UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________________________________ _____________________________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO _____________ ...

Donaldson Company, Inc. (NYSE:DCI) Q3 2021 Earnings Conference Call June 2, 2021 10:00 AM ET Company Participants Charlie Brady - Director of Investor Relations Tod Carpenter - Chairman, Chief Executive Officer & President Scott Robinson - Chief Financial Officer Conference Call Participants Bryan Blair - Oppenheimer Nathan Jones - Stifel Richard Eastman - Baird Brian Drab - William Blair Dan Rizzo - Jefferies Dillon Cumming - Morgan Stanley Operator Good day and thank you for standing by. Welcome to the Do ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________________________________ _____________________________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO ___________ ...

Donaldson Company, Inc. (NYSE:DCI) Q2 2021 Earnings Conference Call February 25, 2021 10:00 AM ET Company Participants Charlie Brady - Director of Investor Relations Tod Carpenter - Chairman, Chief Executive Officer & President Scott Robinson - Chief Financial Officer Conference Call Participants Bryan Blair - Oppenheimer Brian Drab - William Blair Richard Eastman - Baird Laurence Alexander - Jefferies Adam Farley - Stifel Dillon Cumming - Morgan Stanley Operator Ladies and gentlemen, thank you for standing ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________________________________ _____________________________________________________________ Non-accelerated filer ☐ Smaller reporting company ☐ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRA ...

Financial Data and Key Metrics Changes - First quarter sales increased by 3% sequentially, indicating a potential recovery from the pandemic's impact [4] - Gross margin improved by 60 basis points year-over-year, reaching the highest first quarter gross margin in four years [5] - Operating expenses were reduced by 5%, contributing to a positive operating margin of 4% despite economic challenges [5][6] Business Line Data and Key Metrics Changes - Total sales decreased by 5.4% year-over-year, with a 6.4% decline in local currency [7] - In the engine segment, over one-third of the decline was attributed to aerospace and defense, significantly affected by the pandemic [7] - On-road sales were down 21%, but showed improvement compared to previous quarters, with increasing order rates for Class 8 trucks [9] - Off-road sales trends varied by region, with a notable recovery in China where off-road sales increased by over 50% [11][12] - Aftermarket sales were down slightly year-over-year but up 6% from the prior quarter, with strong performance in China [13][14] Market Data and Key Metrics Changes - The U.S. aftermarket was impacted by the oil and gas sector slowdown, while Europe and China showed growth in aftermarket sales [13][14] - The industrial segment saw a 6% decline in sales, primarily due to industrial filtration solutions [16] - The company experienced strong cash conversion and maintained a solid balance sheet, positioning itself well for future growth [6][48] Company Strategy and Development Direction - The company aims to invest in growth and market share gains, particularly in advanced and accelerate portfolios [49] - Focus on optimizing cost structures and enhancing productivity through capital investments made in previous years [52] - The company is exploring acquisitions to enhance capabilities and technologies, particularly in high-value markets [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about recovery, particularly in the on-road and agricultural markets [64] - The company anticipates a year-over-year sales increase in the second half of fiscal 2021, with expectations for improved operating margins [40][42] - Management acknowledged the uncertainty surrounding the pandemic's impact on future performance and market conditions [39][46] Other Important Information - The company returned over $40 million to shareholders, including share repurchases and dividends [38] - Capital expenditures are expected to be lower this year as the company shifts focus to optimization and productivity initiatives [47] - The company maintains a target of net debt to EBITDA at 1.0, ensuring a conservative approach to capital deployment [114] Q&A Session Summary Question: Can you provide more detail on second quarter sales expectations by segments? - Management indicated that the on-road recovery is led by the U.S. and emerging growth in China, with expectations for a broad-based pickup in agricultural markets [64] Question: How did innovative products perform in the engine aftermarket for the quarter? - Overall performance was strong, with PowerCore achieving record sales, contributing to a mid-single-digit growth in total innovative products [65] Question: What is the outlook for the aftermarket business in the second quarter? - Management expects the aftermarket business to have a positive comparison in the second quarter, overcoming previous declines [72] Question: Can you elaborate on the performance of the on-road and off-road engine businesses? - Management noted positive momentum in the on-road segment, particularly in the U.S., while the off-road segment is seeing improvements driven by agricultural demand [75] Question: What are the expectations for gross margins moving forward? - Management remains confident in achieving long-term gross margin targets of 35.5% to 36% as market conditions improve [80][82] Question: Is there an expectation for restocking in the OEM and distribution channels? - Management indicated that restocking behavior is uncertain, but there are signs of stabilization in the independent channel [87] Question: What percentage of revenue is generated in China? - Approximately 6% of engine sales and 12% of industrial sales came from China in the quarter, with significant growth in share over the past five years [91] Question: What growth rates are expected for the process filtration business? - Management anticipates mid-single-digit to high single-digit growth rates for the process filtration business due to increased investments [104]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended July 31, 2020 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________ Commission File Number: 1-7891 DONALDSON COMPANY, INC. (Exact name of registrant as specified in its charter) Delaware 41-0222640 (State or other jurisdi ...

Donaldson Company, Inc. (NYSE:DCI) Q4 2020 Results Earnings Conference Call September 3, 2020 10:00 AM ET Company Participants Brad Pogalz - Director of Investor Relations Tod Carpenter - Chairman, President, Chief Executive officer Scott Robinson - Senior Vice President, Chief Financial Officer Conference Call Participants Nathan Jones - Stifel Bryan Blair - Oppenheimer Joe Aiken - William Blair Dillon Cumming - Morgan Stanley Daniel Rizzo - Jefferies Richard Eastman - Baird Operator Ladies and gentlemen, ...

[Filing Information](index=1&type=section&id=Filing%20Information) Details the Form 10-Q filing for Donaldson Company, Inc. for the period ended April 30, 2020, confirming SEC compliance [Form 10-Q Details](index=1&type=section&id=Form%2010-Q%20Details) Details the filing of the Quarterly Report on Form 10-Q for Donaldson Company, Inc. for the period ended April 30, 2020, confirming SEC compliance - The report is a Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended April 30, 2020[2](index=2&type=chunk) - Donaldson Company, Inc. (Commission File Number 1-7891) is incorporated in Delaware with its principal executive offices in Minneapolis, Minnesota[3](index=3&type=chunk) - The registrant has filed all required reports during the preceding 12 months and is a large accelerated filer[3](index=3&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements, management's discussion, and market risk disclosures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and equity changes, with detailed notes [Condensed Consolidated Statements of Earnings](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EARNINGS) Provides the company's net sales, gross profit, operating income, and net earnings for the specified periods Condensed Consolidated Statements of Earnings (in millions, except per share amounts) | Metric | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $629.7 | $712.8 | $1,964.4 | $2,117.9 | | Cost of sales | $420.5 | $472.1 | $1,300.7 | $1,413.4 | | Gross profit | $209.2 | $240.7 | $663.7 | $704.5 | | Operating expenses | $124.7 | $140.7 | $406.1 | $420.7 | | Operating income | $84.5 | $100.0 | $257.6 | $283.8 | | Interest expense | $4.4 | $5.2 | $13.5 | $14.7 | | Other income, net | $(4.3) | $(4.7) | $(9.8) | $(7.3) | | Earnings before income taxes | $84.4 | $99.5 | $253.9 | $276.4 | | Income taxes | $21.0 | $24.3 | $61.0 | $67.3 | | Net earnings | $63.4 | $75.2 | $192.9 | $209.1 | | Net earnings per share – basic | $0.50 | $0.59 | $1.52 | $1.63 | | Net earnings per share – diluted | $0.50 | $0.58 | $1.50 | $1.60 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Details net earnings and other comprehensive income components, including foreign currency translation and pension adjustments Condensed Consolidated Statements of Comprehensive Income (in millions) | Metric | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :-------------------------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net earnings | $63.4 | $75.2 | $192.9 | $209.1 | | Foreign currency translation loss | $(35.3) | $(11.9) | $(24.8) | $(12.4) | | Pension liability adjustment, net of deferred taxes | $(2.0) | $1.2 | — | $3.3 | | Gain (loss) on hedging derivatives, net of deferred taxes | $1.4 | $(0.2) | $2.2 | $0.3 | | Reclassifications of losses on hedging derivatives to net earnings, net of taxes | $2.1 | — | $3.4 | — | | Total derivatives | $3.5 | $(0.2) | $5.6 | $0.3 | | Net other comprehensive loss | $(33.8) | $(10.9) | $(19.2) | $(8.8) | | Comprehensive income | $29.6 | $64.3 | $173.7 | $200.3 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Presents the company's financial position, including assets, liabilities, and shareholders' equity as of specific dates Condensed Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | April 30, 2020 | July 31, 2019 | | :--------------------------------- | :------------- | :------------ | | **Assets:** | | | | Cash and cash equivalents | $326.5 | $177.8 | | Accounts receivable, net | $460.5 | $529.5 | | Inventories, net | $346.5 | $332.8 | | Total current assets | $1,220.5 | $1,122.6 | | Property, plant and equipment, net | $614.3 | $588.9 | | Goodwill | $303.8 | $303.1 | | Total assets | $2,338.5 | $2,142.6 | | **Liabilities:** | | | | Total current liabilities | $432.8 | $482.9 | | Long-term debt | $735.1 | $584.4 | | Total liabilities | $1,383.7 | $1,239.9 | | **Shareholders' Equity:** | | | | Total shareholders' equity | $944.5 | $892.7 | | Total liabilities and shareholders' equity | $2,338.5 | $2,142.6 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes cash flows from operating, investing, and financing activities for the nine-month periods Condensed Consolidated Statements of Cash Flows (in millions) | Activity | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :---------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $265.2 | $223.2 | | Net cash used in investing activities | $(106.2) | $(208.4) | | Net cash used in financing activities | $(3.7) | $(13.7) | | Effect of exchange rate changes on cash | $(6.6) | $(2.0) | | Increase (decrease) in cash and cash equivalents | $148.7 | $(0.9) | | Cash and cash equivalents, beginning of period | $177.8 | $204.7 | | Cash and cash equivalents, end of period | $326.5 | $203.8 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY) Details changes in common stock, retained earnings, and other equity components over the reporting periods Shareholders' Equity Changes (in millions) | Metric | Balance Jan 31, 2020 | Three Months Ended April 30, 2020 | Balance April 30, 2020 | | :-------------------------------------- | :------------------- | :-------------------------------- | :--------------------- | | Common Stock | $758.2 | — | $758.2 | | Retained Earnings | $1,354.1 | $63.4 | $1,418.8 | | NonControlling Interest | $5.6 | $0.1 | $5.7 | | Stock Compensation Plans | $14.5 | $(0.5) | $14.0 | | Accumulated Other Comprehensive Loss | $(178.3) | $(33.8) | $(212.1) | | Treasury Stock | $(1,013.7) | $(29.3) | $(1,040.1) | | Total | $940.4 | $4.1 | $944.5 | Shareholders' Equity Changes (Nine Months Ended April 30, 2020) | Metric | Balance July 31, 2019 | Nine Months Ended April 30, 2020 | Balance April 30, 2020 | | :-------------------------------------- | :-------------------- | :------------------------------- | :--------------------- | | Common Stock | $758.2 | — | $758.2 | | Retained Earnings | $1,281.5 | $192.9 | $1,418.8 | | NonControlling Interest | $5.4 | $0.3 | $5.7 | | Stock Compensation Plans | $21.7 | $(7.7) | $14.0 | | Accumulated Other Comprehensive Loss | $(192.9) | $(19.2) | $(212.1) | | Treasury Stock | $(981.2) | $(94.3) | $(1,040.1) | | Total | $892.7 | $51.8 | $944.5 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Summary of Significant Accounting Policies](index=9&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and estimates used in preparing the financial statements, including COVID-19 considerations - The financial statements are prepared in accordance with GAAP and Form 10-Q instructions, with all necessary adjustments included[25](index=25&type=chunk) - Management evaluated accounting estimates considering COVID-19 impacts, concluding no impairment triggering event existed as of April 30, 2020, due to the essential nature of most business operations[25](index=25&type=chunk) - The Company adopted ASU 2016-02, Leases (Topic 842), in Q1 fiscal 2020, increasing assets and liabilities by **$71.5 million** as of August 1, 2019[25](index=25&type=chunk) [Note 2. Acquisitions and Divestitures](index=10&type=section&id=Note%202.%20Acquisitions%20and%20Divestitures) Details significant business transactions, including the BOFA International LTD acquisition and the binding offer for the Exhaust and Emissions business - In Q1 fiscal 2019, the Company acquired **88% of BOFA International LTD for $98.2 million**, expanding its fume collection business and filtration technology[28](index=28&type=chunk) - On February 21, 2020, the Company received a binding offer from Nelson Global Products for its Exhaust and Emissions business[28](index=28&type=chunk) [Note 3. Supplemental Balance Sheet Information](index=10&type=section&id=Note%203.%20Supplemental%20Balance%20Sheet%20Information) Provides detailed breakdowns of net inventories and property, plant, and equipment components Net Inventories (in millions) | Component | April 30, 2020 | July 31, 2019 | | :---------------- | :------------- | :------------ | | Raw materials | $114.8 | $114.7 | | Work in process | $35.6 | $33.0 | | Finished products | $196.1 | $185.1 | | Inventories, net | $346.5 | $332.8 | Property, Plant and Equipment, Net (in millions) | Component | April 30, 2020 | July 31, 2019 | | :-------------------------------- | :------------- | :------------ | | Land | $23.7 | $24.2 | | Buildings | $346.3 | $325.3 | | Machinery and equipment | $834.9 | $813.5 | | Computer software | $143.9 | $142.8 | | Construction in progress | $137.5 | $114.3 | | Less: accumulated depreciation | $(872.0) | $(831.2) |\n| Property, plant and equipment, net | $614.3 | $588.9 | [Note 4. Earnings Per Share](index=11&type=section&id=Note%204.%20Earnings%20Per%20Share) Explains the calculation of basic and diluted earnings per share, including the impact of share-based awards Earnings Per Share Calculation (in millions, except per share amounts) | Metric | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net earnings for basic and diluted earnings per share computation | $63.4 | $75.2 | $192.9 | $209.1 | | Weighted average common shares – basic | 126.9 | 128.2 | 127.0 | 128.5 | | Dilutive impact of share-based awards | 0.8 | 1.8 | 1.5 | 1.9 | | Weighted average common shares – diluted | 127.7 | 130.0 | 128.5 | 130.4 | | Net earnings per share – basic | $0.50 | $0.59 | $1.52 | $1.63 | | Net earnings per share – diluted | $0.50 | $0.58 | $1.50 | $1.60 | - Certain outstanding options (**2.5 million for Q3 2020, 1.7 million for YTD 2020**) were excluded from diluted EPS calculations due to exercise prices exceeding market prices[31](index=31&type=chunk) [Note 5. Goodwill and Intangible Assets](index=11&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) Discusses the annual impairment assessment of goodwill and provides a breakdown of intangible assets - Goodwill is assessed annually for impairment during the third fiscal quarter; no impairment was recorded in Q3 fiscal 2020[32](index=32&type=chunk) Goodwill by Reportable Segment (in millions) | Segment | July 31, 2019 | Currency Translation | April 30, 2020 | | :------------------- | :------------ | :------------------- | :------------- | | Engine Products | $84.5 | $(0.4) | $84.1 | | Industrial Products | $218.6 | $1.1 | $219.7 | | Total | $303.1 | $0.7 | $303.8 | Intangible Assets, Net (in millions) | Component | Gross Carrying Amount | Accumulated Amortization | Total (April 30, 2020) | | :------------------------------- | :-------------------- | :----------------------- | :--------------------- | | Customer relationships | $101.8 | $(47.9) | $53.9 | | Patents, trademarks and technology | $22.4 | $(11.0) | $11.4 | | Total intangible assets, net | $124.2 | $(58.9) | $65.3 | [Note 6. Revenue](index=12&type=section&id=Note%206.%20Revenue) Describes the company's revenue recognition policies and disaggregates net sales by geographical region - The Company recognizes revenue from filtration solutions, primarily manufactured systems and replacement parts, with limited services and installation[35](index=35&type=chunk) Net Sales Disaggregated by Geography (in millions) | Geography | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :--------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | United States | $265.2 | $301.5 | $819.6 | $896.0 | | Europe, Middle East and Africa | $182.1 | $208.0 | $570.9 | $611.7 | | Asia Pacific | $134.9 | $146.8 | $412.8 | $443.4 | | Latin America | $47.5 | $56.5 | $161.1 | $166.8 | | Total net sales | $629.7 | $712.8 | $1,964.4 | $2,117.9 | - Contract assets increased to **$14.8 million** (from $12.4 million) and contract liabilities increased to **$13.3 million** (from $10.4 million) as of April 30, 2020, compared to July 31, 2019[36](index=36&type=chunk) [Note 7. Warranty](index=13&type=section&id=Note%207.%20Warranty) Details the activity in the warranty reserve, including accruals and settlements for product warranties Warranty Reserve Activity (in millions) | Metric | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :------------------------------------------------------------------ | :------------------------------- | :------------------------------- | | Balance at beginning of period | $11.2 | $18.9 | | Accruals for warranties issued during the reporting period | $2.0 | $1.6 | | Accruals related to pre-existing warranties (including changes in estimates) | $(0.9) | $(2.0) | | Less: settlements made during the period | $(2.5) | $(6.9) | | Balance at end of period | $9.8 | $11.6 | - No individually material specific warranty matters or significant settlements occurred during the nine months ended April 30, 2020 or 2019[38](index=38&type=chunk) [Note 8. Stock-Based Compensation](index=13&type=section&id=Note%208.%20Stock-Based%20Compensation) Outlines the company's stock incentive plans and the associated compensation expense for stock options and performance-based awards - The 2019 Master Stock Incentive Plan replaced the 2010 Plan, allowing for various stock-based awards including options and performance-based awards[39](index=39&type=chunk) Stock Option Compensation Expense (in millions) | Metric | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Pretax compensation expense associated with stock options | $1.3 | $1.4 | $9.0 | $8.3 | | Tax benefits associated with stock options | $0.3 | $0.3 | $1.4 | $1.7 | Performance-Based Award Compensation Expense (in millions) | Metric | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Pretax compensation expense associated with performance-based awards | $(0.3) | $1.5 | $1.5 | $4.5 | [Note 9. Employee Benefit Plans](index=15&type=section&id=Note%209.%20Employee%20Benefit%20Plans) Describes the company's defined benefit pension plans and the calculation of net periodic benefit costs - The Company operates defined benefit pension plans for employees, including U.S. Hourly and Salaried Pension Plans (Salaried Plan no longer accrues new contributions)[41](index=41&type=chunk) Net Periodic Benefit Costs (in millions) | Component | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :----------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Service cost | $1.5 | $1.5 | $4.7 | $4.5 | | Interest cost | $3.3 | $4.1 | $10.1 | $12.3 | | Expected return on assets | $(6.5) | $(6.6) | $(19.5) | $(19.9) | | Prior service cost amortization | $0.2 | $0.1 | $0.5 | $0.4 | | Actuarial loss amortization | $1.6 | $1.1 | $4.8 | $3.3 | | Settlement charge | $2.3 | — | $2.3 | — | | Net periodic benefit costs | $2.4 | $0.2 | $2.9 | $0.6 | - A pension settlement charge of **$2.3 million** was recorded in Q3 fiscal 2020, increasing pension obligations and resulting in a **$7.9 million** adjustment to other comprehensive loss[44](index=44&type=chunk) [Note 10. Income Taxes](index=17&type=section&id=Note%2010.%20Income%20Taxes) Provides information on unrecognized tax benefits and potential expirations within the next 12 months - As of April 30, 2020, gross unrecognized tax benefits were **$16.9 million**, with accrued interest and penalties of **$2.2 million**[45](index=45&type=chunk) - Up to **$6.3 million** of unrecognized tax benefits could expire in the next 12 months[45](index=45&type=chunk) [Note 11. Fair Value Measurements](index=17&type=section&id=Note%2011.%20Fair%20Value%20Measurements) Classifies financial instruments by fair value hierarchy and details derivative fair value measurements - Cash and cash equivalents, accounts receivables, short-term borrowings, and trade accounts payable are classified as Level 1 fair value measurements[47](index=47&type=chunk) - Long-term debt is classified as Level 2, with fixed-rate debt having an estimated fair value of **$283.9 million** compared to a carrying value of **$275.0 million** as of April 30, 2020[47](index=47&type=chunk) Derivative Fair Value Measurements (in millions) | Derivative Type | Notional Amounts (April 30, 2020) | Notional Amounts (July 31, 2019) | Assets (April 30, 2020) | Assets (July 31, 2019) | Liabilities (April 30, 2020) | Liabilities (July 31, 2019) | | :------------------------------------ | :-------------------------------- | :------------------------------- | :---------------------- | :--------------------- | :--------------------------- | :-------------------------- | | Forward foreign currency exchange contracts | $25.3 | $28.2 | $3.9 | $1.6 | $1.6 | $1.8 | | Net investment hedges | $55.8 | $55.8 | $5.7 | $1.1 | — | $1.9 | | Total | $81.1 | $84.0 | $9.6 | $2.7 | $1.6 | $3.7 | [Note 12. Shareholders' Equity](index=19&type=section&id=Note%2012.%20Shareholders'%20Equity) Reports on common stock repurchases, dividends paid, and remaining share repurchase authorization - The Company repurchased **2.0 million shares for $94.3 million** during the nine months ended April 30, 2020, with **10.7 million shares** remaining authorized for repurchase[53](index=53&type=chunk) - Dividends paid per share were **63.0 cents** for the nine months ended April 30, 2020, up from **57.0 cents** in the prior year[53](index=53&type=chunk) - A cash dividend of **21.0 cents** per common share was declared on May 29, 2020, payable June 30, 2020[53](index=53&type=chunk) [Note 13. Accumulated Other Comprehensive Loss](index=20&type=section&id=Note%2013.%20Accumulated%20Other%20Comprehensive%20Loss) Details changes in accumulated other comprehensive loss, including foreign currency translation and pension adjustments Changes in Accumulated Other Comprehensive Loss (Three Months Ended April 30, 2020, in millions) | Component | Balance Jan 31, 2020 | Other Comprehensive (Loss) Income before Reclassifications and Tax | Reclassifications, Net of Tax | Balance April 30, 2020 | | :--------------------------------------------------------------------- | :------------------- | :----------------------------------------------------------------- | :---------------------------- | :--------------------- | | Foreign Currency Translation Adjustment | $(82.2) | $(35.3) | — | $(117.5) | | Pension Benefits | $(97.0) | $(6.0) | $4.0 | $(99.0) | | Derivative Financial Instruments | $0.9 | $1.4 | $2.1 | $4.4 | | Total | $(178.3) | $(39.9) | $6.1 | $(212.1) | Changes in Accumulated Other Comprehensive Loss (Nine Months Ended April 30, 2020, in millions) | Component | Balance July 31, 2019 | Other Comprehensive (Loss) Income before Reclassifications and Tax | Reclassifications, Net of Tax | Balance April 30, 2020 | | :--------------------------------------------------------------------- | :-------------------- | :----------------------------------------------------------------- | :---------------------------- | :--------------------- | | Foreign Currency Translation Adjustment | $(92.7) | $(24.8) | — | $(117.5) | | Pension Benefits | $(99.0) | $(6.0) | $6.0 | $(99.0) | | Derivative Financial Instruments | $(1.2) | $2.2 | $3.4 | $4.4 | | Total | $(192.9) | $(28.6) | $9.4 | $(212.1) | - The pension settlement accounting triggered in Q3 fiscal 2020 resulted in a **$7.9 million** adjustment to other comprehensive loss[55](index=55&type=chunk)[57](index=57&type=chunk) [Note 14. Guarantees](index=21&type=section&id=Note%2014.%20Guarantees) Describes the company's guarantees related to a joint venture's debt and standby letters of credit - The Company and Caterpillar Inc. equally own and guarantee certain debt of their joint venture, Advanced Filtration Systems Inc. (AFSI)[57](index=57&type=chunk) Guarantees (in millions) | Item | April 30, 2020 | July 31, 2019 | | :--------------------------------------- | :------------- | :------------ | | Outstanding debt (Company guarantees half) | $39.6 | $38.8 | | Contingent liability for standby letters of credit | $7.5 | $11.0 | | Amounts drawn for letters of credit | — | — | AFSI Joint Venture Financials (in millions) | Item | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Investment earnings from AFSI | $0.8 | $0.4 | $1.2 | $0.1 | | Royalty income from AFSI | $1.6 | $1.5 | $5.2 | $4.8 | [Note 15. Commitments and Contingencies](index=22&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) States the company's policy for recording provisions for claims and lawsuits when probable and estimable - The Company records provisions for claims or lawsuits when probable and estimable, believing current liabilities are adequate and material excess settlements are remote[60](index=60&type=chunk) [Note 16. Segment Reporting](index=22&type=section&id=Note%2016.%20Segment%20Reporting) Presents financial information for the Engine Products and Industrial Products segments, including net sales and earnings before income taxes - The Company operates in two reportable segments: Engine Products and Industrial Products, with Corporate and Unallocated covering non-allocable corporate expenses[60](index=60&type=chunk) Segment Net Sales (in millions) | Segment | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Engine Products segment | $420.4 | $489.4 | $1,315.2 | $1,439.3 | | Industrial Products segment | $209.3 | $223.4 | $649.2 | $678.6 | | Total | $629.7 | $712.8 | $1,964.4 | $2,117.9 | Segment Earnings Before Income Taxes (in millions) | Segment | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | Nine Months Ended April 30, 2020 | Nine Months Ended April 30, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Engine Products segment | $56.5 | $71.5 | $172.2 | $188.6 | | Industrial Products segment | $34.7 | $32.7 | $98.8 | $101.5 | | Corporate and Unallocated | $(6.8) | $(4.7) | $(17.1) | $(13.7) | | Total | $84.4 | $99.5 | $253.9 | $276.4 | [Note 17. Leases](index=23&type=section&id=Note%2017.%20Leases) Details the company's operating lease arrangements, including lease costs and supplemental balance sheet information - The Company leases real estate, IT, manufacturing equipment, vehicles, and other assets through operating lease arrangements, recognizing right-of-use assets and lease liabilities[63](index=63&type=chunk) Operating Lease Costs (in millions) | Cost Type | Three Months Ended April 30, 2020 | Nine Months Ended April 30, 2020 | | :------------------ | :-------------------------------- | :------------------------------- | | Operating lease cost | $7.5 | $22.7 | | Short-term lease cost | $0.5 | $1.6 | | Total lease costs | $8.0 | $24.3 | Operating Lease Supplemental Balance Sheet Information (in millions) | Item | April 30, 2020 | August 1, 2019 | | :-------------------------- | :------------- | :------------- | | Right-of-use lease assets | $71.4 | $71.5 | | Current lease liabilities | $24.0 | $26.0 | | Long-term lease liabilities | $47.4 | $45.5 | [Note 18. Borrowings](index=25&type=section&id=Note%2018.%20Borrowings) Provides information on the company's revolving credit facility and term loan, including recent borrowing activities - The Company has a **$500.0 million** unsecured revolving credit facility expiring July 21, 2022, with **$142.5 million** available as of April 30, 2020[66](index=66&type=chunk) - In March 2020, **$100.0 million** was borrowed from the revolver as a precautionary measure due to COVID-19 uncertainty[66](index=66&type=chunk) - In October 2019, the Company entered into an **€80.0 million ($89.2 million)** unsecured term loan maturing in October 2024, fully borrowed as of April 30, 2020[67](index=67&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial performance, condition, liquidity, and capital resources, including COVID-19 impacts [Overview](index=27&type=section&id=Overview) Introduces Donaldson Company, Inc. as a global filtration manufacturer and discusses the operational impacts of the COVID-19 pandemic - Donaldson Company, Inc. is a global manufacturer of filtration systems and replacement parts, operating through Engine Products and Industrial Products segments[70](index=70&type=chunk) - The COVID-19 pandemic has impacted worldwide economic activity, but the Company has maintained operations at most facilities due to its business lines being deemed 'essential'[70](index=70&type=chunk) - The magnitude and duration of future COVID-19 impacts on revenue cannot be reasonably estimated and will likely be material[70](index=70&type=chunk) [Consolidated Results of Operations](index=28&type=section&id=Consolidated%20Results%20of%20Operations) Analyzes the company's overall financial performance, including net sales, gross profit, operating income, and net earnings trends [Three months ended April 30, 2020 compared with three months ended April 30, 2019](index=28&type=section&id=Three%20months%20ended%20April%2030,%202020%20compared%20with%20three%20months%20ended%20April%2030,%202019) Compares consolidated financial results for the three-month periods, highlighting sales and margin changes Consolidated Results of Operations (Three Months Ended April 30, in millions) | Metric | 2020 | % of sales (2020) | 2019 | % of sales (2019) | | :------------------------- | :------ | :---------------- | :------ | :---------------- | | Net sales | $629.7 | | $712.8 | | | Cost of sales | $420.5 | 66.8% | $472.1 | 66.2% | | Gross profit | $209.2 | 33.2% | $240.7 | 33.8% | | Operating expenses | $124.7 | 19.8% | $140.7 | 19.7% | | Operating income | $84.5 | 13.4% | $100.0 | 14.0% | | Net earnings | $63.4 | 10.1% | $75.2 | 10.6% | - Net sales decreased by **$83.1 million (11.7%)** to **$629.7 million**, primarily due to lower demand from COVID-19 and a negative foreign currency translation impact of **$14.2 million (2.2%)**[72](index=72&type=chunk) - Gross margin decreased to **33.2%** from **33.8%**, mainly due to loss of leverage on lower sales and higher depreciation, partially offset by favorable sales mix and lower raw material costs[72](index=72&type=chunk) [Nine months ended April 30, 2020 compared with nine months ended April 30, 2019](index=29&type=section&id=Nine%20months%20ended%20April%2030,%202020%20compared%20with%20nine%20months%20ended%20April%2030,%202019) Compares consolidated financial results for the nine-month periods, focusing on sales and margin drivers Consolidated Results of Operations (Nine Months Ended April 30, in millions) | Metric | 2020 | % of sales (2020) | 2019 | % of sales (2019) | | :------------------------- | :-------- | :---------------- | :-------- | :---------------- | | Net sales | $1,964.4 | | $2,117.9 | | | Cost of sales | $1,300.7 | 66.2% | $1,413.4 | 66.7% | | Gross profit | $663.7 | 33.8% | $704.5 | 33.3% | | Operating expenses | $406.1 | 20.7% | $420.7 | 19.9% | | Operating income | $257.6 | 13.1% | $283.8 | 13.4% | | Net earnings | $192.9 | 9.8% | $209.1 | 9.9% | - Net sales decreased by **$153.5 million (7.2%)** to **$1,964.4 million**, impacted by lower unit volume and negative foreign currency translation of **$28.3 million (1.4%)**[74](index=74&type=chunk) - Gross margin increased to **33.8%** from **33.3%**, driven by production, supply chain, procurement, and pricing optimization initiatives, favorable sales mix, and lower raw material costs[74](index=74&type=chunk) [Segment Results of Operations](index=30&type=section&id=Segment%20Results%20of%20Operations) Provides a detailed analysis of the financial performance for the Engine Products and Industrial Products segments [Engine Products Segment](index=30&type=section&id=Engine%20Products%20Segment) Analyzes net sales and earnings before income taxes for the Engine Products segment, including sub-segment performance [Three months ended April 30, 2020 compared with three months ended April 30, 2019](index=30&type=section&id=Engine%20Products%20Segment%20-%20Three%20months%20ended%20April%2030,%202020%20compared%20with%20three%20months%20ended%20April%2030,%202019) Compares Engine Products segment performance for the three-month periods, noting sales and earnings drivers Engine Products Segment Net Sales (Three Months Ended April 30, in millions) | Sub-segment | 2020 | 2019 | | :-------------------- | :----- | :----- | | Off-Road | $63.5 | $84.8 | | On-Road | $25.1 | $46.9 | | Aftermarket | $301.9 | $327.7 | | Aerospace and Defense | $29.9 | $30.0 | | Total Net Sales | $420.4 | $489.4 | - Engine Products net sales decreased by **$69.0 million (14.1%)**, or **12.0%** excluding currency, primarily due to lower equipment production in On-Road and Off-Road markets from COVID-19 shutdowns[78](index=78&type=chunk) - Earnings before income taxes for Engine Products decreased to **13.4% of sales** from **14.6%**, driven by loss of leverage on lower sales and higher depreciation, partially offset by cost optimization and lower raw material costs[78](index=78&type=chunk) [Nine months ended April 30, 2020 compared with nine months ended April 30, 2019](index=32&type=section&id=Engine%20Products%20Segment%20-%20Nine%20months%20ended%20April%2030,%202020%20compared%20with%20nine%20months%20ended%20April%2030,%202019) Compares Engine Products segment performance for the nine-month periods, detailing sales and earnings trends - Engine Products net sales decreased by **$124.1 million (8.6%)**, or **7.1%** excluding currency, mainly due to lower equipment production and reduced end-user demand in Aftermarket[80](index=80&type=chunk) - Earnings before income taxes remained consistent at **13.1% of sales**, with cost optimization and lower raw material costs offsetting the impact of lower sales and higher depreciation[80](index=80&type=chunk) [Industrial Products Segment](index=32&type=section&id=Industrial%20Products%20Segment) Analyzes net sales and earnings before income taxes for the Industrial Products segment, including sub-segment performance [Three months ended April 30, 2020 compared with three months ended April 30, 2019](index=32&type=section&id=Industrial%20Products%20Segment%20-%20Three%20months%20ended%20April%2030,%202020%20compared%20with%20three%20months%20ended%20April%2030,%202019) Compares Industrial Products segment performance for the three-month periods, noting sales and earnings drivers Industrial Products Segment Net Sales (Three Months Ended April 30, in millions) | Sub-segment | 2020 | 2019 | | :---------------------------- | :----- | :----- | | Industrial Filtration Solutions | $137.4 | $155.2 | | Gas Turbine Systems | $29.2 | $27.5 | | Special Applications | $42.7 | $40.7 | | Total Net Sales | $209.3 | $223.4 | - Industrial Products net sales decreased by **$14.1 million (6.3%)**, or **4.6%** excluding currency, due to lower industrial production impacting Industrial Filtration Solutions, partially offset by growth in Gas Turbine Systems and Special Applications[82](index=82&type=chunk) - Earnings before income taxes for Industrial Products increased to **16.6% of sales** from **14.6%**, driven by favorable sales mix, cost optimization, and lower raw material costs[82](index=82&type=chunk) [Nine months ended April 30, 2020 compared with nine months ended April 30, 2019](index=33&type=section&id=Industrial%20Products%20Segment%20-%20Nine%20months%20ended%20April%2030,%202020%20compared%20with%20nine%20months%20ended%20April%2030,%202019) Compares Industrial Products segment performance for the nine-month periods, detailing sales and earnings trends - Industrial Products net sales decreased by **$29.4 million (4.3%)**, or **3.3%** excluding currency, primarily due to lower industrial production in Industrial Filtration Solutions, despite growth in Process Filtration and Special Applications[84](index=84&type=chunk) - Earnings before income taxes for Industrial Products increased to **15.2% of sales** from **15.0%**, benefiting from favorable sales mix, cost optimization, and lower raw material costs, partially offset by investments in strategic growth businesses[84](index=84&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash flow generation, investing activities, debt levels, and overall capital structure - Cash provided by operating activities increased by **$42.0 million** to **$265.2 million** for the nine months ended April 30, 2020, driven by improvements in net operating assets and liabilities[85](index=85&type=chunk) - Cash used in investing activities decreased by **$102.2 million** to **$106.2 million**, mainly due to the absence of the BOFA acquisition (fiscal 2019) and a decrease in capital expenditures[85](index=85&type=chunk) - Long-term debt increased by **$150.7 million** to **$735.1 million** as of April 30, 2020, with total debt representing **45.6%** of total capitalization (up from **41.6%** at July 31, 2019)[87](index=87&type=chunk) [Critical Accounting Policies](index=34&type=section&id=Critical%20Accounting%20Policies) Confirms no material changes to the company's critical accounting policies from the prior fiscal year's Annual Report on Form 10-K - There have been no material changes to the Company's critical accounting policies as disclosed in its Annual Report on Form 10-K for the fiscal year ended July 31, 2019[89](index=89&type=chunk) [Safe Harbor Statement under the Securities Reform Act of 1995](index=34&type=section&id=Safe%20Harbor%20Statement%20under%20the%20Securities%20Reform%20Act%20of%201995) Warns that forward-looking statements are subject to various risks and uncertainties, including COVID-19 impacts - The Company's forward-looking statements are subject to risks and uncertainties, including economic conditions, competitive markets, intellectual property protection, global operations, and the impact of COVID-19[89](index=89&type=chunk)[91](index=91&type=chunk) - The Company does not undertake to publicly update or revise any forward-looking statements unless required by law[91](index=91&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Discusses exposure to foreign currency, interest rate, and commodity price risks, and mitigation strategies - The Company is exposed to market risks from foreign currency exchange rates, interest rates, and commodity prices, and uses strategies to mitigate these fluctuations without engaging in speculative trading[92](index=92&type=chunk) - A stronger U.S. dollar negatively impacted net sales by **$28.3 million** and net earnings by approximately **$2.0 million** for the nine months ended April 30, 2020[92](index=92&type=chunk) - The Company uses forward foreign currency exchange contracts (maturing in 12 months or less) and fixed-to-fixed cross-currency swap agreements (maturing July 2029) to hedge foreign currency exposure[92](index=92&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures and the absence of material changes in internal control over financial reporting - Management, with CEO and CFO participation, concluded that the Company's disclosure controls and procedures were effective as of April 30, 2020[95](index=95&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended April 30, 2020[96](index=96&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) States the company records provisions for probable and estimable claims, with current liabilities deemed adequate - The Company records provisions for claims or lawsuits when a liability is probable and estimable[98](index=98&type=chunk) - Recorded liabilities for claims or litigation were not material, and it is remote that settlements will materially exceed accrued amounts[98](index=98&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Highlights risks, particularly the potential adverse effects of the COVID-19 pandemic on business and financial results - The COVID-19 pandemic could adversely affect the Company's business, operations, financial condition, and cash flows due to disruptions to employees, suppliers, and customers[101](index=101&type=chunk) - Potential impacts include temporary shutdowns, supply chain disruptions, failure of third parties, and significant reductions or volatility in demand for products[101](index=101&type=chunk) - While most operations are deemed 'essential,' future government orders or site-specific health concerns could halt operations, and employee protection measures may affect efficiency[101](index=101&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common stock repurchase activities during the three months ended April 30, 2020 Repurchases of Equity Securities (Three Months Ended April 30, 2020) | Period | Total Number of Shares Purchased | Average Price per Share | | :---------------------------- | :------------------------------- | :---------------------- | | February 1 - February 29, 2020 | — | — | | March 1 - March 31, 2020 | 675,000 | $43.33 | | April 1 - April 30, 2020 | — | — | | Total | 675,000 | $43.33 | - The Company repurchased **675,000 shares for $43.33 per share** in March 2020 under its existing authorization[103](index=103&type=chunk) - As of April 30, 2020, the Company had remaining authorization to repurchase **10.7 million shares**[102](index=102&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States this item is not applicable to the company for the reporting period [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States this item is not applicable to the company for the reporting period [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) States this item is not applicable to the company for the reporting period [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including corporate documents and certifications - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, CEO/CFO certifications (302 and 906), and a 364-Day Revolving Credit Agreement dated May 18, 2020[105](index=105&type=chunk) - The report also includes financial statements and notes formatted in iXBRL as Exhibit 101 and the cover page in iXBRL as Exhibit 104[105](index=105&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) Contains the signatures of authorized officers, certifying the report on June 3, 2020 [Signatures](index=39&type=section&id=Signatures) Contains the signatures of authorized officers, including the CEO, CFO, and Corporate Controller, certifying the report on June 3, 2020 - The report is signed by Tod E. Carpenter (Chairman, President and CEO), Scott J. Robinson (Senior Vice President and CFO), and Peter J. Keller (Corporate Controller) on June 3, 2020[109](index=109&type=chunk)

Donaldson Company, Inc. (NYSE:DCI) Q3 2020 Earnings Conference Call June 2, 2020 10:00 AM ET Company Participants Brad Pogalz - Director of Investor Relations Tod Carpenter - Chairman, President and Chief Executive officer Scott Robinson - Senior Vice President and Chief Financial Officer Conference Call Participants Nathan Jones - Stifel Financial Corp. Brian Drab - William Blair & Co. Laurence Alexander - Jefferies & Company Operator Ladies and gentlemen, thank you for standing by and welcome to the Donal ...