Facet Acquisition Adds $30 Million to Donaldson Sales and Supports 2027 Growth Outlook
Key Facts
Donaldson’s fiscal 2026 results showed its acquisition of Facet beginning to contribute to sales, adding about $30 million to fourth-quarter revenue, according to the company’s statement. Donaldson announced a definitive agreement on February 2 to acquire Filtration Group’s Facet Filtration business for approximately $820 million in cash, then announced the deal’s completion on May 4. Facet provides fuel and liquid filtration solutions for critical applications, particularly in aerospace and defense and power generation. Donaldson said when it announced the deal that about 70% of Facet’s revenue comes from recurring, structured sales of high-margin replacement parts. The acquisition has therefore become part of the company’s results and outlook, rather than a new acquisition announcement in November.
Facet recorded about $108 million in sales in calendar 2025, with 57% from North America and 26% from Europe, according to Donaldson data released when it announced the agreement. The company estimated the purchase price at about 20 times Facet’s 2025 earnings before interest, taxes, depreciation and amortization. The multiple falls to 16.6 times when the present value of expected tax benefits and cost savings is included. This reflects the fact that the deal’s valuation depends in part on benefits Donaldson expects to realize after the acquisition. The company said Facet products operate at multiple stages of the aviation fuel supply chain, in addition to their uses in the aerospace and defense and energy sectors.
Donaldson recorded annual sales of about $3.9 billion in fiscal 2026, up 5.3% from the previous year, while adjusted earnings per share rose 8.2% to $3.98. In the fourth quarter, sales increased 8% to $1,058.8 million, compared with $980.7 million in the same period of 2025. The company attributed the increase to higher volume and pricing benefits, with Facet contributing about $30 million. Chief Executive Rich Lewis said quarterly sales and earnings reached record levels, driven by organic volume growth, the acquisition and execution across the three segments. Quarterly operating margin rose to 16.7%, up 120 basis points year over year, as gross margin expansion was partly offset by higher operating expenses.
However, reported 2026 sales growth in the aerospace and defense segment masked a decline in organic activity: the segment’s organic sales fell 2.8% from the previous year amid ongoing supply chain constraints. By contrast, Facet contributed 980 basis points to Industrial segment growth, according to Donaldson. The acquisition financing was associated with higher debt; the company issued $820 million in new debt during fiscal 2026. Its long-term debt stood at $1.28 billion on July 31, 2026, compared with $637.1 million on the same date in 2025. Fourth-quarter interest expense also rose to $14.7 million from $7.1 million a year earlier, which the company attributed to higher debt related to the deal and rising interest rates.
Donaldson expects sales growth of between 5.5% and 9.5% in fiscal 2027 and earnings per share of between $4.22 and $4.38, including dilution of about $0.12 per share from the Facet deal. The sales growth estimate includes a contribution of about 2% from Facet, 2% from pricing and a 1% boost from foreign currency translation. The company expects an operating margin of between 16.6% and 17.2%, compared with 15.4% in 2026, or 16.0% on an adjusted basis. It attributes the expected improvement to gross margin expansion, partly offset by lower operating expense leverage. It expects Industrial segment sales to grow in the mid-single digits, while aerospace and defense sales are expected to rise by more than 50% on additional Facet sales, with organic segment growth in the mid-single digits.
In trading, Donaldson shares closed at $85.33 on November 2, 2026, compared with $82.96 on October 30, according to EL7 data. These prices put the stock’s movement in the context of the company’s latest results and outlook, but do not isolate the effect of the Facet deal from other factors affecting trading. The 2027 guidance indicates that the acquisition will support reported revenue growth, while its effect on earnings per share remains dilutive by about $0.12, according to the company’s estimate. The aerospace and defense growth outlook is based on additional Facet sales, while Donaldson also expects organic growth in the segment. The outlook covers fiscal 2027, and the statement provided did not specify a separate later date for an update.