Donaldson (DCI) Gabelli Funds 48th Annual Automotive Aftermarket Symposium summary

Strategic overview and growth initiatives

• Focus on solving complex customer problems, leading to deep relationships and industry leadership in filtration technology.

• Balanced strategy between organic investment and acquisitions, with a new emphasis on expanding the life sciences vertical.

• 65% of revenue comes from replacement parts, with a global presence in 140 locations and 14,000 employees.

• Consistent investment in innovation, averaging one patent granted per day globally between 2019 and 2023.

• 75% of manufacturing is regionally based to support local markets, avoiding a low-cost country import model.

Financial performance and targets

• Record revenue and EPS achieved over the past five years, with 4% sales growth expected this year.

• Adjusted operating margin targeted to reach 16.2% by fiscal 2026, with 13% EPS growth expected.

• Three-year targets include 4% overall growth and margin expansion, supported by strong free cash flow and $800 million available for acquisitions.

• Dividend has been increased for over 20 consecutive years, with consistent share repurchases averaging 2% annually.

Segment highlights and market opportunities

• Mobile solutions segment leads in construction, mining, agriculture, and long-haul trucks, with proprietary technologies like PowerCore.

• Industrial segment addresses particulate, mist, and fume removal, with significant opportunities in power generation.

• Life sciences is the newest vertical, with recent acquisitions and a $21 billion addressable market addition.

• Medica acquisition brings kidney dialysis technology into biosciences, with a path to majority ownership.