Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Donaldson Company third quarter conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). This conference is being recorded today, May 20, 2014. I would now like to turn the call over to your host, Mr. Rich Sheffer, Assistant Treasurer and Investor Relations. Please go ahead

Thank you, Elizabeth, and welcome, everyone to Donaldson's fiscal 2014 third quarter earnings conference call and webcast. Following this brief introduction, Bill Cook, our Chief Executive Officer, Tod Carpenter, our Chief Operating Officer and Jim Shaw, our Chief Financial Officer will review our third quarter earnings and our updated outlook for the balance of fiscal '14. Next I need to review our Safe Harbor statement with you. Any statements in this call regarding our business that are not historical facts are forward-looking statements and our future results could differ materially from the forward-looking statements made today. Our actual results may be affected by many important factors, including risks and uncertainties identified in our press release and in our SEC filings. Now I’d like to turn the call over to Bill Cook. Bill?

Thanks, Rich, and good morning, everyone. In a few minutes, Tod and Jim will cover both the details of our third quarter results and our outlook for the balance of fiscal '14. But first I’d like offer some summary comments. As most of you may recall, during last year’s third quarter we enjoyed a record surge in gas turbine shipments which wasn’t repeated this year. This large change in gas turbine year-over-year masks what happened in the rest of our businesses this quarter. Our other businesses were up 6% in aggregate year-over-year despite the fact that the economic conditions in many of their end markets remained flat. For example, we had double digit percentage revenue increases in our on-road and engine after-market businesses. We also had an 8% increase in our industrial filtration business, which much of that driven by growth in replacement filters. While the pace of this industrial recovery remains weak and uneven across many of our end markets and can be very frustrating, we are focused on those things that we can control to grow our business, expand our margins, and deploy our capital in order to return superior value to our shareholders. We are very proud of how our company is operating. We delivered a 14.9% operating margin in the quarter, and during the quarter returned $120 million in value to our shareholders between our quarterly dividend and share buybacks. And our sights remained fixed on our long-term objectives of building our company to first $3 billion in sales and then $5 billion. Despite the temptation to cut expenses in the short term, we continued to make the strategic investments that will make this into a larger and even stronger company in the long run. During the quarter, we had discretionary spending of about $6 million to support our global ERP system implementation and our special growth initiatives. Even with these higher spending levels, our third quarter EPS of $0.46 per share matched our prior third quarter record. Now, I’d like to turn the call over to Tod for a review of our third quarter sales. Tod?

Thanks, Bill and good morning, everyone. Our reported sales increased 1% from last year’s third quarter. Foreign currency translation had a minimal impact at the consolidated level. However, that is the summary result of larger offsetting swings across the region. For example our European business had a 5% benefit from translation while our Asian businesses had a 5% headwind from translation. As a reminder, you can find a detailed analysis of currency translation by business unit and region on the investor relations homepage of our website. The rest of this review will discuss local currency results. Within our Engine product segment, our OEM sales decreased 1%. Our on-road OEM sales increased 13% with strong local currency growth in both Europe and Asia Pacific. Our off-road OEM sales decreased 5% as the slowdown in new agricultural equipment began impacting sales in both Europe and the Americas, while continued softer mining and construction equipment demand in our OEM drove a sales decrease in Asia Pacific. Based on our customers’ commentary, we believe the mining equipment market will remain soft until sometime next calendar year and that the agricultural equipment is in the beginning stages of a gradual weakening. We continued to see improving conditions in our Engine aftermarket where we supply replacement filters through both our OEM and independent distribution channels. Our Engine aftermarket sales increased 11% in the quarter, with strong sales in all of our major regions. We attribute this growth to the combination of improving equipment utilization in the field and our market growth initiative. We are continuing to see strong replacement filter sales growth in developed markets from our OE customers’ dealer organizations and are benefiting from our increased aftermarket penetration with independent dealers and distributors in emerging economies. Aftermarket is our earliest cycle end market, and the…

Thanks, Tod, and good morning, everyone. Our gross margin was 35.8% which was the same as the gross margin that we reported in last year’s third quarter. As we noted in our press release, there were pluses and minuses in the gross margin this quarter which offset each other. One of the drivers was a lower number of large gas turbine shipments in the quarter, which were a headwind to our gross margin in fiscal 2013. We also benefited from a higher percentage of replacement filter sales. which were 56% in the current quarter compared to 51% last year. In many of our end markets, the utilization of the existing equipment in the field is good and that helps our replacement filter sales, which carry a higher margin. Overall, product mix had a positive 40 basis point impact on gross margin. In addition, our ongoing continuous improvement initiatives benefited our gross margin by approximately 60 basis points compared to last year. Offsetting these benefits was the 70 basis point impact on margin from higher compensation and indirect costs as we’ve made investments in engineering and management in our operations. We’ve also had higher incentive compensation costs compared to last year. Our operating expenses increased by $8 million compared to last year’s third quarter. As a percentage of sales, operating expenses increased 110 basis points. Higher incentive compensation expense, incremental expenses related to our global ERP project, and increased travel and entertainment expenses impacted operating expenses by 150 basis points. These increases were primarily offset by lower pension, insurance, and warranty expenses, which reduced our operating expenses as a percentage of sales by 40 basis points. As gross margins were consistent with last year, the higher operating expenses resulted in a 100 basis point decrease to our operating margin in the…

Thanks, Jim. As Tod and Jim have already noted, we have continued to make key expense and capital investments to support the long term objectives outlined in our strategic plan. This plan is a compilation of the very detailed plans by business unit and region that when aggregated add up to our sales target of $3 billion and $5 billion. We have a number of very focused initiatives underway that will help us grow over time regardless of the economic environment. I’d like to take a minute to highlight a few of these initiatives. The first is with emerging economies such as Latin America, Southeast Asia, India, China and Eastern Europe. We have entered these regions more recently and as a result our presence in these markets is generally lower than it is in North America, Western Europe or Japan, each of which we’ve been in for decades. The other way of saying this is that we have pretty significant growth opportunities in these emerging economies. So in our targeted emerging markets, we are continuing to add sales resources, parts to our product lines, distribution capabilities, distributors and OEM customers. For example in our Engine aftermarket business we added 94 new distributors and over 600 new part numbers in the quarter. By having more of our product offering available locally supported by local distributors, inventory and sales people, we have shown time and time again we can grow our business. As we noted earlier our global Engine aftermarket business is up globally 11% in the quarter and these emerging economies it was up 19%. Another of our key growth initiatives is the utilization of our technologies to help better solve our customer’s filtration issues on their new equipment while protecting their replacement filter business over time. One of our most…

Thank you, sir. (Operator Instructions) And our first question is from the line of Charley Brady with BMO Capital Markets. Please go ahead. Charley Brady – BMO Capital Markets: On the agriculture side, can you just quantify what your expectation is for the decline in growth there currently? I guess a similar question on the commercial aerospace, it sounds like some of that's come down as well in addition to kind of maybe weaker defense.

Yeah. Charley, this is Tod. So, I’ll talk about Ag first. So within Ag, we take a look and obviously you’ve seen the reports of Deere and others, and we see between 5% and 10% decline, but we see it gradually declining all the way into our calendar year 2015, so we have that baked into our new model, so it will continue to slowly decline. When you look at the aerospace and defense, commercial aerospace is not actually the issue for us. It’s really just defense. It’s ground vehicles, and it’s the continuing defense slowdown that really is driving what we call A&D on the decline. We will kind of -- it’s not going to be -- its low-single digits as an overall company as far as percentage of revenue, and we’ll continue to see a little bit of a decline there, but it should be stabling at the current levels, and our ability to really offset the defense decline has been in the aerospace. This time, defense has declined faster than we’ve been able to pick up on aerospace, and so that’s why we had to take that guidance down.

So Charley, this is Rich. One follow-up to Tod’s comments on the Ag market. The gradual decrease we see is really specific to OEM. At least in the near term, we are not anticipating and have not seen any kind of a decrease in demand for replacement filters in the Ag market.

And our next question is from the line of Eli Lustgarten with Longbow Securities. Please go ahead. Eli Lustgarten – Longbow Research: Can we follow up here the same trend? Can you talk about one, gas turbine we had postponed, but things are getting better. The implication is that we can get a mid upper single to double digit gain in 2015. Is that sort of the path we are on that we are stabilizing enough that we should be able to be up a bit next year? And then can you take us through construction inside North America versus the rest of the world and stuff? What’s going on in that market?

Sure, Eli, this is Tod. So first on gas turbine, as we have talked about in last quarter as well, the way we view gas turbine is a bit of a downturn at this point. But we do see healthy quotes out there and we have confidence that our forecast in fiscal 2015 which does suggest that that business will pick up will ring through. We have that good visibility and we are comfortable with that forecast. As far as the construction markets, it’s really led by the positive outlook in the United States. Europe is a little mixed but it is slightly positive. And then when we turn our attention over to Asia Pacific, we would say that Asia Pacific for us is more positive and it’s really driven because we have a lot of opportunity there since we have a lower share within the construction markets. Eli Lustgarten – Longbow Research: Is the implication of your visibility in gas turbines, I guess is that you should have positive comparisons for most of next year, and I don’t know if you can quantify it for us. And then the other part that you sort of touched on is mining, can you give us some feel for what's going on there?

Eli, this is Jim, I’ll touch on the gas turbine. I think what we are seeing right now does suggest that we’ll see some incremental improvement, at least as we move into the early part of fiscal 2015, but we are in the process of pulling our guidance together right now for next year, and we’ll be able to give you definitive comments on that at our next quarter.

Eli, this is Tod, I’ll take the mining portion. So, within mining, we see mining continuing at the current low levels. We have had some issues from time to time, for example South Africa within this labor issues that they’ve had that slowed us for a month or two, but really we just have mining continuing at the current low levels to perhaps if we would look forward maybe an additional slight deterioration of very low single digits. So longer term as we look out, that will continue on into our calendar year 2015 is really what our customers are suggesting to us.

Thank you. And our next question is from the line of George D'Angelo with Jefferies. Please go ahead. George D'Angelo – Jefferies & Co.: Hello, good morning. As you look at the bridge to 2015, should ERP costs be flat year over year?

Yeah. This is Jim. I think as we look to 2015, they will be around the same level but we are probably anticipating a little bit more and that’s just a function of how the costs that we incur get treated between expense and capitalization and as we bring on more sites will have a little bit more on the expense side. So, I don’t have that quantified yet as we are pulling together our budgets, but I would say slightly higher, not dramatically higher, but slightly higher than what we’ve been running this year. George D'Angelo – Jefferies & Co.: Thanks. For the OEM on-road business, given what you guys said in your press release, do you see that accelerating over the next few quarters?

Yeah. This is Tod again. So what we’ve done is we’ve baked that increase that everyone is talking about in the US into our forecast. We still have it in low double digits and we look at it at that level to continue. So I wouldn’t say it’s an acceleration in future quarters, it’s really going to be at the same level of increase for a while.

Thank you. And our next question is from the line of Kevin Maczka with BB&T Capital Markets. Please go ahead. Kevin Maczka – BB&T Capital Markets: The $30 million cost item that you trimmed to $22 million, that's ERP and incentive comp. Two questions there. Does that include some additional strategic investments that you're making, and can you just talk about what drove the $8 million reduction?

Yeah. This is Jim, Kevin. The $22 million is just incentive related and our ERP project. So the other clocks we refer to would be outside of that. As we started the year we had anticipated about $8 million related to our ERP and about in the range on $22 million from just the increase and incentive camp over last year where we didn’t have the kind of year we would have liked. As we move through the year now and looked at the breakdown of those two categories. It looks now like our ERP cost is going to be about $5 million compared to the $8 million and that’s just as I mentioned before our function between how much gives capitalize and how much gives expense then. As we’ve got smarter about that, we’ve refined that number and then the remainder is our incentive compensation previously that $22 million number. We are now anticipating that to be around $17 million and that’s the function of some of the sales not coming in as good as we would have liked and that’s the way this is supposed to work. So that is the reason for the $22 million. Kevin Maczka – BB&T Capital Markets: Okay, got it. And can we switch over to the segment margins, and maybe starting with Engine. I'd like to touch on both, but starting with Engine. We had revenue up 19%. We had profits down 4%. Aftermarket grew 10%. So that would seem to be at least slightly more favorable mix, and you had your continuous improvement. I'm just wondering, that lower profitability, is that -- how much of that is driven by the higher strategic investments that you called out beyond the ERP and incentive comp issue?

Yeah. I think there’s two issues there. One, Engine as a percentage wise gets more of these investment type costs like our ERP. But on the incentive comp side, given that generally our engine business has performed better this year, they have a very higher proportionate of those incentive comps. So, essentially all of them are on the Engine side in terms of the year-over-year. So that’s a big part of it. the other part is these investments that we discussed earlier in terms of there’s a number of engineering efforts going on for new product launches and those are primarily focused on the engine side. So those are the main drivers. The margins and so forth as we talked about are being helped by the aftermarket, but as a percentage being offset by some of these investments. Kevin Maczka – BB&T Capital Markets: Got it. And same type of question, Jim, on Industrial. The margin was down over 100 basis points there. I assume with gas turbine down so dramatically, that's a favorable mix item, and again, there's continuous improvement. If we don't have the same incentive comp type issue there or engineering effort there, what drove that reduction?

That one is exclusively leveraged. as we said, we don’t have the headwinds on compensation to the extent we do on Engine, but with the sales down, the percentage they are, it’s just a function of some of those fixed costs we can’t and frankly don’t want to adjust because we see opportunities going forward. Kevin Maczka – BB&T Capital Markets: Okay, great. Just finally from me, can you just touch on the corporate expense line? I know currency can be volatile, but maybe not as much this quarter. I think usually we get a benefit as inventories come down, which didn't happen this time. Can you just talk about why that corporate line was so favorable?

Yeah. And that one is hard for us to predict, but we had a little bit higher interest expense. So that’s maybe about $0.5 million of it. The rest really relates to some timing items in terms of our inner company profits and even though inventory was fairly stable, it’s a function of which inventory is being sold and growing where. So a little bit of that. I’d say about $1 million of that is just timing in terms of some corporate expenses that don’t get to the markets right away just based on the way we account for them. Those are probably the two main drivers. Kevin Maczka – BB&T Capital Markets: Any color at all you can give in terms of crystal ball on that line item?

I wish. That one is a hard one. I think in a normal state where we probably end up is in that $2 million to $4 million range like last year is probably a little bit more normal. But again normal has a pretty wide standard deviation just given the nature of some of those items.

Our next question is from the line of Richard Eastman with Robert W. Baird. Please go ahead. Richard Eastman – Robert W. Baird: Yes. Jim, could you just -- can I just double back for one second on the comp and the ERP expenses that sum for the third quarter towards the $22 million. What did you absorb here? Was it $6 million total?

For the third quarter, yeah it was roughly 5 to -- round it to $6 million between the two. Richard Eastman – Robert W. Baird: Okay. And ERP was maybe $1 million?

Yeah. ERP was a little -- right around $1 million, yeah. Richard Eastman – Robert W. Baird: Okay, all right. And then so just wanted to ask, on the on-road side of the business, the Engine business, Bill or maybe Tod, Europe continues to show some big gains. And I'm curious if there's -- was there a new win there on the on-road OEM side? It's fairly substantial. I know the comp was easy, but it's still fairly substantial gains year over year.

This is Tod, Rich. So you’re right. The comp was pretty easy, but we don’t have a new win over in Europe and I think everyone points to what’s taking place. So we really have dissected that pretty hard and see that really as market conditions and it’s been depressed for quite some time. So that’s one. Also the other is it does point to some of the success that we’re having in our aftermarket and we’re getting our main spread further across our European base. So that’s really what’s driving our growth there. Richard Eastman – Robert W. Baird: Okay. And the aftermarket in general being low double digits, again if you look at maybe an average two year growth rate, it’s maybe 5% or 6% which feels a little bit more sustainable, but I’m just curious again, is the aftermarket growth in the low double digits? Is that new part numbers, some share gains? How do you attribute that growth? Because again no tonnage numbers you look at would suggest that we should be able to sustain that.

Rich, this is Tod again. So it really starts with our strategy. Our strategy within our global aftermarket group was to really strengthen our distribution across all regions of the world and pay specific attention to emerging markets. So we have done that. And Bill talked about adding 94 new distributors this year. Our distributing base now worldwide is over 3,000 and we still have a runway there. The second thing is making parts available. So availability is obviously a very important metric in this particular model and we’ve done a real nice job again this quarter by adding over 600 more parts to the model. So those two strategic thrusts that we had, those strategic imperatives are really driving us quite nicely. Last is, it starts with the overall company strategy which is the proprietary first fit that drives our aftermarket retention share and we are benefiting from that and it’s the reason that in these calls that we highlight PowerCore, and now we’ll talk about PowerPleat and we’ll be reporting that in our gains in fiscal 2015 we’ll talk about that. Those are the air new products, but we also have select and bulk fuel on our liquid products. So that’s really what’s driving our aftermarket growth and we would suggest we are taking market share and our strategy is working nicely. Richard Eastman – Robert W. Baird: And is the PowerPleat product the same -- is that a liquid based product? Or is that, again, some of the same applications that PowerCore would address?

Yeah. So this is Tod again. It is not a liquid product. It’s an air product and it’s not the same applications that PowerCore would address. So what happens is it really would go to different end users ones that for example do not have a space limitation at this time and we would be able to actually sell that into that type of requirement. But it’s really kind of a drop in replacement for what they used to have. So we’re replacing our self with proprietary technology in many of those opportunities and that will longer term, help us drive that aftermarket. Richard Eastman – Robert W. Baird: I see. Okay, very good. And just if you don't mind, one last question for Jim. On the cash flow from ops, you bumped that up somewhere between $10 million and $30 million for the year. Is that a mix issue, more replacement? So again, cash flows quicker, or?

Yeah. It’s a little bit of that, but related to that it’s really based on the fact that we’ve taken the sales forecast down a little bit. There’s less investment in that receivables growth or the fourth quarter built in. Richard Eastman – Robert W. Baird: Okay. Great. Thank you very much.

(Operator Instructions). Our next question is from the line of Josh Berman with William Blair. Please go ahead. Josh Berman – William Blair & Company: So just curious what growth was specifically in China in the quarter, and how much of sales comes from China in the quarter.

Josh, this is Rich. In local currency terms, China in total was down around 15%, but if we -- the biggest driver there was a big decrease in our gas turbine business. So if we exclude gas turbine, the other businesses combined to be up 13%. Josh Berman – William Blair & Company: Got it. Thank you. And then just back to gas turbine overall, I guess. So that was all just push out, there are no project cancellations that you're expecting?

Yeah. This is Tod again. No project cancellations or push outs. Josh Berman – William Blair & Company: Okay, great. Thank you.

I’m showing no further questions. I would now like to turn the call back over to Mr. Bill Cook for closing remarks.

Thanks, Elizabeth. Now to conclude our call, we’d like to thank our fellow employees for their contributions to our third quarter performance. And I’d like to thank everyone on the call today for your time and continued interest in our company. Thank you and have a great day. Goodbye.

Thank you. Ladies and gentlemen, that will conclude the conference call for today. If you would like to listen to a replay of today’s conference call, please dial 303-590-3030 or 1800-406-7325 and enter access code of 4681999. We’d like to thank you for your participation and you may now disconnect.