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Excrept from filing document 2025-07-31

As of January 31 2025 the last business day of the registrant s most recently completed second fiscal quarter the aggregate market value of voting and non voting common stock held by non affiliates of the registrant was 8 462 489 351 based on the closing price of 71 19 as reported on the New York Stock Exchange as of that date
is a global leader in technology led filtration products and solutions serving a broad range of industries and advanced markets Donaldson s diverse and skilled employees at more than 150 locations on six continents 77 of which are manufacturing and or distribution centers partner with customers from small business owners to the world s largest
Customers choose Donaldson s filtration solutions due to their stringent technical and performance requirements the need for reliability and the value proposition of Donaldson s solutions and or services
Donaldson s four regions and their contributing share of fiscal year 2025 revenue are as follows the U S and Canada 44 2 Europe Middle East and Africa EMEA 27 8 Asia Pacific APAC 17 2 and Latin America LATAM 10 8 Below are the Company s manufacturing plants and distribution centers by region
The Mobile Solutions segment which represents 62 1 of net sales in fiscal 2025 is organized based on a combination of customers and products and consists of the Off Road On Road and Aftermarket business units Within these business units products consist of replacement filters for both air and liquid filtration applications and filtration housings for new equipment production and systems related to exhaust and emissions Applications include air filtration systems fuel lube and hydraulic systems emissions systems and sensors indicators and monitoring systems Mobile Solutions sells to original equipment manufacturers OEMs in the construction mining agriculture and transportation end markets and to independent distributors and OEM dealer networks
The Industrial Solutions segment which represents 29 9 of net sales in fiscal 2025 is organized based on product type and consists of Industrial Air Filtration Industrial Gases Industrial Hydraulics Power Generation and Aerospace and Defense products These products are further organized by the Industrial Filtration Solutions and Aerospace and Defense business units Within our industrial portfolio the Company provides a wide product offering in the market to industrial customers consisting of equipment ancillary components replacement parts performance monitoring and service globally that cost effectively enhances productivity and manufacturing efficiency Industrial Air Filtration Industrial Gases and Industrial Hydraulics products consist of dust fume and mist collectors compressed air and industrial gases purification systems hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes Power Generation products consist of air inlet systems and filtration sold to gas compression power generation and natural gas liquification industries Aerospace and Defense products consist of air fuel lubrication and hydraulic filtration for fixed wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms Industrial Solutions businesses sell through multiple channels which include OEMs distributors and direct to consumer in some markets
The Life Sciences segment which represents 8 0 of net sales in fiscal 2025 is organized by end market and consists of the Food and Beverage Disk Drive Vehicle Electrification and Medical Device Microelectronics and Bioprocessing Equipment and Consumables markets Within these markets products consist of micro environment gas and liquid filtration for food and beverage and industrial processes bioprocessing equipment including bioreactors and fermenters bioprocessing consumables including chromatography devices reagents and filters polytetrafluoroethylene membrane based products as well as specialized air and gas filtration systems for applications including hard disk drives semiconductor manufacturing sensors battery systems and powertrain components Life Sciences primarily sells to large OEMs and directly to various end users requiring cell growth separation purification high purity filtration and device protection
The Company sells a diverse group of products within each segment and the business units within the segments Below are the product groups across the Company s three segments represented as a percentage of total fiscal 2025 net sales
Air filtration systems are vital for safeguarding engine components against abrasive wear caused by dust particles These systems play a pivotal role in supporting agricultural construction and mining machinery as well as commercial vehicles Donaldson s air filtration solutions are globally renowned featuring the standard in pleated cellulose filters The company also offers advanced air filtration technologies including PowerCore
media technology delivers robust filtration in the harshest environments such as high temperature and humid conditions frequently encountered by diesel turbine hybrid and other powered engines Our Ultra Web
HD media technology further enhances our fine fiber performance by ensuring consistent inter fiber spacing at a microscopic level This makes it ideal for extreme fine dust environments commonly found in mining and high soot industries
Fuel and lube systems achieve optimal operations when contaminants are removed The various components of the engine impacted include fuel injectors valves pumps bearings and actuators Fuel filters include primary and secondary particulate filters coalescing fuel water separators barrier fuel water separators and all in one filtration systems The Company s technology includes Synteq
XP filtration technology which offers significantly higher fuel system protection and longer life under dynamic application conditions compared to commercially available alternatives In addition Donaldson s Synteq
XP coalescing technologies remove significantly more water in real world conditions than current barrier or coalescing filters on the market Fuel and lube filtration supports agricultural construction and mining machinery and commercial vehicles
Hydraulic products provide filtration solutions typically for the same equipment that is filtered by fuel and lube systems Applications include a suction strainer to protect the pump high pressure filters a charge pump or transmission filter a return line filter prior to the reservoir and a breather filter located on the reservoir
filter the Company s primary mobile hydraulics filter is renowned for its achievement of higher pressure in a spin on configuration allowing it to be designed on systems where other more costly harder to service options were previously used The Duramax
the Company s hydraulic filtration media features a first of its kind fine fiber layer to trap and lock particles during frequent flow rate changes delivering transformational improvement in hydraulic equipment protection Advanced contaminant retention results in cleaner oil and helps ensure that equipment will continue to perform better and longer with a lower risk of wear damage and unplanned downtime Hydraulics Systems support agricultural construction and mining machinery and transportation markets
Emissions products include sound reducing mufflers used on machinery and vehicles diesel powered machinery and commercial vehicles Emission control systems include diesel particulate filters exhaust fluid mixers and catalytic reduction substrates to reduce emissions of particulate matter nitrogen oxides and other greenhouse gases Emissions products support agricultural construction and mining machinery industries as well as transportation markets
Industrial air filtration systems collect dust fume and mist within manufacturing facilities Donaldson offers an innovative portfolio of cartridge style or bag house collectors that support customers throughout the entire equipment lifecycle from original consultation design and installation to post sale maintenance and services Customers are supported through a global network of channel partners and service centers which provide a quality customer experience Technology and features are continually added such as the iCue Connected Filtration Technology which proactively monitors a facility s dust collection equipment to reduce unplanned downtime supporting efficient operation and maintenance costs and better connect Donaldson with its end market customers enabling additional service opportunities With continued acquisition activities Donaldson has expanded its service capabilities and geographic presence enhancing its ability to meet customer service needs
Industrial dust fume and mist collectors and filters are utilized globally across major industries including metals mining transportation chemicals food and beverage pharmaceuticals construction materials and emerging markets such as electric vehicle manufacturing recycling and alternative power For example materials transformed in manufacturing such as metal grinding recycling plasma cutting mixing and welding can create air contamination that may inhibit the production environment which can be collected and filtered by Donaldson s products
Power generation provides leading OEMs air inlet equipment systems that deliver filtration and air handling performance Power Generation filtration components are custom engineered air intake systems for gas turbines and industrial compressors for both new and retrofit applications Aftermarket filters and parts are used in a variety of applications including cartridge filters panel and compact filters pulse systems inlet hood components filter retention hardware and accessories Power Generation filtration components are in power plants oil and gas delivery systems other industrial applications and refining and processing machinery
Aerospace and defense products are specifically designed to protect critical systems from contamination to ensure proper and efficient operation The filtration portfolio includes engine intake cabin air avionics air fuel lubrication and hydraulics Applications are found on fixed wing aircraft helicopters ground defense vehicles and naval vessels
Industrial gases provides solutions for challenging industrial gas purification objectives with premium filtration drying and purification products This includes delivering dust and particle collectors for air compressors at the inlet and output of air compressors and lube fuel and air oil separators used in a manufacturing environment
Major product categories include dryers compressed air gases and steam Filtration involved in liquids sterile and condensation management are part of the portfolio as well Industrial gases products are used within major industries including metals mining transportation chemicals and construction materials
Industrial hydraulics helps to solve customers toughest contamination challenges with premium filtration products for hydraulics and lubrication Hydraulic oil is adversely affected by contaminants such as wear metals particulate water and oxidation by products Contaminated fluid reduces performance and shortens lives of various system components including valves pumps bearings and actuators Industrial hydraulic applications include steel mills paper mills refineries oil and gas exploration plastic molding general manufacturing and power generation Industrial hydraulics also supports the OEM fluid power and lubrication systems that support those industries
Donaldson s food and beverage business provides filtration solutions that enable process and product integrity for food and beverage manufacturing and support development of sustainable foods Key products and applications include sterile liquid air and steam filtration compressed air dryers bioreactors and fermenters and tangential and direct flow filtration
Disk drive delivers products that have advanced materials and absorbent technologies to control moisture and contaminants in microenvironments Disk drive filters work in the background to help protect critical components in cloud computing streaming storage sharing and business to business interaction Key products and applications include particle filters chemical filters and relative humidity control
Vehicle electrification and medical device equipment provide a broad range of filters that protect devices and enclosures from pressure fluctuation liquids and harmful contaminants Key products include battery powertrain and headlight vents for the automotive industry including for electric vehicles as well as venting solutions for hearing aids ostomy bags and implantable devices
Microelectronics delivers product filtration solutions for gas phase molecular contamination at fabrication tool and point of use locations It offers protection and filtering for a broad spectrum of contaminants that can degrade tools affect critical processes and impact production yield which enables increased processing speeds and miniaturization of semiconductors Key products and applications include lithography process air filtration point of use chemical filtration compressed air dryers and liquid filtration
Donaldson s bioprocessing business provides equipment and consumables to support the development and production of biologic drugs and genetic medicines including mAbs mRNA and cell and gene therapies along with many other applications that use a bioprocessing workflow
Isolere is an early stage biotechnology company that has developed novel and proprietary IsoTag reagents used for the purification and streamlined manufacturing of biopharmaceuticals Aimed initially at the purification of viral vectors used for cell and gene therapies IsoTag reagents are designed to substantially improve product quality and purity with faster timelines compared to competing solutions
UTEC is a global producer of innovative biomanufacturing solutions for cell and gene therapy research development and commercial manufacturing UTEC s product offering includes the unique scale X single use structured fixed bed bioreactor for the intensified production of viruses used in cell and gene therapy viral vaccines and other therapeutics In addition UTEC s automated NevoLine Upstream platform incorporates industry standard filtration to provide integrated up and mid stream processing capabilities in a single unit driving productivity improvements a reduction in operational footprints and greater consistency of results
Solaris designs and manufactures bioprocessing equipment including bioreactors fermenters and tangential flow filtration systems for use in pharma food and beverage and many other applications that require bioprocess technology
Purilogics is an early stage biotechnology company that has developed novel and proprietary Purexa membrane chromatography products used for the purification and streamlined manufacturing of biopharmaceuticals Aimed initially at the purification of pDNA mRNA and mAbs Purilogics platform is able to address a wide range of biologics Purilogics Purexa membranes have significant competitive advantages over traditional resin and monolith technologies enabling improved productivity speed and production costs
Principal methods of competition in the Mobile Solutions Industrial Solutions and Life Sciences segments are technology innovation product performance service price and geographic coverage The Company participates in a number of highly competitive filtration markets in all segments Donaldson believes it is a market leader within many of its product lines specifically within its Off Road and On Road product lines for OEMs and in the Aftermarket business for replacement filters The Mobile Solutions segment s principal competitors include several large global competitors and many regional competitors especially in the Aftermarket business The Industrial Solutions segment s principal competitors vary from country to country and range from large global competitors to a significant number of smaller competitors who compete in a specific geographical region or in a limited number of product applications The Life Sciences segment s principal competitors include several large global competitors as well as niche players in the individual markets served by the segment
of the Company s cost of sales On an ongoing basis the Company enters into selective supply arrangements with certain of its suppliers that allow the Company to reduce volatility in its costs The Company strives to recover or offset all material cost increases through selective price increases to its customers and the Company s cost reduction initiatives which include material substitution process improvement and product redesigns
Backlog is one of many indicators of business conditions in the Company s markets However it is not always indicative of future results for a number of reasons including the timing of the receipt of orders as well as product mix Backlog orders expected to b
Many of the Company s end markets are generally stronger in the second half of the Company s fiscal year In addition the first half of the fiscal year contains more holiday periods which typically include more customer plant closures
The Company s results of operations are affected by conditions in the global economic and geopolitical environment Under most economic conditions the Company s market diversification between the regions and various end markets it serves and diversification through its OEM and replacement parts customers has helped to limit the impact of weakness in any one product line market or geography on the consolidated operating results of the Company
Investment in research and development strengthens the Company s material science capabilities and supports development of new and improved products and solutions Research and development expenses include scientific research costs such as salaries facility costs testing technical information technology and administrative expenditures Research and development expenses are for the application of scientific advances to the development of new and improved products and their uses Substantially all research and development is performed in house During the years ended July 31 2025 2024 and 2023 the Company spent 87 8 million 93 6 million and 78 1 million respectively on research and development activities which was 2 4 2 6 and 2 3 of net sales respectively
The Company owns a broad range of intellectual property rights relating to its products and services which it considers in the aggregate to constitute a valuable asset These include patents trade secrets trademarks copyrights and other forms of intellectual property rights in the U S and a number of foreign countries The Company protects its innovations arising from research and development through patent filings and owns a portfolio of over
Donaldson is subject to a wide variety of local state and federal governmental laws and regulations in the U S as well as the laws and regulations of other countries in which Donaldson conducts business including securities laws tax laws data privacy employment and pension related laws competition laws U S and foreign export and trade laws the Foreign Corrupt Practices Act FCPA and similar worldwide anti bribery laws government procurement regulations and laws governing improper business practices Donaldson strives to comply with applicable laws and regulations We have robust internal controls quality management systems and management systems related to compliance that govern our internal actions and mitigate our risk of non compliance We also have safeguards established to identify non compliance concerns through internal and external audits and risk assessments as well as an ethics helpline reporting system Failure to comply with these regulations however could lead to fines and other penalties
We are subject to local state federal and international environmental safety and health laws and regulations concerning among other things emissions to air discharges to water the generation handling storage transportation treatment and disposal of waste materials and the use of raw materials and goods such as iron steel aluminum electricity natural gas and hydrogen The operation of manufacturing plants unavoidably entails environmental safety and health risks and we could incur material unanticipated costs or liabilities in the future if any of these risks were realized in ways or to an extent that we did not anticipate
We believe that we operate in compliance in all material respects with applicable environmental laws and regulations Compliance with environmental laws and regulations requires continuing management effort and expenditures We have incurred and will continue to incur costs and capital expenditures to comply with these laws and regulations and to obtain and maintain the necessary permits and licenses We believe that the cost of complying with environmental laws and regulations will not have a material effect on our results of operations financial condition or cash flows but cannot assure that material compliance related costs and expenses may not arise in the future For example future adoption of new or amended environmental laws regulations or requirements or other circumstances could require us to incur costs and expenses that may have a material effect but cannot be presently anticipated
We believe that policies practices and procedures have been properly designed to prevent unreasonable risk of material environmental damage arising from our operations In fiscal 2025 the Company did not experience any material effect on its capital expenditures results of operations or financial condition due to compliance with government rules regulating the discharge of materials into the environment or otherwise relating to the protection of the environment nor does it expect such impact during fiscal 2026
We are also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the U S and other jurisdictions regarding privacy data protection and data security including those related to the collection storage use transmission and protection of personal information and other consumer customer vendor or employee data Such privacy and data protection laws and regulations including with respect to the
European Union s General Data Protection Regulation GDPR the Brazilian General Data Protection Law and the California Consumer Privacy Act of 2018 CCPA and the interpretation and enforcement of such laws and regulations are continuo
roduction related roles When necessary the Company s production facilities augment their resources utilizing contingent labor For over 100 years the Company has been making a difference with customers employees investors suppliers and communities through a collaborative and diverse workplace where every employee matters The Company prides itself on providing innovative technologies and solutions backed by talented and dedicated employees guided by its core values
The Company is comprised of a diverse global team With a broad base of capabilities cultures and perspectives employees reflect the communities they serve The Company promotes a collaborative workplace By working together the Company s employees can better understand and meet the customers needs Every role is recognized and individuals contributions have a direct impact The Company fosters learning and growth To help employees continue to learn and succeed in their careers while keeping pace with a rapidly changing global marketplace the Company provides multiple learning opportunities and programs including online courses and customized development plans
The Company is committed to the health wealth and work life balance of employees and offers competitive financial compensation packages that may include both base pay and bonus elements in addition to competitive benefits packages to help support individuals and their families To support the health and well being of employees in the U S and their dependents the Company offers subsidized health insurance and also provides an employee assistance program In other parts of the world the Company offers social programs specific to the countries in which it operates To help employees provide and prepare for the future the Company provides several other financial and non financial benefits
The Company attracts a qualified workforce through an inclusive and accessible recruiting process that utilizes online recruiting platforms campus outreach internships recruitment vendor partners job fairs and other recruitment tools The Company seeks to retain employees by offering competitive wages benefits and training opportunities as well as promoting a safe and healthy workplace The Company is committed to treating all applicants and employees with the same high level of respect regardless of their gender ethnicity religion national origin age marital status political affiliation sexual orientation veteran status gender identity disability or other protected status It is the Company s policy to comply with all applicable state local and international laws governing non discrimination in employment in every location where it operates This compliance includes terms and conditions of employment which cover recruiting hiring placement promotion termination layoff recall transfer leaves of absence compensation and training
The Company empowers its employees and provides the knowledge and tools needed to make safe decisions and mitigate risks Every employee is responsible for identifying and managing exposure to health and safety hazards and harmful environmental impacts A variety of training methods are available to fulfill these requirements including online learning training coaching or mentoring and group discussions and activities
For generations the Company s employees and their families give their time energy and aid to various philanthropic efforts addressing the needs of our local communities and helping transform lives Organizations are supported in partnership with the Donaldson Foundation and through numerous volunteer events
The Company makes its annual reports on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K proxy statements and other information including amendments to those reports available free of charge through its website at
as soon as reasonably practicable after it electronically files such material with or furnishes such material to the Securities and Exchange Commission SEC These filings are available on the SEC s website at
Also available on the Company s website are corporate governance documents including the Company s Code of Business Conduct and Business Conduct Help Line Corporate Governance Guidelines Audit Committee Charter Human Resources Committee Charter and Corporate Governance Committee Charter The information contained on the Company s website is not incorporated by reference into this Annual Report and should not be considered as part of this report
Ms Becker was appointed to Chief Legal Officer and Corporate Secretary in November 2022 Ms Becker joined the Company in 1998 and held positions as Senior Counsel and Assistant Corporate Secretary Assistant General Counsel and Vice President General Counsel and Secretary Prior to joining the Company Ms Becker was an attorney for Dorsey and Whitney LLP from 1991 to 1995 and was a Project Manager and Corporate Counsel for Harmon Ltd from 1995 to 1998
Mr Briseño was appointed President Industrial Solutions in November 2022 Mr Briseño joined the Company in 2003 and has held various positions including IAF District Manager IFS Latin America Business Manager Industrial Sales Director Latin America Managing Director Latin America and Vice President Latin America
Mr Carpenter was appointed Chairman President and Chief Executive Officer in November 2017 Mr Carpenter joined the Company in 1996 and has held various positions including Director of Operations Gas Turbine Systems General Manager Gas Turbine Systems General Manager Industrial Filtration Systems Vice President Global Industrial Filtration Systems Vice President Europe and Middle East and Senior Vice President Engine Products Mr Carpenter was appointed Chief Operating Officer in April 2014 and President and Chief Executive Officer in April 2015
Ms DeVincke was appointed Chief Human Resources Officer in October 2024 Ms DeVincke resumed employment with the Company in 2016 and has held various positions including Vice President Global Human Resources based in Leuven Belgium and Director Human Resources From 2008 to 2016 Ms DeVincke served as a consultant working on various projects for the Company and other companies with responsibility for issues related to human resources labor relations employee relations and talent acquisition Ms DeVincke was a Human Resources Generalist at the Company from 2001 to 2008 Prior to joining the Company Ms DeVincke practiced law and held Human Resources positions of increasing responsibility for United Defense Industries BAE systems
Mr Lewis was appointed Chief Operating Officer effective August 1 2025 Mr Lewis joined the Company in 2002 and has held various positions including President Life Sciences President Mobile Solutions Plant Manager Director of Operations General Manager Liquid Filtration General Manager Operations Vice President Global Operations and Senior Vice President Global Operations
Mr Pogalz was appointed Chief Financial Officer effective November 1 2024 Mr Pogalz joined the Company in 2015 and has held various positions including Vice President Finance Global FP A EMEA Finance Finance Director Europe Middle East and Africa and Director of Investor Relations Prior to joining the Company Mr Pogalz was the Senior Group Manager Investor Relations for Target Corporation from 2012 to 2015 Prior to that he held various FP A positions at Target Corporation from 2007 to 2012
The Company s we our or us business is subject to various risks and uncertainties The following discussion outlines what we believe to be the risk factors that could materially and adversely affect our business reputation financial condition and results of operations These risk factors should be considered with the Company s cautionary comments related to forward looking statements when evaluating information provided in this Annual Report Risks not currently known to the Company or which the Company currently believes are immaterial may also impair the Company s business reputation financial condition and results of operations The Company periodically reviews its strategies processes and controls with respect to risk identification
Due to the global reach of our operations our business is subject to a complex system of commercial and trade laws regulations and policies including those related to data privacy trade compliance anti corruption and anti bribery We experience exposure to and costs of complying with these laws and regulations Our global subsidiaries joint venture partners and affiliates are governed by laws rules and business practices that differ from those of the U S Our compliance programs may not adequately prevent or deter our employees agents distributors suppliers and other third parties with whom we do business from violating laws regulations or standards We may incur defense costs fines penalties damage to our reputation and business disruptions which could resul
Steps taken by governments to consider applying additional or new tariffs have the potential to disrupt existing supply chains impose additional costs on our business and could lead to other countries attempting to retaliate by imposing tariffs which would make our products more expensive for customers and in turn could make our products less competitive Any additional tariffs in the United States or retaliatory tariffs imposed by other governments could exacerbate the impact Any new substantial tariff increases on imports to the United States from Mexico China and the European Union EU should they be implemented and sustained for an extended period of time could have a material adverse effect on our business and our supply chain Changes in international trade policy could result in an adverse effect on our results of operations financial condition and cash flows due to the international footprint of our Company
There could be an occurrence of one or more unexpected events including a terrorist attack war or civil unrest a weather event a natural disaster a climate related event a pandemic or other catastrophes in countries in which we operate or in which our suppliers are located Such an event could result in physical damage to and complete or partial closure of our headquarters manufacturing facilities or distribution centers temporary or long term disruption in the supply of component products from some local and international suppliers disruption in the transport of our products to customers and disruption of information systems Existing insurance coverage may not provide protection for all costs that may arise from any such event Any disruption in our operations could have an adverse impact on our ability to meet our customer needs or may require us to incur additional expense in order to produce sufficient inventory Certain unexpected events could adversely impact our business results of operations financial condition and cash flows
We obtain raw materials including steel filter media petroleum based products and other components from third party suppliers We often concentrate our sourcing of some materials from one supplier or a few suppliers We rely in part on our suppliers to ensure they meet required quality and delivery standards An unanticipated delay in delivery by our suppliers could result in the inability to deliver our products on time and to meet the expectations of our customers We could experience an increase in the costs of doing business including increasing raw material prices and transportation costs which could have an adverse impact on our business results of operations financial condition and cash flows
Our success depends in large part on our ability to identify recruit engage train and retain highly skilled qualified and diverse personnel globally and successfully execute management transitions at leadership levels of the Company There is competition for talent with market leading skills and capabilities in new technologies Additionally in some locations we have experienced labor shortages causing significant wage inflation We may not be able to attract and retain qualified personnel and it may be difficult for us to compete effectively which could adversely impact our business results of operations financial condition and cash flows
Our ability to fulfill customer orders is dependent on our manufacturing and distribution operations Unexpected or extreme changes in demand could result in longer lead times because additional plant capacity takes significant time to bring online We cannot guarantee we will be able to adjust manufacturing capacity in the short term to meet higher customer demand Efficient operations require streamlining processes to maintain or reduce lead times which we may not be capable of achieving Unacceptable levels of service for key customers may result if we are not able to fulfill orders on a timely basis or if product quality warranty or safety issues result from compromised production We may not be able to adjust our production schedules to reflect changes in customer demand on a timely basis Due to the complexity of our manufacturing operations we may be unable to timely respond to fluctuations in demand which could adversely impact our business results of operations financial condition and cash flows
We operate in highly competitive markets and have numerous competitors that are already well established in those markets We expect our competitors to continue to improve the design and performance of their products and to introduce new products that could be competitive in both price and performance We believe we have certain technological advantages over our competitors but maintaining these advantages requires us to consistently invest in research and development sales and marketing and customer service and support There is no guarantee we will be successful in maintaining these advantages and we could encounter the commoditization of our key products We make investments in new technologies that address increased performance and regulatory requirements around the globe There is no guarantee we will be successful in completing development or achieving sales of these products or that
the margins on such products will be acceptable A competitor s successful product innovation could reach the market before ours or gain broader market acceptance which could adversely impact our business results of operations financial condition and cash flows
Certain industry market trends guide decisions we make in operating the Company and our growth could be threatened by disruptive technologies We may be adversely impacted by changes in technology that could reduce or eliminate the demand for our products These risks include wider adoption of technologies providing alternatives to diesel engines such as electrification of equipment or other alternative power solutions Such disruptive innovation could create new markets and displace existing companies and products resulting in significantly negative consequences for the Company If we do not properly address future customer needs we may be slower to adapt to such disruption which could adversely impact our business results of operations financial condition and cash flows
e technology performance reliability and availability geographic coverage and customer service Our customers continue to seek technological innovation productivity gains competitive prices reliability and availability from us and their other suppliers Additionally we sell through a variety of channels e g OEM dealer distributor and eCommerce in a diverse set of highly competitive filtration markets The variability complicates the supply chain affects working capital needs requires balance between relationships and drives a more targeted sales force As a result of these and other factors we may not be able to compete effectively which could adversely impact our business results of operations financial condition and cash flows
or more of our net sales in fiscal 2025 2024 or 2023 However a number of our customers are concentrated in similar cyclical industries e g construction agriculture mining oil and gas transportation power generation and disk drive resulting in additional risk based on their respective economic conditions Our success is also dependent on retaining key customers which requires us to successfully manage relationships and anticipate the needs of our customers in the channels in which we sell our products Changes in economic conditions could materially and adversely impact our business results of operations financial condition and cash flows
l projections assume certain ongoing productivity improvements as a key component of our business strategy to among other things contain manufacturing and operating expenses maintain competitiveness increase operating efficiencies and align manufacturing capacity to demand We may not be able to realize the expected benefits and cost savings if we do not successfully execute these plans while continuing to invest in business growth Such cost savings may not otherwise be realized or other difficulties could be encountered which could adversely impact our business results of operations financial condition and cash flows
We periodically communicate our strategies commitments and targets related to sustainability matters including greenhouse gas GHG emissions through the issuance of our Sustainability report Although we intend to meet these strategies commitments and targets we may be unable to achieve them due to impacts on resources operational costs and technological advancements In addition standards and processes for measuring and reporting GHG emissions and other sustainability metrics may change over time resulting in inconsistent data or significant revisions to our strategies commitments and targets or our ability to achieve them Our failure to achieve related strategies commitments and targets or failure to meet sustainability requirements could negatively impact our reputation as well as the demand for our products and adversely affect our business results of operations financial condition and cash flow
We have made and continue to pursue acquisitions and divestitures and may pursue joint ventures strategic investments and other similar strategic transactions Acquisitions joint ventures and strategic investments could negatively impact our profitability and financial condition due to operating and integration inefficiencies the incurrence of debt contingent liabilities and amortization of expenses related to intangible assets There are also a number of other risks involved in acquisitions including the potential loss of key customers or employees difficulties in assimilating the acquired operations and the diversion of management s time and attention away from other business matters
Divestitures may involve significant challenges and risks such as difficulty separating out portions of our business or the potential loss of revenue or negative impacts on margins The divestitures may also result in o
are used to process transmit and store electronic information and to manage or support a variety of business processes and activities which are critical to our operations We could encounter difficulties in developing new systems maintaining and upgrading our existing systems managing access to these systems managing the evolving use of artificial intelligence and preventing information security breaches Additionally we collect and store sensitive data including intellectual property and proprietary business information in data centers and on information technology networks
Our data is subject to a variety of U S and international laws and regulations that pertain to the collection and handling of personal information The laws require us to notify governmental authorities and affected individuals of data breaches involving certain personal information These laws include the European GDPR and the CCPA Regulatory litigation or actions that could impose significant penalties may be brought against us in the event of a breach of data or alleged non compliance with such laws and regulations
Information technology security threats are increasing in frequency and sophistication to date none of the threats faced by the Company have been material We have invested in protection to prevent these threats however there can be no assurance our efforts will prevent all potential failures cybersecurity attacks or breaches of our systems These threats pose a risk to the security of our systems and networks and the confidentiality availability and integrity of our data Should such an attack succeed it could lead to the compromise of confidential information manipulation and destruction of data defective products production downtimes and operation disruptions The occurrence of any of these events could adversely affect our reputation and could result in litigation regulatory action potential liability increased costs and operational consequences of implementing further data protection matters
The Company maintains insurance coverage for various cybersecurity and business continuity risks however there can be no guarantee all costs or losses incurred will be fully insured Vulnerabilities could lead to significant additional expenses and an adverse effect on our reputation business results of operations financial condition and cash flow
The ability to protect and enforce intellectual property rights varies across jurisdictions Where possible we seek to preserve our intellectual property rights through patents These patents have a limited life and in some cases have expired or will expire in the near future Competitors and others may also initiate litigation to challenge the validity of our intellectual property rights or allege that we infringe their intellectual property rights We may be required to pay substantial damages if it is determined our products infringe on their intellectual property rights We may also be required to develop an alternative non infringing product that could be costly and time consuming or acquire a license on terms that are unfavorable to us
Protecting or defending against such claims could significantly increase our costs and divert management s time and attention away from other business matters which could adversely impact our business results of operations financial condition and cash flows
We are subject to many laws and regulations in the jurisdictions in which we operate We routinely incur costs in order to comply with these laws and regulations We may be adversely impacted by new or changing laws and regulations that affect both our operations and our ability to develop and sell products that meet our customers requirements We are involved in various product liability product warranty intellectual property environmental claims and other legal proceedings that arise in and outside of the ordinary course of our business We are subject to increasingly stringent laws and regulations in the countries in which we operate including those governing the environment e g emissions to air discharges to water and the generation handling storage transportation treatment and disposal of waste materials and the use of raw materials and goods such as iron steel aluminum electricity natural gas and hydrogen and data protection and privacy It is not possible to predict the outcome of investigations and lawsuits and we could inc
ur judgments fines or penalties or enter into settlements of lawsuits and claims that could have an adverse effect on our reputation business results of operations financial condition and cash flows in any particular period In addition we may not be able to maintain our insurance at a reasonable cost or in sufficient amounts to protect us against any losses
We have operations in many countries with a substantial portion of our annual revenue earned in currencies other than the U S dollar We face transactional and translational risks associated with the fluctuations in foreign currency exchange rates Transactional risk arises from changes in the value of cash flows denominated in different currencies This can be caused by supply chains that cross borders resulting in revenues and costs being in different currencies Translational risk arises from the remeasurement of our financial statements In addition decreased value of local currency may make it difficult for some of our customers distributors and end users to purchase our products Each of our subsidiaries reports its results of operations and financial position in its relevant functional currency which is then translated into U S dollars This translated financial information is included in our Consolidated Financial Statements Significant fluctuations of the U S dollar in comparison to the foreign currencies of our subsidiaries during discrete periods may have a negative impact on our business results of operations financial condition and cash flows
Disruption of the global financial and credit markets may have an effect on our long term liquidity and financial condition There can be no assurance the cost or availability of future borrowings will not be impacted by future capital market disruptions Some of our existing borrowings contain covenants to maintain certain financial ratios that under certain circumstances could restrict our ability to incur additional indebtedness make investments and other restricted payments create liens and sell assets
Donaldson recognizes the critical importance of cybersecurity Protecting the confidentiality integrity and availability of our data we focus on building resilience into the very fabric of our enterprise digital ecosystem Our cybersecurity program is comprehensively integrated within our enterprise risk management and encompasses the enterprise information technology IT and operational technology OT environments Our cyber risk management program controls are based on industry recognized best practices and standards including the National Institute of Standards and Technology NIST Cyber Security Framework and the International Organization for Standardization ISO 27001 information security management system requirements
We seek to maintain an information technology infrastructure that implements risk based physical administrative and technical controls to safeguard our information systems and information stored on our networks including customer information personal information intellectual property and proprietary information
We perform 24x7 security monitoring and execute a cybersecurity incident response plan with a dedicated team to respond to cybersecurity incidents When a potential material cybersecurity incident is identified we deploy cross functional teams responsible for leading the initial assessment of priority and severity and external experts may also be engaged as appropriate Our cybersecurity teams prioritize responses to incidents depending on severity levels We continuously improve our cybersecurity incident management plan through periodic tabletop exercises or simulations at the enterprise and business levels
We require annual training for personnel for information security including information about the latest cybersecurity threats To equip employees with the knowledge to identify potential risks with tools to report any suspicious activities we implemented monthly phishing exercises that encompass various real life simulations We also practice scenario based simulation drills such as tabletop exercises for employees and contractors to enhance awareness and vigilance of potential threats For fast developing threat situations we utilize enterprise wide corporate communication channels to broadcast security alerts for the timely delivery of important information to our employees
We have IT systems essential to business operations managed by third parties These systems process transmit store electronic information and manage or support a variety of business processes and activities Before any engagement we conduct holistic risk assessments of third party providers We scrutinize multiple dimensions of risk factors including information security regulatory compliance and architectural design We established monitoring procedures to mitigate risks related to data breaches or other security incidents originating from third parties
We regularly engage third party consultants legal advisors and audit firms in evaluating and testing our risk management processes compliance with international standards and regulations and assessing potential cybersecurity threats as appropriate Any recommendations are tracked with senior IT ownership and timelines for remediation
We consider cyber risks among the top risks for us within our enterprise risk management framework This framework includes internal reporting at the business and enterprise levels with consideration of key risk indicators trends and countermeasures for cybersecurity and other types of significant risks As of the date of this Form 10 K we are not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect us including our business strategy results of operations or financial condition and that are required to be reported in this Form 10 K We do not believe we have experienced any risks from cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect us our business strategy or our results of operations or financial condition including for any of the three years ended July 31 2025 2024 or 2023 For further discussion of the risks associated with cybersecurity incidents refer to the cybersecurity risk factors in Item 1A Risk Factors in this Form 10 K
Our board of directors has oversight of overall risk management prioritizing the most significant risks including strategic operational financial and legal compliance risks The board s risk oversight process builds upon management s risk management processes which include processes for identifying assessing and managing material risks from cybersecurity threats The board implements its risk oversight function primarily through its audit committee which receives reports about our practices programs notable threats or incidents and other developments related to cybersecurity throughout the year To this extent the audit committee receives information about cybersecurity risks as part of our enterprise risk management framework and reporting The audit committee then assesses implemented cybersecurity controls to monitor and evaluate the mitigation of cybersecurity risks
Our Chief Information Officer CIO provides annual reports with additional updates as necessary to the board of directors Our CIO also attends annual audit committee meetings and provides cybersecurity updates which include specific cybersecurity topics covering material risks and threats Our CIO oversees the cybersecurity program With an extensive background in the IT industry our CIO has previously held CISO positions and other top global leadership roles that drove digital transformation and owned technology from end to end Our CIO leads a cross functional information security team comprised of experienced professionals from the global infrastructure and cybersecurity legal and compliance organizations Beyond information technology this leadership team also partners with our Enterprise Operations team managing the operational technology security of our manufacturing facilities
The Company s corporate headquarters and primary research facilities are located in Minneapolis Minnesota The Company also has administrative and engineering offices as well as research facilities in the regions of EMEA APAC and LATAM
The Company records provisions when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated Claims and litigation are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter The Company believes the estimated liability in its Consolidated Financial Statements for claims or litigation is adequate and appropriate for the probable and estimable outcomes Liabilities recorded were not material to the Company s financial position results of operations or liquidity The Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued
Information in connection with purchases made by or on behalf of the Company or any affiliated purchaser of the Company of shares of the Company s common stock during the three months ended July 31 2025 was as follows
In November 2023 the Board of Directors authorized the repurchase of up to 12 0 million shares of the Company s common stock under the Company s stock repurchase plan replacing the Company s previous stock repurchase plan dated May 31 2019 This repurchase authorization is effective until terminated by the Board of Directors The Company has remaining authorization to repurchase 5 9 million shares under this plan There were no repurchases of common stock made outside of the Company s current repurchase authorization during the three months ended July 31 2025 The Total Number of Shares Purchased column of the table above includes 5 167 shares of previously owned shares tendered by option holders in payment of the exercise price of options during the three months ended July 31 2025 While not considered repurchases of shares the Company does at times withhold shares that would otherwise be issued under stock based awards to cover the withholding of taxes due as a result of exercising stock options or payment of stock based awards
The graph below compares the cumulative total stockholder return on the Company s common stock for the last five fiscal years with the cumulative total return of the Standard Poor s S P 500 Stock Index and the S P Industrial Machinery Index The graph and table assume the investment of 100 in each of the Company s common stock and the specified indexes at the beginning of the applicable period and assume the reinvestment of all dividends
The following Management s Discussion and Analysis of Financial Condition and Results of Operations MD A provides a comparison of the Company s results of operations liquidity and capital resources for the years ended July 31 2025 and 2024 A discussion of the changes in the Company s results of operations and liquidity and capital resources for the year ended July 31 2024 from July 31 2023 can be found in Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of the Company s Annual Report on Form 10 K for the year ended July 31 2024 the 2024 Annual Report which was filed with the SEC on September 27 2024
The MD A should be read in conjunction with the Company s Consolidated Financial Statements and Notes included in Item 8 of this Annual Report This discussion contains forward looking statements that involve risks and uncertainties The Company s actual results could differ materially from those anticipated in these forward looking statements as a result of various factors including those discussed elsewhere in this Annual Report particularly Item 1A Risk Factors and in the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Excluding foreign currency translation from net sales and net earnings i e constant currency are not measures of financial performance under GAAP however the Company believes they are useful in understanding its financial results and provide comparable measures for understanding the operating results of the Company between different fiscal periods Reconciliations within this MD A provide more details on the use and derivation of these measures
Founded in 1915 Donaldson Company Inc is a global leader in technology led filtration products and solutions serving a broad range of industries and advanced markets Donaldson s diverse and skilled employees at more than 150 locations on six continents 77 of which are manufacturing and or distribution centers partner with customers from small business owners to the world s largest original equipment manufacturer
Customers choose Donaldson s filtration solutions due to their stringent technical and performance requirements the need for reliability and the value proposition of Donaldson s solutions and or services
The Company s operating segments are Mobile Solutions Industrial Solutions and Life Sciences The Mobile Solutions segment is organized based on a combination of customers and products and consists of the Off Road On Road and Aftermarket business units Within these business units products consist of replacement filters for both air and liquid filtration applications and filtration housings for new equipment production and systems related to exhaust and emissions Applications include air filtration systems fuel lube and hydraulic systems emissions systems and sensors indicators and monitoring systems Mobile Solutions sells to OEMs in the construction mining agriculture and transportation end markets and to independent distributors and OEM dealer networks
The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration Industrial Gases Industrial Hydraulics Power Generation and Aerospace and Defense products These products are further organized by the Industrial Filtration Solutions and Aerospace and Defense business units Within our industrial portfolio the Company provides a wide product offering in the market to industrial customers consisting of equipment ancillary components replacement parts performance monitoring and service globally that cost effectively enhances productivity and manufacturing efficiency Industrial Air Filtration Industrial Gases and Industrial Hydraulics products consist of dust fume and mist collectors compressed air and industrial gases purification systems hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes Power Generation products consist of air inlet systems and filtration sold to gas compression power generation and natural gas liquification industries Aerospace and Defense products consist of air fuel lubrication and hydraulic filtration for fixed wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms Industrial Solutions businesses sell through multiple channels which include OEMs distributors and direct to consumer in some markets
The Life Sciences segment is organized by end market and consists of the Food and Beverage Disk Drive Vehicle Electrification and Medical Device Microelectronics and Bioprocessing Equipment and Consumables markets Within these markets products consist of micro environment gas and liquid filtration for food and beverage and industrial processes bioprocessing equipment including bioreactors and fermenters bioprocessing consumables including chromatography devices reagents and filters polytetrafluoroethylene membrane based products as well as specialized air and gas filtration systems for applications including hard disk drives semiconductor manufacturing sensors battery systems and powertrain components Life Sciences primarily sells to large OEMs and directly to various end users requiring cell growth separation purification high purity filtration and device protection
The Company s results of operations are affected by conditions in the global economic and geopolitical environment Under most economic conditions the Company s diversification between its diesel engine end markets its global end markets its diversification through technology and its OEM and replacement parts customers has helped to limit the impact of weakness in any one product line market or geography on the consolidated operating results of the Company
The U S imposed tariffs on a wide range of imports with the potential for further tariff actions which resulted in retaliatory tariffs These trade measures along with updates to export controls and sanctions regimes pose ongoing risks to global supply chains potentially increasing the cost of goods straining procurement cycles and impacting customer demand The Company is closely monitoring the evolving trade landscape as well as its ability to mitigate the impact of tariffs and its analysis of the potential impact While the ultimate impact of tariffs remains uncertain the Company continues to expect annual costs related to recently implemented or increased tariffs of approximately 35 million which represents less than 1 of the Company s total sales and is expected to be largely offset by pricing increases
Any additional tariffs in the U S or retaliatory tariffs imposed by other governments could exacerbate the impact Any new substantial tariff increases on imports to the U S from Mexico China and the EU should they be implemented and sustained for an extended period of time could have a significant adverse effect on the Company and its supply chain
For additional information regarding the impact and potential impact of trade policy and tariffs on the Company refer to Part I Item 1A Risk Factors of this Annual Report which outlines the risks and uncertainties the Company believes are the most material to its business
The impact of foreign currency translation was calculated by translating current fiscal year foreign currency net sales into U S dollars using the average foreign currency exchange rates for the prior fiscal year The impact of currency translation does not change the underlying drivers of revenue shown in this chart
cting higher sales in the Mobile Solutions segment of 40 2 million or 1 8 the Industrial Solutions segment of 37 9 million or 3 6 and the Life Sciences segment of 26 5 million or 9 8 Foreign currency translation increased net sales by 8 3 million reflecting increases in the Industrial Solutions and Life Sciences segments of 4 7 million and 5 2 million respectively and a decrease in the Mobile Solutions segment of 1 6 million In fiscal 2025 the Company s net sales increased primarily from higher sales volume as well as pricing actions
July 31 2025 was 2 404 7 million compared with 2 311 9 million for the year ended July 31 2024 an increase of 92 8 million or 4 0 Gross margin as a percentage of net sales for the year ended July 31 2025 was 34 8 compared with 35 5 for the year ended July 31 2024 a decrease of 0 7 The decrease in gross margin as a percentage of net sales was driven primarily by higher manufacturing costs associated with footprint optimization initiatives and tariff related inflation on the Company s LIFO inventory valuation
al and administrative expenses for the year ended July 31 2025 were 641 0 million or 17 4 of net sales compared with 636 7 million or 17 8 of net sales for the year ended July 31 2024 an increase of 4 3 million or 0 7 The decrease in selling general and administrative expenses as a percentage of net sales was primarily due to ongoing disciplined expense management and a 4 0 million benefit from the reduction of the Purilogics contingent consideration liability which represents the fair value based on the probability of achieving certain milestones partially offset by restructuring business development and other non recurring expenses
Loss on impairment of intangible assets for the year ended July 31 2025 was 62 0 million or 1 6 of net sales compared with no expense for the year ended July 31 2024 The fiscal 2025 impairment expense included 46 6 million related to Univercells Technologies reflecting lower than anticipated bioprocessing capital spending particularly for early stage assets while drug development timelines are longer than previously anticipated The remaining 15 4 million of impairment expense was related to Solaris as market demand for industrial bioreactors had significantly declined
rch and development expenses for the year ended July 31 2025 were 87 8 million or 2 4 of net sales compared with 93 6 million or 2 6 of net sales for the year ended July 31 2024 a decrease of 5 8 million or 6 2 The decrease in research and development expenses as a percentage of net sales was primarily driven by focused project prioritization
st expense for the year ended July 31 2025 was 24 2 million compared with 21 4 million for the year ended July 31 2024 an increase of 2 8 million or 13 5 The increase primarily reflects a higher average level of indebtedness during fiscal 2025 compared to the prior year
Other income net for the year ended July 31 2025 was 21 0 million compared with 12 6 million for the year ended July 31 2024 an increase of 8 4 million or 66 8 driven primarily by lower pension related expenses in the current year
The effective tax rates were 25 4 and 22 7 for the years ended July 31 2025 and 2024 respectively The higher effective tax rate was primarily due to the fiscal 2025 third quarter loss on impairment of intangible assets as the discrete tax benefit on the loss on impairment of intangible assets was reduced by an increase in valuation allowance Excluding the impact of the loss on impairment of intangible assets the effective tax rate is higher due to a decrease in discrete tax benefits
The Organization for Economic Co operation and Development OECD released the Model GloBE Rules for Pillar Two on December 20 2021 which defined a 15 global minimum tax Since the model rules have been released many countries have enacted or continue to consider changes in their tax laws and regulations based on the Pillar Two proposals some of which became effective for tax years beginning after January 1 2024 We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available The Company does not expect Pillar Two to have a material impact on its financial statements as most jurisdictions in which the Company operates have an effective tax above the 15 threshold
Net earnings for the year ended July 31 2025 were 367 0 million compared with 414 0 million for the year ended July 31 2024 a decrease of 47 0 million or 11 3 Diluted EPS were 3 05 for the year ended July 31 2025 compared with 3 38 for the year ended July 31 2024
The impact of foreign currency translation was calculated by translating current fiscal year foreign currency net earnings into U S dollars using the average foreign currency exchange rates for the prior fiscal year
During fiscal 2025 the Company continued its global footprint and cost optimization actions to further improve the operating and manufacturing cost structure which began in fiscal 2024 These activities resulted in restructuring expenses primarily related to severance of 16 8 million and 6 4 million for the years ended July 31 2025 and 2024 respectively Charges of 6 5 million and 3 8 million were included in cost of sales in the Consolidated Statements of Earnings for the years ended July 31 2025 and 2024 respectively Charges of 10 3 million and 2 6 million were included in operating expenses in the Consolidated Statements of Earnings for the years ended July 31 2025 and 2024 respectively As of July 31 2025 and July 31 2024 7 1 million and 6 4 million of accrued expenses were included in accrued employee compensation and related taxes in the Consolidated Balance Sheets respectively The estimated range of future costs associated with actions related to this restructuring through fiscal 2026 is 5 0 million to 10 0 million
n conjunction with the organizational redesign the Company recorded 21 8 million of charges consisting of 15 3 million of severance charges and other organizational redesign costs and 6 5 million of costs mainly associated with the exiting of a lower margin customer program and a lower margin product Charges of 2 9 million were included in cost of sales and 18 9 million
The impact of foreign currency translation was calculated by translating current fiscal year foreign currency net sales into U S dollars using the average foreign currency exchange rates for the prior fiscal year The impact of currency translation does not change the underlying drivers of revenue shown in this chart
ent for the year ended July 31 2025 were 2 291 0 million compared with 2 250 8 million for the year ended July 31 2024 an increase of 40 2 million or 1 8 driven by a 14 7 million volume increase and a 27 1 million increase from pricing benefits The impact from foreign currency translation for the year ended July 31 2025 was not material
Net sales of Aftermarket increased 90 7 million due to volume increases driven by solid market demand and market share gains Net sales of On Road and Off Road decreased 29 2 million and 21 3 million respectively primarily due to a decline in global equipment production driven by weak end market conditions including transportation and agriculture
he Mobile Solutions segment for the year ended July 31 2025 were 417 6 million or 18 2 of net sales an increase from 18 0 of net sales for the year ended July 31 2024 The increase was driven by timing of inventory cost adjustments and leverage on higher sales
The impact of foreign currency translation was calculated by translating current fiscal year foreign currency net sales into U S dollars using the average foreign currency exchange rates for the prior fiscal year The impact of currency translation does not change the underlying drivers of revenue shown in this chart
the Industrial Solutions segment for the year ended July 31 2025 were 1 104 4 million compared with 1 066 5 million for the year ended July 31 2024 an increase of 37 9 million or 3 6 driven by a 22 4 million volume increase and a 10 8 million increase from pricing benefits Foreign currency translation positively impacted net sales for the Industrial Solutions segment by 0 5 Both IFS and Aerospace and Defense were positively impacted by foreign currency translation
Net sales of IFS increased 13 1 million driven by new equipment and replacement part sales strength in several key businesses Net sales of Aerospace and Defense increased by 24 8 million due to ongoing strength in these end markets
The impact of foreign currency translation was calculated by translating current fiscal year foreign currency net sales into U S dollars using the average foreign currency exchange rates for the prior fiscal year The impact of currency translation does not change the underlying drivers of revenue shown in this chart
were 295 5 million compared with 269 0 million for the year ended July 31 2024 an increase of 26 5 million or 9 8 driven by a 22 9 million volume increase partially offset by a 1 6 million decrease from pricing The net sales increase was primarily driven by strong market demand in Disk Drive and strong market demand and market share gains in Food and Beverage Foreign currency translation positively impacted net sales for the Life Sciences segment by 1 9
Earnings before income taxes for the Life Sciences segment for the year ended July 31 2025 were 4 4 million or 1 5 of net sales an increase from losses of 10 4 million or 3 9 of net sales for the year ended July 31 2024 The increase in net earnings was driven by higher volume benefits from restructuring activities and a 4 0 million benefit from the reduction of the Purilogics contingent consideration liability which represents the fair value based on the probability of achieving certain milestones
Liquidity is assessed in terms of the Company s ability to generate cash to fund its operating investing and financing activities Significant factors affecting liquidity are cash flows generated from operating activities capital expenditures acquisitions dividends repurchases of outstanding s
d the ability to attract long term capital with satisfactory terms The Company generates substantial cash from the operation of its businesses as its primary source of liquidity with sufficient liquidity available to fund growth through reinvestment in existing businesses and strategic acquisitions
was 418 8 million compared with 492 5 million for the year ended July 31 2024 a decrease of 73 7 million The decrease in cash provided by operating activities was primarily driven by higher working capital requirements and the timing of income tax related payments
Cash used in investing activities for the year ended July 31 2025 was 150 4 million compared with 86 9 million for the year ended July 31 2024 an increase in cash used of 63 5 million The increase in cash used was primarily due to the equity method investment in Medica of 71 2 million
Cash used in financing activities generally relates to the use of cash for payment of dividends and repurchases of the Company s common stock net of borrowing activity and proceeds from the exercise of stock options Cash used in financing activities for the year ended July 31 2025 was 321 7 million compared with 355 9 million for the year ended July 31 2024 a decrease of 34 2 million The decrease was primarily driven by net proceeds from long term debt of 123 1 million in the current year compared to a net repayment of long term debt of 109 1 million in the prior year partially offset by an increase in the repurchases of the Company s common stock of 168 8 million and lower proceeds from the exercise of stock options
To determine the level of dividend and share repurchases the Company considers recent and projected performance across key financial metrics including earnings cash flow from operations and total debt Dividends paid for the years ended July 31 2025 and 2024 were 131 9 million and 122 8 million respectively Cash paid for share repurchases for the years ended July 31 2025 and 2024 were 331 5 million and 162 7 million respectively
Additional sources of liquidity are existing cash and available credit facilities Cash and cash equivalents as of July 31 2025 was 180 4 million compared with 232 7 million as of July 31 2024 A significant portion of the Company s cash and cash equivalents is held by subsidiaries throughout the world as over half of the Company s earnings occur outside the U S Additionally the Company has capacity of 759 6 million available for further borrowing under existing credit facilities as of July 31 2025
The Company s cash requirements within the next 12 months include short term borrowings accounts payable accrued expenses income taxes payable dividends payable purchase commitments and other current liabilities Additionally in fiscal 2026 the Company expects its cash paid for capital expenditures to be between 65 million and 85 million primarily associated with capacity expansion new products and technologies and maintaining the Company s existing assets
debt obligations and interest payments see Note 7 Short Term Borrowings and Long Term Debt in the Notes to Consolidated Financial Statements included in Item 8 of Part II in this Annual Report for further detail of the Company s debt and the timing of expected future principal and interest payments and
operating leases see Note 9 Leases in the Notes to Consolidated Financial Statements included in Item 8 of Part II in this Annual Report for further detail of our lease obligations and the timing of expected future payments
The Company believes the liquidity available from the combination of expected cash generated by operating activities existing cash and available credit under existing credit facilities will be sufficient to meet its cash requirements for the next 12 months and beyond including working capital needs debt service obligations capital expenditures payment of dividends share repurchase activity and potential acquisitions
As of July 31 2025 total debt including short term borrowings and long term debt represented 31 5 of total capitalization defined as total debt plus total stockholders equity compared with 26 5 as of July 31 2024
t outstanding as of July 31 2025 was 637 1 million compared with 508 4 million as of July 31 2024 an increase of 128 7 million In fiscal 2025 the increase in debt was driven primarily by financing needs for the equity method investment in Medica
During the fourth quarter of fiscal 2025 the Company entered into an amendment to its 500 0 million revolving credit facility The amendment provides for the following modifications to the existing agreement i the maturity date of the revolving credit facility was extended from May 21 2026 to June 12 2030 ii the aggregate revolving credit limit was increased from
iii a new term loan facility was added in the amount of 200 0 million with a maturity date of June 12 2028 which was fully advanced on the closing date iv the revolving credit facility was repaid in part with the proceeds of the term loan facility and v the incremental credit facility option was increased from 250 0 million to 350 0 million and may be in the form of an increase to the revolving credit facility and or incremental term loans
In order to help measure and analyze the impact of working capital management the Company calculates days sales outstanding as the average accounts receivable net for the quarter divided by net sales for the quarter multiplied by the number of days in the quarter The Company calculates days inventory outstanding as the average inventories net for the quarter divided by cost of sales for the quarter multiplied by the number of days in the quarter The Company calculates days payable outstanding as the average accounts payable for the quarter divided by cost of sales for the quarter multiplied by the number of days in the quarter The Company calculates net cash cycle as the sum of days sales outstanding and days inventory outstanding less days payables outstanding
The Company has an unconsolidated joint venture Advanced Filtration Systems Inc AFSI established by the Company and Caterpillar Inc Caterpillar in 1986 AFSI designs and manufactures high efficiency fluid filters use
d in Caterpillar s machinery worldwide The Company and Caterpillar equally own the shares of AFSI and both companies guarantee certain debt and banking services including credit and debit cards merchant processing and treasury management services of the joint venture The Company accounts for AFSI as an equity method investment
The outstanding debt relating to AFSI of which the Company guarantees half was 43 9 million and 51 0 million as of July 31 2025 and 2024 respectively AFSI has 63 0 million in a revolving credit facility which expires in 2027 and 17 0 million in an additional multi currency revolving credit facility which terminates upon notification of either party The Company does not believe this guarantee will have a current or future effect on its financial condition results of operations liquidity or capital resources
The Company s Consolidated Financial Statements are prepared in conformity with GAAP Our significant accounting policies are disclosed in Note 1 in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report The preparation of these Consolidated Financial Statements requires the use of estimates and judgments that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the periods presented Management bases estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances the results of which form the basis for making judgments about recorded amounts The Company believes its use of estimates and underlying accounting assumptions adheres to GAAP and are reasonable and consistently applied The Company s Critical Accounting Estimates are those which require more significant assumptions and judgments used in the preparation of its Consolidated Financial Statements and are the most important to aid in fully understanding its financial results The Company s Critical Accounting Estimates are as follows
Revenue is measured as the amount of consideration the Company expects to receive in exchange for the fulfillment of performance obligations The transaction price of a contract could be reduced by variable consideration including volume purchase rebates and discounts product refunds and returns At the time of sale to a customer the Company records an estimate of variable consideration as a reduction from gross sales The Company primarily relies on historical experience and anticipated future performance to estimate the variable consideration Revenue is recognized to the extent it is probable a significant reversal of revenue will not occur when the contingency is resolved
For volume purchase rebates and discounts management estimates are based on the terms of the arrangements with customers historical payment experience field inventory levels volume in quantity or mix of purchases of product during a specified time period and expectations for changes in relevant trends in the future Actual results may differ from estimates if competitive factors create the need to enhance or reduce sales promotion and incentive accruals or if customer usage and field inventory levels vary from historical trends Adjustments to sales promotions and incentive accruals are made as actual usage becomes known in order to properly estimate the amounts necessary to generate consumer demand based on market conditions as of the balance sheet date
For product refunds and returns estimates are based primarily on the expected number of products sold the trend in the historical ratio of returns to sales and the historical length of time between the sale and resulting return Actual refunds and returns could be higher or lower than amounts estimated due to such factors as performance of new products or significant manufacturing or design defects not discovered until after the product is delivered to customers
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations under the purchase method of accounting Goodwill is assessed for impairment annually or if an event occurs or circumstances change that would indicate the carrying amount may be impaired The Company performed
one level below the operating segment level and utilizes either a qualitative or quantitative assessment The Company determined the fair value for all its reporting units was substantially in excess of their respective carrying values and there were no indicators of impairment for any of the reporting units evaluated An impairment loss would be recognized when the carrying amount of a reporting unit s net assets exceeds the estimated fair value of the reporting unit
The optional qualitative assessment evaluates general economic industry and entity specific factors that could impact the reporting units fair values For reporting units evaluated using a qualitative assessment if it is determined the fair value more likely than not exceeds the carrying value no further assessment is necessary For reporting units evaluated using a quantitative assessment the fair values are determined using an income approach a market approach or a weighting of the two The income approach determines fair value based on discounted cash flow models derived from the reporting units long term forecasts The market approach determines fair value based on earnings multiples derived from prices investors paid for the stocks of comparable publicly traded companies Estimates and assumptions are utilized in the valuations including discounted projected cash flows earnings before interest taxes depreciation and amortization margins terminal value growth rates revenue growth rates discount rates and the determination of comparable publicly traded companies Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment
Management is required to estimate income taxes in each of the jurisdictions in which the Company operates This process involves estimating current tax exposure and assessing future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis These deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are anticipated to reverse based on future taxable income projections and the impact of tax planning strategies The Company intends to indefinitely reinvest undistributed earnings for certain of its non U S subsidiaries and thus has not provided for income taxes on these earnings
Additionally benefits of tax return positions are recognized in the Consolidated Financial Statements when the position is more likely than not to be sustained by the taxing authorities based solely on the technical merits of the position If the recognition threshold is met the tax benefit is measured and recognized as the largest amount of tax benefit that in the Company s judgment is greater than 50 likely to be realized The Company maintains a reserve for uncertain tax benefits that are currently unresolved and routinely monitors the potential impact of such situations The liability for unrecognized tax benefits accrued interest and penalties was 24 7 million and 23 0 million as of July 31 2025 and 2024 respectively
The Company believes it is remote that any adjustment necessary to the reserve for income taxes for the next 12 months will be material However it is possible the ultimate resolution of audits or disputes may result in a material change to the Company s reserve for income taxes although the quantification of such potential adjustments cannot be made at this time
The Company incurs expenses for employee benefits provided through defined benefit pension plans In accounting for these defined benefit pension plans management must make a variety of estimates and assumptions including discount rates and expected return on plan assets The Company considers current and historical data and uses a third party specialist to assist management in determining these estimates
The Company s objective in selecting a discount rate is to select the best estimate of the rate at which the benefit obligations could be effectively settled on the measurement date taking into account the nature and duration of the benefit obligations of the plan In making this best estimate the Company looks at the rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the benefits This process includes assessing the universe of bonds available on the measurement date with a quality rating of Aa or better Similar appropriate benchmarks are used to determine the discount rate for the non U S plans
The Company considers historical returns and future expected returns for each asset class as well as the target asset allocation to develop the assumption for each of its U S pension plans The assumption for non U S pension plans reflects the investment allocation and expected total portfolio returns specific to each plan and country
If the Company were to use alternative assumptions for its pension plans as of July 31 2025 a one percentage point change in the assumptions would impact fiscal 2025 net periodic benefit cost as follows in millions
The Company s net periodic benefit cost recognized in the Consolidated Statements of Earnings was 0 5 million 6 6 million and 6 2 million for the years ended July 31 2025 2024 and 2023 respectively While changes to the Company s pension plan assumptions would not be expected to impact its net periodic benefit cost by a material amount such changes could significantly impact the Company s projected benefit obligation
The Company allocates the purchase price of acquired businesses to the estimated fair values of the assets acquired and liabilities assumed as well as any contingent consideration where applicable as of the date of acquisition The fair values of the long lived assets acquired primarily intangible assets are determined using calculations which can be complex and require significant judgment Estimates include many factors such as the nature of the acquired company s business its historical financial position and results technology obsolescence customer retention rates discount rates royalty rates and expected future performance Independent valuation specialists are used to assist in determining certain fair value calculations
The Company estimates the fair value of acquired customer relationships using the multi period excess earnings method This approach is typically applied when cash flows are not directly generated by the asset but rather by an operating group which includes the particular asset Fair value is estimated as the present value of the benefits anticipated from ownership of the asset in excess of the economic returns required on the investment in contributory assets which are necessary to realize those benefits The intangible asset s estimated earnings are determined as the residual earnings after quantifying estimated economic returns from contributory assets Assumptions used in these calculations include same customer revenue growth rates estimated earnings and customer attrition rates
The Company estimates the fair value of trade names and or trademarks using the relief from royalty method which calculates the cost savings associated with owning rather than licensing the assets Assumed royalty rates are applied to projected revenue for the remaining useful lives of the assets to estimate the royalty savings Royalty rates are selected based on the attributes of the asset including reputation and recognition within the industry
The Company estimates the fair value of technology utilizing the multi period excess earnings method or the relief from royalty method depending on the technology asset acquired The multi period excess earnings method is consistent with the approach used to value acquired customer relationships and the relief from royalty method is consistent with the approach used to value trade names and or trademarks
While the Company uses its best estimates and assumptions especially at the acquisition date including its estimates for intangible assets pre acquisition contingencies and any contingent consideration where applicable the fair value estimates are inherently uncertain and subject to refinement As a result during the measurement period which may be up to one year from the acquisition date the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill Any adjustments required after the measurement period are recorded in the Consolidated Statements of Earnings The judgments required in determining the estimated fair values and expected useful lives assigned to each class of assets and liabilities acquired can significantly affect net income
The Company through its management may make forward looking statements reflecting the Company s current views with respect to future events and expectations such as forecasts plans trends and projections relating to the Company s business and financial performance These forward looking statements which may be included in reports filed under the Securities Exchange Act of 1934 as amended the Exchange Act in press releases and in other documents and materials as well as in written or oral statements made by or on behalf of the Company are subject to certain risks and uncertainties including those discussed in Part I Item 1A Risk Factors of this Annual Report which could cause actual results to differ materially from historical results or those anticipated The words or phrases such as will likely result are expected to will continue will allow estimate project believe expect anticipate forecast plan and similar expressions are intended to identify forward looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933 as amended as enacted by the Private Securities Litigation Reform Act of 1995 PSLRA In particular the Company desires to take advantage of the protections of the PSLRA in connection with the forward looking statements made in this Annual Report All statements other than statements of historical fact are forward looking statements These statements do not guarantee future performance
These forward looking statements speak only as of the date such statements are made and are subject to risks and uncertainties that could affect the Company s performance and could cause the Company s actual results for future periods to differ materially from any opinions or statements expressed These factors include but are not limited to challenges in global operations changes in international trade policy impacts of global economic industrial and political conditions on product demand impacts from unexpected events effects of unavailable raw materials significant demand fluctuations or material cost changes inability to attract and retain qualified personnel inability to meet customer demand inability to maintain competitive advantages threats from disruptive technologies effects of highly competitive markets with pricing pressure exposure to customer concentration in certain cyclical industries inability to manage productivity improvements inability to achieve commitments related to sustainability results of execution of any acquisition divestiture and other strategic transactions vulnerabilities associated with information technology systems and security inability to protect and enforce intellectual property rights costs associated with governmental laws and regulations impacts of foreign currency fluctuations and effects of changes in capital and credit markets These and other factors are described in Part I Item 1A Risk Factors of this Annual Report The Company undertakes no obligation to publicly update or revise any forward looking statements whether as a result of new information future events or otherwise unless required by law
The Company s market risk includes the potential loss arising from adverse changes in foreign currency exchange rates interest rates and commodity prices To manage these risks the Company employs certain strategies to mitigate the effect of these fluctuations The Company does not enter into any of these strategies for trading or speculative purposes
The Company maintains significant assets and operations outside the U S resulting in exposure to foreign currency gains and losses A portion of the Company s foreign currency exposure is naturally hedged by incurring liabilities including bank debt denominated in the local currency in which the Company s foreign subsidiaries are located
During fiscal 2025 the U S dollar was generally weaker than in fiscal 2024 compared with many of the currencies of the foreign countries in which the Company operates The overall weaker dollar had a positive impact on the Company s international net sales and net earnings because the foreign denominated revenues translated into more U S dollars in many regions around the world The estimated impact of foreign currency translation for the year ended July 31 2025 resulted in an overall increase in reported net sales of 8 3 million and a decrease in reported net earnings of 0 5 million
The Company enters into derivative instrument agreements including foreign currency forward contracts and net investment hedges to manage risk in connection with changes in foreign currency The Company only enters into derivative instrument agreements with counterparties who have highly rated credit See Notes 12 15 and 16 in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report
The Company buys materials from foreign suppliers Those transactions can be denominated in those suppliers local currency The Company also sells to customers in foreign countries Those transactions can be denominated in those customers local currency Both of these transaction types can create volatility in the Company s financial statements The Company uses foreign currency forward contracts to manage those exposures and fluctuations These contracts generally mature in 15 months or less which is consistent with the forecasts of the related purchases and sales Certain contracts are designated as cash flow hedges whereas the remaining contracts most of which are related to certain intercompany transactions which offset balance sheet exposure are not designated as hedging instruments The total notional amount of the foreign currency forward contracts designated as hedges as of July 31 2025 and 2024 were 35 7 million and 32 3 million respectively The total notional amount of the foreign currency forward contracts not designated as hedges as of July 31 2025 and 2024 was 189 6 million and 249 7 million respectively
The Company uses fixed to fixed cross currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe The Company has elected the spot method for designating these contracts as net investment hedges
Based on the net investment hedges outstanding as of July 31 2025 a 10 appreciation of the U S dollar compared to the Euro would result in a net gain of 8 6 million in the fair value of these contracts
The Company s exposure to market risk for changes in interest rates primarily relates to debt obligations that are at variable rates as well as the potential increase in the fair value of long term debt resulting from a potential decrease in interest rates As of July 31 2025 the Company s financial liabilities with exposure to changes in interest rates consisted of 60 0 million outstanding on the Company s unsecured revolving credit facility 80 0 million or 91 6 million of a variable rate term loan 200 0 million of a variable rate term loan and 2 0 billion or 13 4 million of variable rate senior notes As of July 31 2025 short term borrowings outstanding consisted of 31 2 million Assuming a hypothetical 0 5 percentage point increase in short term interest rates with all other variables remaining constant interest expense would have increased approximately 2 0 million in the 12 months ended July 31 2025 The Company had no interest rate hedging agreements in fiscal year 2025 or 2024 Interest rate changes would also affect the fair market value of fixed rate debt As of July 31 2025 the estimated fair values of fixed interest rate long term debt were 247 5 million compared to the carrying values of 275 0 million The fair values are estimated by discounting the projected cash flows using the interest rates at which similar amounts of debt could currently be borrowed
In addition the Company is exposed to market risk for changes in interest rates for the impact to its qualified defined benefit pension plans The plans projected benefit obligation is inversely related to changes in interest rates Consistent with published bond indices in fiscal 2025 the Company increased its weighted average discount rate from 5 44 to 5 60 on its U S plans and increased its weighted average discount rate from 4 33 to 4 82 on its non U S plans To protect against declines in interest rates the pension plans hold high quality long duration bonds The rates impact both the projected benefit obligation and the fair value of the plan assets and hence the funded status of the plans The plans were overfunded by 2 7 million as of July 31 2025 since the fair value of the plan assets exceeded the projected benefit obligation
The Company is exposed to market risk from fluctuating prices of purchased commodity raw materials including steel filter media and petrochemical based products including plastics rubber and adhesives On an ongoing basis the Company enters into selective supply arrangements that allow the Company to reduce volatility in its costs The Company strives to recover or offset all material cost increases through price increases to its customers and the Company s cost reduction initiatives which include material substitution process improvement and product redesigns However an increase in commodity prices could result in lower gross profit
Consistent with common business practice in APAC the Company has subsidiaries which accept bankers acceptance notes from their customers in settlement of certain customer billed accounts receivable Bankers acceptance notes represent a commitment by the issuing financial institution to pay a certain amount of money at a specified future maturity date to the legal owner of the bankers acceptance note as of the maturity date The maturity dates of bankers acceptance notes vary but it is the Company s policy to only accept bankers acceptance notes with maturity dates no more than 180 days from the date of the Company s receipt of such draft As of July 31 2025 and 2024 the Company owned 8 6 million and 8 4 million respectively of these bankers acceptance notes and includes them in accounts receivable on the Consolidated Balance Sheets
We have audited the accompanying consolidated balance sheets of Donaldson Company Inc and its subsidiaries the Company as of July 31 2025 and 2024 and the related consolidated statements of earnings of comprehensive income of changes in stockholders equity and of cash flows for each of the three years in the period ended July 31 2025 including the related notes collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of July 31 2025 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of July 31 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended July 31 2025 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of July 31 2025 based on criteria established in Internal Control Integrated Framework 2013 issued by the COSO
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Management s Report on Internal Control over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that i relates to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
3 690 9 million for the year ended July 31 2025 of which a majority pertains to product sales Revenue is measured as the amount of consideration the Company expects to receive in exchange for the fulfillment of performance obligations For most customer contracts the Company recognizes revenue at a point in time when control of the goods is transferred to the customer For product sales control is typically deemed to have transferred in accordance with the shipping terms either at the time of shipment from the plants or distribution centers or the time of delivery to the customers The transaction price of a contract could be reduced by variable consideration including volume purchase rebates and discounts product refunds and returns At the time of sale to a customer the Company records an estimate of variable consideration as a reduction from gross sales Revenue is recognized to the extent it is probable a significant reversal of revenue will not occur when the contingency is resolved
The principal consideration for our determination that performing procedures relating to revenue recognition for product sales is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company s revenue recognition
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the revenue recognition process These procedures also included among others i evaluating certain revenue transactions by either a testing the issuance and settlement of invoices and credit memos tracing transactions not settled to a detailed listing of accounts receivable and testing the completeness and accuracy of data provided by management or b testing on a sample basis the revenue recognized by obtaining and inspecting source documents including executed contracts invoices shipment or delivery documents and cash receipts as applicable ii testing on a sample basis the recognition of variable consideration for rebates issued during the year by obtaining and inspecting source documents including support for the nature of the rebate amount and agreement with the customer and iii confirming on a sample basis outstanding customer invoice balances as of year end and and for confirmations not returned obtaining and inspecting source documents including executed contracts invoices shipment or delivery documents and subsequent cash receipts as applicable
Donaldson Company Inc the Company is a global leader in technology led filtration products and solutions The Company s core strengths include leading filtration technology diverse business and a global presence Products are manufactured and sold around the world to original equipment manufacturers OEMs distributors dealers and directly to end users
od The Company is party to joint ventures with Advanced Filtration Systems Inc AFSI and PT Panata Jaya Mandiri PTPJM as well as a non controlling interest in Medica S p A Medica all of which are considered related parties The investment and earnings from joint ventures are not material
requires management to make estimates and assumptions that affect the amount of assets and liabilities and the disclosures regarding contingent assets and liabilities at period end and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
For most foreign operations local currencies are considered the functional currency Assets and liabilities of non U S dollar functional currency entities are translated to U S dollars at fiscal year end exchange rates and the resulting gains and losses arising from the translation of net assets located outside the U S are recorded as a cumulative translation adjustment a component of accumulated other comprehensive loss on the Consolidated Balance Sheets Elements of the Consolidated Statements of Earnings are translated at average exchange rates in effect during the fiscal year Foreign currency transaction losses are included in other income net in the Consolidated Statements of Earnings and were 2 5 million 1 7 million and 6 4 million in the years ended July 31 2025 2024 and 2023 respectively
The Company considers all highly liquid temporary investments with an original maturity of three months or less to be cash equivalents Cash equivalents are carried at cost which approximates market value
Revenue is measured as the amount of consideration the Company expects to receive in exchange for the fulfillment of performance obligations The transaction price of a contract could be reduced by variable consideration including volume purchase rebates and discounts product refunds and returns At the time of sale to a customer the Company records an estimate of variable consideration as a reduction from gross sales The Company primarily relies on historical experience and anticipated future performance to estimate the variable consideration Revenue is recognized to the extent it is probable a significant reversal of revenue will not occur when the contingency is resolved The Company accounts for amounts billed to customers for reimbursement of shipping and handling costs by recording these amounts as revenue and accruing costs when the related revenue is recognized
For most customer contracts the Company recognizes revenue at a point in time when control of the goods or services is transferred to the customer For product sales control is typically deemed to have transferred in accordance with the shipping terms either at the time of shipment from the plants or distribution centers or the time of delivery to the customers Revenue is recognized for services upon completion o
f those services Payment terms vary by customer and the geographic location of the customer The Company s contracts with customers do not include significant financing components or non cash consideration
The Company has some contracts with customers where the performance obligations are satisfied over time Certain customer contracts provide the Company with an enforceable right to payment of the transaction price for performance completed to date and the Company uses either an input or an output method of production to measure the progress towards the completion of the performance obligation in these arrangements depending on the nature of the contract The timing of revenue recognized from these products is slightly accelerated compared to revenue recognized at the time of shipment or delivery
The Company generally does not incur significant incremental costs related to obtaining or fulfilling a contract prior to the start of a project The Company may incur certain fulfillment costs such as initial design or mobilization costs which are capitalized if they relate directly to the contract if they are expected to generate resources that will be used to satisfy the Company s performance obligation under the contract and if they are expected to be recovered through revenues generated under the contract Such costs which are amortized over the life of the respective project were not material for any period presented
Accounts receivable net are recorded at the invoiced amount and do not bear interest The allowance for doubtful accounts is the Company s best estimate of the amount of credit losses in its existing accounts receivable The Company determines the allowance based on utilization of a combination of aging schedules with reserve rates applied to both current and aged receivables using historical write off experience regional economic data and evaluation of specific customer accounts for risk of loss and changes in current or projected conditions to calculate the allowances related to accounts receivable net The Company reviews its allowance for doubtful accounts monthly Account balances are reviewed on a pooled basis by reporting unit and geographic region and are reserved when the Company determines it is probable the receivable will not be recovered The Company reduces the receivable and corresponding allowance when it confirms an account is uncollectible
The Company has agreements with financial institutions to sell certain trade receivables from customers without recourse The Company accounts for trade receivable transfers as sales and de recognizes the sold receivables from the Consolidated Balance Sheets During fiscal 2025 and 2024 the Company sold receivables under factoring agreements of 86 1 million and 29 9 million respectively Costs incurred on these sales during the years ended July 31 2025 and 2024 were 4 1 million and 1 7 million respectively and are included in the cost of sales within the Consolidated Statements of Earnings Cash received from selling receivables in fiscal 2025 and 2024 of 82 0 million and 28 2 million respectively is presented as a change in accounts receivable within the operating section of the Consolidated Statements of Cash Flow
Inventories are stated at the lower of cost and net realizable value U S inventories are valued using the last in first out LIFO method while the non U S inventories are valued using the first in first out FIFO method Inventories valued at LIFO were approximately 34 4 and 35 3 of total inventories as of July 31 2025 and 2024 respectively For inventories valued under the LIFO method the FIFO cost exceeded the LIFO carrying values by 60 3 million and 51 3 million as of July 31 2025 and 2024 respectively Results of operations for all periods presented were not materially affected by the liquidation of LIFO inventory
Property plant and equipment are stated at cost Additions improvements or major renewals are capitalized while expenditures that do not enhance or extend the asset s useful life are expensed as incurred Depreciation is computed using the straight line method Depreciation expense was 85 6 million 82 8 million and 80 9 million in the years ended July 31 2025 2024 and 2023 respectively The estimated useful lives of property plant and equipment are 10 to 40 years for buildings including building improvements and three to 10 years for machinery and equipment see Note 5
The Company capitalizes direct costs of materials and services used in the development and purchase of internal use software Amounts capitalized are amortized on a straight line basis over a period of two to six years and are reported as a component of property plant and equipment
The Company capitalizes certain costs incurred during the application development stage of implementation of internal use software in cloud computing arrangements Amounts capitalized are amortized on a straight line basis over a period of three to 10 years and are reported as a component of other long term assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations under the purchase method of accounting Goodwill is assessed for impairment annually or if an event occurs or circumstances change that would indicate the carrying amount may be impaired The Company performed
one level below the operating segment level and utilizes either a qualitative or quantitative assessment The Company determined the fair value for all its reporting units was substantially in excess of their respective carrying values and there were no indicators of impairment for any of the reporting units evaluated An impairment loss would be recognized when the carrying amount of a reporting unit s net assets exceeds the estimated fair value of the reporting unit see Note 6
Intangible assets comprised of customer relationships trademarks technology and patents and non compete agreements are amortized on a straight line basis over their estimated useful lives of three to 22 years
The Company allocates the purchase price of acquired businesses to the estimated fair values of the assets acquired and liabilities assumed as well as any contingent consideration where applicable as of the date of acquisition The fair values of the long lived assets acquired primarily intangible assets are determined using calculations which can be complex and require significant judgment Estimates include many factors such as the nature of the acquired company s business its historical financial position and results technology obsolescence customer retention rates discount rates royalty rates and expected future performance Independent valuation specialists are used to assist in determining certain fair value calculations
During the measurement period which may be up to one year from the acquisition date the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill Any adjustments required after the measurement period are recorded in the Consolidated Statements of Earnings
The Company reviews its long lived assets including identifiable intangibles for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets the carrying value is reduced to the fair market value
In fiscal 2025 the Company identified a triggering event related to certain asset groups and performed a valuation of certain long lived intangible assets in accordance with ASC 360 Impairment and Disposal of Long Lived Assets The Company used a discounted cash flow analysis to estimate the fair value of each long lived asset group As a result of the valuation the Company recorded 62 0 million of impairment expense related to intangible assets in the Company s bioprocessing businesses within the Life Sciences segment during the third quarter of fiscal 2025 The impairment expense was included in Loss on impairment of intangible assets in the Consolidated Statements of Earnings Of the impairment expense 46 6 million was related to Univercells Technologies reflecting lower than anticipated bioprocessing capital spending particularly for early stage assets while drug development timelines are longer than previously anticipated The remaining 15 4 million of impairment expense was related to Solaris as market demand for industrial bioreactors had significantly declined There were no other indicators of impairment or impairment charges recorded for the year ended July 31 2025 and no indicators of impairment or impairment charges recorded for the year ended July 31 2024
The provision for income taxes is computed based on the pretax income reported for financial statement purposes Deferred tax assets and liabilities are recognized for the expected future tax consequences attributed to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are anticipated to reverse Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not a tax benefit will not be realized
The Company maintains a reserve for uncertain tax benefits Benefits of tax return positions are recognized in the financial statements when the position is more likely than not to be sustained by the taxing authorities based solely on the technical merits of the position If the recognition threshold is met the tax benefit is measured and recognized as the largest amount of tax benefit that is greater than 50 likely to be realized in the Company s judgment see Note 8
The Company determines whether an arrangement that provides control over the use of an asset to the Company is a lease The Company recognizes a lease liability and corresponding right of use asset on the Consolidated Balance Sheets based on the present value of future lease payments and recognizes lease expense on a straight line basis over the lease term Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term or at fair values in the case of those leases assumed in an acquisition Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and are expensed on a straight line basis over the lease term Variable lease expense is immaterial and primarily includes leases with payments indexed to inflation when the index changes after lease commencement
r lease components from non lease components for all asset classes Lease agreements may include extension termination or purchase options all of which are considered in calculating the lease liability and right of use asset when it is reasonably certain the Company will exercise an option The Company s incremental borrowing rate on the commencement date is used to calculate the present value of future payments for most leases since the rate implicit in the lease is generally not readily determinable These rates are assessed on a quarterly basis for measurement of new lease obligations see Note 9
Research and development expenses include scientific research costs such as salaries facility costs testing technical information technology and administrative expenditures Research and development expenses are for the application of scientific advances to the development of new and improved products and their uses Substantially all research and development is performed in house Expenses are charged against earnings in the year incurred
The Company buys materials from foreign suppliers Those transactions can be denominated in those suppliers local currency The Company also sells to customers in foreign countries Those transactions can be denominated in those customers local currency Both of these transaction types can create volatility in the Company s financial statements The Company uses foreign currency forward contracts to manage those exposures and fluctuations These contracts generally mature in 15 months or less which is consistent with the forecasts of the rel
ated purchases and sales Certain contracts are designated as cash flow hedges whereas the remaining contracts most of which are related to certain intercompany transactions which offset balance sheet exposure are not designated as hedging instruments
The Company uses fixed to fixed cross currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe The Company has elected the spot method for designating these contracts as net investment hedges The maturity dates range from 2027 to 2029 see
The Company provides for estimated warranty expense at the time of sale and accrues for specific items at the time their existence is known and the amounts are determinable The Company estimates warranty expense on certain products at the time of sale using quantitative measures based on historical warranty claim experience and evaluation of specific customer warranty issues see Note 18
In June 2022 the FASB issued ASU 2022 03 Fair Value Measurement Topic 820 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and therefore is not considered in measuring fair values it also re
quires additional disclosures including the nature and remaining duration of such restrictions The guidance is effective for fiscal years beginning after December 15 2023 with early application permitted The Company adopted ASU 2022 03 in the first quarter of fiscal 2025 The adoption did not have an impact on its Consolidated Financial Statements or Condensed Consolidated Financial Statements
which improves the segment disclosures to include reportable segment s expenses The guidance is effective for fiscal years beginning after December 15 2023 with early adoption permitted This ASU is applicable beginning with annual reporting for the Company s fiscal 2025 and interim reporting for the first quarter of the Company s fiscal 2026 The Company adopted ASU 2023 07 in the fourth quarter of fiscal 2025 for its fiscal year ended July 31 2025 and all interim periods thereafter
In November 2024 FASB issued ASU No 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses which improves disclosures about a company s expenses and provides more detailed information about the types of expenses in commonly presented expense captions The guidance is effective for fiscal years beginning after December 15 2026 with early adoption permitted This ASU is applicable beginning with annual reporting for the Company s fiscal 2028 and interim reporting for the first quarter of the Company s fiscal 2029 The Company will adopt ASU 2024 03 for the annual reporting period ending July 31 2028 and for interim reporting periods thereafter The Company is in the process of evaluating the impact of the ASU on its related disclosures
which enhances the transparency and decision usefulness of income tax disclosures The guidance is effective for fiscal years beginning after December 15 2024 with early adoption permitted This ASU is applicable beginning with annual reporting for the Company s fiscal 2026 and interim reporting for the first quarter of the Company s fiscal 2027 The Company will adopt ASU 2023 09 for the annual reporting period ending July 31 2026 and for interim reporting periods thereafter The Company does not expect adoption of this standard will have a material impact on the Consolidated Financial Statements and is in the process of evaluating the effects of this guidance on its related disclosures
On August 9 2024 the Company acquired a 49 non controlling stake in Medica headquartered in Medolla Italy for cash consideration of approximately 62 1 million or 67 9 million and capitalized transaction costs of approximately 5 1 million or 5 8 million Medica is a leader in hollow fiber membrane filtration technology for medical applications and water purification The Company has the option to acquire the remaining 51 stake in three years The investment is accounted for under the equity method of accounting The earnings from the investment were not material for the year ended July 31 2025
The Company recognizes revenue on a wide range of filtration solutions sold to customers in many industries around the globe Most of the Company s performance obligations within customer sales contracts are for manufactured filtration systems and replacement parts The Company also performs limited services and installation Customer contracts may include multiple performance obligations and the transaction price is allocated to each distinct performance obligation based on its relative standalone selling price
The satisfaction of performance obligations and the resulting recognition of revenue typically correspond with billing of the customer In limited circumstances the customer may be billed at a time later than when revenue is recognized resulting in contract assets which are reported in other current assets on the Consolidated Balance Sheets Contract assets were 24 3 million and 15 9 million as of July 31 2025 and 2024 respectively In other limited circumstances the customer may make a payment at a time earlier than when revenue is recognized and prior to the satisfaction of performance obligations resulting in contract liabilities which are reported in deferred revenue on the Consolidated Balance Sheets Contract liabilities were 20 8 million and 19 7 million as of July 31 2025 and 2024 respectively
The Company will recognize revenue in future periods related to remaining performance obligations for certain open contracts Generally these contracts have terms of one year or less The amount of revenue related to unsatisfied performance obligations in which the original duration of the contract is greater than one year is not significant None of the Company s contracts contained a significant financing component
The Company allocates goodwill to reporting units within its Mobile Solutions Industrial Solutions and Life Sciences segments There were no dispositions or impairment charges recorded during the years ended July 31 2025 2024 and 2023 Goodwill is assessed for impairment annually during the third quarter of the fiscal year or more frequently if events or changes in circumstances indicate the asset may be impaired The Company performed its annual impairment assessment during the third quarter of fiscal 2025 and did not record any impairment as a result of this assessment
In the third quarter of fiscal 2025 the Company identified a triggering event related to certain asset groups and performed a valuation of certain long lived intangible assets in accordance with ASC 360 Impairment and Disposal of Long Lived Assets The Company used a discounted cash flow analysis to estimate the fair value of each long lived asset group Estimates and assumptions are utilized in the valuations including discounted projected cash flows earnings before interest taxes depreciation and amortization margins terminal value growth rates revenue growth rates discount rates and the determination of comparable publicly traded companies As a result of the valuation the Company recorded 62 0 million of impairment expense related to intangible assets in the Company s bioprocessing businesses within the Life Sciences segment including 53 1 million of impairment expense related to technology and patents 7 7 million of impairment expense related to trademarks 1 0 million of impairment expense related to customer relationships and 0 2 of impairment expense related to non compete agreements The impairment expense was included in loss on impairment of intangible assets in the Consolidated Statements of Earnings Of the impairment expense 46 6 million was related to Univercells Technologies reflecting lower than anticipated bioprocessing capital spending particularly for early stage assets while drug development timelines are longer than previously anticipated The remaining 15 4 million of impairment expense was related to Solaris as market demand for industrial bioreactors had significantly declined
as 13 9 million 15 7 million and 11 4 million for the fiscal 2025 2024 and 2023 respectively and is included in operating expenses in the Consolidated Statements of Earnings Amortization expense relating to existing intangible assets as of July 31 2025 was as follows in millions
During the fourth quarter of fiscal 2025 the Company entered into an amendment to its 500 0 million revolving credit facility The amendment provides for the following modifications to the existing agreement i the maturity date of the revolving credit facility was extended from May 21 2026 to June 12 2030 ii the aggregate revolving credit limit was increased from
iii a new term loan facility was added in the amount of 200 0 million with a maturity date of June 12 2028 which was fully advanced on the closing date iv the revolving credit facility was repaid in part with the proceeds of the term loan facility and v the incremental credit facility option was increased from 250 0 million to 350 0 million and may be in the form of an increase to the revolving credit facility and or incremental term loans The Company s
revolving credit facility is with a group of lenders and allows for borrowings in multiple currencies The interest rate is calculated using the appropriate benchmark rate plus the applicable rate which varies depending on the Company s leverage ratio and the applicable benchmark rate The borrowing availability can be reduced or terminated early at the option of the Company The Company can request to increase the revolving credit facility by up to 350 0 million through an accordion feature subject to terms of the credit facility agreement including written notification and lender acceptance Borrowings are automatically rolled over until the credit facility maturity date unless the agreement is terminated early or the Company is found to be in default The total facility includes a commitment fee of 0 08 to 0 25 depending on the Company s leverage ratio
The Company has long term borrowing capacity of 532 1 million available for further borrowing under the existing credit facility as of July 31 2025 The remaining borrowing capacity has been reduced for standby letters of credit as discussed in Note 17
On July 4 2025 the One Big Beautiful Bill Act OBBBA was enacted into U S law which primarily modified tax provisions from the 2017 Tax Cuts and Jobs Act that include but are not limited to the reinstatement of 100 bonus depreciation the deduction of U S based research expenditures the deduction of interest expense the deduction for foreign derived intangible income FDII the tax and related foreign tax credit on Global Intangible Low Taxed Income GILTI and the base erosion anti abuse tax BEAT
The impact of the enacted legislation effective for the Company s current fiscal year is the permanent reinstatement of 100 bonus depreciation The other provisions within the OBBBA have staggered effective dates to be phased in between fiscal years 2026 and 2027 and the Company continues to evaluate the future impact of these provisions
As of July 31 2025 the Company had deferred tax assets related to U S federal foreign tax credits of 10 7 million related to state research and development credits of 3 8 million and related to foreign operating loss carryovers of 10 6 million The U S federal tax credits will expire after 10 years the state portion after one to 20 years and the foreign portion has an indefinite carryover period As of July 31 2025 the Company had provided 22 7 million for a valuation allowance against certain of these deferred tax assets based on management s determination it is more likely than not the tax benefits related to these assets will not be realized
As of July 31 2025 the total undistributed earnings of the Company s non U S subsidiaries were 1 5 billion of which 1 1 billion were not considered indefinitely reinvested The Company is subject to foreign withholding taxes on a small portion of these earnings distributable in the future in the form of dividends Thus the Company provides for foreign withholding taxes payable upon future dividend distributions of the earnings not considered indefinitely reinvested annually For the year ended July 31 2025 the Company recognized a tax charge of 6 0 million related to these foreign withholding taxes The remaining 396 7 million of earnings are considered indefinitely reinvested and it is not practicable to estimate within any reasonable range the additional taxes that may be payable on the potential distribution of the portion of the undistributed earnings considered indefinitely reinvested
The transition tax related to the U S Tax Cuts and Jobs Act of 2017 on undistributed earnings was accrued in fiscal 2018 and it is payable over an eight year period The final 22 1 million installment of the transition tax will be paid within 12 months and is classified in the current income tax payable on the Consolidated Balance Sheets as of July 31 2025
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income taxes in the Consolidated Statements of Earnings As of July 31 2025 and 2024 accrued interest and penalties on a gross basis were 2 7 million and 2 2 million respectively During the year ended July 31 2025 the Company recognized interest expense net of tax benefit of 0 8 million If the Company were to prevail on all unrecognized tax benefits recorded substantially all the unrecognized tax benefits would benefit the effective tax rate With an average statute of limitations of five years up to 2 8 million of the unrecognized tax benefits could potentially expire in the next 12 months unless extended by an audit
The Company files income tax returns in the U S federal jurisdiction and various state and foreign jurisdictions The U S Internal Revenue Service has completed examinations of the Company s U S federal income tax returns through fiscal
The Company believes it is remote that any adjustment necessary to the reserve for income taxes for the next 12 months will be material However it is possible the ultimate resolution of audits or disputes may result in a material change to the Company s reserve for income taxes although the quantification of such potential adjustments cannot be made at this time
Basic net earnings per share EPS is computed by dividing net earnings by the weighted average number of outstanding common shares Diluted net EPS is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options and other stock incentive plans
In November 2023 the Board of Directors authorized the repurchase of up to 12 0 million shares of common stock under the Company s stock repurchase plan replacing the Company s previous stock repurchase plan dated May 31 2019 This repurchase authorization is effective until terminated by the Board of Directors During the year ended July 31 2025 the Company repurchased 4 9 million shares for 333 6 million During the year ended July 31 2024 the Company repurchased 2 5 million shares for 163 3 million As of July 31 2025 the Company had remaining authorization to repurchase 5 9 million shares under the November 2023 stock repurchase plan
Dividends paid were 1 11 and 1 02 per common share for the years ended July 31 2025 and 2024 respectively On July 25 2025 the Company s Board of Directors declared a cash dividend in the amount of 30 0 cents per common share payable August 27 2025 to stockholders of record as of August 12 2025
In fiscal 2024 pension settlement accounting was triggered In addition pension curtailment accounting was triggered in fiscal 2024 Remeasurements of the Company s pension obligations resulted in an increase of 11 1 million and 9 0 million in fiscal
Amounts include reclassifications of 0 0 million and 4 8 million a foreign currency translation gain of 0 9 million and loss of 0 1 million and net amortization of prior service costs and actuarial losses of 2 2 million and 1 4 million in fiscal 2025 and 2024 respectively Amounts are included in other income net in the Consolidated Statements of Earnings see Note 14
The Company recognizes compensation expense for all stock based awards based on the grant date fair value of the award Stock based awards consist primarily of non qualified stock options performance based awards restricted stock awards and restricted stock units Grants related to restricted stock awards and restricted stock units are immaterial
The exercise price of options granted is equal to the market price of the Company s common stock at the date of the grant Options are generally exercisable for up to ten years from the date of grant and vest in equal increments over three years
Fair value is calculated using the Black Scholes option pricing model The weighted average fair value for options granted during the years ended July 31 2025 2024 and 2023 was 21 67 19 00 and 15 67 per share respectively
The number of shares authorized as of July 31 2025 for outstanding options and future grants was 11 144 365 Forfeited options are recorded as an offset to operating expenses in the Consolidated Statements of Earnings in the period in which they occur
As of July 31 2025 there was 8 9 million of total unrecognized compensation expense related to non vested stock options which is expected to be recognized over the remaining vesting period during fiscal 2026 2027 and 2028
Performance based awards are payable in common stock and are based on a formula that measures Company performance over a three year period These awards are settled after three years with payouts ranging from 0 to 200 of the target award depending on achievement Pretax performance based awards expense was 5 7 million 5 8 million and 6 3 million for the years ended July 31 2025 2024 and 2023 respectively
As of July 31 2025 there was 6 1 million of total unrecognized compensation expense related to non vested performance based awards which is expected to be recognized over the remaining vesting period during fiscal 2026 and 2027 Forfeited performance based awards are recorded as an offset to operating expenses in the Consolidated Statements of Earnings in the period in which they occur
They consist of plans in the U S Belgium Germany Mexico and the United Kingdom These plans generally provide pension benefits based on years of service and compensation level Components of net periodic pension costs other than the service cost component are included in
t overfunded status of 2 7 million and 9 6 million as of July 31 2025 and 2024 respectively is recognized on the Consolidated Balance Sheets The pension related accumulated other comprehensive loss as of July 31 2025 and 2024 prior to the consideration of income taxes was 120 5 million and 111 3 million respectively and consisted primarily of unrecognized actuarial losses The accumulated benefit obligation for all defined benefit pension plans was 380 5 million and 385 1 million as of July 31 2025 and 2024 respectively The decrease in the accumulated benefit obligation during fiscal 2025 is due to actuarial gains Pension settlement accounting was triggered in fiscal 2024 as a result of the amount of lump sum distributions in the defined benefit pension plans exceeding the service and interest cost threshold
The projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were 82 8 million and 51 6 million respectively as of July 31 2025 and 75 3 million and 49 1 million respectively as of July 31 2024
The projected benefit obligation accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were 82 8 million 60 6 million and 51 6 million respectively as of July 31 2025 and 17 7 million 16 4 million and 7 3 million respectively as of July 31 2024
The Company s objective in selecting a discount rate is to select the best estimate of the rate at which the benefit obligations could be effectively settled on the measurement date taking into account the nature and duration of the benefit obligations of the plan In making this best estimate the Company looks at the rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the benefits This process includes assessing the universe of bonds available on the measurement date with a quality rating of Aa or better Similar appropriate benchmarks are used to determine the discount rate for the non U S plans
The Company considers historical returns and future expected returns for each asset class as well as the target asset allocation to develop the assumption for each of its U S pension plans The assumption for non U S pension plans reflects the investment allocation and expected total portfolio returns specific to each plan and country
The Company s actuary uses the Pri 2012 mortality table issued by the Society of Actuaries during the pre retirement period and the Mercer Industry Longevity Experience Study MILES table for the Auto Industrial Goods and Transportation industry group for post retirement mortality both reflecting the Scale MMP 2021 mortality improvement projection scale for its U S pension plans These assumptions were used for determining the benefit obligations as of July 31 2025 and for developing the annual expense for its U S pension plans for the fiscal year ending July 31 2026 The Company follows the local actuaries recommendations for non U S pension plans
The Company uses a full yield curve approach to estimate service and interest costs by applying specific spot rates along the yield curve used to determine the benefit obligation of relevant projected cash outflows This method provides a precise measurement of service and interest costs by aligning the timing of the plans liability cash flows to the corresponding spot rate on the yield curve
Global equity securities consist primarily of publicly traded U S and non U S equities mutual funds collective investment trusts diversified growth investment funds and private equity Publicly traded equities and index funds are valued at the closing price reported in the active market in which the individual securities are traded Private equity consists of interests in partnerships that invest in U S and non U S equity and debt securities This may include a diversified mix of partnership interests including buyouts restructured or distressed debt growth equity mezzanine or subordinated debt real estate special situation partnerships and venture capital investments Interests in these funds are valued at net asset value NAV
Fixed income securities consist primarily of investment and non investment grade debt securities debt securities issued by the U S Treasury multi asset credit investment funds and exchange traded funds Government corporate and other bonds and notes interest rate and inflation swaps physical inflation linked and nominal gilts synthetic gilts money market instruments and cash are valued at the closing price reported if they are traded on an active market or if they are traded at yields currently available on comparable securities of issuers with similar credit ratings Fixed income securities also include smaller allocations to alternative investments private equity and alternative fixed income investments Alternative investments consist primarily of private placement funds private equity investments and alternative fixed income like investments Private equity consists of interests in partnerships that invest in U S and non U S equity and debt securities This may include a diversified mix of partnership interests including buyouts restructured or distressed debt growth equity mezzanine or subordinated debt real estate special situation partnerships and venture capital investments Alternative fixed income securities consist primarily of private partnership interests in hedge funds Interests in these funds are valued at NAV which is determined by the administrator or custodian of the fund based on the fair value of the underlying assets owned by the fund less its liabilities
Insurance contracts are individual contracts whereby an insurance company offers a guaranteed minimum interest return The Company does not have any influence on the investment decisions made by the insurer European insurers in general are strictly regulated by an external control mechanism and have to invest for their guaranteed interest products within certain boundaries Typically they have a strategic asset allocation with 80 to 90 fixed income products and 10 to 20 equity type products including real estate
Fair value measurements of plan assets are reported in one of three levels based on the lowest level of significant input used For Level 1 inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities For Level 2 inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability either directly or indirectly For Level 3
he Company uses a total return on investment approach to achieve a long term return on plan assets with what the Company believes to be a prudent level of risk for the purpose of meeting its retirement income commitments to employees The U S pension plans investments are diversified to assist in managing risk During the year ended July 31 2025 the Company s asset allocation was as follows
The target allocation guidelines are determined in conjunction with the Company s investment consultant and through the use of modeling the risk return trade offs among asset classes utilizing assumptions about expected annual return expected volatility standard deviation of returns and expected correlations with other asset classes
For non U S plans the general investment objectives are to maintain a suitably diversified portfolio of secure assets with appropriate liquidity that will generate income and capital growth to meet together with any new contributions from members and the Company the cost of current and future benefits Investment policy and performance is measured and monitored on an ongoing basis
The Company s general funding policy is to make at least the minimum required contributions as required by applicable regulations plus any additional amounts it determines to be appropriate The Company made contributions of 2 7 million to its
The Company provides a contributory employee savings plan to U S employees that permits participants to make contributions by salary reduction pursuant to section 401 k of the Internal Revenue Code For eligible employees employee contributions of up to 50 of compensation are matched at a rate equaling 100 of the first 3 contributed and 50 of the next 2 contributed In addition the Company contributes 3 of compensation annually for eligible employees Total contribution expense for this plan was 33 7 million 32 7 million and 28 6 million for the years ended July 31 2025 2024 and 2023 respectively
The Company provides various deferred compensation and other benefit plans to certain executives The deferred compensation plan allows eligible employees to defer the receipt of all or a portion of their cash bonus and other stock related compensation and up to 75 of their salary to future periods Other benefit plans are provided to supplement the benefits for a select group of highly compensated individuals that are reduced because of compensation limitations set by the Internal Revenue Code The Company has recorded a liability of 0 4 million and 1 2 million as of July 31 2025 and 2024 respectively related primarily to its deferred compensation plans
The Company enters into derivative instrument agreements including foreign currency forward contracts and net investment hedges to manage risk in connection with changes in foreign currency The Company only enters into derivative instrument agreements with counterparties who have highly rated credit There is risk the counterparties to derivative contracts will fail to meet their contractual obligations In order to mitigate counterparty credit risk the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors
Contract provisions may require the posting of collateral or settlement of the contracts for various reasons including if the Company s credit ratings are downgraded below its investment grade credit rating by any of the major credit agencies or for cross default contractual provisions if there is a failure under other financing arrangements related to payment terms or covenants As of July 31 2025 and 2024
The Company buys materials from foreign suppliers Those transactions can be denominated in those suppliers local currency The Company also sells to customers in foreign countries Those transactions can be denominated in those customers local currency Both of these transaction types can create volatility in the Company s financial statements The Company uses foreign currency forward contracts to manage those exposures and fluctuations These contracts generally mature in 15 months or less which is consistent with the forecasts of the related purchases and sales Certain contracts are designated as cash flow hedges whereas the remaining contracts most of which are related to certain intercompany transactions which offset balance sheet exposure are not designated as hedging instruments The total notional amount of the foreign currency forward contracts designated as hedges as of July 31 2025 and 2024 were
d in accumulated other comprehensive loss on the Consolidated Balance Sheets until the related transaction occurs see Note 12 Designated hedges are recognized as a component of either net sales cost of sales selling general and administrative expenses or
Amounts related to foreign currency forward contracts designated as hedges are expected to be reclassified into earnings during the next 15 months based upon the timing of inventory purchases and sales
The Company uses fixed to fixed cross currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe The Company has elected the spot method for designating these contracts as net investment hedges
Gains and losses resulting from a change in fair value of the net investment hedge are offset by gains and losses on the underlying foreign currency exposure and are included in accumulated other comprehensive loss on the Consolidated Balance Sheets Amounts related to excluded components associated with the net investment hedge are expected to be reclassified into earnings in interest expense in the Consolidated Statements of Earnings through their maturity
Fair value measurements of financial instruments are reported in one of three levels based on the lowest level of significant input used For Level 1 inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities For Level 2 inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability either directly or indirectly For Level 3
As of July 31 2024 the estimated fair values of fixed interest rate long term debt were 267 7 million compared to the carrying values of 300 0 million The fair values are estimated by discounting the projected cash flows using the interest rates at which similar amounts of debt could currently be borrowed The carrying values of total variable interest rate long term debt
The Company holds investments in joint ventures and a non controlling interest which are accounted for as equity method investments at fair value and are included in other long term assets on the Consolidated Balance Sheets The aggregate carrying amount of these investments was 103 6 million and 26 9 million as of July 31 2025 and 2024 respectively The increase is primarily driven by the 69 7 million equity method investment in Medica as of July 31 2025 These equity method investments are measured at fair value on a non recurring basis The fair value of the Company s equity method investments has not been adjusted as there have been no triggering events or changes in circumstance that would have had an adverse impact on the value of these investments In the event these investments are required to be measured they would fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value as the investments are in privately held entities
The fair values of the Company s foreign currency forward contracts net investment hedges and interest rate swaps reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date exit price The fair values are based on inputs other than quoted prices that are observable for the asset or liability and are determined by standard calculations and models that use readily observable market parameters These inputs include foreign currency exchange rates and interest rates Industry standard data providers are the primary source for forward and spot rate information for both interest rates and foreign currency exchange rates The fair values of the Company s foreign currency forward contracts net investment hedges and interest rate swaps are classified as Level 2 in the fair value hierarchy For discussion of the Company s derivatives and hedging see Note 15
Amounts related to excluded components such as forward points are excluded from the assessment of hedge effectiveness of net investment hedges and are expected to be reclassified into earnings throughout their maturity dates See Note 12 for additional information on accumulated other comprehensive loss
The fair value of the contingent consideration liability is determined using a probability weighted discounted cash flow method This fair value measurement is based on unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy This analysis reflects the contractual terms of the purchase agreement e g potential payment amounts length of measurement periods manner of calculating any amounts due and utilizes assumptions with regard to future financial and operational milestones probabilities of achieving such milestones and a discount rate Depending on the contractual terms of the purchase agreement the probability of achieving milestones generally represents the only significant unobservable input The contingent consideration liability is measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings
The fair value of the Company s contingent consideration liability that uses unobservable inputs was 11 3 million as of July 31 2025 and 21 8 million as of July 31 2024 The decrease of the contingent consideration liability was driven by a reduction in the assessed probability of achieving certain milestones and
of total contingent consideration paid during fiscal 2025 The maximum potential payout of the contingent consideration was 22 5 million and 29 8 million as of July 31 2025 and July 31 2024 respectively see Note 18
The Company has letters of credit which guarantee payment to third parties in the event the Company is in breach of contract terms as detailed in each letter of credit The outstanding debt contingent liability for standby letters of credit was as follows in millions
d in Caterpillar s machinery worldwide The Company and Caterpillar equally own the shares of AFSI and both companies guarantee certain debt and banking services including credit and debit cards merchant processing and treasury management services of the joint venture The Company accounts for AFSI as an equity method investment
The outstanding debt relating to AFSI of which the Company guarantees half was 43 9 million and 51 0 million as of July 31 2025 and 2024 respectively AFSI has 63 0 million in a revolving credit facility which expires on July 31 2027 and 17 0 million in an additional multi currency revolving credit facility which terminates upon notification of either party
The Company records provisions when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated Claims and litigation are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter The Company believes the estimated liability in its Consolidated Financial Statements for claims or litigation is adequate and appropriate for the probable and estimable outcomes Liabilities recorded were not material to the Company s financial position results of operations or liquidity The Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued
The Company is party to agreements that include deferred payment provisions representing potential milestone payments for former owners of acquired businesses The provisions are made up of two general types of arrangements contingent compensation and contingent consideration A contingent compensation arrangement is contingent on the former owner s future employment with the Company and the related amounts are recognized over the required employment period A contingent consideration agreement is contingent on the achievement of certain revenue and manufacturing milestones regardless of the former owners employment status Contingent consideration was recorded as purchase consideration at the time of the initial acquisition based on the fair value of the estimated liability
The decrease in the Purilogics contingent consideration liability in fiscal 2025 was primarily driven by a 6 2 million reduction of the fair value during the twelve months ended July 31 2025 based on the probability of achieving certain milestones The total contingent consideration paid as of July 31 2025 was 5 0 million of which 3 0 million was paid during fiscal 2025 and 2 0 million was paid during fiscal 2024
A contingent consideration liability of 1 5 million was added in fiscal 2025 due to a non material acquisition The total contingent consideration paid as of July 31 2025 was 2 8 million which was all paid in fiscal 2025
The Company estimates warranty expense on certain products at the time of sale using quantitative measures based on historical warranty claim experience and evaluation of specific customer warranty issues The Company s accrued warranty reserves were 6 9 million and 10 2 million as of July 31 2025 and 2024 respectively During the year ended July 31 2025 there were no individually or collectively material specific warranty matters accrued for and there was a 4 1 million specific reserve settled for one customer During the year ended July 31 2024 there was a 4 1 million specific warranty reserved for one customer and there were no other individually or collectively material specific warranty matters accrued for or significant settlements made
The Company s reportable segments are Mobile Solutions Industrial Solutions and Life Sciences The organizational structure also includes Corporate and Unallocated which includes interest expense and certain corporate expenses determined to be non allocable to the segments such as restructuring charges and business development expenses The Company determines its operating segments consistent with the manner in which the chief operating decision maker CODM manages operations and evaluates performance for internal review and decision making The CODM evaluates trends in earnings loss before income taxes to assess performance of the segments The CODM considers variances in reported results to budget and variances to prior periods to make decisions about allocating resources to each segment The Company s CODM is the Chief Executive Officer In fiscal 2025 and 2024 Corporate and Unallocated included a charge of 16 8 million and 6 4 million respectively related to restructuring see Note 20
The Mobile Solutions segment is organized based on a combination of customers and products and consists of the Off Road On Road and Aftermarket business units Within these business units products consist of replacement filters for both air and liquid filtration applications and filtration housings for new equipment production and systems related to exhaust and emissions Applications include air filtration systems fuel lube and hydraulic systems emissions systems and sensors indicators and monitoring systems Mobile Solutions sells to original equipment manufacturers OEMs in the construction mining agriculture and transportation end markets and to independent distributors and OEM dealer networks
The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration Industrial Gases Industrial Hydraulics Power Generation and Aerospace and Defense products These products are further organized by the Industrial Filtration Solutions and Aerospace and Defense business units Within our industrial portfolio the Company provides a wide product offering in the market to industrial customers consisting of equipment ancillary components replacement parts performance monitoring and service globally that cost effectively enhances productivity and manufacturing efficiency Industrial Air Filtration Industrial Gases and Industrial Hydraulics products consist of dust fume and mist collectors compressed air and industrial gases purification systems hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes Power Generation products consist of air inlet systems and filtration sold to gas compression power generation and natural gas liquification industries Aerospace and Defense products consist of air fuel lubrication and hydraulic filtration for fixed wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms Industrial Solutions businesses sell through multiple channels which include OEMs distributors and direct to consumer in some markets
The Life Sciences segment is organized by end market and consists of the Food and Beverage Disk Drive Vehicle Electrification and Medical Device Microelectronics and Bioprocessing Equipment and Consumables markets Within these markets products consist of micro environment gas and liquid filtration for food and beverage and industrial processes bioprocessing equipment including bioreactors and fermenters bioprocessing consumables including chromatography devices reagents and filters polytetrafluoroethylene membrane based products as well as specialized air and gas filtration systems for applications including hard disk drives semiconductor manufacturing sensors battery systems and powertrain components Life Sciences primarily sells to large OEMs and directly to various end users requiring cell growth separation purification high purity filtration and device protection
The Company has manufacturing facilities that serve multiple reportable segments As such capital expenditure information by reportable segment has not been provided because the Company does not produce or utilize such information internally In addition although depreciation and amortization expense is a component of each reportable segment s operating results it is not discretely identifiable as a result of the shared manufacturing facilities
The Company is an integrated enterprise characterized by substantial intersegment cooperation cost allocations and sharing of assets Therefore the Company does not represent these segments if operated independently would report earnings before income taxes and other financial information as stated below
There were no customers that accounted for over 10 of net sales for the years ended July 31 2025 2024 or 2023 There were no customers that accounted for over 10 of gross accounts receivable as of July 31 2025 or 2024
During fiscal 2025 the Company continued its global footprint and cost optimization actions to further improve the operating and manufacturing cost structure which began in fiscal 2024 These activities resulted in restructuring expenses primarily related to severance of 16 8 million and 6 4 million for the years ended July 31 2025 and 2024 respectively Charges of 6 5 million and 3 8 million were included in cost of sales in the Consolidated Statements of Earnings for the years ended July 31 2025 and 2024 respectively Charges of 10 3 million and 2 6 million were included in operating expenses in the Consolidated Statements of Earnings for the years ended July 31 2025 and 2024 respectively As of July 31 2025 and July 31 2024 7 1 million and 6 4 million of accrued expenses were included in accrued employee compensation and related taxes in the Consolidated Balance Sheets respectively
n conjunction with the organizational redesign the Company recorded 21 8 million of charges consisting of 15 3 million of severance charges and other organizational redesign costs and 6 5 million of costs mainly associated with the exiting of a lower margin customer program and a lower margin product Charges of 2 9 million were included in cost of sales and 18 9 million
Management of the Company with the participation of its Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the Company s disclosure controls and procedures as of the end of the period Based on their evaluation as of the end of the period covered the Company s Chief Executive Officer and Chief Financial Officer concluded the Company s disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Exchange Act were effective The Company s disclosure controls and procedures are designed so information required to be disclosed by the issuer in the reports it files or submits under the Exchange Act is recorded processed summarized and reported within the time periods specified in the Securities and Exchange Commission s SEC rules and forms and such information is accumulated and communicated to management of the Company with the participation of its Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure
No change in the Company s internal control over financial reporting as defined by Rules 13a 15 f under the Exchange Act occurred during the fiscal quarter ended July 31 2025 that has materially affected or is reasonably likely to materially affect the Company s internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a 15 f Management of the Company has assessed the effectiveness of the Company s internal control over financial reporting as of July 31 2025 In making its assessment of internal control over financial reporting management used the criteria described in
issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO Based on this evaluation management concluded that the Company s internal control over financial reporting was effective as of July 31 2025 based on criteria in Internal Control Integrated Framework issued by the COSO The Company s independent registered public accounting firm PricewaterhouseCoopers LLP has audited the effectiveness of the Company s internal control over financial reporting as of July 31 2025 as stated in its report which appears herein
During the three months ended July 31 2025 no director or officer of the Company adopted modified or terminated a Rule 10b5 1 trading arrangement or non Rule 10b5 1 trading arrangement as each term is defined in Item 408 a of Regulation S K
The information under the captions Item 1 Election of Directors Director Selection Process Audit Committee Responsibilities Audit Committee Expertise Complaint Handling Procedures Delinquent Section 16 a Reports and Security Trading and Information Disclosure Policy of the 2025 Proxy Statement is incorporated herein by reference Information on the Executive Officers of the Company is found under the caption Information about our Executive Officers in Part I of this Annual Report
The Company has adopted a code of business conduct and ethics in compliance with applicable rules of the SEC that applies to its Principal Executive Officer its Principal Financial Officer and its Principal Accounting Officer or Controller or persons performing similar functions A copy of the code of business conduct and ethics is posted on the Company s website at
The code of business conduct and ethics is available in print free of charge to any stockholder who requests it The Company will disclose any amendments to or waivers of the code of business conduct and ethics for the Company s Principal Executive Officer Principal Financial Officer and Principal Accounting Officer on the Company s website
The information under the captions Policy and Procedures Regarding Transactions with Related Persons and Board Oversight and Director Independence of the 2025 Proxy Statement is incorporated herein by reference
The information under the captions Independent Registered Public Accounting Firm Fees and Audit Committee Pre Approval Policies and Procedures of the 2025 Proxy Statement is incorporated herein by reference
II III IV and V for which provision is made in the applicable accounting regulations of the SEC are not required under the related instruction or are inapplicable and therefore have been omitted or the required information is shown in the consolidated financial statements or the accompanying notes to the consolidated financial statements
First Amendment dated as of March 9 2015 to Note Purchase Agreement dated as of March 27 2014 by and among Registrant and the purchasers named therein Filed as Exhibit 10 1 to Form 8 K Report filed on March 12 2015
First Supplement dated as of April 16 2015 to Note Purchase Agreement dated as of March 27 2014 by and among Registrant and the purchasers named therein as amended Filed as Exhibit 10 1 to Form 8 K Report filed on April 21 2015
Form of Restricted Stock Unit Award Agreement Graded Vesting under the 2019 Master Stock Incentive Plan commencing with fiscal 2021 grants Filed as Exhibit 10 AN to Form 10 Q for the first quarter ended October 31 2020
The following financial information from the Donaldson Company Inc Annual Report on Form 10 K for the fiscal year ended July 31 2025 formatted in Inline eXtensible Business Reporting Language iXBRL i the Consolidated Statements of Earnings ii the Consolidated Statements of Comprehensive Income iii the Consolidated Balance Sheets iv the Consolidated Statements of Cash Flows v the Consolidated Statements of Changes in Stockholders Equity and vi the Notes to Consolidated Financial Statements
Pursuant to the provisions of Regulation S K Item 601 b 4 iii A copies of instruments defining the rights of holders of certain long term debts of the Registrant and its subsidiaries are not filed and in lieu thereof the Registrant agrees to furnish a copy thereof to the SEC upon request
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September 26 2025

Company Name	DONALDSON Co INC Vist SEC web-site
Category	INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP
Trading Symbol	DCI