DOV - Earnings call transcript Q3 2018

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Operator

Good morning and welcome to Dover's Third 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] As a reminder, ladies and gentlemen, this conference call is being recorded and your participation implies consent to our recording of this call.

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

Paul Goldberg

quarter and and Brad Good to Dover's third will Laurie. and and on on with earnings financial our operating third outlook. performance begin Rich you, call comments call. from Thank comments quarter Today's some morning Dover's welcome XXXX

call then for questions. open the up will We

started website months. analysis following of adjusted our access reflecting follow-up. call and adjusted dovercorporation.com. our EPS code in We that to amortization, this measures be uncertainties. limit and and any As a our investor anticipated be statement. for and playback portion I'd aforementioned everyone Reconciliations associated a certain yourself Form referring that you note offers Dover through and easier need courtesy, is of included materials. the reflects are comments contain intended inherently those supply in with differ When release, question you'll to today, the believe this get can and forward-looking guided more that of adjustments today that results other subject factors to providing we on guidance facilitates results, your like list better to that will by (XXX) to to supplement are our audio comparability be a understanding results between XX our from for rightsizing amortization. our website and supplement of EPS core exclude accessing to forward-looking cause presentation caution Dover be such EPS that supplement XXXXXXX. XX-K kindly one November The statements available could number acquisition-related XXX-XXXX. before This presentation to peer operating investor call Dover Please in adjusted their may acquisition-related with archived our transparency for basis We costs are on earnings is for will remind telephone our ask which current after-tax three replay on the GAAP we everyone playback, And reporting companies. found

We obligation any revise over can And information law. required forward-looking update would also except more found. your our like to the considerably publicly also undertake call that, no or website with Rich. to turn by statements direct I'd attention to We where be to as

Rich Tobin

X% at Good earnings were per are across respectively. solid of internal remained billion and comments up for and and of in started quarter Engineered this Bookings the demand $XXX at us was earnings morning, you, share Refrigeration. let's up end revenue QX. Thank adjusted than forecast excluding $X.X of offset environment demand the Thanks with our largely the earnings get line X% Organic in on Refrigeration Slide quarter quarter joining the broad-based weak for X. Overall the more portfolio and everybody. Food was Fluids and end trends on Paul. and at Adjusted conference million our the Systems continued XX% the in call, Equipment. QX morning's solid as

guidance. tougher our to footprint the Fluids this colonization at conditions quarter and fueling in with Pumps as Food QX quarter volume into Equipment solid performed and than our a transport. incorporated residual proved our buffering Process be and Systems previous a XX%. slower expected and the expected Refrigeration we've in expected in & current the results Solutions of Systems result costs production Engineered in margin despite full-year operations, Engineered to European strong as We relative remained at demand shutdowns scheduled conversion,

us, as business to impact tax quarter up we Food the with projected coupled our Equipment flow-through segment Refrigeration conversion the offsetting the margin of rate more cost than issues Fluids negative by behind initiatives the improved fourth in quarter. and our and higher of operational driven be stacking get Our our for

We which will forward presentation we we're activities, the with in our QX. executing quarter, during footprint in which our we significantly rightsizing to that and the plans address completed have rationalization moving SG&A begin expect

As to have come pass result of a to of here of and to slides, share. we guidance tightened the the I'll back end the EPS above, segment top it further per range Brad our Brad? $X.XX the during $X.XX

Brad Cerepak

everyone. morning, Good Rich. Thanks

turn Slide Let's to X.

This XX% were segment conversion was Equipment. million performance Fluids. XX.X%. $X.XX. and tax As EBITDA from was full-year volume be benefits. million. a EPS segment in adjusted offset in and in by solid Engineered Food systems to between adjusted in largely the Systems tax and benefited reflected $XXX million margin driven $XXX EBIT is Adjusted and now largely results engineered quarter lower essentially EPS strong at fluids, earnings in Adjusted by expected rate Adjusted demand $XXX mentioned, and was XX%. improved performance The was lower Refrigeration our rate unchanged discrete a on effective was and

a in Slide more our quarter. get revenue detail the on little Moving and into to let's on X, bit bookings results

in headwind which of QX, billion resulting organic remained above comprised QX, of dispositions the in quarter. despite a tailwind Refrigeration and was a Third of from $X.X QX was X.X% impact in growth, of net of small X.X%. FX, FX X% Equipment. X% decelerated acquisitions. a was X% in Organic Food in a revenue offset quarter by headwinds minimal growth into

Weak on Fluids' and forecast. dollar-euro of Systems X%. US markets assumption broad-based $XX million Systems Asia and refrigeration Food was Equipments' offset X% equipment $XX largely drove X% fluids segment. can-shaping Fluids grew a our in the From reflecting million our and and broad-based was U.S., Organic $XX a using overall. grew Engineered From organically increased by where segment strong are respectively, growth Retail in current Systems $X.XX revenue. Bookings a a was driven activity. and Engineered delayed in decline $XX demand. million organically activity and Engineered Refrigeration perspective, geographic shipments growth our retail in We and Europe flat Of XX%, grew note, million market by and largest was up million bookings broad-based Fluid $XX grew organic perspective, market organically Refrigeration.

book-to-bill X.XX%. Finally, finished at

a $X million, earnings improved execution decline Let's negative volume the adjusted segment reflects driven X. growth EBITDA of by fueling solid retail conversion Fluids' bridges largely $X engineered Equipment on business volume look and million on The and Slide million mix. Food revenue $XX our other reflects lower top, Refrigeration on at better EBITDA Starting the businesses. take growth. and in in at conversion broad-based on

million and corporate cost chart; driven a by interest of bottom the improved or lower to lower primarily Going the adjusted X%, rate. and tax $XX earnings

Now on was continuing or XX% $XXX nine-month of our X; Slide free from flow earnings operations. cash million

$XXX was track largely line on expectations Third with million, quarter was in with last year. free and flow our cash

Of which $XX in was of year-to-date was We flow full is our In within QX. to million pattern. Day expect to the basis year, in our free provided highest fourth expect normal that our deliver all, million quarter paid Investor the year the of cash at we quarter which on of September. flow we cash $XX flow be the impact free range cash note, our a initiatives restructuring

by The completed X be it that, the in repurchase we October a Rich. to finally, year-end million billion the repurchasing finalized week thus of With program full first of in XXX the open share X; ASR back XXX after program. Slide to me let will market completing QX. Moving portion our million turn

Rich Tobin

Okay. Brad. Thanks

broad-based revenue, improving operating a to the Systems. solid with was XX topline quarter-over-quarter. put Engineered color all profitability organic out of eight companies Margin the try had quarter in Engineered in a some XX% some driving starting Systems Let's improved around growth of operating seven quarter X%. conversion posting quarter at performance of segment on companies excellent the with Slide with

equipment was as all Dover platform is and portfolio competitive profits operate in control increased market both digital performance margin CapEx identification and geographically of price growth Market average platform printing at initiatives, accretive modest the in environment. is offsetting which is demand of cost driven business to segment. than printing continue in Our topline margins. our which to businesses constructive margins digital had by environment. growth with by industrial the particular printing broad-based comparative large greater a the strength consumables, shipments to levered The positive a posted solid

continued higher raw from absolute rich profit less strong mix a despite continued Our through. cost the deliver product ESG having pass pressure results and material to during business the quarter

military TWG Our continued end to vehicle products maintenance to delivered dealer its spending. performance and constructive its we from the for quarter. stocking group what in down despite year service microwave strong of benefit beings European demand environment be margins to DESTACO and multiyear continued OKI, perform believe the and a CapEx-driven market in for margin scheduled facilities

Engineered Going remained into bookings for Systems solid. QX,

in and Markem-Imaje, printing exposed one, despite good and We to are product businesses our expect in material that products digital ESG. comparable quarter a headwinds ESG predominantly, Europe microwave mix be the some negative FX and to

Next posted comparative for slide. fueling majority particular transport businesses. and The quarter portfolio organic growth Fluid growth of margin in posting result business, flat impact transitory Consolidated contained dilutive segment segment systems with the topline be QX. strength the our the of our the the which with in footprint in segment for largely was a should largely of to fueling margin transport as some X% of issues and

below result single-use well outlined in in headwinds and exit choppy weather-related margin into XX% our margin the margin production growth Our Components costs while pumps we leverage, DFS volume of bottom of margin while costs direction for was headed a input components. cost transport period our in and objectives forecast as a the performance margin cost margin both performance expectations, period, imported did but we posted businesses right prior point Incremental solid Colder conversion and footprint Carolina of leaves in and us have footprint-related on QX, mix consolidation from of conversion costs the In view, be top time quarter and continued Precision outweighing of a during encouraging lost as had and our demand as we our in performance that issues. and in quarter. are the September our as in tariff are quarter the and topline and and the performed lines satisfactory, Fueling in still QX. well the North our was are OPW, the topline to at facility meeting control a solutions perform all for period connectors. in MAG presentation. that to and in majority result a process our and result margin incremental we quarter solid was all improved In us of confident PSG, pricing it were excess initiatives, behind in leading

businesses, line the we transport are some largely much to and improving their Dover decisions the level absorption expected note, projected particularly to margin Scotland, will in as by while to driven demand cost rates are the benefit to forecast support the from making our in initiatives. by we'll carried I quarter is improve fueling and to for of set for am in segment, frictional and XXXX from reduction the our improvement, in appropriate of facility U.S. Fluid be be the flow-through QX January remains Of component control into do, industrial costs. and stock in there performance through confident driven beginning assessing demand. outlook our EMV and operational the I've returned Our the our that Dundee, conversion just

XX% QX Equipment Refrigeration with of its and $XXX year the million. to had on and down Moving toughest Food segment revenue quarter the

quarter difficult While year. XXXX, Belvac segment prior deliveries refrigeration, business, retail forecast guard have for caught margin where another increasingly our in impacting have off and in expecting machine into are negatively we the our deferred we full for been quarter

into does nor fundamental miss as largely an are segment begins Retail of earnings full-year now in returns. margins delivering is modest in challenge from in partially does demand change this business. as segment. accretive the value operational Belvac Retail deliveries to unique high, offset forecast in the and bottom which Refrigeration a mix actions undertaken will portfolio as not push This of the the machine to significantly in impact add it to Belvac a business control Our additional of asset, but inherently the business in incorporates capable the it the Group, and year, decline cost more lumpy be Refrigeration out negative This XXXX, by

to improving to As actions the it the the earnest in in established target in segment we address we've September, is our the presented path to presentation. begun we that as footprint clearest in margins ranges

to expect the QX We continue in XXXX. project begin and through

initiative are in go in the Let's the release, as on that Investor planned morning's meeting September. we rightsizing press in slide, we we announced to progressing our next noted as the at

non-headcount well reduction the the concluding the and exclusively almost cash, As charges plan. and plan way our the force and are to addressed the reduction for we think that QX the portion and can towards in reconciliation you impact of cash in PLL the can cost I charges the weighted that SG&A the you charges the in timing restructuring do QX with of the deal Q&A. the of XXXX in see impact portion charge both into the see on The project projection of will balance of be of these plan we and converting on for what slide, Brad the we the

to cost year guidance, looking enter We press performance. these to costs in with a cost global slide best-in-class the in has our on structure, of challenges of the input next guidance, trade to our good to of my the release in our embarking the do which portfolio, embrace much but comments by stage order next to on Moving engagement good I'm position weathered to objective and an the the our outlooks in on been during environment deliver uncertain addressed backlog much to forward delivering operating acting I of Clearly conclude. of the and I've encouraged our initiatives are on segment year. there leaders deliver. the it. is QX full changes to the remains by That's we decisively higher which

move on Q&A. to Let's

Paul Goldberg

have we just can if question I one with before yourself you a to question, be more Rich. queue. will people in follow-up, like first to Laurie, that everybody, get our remind Thanks to limit able the

first Let's have question. our

Operator

the of from of comes Citi. question Kaplowitz line first Andrew Your

Andrew Kaplowitz

guys. Hey. morning, Good

Rich Tobin

Good morning.

Andrew Kaplowitz

see at Refrigeration. Rich, pricing Day starting stability in in the you Analyst September, you're some mentioned to within

was products talk out. us than about you'd you of presentation Obviously, mentioned coming the there, margin some lower kind also new Belvac most did delays of the have You today, in interesting but thought.

is you there? cost go it the into too volume the keep -- can with Can use XXXX? as So to you up call keep with still and you there can early declines pick to it bottom cost up we up

Rich Tobin

pretty last to that comparable the million cost answer XXXX. I Belvac we profits backlog quite the I to the Well, where is about think I just move that am the bifurcate that going returns revenue as Okay. going really and Belvac need worried on not us We're lumpy to mentioned, not there. That's into in between is high. headwind to It's business overall. on $XX and QX are the these The margin is year. volume about

prepared negative So we're of from Retail the shows On that the really but some on see but clearly with slowing to at to cost going least is the of last of of particular think cost moderate. pressure pricing seen what positive saw actions I can a has we of first basis in headwind the think that QX have the aggregate at call environment, into we we that backlog to started we're make from going the the don't control end market actions. begun control Refrigeration, data up year in I down early pricing haven't half to year. bottom, that that that

gets backlog decline seeing all significantly in rate So the than is smaller the year. of better, terms comp but we've been the of

data size cost now call from from to right it. going come and think to We're show bit takeout we and some. to project really full-year of is the the our decline of think really the say So going bottom, point that are a a down prepared take moderated I would pricing to at that's but really that's I market view, have quite but don't the move do the year has headwinds the going be that process decision-making a we're drive to us footprint the can what's going into next that to

from but year going that indicators 'XX I So much better fact going the just going than into be that we comps the the start I'm into worse in I when the XXXX. -- any that think 'XX, say will to other we don't takeout I -- think through it's that benefit getting cost doing it's don't have look,

Andrew Kaplowitz

into Great holding geography, us you across sort color it's talked some and then more is know Rich, the that maybe U.S. down. can of revenue Obviously, flat. We give by you Refrigeration company. growth

Asia it. X.X%, out obviously side of there is concern a the seeing into seem lot Asia, guys are there China macro and on you didn't like but

geographic in of about as have talk you the you maybe QX So go two the and visibility XXXX? into growth

Rich Tobin

is demand, overall, is not but the Look particular terms right clearly underground now. is North that it's we've in are the in overly kept the -- America seen in in is up. Asia portion the portion business market think it's demand A that to but different the the leader day. I China now at a the relative or the North exposure our of lot of couple of material, American of right the OPW tales end

levered are think growth. CapEx posting I that have good topline the we businesses

for some the close comments I think fueling in can release go that who's if press but of is systems you our of the about it through again, clocking double-digit quarter. XX go wrote some the growth, to through the I -- we

So EMV. to have to going that happen question what the of to begs

it's question. leave in I'll follow-on overall, America up North of CapEx a that So driving end But and our GDP to the is businesses.

sector. is the Markem-Imaje in performing I the just think

for it's So close X% to the quarter. was growth

those I the business clocking in that it's been So margin has in as excellent. mentioned quite well conversion and

Andrew Kaplowitz

color. good That's Thanks.

Operator

question UBS. comes Winoker of next Your Stephen from the of line

Steve Winoker

couple good one, just just off. cheated you a Hi, all. morning not Thanks because and questions;

you of terms So forward? trajectory you about What in the growth and EMV in there was quarter? going are how that what are thinking seeing the

Rich Tobin

[indiscernible] that quarter rate terms, I will during that describe EMV-driven think EMV I don't full on to QX, it up grew to prepared between XXXX but year. want guidance. the think our that view expectation our continue in X%. demand, however The units I we're to same won't into US is percentage be approximately put just that yet, demand going we it to going clearly next a it's be quantum but and is put in

coming, to we're said if my much decisions a it's trying to flex how delay inventory in is the inventory comments, as we get the make in So big beginning of prepared I delay XXXX. that be how much at in

Steve Winoker

at just their I from to listen up pushed the then And quarter, Belvac it we to backend as if it's at it remain. was expectation The will hear. to comments and back Good that well, because want and that go to follow Okay. look loaded simply last thought commentary was was time QX.

easy a then always they own of comfort going of on and little here what's large that us project it's Can one we for quarter level it's as a put more and why you in QX. specifically, So companies can of give out for lot push projects. just numbers for more sort our

Rich Tobin

pretty that get I [ph] have right. deferred. the We're we're the We into beginning been into Yeah, moving off units. of look large source did raw think we're caught and to had bias building some actually source some and the transparent. we deliveries backlog pretty guard The out

Now for is does additive. what XXXX an that mean

machines. we going these what say, it's to but look the think too I early I deliver had in pipe. are I in XXXX, is think we very We're big but that what to believe mean,

fact are they margins stretch the There's some canning structure changed that times beverage. a have be had retail and but terms customers So they something for is food everybody that retail mean, of that beverage on know got, retail you what that's rolling the prices don't on very in believe I makers some that market reason and would I called, that them that they lot the off a pissed themselves. the ticket what high as imagination it's our of of there is by over it big

in it think I of So fact but poor that think it that we've overly in should we'll I business that in a is don't that deliver good I it we sector already would on volume that, XXXX. and it think poor, doubly timing happened that that it's just I worrisome. had headwinds still it's expect is and makes the been have the a

Brad Cerepak

automatic the that I in would your slightly quarter. to of have timing to about would say add it's not later is think 'XX, We'll that. come just earlier, expected I January more back be this that, an that at first ship later in stage comment or which than than this to but the we'll on just

Steve Winoker

Thanks. really All That's Okay. right. helpful. on. all it I'll pass

Operator

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

Jeffrey Sprague

you. all. Good Thank morning

Rich Tobin

morning. Good

Jeffrey Sprague

the think numbers got of in of roughly of helpful. most If the Belvac Rich, better price missing little any a we pricing of and and just in little in counteraction term give with you kind upside we detail, about guess want about kind price dealing more I in what to color the that million takes for quarter tailwinds XXXX. of the there more us a cost. Can puts lack on and little is $XX a restructuring is you the kind bit color really think you're Should the of think taking? cost a here you're

Rich Tobin

as think in mentioned my as expected. that Group both we I performed comments, Engineering Group and the Fluids think I I Systems

Systems trajectory we that be clock the the think trajectory. that at knew made to that that year of earnings just is little because a comments going to bit that through Engineering that the you at if the the looked I in QX couldn't QX, fact some of balance you of light I of end

margin significant. is incremental revenue on that Now the having said that, still

that portion Fluids. a our month year-over-year performance, and of conversion operating the that's operating our forecast, It is well So full-year driven expected a the still It's it's growth extent. actually just DFS same performance business. Fluids, rate very but be of in the to of had certain is margin quite little the we On in story a by terms least comparable why year-to-date bad on any September it's happen exited think not good, means a we've bit at that the of of to by I performance. lot the that our can in

Jeffrey Sprague

think was curious. also I And

now of I Is in exercise. actually is footprint said thinking was that restructuring XXXX the think I more done fueling. a was you that correct?

Rich Tobin

been I P&L What never which all that was into taken year. saying the is largely We've went that of Europe, the The the first no. consolidation. footprint, around complete. No, the carrying been restructuring. of That cost the piece we've European Dundee through is

So that's last was in the where DFS. look rates I gory we're without into up getting September I monthly Look, our week. the up, is into significantly. absorption margins picking are getting margins, at and picking Line details. They’ve moved up

about So QX, a convert it we have feel to we leads into where lot us good that demand shape. pretty that's of September in the can we're going if good fact margins,

Jeffrey Sprague

Great. Thanks for the color.

Operator

comes question Barclays. Julian next Mitchell of the of from Your line

Julian Mitchell

concise of the forth, flow. cash drain nature so Thanks. the detail first I question $XXX been the And but the capital working in a thanks I guess out. cash or nine restructuring has saw first the on free for My is the preparatory million months, so on and remarks. of big

how one wondered expect expect next we should much reverse on year? better just whether I a So to should and that quickly that performance

Rich Tobin

that's in inside expect I to going well, presentation. the guidance to range. clearly out cash terms we that going but topline can on said we the And of revenue take going if lifting the our impact comments think his depend revenue to take get are I It's in some range performance, confident be gave that as restructuring, right. restructuring, for on XXXX we get the in percent we the think the September to Well, within that Brad to there, a of heavy we

the large So is working topline which offset again back building Refrigeration receivables on that. inventory enough are to we of capital, just pretty growth. not net much is

we've revenue on on our good been of coming side balance liquidating down is business. the rates some our pretty refrigeration inventory growth on So but because building conversely inventory

We are flow best-in-class not clocking cash at clearly.

going to lot be So question put we In that way. of that done, there's growth is we'll a we I once dynamic rates think range the before be we of September. through 'XX, in How gave I'll a XXXX. in start functions this but giving it that 'XX, to be for call work

Julian Mitchell

then sort how consolidation that don't one RFE, and adjusted around we Thanks. for yeah are if right get business? is this want you And year quickly profit be to to business may million back you more maybe then circling that just do savings thinking to in in think caught next to we about $XXX it, related start year, see the to that time or that of footprint

Rich Tobin

the segmental -- look, margin quarter-to-quarter. It's I did the not on Belvac to fact won't the $XX about other give some because year-over-year. than color Let's negative answer of the question expectation, be you impact million I going

The to So will are in to going footprint that not material. have that something be we overly optimization make up. begin It's QX. to

but I that terms the in you around of give its XXXX make bigger positive think that will impact color the when we in the we formal announcement.

out year that of we've the I think significant the through that right. a be of overhead fact business taken out that amount bigger positive is the going to

gone So we've we've been rightsizing as down.

large we'll and then there of terms the lot automation physical The and issues because in taking throughout with of XXXX, of benefit larger pretty revenue footprint is actual going are flat terms benefits -- take the of to endeavors in have the out. full-year We footprint. get dealing that a

Julian Mitchell

you. Great. Thank

Operator

question America. next of Obin from line the comes of Andrew Bank Your of

Andrew Obin

benefit morning. that Good on I with a XXXX. back Yes. in of have have you net you simple our everything QX assume just QX we of $X.XX you consistent in Can done is given framework? September and far that that XX, question sort said cost so started cutting

Rich Tobin

Yes.

Andrew Obin

on second still sort numbers timing so you restructuring of then in question of Equipment and the stand. those And So -- also talked Refrigeration Food still about footprint.

timing restructuring we business restructuring and Looking should in part I the understand at segment? going is sort just footprint way what's lot the think a it, of to to rationalization timing on that of thinking the but Belvac the related there that not about that Is the timing as sort the the in queue, well. of is just of here of was think, that was this

Rich Tobin

and Yes to that answer the question. is no,

taking out gone go restructuring you wasn’t there that costs as the in had particular because been all presentation in a lot the back and at revenue year segment If down. had look of September, management

So some that with is low of hanging there restructuring material. residual just of overly not There se. we're waiting in a any is per kind but actions, structuring refrigeration. isn’t along It's the fruit was there comes footprint lot on timing terms the

Andrew Obin

you Fantastic. very much. Thank

Operator

the question Capital RBC of next Deane line from Dray Markets. of Your comes

Deane Dray

morning. Good you. Thank

Rich Tobin

morning. Good

Deane Dray

I like inks in of Hey, and seeing competition use inks you kind nature on and I've I your go, comment in this inks before equipment. do own with make your think to would to only of your Rich whole your could inks because proprietary the heard Markem-Imaje you don't your

inks has So up come competition cropped how business? this in into

Rich Tobin

should I Well, been specific. more have

So about is our that a not of comment. That was was I digital JK apologize. Business part a printing. It comment

I was the comment margin it ink made end I largely at performance of incremental about and was which day. is the driven is the because by think consumables, its Markem-Imaje

of is inks no terms that of the -- business. side more So on issues in competition print side. on on the the digital The

Deane Dray

All reductions and you buffer about Are to inventory, the good like on reductions? question these And step a Thank what you That's of footprint facing questions the Okay build right. going back that,. and go some side some to cutting lot really hear. you maybe a in footprint for you're just retail about that broad then other about to avoid you're disruptions inventory as fueling to up through this?

Rich Tobin

inventory in two retail questions. more one, fueling. like Number different That's carrying actually would we're we than

very some year work of that growth right. chain, Some is in supply topline this based footprint impacted of fact but by robust, on been has last that the much that the started it's consolidation

systems. a longer moving of closing to whole significant you're to capital Malmo takes amount this Dundee, So of through transferring basically grind the it working and

it. happy we we're clear operationally. I with performance backlog. can about how not not is not The in question actually a understandable good comment but a It's about we're of So inventory much got made it's our pleased DFS now. -- We've right out we're

we got I here caught XXXX, want we end in entirely we don't costs saying we've of -- the off-guard. to to So should to kits inventory, EMV start about in consume be really shipments operational pace of lot going there. and we're can support sure able Right didn't QX what EMV in be carry want the of sitting we've don't we that in going sure for XXXX we that of but get demand that into make kind have decision QX make air the some is we're to and sure and a perform a because need there at support of to not got frictional but in off for place whatever expediting be now EMV 'XX to the be I'm enough demand that is reasonably we prudent inventory to

Deane Dray

inventory, buffer you practice How embark a on reductions? about these the as safety as footprint just

Rich Tobin

one, we I when part think the I we that would material do think of a be disclosure. Yeah when

Deane Dray

Thank you. Okay.

Operator

Steve next question Tusa comes from the of Your JPMorgan. of line

Steve Tusa

Hey guys, good morning.

Rich Tobin

Good morning, Steve.

Steve Tusa

within So the the cash assume range, a of you're bit kind kind bit, Should X% just to saying clarify year? it's free you're range low-end range guess of commentary little but a the a TBD. for the be going the is just we to I you said flow of what of this little

Brad Cerepak

get going can't I granularity X.XX%. the be it's you of in can I be Steve. it will range assume the down level to to say to that think

Steve Tusa

Bps that Okay. $XX to headwind? And be of XX just at of million restructuring about the clear,

Brad Cerepak

flow terms the cash headwind. In of

Steve Tusa

a just the on headwind cash margin. Yeah,

Brad Cerepak

I haven't made that calculation.

be I we of approximately of think expect fourth slow. restructuring would probably that it balance the and of charge the say XX% charge, would can that out I'd cash quarter

Rich Tobin

We over. also have carry some

$XX math. full than little of flow So to cash. million is million, Bps $XX do XX I It's impact want think QX the you bit about cash if year higher including the

Steve Tusa

think in restructuring would kind or or know restructuring assume up that I And of are service? you Okay. to just or quick, PID, some sales one any then on I stand PID, is of you follow doing related

Rich Tobin

day that more back center open you the from our has about part to digital with fact the transfer the it's far press and Boston. about It's other that of office Keane do release of as saw between some our assets and No. of

Steve Tusa

a Thanks lot. Great. Okay.

Operator

Your next John of from Haskett. of line the Gordon Inch question comes

John Inch

Good morning, everyone.

might with much the seems be but called as big to commentary just dovetail and this, around the It have aspect out implies just the that of think Is it's to improving you segment somewhere cited refrigerated a So to I pricing the may impact week as is case in and of because trying closer door bottoming. there kind a sales dynamic have queue. of not sort Rich not am your even getting as that to weakness? other queue of phase which new a it I remodeling

Rich Tobin

really has the Greenfield year or expect it in nothing's no Well refurbishment a on has did -- maintenance at writing been we've CapEx of build-out deferred changed. not a been lot The is or cap so construction done we not 'XX. build-out the and been year the new Okay. what of is weak, down beginning kind of that been of

end the at QX. the is rate decline the of QX dynamic has So the of but same, going into moderated

nothing So it's there. really

John Inch

of in Getting somehow are expect new impactful, deferrals or kind back? cycle? going that may a be for but sort industry we go is What asking why the context are question of on that's about normal that it's Is at that's maintenance still It the of would industry to new. while? this get this maintenance have to and something suggesting been troubles I'm it caught not whereas --

Rich Tobin

My we're right best Hard to now. guess right say is bottoming now.

worst 'XX in case maintenance spend the scenario portion back to flat it's up. starts move So the of better scenario, case

John Inch

the XX% almost of angle mix for improvement that's cause segment XX% is result? such that behind in in that contribution What's ES, to a off-profit there margins? a big to the driving sort drive variable number margins

Rich Tobin

of combination performance. good good and a operational It's mix

some we've headwinds volume on them and margins levered businesses, I excess -- got and think such, cost very as pricing done those that of highly well, of that that are products certain have engineered in are the CapEx businesses are good. input

John Inch

realize, these cut quarter restructuring, today curious they cut, some go third through Just is one fourth quarter programs, gone they are that as company the more the into through where can't they just last I'm you maybe your about when opportunities about? had seeing that cost you as some to talked previously the maybe Are set what's even started? expectations you out -- think opportunity that the feedback overhead versus of the you go much more they and we more sort -- restructuring this after more you've one as

Rich Tobin

little reinvesting I the cost. here can cost take is more think talk management bit the because I'm you about that What to out the too team easy, just these make in a have to plan businesses I belief place we that a while in take think but of us it's a to that challenge stronger. there's I that embracing it's proud the to those overhead not platforms costs early allows tell out

John Inch

very Thanks much.

Rich Tobin

You're welcome.

Operator

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

Joe Ritchie

guys. morning, Good Thanks.

Rich Tobin

Joe. Hi

Joe Ritchie

how couple that been So look little of over versus about pricing talk the how moving tariff-related maybe better bit has you're previous to next be and quarters? is getting Rich, a forward we it much like got just a two like it than this lot quarter quarters, thinking number the about that should pricing that

Rich Tobin

towards not materially better think overall. weighted and more pricing, it's mix much I It's price

large think in done that of and by we've that think price. well terms I I reasonably

uniqueness kind there better the product, operations lot based than others price. Some but on the of of is of not backlog and a

number. I cost is immaterial it's coming leverage more all think see through, coming little that but better price. is you a there volume price, headwinds, through element mix a there relatively you I of and of see than net mean

Joe Ritchie

the color so curious just recognize that following on I'm gotten on Okay. but a there's just additional you just like Are the little It guys, like okay. that's Belvac customers through All there? curious right. deferrals Belvac it queue, discussion, just based your like related if am are to any saying? the better what concerns? seemed had surprised I just bit Maybe tariff-related

Rich Tobin

a are own they of up footprints. dogs ends They of reasons, all their timing a There build-outs terms being are Yeah all different it in is of variety breakfast. rational.

-- a out I the there I little lot certain of -- variety of is got deliberate the volume bit to this plans. of making an that in volume their think system, there and you've which a people is own CapEx of element in more terms a macro embedded kind noise international extent. of It's been think some that's is of

the think in I noise. overall, but kind are up that it that of some think projects macro caught I of intact has general

Joe Ritchie

it maybe right. the $XX through rightsizing happen right from restructuring benefits Got XXXX And this can if you that call the clarify have from just in so it. to investment the it quickly coming comments roughly million, I Andrew's year, going now I all with earlier,

around So $X.XX, the be right? benefit incremental that should is

Rich Tobin

and Well, of here, out picked round I of it XXXX gets XXX said up was in right. the that's XXX a gross right XX

So it's rolling rolling on it's -- a XX XXX. a

complete. of SG&A that in headcount by right percentage get it a back say a and tracking about is if of along. at balance headcount you related, the that to we're of the that is that kind right. of that's I is So extent part substantially The certain go look 'XX said you the is it we're broad-based the consumption 'XX presentation,

full of effect the So 'XX. that is in portion

Joe Ritchie

Thanks Got it. guys.

Operator

the comes line Your question Coe from Wolfe of Research. next Nigel of

Nigel Coe

Thanks. Good morning.

about quarter. lot X.X% your back go decent. is price? calls that to pretty pricing. number Is which At Just to comment previous the a the mix out pure it last that It's Rich pricing or is price better queue than certainly a

Rich Tobin

price a price right, net it's but a pure input. price, a Yeah it's it's of pure

Nigel Coe

Okay. pull but off, is not I'll bad. X.X%

Rich Tobin

mix. earnings That's That's That's for price. pure the not thing.

it's pure number. it's side, revenue the net on On price the EBIT side, a

Brad Cerepak

up what costs better too. Material into the are it's going than As slightly quarter. we expected third slightly we said,

the way So think were puts in we us about the net, it the I net before. same is position That's it?

Nigel Coe

some a run is during that that increases fully it really, was through loaded? XQ that rate the is price quarter better X.X%, that from good the X.X% question my makes than is Was So that here? came or

Rich Tobin

No, seeing going and think quarter? that's businesses businesses, cost for a while the like stable have our because into in have I good been added a rate fourth which the run a and certain momentum higher of I feel good pretty input it's we're

Nigel Coe

made then comments, Rich, small I which interesting. And you thought helpful. was That's Okay.

those going Did did XQ. I was in stocking saw some that right? I then but you see up you Europe mentioned think quarter? You stocking, during the And think dealer in the mentioned pick weakening you into that broader dealer the just sector, I

Rich Tobin

that Well, look businesses goes through we've the cases are certain revenue distribution. got in Sure. of XX%

see really can't you retail So customer. the

dealers So our the at day. two of are the end revenues

bad is thing So stock the stocking because based necessarily a of not our demand. their of on a dealers only dealer projection fact

of we're TWG overall of have pushing be going and smaller So that to we're businesses the and OKI, worried that kind into to about about the for kind dealers the like talking that. I pay we're price some wouldn't of

comment some positive it's that think of of through sell I more distribution. our a businesses of

positive on hands trying their is we to make. network Our and get they're what

Nigel Coe

thanks. Great

Rich Tobin

more part it right. second Yeah comment was and of an of FX-related then the

So quarter-over-quarter, there is on the a headwind euro.

of revenue went I think based our $XX.XX $XX.XX, at Brad so the European the largely -- way which a least headwind forecasting on use anything issue on cleared, we trajectory and revenue kind through in it of more he a levered than is businesses, a we're think is I that else. there

Nigel Coe

All right.

guys. Thanks Okay.

Operator

Your next Baird. Dobre Mircea question of comes of line the from

Mircea Dobre

Yes, morning. Good thanks.

your your this looking what's I realize some color you Can driving XX, bit. but gross little a Just update, little nitpicking Slide savings maybe has give a us changed of is mix rightsizing a at the to assuming segment level? as

Rich Tobin

at Yeah, the level. I a change segment think it's don't

think cost you on there's as a well. of now well side, that's associated of the I if with side bit little little a benefit driving corporate, the notice cost bit

So it's change. a just minor

Mircea Dobre

savings at so and -- that sure what looking making to into essentially Okay. I saying correctly, you’ve on switches an contribution detailed understand here I this you And we're you're 'XX that's another call that and from was then that rightsizing $XX into any operating the incremental. got the to just XX it that what you've back income slide 'XX, 'XX if this carries million Belvac got

anything that 'XX something make there no be of of XX. helps aware us had that 'XX terms that to else there will that Is you longer of in or be drag we So that in bridge? specific else kind takes us should in that

Rich Tobin

think that's I for now. enough

Mircea Dobre

right. All

Rich Tobin

we'll we'll in your It's that about 'XX, fingers two you think close and forward. of in 'XX give overall, the the pieces right. we the we Belvac year you’ve roll what mix do mean kind kind give of we now the takeout I the you and guidance color right got but it of on the can cost when the

Mircea Dobre

mentioned what fluids. one me drag that going Section from magnitude impact tariffs forward? this XXX humor you with the can detail be what more, then maybe been Well, you you'll and would the I'm wondering on has

Rich Tobin

price. front got tell in right now I've productivity I and what, covering know we're spreadsheet you through of You can big that a me. it

particular believe drag. don't I material not any components of to I'm exposure a If it's So it's in that aware segment. about RF&E, specifically imported

Brad Cerepak

stage on not us. we've number but talked which XXX to this Certainly of again of big for have and at into Rich a but at lot China yeah. productivity. see progresses before, out 'XX. this it's correct, We on covered ship it's to product the XXX been stage into that how On we'll don't about is XXX, a U.S.

Mircea Dobre

Great. Thanks.

Operator

Your from next Jones question of comes Stifel. of the Nathan line

Nathan Jones

think I one everyone. got I've the quarter. said push-out, in the Brad more morning, Good ship Belvac don't that on first expect to

to out that confidence gives happen? you been shift against So shipments that, How pushed now do potential a about and what feel year. to away have for not those cancellations you probably have in this? Do close these you contractual won't protections the actually orders to the right go

Brad Cerepak

we I and so off. was start don't it and expect right believe going get unclear would believe the and a will kick comparable crystallizing kick it's on engineering There when of into is big to be and amount think to but orders double look the procurement January negative progress and 'XX, segment to that that backlog that It's push we expect the XX. as that say, a Brad off It's not I as phase, look an the additional out We're bump building we it we we of into translation during of roll because let's going an We right. right year. careful. in on now once quarter it first the

Nathan Jones

My second process pump is question business. and Thanks. Okay. on

comments above thing? pretty the of XX%, initiatives you pricing market incrementals your internal high driving terms you talk of those demand good realized business your of that been has that while. Can a for in during said think incremental the part what's versus in improved about there that I kind

Brad Cerepak

I think that answers granular. -- ends incredibly up being

has revenue moving that segment, in having up of direct the a think overall it's volume the impact. a leverage I combination because been

positive cost or is headwinds there. fact has then the either front demand their that impact got that net neutral in and think input an they're I that of they've

not of absorption impact that's pure just not So volume, then kind it. of the absorption,

then combination product. of Components nature So the that businesses you’ve of like Precision business got it's those. engineered certain highly its and it's when that In all a companies up,

business of of the the and segment. products good end expanding drawer of in on the we've as I has business are very we're particular colder the because that our margins got at been So footprint those accretive mentioned demand is QX the to that and some margins very high strength great

Nathan Jones

very much. Thanks

Operator

Robinson the of SunTrust line of Humphrey. come Your final Brady question from will Charley

Charley Brady

for Just finish a quick to it here. one me

to to better, Analyst Your how a of too and want rate it granular, had to getting your comment it's getting back than like on maybe at back performing just I go XX% without earlier that's comments originally the little anticipated. sounds faster you XX%, bit

Rich Tobin

better not and it's faster. think I

the full there think We've year. I we're that been happy just right. for around bragging

we team really a coming had consolidation I in we Europe, that pretty but they’ve terms out in in and side. that the think ground it the situation, hard see bad of worked ourselves has through on other

of has So out it when negative. we premiums got making don't It's facility, in freight. just air get other consolidation supplier of It throughput that and which facilities, have Europe. you're up a wasn't can't you the the lot and

margins demand got up kind to frictional Dundee's feet the of the EMV the coming you of I and has products are of system. all you that of will couple because coming lot EMV with additional now costs That's a the ground there's if beneficial think Group. the in and that out on So

we our the that is for going into year-over-year confidence us are and we margins and exit what some segment. of in year-over-year come basis amount of saw So a change from out profit looking is QX we objectives like what lot because of our in a going leads QX meeting particular of that to

Charley Brady

there now impact a on few back, quantify that? on on is can working weather days margin Can more perspective, you the you commented and you you lost quantify material one OPW, if that's Just obviously.

Rich Tobin

I overly don't front It's me. in material. have the of number not

issue the had, quarter, I but contained which some that OPW consolidation it something initiative a announced new they quarter-to-quarter think finished basis at said I they and footprint been just This had going that we think the all that's of is cost kind bigger QX. started was I some this before helpful, like in took the in then it's on weren't largely charges They year. right. up

So be our QX going OPW's in are expectation is to margins good. that

Charley Brady

much. very it. Appreciate Thanks Okay.

Operator

back Thank Goldberg I concludes would remarks. the question-and-answer you. turn for closing to call That's now to over our period. Mr. like

Paul Goldberg

Yeah. the great a to QX forward next Thanks again very for speaking We for much Have look earnings quarter. you joining call. to day. us

Operator

third That earnings quarter you. call. Thank today's Dover conference XXXX concludes

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

Dover (DOV) 18 Oct 182018 Q3 Earnings call transcript