Brian Drab's questions to DONALDSON Co (DCI) leadership • Q4 2025
Question
Brian Drab of William Blair asked about the drivers behind the forecasted 40% incremental operating margin for fiscal 2026. He also inquired about the expected margin trend throughout the year, the quarterly progression of the 2% volume growth forecast, and the contribution of new distribution wins to the outlook.
Answer
CFO Brad Pogalz attributed the strong incremental margin to gross margin expansion, benefits from structural cost reductions, and lapping the heavy lift of footprint optimization work later in the year. He noted that profit margins will step up over the year and are typically more back-half weighted than sales. For volume, he pointed to the historical 48/52 first-half/second-half sales split as a guide. Chairman, CEO & President Tod Carpenter confirmed that new distribution wins are a factor in the positive outlook.