- Strong Q1 Performance: Sales rose to $935 million (+4% YoY), with record operating margin of 15.5% and EPS of 94¢ (+13% YoY).
- Shareholder Returns: $127 million returned via share repurchases and dividends, reflecting disciplined capital allocation.
- Revised Fiscal 2026 Outlook: Sales guided to $3.8 billion, 16.5% operating margin, and $4.03 EPS (up from prior guidance).
- Segment Growth Drivers: Life sciences up 13% YoY (food, beverage, disk drive), mobile solutions sales +5% YoY (aftermarket +7%), and power generation with full order books.
Segment-wise Performance
In mobile solutions, sales were $598 million, up 5% year-over-year, with aftermarket sales growing 7%. First fit sales also increased, led by off-road growth. Industrial solutions sales were $258 million, flat to the prior year, with industrial filtration solutions sales growing 2%. Life sciences sales grew 13% year-over-year, driven by double-digit growth in food and beverage and disk drive. As noted by Todd Carpenter, "we have a strong diversified portfolio of businesses... we're winning share gains in areas like aftermarket, industrial, mobile solutions, and life sciences."
Guidance and Outlook
The company is increasing its operating margin and EPS outlook for Fiscal 2026, expecting record sales of $3.8 billion, operating margin expansion of 80 basis points to 16.5%, and all-time high earnings per share of $4.03. Segment-wise, mobile solutions sales are expected to be flat to up 4%, industrial solutions sales to grow 2-6%, and life sciences sales to grow 1-5%. The company expects to benefit from pricing, cost optimization initiatives, and structural efficiencies.
Valuation
With a P/E Ratio of 28.05 and an EV/EBITDA of 18.52, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 4.3%. The company's ROIC is 16.57%, and ROE is 25.55%, indicating a strong return on capital. The dividend yield is 1.27%, providing a relatively stable income stream.
Growth Drivers
The disk drive business is seeing strength driven by AI and cloud-based storage, and is expected to continue growing. The data center opportunity is expected to materially impact the business, with opportunities in power generation, microelectronics, and cooling. The company expects mid-single-digit growth in the power generation business, driven by complex projects and ramp-up challenges.