DOV - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to Dover's Second Quarter 2018 Earnings Conference Call.

Speaking today are Richard J. Tobin, President and Chief Executive Officer; Brad Cerepak, Senior Vice President and CFO; and Paul Goldberg, Vice President of Investor Relations. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions].

and participation conference recording implies call. ladies recorded is of reminder, your and consent a gentlemen, call this being this As to our

you Goldberg, to turn please call over these Thank If Paul I ahead, the agree Goldberg. sir. Mr. this Mr. you. like at go time. terms, now would to not do please disconnect with

Paul Goldberg

with to Rich Thank you, call comments today earnings are Tobin call. on quarter Brad quarter Rich Dover's will Crystal. comments Good performance operating from begin our Dover's morning Brad and and With second XXXX outlook. and and Today's and welcome on Cerepak. second me some financial

up will open We for the call then questions.

code be earnings can and you'll will The and to for non-GAAP that and adjusted you amortization. included a our for yourself note acquisition-related audio in through Xnd playback, need follow-up. our question investor GAAP on to our measures materials. we exclude Reconciliations call that supplement telephone supplement XXXXXXX. be costs results between access adjustments replay presentation one are associated reflecting providing is amortization, a other including EPS supply Please three and playback after-tax August presentation dovercorporation.com. rightsizing be available ask When As and and this EPS number courtesy, related our guidance the of accessing archived release, that call aforementioned portion the will the for limit XXX-XXXX. website on current with months. measures This website found following is kindly investor Dover costs (XXX)

in statement. supplement We turn certain by understanding forward-looking which analysis our remind that our considerably forward-looking for of by And cause no to uncertainties. to Rich. Form to any everyone inherently forward-looking are could I'd your subject caution from XX-K required anticipated be of like to Dover direct Dover we Before intended factors our obligation more that to that revise differ also guided contain to I'd those comments to everyone today, list statements Also We results to their a call are publicly referring may can law. of we update would in get that, like today your to over where such with information as to the be found. our any except website attention or undertake statements started

Richard Tobin

the as across portion we spin-off the good which will quarter Apergy result deck. later take Brad of you Thanks and and the the of X% revenue In thanks good started. consolidated and for this $X.XX us EPS $X.X conference completed posted QX, earnings of the broad-based beginning end the a Bookings The and morning excluding everybody the a retail share, adjusted joining with the diluted at the for up quarter count is of at respectively. a share up in billion morning's let's call, portfolio solid and impact share on Dover million executed have announced $XXX XX% adjusted Paul, of are refrigeration. at program get remained through, repurchase XX%

count corporate in $X.XX despite as largely are forecast EPS result full-year and refrigeration demand share tight $X.XX improved the a We QX, to controls, tightening of the cost original and below reduction. being expected to range margin guidance our full-year Fluids and retail environment conversion segment in share a the

in will guidance a this beginning the I be current the a with we morning, reduction we in not is implementing to I cost EPS QX in subject and will noted have separate that, full-year deal reflected press release As be announcement in our program which think, Q&A. will

to let presentation, it pass the Brad. me off in on go let's So

Brad Cerepak

everyone. Thanks Rich. Good morning

on Page of deck. start X Let's presentation the

flat essentially supply $XXX segment revenue $XXX Equipment. Fluids On by consolidation Adjusted was issues the detail between effective XX% were earnings expected Systems million. Engineered continued tax on our performance Systems bit bookings tax increased a and a EBITDA more tax from our grew was EPS in improved $X.XX. offset EBIT is X, in million. Engineered segment $XXX The in was let's This reflected rate Overall in revenue footprint to adjusted Food to Slide conversion little the quarter. Refrigeration chain by Adjusted was & which adjusted slightly billion. full-year be And and solid to into XX% lower Fluids. lower at get XX.X%. on and discrete volume and Adjusted rate margin XX%. benefited demand results whereas in EPS solid and million $X.X largely driven benefits results mentioned, X% As to

X% growth FX. Second comprised of from X% these revenue impact and net Partially organic dispositions. results of X% was X% was from growth a offsetting quarter

about U.S. Importantly the on basis, was into accelerated which against X% our in result a QX. FX of from other a X% X.X% X.X% sequential in QX to dollar a trading QX decelerated organic of growth as in to about currencies. appreciating QX tailwind

revenue. are and We Engineered decline reflecting $XX growth activity a a bookings current million Refrigeration perspective, X%, Euro retail refrigeration Weak $XX million. Systems up Fluids geographics X% increased forecast. perspective, Organic the grew driven Of respectively grew Asia drove in grew $X.XX largely overall. a $XX X%. strong by broad-based Europe From in Systems full-year $XX demand. a our largest and segment. Fluids of grew million markets our dollar Engineered U.S. Food From using organic was Booking million Fluids our grew segment XX% and market organically & U.S. assumption in million note market X% Equipments organically while $XX was

to Finally at bill X.XX. finished book

Equipment top, growth. now largely earnings volume. $X and Food & adjusted million X. at on conversion Engineered Systems $XX improved to on lower EBIT footprint reflects bridge broad-based consolidation issues. $XX Let's the The reflected supply segment Starting by million go decline conversion Fluids on Slide of solid growth to driven EBIT the Refrigeration due chain weak million revenue

or lower interest, segment earnings, XX%, $XX costs the and Going bottom chart, and to earnings drove the corporate rate lower of tax the higher a adjusted improved million improvement.

look Let's X. Slide at

of from continuing $XX earnings ops. half cash or first million Our free flow XX% was

flow Second year. was largely quarter cash line with in last free

spending was projects increased revenue. growth of capital CapEx focused million volume came percent capital XXX $XX although basis will Our as multiple on a down which and to working of revenue help Working productivity. growth drive XX% points on

on Now X. Slide

during previously mentioned program $XXX repurchase million the initiated by As Apergy second an the accelerated we quarter dividend. funded

average you in me the ending these we billion shares drops turn year-end, of year. to that, repurchases. XXXX million we completion repurchase on let ASR, the last the will to the the as open in into repurchase market. know, X Beyond the complete back With over committed on to we And XXX half second it XXXX further XXXX substantially full-year weighted more expect Rich. By

Richard Tobin

Brad. Thanks

Let's renewal driven move a XX% a in TWG delivered following. improved tariff uptick continued demand and to in in platform, ESG the of TWG, subjected digital input automation the in result printer they results very by on more a In of DESTACO volume In with the as in military mix mix as and of Markem-Imaje accessories at back issues. comparable segment and period quarter. Engineered cost the solid headwinds Industrial performance broad-based of and conversion result Margin in the and are was slides. delivered have recovery strength and in LaRio good positive material mixed mix ESG QX. very timing identification product volume cost fleet to result demand vehicle both in spending. MPG delivered in organic was more the printing demand was growth good and Systems QX deliveries and as volume strong both revenue leverage of the more print performance than improved offsetting and been an should delivered but in expected businesses. a performances which the on on

remain outlook industrial printer shutdowns facility QX Europe Full-year as towards While which result lower VSG timing going incremental increases expected is up implementation in maintenance QX. of Engineered QX and to for leverage in pulled pricing primarily is the a profits were a unable of cost and absolute being were HX. with expected large cover print earnings quarter digital into Systems the delays input volume into and margins enacted as levered as of to shipments pricing result for reported the than strong in

go growing solutions, revenue and companies transport let’s growth and was posted issues Fluids revenue the improved a Fluids. with balance pumps, Consolidated from DFS segment. the The operating segment partially organic in underwhelming in segment specifically to result businesses. X% transport process the performances all Okay, the comparable especially our margin forward of quarter as period offsetting performances of fueling with strong the in of during in performance execution for

is and tale because and XX% will and largely is process U.S. business as which and regulatory as is segments line European of in mixed. facility a colder expediting worlds and year revenue consider of that were related to ground driven extent firm. which the PSG's this colder to shipment costs strong market costs the with pumps results margins Let expansion. continued consolidated products. being could in the posting significant fastest business been consolidation, earnings rate earmarked a we X% has margins. remains Margin continued which quarter. strength. operational attraction had start in significant the is top-line little mix me comment In at result on negative all end bit and geographic the bottom while of supply a in a solid and with in conversion it's chain in quarter. solutions, OPW consolidation segment a posted some top-line delivered June The have the below a of here. forward three beneficial was MAG of fees, was and costs to the highest hydro PSG of lesser conversion associated of sign better transport CapEx levered Results the that growth APAC dilutive portfolio and QX a to a going expectation spending in to years gain The that half China footprint one and second items revenue discrete the businesses continue growing conversion by positive becoming capacity a the result demand our strong DFS for of through fueling as a two business transitory have OPW

bench end half of us the the What and issues during us Our expectation is earnings -- The much business. a of I is we on performance will issues cost track QX product this QX. to back did benchmarking we're you that which that Europe to be to margins, the that paths underway. as operational going positive. improved still encouraging customer And product improve our the second into I plans has do clear add we quarter and that and is significant our performance in be can discrete margins there items execution to the for that not of are behind execute tell profit operational that a materially from APAC to it's approximately clear and million these portion news by confident and perspective if issue it's and $X in feedback have establish is get that remains and improvement will

Equipment. of as & QX back-end in QX. move down food & XXXX Let's of Belvac Food in loaded driven particularly calendarization quarter primarily had are to Food which Refrigeration and Food at shipments on Equipment especially Retail reduced out in to X% revenue demand Refrigeration Dover trends was equipment by another tough

margin backlog a on forecast Belvac $X and in Retail, $XX this align We XXX current reduced the comparable the Food our quarter earnings or in updated on declined $XX points and million full-year have EBITDA million segment for demand over Dover basis. in trends. and basis million with

through shipment XX% Belvac improving Brands year-over-year remain narrow comparable weak Dover expectations QX reverse Belvac through through and in of in Dover will result which the but declines headcount balance has year Food in for shipments Retail in flow as Our QX United refuse and HX, through June. margin by -- a mix of Retail actions the in QX full-year of to that and Food the a cost demand and segment in its reduced

to in end. XX, softer forecasted reflect end Slide towards outlook updated the the Refrigeration the revenue the tightened higher mentioned a to as range on on to full-year our our and of I conditions in Moving presentation, EPS earlier we've range bias the Retail top demand with than

on have backlogs and Our with that better participating and implement material profiles. It revenue trends execute clear need some to largely aggressively raw markets actions and in strong conversion we we in demand our to is of inflation. areas offset increased that input to portfolio businesses are margin indicate

the management our achieve XX% improved implementing we committed approximately so last are revenue During That's visited have actions the commitment our and to the last total move it. deliver there company in Q&A. the will to I to slide, teams XX The on of necessary days, performances to we and quarter.

Paul Goldberg

if Crystal, have we question. first the can Thanks.

Operator

[Operator Instructions].

line Our first Mitchell question comes of with from the Barclays. Julian

Julian Mitchell

and morning. candid good to tone. thank Welcome Hi, you Richard the for

In I how cost cost about of talked see meaningful the payback of any on perhaps could to provide that and execution quickly also of a you on investors magnitude terms you've guess extra reduction color speed expect those and in should measures reduction efforts. terms

Richard Tobin

We’re the notices our things. accounting to with deal that a mid-August issues by well expect some because of will quite complete on there through frankly we I plans our plans. from have other treatment war will variety be work there's and we

before at that to those cost so group a the and result separate ability of spinoff. we'll of be written end the that press our with announcement, on confident this rightsizing but This the point execute clarifying materially announcing is think in to going initiative seen guess you a will of segment, I'm QX, some to the a including under our as the gone have through said cost the do I as into that nor point. will in if we want the I timing in Before those the it larger of and flow scale in nutshell the the as on of XXXX initiatives SG&A confuse well what the you across way overhead, I be this and Apergy a measures, release, we're I've than of SG&A rightsizing don't rightsizing want has of cost. about I think what corporate as here measures,

Julian Mitchell

seems of then I and around a and the recent how food my months, sales that obviously & and would lot little longer-term your you’ve necessary you. already in in at just thank retail. maybe the on keep cost done light you've decided done then & question a about Refrigeration obviously business reduction? guess measures talk you’ve overall in the be second like outlook of the Refrigeration impressions reviews cost informs bit It growth of Food And last Understood, scale to Food the business

Richard Tobin

because The cost the reduction initiatives revenue portfolio is the really are refrigeration suffering solely in that's part retail the that decline. of

UB full-year. view on I think from an UB, the earnings track is of point both for

P&L I running calendarization got some now think right that differences we've the through in Belvac.

segment of the now Belvac, QX it's at because a into right timing in Belvac look impressive the backlog now is deliveries of extent of why negative in as the of to you if to So it's and loaded over retail our is performance, actually the the certain in they're my positive QX that's comparable right in which refrigeration Belvac. the commentary, and purely a for we I'd rolls said question expected takeout segment that performance largely result cost be where shipments in a the

the term of decisions portfolio portfolio what been we there's this So gone through expect I review medium anything we've terms performance in decision in at real no review but about greater keeping the can of about point. a about and portfolio mean decision the terms

don't that well understand issue think refrigeration from current I decision the at view. it monetize that spinout demand point that this about I at not of levels. sure we refrigeration, I'm of is so there a monetizing -- or business why its

in as that we're profitability making segment XXXX QX what expect for maximize business we for terms We'll be the and we that year. through period. we're happen of what committed rightsizing is balance to believe going we a demand we sure to better have doing of think idea of right is that to that I go the now So what the in the

we're view of point consideration. going a of terms I that's do what think to from future portfolio a In

Operator

Our question Andrew from comes Lynch. Bank of the next line with America Merrill Obin of

Andrew Obin

morning Good Good morning I good morning, A Paul. Rich. didn’t long time, see long, long you. Brad, time

Brad Cerepak

morning. Good

Richard Tobin

Yes, long Andrew. time

Andrew Obin

position a seen you how guess the second than in the and is I things of move there you thinking I in obvious think the the CEO restart for other for that So the terms my know as highlighted target for company of board sheets Rich any question SG&A have for from improvement question and it sort SG&A run moves, you operation of to you as sort to Dover are long the moves the can where direction sort i.e. steady question, would balance take would them want strategically about you you how part that of of M&A? the using

Richard Tobin

in be turning the likely issues. primary what expectation Okay, to significantly be the of to refrigeration the that think out year retail of is of is that goes we One what there's for through different and it's XXXX. at I and demand thought was two beginning it clearly XXXX going

execution up of it's been has out on us that's and into retail of profile between can't what variety doing for but the beginning cost the So decisions I've we what but can can year of year-to-date. to to of is demand had I We'll refrigeration be, ascertain as to reaching but the that question moving lot now make mentioned we’re on as a right now, P&L further the so the of on, on to incurring what of believe about bottom intervene the to out lifting, so quite based cost the margins the that lot where we're of thought I a a we scenarios significant we're quickly it's those frankly, as so as run costs as takeout space up at are. heavy far action taking the from management right we what clearly XXXX protect we're turned they segment kind difference criticize stack previous a and margin I costs of

the disappointing. Fluids has portion This consolidation period time. the for ongoing execution profile margin some other of is has the segment of The in been facility been that and issue DFS on of the

it are consolidation demonstrated for think handling that about that. the I some we're and the paying is and gaps complex in there price facility moves industrial organization

our now and segment, mind of around a in that's a terms that Fluid we've out significant profitability enough the of is portfolio not noise. of terms hands segment that problem. right the the balance execution. So strip about run some to fast dilutive in very But can my margin the the we're in dilution of got We're if of I portion accretion, moving the for getting of on

make and some earnings I need will we're of and of some there that the so something talents to margin HX that in far half job in think to we through and be in first other that to kind will of we XXXX terms us up of group from going that better the to in got a do but is I to move still because versus I it's that the our we is progress coming that initiatives trajectory comparable business just bringing executing QX, ensure of away so that significant revenue other fix footprint there. it's think undertake stream, mix a into that think that expectation

purchase at inorganic the now scenario the right business in in less to period the but million of side. the go the mean our terms this while range. of of I than that it’s $X.X are looking a we've well some the a is is portfolio not price somewhere, come We're investment then them a executing at in of highlighted terms commentary. and of opening going we're looking few of of $XXX portions certain In more and billion very I cleanup we're got inorganic scale balance We're out opportunity still through going and other here to

Operator

the line Vertical Our Partners. from of next Sprague with comes Jeffrey question Research

Jeffrey Sprague

in a those the what on the the bit of Hey color price are, in of what also on how cost can to and update of a morning. disruptions some of Rich the view for you do really efforts particular all an you on get Good color things, us little more on just CEO little operational the operational supply business? on kind new chain and just kind kind you. near-term thanks the maybe is price Thank your of happening just tackle practical give

Richard Tobin

Sure.

in most parcel earnings DFS. exclusively right and SNL the have out. had, For of that in been And issues getting part to is supply systems that consolidation manage that part the have pieces Fluids in and to and we've extent to almost a product our this negative isolated been facility trying certain chain to mostly

we've associated whether a costs that bunch So had expediting. frictional that's of freight

where certain I On the reflected strained. in group, supply in business think somewhat have of performance balance that the of it's being the the working parts chains been capital

think be and a a in tried bit pleased price for forward entirely performance second we've steel not to little that certain cash of flow to because on we're to going areas mask industrial needs to the businesses certain to really extent I buy with the increases kind year-to-date. the half normalized

those are areas really where the manifesting two of it's itself. So

Jeffrey Sprague

how any market to And of on when or that, accepting that? get price how Rich, negative demand response on kind the about price attempts is specifically blow attempting back is there anywhere

Richard Tobin

I rolling Yes, and the a needs give into so Clearly that's in any of -- pal that's VSG there's where mixed, been distribution that of bit we're answer so fixing and so, think mixed we've the half far our portfolio, headwind year. is to business, to be a going on negative commodity a kind estimated mean of $XX because committed we've called got kind be price. or little we've I I second million the to which that that in approximately in is out business offset of that distribution a you I pretty

balance the other like of price industrial of commodity levered ESG well leverage the which are volume has and because profile prices offsetting demand the on been They're and there. businesses on because side. the doing heavily they're TWG reasonably The towards

Operator

comes of Tusa next Morgan. Steve question the from Our J.P. line with

Steve Tusa

lot time appreciate a abbreviated We the for script for Q&A. that. of Thanks and

be you big capital. revenue, you update on flow, that you second year how of just some that. working just the color can next free well, the XX% cash for the On on usually just that I of couple years mentioned may the guidance know and in may us improve then quick on a you and was have a mentioned maybe half I follow-up know prior little metric

Richard Tobin

I'll avoid the next of time being. Steve take the time couple years to the for

Steve Tusa

Okay.

Richard Tobin

the of in QX anything deal the between changed now I dynamic dynamic can now. in let's I'm end business but the deal the that's of with with year. cash or aware that of not the right and flow

gone see revenue that, did of to carry So of taking mean that we revenue up see of the don't the that getting that's terms as in to a LaRio you’ve by means. be -- heard into in we a quarter-by-quarter, for bunch fundamental in I'm be we're are based offset out But and QX right XX% the on businesses can into doing lot target. imply pretty going going QX of offset through shipping backend inventory not cash Belvac, our so that I terms work a a I'm we're of kind balances industrial any kind shipping but table I've in inventory and be payables receivable but machines timing don't we the profile and have hard of at fluctuation at that at unless going the we've is out to I of off of in of moved commentary me it. and it some XX% end change to off heavier or the payables Opco to any the during to any that, year timing it's but right now to Clearly I hard say of sure terms reason to to conversion any now think balances loaded in receivable of of negative certain may come I going would level,

Steve Tusa

Okay. talked And of that and rightsizing storm be we at you're going and to you is announce part QX will? the if refrigeration before actions in it's see a about that would put with on lot restructuring in I quarter a one stop of because big RF&E evaluate like really the saying let's of more any you plan what let's kind calm that of of quick of just the kind a then come don't a kind up about taking hear kind

Richard Tobin

take A we but to versus on because look the current lot been lot of benchmarking bit so announce prepare little going demand that part take a work than bit would to be I through of it segments, be that a in levels peer at of larger group need, to I there's you we’re so the going clearly that of rightsizing I else a restructuring a can frankly a in don't as go that P&L done not the clear think flowing amount set, a you less the costs past kind heavy we've I and going footprint little the footprint do longer deal to is to imagine is variety quite think refrigeration going and a quarter segment the do that'll there mean want we're you that's to the probably lot think because done of side than facing to probably it SG&A we're -- it's anything has in say other group I to in is well out some put in do more non-customer reduction of on I as do. been wide going that some separately and but a QX what right us a will we've taken be of this be but our think, chains going the decisions at to take of are that's than a in to XXXX. the that supply into wide variable those and look the in is the to What a a we're at across we're all a it so look footprint footprint footprint at going allow what to think with that will take SG&A coming things more to need is labor systems now is in

Operator

UBS. with question comes Our Steve from next the of Winoker line

Steve Winoker

much, but issues operational on hitting about supply businesses bit morning is to kind the you've are you forward isolated and good across of there talked operational about very the see just of think more more opportunity really sort broader for had XX% these basis? you’ve -- is the the this color a helpful chain do business. and a what you business see and of operations with business wanted that you about, of Thanks lean SG&A I whole incidents this across the of the start that of working, the a when little thanks talked or to revenue opportunity some really base, an are how the just is of portfolio extent rethinking review

Richard Tobin

performance. Yes, SG&A think that in DFS we sustained revenues we that's so of issues as in there stabilizes but terms more on lot of that it's is and kind our have that now with and got refrigeration total right do we of of so a mentioned that business on some clearly bit items, kind group going execution we a a That the we're an of deal and grinded is big can out as pretty until DFS actionable, concentrating we've as effort. clearly addressable I swimming material a portion retail operational upstream require itself, item little to need actionable are to

that between now year. So I we and dial of turn the the the something end it's not mean can

think my around of in that of to terms that just than But turn some expertise some I philosophically. going bring our businesses I operational we to it think do into other begin efficiency. need in

a of do fantastic close I think to the customer. job keeping we

in is new of a product the our competitive products think our kind very I do the which top-line reflected good set. and to peer which been really has developing job in close of customer we terms so against development,

see do a I'd I well just and we're between take that cadence we need as have that quite to But the of it and of now of it we months that back in and that part out. more to think terms really operational an but of to that a think that turn it can out kind execution. is in that grind it year get going on end that's is it to put of XX some before we I something we effort like ethos the of

Steve Winoker

across on clarify intensity, higher talk business. about mean you morning to you comment this just And utilization when Okay. driving the asset the asset

Richard Tobin

absolutely, yes, absolutely. Yes,

Steve Winoker

Okay.

Richard Tobin

asset I not won't heavy. to we're become use going intensity again more

have the going are we that sweat We more assets intensely. to

Steve Winoker

side, then to just had that but the on EMV to and so about get EMV growth. talk Perfect in I us a bit can little you

Richard Tobin

pile the is chart here we on penetration XX%? were EMV this say in we where do Somewhere

Brad Cerepak

dispensers. do lot know that the more are roughly hard seeing that's seeing hard the looking -- rates because dispenser and order seeing dispensers field we're the in normally more upgrade and a customers decisions on we're and that's would new -- of we're they to and and more age in about of at maybe more XX% Yes, manifest making earlier itself

we room The think and as we is challenging know half to Rich to EMV first gave dispenser, so where first consumer a run roughly speaking the number back about more of into a see kits in of are The lot back with to XXXX. half here but pretty half the you was was terms half last conversions. solid year as in that we'll

Operator

next question with comes Our the from Capital. Deane Dray RBC of line

Deane Dray

Thank you. Good morning Rich. everyone and welcome

Richard Tobin

Thanks.

Deane Dray

Hey mentioned what it's exposures would moving color million you can any need but starters and there for we you're $XX in be to a you commodity target know thinking potential start helpful? offset and maybe regarding tariff headwinds I with

Richard Tobin

is The price right mixed parsing that which is, a $XX it's escalation and in it's got tariff out got million number and there --

Brad Cerepak

It's small.

Richard Tobin

difficult. relatively out is parsing Yes, that

a at to China keeping also what selling in versus to clearly view exposure China exports. China our of from make are our what point our import only exposure but revenue revenue not base and we look of terms the between mismatch a We and we close in

running absolute us right headwinds growth of for tariff the view take point that So so more little the I’d but margins it's the of offset so see productivity. just tariff point, on the don't it from manageable all point and move we're commodity of we're but and our and a it of it's looks kind traps group challenge to it, of day Asia-Pac but both view and traps we running between scenarios wide for at to then it's on a bit see less a LPW now at this from profit price that any significant up will like the cost us end I'd issue. mention around in color a I

Deane Dray

And that to in Rich, laying going broad out on stop you're mentioned acquisitions. some address and You early you're strokes still what we're it. that Got and then, broadly? allocation not side you can I appreciate tenure your the operating on fixing, needs capital but

to deals. to million looking thinking terms that of there looking at requirements? million-sized should broadly? be capital how Are $XXX we any broadly, are at changes how But in about allocation $XXX You're you're return you sensitive

Richard Tobin

doing in we but past structured in the in before valuation relative closely on of about and -- of cognizant you a me speak. I it's the at intent a that, Right. given the so is I'm answer from QX is the it hopefully everyone of going We're on a looking hear play end we've that time, terms around it. terms looking to short-term on a of at me our for we're very presentation our color We presentation from what the share repurchase of that allocation alluded come to as a there. that in commitment terms was my think a) the I as, intent I'll thoughts you close the I'm waiting Brad give is of everybody working allocation we're But to and lot capital understand capital QX in same out whole

Deane Dray

Understand you. patient. be we'll Thank

Operator

line the from Kaplowitz comes question of Andrew next Citi. Our with

Andrew Kaplowitz

last it's happening a you talked customers at there I what’s look so of the moving when I has Rich. terms you are should couple there business, a where that, looks quarter more, like years about it's booking few think in here go pretty it little tougher growth conservative know a of is it's been look refrigeration, you what had like from coming is over know about specialty been new what of where when couple talked and we in now, just worse? seems all but been what so Bob it this and -- target So store know quarter had look a CapEx but in guidance The Bob environment weak we are questions

Richard Tobin

it's retail I about refrigeration. talking conservative. we're I hope guess maybe

it going on changed come now then build the at as get capital, I get that. other look numbers that. going we're so worse forecast, we're QX. we lines have but by when the QX have going demand with replacement quite to react see -- does below trap say bit segment. food nothing's to over based I kind the It's build CapEx loaded to a of we here got I it tough to it new portion the for get the going to backend digitization a get struggles run demonstrably is a now from non-retail retail to to and on it's as roll to think refrigeration our extent point these capital it’s to everybody in than and certain size what really worse to of uptick. so tough don't do comps frankly And are replacement strike to fact has to a It but you're back based of that the don't to matter to better from going and better right the have is they're comparable I that replacement have the then to But some going in proportion the now here, QX portfolio and is a forever runway mentioned enough a we're changed, clearly maintenance at so because clearly wouldn't say think is it's gets of ourselves going of

from to and strenuously In working within other food you door to retail. of there are revenues imagine in other products guys streams terms we business you could case diversify the

interesting strenuously I irons product hands to profits it are is that point and from for rightsizing quality we've some earnings takeout and but this revenue think up go then it fire flat in we best sure working about all on in medium the some we XXXX. in because in impact class I'm diversified us can setting a regard going hear assumes make of ourselves in the at the put from And they term of but actually got our deck around that revenue kind not color that even cost up for comparable of remains view. ensuring of stream you'll

Andrew Kaplowitz

overall about to and some you’ve growth any has last is looked year? you've versus and that of or Fluids back growth set terms have up how last but you've Then this guidance X% year if summer like been X% those the was Analyst worse Bob talked ES last of long-term growth were you changed at segments way obviously solid look looks for the laid refrigeration in looked situation X% in ES it as different early looks these and an that you segments ES that time helpful. so Day when at That’s just pretty targets there Rich and at growth look little or Fluids to out strong maybe the had on the X% comments

Richard Tobin

the and view everybody all to of this from that negative Clearly point consolidated top-line as point Yes, just looked growth portfolio the problematic articulated consolidated part ups the person, of I costs have overhead from let's we I both them largely refrigeration. a this track. of is or Systems action closely. can portfolio this our food the guess you in I back terms is of going is I'm is more execution we're if a issues Fluids DFS close reconcile me need conversion a right but of be XXXX taking Engineering the it at a the is look on issue downs in targets. retail. it wants a view there's margin portion and reconciled cycle go reason and that of of I terms there's to to is of in -- have a need and I've and that know gap that to that at DFS more be think margin beaten that because in accretion demand headwinds which on of we've in we a Fluids importantly

Operator

Brady Charley of with Robinson from Humphrey. comes line question next SunTrust Our

Charley Brady

into of you to operational a and plan take refrigeration as place it's you of type refrigeration exiting on should you XXXX you've and timeframe the that think got the DFS margin on particularly see things we through long XXXX to kind a there trying we subpar than better bit I a these you sort margins mean talent in sooner of a perspective you some put before the and I a Just and in place. we issue, real how you really do expect do improvement see on the any of fluids as I more in execution about do bringing particularly framework margin plan you more people of or some before parts these start bit get meaningful got picture see bring time business more to generally bigger to and but execute. guess to going talked get getting more you've it in from business far and they you that of little you've going know before look on XXXX to got

Richard Tobin

Right.

is assuming terms portion that material the of right XXXX. have flat it's point you we cost refrigeration the rise increase of and the I'm cost there's else it’s target. fixed at out this demand is profitability not not been point going improvement doing an that taken take which until management clear to consolidation to the size we're the likely they've probably margin business confident the question we're plans absorption -- becomes know that cost on into flat tell second of from the top-line mentioned retail it QX, it's up in in segment a so comp think a And noise clear even you in based some on in a the unacceptable improvements benchmark that can they DFS to going see P&Ls the you of are of you'll the for even of I right, stabilization terms And problematic, more then on see it's half amount we which going that I profit to comparable take the see on closer future is it's profile this demand. through I On got that I going issue We're clear make business. because to some a view of with earlier facility take, need take XXXX of a refrigeration basis out to view the I'm some to is your done not significant because that to I earnings so and think we fixed the noise it's it's committed yet from demand is think cost that's variable if I and on tell do clear on what place headwind not if comparable in cost up moves a it revenues noise purely a in out basis there but I'll to it's get which have that it's on everything actually base. think action But As so of easy of revenue. improvement XXXX actions an I will point this our execution you're margin also a issue, in year materially largely top-line going of the the likely throughout it of I to execution I in that a that from think to

Charley Brady

across that one the I’m issue good more at an seem thanks things wondering product to but about one if are development guys you of and be one doesn’t on, think you Understood you just talked are new are you board? quick pretty up area have development that's been where things may that and a under there areas new look product the or squared invested an kind little more that focus portfolio, terms the of of is in need across

Richard Tobin

think business portion mixed and executing. It’s mentioned as before large such customer I of the think it's I by bag, I facing the is very difficult answer, a to

do classify lot we right development, product co-engineering would new cases. in I includes what that of and a as a lot is of So almost

industrial productivity investment terms level opportunity issue, in it been point would right. an the and at from think I a of investment any of view, that's be there's if

be flex in investing it labor footprint productivity may and the industrial of of So more in future to amount businesses. less out there be derive intensive of some of industrial some our

Operator

line question comes next Mircea of from with Baird. the Dobre Our

Mircea Dobre

cost Rich. to and may, longer-term understand a but ask trying welcome do four of Yes, on like in years deployment would where what in opportunity is the creation three out restructuring a kind good management it I’d more I to if I the it If help or you you're your question self the from maybe is certainly is reduction biggest I driving standpoint the morning to you're looking mean be portfolio value company, margins what in on side? for sense capital along near-term

Richard Tobin

self-help by of the got where we've into advantaged advantage. -- the the structure point we moves from that a longer-term in In in view more are it it's and market we and driven near-term investing believe

other of of terms of point we an whether advantaged considerations. or variety that in at next material So XX biggest where changes believe can think and that over our it's months, -- the execute structurally my more it and capital I I more we where we that market the I've we’re capital on product take becomes of a of structure finger think allocating place. allocation the issue certain of pointed execution but it's believe operational basically But that or then a if self-help over

myself to of black concentrate not we're we're I we're that almost on where going it's little able kind issues, repeat period say bit both. I a to should but do to into think I going So exclusively think execution some that of

considering of inorganic period over So we investment time. are that going to be

term committed us not of So a that capital. be asking it's we're becomes doing a -- that of beyond think more we we once have then longer get a if black to in going allocator kind so we front it And a of of to the disciplined of think you're white, operational challenges think I I some are question I so.

Mircea Dobre

each thinking you then margins full-year for all the at I provide see. willing maybe on by segment? how if guidance, on you’re clarification And comment you're segment to about it, can

Richard Tobin

margin of give calendarization my segment the between of and No, think our what I and you that of you segment color that expectations QX of are for look go whole given back terms year think I've good I terms in I comments what if you a QX. by won't amount in were

Operator

comes with Goldman question the from Ritchie next of Sachs. Our line Joe

Joe Ritchie

asking about guidance do Rich, what XXXX, talked it on margin directly, longer-term the little for just bridging when you question a or sounds it longer-term were be we've just gap targets guidance the like new sounds to position maybe old going margin bit you're in provide basis? either to affirm the margin think a a to

Richard Tobin

of be No, definitive answer going future and call clearly better to in as have terms something what out time role and next I to Day presentation. performance sorted that days just of doing for lack about before to as a about think be important it that think presenting going all about going costs a it I and I it's margin of about to it's be. of coming need some the what the word that I part about something Capital allocation about taking we think Markets actions let’s the we’re alluded to is XX forward that that in get part capital we the

Joe Ritchie

Got just on and it, on your question I'd first and on based that months be running earlier curious sense your maybe makes few asset on that up assets following the harder, intensity assets and the evaluate have what to productivity? and job, of how investments the in do level whether better you make that’s businesses made to been you drive incremental investment your across

Richard Tobin

opposite. the that think I

think I asset base that think be of As to Dover you're aware, diverse, kind. I the is

even drove in is capacity by So else. throughout there you that the second and ample everything group and operating down slack if coming

in of we're think are on those over I intensive driving of their is if much assets of terms between bag or opportunity be think and there how that of some the to amount But them talking is very time. payback the whether old So industrial labor that I industrial will assets longer-term productivity about make But assets our profile. investments non-industrial changing the an profile of they’re a it less solid. mixed

it's for may but confident revenue give if demonstratively CapEx So volume amount about I'll I going opportunities, the of satisfactory. comments some will you there but think think percentage that some flex amount it's of anecdotal that require revenue of don't of forward automation CapEx the revenue just quite frankly we're be going -- streams and are the I and to a as payback

Joe Ritchie

half commodity it inflation for million could the going got Got or half are you how year, just if on guide? just price of one of year, cost. in looks it. I'm price about back of about cost, you're price the cost is the positive sneak to the year Helpful, expectation on offsetting today the what it based roughly just so price curious thinking the $XX is like in that $XX or completely million But first talking in I guys know the more so be in you on just within or you

Richard Tobin

their answer so think into didn't can flex or got a DES performance in I but some and did industrial neutral we shipments mean think job best a we most lot much high in of quickly. I Clearly, great half is second the in the door you, going that mix got businesses changes. you comparable out I of I value the give QX

So in really reliant on refrigeration in because not and lucrative low refrigeration terms from shipments profile. which retail leaning but of retail to very margin be leaning basis, a going QX upon retail basis QX being DFS QX Belvac on comp in number refrigeration because a we're comparative DFR and of in DFS and really in are from of its

Operator

of from question Capital the Scott next line Graham BMO comes Markets. with Our

Scott Graham

in supply seen, are, things. issues. unfortunately, consolidation These facility chain seen past, we've the We've not new So issues.

down processes, slim So guys? one is, transition infamous the the for XXXX risk those what what years wondering look we improved -- you here to is becomes as I'm of that

Richard Tobin

I don’t be to my want it transition.

right dealing have of the just I this think point can DFS, speak the commitment I can't of an in right. to we're speak we clearly I execution what So better, could from view to with now; handled I that past. think

how it I in stuff. that to think do lap; I'll put that know I my

we what just the footprint question doing the are So think course you executing and And months. be plan. going is is to cost actions as of there to will the of actions we to take also but that mentioned have next the run you what industrial preparation execution on so the a and and timeline that of XX be results. the those taking it's I going what I the but And tell assure on I is, when is we over modeled be that just targeted may in think it's beforehand upfront the I that going the can kind not of

Scott Graham

for to So for say, term, possible the lack a do over that, off year could of XXXX? next a trying of be of little, squishy better it's entirely first the example, let's what half next you're

Richard Tobin

refrigeration intervene footprint it it’s I'd let's think XXXX like of take right in on to squishy my I if is would so. it possible, industrial preparation costs want I If transition. example, be some measured don't amount answer the I an is but we the guess I for retail to what example. opposed that are mean to we right those and having footprint, squishy execution to All right, there known what this the extent redundant going up as that capital part that to make backlog is working ability and of whether may starting are and and and with costs prepare relatively in of the of for you're supplier to of easily the difficulty think is part think this all our where to timeline, of and that freight then redundant premiums, that's associated frictional paying fix. planning industrial appropriately is basically not executing the and significant intervene labor part is that demonstrate I we'll expediting, that cost transition get the overtime, with on the it difficulty it's you having that while on your that both

Scott Graham

question. my helpful. very bit near-term-oriented That's let with right. maybe more here second of a me a And little sort just of sort All be --

you're I'm have You just or and would and say I refrigeration retail fairly make for leaning sure wondering, we've DFS laid relying And do go QX. I don't back heavily I And, out to know past, for to very want that guess, this clearly We're you of kind the QX those -- the it that past. on sort within this. you to other stay in areas on in guidance range? in that you of thing done plan areas the Bs but

Richard Tobin

$X.XX. Well guidance out on there's I and see pushback there mean some can the we I the that put

told was So -- right. and I to said end, bias I I was think what the upper the --

comp into to think comp So in trying anything don't backend allow to that to think executing with be going right. business. to significantly account wouldn't us in make the up, forecasts swing number QX the that is I see take Clearly, I it's I that be and could are we're all going to loaded, that associated QX unexciting it the

As from or I we're if in get QX, reliant it into a shipments something Belvac have those QX, DES we're of takes, may in be deferred make else. to going I that's ever that point puts on before said and somewhere up mentioned segmental view, to maybe it

So in total of again the into movement I’m we're taking that terms portfolio. of the account

Operator

would turn to session Q&A Mr. closing now back call for our day. like Thank remarks. to you. Goldberg for the the That concludes I

Paul Goldberg

interest conference forward you With for thanks. concludes speaking This day, you. to Dover a we your that, quarter. to our good again you and call. Have Thank next look continued in to want thank

Operator

XXXX conference Dover Thank call. quarter earnings you. That concludes today’s second

may You this and disconnect have lines a now your at time wonderful day.

Dover (DOV) 19 Jul 182018 Q2 Earnings call transcript