Donaldson narrows FY25 adjusted EPS view to $3.60-$3.68, consensus $3.63

Adjusted full-year EPS guidance is narrowed to between $3.60 and $3.68, excluding $0.06 of first half fiscal 2025 restructuring and business development charges, and the midpoint is consistent with previous guidance. 2024 GAAP and adjusted EPS were $3.38 and $3.42, respectively. Sales are forecast to be flat to up 4% compared with prior year, with a headwind from currency translation of roughly 1% and a pricing benefit of approximately 1%. Mobile sales are projected to be down 1% to up 3% versus 2024. Off-Road sales are expected to decline mid-single digits due to end-market weakness, particularly in agriculture. On-Road sales are forecast to decrease low-double digits due to an exit from non-strategic product sales combined with a decline in global truck production. Aftermarket sales are projected to increase low-single digits, driven by robust OEM channel demand and market share gains. Industrial sales are forecast to grow between 1% and 5% year over year. IFS sales are projected to increase low-single digits with growth across most businesses, including dust collection, Industrial Hydraulics and Industrial Gases. Aerospace and Defense sales are expected to increase high-single digits as robust end-market conditions continue. Life Sciences sales are forecast to grow high-single digits compared with 2024 driven by growth in Disk Drive and Food & Beverage. Adjusted operating margin, resulting from solid gross margin and operating expense leverage, is expected to be between 15.6% and 16.0%, up from previous guidance of 15.3% and 15.9%, and versus 15.2%, or 15.4% on an adjusted basis, in 2024. Interest expense is estimated to be approximately $21 million and other income is forecast to be between $18 million and $20 million. Donaldson (DCI) projects a fiscal 2025 effective income tax rate of between 23% and 25%. Capital expenditures are forecast to be between $85 million and $100 million and free cash flow conversion is expected to be between 85% and 95%. For the full year, Donaldson anticipates repurchasing 2% to 3% of its shares outstanding.