Donaldson Company, Inc.

Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Donaldson second quarter fiscal year 25 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Sarika Dogwell, Senior Director, Investor Relations and ESG. You may begin.

Good morning. Thank you for joining Donaldson's second quarter fiscal 2025 earnings conference call. With me today are Todd Carpenter, Chairman, President, and CEO, and Brad Pogel's Chief Financial Officer. This morning, Todd and Brad will provide a summary of our second quarter performance and our updated outlook for fiscal 2025. During today's call, we will discuss non-GAAP or adjusted results. For second quarter 2025, non-GAAP results exclude pre-tax restructuring charges of 2.2 million related to footprint optimization and cost reduction initiatives, as well as 4.4 million of business development charges. A reconciliation of GAAP to non-GAAP metrics is provided within the schedules attached to this morning's press release. Additionally, please keep in mind that any forward-looking statements made during this call are subject to risks and uncertainties which are described in our press release and SEC filings. With that, I will now turn the call over to Todd.

Thanks, Sharika. Good morning, everyone. I am proud of what the Donaldson team accomplished this quarter through resilience and dedication. We delivered for our stakeholders. Total sales increased in constant currency and earnings rose at a faster pace, reflecting overall margin improvement. We executed on what was in our control in light of macro headwinds. Our team navigated a choppy operating environment and with the benefits of our diversified portfolio of businesses delivered higher sales in key higher margin businesses. We diligently managed costs and pricing and exercised strong expense discipline while still investing for the future. Now, some highlights from each of our segments. In all three segments, sales were impacted by weak end market conditions, including in agriculture, transportation, industrial gases, dust collection, and bioprocessing. In spite of that backdrop, in mobile solutions, sales grew in constant currency, driven by solid aftermarket performance, where we continue to gain share. Our recently opened distribution center in Olive Branch, Mississippi is allowing us to deliver products with speed and reliability and our fill rates remain at almost 100%. We are also planning ahead and ensuring we are well positioned to address all future engine adoption scenarios with our alternative power solutions. In January, we announced a partnership with Daimler Truck North America on their hydrogen fuel cell project. Donaldson's advanced air filter technology will be featured in the next generation Freightliner Super Truck 2, solidifying our position at the forefront of hydrogen fuel cell innovation. In industrial solutions, our aerospace and defense business is outperforming our expectations. Demand for new equipment in commercial aerospace has been at record levels and defense orders and quoting activity are very strong. Overall, we continue to build our industrial business through our create, connect, replace, service business model. The number of connected machines and customer facilities is growing and both metrics were up double digits in the quarter. Our services businesses are performing well, and our most recent acquisition, EasyFlow, which expanded our capabilities and presence in the southeast United States, is outpacing our sales expectations. In life sciences, pre-tax profit margin improved sequentially and year over year. The cost reduction actions we implemented last quarter are taking hold and we are now leveraging with higher sales a more focused cost structure. We are working to grow our high margin legacy businesses such as disk drive and food and beverage and scale our acquired businesses. In bioprocessing, early stage capital spending is still constrained. However, our therapy pipeline remains solid and we look forward to continuing to expand our presence. Now I'll cover some consolidated company highlights. Sales of $870 million decreased 1% year over year, driven by a 170 basis point negative impact from currency translation. Excluding currency, sales increased 1% with a pricing benefit of approximately 1%. Adjusted EPS in the quarter was 83 cents, up roughly 3% versus prior year. Margins remained strong, including operating margin, which expanded year over year as a result of expense discipline. Our global operations teams, in several cases working through supply chain challenges, delivered on our backlogs. We maintained strong on-time delivery rates and focused on serving our customers. Mark Warren, Importantly, while we tightly managed our expenses in the quarter, we did invest for the future, ensuring we maintain our leadership position in technology led filtration. Mark Warren, Capital expenditures included investments in capacity expansion and new products and technologies R&D investments continued across all segments. We are committed to leveraging our robust free cash flow generation and strong balance sheet to continue targeted strategic investments, both organic and inorganic. Now I'll provide some detail on second quarter sales. In mobile solutions, total sales were $548 million, down 1% versus 2024. Excluding currency, sales grew 1%. Aftermarket sales of $442 million were up 4% year over year, driven by low double-digit growth in the OE channel. OE demand was particularly strong this quarter, and independent channel sales declined low single digits, but were roughly flat on a constant currency basis. Importantly, independent channel sales strengthened as the quarter progressed. With respect to first fit sales, off-road sales of $80 million were down 13% due to ongoing weakness in the agriculture market. On-road sales of $25 million declined 24%, driven by an exit from non-strategic product sales and a decrease in global truck production. Now on China. Mobile Solutions China sales increased 1% with aftermarket sales offsetting first-fit softness. Macro weakness continues in the region. However, we do believe we are near trough levels. We are also encouraged by market trends in off-road, including a recent large OEM program win and what we believe is a structural shift towards larger and more sophisticated equipment which bodes well for our technology-led products. Turning to the industrial solutions and life sciences segments. Industrial sales decreased 4% to $254 million. Industrial filtration solutions, or IFS, sales decreased 8% to $208 million, driven by slower investments in CAPEC-based businesses and power generation project timing. Aerospace and defense sales growth of 19% partially offset IFS weakness. Life sciences sales of $69 million grew 9% compared with the prior year due to ongoing strength in disk drive. Overall, I'm encouraged by the results we were able to deliver this quarter and confident in our ability to achieve record earnings in fiscal 2025. Now I will turn it over to Brad, who will provide more details on the financials. Brad?