Donaldson Company delivered a solid Q4 2024 performance with momentum across multiple segments and clear execution on a strategy designed to compound earnings over the next several years. Revenue for the fourth quarter was $935.4 million, up 6% year over year, driven primarily by higher volumes and aided by a modest pricing tailwind. The company reported a gross margin of 36.2% in the quarter and a 16.3% operating margin, underscoring disciplined cost management and favorable mix, with full-year gross margin at 35.6% and operating margin at 15.4% on a GAAP basis. Net income for the quarter was $109.7 million, or $0.94 per share (GAAP), with adjusted EPS of $3.42 for the full year, a 13% increase from the prior year. Cash flow remained robust, evidenced by a cash conversion of 93% in Q4 and a three-year trajectory of capital deployment that supports returning capital to shareholders (dividends and buybacks) while funding growth.
Management highlighted several levers underpinning the outlook: continued margin expansion in Mobile Solutions and Industrial Solutions driven by mix, volume, pricing, and deflation of select input costs; resilient Aftermarket strength; and a measured but meaningful ramp in Life Sciences, supported by the Medica S.p.A. investment in hollow fiber membrane technology. Donaldson guided 2025 sales growth of 2%â6% and an adjusted operating margin of 15.3%â15.9%, with adjusted EPS of $3.56â$3.72. For 2026, the company raised target margins in Mobile (18.1%â18.9%) and Industrial (17.8%â18.6%), signaling ongoing profitability upside even as Life Sciences earnings leverage remains more muted given macro headwinds. The long-term plan remains intact: grow profitability through a diversified, technology-led portfolio, sustain a meaningful R&D cadence, pursue select M&A (notably Life Sciences and Industrial Services), and maintain an active capital return program.
Key takeaways for investors include the following: (1) the base business is delivering resilient profitability with a strong cash-generating profile; (2) Life Sciences remains a growth vector but carries higher execution risk due to a slower bioprocessing ramp; (3) balance sheet strength and a disciplined capital allocation framework underpin the ability to fund growth, fund acquisitions, and return capital; (4) the path to higher long-term margins is intact, supported by mix and pricing advantages across core segments and ongoing cost optimization initiatives.