Donaldson (DCI) Oppenheimer 20th Annual Industrial Growth Conference summary

Strategic positioning and growth

• Focus on leveraging filtration technology across diverse markets, including legacy and emerging sectors like Life Sciences and bioprocessing.

• Expansion driven by both organic investment and targeted acquisitions, especially in disruptive technologies.

• Recurring revenue model with about 66% of sales from consumables and replacement parts, supporting long-term stability.

• Mobile Solutions segment maintains high aftermarket retention, with about 75% recurring revenue.

• Connected services and digital solutions are expanding, particularly in industrial air filtration, enhancing customer relationships and aftermarket growth.

Financial performance and capital allocation

• Fiscal 2024 revenue reached $3.6 billion, with forecasted top-line growth of 0–4% for fiscal 2025.

• Adjusted EPS midpoint guidance for fiscal 2025 is just over $3.60 per share.

• Historical sales CAGR of 4% and adjusted EPS CAGR of 13% over recent years.

• Capital allocation prioritizes business growth (organic and M&A), followed by dividends and share repurchases.

• Nearly 30 consecutive years of annual dividend increases, qualifying for the S&P High Yield Dividend Aristocrats Fund.

Market trends and risk management

• Alternative power trends in mobile markets present more opportunities than risks, with filtration needs persisting across hybrid, hydrogen, and traditional engines.

• Aftermarket business remains robust due to the large installed base of equipment, supporting long-term growth despite shifts in engine technology.

• Tariff and trade risks are mitigated by a global production footprint, natural hedges, and flexible supply chain strategies.

• Pricing strategies refined post-pandemic to offset inflation and tariff impacts, maintaining fair customer relationships.

• Ongoing supply chain and production adjustments ensure resilience against trade policy changes.