Morning, everyone. Welcome to the 20th Annual Oppenheimer Industrial Growth Conference. Next up, we have Donaldson Company. Very happy to have CFO Brad Pogalz with us. That still has a nice ring to it, Brad, as well as Director of IR, Sarika Dhadwal. Thank you. Thank you both for taking the time this morning. Always good to chat. Great. Thank you. Just before we get started, I just wanted to mention to everybody on the call that we did just close our fiscal third quarter 2025 at the end of April, April 30th. Anything we talk about today in terms of presentation material or Q&A will be backdated as of our second quarter earnings conference call. With that, we'll kick it off, Brad. Great. Thanks everyone for the time today. Brad Pogalz, as Brian mentioned, I've been with Donaldson for about 10 years, but CFO for the last six months. Looking forward to reconnecting with some of you or connecting for the first time as we go through this. A quick update today for us is first the—there we go—the exciting part of forward-looking statements. As Sarika mentioned, I think that's the most important one. We have an off-cycle fiscal year. Of course, these are all forward-looking statements. A few investment points for Donaldson that are very consistent with how we've talked about our business for a while. I think most importantly, we're a leader in filtration. We're a filtration company, technology-led filtration. That goes to the second point. When we think about our opportunities, it's about leveraging our filtration technology in different markets. Where some companies perhaps chase a specific market, for us, it's about developing technology at one of our facilities around the world and then thinking about ways to apply it to customer problems that might open doors to find our way into different markets that we hadn't thought about, a niche opportunity. We use the portfolio of technology that we have to do that. This is what's helped us grow very profitably for a very long time now. Helping customers meet evolving environmental and operational goals. As we think about the markets and the opportunity for filtration, as technology gets tighter, as people, customers, or geographies move up a technology curve, that tends to lend itself to better opportunities for us. Things like on-road transportation, sometimes we get the questions about how do we think about environmental regulations. Of course, that creates a moment where everybody has to be on the same page at the same time with regulations. Our business isn't predicated on growth through regulation. As customers, our customers want to improve the quality of their equipment for their customers. It tends to result in something that's a better performing engine or a cleaner facility. That requires better filtration. That's where we step in. Strategic and balanced growth strategy. Our position in legacy markets like Mobile Solutions we've been in for over 100 years, but then also leveraging technology to get into newer markets. As we think about the industrial growth opportunities, it's about things like having connected services that get us closer to our customers where we can dig in and expand our aftermarket business in industrial facilities or in Life Sciences, food and beverage filtration, or even new technologies in disk drive where we've had this business for a long time. Our newest set of businesses is acquisitions in bioprocessing. Things like this are all at the core of how we expand. We're very smart about it, and we're very balanced in how we do it. Finally, this progress towards Life Sciences. We've made a few acquisitions over the last several years in all about the bio spaces. Again, these are akin to filtration in certain ways, thinking about where we can grow our consumables with some of these technologies. For the most part, we're looking at companies that offer disruptive technology. It's not necessarily playing as a me- too character in this world, but looking for disruptive technologies in how we support Life Sciences trends. Now, of course, this is something that's newer to our portfolio. It's building over time. It's a place where, again, we see an opportunity based on our core know-hows and then also leveraging technologies in a space where we're a bit new. Overview of the company, as I mentioned, over 100 years old, 110 this year. We've got about 14,000 employees. About two-thirds of those are in the production space, 150 locations around the world. I think one of the most important statistics for Donaldson is our active patents. Again, we think about filtration technology. We have an amazing group of engineers and scientists that help us build capabilities that give us room to pursue a lot of different opportunities around the world. About $8.7 billion in market cap. An important one is long-term dividend CAGR. We are a company that's within the S&P High Yield Dividend Aristocrats Fund, which means to be in this, we've increased the dividend for at least 20 years. At this point, we're coming up on 30 years of annual increases. A really nice trajectory. On the bottom left of the screen is a breakdown of our revenue base in a couple of different categories. First is our operating segments, Mobile Solutions, which is largely related to engines, Industrial Solutions which is about industrial air filtration, power generation, and then Aerospace and Defense. Finally, Life Sciences, the smaller part of our business. Most of that 8% is coming from more legacy businesses, non-acquired. It is food and beverage, thinking about filtration for wine, beer, bottled water. Disk drive filtration is in there because it is a very unique technology. Some venting solutions, think about things like battery venting for electric vehicles. Our new bio businesses, which again are a very small part of this. Breaking it down a different way, I think the 66% is one of the statistics we get asked about a lot that is a core part of the strength of Donaldson. 66% recurring revenue. We have done a lot of work over a long time to set up essentially a razor razor blade model where we work with our customers to come up with an innovative solution. That is on that first bit housing or piece of new equipment. Our filter is the one that goes back in there. That's the razor blade. We're very successful with it because we offer a good value proposition, again, to the customers. It's not just make something that's a razor blade, but we do it with a lot of science and a lot of technical know-how on filtration that our customers value pretty highly. Quick stats on the revenue. I'll go to the far right of both charts. Last fiscal year, fiscal 2024, we're in fiscal 2025 right now. As Sarika mentioned, we just closed our third quarter. Last year, $3.6 billion in revenue. We've forecasted some growth this year, 0-4% in total top line sales. EPS on the far right, excluding certain one-time items, $3.42 per share. This year, we're just over $3.60 per share at our midpoint of the guidance for fiscal 2025. Few of the historical highlights. I touched on the guidance here. If we look at the CAGR, 4% over the last few years. I think, again, it really comes down to the strength of both the products, replacement parts, and then this process filtration, which is about food and beverage. Adjusted operating margin. This is a pretty remarkable set of improvements over the last few years. If you go back to fiscal 2022, this is when the world was feeling a lot of pressure on that period of hyperinflation post-COVID. Our teams did an excellent job looking at both cost in our business, but then also, I would say our pricing muscle is very strong right now. We look to have fair pricing with our customers. We benefited from that as we saw some leverage in fiscal 2023, continued growth in 2024, and again, forecasting another year of growth this year. Finally, adjusted EPS, the CAGR of 13%. Sales CAGR of 4%, earnings growth of 13%. We expect continued improvement in fiscal 2025, which I mentioned already. Another side is in terms of our forecast, we continue to view return to shareholders with dividend and share repurchase as a big part of that. I'll talk about capital allocation in a different slide. The competitive advantages that we think we bring, and this is the top left, is really the core, the filtration technology leadership. A highlight for us, we invented the first engine air filter. Our founder, Frank Donaldson, was working on a tractor, and that's where that came from. We have been expanding ever since. It all starts with filtration and how we can work our technology to solving a customer problem. I am going to go to the top right, deep customer relationships. The thing for us that is really important to keep in mind is we have relationships with some of the world's largest manufacturers of mobile equipment, some large industrial companies. These relationships are built with trust and development of solutions that matter to them. It is a very high barrier to entry if you want to support some of these large customers because you have to be able to deliver, but you have to offer some technology that really matters to them. We have done this over a very long period of time. The third bullet in this section I want to just quickly touch on, connected services solutions. This is what I said earlier about really managing the customer relationship at a deeper level. We're expanding our connected services technology in the industrial space, but then also growing in our service business. We've done a few small acquisitions to essentially build out territories with service companies. That gives us access to a customer that's at a lower level than we've had in the past. Now moving down, again, I'm going to zigzag here. Industry leader in advanced filtration operational excellence. I think the opportunity here is all about optimizing resources with efficiency. When we think about where we're going over the next 10 years, we're looking at ways that help our customers meet some of their targets. It's not just about environmental. It's about cost targets. You think about the second bullet, alternative power solutions. We have a real opportunity here as we work with our internal combustion engine customers on what alternative powers would look like. We also have opportunity with our power generation business, natural gas power plants. All of these things are places where we have expertise that we can build on and kind of meet this new demand in the current environment. Diversified business, I already talked. We have a lot of locations around the world. I do want to do a quick sidebar here on tariffs with our global scale. Tariffs is one of the most popular questions right now. Of course, that makes sense to all of us that this is the topic. For Donaldson, we have this natural hedge built into our business. About 75% of what we produce in a certain region is consumed in that region. We do not have a lot of our supply chain where it is building a lot of things in China to bring it to the U.S. or vice versa. This creates a natural hedge. Then on top of it, as we look across our business, this is a way for us to think about how we can explore, let's say, defensive opportunities in the tariff world. If there are things where we make it in the U.S., we want to promote that. Our biggest trading partner in the U.S. is with Mexico. A lot of our products are covered with the USMCA agreement. That helps create some hedge again right now. As far as tariffs, we are certainly paying attention to it like all of you. It is something that we believe we are managing smartly right now. Of course, we pay attention to the news, and we'll continue to monitor that. High aftermarket retention, this is what I mentioned earlier. About two-thirds of the business is consumable. With our proprietary products, this gives us a great opportunity to replenish that. If you have one of our systems with a proprietary product, you tend to need that filter. We haven't really had to give up a lot of opportunities because our filter helps us retain that business. When we think about the growth, it's about continuing to populate the world with new solutions that have our filter as that proprietary razor blade, like I said earlier. Operations, again, our teams around the world are focused on continuous improvement and taking out costs where it makes sense. Capital allocation, I'll speed up a little bit through here. Of course, we can take questions at the end. I want to start at the top, and we'll go counterclockwise. 21% is organic investment in this over the last three years, $1.4 billion, 25% through dividend, 34% through share purchase, and 20% through M&A. The top priority for us is growing the business. When we look at that M&A and organic, that is our number one priority for capital deployment. We want to grow our business. Next is dividend, and following that is share repurchase. On share repurchase, we typically look to at least offset dilution of about 1%. Over time, we've gone above that by about 1%. Our average is around 2% in the past many, many years. These are the last points, and this is the points I started with. I think if you take away anything, it's about leader in filtration and technology because it's based on getting plugged in with our customers. With that, Brian, I'm happy to take questions, and we can go from there. Okay. Sounds great. In covering Donaldson for quite a while, with regard to your mobile business, there are always questions on how much risk there is with alternative power, as you referenced, different engine adoption scenarios, where are you vulnerable, how is your team managing through those potential outcomes? Maybe just walk us through that in terms of the puts and takes of the key potential engine adoption scenarios, where you are positioned now, how your team in terms of technology development is managing through each of those potential paths. I guess what it means going forward, obviously, that secular risk, that watch item has been there for covering the stock for over a decade. It has been discussed the whole time. Your mobile solutions team has put up some pretty good numbers. That certainly has not hit you yet. Profitability continues to climb. The concern remains. It is understandable at a high level. Just curious what final thoughts you have on that. Sure. The 10-year that you mentioned is I kind of think about that too. Ten years ago, the question that we would often get posed is similar, how does this affect our business? At the time, the perspectives were binary. It was much more clear at the time that it was internal combustion or electrification. That was it. Now, a fully electrified engine does not have a lot of filter content on it. I can understand the concerns at the time. What has evolved, and I think what is really exciting for us, is the spectrum of options is much, much wider than ICE or EV. Things like hydrogen fuel cell, where we have a partnership with Daimler to work on a concept truck with them. We did a press release on that. Hydrogen fuel cell requires pristine air intake. Of course, as I mentioned earlier, we started with air, and we've been doing that for 100 years plus, and we're very, very good at air intake. The standard with hydrogen fuel cell is that the air intake goes up. You require a little bit extra because there's now chemical filtration that has to come into it. These are solutions that we have developed, and we see really good content opportunities on that. Hybrid equipment, kind of the same. If there's a diesel power plant running a lot of electric drive motors or electric equipment on the machine, that still creates opportunity. The air filtration, the fuel filtration, the lube filtration, hydraulics. As we look at the landscape of things, there is probably more opportunity than risk because the likelihood that EVs just become the only solution is very, very low. Now, this is a debatable thing on how long will it take. One of the things we talk about also is the population of equipment in the world. Our aftermarket business, as we already said, is huge. Conversion to new equipment, if it started today, still leaves us with decades of aftermarket equipment, unless you believe that all that equipment just sort of goes away right away, which we do not. Our growth in aftermarket and our commitment to expanding share there with the newest technologies, best availability, good options, all of that creates long, long-term opportunity. I would say from our chair right now, as we work on these things, we have more optimism than concern with regard to this new set of technologies because we think we are really well positioned to be a key player in the alternative power space. That's very helpful and encouraging. One last setting question on that truck. Within mobile, you had mentioned the 66% replacement consolidated. What is it? 75% plus with mobile? Yeah. Sorry, mobile, the% replacement parts, yeah, 70-something%. Yeah. That's right. Yep. That's a good point too. About three-quarters of that business is some sort of recurring. Particularly now, given where we are in the cycle. Indeed. All right. I've been intrigued by industrial solutions connectivity for a while. I do tend to admittedly overlook the service component of that. Maybe talk about the, I guess, the decision to go down that path more and more over the years, the steps your team has taken in terms of technology rollouts, some adjustments along the way. Where you stand now in terms of the connected end-to-end service strategy, overall portfolio role, what it can mean for Donaldson over the medium to long term? Sure. The impetus, I would say, is as this business has expanded, the opportunity for us was to get closer to our customers. We sell through every channel in industrial. Let's talk specifically industrial air filtration, which is the largest portion of that segment. This is dust collection across a variety of sizes, and it can be across pretty much every market you could consider. It's woodworking, pharmaceutical dust, weld fume, anything like that. As we grew this business, it was about boots on the ground, people selling to maintenance people in a facility or more strategic key accounts at a parent or working with distributors and dealers around the world where maybe we needed the access. Kind of every channel. Connectivity allows us to understand more of the customer-specific needs. One of the things that we launched several years ago is this iCue Connected Solutions that gives us insight into what a dust collector is doing. You think about some specific unit in a factory, and we know about the pressure in that. We know if the fan is operating. We know about the utilization of that equipment. Why that matters to the customer, though, is they do not have to worry about it then. If there is something that looks like it could be an issue, we can help them spot it. If it looks like there is an issue, we can perhaps fix it even over the phone. Maybe it is as simple as literally a dustbin needs to be emptied. These are the things that all of a sudden we have, these sensors and this capability where the customer, the end user, is thinking about Donaldson, not necessarily just their distributor partner that hopefully comes to us. That connection is really important because what we're also finding is as the world gets more complicated, and of course, our customers, especially in the plants, are very, very busy. They want that peace of mind. The thing that they want to worry about is how they make their widget and the quality of their widget. They don't want to worry about these very complicated systems to make sure that the air is clean and their systems are operating properly. This gives us a whole different set of opportunities to plug in in a meaningful way. What I expect that that gives us the opportunity to report back to all of you is we'll watch more and more of the growth in the sales and service or, excuse me, the aftermarket and service part of this business. Which I assume over time will be increasingly mixed accretive. Yes. Absolutely. I know it's not the easiest stat to provide, so any color would be helpful. What is the mix now of truly connected revenue and/or service revenue for industrial? What's the, I guess, entitlement mix over time as you look forward? Yeah. Service revenue is small. I want to caveat the connected revenue. It's not something that we're lobbying as a subscription. The connected is the, think of it as the access point. The more we know about how to support the customers, the better opportunity for growing either the aftermarket part or service. To the extent of the shipment shows up today because you're going to need a replacement part tomorrow for this type of filter. It's things like that. Brian, we'll measure success more in service revenue, which is small as a part of industrial today, and aftermarket part growth. Okay. Understood. All right. Let's talk Life Sciences, the newest leg of at least bioprocessing, specifically being the newest leg of the Donaldson store. Maybe recap the decision to get into the space. You did touch on that a little bit earlier. Talk about the impetus for getting into bioprocessing, the "puzzle pieces" that your team has put in place thus far, and what differentiates those assets from competing previously available technologies. Sure. The decision to go in is kind of similar to our legacy of this continued expansion. We were an engine air filtration company, and then we moved into industrial air filtration. Then there was disk drive, and we've got aerospace and defense, and we got into process filtration via an acquisition 25 years ago now, right around 2000, 2001. This is kind of next leg in a journey that's not inconsistent with what we've been doing for a long time. The biospace is specifically we're looking more for disruptive technologies. It's less about trying to be a me too and push ourselves in, more about smaller companies that have some sort of niche offering or niche approach or disruptive approach to how they approach these markets. We've bought four companies, I guess technically 4.49 companies. We also announced a 49% share in a company called Medica. I'll talk about the other four companies. Two of them are pre-revenue, and two of them are small with some existing business. The two small with some existing business are focused specifically on bioreactors. One of them is called Solaris, and that was our first acquisition in the space. That is more about bioreactors in labs or for very specific types of things. When we talk about we did a press release a few years ago of looking at different proteins, making salmon in a bioreactor for consumption. Some really interesting spaces like that, especially as you think about food sources and where growth can come from in the world and how that is supported. The other one, Univercells, was in Belgium, and that's a company that is also in bioreactors, but a little bit more of the traditional biospace. Both of them have a unique approach to the bioreactors. The opportunity for us was to leverage that and see where we can get into customers with a different value proposition, and we think a pretty strong value proposition in terms of cost or efficiency. The other two are pre-revenue companies. This is something where we're developing technologies. We just did a press release, I think, a week ago for one of them called Isolere and announcing some new technologies. This is something that is very, very early innings. I think what we've learned about this space over time is these things take a long time. We bought these companies over a while, and they're still immaterial to the total revenue for the company. Something where when we think about the space, again, to your question, Brian, it aligns well with how we think about expansion, smart, strategic, specific technology offerings, not just jamming out a me too, like I said earlier, but ways to go on these. I don't want to oversell where we are today. There's still a lot of road in front of us. Understood. That's a helpful walkthrough. I guess, what can you provide with the lessons learned and knowing or better understanding the positioning of these assets and the timelines and market with different technologies? How does the path to commercialization look at this point for the platform in ag? Sure. On the two bioreactor companies, it looks a lot like a traditional path in that it's about being on clinical trials and being specced in early. To just leapfrog that process and land on a commercial application, the likelihood of that is very small, which, of course, is something that prolongs the timeframe relative to some of our other businesses. The biggest thing in terms of milestones, though, is clinical trials and then engagement with customers. We've also partnered with some academia. One of the things we did with Univercells, and again, via press release, so you could all reference this, but we set up a partnership with the labs at University of Pennsylvania. Work on our products, test them, use them in your applications. Things like that, Brian, that help us sort of build the awareness of what we offer and then also help us build our understanding of where opportunities are in the space. Definitely makes sense. At least at a high level. Every time I try to drill down on some of the individual technologies, I get a bit confused. We've got a lot of very smart people here that do that well, and I can't claim myself amongst them. All right. I mentioned the puzzle pieces, and you discussed what's in place now with the four acquarter assets. What's left in terms of the kind of string of hurdles that they build out, or what do you need to develop organically to really round out, make this a holistic value proposition that can be scaled more and more? Yeah. I think part of it right now is we're trying to be really smart about the investments we're making in how we grow what we have. For the group, this puzzle that Brian is talking about, we've put this out in some of our investor materials. This gives a sense of how things fill in from upstream and downstream and then systems versus consumables. Brian, to your question, I think when we've talked about this business, it's well documented at this point. We've said that the ramp-up is taking longer than we expected. Some of it right now is really dig into what we have. The puzzle is still, of course, something we consider, but our motivation right now is to make sure we're properly prioritizing what we have as we think about the next leg of these things. It's not walking away from the puzzle as much as you've heard us talk in the last couple of quarters about some restructuring. Part of that included Life Sciences and then a reprioritization within these businesses. Okay. Understood. We have a couple of minutes left. As much as I hope looking forward, it's not a real focal point, but tariffs are the kind of myopic focus for the time being. Circling back to the exposures that you have, your abilities team to directly offset cost, play offense and defense as needed in the tariff and trade war kind of environment that we have. We know that the pricing model was refined during and post-pandemics. That's a relative good guide. If you want to offer any finer points on that, please feel free. We did discuss it. In addition to that, what cost actions have been taken, and what are the key considerations in terms of your manufacturing footprint, supply chain adjustments that have taken place over time? I know even pre-pandemic, you had started a number of those actions that continued beyond. Your positioning overall, I guess, surmises quite a bit better than it would have been to navigate this environment. Just feel free to walk through the key points on that. Sure. Rewinding the clock a bit, Brian's right. The post-pandemic and hyperinflation that all of us dealt with was a moment for Donaldson where we got much stronger in our pricing muscle. Of course, that helped us offset and then grow the profitability of our businesses. What's important to note is that's not something we intend to walk away from. I think we've gotten much more strategic in how we approach these things. The goal for us is always a fair relationship with our customers. It's not about pricing ourselves out of the market. We're sensitive to that, and we acknowledge that. With tariffs specifically, the three dimensions that you mentioned, Brian, are the price and then supply chain and production. I kind of look at it in that order from easiest to impact or most immediate to longest term. Like pretty much everybody we're hearing as we go through this quarterly earnings cycle, we're committed to trying to offset the cost of tariffs. How we do that is a bit dependent on the business and the customer relationships. In some cases, especially with our large OE customers, we have longer-term commitments with them. There's an aspect of transparency that we go through with that. It may be insert charges versus pricing or tariff-specific pricing, but we're doing our best to help our customers understand that this is a product of tariff versus us getting too greedy. Again, we're really committed to these fair relationships with our customers. In some businesses, it's more straight pricing. In other businesses, it's about today's quote. A large dust collector, we would quote today based on source of goods and the bill of materials and the supply. Again, we're trying to be clear with our customers on where tariffs fit in that. There is a variety of mechanisms. Supply chain, we're looking at it, and we're taking advantage of that where there are specific opportunities. That's a little tougher to comment on because it's almost the micro opportunities around the world. It's not something where we ship right from Mexico to Canada, for example. I mean, those are things that are more dramatic examples. Production is something where we're being smart about how we think about where things are produced, but that's a longer-term decision. For us, and I mentioned this during the intro slides, the way we're structured today gives us a lot of natural hedges. We want to be smart about our production strategy and where it goes with the long term in mind, not today's announcement on tariffs. That makes complete sense. I think it's a good place to wrap and refresh as we go over time, but very, very helpful color throughout. Appreciate the time as always. Brad, sorry. Thanks, Brian. Thank you. Thanks, everybody that joined. Appreciate the time. See you.