William Blair2017 Growth Stock Conference

Tod CarpenterPresident and CEO

Safe Harbor Statement

This presentation includes forward‐looking statements which reflect the Company’s current views with respect to future events and financial performance, but involve uncertainties that could significantly impact results.

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Overview of Donaldson

Donaldson Company

• Technology leader in our markets

• Diversified portfolio of global businesses

We are a filtration company

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Value Proposition To Our Customers

Technology Advantages• Higher efficiency

• Small system size

• Longer filter life

• Reduced operating and maintenance costs

Better Aftermarket Retention

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Value Proposition To Our Shareholders

• Diversified portfolio of technology, products

• Deeply integrated into global economy

• Committed to growth & financial performance

• Disciplined capital deployment

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Diversified Product Assortment: Engine

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Diversified Product Assortment: Industrial

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Revenue Highlights

Segment Composition and Performance

*Nine Months ended April 30, 2017

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

Engine66%

Industrial34%

Revenue Composition

70%

16%

7% 7%

Engine: +9.4% YTD*

Aftermarket

Off‐Road

On‐Road

A&D

65%

21%

14%

Industrial: (1.9)% YTD*

Ind. Filtration

Spec. Apps

Gas Turbine

Fiscal 2017 Expectations*

At the beginning of the year, we forecast:• Sales: +/‐ 2%

• Both segments had the same guidance range

• EPS: $1.50 ‐ $1.66; ~4% above PY*

Based on Q3 results and current trends, we now expect:• Sales: +6%

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

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

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

Operating Environment

At the beginning of FY17:Production expected to decline

Strength in replacement parts

Limited global capital spending

Geopolitical uncertainty

As of Q3’17 earnings:Off‐road production increasing

Stronger‐than‐expected aftermarket

Limited global capital spending

Geopolitical uncertainty

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Increased guidance driven entirely by Engine; Industrial markets still uncertain

FY17 Revenue Guidance* vs. Prior Year

$2,220 

$2,373  $2,357  $2,353  +6%

+Low Teens

+Low Teens +LSD +MSD ‐~20% ‐LDD ‐LSD

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*Guidance as of June 1, 2017

Strategic Growth Plans

Strategic Growth Plans

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Acquisitions

Geography

ExpandCoreDONALDSON 

CORE

Expand core products & technologies

Expand geographies

Execute acquisitions

Sales Growth Model

CreateHoles

Sell Replacements

Reinvest

Growth

Use Innovative Technology

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Innovative Product to Improve Retention

0%

20%

40%

60%

80%

100%

Yr 0 Yr 2 Yr 5 Yr 8 Yr 10 Yr 15

LegacyProducts

Innovative Products

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

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Innovative Air Filtration

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PowerCore DownFlo Evolution

Innovative Liquid Filtration

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• Designed for new diesel fuels, higher fuel injector pressure

• Higher efficiency and extended filter life

Capital Deployment

Capital Deployment Priorities

• Invest in our company

• Pay a dividend

• Repurchase our shares

Reinvesting in the Business

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• Organic Growth Investments• Development of new and innovative products• Lab upgrades and IT investments• Production capacity and distribution expansion

• Acquisitions• Completed five bolt‐on acquisitions in 2 ½ years

Consistent Dividend Growth

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$0.02

$0.70

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

1990 2017

Per Share

16% CAGR

• Paid quarterly dividend for 60+ years• Increased annually for 20+ years

Consistent Share Repurchase

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0

50

100

150

200

250

1990 2017

Shares Outstandingin Millions

-2% CAGR

• Goal is to at least offset annual dilution of ~1%

Value Proposition To Our Shareholders

• Diversified portfolio of technology, products

• Deeply integrated into global economy

• Committed to growth & financial performance

• Disciplined capital deployment

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A Measure of Performance

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26%

6%

11%

17%16%

7%

1 Year 5 Years 10 Years

Annualized Total Return to Shareholders*

DCI S&P 500*As of 6/7/2017.

Thank You