Donaldson (DCI) 47th Annual Raymond James Institutional Investor Conference summary

Strategic Overview and Leadership Direction

• Emphasizes leadership in filtration, innovation, and technology as core differentiators, focusing on protecting customer assets and lowering total cost of ownership.

• Balanced growth strategy targets core and new markets, with organizational redesign and best-in-class technology to drive long-term profitable growth.

• Progressing toward leadership in Life Sciences, leveraging exposure to mega trends for significant market potential.

• No fundamental change in strategy under new CEO, but potential for more aggressive investment in mobile and industrial segments.

• Investor day planned later in the year to detail strategy.

Financial Performance and Outlook

• FY23–FY25 adjusted EPS CAGR of ~10%, with FY25 adjusted EPS at $3.68 and sales at $3.691B; FY26 sales expected to grow 1–5% year-over-year.

• Q2 saw a step down in operating profit due to seasonal factors, but strong backlogs and order books support a positive second half outlook.

• Guidance anticipates record sales, operating profit margins, and EPS for the year, with margin expansion expected as short-term issues moderate.

• Operating margin projected to improve to 16.0–16.4% in FY26, driven by cost savings and operational efficiencies.

• $465M returned to shareholders in FY25 via dividends and share repurchases.

Market Trends, Business Segments, and Competitive Advantages

• Mobile Solutions business benefits from high recurring revenue and market share gains, with early signs of recovery in agriculture and commercial truck markets.

• Over 100 years of filtration innovation, including the invention of the first engine air filter, and strong OEM relationships.

• Diversified revenue base across mobile, industrial, and life sciences segments, with global presence in over 80% of operating countries.

• Data center exposure is significant, with growth driven by power generation and water filtration, and an elongated upcycle expected.

• Advanced filtration solutions support alternative power adoption and operational efficiency.