Donaldson Company, Inc.

Hello everyone. Thank you for joining us and welcome to the Donaldson Company third quarter fiscal year 2026 earnings webcast and conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Sarika Dodd-Wall, Head of Investor Relations. Please go ahead.

Good morning. Thank you for joining Donaldson's third quarter fiscal 2026 earnings conference call. With me today are Rich Lewis, President and CEO, and Brad Pogel, Chief Financial Officer. This morning, we will provide a summary of our third quarter performance and our outlook for fiscal 2026. During today's call, we will discuss non-GAAP or adjusted results. For third quarter 2026, non-GAAP results exclude pre-tax charges of $9.8 million, including $9 million of restructuring and other, and $800,000 of business development charges. This compares to prior year pre-tax charges of $65.8 million, including $4.2 million of restructuring and other, $800,000 of business development charges, $62 million for the impairment of intangible assets, and a $1.2 million gain on the sale of fixed assets. A reconciliation of GAAP to non-GAAP metrics is provided within the schedules attached to this morning's press release. Before I turn it over to Rich, a quick note on our recently completed acquisition of Facet Filtration. Facet performance will be included in our consolidated fourth quarter earnings results reported in the Aerospace and Defense Business Unit within Industrial Solutions. With that, 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. I will now turn the call over to Rich.

Thanks, Sarika, and good morning, everyone. Third quarter was a strong quarter for Donaldson Company and, as expected, marked a significant step up in performance from our second quarter results. I am proud of our team, whose hard work resulted in the company's strongest quarter to date with respect to sales, adjusted operating margin, and adjusted EPS. We successfully navigated macro uncertainty including uneven cyclical dynamics and the ongoing conflict in the Middle East. To that end, I specifically want to thank our team in Abu Dhabi, whose dedication and resolve have been on display over the last several months. Our leaders have ensured employees feel as safe as possible and that our local operations continue. Globally, this quarter, we continue to serve our customers through our expanded product portfolio, and high on-time delivery rates, including in the higher margin mobile solutions aftermarket business, food and beverage, and our disk drive business. We made further progress on optimizing our cost structure as we closed the last two plants identified within our footprint optimization initiative. We are now focused on ramping up production in the receiving sites, which puts us on the path to delivering incremental efficiencies in the future. Lastly, subsequent to quarter-end, we closed our acquisition of Facet Filtration, adding high-performance fuel and fluid capabilities to our expanding industrial solutions product portfolio. Facet increases our exposure to durable, growing-end markets, including aerospace and power generation, and strengthens our aftermarket position with approximately 70% of revenues driven by recurring, regulated replacement part sales with highly accretive margins. We welcome the FACET team to the Donaldson and integration efforts are underway. As demonstrated this quarter, Donaldson is committed to delivering for all our stakeholders, including our customers, shareholders, and employees. We continually do this through our leadership position and filtration, which was built on decades of solving our customers' most difficult filtration problems. Our best-in-class technology, uniquely powerful because we focus on filtration capabilities and then leverage these technologies across multiple end markets. Our ability to help customers meet evolving environmental and operational goals by helping to protect equipment, processes, and people. And our clear, strategic, and balanced growth strategy. This is how we have and continue to win. Now I will cover some third quarter highlights. Brad will discuss the quarterly financials and full year guidance in more detail. And then I will return for some closing remarks. At a high level, sales were a record 995 million, 6% above prior year, driven by currency translation, net pricing benefits, and volume growth. Operating margin was 16.6%, up 30 basis points over prior year, and an increase of 260 basis points from second quarter. Expense leverage on higher sales was partially offset by gross margin pressure from production shifts to support customer-specific requirements in power generation within industrial solutions. Adjusted earnings per share were $1.06, 7% above 2025. Now I'll cover some highlights by segment. In mobile solutions, sales were 630 million, up 8%, inclusive of strong volume growth. Aftermarket sales were 498 million, up 8% with growth in all regions and in both channels. We grew double digits in our independent channel where our product availability, reliability, and consistency continue to drive share gains. This quarter, we had a large increase competitive win with a major North America fleet operator, supplying a mix of air, lube, and fuel products. These types of programs allow us to strengthen our future dealer relationships and create meaningful future pull-through opportunities for incremental sales. On the first fit side, off-road sales were 104 million, an increase of 9% versus prior year, led by strength in construction. On-road sales of 28 million increased 5% as truck production began to ramp, particularly in EMEA. Touching on China within mobile, sales were up 6% due to strength in off-road. Performance in China has been encouraging, and the growing export market is supporting demand for our technology-led solutions. In industrial solutions, sales were 282 million, down 1%. driven by volume declines partially offset by net pricing and currency benefits. IFS sales of 237 million grew 2% from net pricing and power generation volume growth, primarily in EMEA where sales of new equipment more than doubled as we continue to benefit from the super cycle. Partially offsetting this favorability were volume declines in new equipment sales for industrial gases and dust collection. Importantly, we are encouraged by the positive macro indicators we are seeing for our CapEx-based businesses, including strengthening industrial production and capital expenditures in certain regions, including North America and APAC. This more supportive backdrop, combined with our new product introductions, gives us confidence in our ability to win in these markets. Last month, we launched our Stratos Mist Collector as part of our dust collection product portfolio. With modern machining operations, elevated levels of smaller mist particles and contaminants need to be captured. We are solving this customer problem through Stratos' reliable, continuous duty filtration, which comes in a space-efficient footprint and supports multiple industries. Early indications are positive, including strong customer interest and quoting activity. Switching over to aerospace and defense, sales were 45 million, down 14%, versus 2025 due to weaker new equipment sales. Volumes were pressured by ongoing supply chain constraints and project timing. In life sciences, sales of 84 million increased 13% largely as a result of robust new equipment volume in food and beverage and ongoing strength and disk drive. Momentum continues in our food and beverage business where sales grew over 30% supported by new equipment sales and with a growing install base driving consumables demand. We are excited about the customer and channel partner reception to our new technology-led offerings and continue to build out our portfolio. In March, we expanded our Lifetech product line by introducing our most advanced high-loading performance filter, largely for use in bottled water filtration applications. This product is built with Donaldson membrane, manufactured in our own material research center, and is designed to improve efficiency and filter life, driving lower total cost of ownership and value to our customers. In summary, I am pleased with our third quarter results. We exited the quarter with robust order volumes, elevated backlogs, and focused executions. giving us confidence in delivering on our record organic guidance ranges, inclusive of record sales of over $3.8 billion or a 4% increase over prior year, driven by growth in several key high-margin businesses, operating margin expansion versus 2025, earnings per share roughly 8% above prior year, and free cash flow conversion of approximately 90%. important as we remain committed to returning value to our shareholders. With that, I will now turn it over to Brad, who will provide more details on the financials and our outlook for fiscal 2026. Brad.