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Dover Investor Presentation January 12, 2017 Bob Livingston President & Chief Executive Officer
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2 Forward looking statements We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties and risks. We caution everyone to be guided in their analysis of Dover by referring to the documents we file from time to time with the SEC, including our Form 10-K for 2015 and our Form 10-Q for the third quarter of 2016, for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. We would also direct your attention to our website, www.dovercorporation.com, where considerably more information can be found.
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3 Our strategy to create long-term value Build platforms in key markets with significant growth potential Capitalize on our expertise by providing a larger suite of products and solutions to customers on a global basis Innovate to launch new products to help customers win in their markets Continue to focus on margin by actively managing our portfolio and driving productivity 3
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4 $1.3 $2.5 $2.2 $1.6 2017F Revenue Refrigeration & Food Equipment • Retail refrigeration • Food equipment • Heat transfer solutions Fluids • Retail fueling • Hygienic & Pharma • Polymer processing equipment • Specialty industrial pumps Engineered Systems • Marking & Coding • Digital Printing • Refuse collection, compaction & processing • Auto service equipment Energy Refrigeration & Food Equip. Applying performance management systems to incentivize Opcos to maintain and improve margin and ROIC Fostering a unique culture where Opcos embrace their responsibility of helping our customers win Segments, key platforms, and unique capabilities Energy • Drilling & Artificial Lift • Automation • Bearings & Compression $ in billions Engineered Systems Fluids Using in-depth knowledge of customers and opportunities to identify attractive companies in our markets ≈ ≈ ≈ ≈
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5 Select growth markets at a glance - Energy Estimated market size $8.0B $4.0B 2017 – 2019 est. market CAGR Key competitors Drilling & Artificial Lift (USS, DAL) Bearings & Compression (Waukesha, Cook) 2017F DOV revenues ~$725M ~$140M high potential growth tied to rig count growth and new well completions Key growth drivers • Oil price stability/growth • NA rig count growth • Increased well completion activity • Shale activity growth • New product introduction Automation (DEA) $4.0B ~$290M low-singles • Increasing use of natural gas in power gen • Growing installed base of reciprocating and rotating machinery • Global energy demand and gas production high potential growth tied to well completions and productivity spend • Oil price stability/growth • Focus on productivity • New products • Customer adoption
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6 Select growth markets at a glance - Engineered Systems Text Estimated market size $2.0B $3.5B 2017 – 2019 est. market CAGR double- digits Key competitors Digital Printing (MS & JK) Refuse collection, compaction & processing (ESG) $3.0B Auto service equipment (VSG) 2017F DOV revenues ~$835M <$200M ~$440M ~$525M $5.5B Marking & Coding (MI) mid-singles low-to-mid singles Key growth drivers • Growing consumerism in developing economies • Food safety concerns • Logistics • New packaging designs and materials • Growth in fast fashion • Water conservation • Print quality and consistency • Flexibility • Productivity • Productivity • Safety • Reduced availability of landfills • Growth in recycling • Addition of Ravaglioli (RAV) • Increasing average age of vehicles • Growing global car park • New materials used in auto manufacturing low-to-mid singles
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7 Select growth markets at a glance - Fluids Estimated market size $2B $7B 2017 – 2019 est. market CAGR Key competitors 2017F DOV revenues ~$1.3B ~$250M Retail Fueling (OPW, Wayne,Tokheim, Fairbanks) low-to-mid singles, plus EMV lift mid-to-high singles Key growth drivers Hygenic & Pharma (Hydro, CPC, certain PSG brands) • Recent acquisitions • EMV upgrade cycle • Environmental and safety regulations • Remote monitoring and SaaS • Increasing miles driven • Auto growth in developing markets • Health and safety concerns • Growing single use adoption • Expanding applications • Aging demographics Polymer Equipment (Maag) $5B ~$275M low-to-mid singles • Significant global petrochemical investment • Low feedstock prices • Worldwide growth of plastics usage
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8 Select growth markets at a glance - Refrigeration & Food Equipment Estimated market size $6.0B $2.5B $11.0B 2017 – 2019 est. market CAGR Key competitors Retail Refrigeration (Hillphoenix & Anthony) 2017F DOV revenues ~$300M ~$1.1B ~$215M Food Equipment (UB & Belvac) low-singles mid-singles mid-singles Key growth drivers Heat Transfer Solutions (SWEP) • Regulation/Energy efficiency • Sustainability • Changing trends in merchandising • Fresh & healthy • Rising wages drive need for productivity solutions • Demographic trends • Food safety • Convergence of restaurants and food retailers • Growth in developing economies • Regulation/Energy efficiency • Expanding applications • Market adoption of brazed plate technology • Urbanization driving demand for compact solutions Alfa Laval
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9 Building the Dover Fueling Solutions platform Pre 2013 • Hanging hardware • Valves • Car wash systems • Fleet fueling systems 2013 • Containment systems • Access & fill covers • European style piping 2016 • Dispensers • Automation & POS systems • Wireless tank gauges • Cloud-based /remote monitoring /SaaS • Dispensers • Automation & POS systems Strong market characteristics, including: steady growth, strong after- market, periodic tailwinds, favorable customer-to-supplier ratio Developed detailed acquisition roadmap comprising products and geographies Initial focus on product expansion 2016 acquisitions build out the industry’s only global end-to-end solution 2017F Retail Fueling revenue: ≈ $1.3B
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10 Dover Fueling Solutions - Wayne Fueling acquisition Dispensers, POS systems and service for global retail fueling markets; strong US position Completes end-to-end global retail fueling solution Full participation in US EMV upgrade cycle Highly synergistic with Tokheim 2017F Revenue: ≈ $600M 2017 – 2020 growth rate: high singles New 3 year synergy target: ≈ $35 million Costs to achieve synergy: ≈ $25 million 2017F EPS: $0.18 - $0.20 Strategic fit Key metrics
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11 Q4 update Solid fourth quarter activity Overall operating performance within previous guidance range – Early cycle oil & gas related end-markets showing sequential improvement – Printing & Identification platform remains strong – Industrial businesses generally performing at/near expectations – Continued weakness in later cycle oil & gas markets – Refrigeration margins remain challenged as we implement manufacturing changes; results also impacted by product mix Portfolio actions – $0.31 net benefit on disposition of business – $0.05 impact from Wayne acquisition, excluding financing costs Anticipated early 2017 voluntary product recall has $0.09 impact 11 Prior 2016 EPS Guidance: $3.00 - $3.05 Plus: Net benefit on Q4 disposition: ≈$0.31 Less: Q4 Wayne related costs: ≈($0.05) Less: Q4 Product recall charge: ≈($0.09) Updated 2016 EPS Guidance $3.17 - $3.22
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12 2017 preview Organic growth outlook Significant revenue and accretion from 2016 acquisitions Meaningful carryover benefits from prior restructuring and lower 2017 restructuring costs Offsets from compensation & investment, interest and corporate expense, and FX Modest core margin* improvement at the mid-point 12 2017F EPS from continuing operations: $3.40 to $3.60 * Core margin adjusted for the impact of completed acquisitions and dispositions, deal costs and restructuring costs for 2016E and 2017F
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13 Revenue drivers in 2017 Energy (up 13% to 16%*) – Growth in North American rig count – Capex increases drive well completion activity Engineered Systems (up 1% to 3%*) ‒ Completed acquisitions ‒ Continued adoption of digital printing technology; Strong Printing & Coding markets ‒ Modest industrial markets Fluids (flat to 2%*) – Completed acquisitions – Solid activity in petrochemical & polymers and hygienic & pharma markets – Challenging longer cycle oil & gas applications, including tank & rail car Refrigeration & Food Equipment (flat to 2%*) – Growing glass door and specialty case activity – Strong backlog in can-shaping equipment – Standard case and system activity remains subdued 13 * Growth rates represent forecasted organic growth rate. See appendix chart for additional information
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14 2017 summary Fully leverage recovery in North American oil & gas markets Capture significant acquisition growth in Fluids and Engineered Systems Core margin improvement Acquisition integration 14
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15 $- $400 $800 $1,200 $1,600 Acquisitions Capex Dividends Share Repurchase $ in millions 2012 2013 2014 2015 2016E Return to investors Capital allocation Invest in growth; acquisitions and capex ≈ 60% over 5 years Consistently return cash to shareholders; dividends and repurchases ≈ 40% over 5 years We expect to continue our longstanding record of raising the annual dividend Continuous focus on FCF generation; expected to be 11% of revenue in 2017 15 Growth Capital Deployed 2012 – 2016E
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16 Key takeaways Our strategy remains consistent. We have great platforms serving markets that offer ample opportunities for growth We are anticipating strong growth and have above market expectations of this portfolio. We continue to expand our capabilities to service our customers with a focus on helping them win in their markets We are committed to margin enhancement through our set of productivity tools and processes We will remain focused on pursuing opportunities to expand internationally and into adjacencies We will continue to generate strong free cash flow, while maintaining our measured approach to capital allocation
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18 Appendix
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19 FY 2016 guidance update 19 Prior 2016 EPS Guidance – Continuing Ops (GAAP) $3.00 - $3.05 – Plus: Net benefit on disposition(1): ≈$0.31 – Less: Q4 Wayne related acquisition costs(2): ≈($0.05) – Less: Q4 Product recall costs: ≈($0.09) Updated 2016 EPS Guidance – Continuing Ops (GAAP) $3.17 - $3.22 (2) Reflects Q4 operating performance, deal costs and purchase accounting amortization associated with Wayne, totaling ($0.05) EPS (1) Reflects Q4 net benefit on sale of Tipper Tie Expected Q4 2016 GAAP EPS: $0.95 - $1.00 (3) (3) Includes Q4 operating performance, deal costs and purchase accounting amortization associated with Wayne, totaling ($0.05) EPS, $0.31 EPS associated with net benefit on disposition of Tipper Tie, and charge of $0.09 for expected product recall
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20 FY 2017 Guidance – Revenue & margin by segment 2017F Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic rev. 13% - 16% 1% - 3% 0% - 2% 0% - 2% 3% - 5% Acquisitions - ≈ 7% ≈ 31% - ≈ 10% Dispositions - (1%) - (5%) (1%) Currency (1%) (2%) (2%) (1%) (2%) Total revenue 12% - 15% 5% - 7% 29% - 31% (6% - 4%) 10% - 12% 2017F Energy Engineered Systems Fluids Refrigeration & Food Equip Total Margin - midpoint ≈11.6% ≈15.8% ≈13.3% ≈13.3% ≈13.7% Chg. vs 2016 up > 600 bps down < 75 bps(b) up > 150 bps down < 400 bps(b) up > 10 bps Chg. vs 2016 - adjusted core(a) up > 450 bps down < 70 bps down < 300 bps(c) up > 100 bps up ≈ 10 bps (a) Adjusted for the impact of completed acquisitions and dispositions, deal costs, restructuring costs and recall charges for 2016E and 2017F (c) Reflects the impact of Tokheim, which is now treated as organic for purposes of organic revenue and adjusted core margin (b) Includes the impact of the gains on the 2016 dispositions of Texas Hydraulics in DES, and the disposition of Tipper Tie in DFRE
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21 FY 2017F Guidance Revenue – Organic revenue: 3% - 5% – Completed acquisitions: ≈10% – Dispositions: (1%) – FX impact: (2%) – Total revenue: 10% - 12% Corporate expense: ≈ $125 million Net interest expense: ≈ $133 million Full-year tax rate: ≈ 28% Capital expenditures: ≈ 2.3% of revenue FY free cash flow: ≈ 11% of revenue
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22 2017F EPS Guidance – Bridge 2016E EPS – Continuing Ops (GAAP) – Mid-point: $3.19 – Less 2016 gain on dispositions(1): (0.40) – Less 2016 earnings from dispositions(2) : (0.05) – Plus 2016 charges related to expected recall: 0.09 2016E Adjusted EPS $2.83 – Net restructuring(3): 0.08 - 0.10 – Performance including restructuring benefits: 0.80 – 0.94 – Compensation & investment: (0.15 - 0.13) – Interest / Corp. / Tax rate / Shares / Other (net): (0.16 - 0.14) 2017F EPS – Continuing Ops $3.40 - $3.60 (2) Includes 2016 operating earnings from THI and Tipper Tie (3) Includes restructuring costs of approximately $0.19 in FY 2016 and $0.09 - $0.11 in FY 2017F (1) Includes $0.07 gain on the disposition THI in Q1 2016 and $0.33 gain on disposition of Tipper Tie in Q4 2016
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23 Energy commentary Segment revenue driven by pace of rig count and capex spending (influenced by oil price dynamics) ‒ Directly impacts drilling, artificial lift and automation markets (two-thirds of segment revenue) Drilling more correlated with rig count Artificial lift and automation more tied to oil well completion activity Base case assumptions: – Drilling, artificial lift and automation up: ≈ 20%* – 2017 average US rig count: ≈ 680 - 700 – 2017 average WTI: ≈ $55 * Represents forecasted organic growth rate