DONALDSON COMPANY Baird 2018 Global Industrials Conference

Transcription

1 DONALDSON COMPANY Baird 2018 Global Industrials Conference Tod Carpenter Chairman, President and Chief Executive Officer

2 SAFE HARBOR STATEMENT This presentation includes forward-looking statements which reflect the Company s current views with respect to future events and financial performance, but involve uncertainties that could significantly impact results. NOTE: Donaldson s fiscal 2019 first quarter ended October 31, 2018 and the Company will report results Tuesday, December 4. Comments made during this presentation related to the Company s forecast, market conditions or general outlook are as of the previous earnings report from September 6, 2018.

3 DONALDSON IS A TECHNOLOGY-LED FILTRATION COMPANY Technology leader in our markets Diversified portfolio of global businesses

4 VALUE PROPOSITION TO OUR CUSTOMERS Technology Advantages - Higher efficiency - Small system size - Longer filter life - Reduced operating and maintenance costs Better Aftermarket Retention

5 VALUE PROPOSITION TO OUR SHAREHOLDERS Diversified portfolio of technology and products Global sales, production and distribution footprint Committed to growth and financial performance Disciplined capital deployment - Invest in our company - Pay a dividend - Repurchase our shares

6 WE DIVERSIFY THROUGH OUR TECHNOLOGY Engine Products are ~68% of total revenue * ~70% replacement parts; ~30% first-fit products * Twelve months ended July 31, 2018

7 WE DIVERSIFY THROUGH OUR TECHNOLOGY Industrial Products are ~32% of revenue * ~40% replacement parts; ~60% first-fit products * Twelve months ended July 31, 2018

8 STRATEGIC GROWTH PLANS Geography DONALDSON CORE Expand Core Expand core products and technologies Expand geographically Execute acquisitions Acquisitions

9 SALES GROWTH MODEL Use Innovative Technology Reinvest Create Holes Sell Replacements Growth

10 INNOVATIVE PRODUCTS DRIVE RETENTION Aftermarket retention rate of innovative products is higher than legacy products over time 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Yr 0 Legacy Products Yr 2 Innovative Products Yr 5 Yr 8 Yr 10 Yr 15

11 INNOVATIVE AIR FILTRATION PowerCore DownFlo Evolution

12 INNOVATIVE LIQUID FILTRATION Designed for new diesel fuels, higher fuel injector pressure Higher efficiency, extended filter life

13 INNOVATIVE PROCESS FILTRATION Filtration for the Food and Beverage industry Stronger, longer-lasting, high-efficiency

14 RECENT PERFORMANCE HAS BEEN STRONG Record levels of sales in FY18 - New program wins - New and expanded product offering - Market conditions Record level of adjusted EPS * in FY18 - Expense leverage offset gross margin pressure - Increased level of investment into the company *Adjusted EPS is a non-gaap financial measure that excludes the impact of certain matters not related to the Company s ongoing operations, including charges related to the provisional estimates of the impact from tax reform. See press release from September 6, 2018, for more information.

15 PROJECTING ANOTHER STRONG YEAR IN FY19 * Continued sales momentum in both segments Pricing gains expected to offset cost increases Focused expense plan Incremental margin in line with historic averages Robust investment agenda *Reflects guidance, commentary from fourth quarter earnings release and conference call on September 6, 2018.

16 CURRENT INVESTMENTS IN OUR COMPANY Sales-driving initiatives Technology development Capacity expansion Strategic acquisitions

17 BOFA IS NEWEST ACQUISITION Dynamics are attractive: ~$40 million in revenue Above-average margin Strong OE business with high aftermarket retention In growing markets Donaldson will leverage: Technology expertise Global footprint

18 CONSISTENT DIVIDEND GROWTH Per Share $0.80 $0.70 $0.60 $0.50 Paid quarterly dividend for 60+ years Increased annually for 20+ years Announced 5.6% increase in May % CAGR $0.73 $0.40 $0.30 $0.20 $0.10 $0.00 $

19 CONSISTENT SHARE REPURCHASE Shares Outstanding in Millions 250 Very long history of repurchasing shares Goal is to at least offset annual dilution of ~1% -2% CAGR

20 VALUE PROPOSITION TO OUR SHAREHOLDERS Diversified portfolio of technology and products Global sales, production and distribution footprint Committed to growth and financial performance Disciplined capital deployment - Invest in our company - Pay a dividend - Repurchase our shares

21 THANK YOU