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Donaldson Company's CEO Discusses F3Q12 Results - Earnings Call Transcript

Our off-road product sales were up 13% as the agricultural and mining end markets our customers serve remained strong globally, and the U.S. construction equipment market continued to enjoy a strong replacement cycle. The ongoing strength in these end markets has increased the demand for our customers’ new equipment, upon which our air and liquid filtration systems are installed. We also had help during the quarter from our engine aftermarket business as replacement filter sales were up 6% as utilization rates of existing truck and off-road equipment fleets were good in the Americas.

We also are continuing to expand our distribution networks and product line. Since our last call, we’ve added another 94 distributor with the majority of these latest distribution additions in Asia, Latin America and the U.S. Also during the past three months, we’ve added over 300 part numbers to our product offering with the majority of these adds in our emerging market businesses.

Now switching to our industrial products segment, our local currency sales increased 13% as we delivered very good results across all three product groups. Our largest industrial product group, Industrial Filtration Solutions, grew local currency sales by 11%. Sales growth was good in both the U.S. and Europe during the quarter for both new Torit dust collection equipment and replacement filters for those systems already installed in the field. Our second industrial product group, Gas Turbine Systems, our sales were up 17% in the quarter driven mainly by strong demand for new power generation systems as this late-cycle business is now just beginning to ramp up. Finally, our sales of special application products increased 14% with solid sales growth from product lines serving the disc drive, membrane and venting markets. As we mentioned on our last call, our disc drive filter sales have continued to recover from the impact of last fall’s floods in Thailand and are now back to pre-flood or normal levels.

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