DONALDSON Co INC recently released its 10-K report for the year ended July 31, 2025. Donaldson Company, Inc., founded in 1915 and based in Bloomington, Minnesota, makes and sells filtration systems and replacement parts worldwide. Its business is organized into Mobile Solutions, Industrial Solutions, and Life Sciences, serving OEMs, distributors, and end users across construction, mining, agriculture, transportation, industrial, aerospace and defense, food and beverage, microelectronics, and bioprocessing markets.
In Item 7, management says the discussion should be read alongside Item 8 and notes that the MD&A includes forward-looking statements and non-GAAP measures such as constant-currency comparisons. The company says its results are shaped by global economic and geopolitical conditions, with diversification across end markets, geographies, technologies, and replacement-part sales helping reduce the effect of weakness in any one area.
For the year ended July 31, 2026, net sales rose to $3.886 billion from $3.691 billion, up $194.7 million, or 5.3%. Mobile Solutions contributed $2.420 billion of sales, up $128.7 million; Industrial Solutions rose to $1.133 billion, up $28.3 million; and Life Sciences increased to $333.2 million, up $37.7 million. Foreign currency translation added $67.6 million to sales, including $42.0 million in Mobile Solutions, $15.5 million in Industrial Solutions, and $10.1 million in Life Sciences.
Gross profit was $1.346 billion, compared with $1.286 billion a year earlier, while gross margin slipped to 34.6% from 34.8%. Cost of sales increased to $2.540 billion from $2.405 billion. Management tied the margin decline mainly to operational inefficiencies from shifting Power Generation equipment production to a new manufacturing point and to footprint optimization costs, partly offset by favorable mix, pricing, and volume leverage.
Selling, general and administrative expenses increased to $679.2 million from $642.2 million. The company pointed to $8.9 million of additional amortization from the Facet acquisition, a $4.0 million prior-year benefit from reducing the Purilogics contingent consideration liability that did not repeat, and normal inflation, partly offset by expense discipline. Research and development fell to $76.1 million from $87.8 million, a decline of $11.7 million, as the company prioritized projects.
Operating income rose to $599.9 million from $495.4 million, and operating margin improved to 15.4% from 13.4%. The prior year included a $62.0 million impairment charge; there was no impairment charge in 2026. Operating income also benefited from a $9.3 million gain on sale of fixed assets, up from $1.2 million a year earlier.
Interest expense climbed to $36.0 million from $24.2 million, reflecting higher debt tied to the Facet acquisition. Other income, net was $21.9 million versus $21.0 million, helped by higher income from equity investments and joint ventures, partly offset by higher pension expense. Pretax income increased to $585.8 million from $492.2 million.
Income tax expense was $132.0 million, compared with $125.2 million, while the effective tax rate fell to 22.5% from 25.4%. Management attributed the lower rate mainly to the tax effect of the prior-year impairment charge and higher excess tax benefits from stock-based compensation. Net earnings increased to $453.8 million from $367.0 million, and diluted EPS rose to $3.85 from $3.05.
By geography, U.S. and Canada sales were $1.652 billion, or 42.5% of total net sales; EMEA was $1.136 billion, or 29.2%; APAC was $689.5 million, or 17.7%; and LATAM was $408.1 million, or 10.6%. Management also highlighted tariff exposure, noting that trade actions and retaliatory measures can affect supply chains, procurement cycles, and customer demand, and said it continues to use its global manufacturing footprint to offset cost pressure. As a result of these announcements, the company's shares have moved -0.16% on the market, and are now trading at a price of $86.60. For the full picture, make sure to review DONALDSON Co INC's 10-K report.
