Donaldson raises FY25 adjusted EPS view to $3.64-$3.70, consensus $3.60

Prior view was $3.60-$3.68. Sales are forecast to increase 1% to 3% year over year, consistent with previous expectations. FY25 consensus $3.66B. Pricing is expected to contribute one percentage point of the increase. Impacts from currency translation and tariffs are projected to be immaterial. Mobile sales are projected to be flat to up 2% versus prior year. Off-Road sales are forecast to decline mid-single digits as weak end-market conditions persist, particularly in agriculture. On-Road sales are expected to decrease high teens driven by an exit from non-strategic product sales, as well as a decrease in global truck production. Aftermarket sales are forecast to grow low-single digits, resulting from robust OEM channel demand and market share gains. Industrial sales are forecast to increase between 2% and 4% compared with 2024. IFS sales are expected to grow low-single digits, driven by growth across most businesses, including dust collection, Industrial Hydraulics and Industrial Gases. Aerospace and Defense sales are forecast to increase low teens, supported by strong end-market conditions. Life Sciences sales are projected to grow high-single digits versus 2024 as a result of healthy market demand in Disk Drive and Food & Beverage replacement parts sales. Adjusted 2025 operating margin is expected to improve to between 15.6% and 16.0% versus 15.2%, or 15.4% on an adjusted basis, in 2024, driven by operating expense discipline and sales leverage. Interest expense is estimated to be approximately $23 million and other income is forecast to be between $18 million and $20 million. Donaldson (DCI) projects a fiscal 2025 adjusted effective income tax rate of between 23% and 24%. Capital expenditures are forecast to be between $75 million and $90 million and adjusted free cash flow conversion is expected to be between 80% and 90%. For the full year, Donaldson anticipates repurchasing between 3.5% and 4.0% of its shares outstanding.