Intellisight 6 th Annual Conference Hosted by the CFA Society of MN - - PowerPoint PPT Presentation

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Intellisight 6 th Annual Conference Hosted by the CFA Society of MN - - PowerPoint PPT Presentation

Oct 11, 2022 45 likes •298 views

Intellisight 6 th Annual Conference Hosted by the CFA Society of MN Tod Carpenter President and CEO Safe Harbor Statement This presentation includes forward-looking statements which reflect the Companys current views with respect to future

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SLIDE 1

Intellisight 6th Annual Conference

Hosted by the CFA Society of MN

Tod Carpenter President and CEO

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SLIDE 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.

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SLIDE 3

Overview of Donaldson

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SLIDE 4

Donaldson Company

  • Technology leader in our markets
  • Diversified portfolio of global businesses

We are a filtration company

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SLIDE 5

Value Proposition To Our Customers

Technology Advantages

  • Higher efficiency
  • Small system size
  • Longer filter life
  • Reduced operating and maintenance costs

Better Aftermarket Retention

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SLIDE 6

Value Proposition To Our Shareholders

  • Diversified portfolio of technology and products
  • Global sales, production and distribution footprint
  • Committed to growth & financial performance
  • Disciplined capital deployment

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SLIDE 7

Business Composition

7 68% 16% 9% 7%

Engine Segment $1.4 billion, or 63% of FY16 sales

Aftermarket Off-Road On-Road A&D 62% 20% 18%

Industrial Segment $0.9 billion, or 37% of FY16 sales

  • Ind. Filtration
  • Spec. Apps

Gas Turbine

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SLIDE 8

Performance and Outlook

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SLIDE 9

Year-to-Date* Sales Performance

12.4% 12.3% 12.1%

  • 18.6%
  • 25%
  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 10% 15% Engine Segment

Total sales: +9.4% YTD*

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Year-to-date* sales of $1.7 billion; +5.2% over last year

2.1% 0.6%

  • 18.9%

Industrial Segment

Total sales: (1.9)% YTD*

*Nine Months ended April 30, 2017

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SLIDE 10

Full-Year 2017 Expectations*

Full-year sales expected to increase 6% from PY:

  • Engine sales up 10% - 11%
  • Industrial sales down 3% to 2%

Adjusted EPS: $1.67 - $1.71; ~11% above PY**

  • Operating margin of 14.0% - 14.4%; up from 13.2% LY**
  • Share repurchase between 2% and 3%

10 *Guidance as of June 1, 2017 **Adjusted metrics, which are non-GAAP, exclude certain one-time charges

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SLIDE 11

Operating Environment

At the beginning of FY17:

Production expected to decline Strength in replacement parts Limited global capital spending Geopolitical uncertainty

As of Q3’17 earnings:

Off-road production increasing Stronger-than-expected aftermarket Limited global capital spending Geopolitical uncertainty

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Increased guidance driven entirely by Engine; Industrial markets still uncertain

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SLIDE 12

Strategic Growth Plans

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SLIDE 13

Strategic Growth Plans

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Acquisitions Geography Expand Core

DONALDSON CORE

Expand core products & technologies Expand geographies Execute acquisitions

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SLIDE 14

Sales Growth Model

Create Holes Sell Replacements Reinvest Growth Use Innovative Technology

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SLIDE 15

Innovative Product to Improve Retention

0% 20% 40% 60% 80% 100% Yr 0 Yr 2 Yr 5 Yr 8 Yr 10 Yr 15

Legacy Pr Prod

  • duc

ucts ts In Inno nova vativ tive e Pr Prod

  • duc

ucts ts

Aftermarket retention rate of innovative products is higher than legacy products over time

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SLIDE 16

Innovative Air Filtration

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PowerCore DownFlo Evolution

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SLIDE 17

Innovative Liquid Filtration

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  • Designed for new diesel fuels, higher fuel injector

pressure

  • Higher efficiency and extended filter life
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SLIDE 18

Capital Deployment

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SLIDE 19

Capital Deployment Priorities

  • Invest in our company
  • Pay a dividend
  • Repurchase our shares
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SLIDE 20

Reinvesting in the Business

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  • Organic Growth Investments
  • Expecting to increase R&D spend over time to 3% - 4% of sales
  • Development of new and innovative products
  • Lab upgrades and IT investments
  • Production capacity and distribution expansion
  • Acquisitions
  • Completed five bolt-on acquisitions in <3 years
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SLIDE 21

Consistent Dividend Growth

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$0.02 $0.70

$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80

1990 2017

Per Share

16% CAGR

  • Raised quarterly dividend 2.9% to $0.18/share*
  • Paid quarterly dividend for 60+ years
  • Increased annually for 20+ years

*Announced on 7/28/17; payable 8/31 to shareholders of record on 8/15

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SLIDE 22

Consistent Share Repurchase

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50 100 150 200 250 1990 2017

Shares Outstanding in Millions

  • 2% CAGR
  • Goal is to at least offset annual dilution of ~1%
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SLIDE 23

Value Proposition To Our Shareholders

  • Diversified portfolio of technology and products
  • Global sales, production and distribution footprint
  • Committed to growth & financial performance
  • Disciplined capital deployment

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SLIDE 24

A Measure of Performance

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32% 8% 11% 16% 14% 8% 1 Year 5 Years 10 Years

Annualized Total Return to Shareholders*

DCI S&P 500

*As of 8/8/2017.

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SLIDE 25

Thank You