唐纳森（DCI）：第三季度每股收益超出预期0.04美元，售后市场和替换销售领先

Q3 Beats By $0.04. Aftermarket andReplacement Sales Take The Lead Q3 EPS of $0.99 was $0.04 above consensus, and in-line with our estimate. The2025 EPS range increased <1% at the midpoint to $3.64-$3.70, implying Q4 EPSof $0.99-$1.05 (vs. consensus $0.99). The direct impact of tariffs will likely beminimal, but the macro volatility likely hurts first-fit order trends into fiscal 2026.Aftermarket and replacement orders likely more than offset this headwind, witha further EPS tailwind from favorable operating leverage. Q3 Review:Q3 EPS of $0.99 was in-line with our estimate: -$0.07 in Mobile Solutions; -$0.01 inIndustrial Solutions; +$0.02 in Life Sciences; +$0.03 in Corporate; in line in Other Income; in-lineInterest Expense; +$0.02 Tax Rate; in-line Share Count; and ~$0.01 from rounding. Sales were +1%YoY in Q3 with On-Road -25%, Off-Road -8%, Aftermarket +3%, Aerospace and Defense +27%, IFS+1%, and Life Sciences +1%. Environment Volatile:Near-term, the direct impact of tariffs will likely be minimal. 75% of salesare produced locally, and the largest cross-border exposure is between Mexico and the US. 85% ofthese sales are USMCA compliant. Tariffs are pegged as a $35m headwind, but will be completelyoffset by surcharges and a shift in trade flows. For the next several quarters, however, macrouncertainty created by tariffs will likely continue to weigh on On-Road and Off-Road first-fit demand,and discourage decisions on industrial capital equipment purchases. Aftermarket sales in theMobile segment and replacement part sales in the Industrial segment will likely provide an offset,as customers invest to extend the life of aging fleets and equipment. Additionally, market sharegains will likely add 50-100bps of volume growth each year. In Life Sciences, the company took a$62m impairment charge for the Solaris and Univercells Technologies businesses to account forthe weakness in bio-processing. A ramp in bio-processing appears unlikely until 2H26-2027 at theearliest, but F&B and disk drive sales likely support a 6% segment revenue CAGR over the next fewquarters at least. FCF Outlook:Tariffs have triggered supply chain disruptions, and company inventories will likelyremain elevated in the near-term to ensure that customer needs are met. The expected FCFconversion in 2025 is lowered 6% at the midpoint to 80-90% which is still in-line with the historicalaverage. 2025 capex spending was reduced by $10m (~11%) at the midpoint to offset the increasein inventories. We forecast $282m in post-dividend FCF in 2025 and ~$850m cumulatively through2027. Bolt-on M&A is possible, but share re-purchases are a company focus. Donaldson expectsto repurchase 3.5-4.0% of outstanding shares in 2025, and we expect share repurchases to reduceoutstanding shares by 2% annually in 2026 and 2027. Laurence Alexander * | Equity Analyst(212) 284-2553 | lalexander@jefferies.com Daniel Rizzo * | Equity Analyst(212) 336-6284 | drizzo@jefferies.com Kevin Estok * | Equity Associate(212) 778-8516 | kestok@jefferies.com Xianrao Zhu * | Equity Associate+1 (212) 778-8742 | xzhu@jefferies.com Carol Jiang * | Equity Associate+1 (212) 284-1714 | cjiang@jefferies.com The Long View: Donaldson Investment Thesis / Where We Differ Our investment thesis for Donaldson hinges on 1) end-market demand inon-road and off-road (customer guidance is a good proxy, i.e., in Ag); 2)class 8 truck orders; 3) progress and visibility in industrial filtration orders;4) offsetting raw material inflation through price initiatives and ongoingproductivity improvement; and 5) continued investments in emerging markets. Downside Scenario,$36, -48% Upside Scenario,$110, +59% Base Case,$75, +8% •Demand intact in 2024 and 2025.•Price hikes and productivity offset costincreases.•Only modest M&A:Share repurchases add$0.12 in cumulative EPS through 2025.•FY27E EPS: $4.35; Target Multiple: 17.2x P/E; PT$75. •Robust demand environment leads to 4% GDPgrowth; volume tracks GDP.•Price/mix outpaces raw materials.•Industrial filtration/gas turbines accelerate.•New products lead to market share gains,especially in emerging markets.•M&A/buybacks add $0.15 to EPS.•Peak EPS: $5.00; Target Multiple: 22x; PT: $110. •Recession lowers 4- to 5-year sales CAGR to0-1%.•Competition from EVs erode pricing power.•Productivity cycle winds down.•Liquid filtration initiatives stall.•Trough EPS: $2.40; Target Multiple: 15x PT: $36. Sustainability Matters Catalysts Top Material Issue(s): 1/ Air Quality.Donaldson’s competitive advantage stems from more than acentury of know-how around the design and production of air filters for industrial, aerospace, military,chemical, and pharmaceutical applications.2/ Product Design & Lifecycle Management.A fundamentalshift in the company’s IP management strategy, coupled with iterative differentiation of its products,supports share gains and margins in volatile and highly competitive markets. •End-market indicators:Especially capacityutilization, commodity