Donaldson Company, Inc. (NYSE:DCI) Q1 2023 Earnings Conference Call November 30, 2022 10:00 AM ET

Company Participants

Sarika Dhadwal - Director, IR

Tod Carpenter - Chairman, CEO & President

Scott Robinson - SVP & CFO

Conference Call Participants

Brian Drab - William Blair

Daniel Rizzo - Jefferies

Dillon Cumming - Morgan Stanley

Robert Mason - Baird

Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donaldson Company, Inc. First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Sarika Dhadwal. Please go ahead.

Sarika Dhadwal

Good morning. Thank you for joining Donaldson's first quarter fiscal 2023 earnings conference call. With me today are Tod Carpenter, Chairman, CEO and President; and Scott Robinson, Chief Financial Officer. This morning, Tod and Scott will provide a summary of our first quarter performance and an update on our outlook for fiscal 2023. As a reminder, we have posted a supplemental quarterly earnings presentation summarizing our results and our outlook on our Investor Relations website at ir.donaldson.com.

During today's call, we will discuss non-GAAP or adjusted results. For fiscal 2023, non-GAAP results exclude $7.6 million in pretax restructuring and related charges stemming from our previously announced organizational redesign. It is important to note that the redesign is ongoing, and there will be additional charges forthcoming. For fiscal 2022, non-GAAP results exclude $3.4 million in pretax charges related to the termination of our operations in Russia.

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 the call are subject to risks and uncertainties, which are described in our press release and SEC filings.

With that, I'll now turn the call over to Tod Carpenter. Please go ahead.

Tod Carpenter

Thanks, Sarika. Good morning, everyone. I am pleased to report a strong start to fiscal 2023 as we build upon momentum we had in the fourth quarter. Once again, we delivered double-digit top and bottom line growth. Our margins improved, gross margin increased both sequentially and year-over-year and operating margin of 15% reached a six year quarterly high. This improvement resulted in solid incremental margins and contributed to strong free cash flow conversion.