Donaldson (DCI) 49th Annual Automotive Symposium summary

Strategic direction and business model

• Focused on technology leadership in filtration, global presence, and deep customer relationships, with a proprietary model where 68% of products are replacement parts and 32% are first-fit or CapEx-based.

• Transitioned from a regional to a vertically-oriented structure, enabling faster decisions and agility, and entered the life sciences segment three years ago.

• Holds over 3,000 active patents, averaging one patent granted per day globally between 2019 and 2023.

• Manufactures 75% of products in the region where they are consumed, minimizing tariff exposure and enhancing flexibility.

• Achieved record revenues and EPS for four consecutive years, with guidance for another record year at $3.8 billion revenue and 16.4% operating margin.

Operational performance and market dynamics

• Aftermarket business is robust, with normalized inventory and broad-based improvement, especially in Europe and the U.S.

• First-fit markets (construction, mining, ag, long-haul trucks) are at a bottom, with expected recovery in 12–18 months based on historical cycles.

• Supply chain disruptions have been overcome, with operational improvements and plant closures in high-cost regions like California and England to optimize cost structure.

• Aerospace and defense segment has expanded margins and momentum, with new programs like the H-53K helicopter and ongoing cost optimization.

• Life sciences EBIT margins are expected to reach company averages over the next five years as the business is focused on its best opportunities.

Innovation, technology, and digital initiatives

• Digitization in industrial solutions is driving deeper customer relationships and higher aftermarket sales, with connected products offering three to four times more aftermarket opportunity.

• Plans to connect an additional 2,000–2,500 dust collectors this fiscal year, further accelerating growth in industrial aftermarket.

• In engine markets, sensor technology is prioritized over AI, enabling operational data collection and improved customer experience.

• Product innovation, such as PowerCore technology, has reduced filter size and cost while maintaining performance, enhancing aftermarket positioning.