Q1 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Sales | $6 billion | up 18% |
| Adjusted EPS | $8.90 | up 23% |
| Organic Growth | 11.5% | exceeded 8% guide |
| Segment Operating Margin | 28.6% | up 120 basis points |
| Backlog | $13.7 billion | record |
Guidance and outlook
- Full-year reported sales growth is now expected to be 16% to 19%.
- Full-year organic growth guidance is raised to a range of 7.5% to 10.5%.
- Adjusted EPS guidance for the full year is raised to $36.85, plus or minus $0.40.
- Free cash flow guidance is raised to a range of $3.5 billion to $4 billion.
- Q2 reported sales are forecasted to be nearly $6.2 billion with organic growth of about 10%.
How management sounded
Positive (+7 on our -10 to +10 scale). Management raised full-year guidance and reported record sales and margins, citing broad-based demand and successful integration of the Filtration Group acquisition. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Industrial Demand
Asked: Andrew Obin asked what has changed to drive the industrial recovery and how much visibility management has.
Answer: Management noted a broad-based recovery across all markets, including strong electronics and semiconductor growth, and stated there are no concerns about the current outlook.
Aerospace Aftermarket
Asked: Andrew Obin asked about the drivers behind the positive surprise in commercial aftermarket demand.
Answer: Management attributed the strength to an aging aircraft fleet and noted that they are not seeing many aircraft retirements.
Filtration Group Integration
Asked: Scott Davis asked about the difficulty of integrating Filtration Group and the status of key metrics.
Answer: Management described the integration as a heavy lift but emphasized it is a core competency, noting they are focused on safety and implementing the Win Strategy.
Data Centers
Asked: Mircea Dobre asked about the company's exposure to data centers and related risks.
Answer: Management stated data centers represent approximately 1.5% of sales and are a high-growth driver, with the company providing liquid cooling systems and subsystem components.
What to watch before the next call
- Progress on the integration of the Filtration Group acquisition and realization of the targeted $40 million in cost synergies for this fiscal year.
- Developments in the Aerospace segment, specifically commercial aftermarket demand and production rates.
- The upcoming Investor Meeting scheduled for May 13, 2027, where management plans to share further details on the company's long-term outlook.
