $0.03, projecting full-year EPS between $3.64 and $3.70.

Segment Performance Mixed as Industrial Division Leads

Mobile Solutions sales dipped 0.4%, weighed by weak transportation and agricultural markets, though aftermarket parts demand showed growth. On-Road sales dropped 24.5% and Off-Road declined 8.3%, but independent channels helped boost overall aftermarket sales by 3.3%. Price adjustments helped partially offset volume pressures in the segment.

Industrial Solutions recorded a 5.3% sales increase, mainly driven by solid Aerospace and Defense growth of 27.1%. Industrial Filtration Solutions also saw a 1.4% increase as replacement part demand remained steady despite slower new equipment sales. Donaldson anticipates 2% to 4% growth in industrial sales for the full year.

Life Sciences sales rose 0.7% amid strength in Disk Drive and Food & Beverage replacement products, offset by bioprocessing delays. The company expects high single-digit growth in the segment, citing stable end-market conditions. Market demand for industrial bioreactors and early-stage bioprocessing assets has softened considerably.

Shareholder Returns Accelerate Through Dividends and Buybacks

Donaldson repurchased 2.4% of its shares in Q3, totaling $192.4 million in buybacks. This brought total buybacks to 3.3% of outstanding shares year-to-date, with a full-year target of up to 4%. The company also paid $32.3 million in dividends during the quarter.

Capital returns remain a key focus, with Donaldson increasing its quarterly dividend by 11% this year. Year-to-date dividends now stand at $96.9 million. The firm plans to allocate between $75 million and $90 million in capital expenditures, prioritizing growth and operational improvements.

The company’s tax rate rose to 33.6%, though the adjusted rate was 22.1%, which was in line with expectations. Due to higher rates, interest expense rose slightly to $5.7 million, while other income totaled $5.3 million. Donaldson projects adjusted free cash FLOW conversion between 80% and 90% for the full fiscal year.