DOV - Earnings call transcript Q4 2018

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Operator

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

Speaking today are Richard J. Tobin, President and Chief Executive Officer; Brad Cerepak, Senior Vice President and Chief Financial Officer; and Andrey Galiuk, Vice President of Corporate Development and 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 Galiuk. Andrey Mr. Galiuk, ahead, go please sir.

Andrey Galiuk

is quarter questions. Rich and Good to and will call. Maria. and the Brad begin and call our audio this call open number will fourth for We'll This call playback from for you, earnings replay of available XXX-XXX-XXXX. three through February The full-year archived portion comments in Thank with website will then be XXXX 'XX for morning months. and the be Dover's welcome telephone

to While investor the EBITDA accessing the supplement which are and and adjusted our playback, you'll non-GAAP GAAP as between access need provides XXXXXXX. presentation dovercorporation.com. adjusted materials, information measures Reconciliations such on supply Dover available are our code in website guidance. and results following included

to Our subject may our list guided by inherently for from statements to to that their XX-K uncertainties, referring analysis comments are any be Also contain could obligation cause With everyone Dover factor in no that I'd of law. undertake our or required in caution turn today forward-looking to forward-looking publicly to call over as from of we a this Rich. differ like update except we any to those revise that, statements. by to forward-looking results statements anticipated

Richard Tobin

Thanks, Andrey, and good morning everyone from balmy Chicago.

driven growth, in leverage adjusted favorable impact Retail. QX Equipment engineering the and making was Let's X. Food cost continued can and of again EPS at for earnings and $X.XX environment X.X% up tax. in growth more XX% by $X.XX QX. of were quarter share strong gets had than Adjusted Food and the initiated fluid Slide Refrigeration solid performance per particularly revenue weak segment offset on was trends inclusive XX% systems started organic volume from up in exceptionally actions and in demand line top QX & up Thus demand our equipment

cash some made The QX, backlogs cost-saving in to the heavy to lifting Equipment. at its effort offset targets, solid businesses trading with we determined end shipping and the to end above excellent the quarter, discussed of had QX QX organization the remained forecast ratio our a we bookings broad-based many a its As the Food of environment & and crystallizes convert good which for effect. do conversion at Refrigeration of performance one, the book-to-bill across focus on Despite were portfolio. through posting

quarter QX, we $X have forecast taken in our million. of one footprint annualized footprint In run particularly initial into Our efforts, we of initiative the Unified consolidation XXXX we SG&A rationalization projects deliver and result $X million plan, of the rightsizing largely announced a million an which production which the rationalization sites Brands, restructuring is is to three the rate savings our complete first underway. charge during as $XX began with of to

productivity flow in been top solid capital and to that the Finally, growth the for on It's of manufacturer, Belanger, I’m analyst our acquisition generate a all we of line on Company, now our and on quarter initiatives investment able meets a deliver since that attractiveness, laid completed of concurrently day significant the leading out were operations pleased Belanger at in the earlier month. profile September. cash while inorganic equipment delivering busy from invested growth September. inorganic front, market wash return we the announced last which criteria terms we execution in car for Friday,

Brad. pass balance the From that’s on I here, to comments. it So opening the of will

Brad Cerepak

everyone. Good Rich. Thanks, morning,

the through Slide go details on Let’s starting X.

reflected improved Adjusted XXX XX margin margin an Act was conversion in segment by EBIT EPS and by Refrigeration adjusted normalized in on million diluted points was were margin and on strong EBITDA tax XXXX results revenue results effective to Engineered year X the impact lower of conversion and over last narrative for Adjusted was a the tax The This Results an same segment conversion margin when our fourth & and stronger plan. cost mentioned, increase X% Fluids, for year. the were our by Food benefits, our by Tax Equipment. regulatory increased driven rate. Food in increase Full XX.X%, XX.X%, largely of for growth & Engineered was the performance partially followed driven and actions. to billion. in growth an by basis XXX increase were Fluids, share quarter increased and EBIT was Systems earnings X% partially Adjusted XXX increase The XX.X% our by As Adjusted driven a was Refrigeration additional lower growth strong demand improvement offset revenue Engineered EBIT XXX. performance $XX, Equipment XX% segment adjusted quarter. XX basis solid volume over tax quarter repurchases Systems million. EPS rate Adjusted just volume SAB full the and of Systems lower year year as by million Fluids across offset in and in the covered segments supported full excluding strong of by the within XXXX discrete segments. growth points. guidance

X. Slide to turning Now

due and at bookings across retail in retail million bookings growth primarily broad-based of was Systems offset the growth Engineered by growth revenue. XX quarter. more respectively which the in In its our grew & revenue the business increased X%. in strong organically billion. XXXX year-over-year million expected perspective, where headwinds quarter, the a XX the grew grew in and in million perspective, weak and despite and an at million detail Equipments approximately Europe backlog geographic strong little XX the flat. refrigeration, Systems XX food market and across can-shaping grew up majority Within and X.X% segment organically of added refrigeration X% third X% revenue and from and X% is organic Refrigeration with organically both revenue Let’s X.X quarter drove note segments. organically quarter From was bit posted at XX lowest XXXX the by exceeded declines business. overall. The segments FX by is all markets domestic organically respectively. Food impact decline refrigeration Fluids and XX% broad-based on XX in about activity a results & a over or get Bookings driven China quarter. million which fourth bookings reflecting Fourth a & was a and Delayed million equipment retail of grew XX% grew orders revenue and contributing refrigeration of Equipment in in the Belvac. segments or headwinds rate the Engineered in XX.X% increase million demand. and on segment. to strong decline broad-based shipments was X.X% or growth Asia, fourth From partially Refrigeration XXXX. performance organic XX.X% approved quarter by market Food Organic organically XXX and at of Systems Food Refrigeration and X% grew retail Asia Engineered our Organic to largest The our X.X% dispositions X% quarter U.S. Equipment. was Fluids into a Fluids Of

Equipment. orders our reflecting strong segments book-to-bill Food Finally Refrigeration & at across including X.XX, finished

strong Fluids on top, XX headwinds growth the solid million Systems on can on reflects EBITDA business lower of in segment EBITDA to X. million, bridge earnings execution and businesses. conversion combination go revenue now as in dispositions. our on The volume largely Slide the Engineered better well conversion Food in adjusted refrigeration other FX a more Starting making and businesses. XX retail broad-based across the decline robust refrigeration million from Equipment fueling offsetting driven reflects Let's mix of as segments, in and improved negative by XX particularly growth volume growth than retail

began results Additionally, with our improvement million of to our SG&A deliver contributing XX QX results. savings initiative plan to margin

or by segment bottom and higher improved XX continuing and by the primarily earnings. earnings taxes interest corporate lower from costs, increased driven operations to Going chart, the XX%, offset partially of million adjusted earnings, higher

Slide in free receivables. revenue guidance the flow initiatives cash highest within X.X% X, cash seasonally the our Free to highest quarter in flow cash flow such day X.X% year-end quarterly posting excluding is year, me September. cost our quarter. Cash of cash non-recurring for back The on resulting of our fourth quarter impacted Now strong flow negatively was XX from Rich. outlays, for restructuring for revenue turn was the our despite was cash year or Now of let flow analyst flow our traditionally free million XXX impact higher in cash associated strong with the cash revenue the million year

Richard Tobin

Brad. Thanks

platform more was as top in largely demand constructive revenue despite the broad-based solid a perform Incremental Let’s to organic excellent, go favorable The Systems and businesses of the posting in conversion and CapEx line had in modest growth mix and top line line Slide QX. board quarter growth driven in industrial our a rate across to margin well actions cost comparable environment X.X%. continue platform Engineered operate a X, levered all by IT increases. top on quarter printing the

expected expansion deliver and single forecasted and the a robust in a building contributing products to to solid military strong TWG environment. a for DESTACO delivered runway finish continued business ESG microwave XXXX. all and with growth solid as Our trend OKI, positive results bookings margin a performance spending year robust digit

XXXX bookings into systems solid. for Going engineering remained

posting as majority and margin XX% exposed was digital to to the leverage segment the was top favorable are our bottom were material for for and FX margin the and of rates. headwinds with solid line able printing the to grommets controls businesses expect the ESG. offset both growth quarter comparable the despite double-digit of contribute We to impact quarter Incremental product geographic predominantly The organic Europe portfolio marking in mix. Fluid growth and segment cost is posted the positively that the forecast volume of

in and revenue line the XX%, performance down an sequentially and period outweighing to revenue for to and came the and fourth was in we control in transitory at of volume period refrigeration and performance first we mix Our cost that's objectives September headwinds expected built are during costs improving been year. of a Equipment robust excellent as quarter rationalization in a decline that and transport difficult MAG, and also to preparation initiatives, had we Hydro mix with backlog margin Fueling efforts solutions increased. were opportunity our built six Refrigeration is performance DFS improvement Margin for on segment XX% excess posted at leverage, the in result be largest Belvac track quarter negatively for bookings with demand quarter in clear through components. the in consolidations tariff project Components the conversion has organic pumps and in retail impacted time the and able & Precision input up performance another the costs segment targeting out associated and were XXXX. quarter, of businesses going The result quarter the retail margin automation facility out our Positively, with line in incremental to while laid and in refrigeration the XXXX, into activity incurred forecasts, exceptional by progressively refrigeration top process refrigeration Food quarter the margin as in as Belvac. in with pricing and results cost the imported OPW. volume programs remained product

to presented by in our we our actions Brands business. September, Unified footprint in earnest As in begun and we've starting address productivity

have as in the fund production is and retail on automation are path the margins our improved capital We're in in segments, consolidation preparation programs revenue planning XXXX in full the spending guidance. refrigeration based to and our to optimistic for committed for you initial phase we and improving order these backlog according projects. it and activity clearest and refrigeration our cautiously As segment year XXXX performance XXXX see for the and

So let’s move on to the guidance.

offset by guidance following, X% X%. total impacted to to by growth organic of revenue Our X% full growth, foreign X% X% exchange is revenue made of the of X% acquisitions up year positively

first year. the of We concentrated to expect the from FX half the impact be

reflects You on does I'm not and following the footprint EPS, actions a be slide. taken conversion can programs unannounced rate. XXXX. Guidance on announced XXX. see flow guidance XXX back-up with EPS the of going to restructuring The adjusted to that include tax to range there deal slide and CapEx cash the free in is

look a take the and go in let's slide. So bridge the EPS at following

incremental guidance point XXXX As as announced XXXX, $X.XX XXXX SG&A EPS items discrete far for a rightsizing footprint the were as as normalized full the for impact is actions. EPS starting can you left. carried Contributions see well follows. tax for from as at the for year into

is as per in forecasted in look which we from of XX the $X.XX the included $X.XX $X.XX initial XX rate at. the improve on XXth, the connector does supplemental second it is support and share you online tax consolidation, program, repurchase driven EPS which that million for expenditure. outstanding million a share an Belanger XX%, moving in will to have any CapEx as of last operational scheduled to which will count in to plant and well business, we it's take to XXXX the XX% which to productivity XXXX in business XXXX, from The XXXX, projects. The refrigeration repurchases of has a and leaving half. a revenue have negative to capital growth us to approximately is our investment $X.XX acquisitions, January automation and year several not fully from backup for increase footprint reduction to closed slides targeted We plant greenfield significant by the investment. is colder slide come conversion enable include progressively range retail the become share in and guidance.

portfolio, Excluding historical wrap-up, and by QX with by and investment driven these potential as revenue line investments, rates, in digital To CapEx growth solid backlogs solid Dover initiatives. momentum of them XXXX volume of order cost with structural initiatives. enters expansion large between significant margin most is in across organic despite averages represented our X.X our and the X

We top and the strong are for solid included in the reinvestment drilled in commitments EPS platforms, our believe and XXXX. which line We in double-digit on September alignment we are delivering schedules. I've to cost accretion supplemental growth deliver well-positioned

recent well capital environment, focus of open as that improvement of Belanger. Our underscored on acquisition disciplined to deployment programs Andrey. questions, we constructive and will the concludes continued the a guidance reflects rightsizing margin demand and And as by presentation

Andrey Galiuk

Q&A. Maria, we the to can open-up

Operator

line Thank open first you. is now the for Our Steve of question your Tusa of the [Operator And floor Instructions] from Morgan. questions. JP comes

Steve Tusa

so yet sales I CapEx XX% X% year of -- cash to a quite up you Can free still curious, Just guiding there to know, next and kind going of are flow. bit you is of Can the CapEx? and some this us parts noise bridge the around headwinds. maybe gap there maybe and obviously some other working help the restructuring kind you year outside moving capital just

Richard Tobin

we for covered, the a, Brad flow it of restructuring like impact cash let's think I call Sure, cash operations. gave normalized

revenue maybe of receivable. was So, amount year. we're for QX, growth XX% some just in the hung in under had flow that And with the up cash strong we

if So, if that growth at kind terms that QX flow. at And unwind the frankly, is of at not XXX% you year, not take we a cash momentum, conversions. quite through would revenue cash it's next performing look so as we’re same of revenue in

year, making million over the I’m we've million So got up that XX it. ability to the to do XX

to spend on think we -- the doing we’re I that forecasting negatively for don't CapEx cash it. were projects target the don't But more impact flow that, we that believe in I for spend XXXX. we it's know think is So, CapEx,

Steve Tusa

you've comparable ID. And across talk it's sure to but prepared then weakness in the what’s how regards not for guys digital and strong business? fourth is cap comments, was smaller anything digital globally pretty you there seeing orders quarter? I’m with printing. product just there been printing And not Are you guys, mentioned a in growth some not, then, maybe demand to in here this quickly know I the board. trends there the about on if the

Richard Tobin

these lumpiness book-to-bill reflected so but ID digital Markem-Imaje a in margin XXXX to is are look to the in much revenue. so for tends performance did But our increase printing revenue for of piece, printing, the the print it's and is job. dollar you mean, high bit the year-over-year not orders, our I It printers, just as its be at fantastic lumpy. terms more digital expectation in little know, is Yes, of

Brad Cerepak

just been solid so that has us. remains above at Markem-Imaje for steady that year I add one book-to-bill all business would and along

Steve Tusa

reason kind the orders down? was printing So the for were of I quarter, said weaker think in the guess they you I digital

Richard Tobin

which Yes, when lumpiness just a will it's of us. allowing be

Operator

of on of Obin move Merrill Bank will Lynch. to We America Andrew

Andrew Obin

Just it. I footprint of refrigeration sort up a to question its actions Can explain unannounced you and is? consolidation, to Can to food on that just us what clear related that? assume automation expound you just

Richard Tobin

Necessarily, progressively of footprint to expand in I so online, mean, investing refrigeration capacity the automation going that is and we're Richmond. in the retail come

So, it's the more a get take to year is to that that less not alluding mean necessarily. online. that’s or going to whole project I

Andrew Obin

we refrigeration have all food of now. in that's announced And terms right

Richard Tobin

thing of consolidation that -- from United footprint brands segment terms X we've X to which in is only announced underway. in the The the is bringing

Andrew Obin

flow drives second to I to range in. inside focus cash remember cash then of just run? question, when the you Dover And flow was you back long are And How Can changing systems to the better XX. going you X came big the a what this in bracket that the at achieve C&H range? cash

Richard Tobin

been cash historical by stretch generation Dover's pour not any imagination. has

I of wide is think to more we generation, from that revenue business, CapEx. just what did business range the related cash open-up and which for consumption capital and recycling the in was

the growth full restructuring little so the at year bit, the in Despite that getting the take if having cost because cash was end the the what a was day, penalized normalize QX you robust. a actions. for bit 'XX, if we up fact of below the of of came rate fact slightly at we're of little generated So look we for CapEx XX%, that

up hung receivable. that's some got of you've cash in So, amount

we operating frankly. to have where and taking the prefer on because manage the to are to cash profit quite making orders that extent we don't not number So, want one that deliveries we hand,

-- point So, working so way if should stop XX% of of a can into and on revenues. we've and what if at balance higher quartered it's our We're wait look right. here just revenue get as accommodate payments, a receivables We the negative the really self look on we other our here at capital earnings say shipping, of working we the kind get we at we where good the cycling impact is, not it's minute liquidating of will. But just you and the it that got hand, sheet, to it. taking

Andrew Obin

That think, generation was Apergy cash the and ex- the that makes big was The think still I sense. Apergy is see nice good. business cash a I perception, was to very

Operator

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

Jeffrey Sprague

And over just is make back refers and to it I certainly other in point I in automation the not a fact to refrigeration, guess or you increasing capacity announced, see some that restructuring moves if capacity. clearly I have at in are we think business you would your not mean unannounced need or you that picking-up as but Richmond, growth follows some where situation

Richard Tobin

that demand we That levels be XXXX, over we capacitized. will forecasted for

Jeffrey Sprague

in the margins the is feel orders such XXXX? better And just you're now know and on you seeing Rich, you that trajectory decent thinking course of pricing these refrigeration about over orders, on the refrigeration

Richard Tobin

about we've we've right be I'd pricing think for view but would that was got if answer, cautious modeled now, pretty would that refrigeration is be for demand in honest year the demand like in in 'XX. what and pricing that modeled current in room kind conditions. accelerate market pricing I retail excess exit to or pricing. One the to better we've hope, some there a But

Jeffrey Sprague

of in get other of time? opportunity, that that just then fairly restructuring it's that first occur that something Unified this you Or one, me over here never period half? one the thrown is some out just quickly to have but big executed Brands been And it'd

Richard Tobin

first be started as going chart much it's one in Don't using smaller other the brand, the to in pretty piece we but consolidation quite that's at and XXXX half a say there. of variety there's a that large is the that to complete. Unified QX all Brands, tends footprint look supplemental us because and is Unified unified to example we're through take of projects of Brands and the

Operator

comes the from of Kaplowitz Andrew Citibank. of question Our line next

Andrew Kaplowitz

Richard, path finalizing that to XX% day, your analyst XX% at was DFS you mentioned a to margin.

exit You mentioned It but overall look rates. like you’re does would is happy in quarter your influence good. DFS' third quite margin call, marginal

improved how margin? much in has DFS been you faster already So improvement And expect? the than has

Richard Tobin

below driven The geographic entirely exit but the DFS mix. margin rate in of that was QX, QX was by slightly

been -- it's EPS mentioned we as in XXXX, pretty the is the sequentially that the robust. bridge, it's I do if of getting and the you’re that revenue if the So, dealt comments, one better in you XXXX. non-reoccurrences -- going lower at math on on the incremental that A the through margin my look the of the end see to some with lot of side issues of you

we in that XXXX showed September margins targets scenarios. were margin realizing and under those be the think to progressively going current XXXX are I through to tracking real demand

Andrew Kaplowitz

Rich. in and strength in helpful, segment fair breakdown you you quarter there of relatively in process strength you to that to it for can then with maybe to back about XXXX in is the is forecast X% confidence that And given high growth pick X% XX% growth booking That’s core the a the impact have. the say the the in The talked the mean I B&B fluids? up solutions. pumps in more little and

Richard Tobin

exit what expecting reflected to that -- and the Bill growth we're out We in the and our our rate there like book that like putting for guidance we for segment. we’re is

QX have we you at into can As present the what we know see is what time.

good demand sentiment feel negativity a we everything environment of in lot we So, for into the despite going are terms were of about XXXX.

forecast feel there. about we good the out have that we So

growth to in lesser quarter. That on maybe for incremental very MAG project-related. other much fueling. also QX have the We've before in to balance the DFS extent well. or In which business the Fluids portfolio the QX business the is portion margin think a retail But the fastest the rates, really the said grew that, Fluids terms been of of growth the I growing the was or commented was contributor of a and large

Operator

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

Julian Mitchell

deployment, for of EPS in any think much capital the question the overseeing on just around Maybe or embedded that you've noted buyback the M&A. XXXX not extra I unannounced assumptions the way

maybe us preference on to if capital year, versus the the guidance you see acquisitions even this use buybacks not that you see on update at of capacity So capital? deployment buyback? you’re how will your us how for least giving And

Richard Tobin

the biggest Sure, all returns well, criteria bias on And of for three change particular the really invested year-over-year is presented what wash terms same I because That so good and the we're what think return we’re acquisition hurdles. organic doing expansion, in which in terms we are looking feel of in the capital margin terms We in reflected risk We've in the quite completed around of execution are September pipeline gave And in meets got a we've the an we one September of and a Belanger of that are as has highest. that's opportunities just size acquisition. of a hierarchy, in that slide. we reasonably in investment equipment that or we're now. got what for organic or scale less in it's good look investment terms inorganic at pipeline investment, right taking car the CapEx those where more business, there. the that

but So cash use whether not can give or we color, year. as you going well say, on the to to sit that's I build of up through not we kind executed the we're on

Julian Mitchell

in not prior be this build-out, again, you've medium-term would the call? U.S. guess, but working I or EMV back fueling about just from around to terms that question build, handling that year revenue twice are the mentioned second and once for the of also thoughts earnings assumptions talk was updated how the capital retail going business, maybe something any then aspect, for fluids you And which my

Richard Tobin

was with of slide because slide in the deal we Yes, an I QX. working DFS it conversion or robust course we and take think of the have very fueling, capital order our the Brad around somewhere one, always the on retail on I'll let working here. EMV have as I'll EMV capital

we with from growth. inventory, of into strong the So, have XXXX go do lot but a not balance we receivable is that

capital So to going it in that had accommodate the it environment. -- that hugging up any leave demand be stock a what of EMV point in We a working what growing, to of the view we total negativity earlier of were comment thought working end highlighted there the XXXX? we to but how we on build Brad what from I'll got we on for the fact in year been to our going have the is robust day, it's was but we QX view, safety receivables, on capital, if and at is fact participated to

Brad Cerepak

on When was EMV, Rich. 'XX. EMV Sure, see the and of not and I including track speak above second reminder, about fourth the very, track quarter that half are carefully. talking dispensers I'm pieces about say we really component just it a It's 'XX ready. very I would

that of came air first to discussions see growth is with based really very, say into sight projects. we solid of customers line would year-over-year of and half. we specific DFS, business our growth go leadership for 'XX in Sequentially, on and see terms out our how in very EMV. in EMV in we XXXX and I pocket confident the our So, we sequentially

So, the EMV is shaping year-over-year improving year. be up into to throughout up sequentially the 'XX

Operator

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

Nigel Coe

the terms to terms the be this you And one because one, it's of going of touch detail based. board growth. a Obviously, I booking quarter. of number want in So, secondly, best but lot just curious bookings it's I'm we the slide, see of the through in to on went

of put that So, could is explain Or structure one there the anything difference that is it about just in you the made investments place inflection the things? or you've orders? the

Richard Tobin

think one a I growth. of of think of those the reflection rate fact that the things. exit it's mean the on I it's I

chains chain. lead are have that reflection the think supply of of that, extent. the of of times extended view variety tariffs and overall I getting people certain I a supply think worried it's gotten I there mean to certain on at an strains is a businesses that things in because of a in because market performance

little are getting front for line -- bit in believe the XXXX. a they they need getting of what So, that for in

is don't -- think businesses in except deliveries that pretty line. and and line overall, look in things. I good that's extend terms and our go top really exception to about in want being growth, an there first variety good ping you supply other a chain our and we've our So, been the a half a out on overhang have there anything got customers us you getting refrigeration, of say, for in in if a is place of get allowed pretty fact there with worry the been to And

Nigel Coe

just question then free free flow. et is cash CapEx going highly of on within I headwind, a the cetera? that's is to Maybe Steve's but XX% cash very cash wide million anything restructuring range explain but on obviously wide why there bandwidth that that to range? understand flow, X% else the $X your And builds cash variable back free

Richard Tobin

would of the growth be It at the end day.

the aggressively, would the Our when balance top as over the sheet we is liquidate expectation at would up moving perform midpoint. line underperform businesses is we the actually or and

Operator

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

Mircea Dobre

you two a that orders finally almost back remain were here struggled I cautious that time business guys XXXX maybe the to understand in lot, first for going into Just decent refrigeration but years. and

quarter that little So a happened this if finally to marketed the is will starting anything there turn Or is I’m wondering, in be bit? discreet? specific customer, something around any of

Richard Tobin

customer. particular any broad-based not customers. our it's It's think traditional since I

of to quite time, as overall low comps for retail a food long easier I of investment the in and been capital period easier cycle. a reflection and think it's regards as off coming just it's

it. for grateful we’re So,

to but like update it's think morale and by it just the trends business, kinds continually remain of quarter, good hold. these if cautious for we hopefully, I quarter in we

Mircea Dobre

of is terms on? is can retailers particular people, say what I mean you're your big dollars sales from In any it demand? anything else hearing Or you it about vertical the and store?

Richard Tobin

into I box want individual its but other. big and all customers, don’t to get

Mircea Dobre

think that in talk of easier the and Belvac, that forward. on do demand, anything 'XX? comps getting you terms going Lastly, can presume you about How lot about in business a I

Richard Tobin

performance lumpy. Belvac's If the we overtime, back it's and go look at

to segment much. the the material because more fact I refrigeration of think it's just that shrunk become so

from wrong because year, of there it’s business a in variety Belvac bad other CapEx got side was it So, and particularly lot of nothing beverage deferred a driven a just projects the a things. is with

customers then view. all engaging a see over think of the backlog We're like I we've also our build sequentially we'd it and where year. got to So the with comment cautious will

Operator

Davis Our Research. Melius next Scott comes of from from question line the

Scott Davis

I the there this consolidated? other many really there how I car Is out you Is understand don’t with business, good it? are a it late help us -- there it a guys know to equipment much already roll about wash little but would up? opportunity just where for to going maybe it in opportunities mean help this out really you bit. educate us queue be just

Richard Tobin

both to it's the want that know opine wash I saying just to one if OPW, and business accretive there that, strategy. the trends car been of like been I Yes, longer-term on in mean don’t to We an point portfolio carwash. size a strength the of kind of along it's traditional mean I now particular position. within widens the execution of total back it our for of go that we've Company. and PDQ, I acquisition very ours had segment from we distributors. a that think that it's with product doable our our got a us with view, This is our and and up

said, other the risks. done secular we this fragmented on execution are in least I we've the North a we there hand, market, our but performance check and trends terms now America. the at of that carwash one in of the like we acquisition, largest we historical it's players box at and growth terms -- of It's is the return margin. like like So, hurdles in in profile And

the like companies continue to think structure check him, also, we but it extent So, and take that boxes we're market look a but I a lot there really for at of did for. we that looking opportunities is additional the to

Scott Davis

cutting questions answering understanding I'm I'm risk bit. are you but these response has capacity? pushback to to in pile level you and little of SKU rationalization? customer been we in tired the there particularly generally to don't some and the have moves? need make choice sort a that refrigeration, that Or What's on I mean a going SKUs, been on then customer the sure And cutting to guys sick just

Richard Tobin

the Yes, it no track of customers of preparing in half the second one our a the we like the terms business year transformational that this run to for our I end that of think at record the while of in unhappy. day, trying sure I'm change, made have some

there our very overtime. this to that and that, to going execute has that having have we're gets think go long we for diligently need think businesses - going amount it's we layout kind a around believe of the the working now we're clearly, been right is and improve but project But said control, costs probably I XXXX. much it's I on as goodwill, this our an quality path we of biggest the I in where project that that time, think to to

Operator

John Haskett. Our the Inch of from question of Gordon comes line

John Inch

that a to backdrop this global of or saw But kind have just what of December, November. because the against kind businesses broad pick-up Asia. just of And of for progress? XXXX? as question softer does some because out in ask So Dover. in softening, sort economic some don't that a you the line curious come you out called to pause softening particularly companies called the of softer economy Does quarters give the obviously October, in I'm trends And any back-up have quarter how I have end or December, and necessarily of you the a specific through watch

Richard Tobin

biggest our in quarter worry the that conversion of in we backlog. the think I was what had

cash a view I and a perfect little and earlier in of like world point of we opening door But quarter it. my bit, both from the view. a I comments, get from had got point in December it crazy the production to as collect little it to we and would a think said got out it converted able run are a during not but in we dicey,

think proud be organization I same management else should the China segment think that the view, I from execution that of because we read point So, to everybody an did. the of itself. things dispatch We

So, business spent and recently in China our see to and week segment it's management impacting like. a how go

in is pretty management feeling confident. China Our

in towards piece consumables relatively of backlog. business portion geared of the OPW, of Now fluids, streams stable generally and which line marsh which is it's revenue decent we've is got a in which has then marketable regulatory China, is really the to terms sight of

were out our But of risk now XXXX. China are right So projections in for cognizant to grow the there.

John Inch

but no about was we a depending how the company about refrigeration you downturn recession. base, perform a have longer but better? would mean at economic get plays much Refrigeration which are a done last historically? different in lower it's the better some it downturn that the think obviously given fact base still is the I is go just that up we talk will the recession the if this level stopping perform as and what's another you what there, broader Apergy just on base and way it out, next economy program refrigeration? I’m clipped that Or you not about down starting In there its high at or got obviously a curious,

Richard Tobin

relates this to refrigeration, but what forbid, as base we’re replacement this was the happen such end had point. put really on enough at add can’t of in anything specifically it god the finger to you been haven't below to said. I we about year think refrigeration your it day John, around if long you at I low to a

John Inch

say least obviously without think about your very the you words to in the possible in Okay, risks good economy context so at mouth? it's feel the I fair of base to

Richard Tobin

I XXXX if tough we execute for for the think the feel in plans business year I will management really our of a us. mean was XXXX. and I good

and a about I got to I’m going better I want to plan. think lot feel good a it. we executed see this

John Inch

and from near-term this way million any this Brad, Just put evolution. sort that would of of you is consolidation footprint Where called context? and manufacturing out size the benefit talked warehouses. to XXX Xif you will a way Phase Is this the the lastly, in about presumably You've Rich or… in this XX Dover's you any part

Richard Tobin

the I I the that so the twofold September, we way it. benefit had answer, when priority answer said to it one-for-one can you control first your in was John. was Yes, we a to that execute after was go and think it to think because way SG&A the meeting in is

to longer. of lot we acting the more footprint we footprint lot Now said risky and moved is on on timing a is a

the benefit real end you see taking the charge why in So in total benefit and us relatively that a that's small the XXXX. is of XXXX,

And are line, the we've these want things. there we top you calculate we pretty the pretty, got returns deliberate so a returns to business to how right. as we're run here, excellent, execute the don't So, about but impact

John Inch

But in several if big as could even good as the Rich it big the years Xb takes footprint/PHASE picture SG&A?

Richard Tobin

that forecasting but start want we've are don’t I million. relatively to that small and size, was taken XX we

is we program. a that So, look multiyear this

Operator

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

Deane Dray

strong as one Rich, we the segment XX%. benefits see that in don't on as first rate talked because, growth Fluids. Want you of back to of And organic all, about circle

of there So cost pricing? there you can of well? you some benefit then a and of take also out any was impacts mix said as us through the the color And with more

Richard Tobin

don’t to want I start.

with I ups. think follow those we can do

fueling, mix within retail margin a got do. biggest consolidation, the issues where behind related we business. at we little the Plus of we've think XXXX. earlier that day about that a half related the you catch-up year talked we've the the fact by I in took which of And year, to work of was that's and that took to the driven over our and I two guess to footprint the of talking had driving the of for in second through, Brad is you fact project in the -- starting come that's some EMV through MAG the segment is end bit a because lot terms backlog the been of positive

QX of in line of So much much as of on what in backlog as lot the got not so fluids MAG, in converting good which we like EBITDA had top EBIT, business of was conversion, very but we for margins. and retail good the in the are a and shipments maybe out

Deane Dray

can you oil then, fluids and away address as how gas you also fueling? did factor broadly and you in tariffs retail mentioned And from then in a

Richard Tobin

about that believe little the a supply-chain, The for about backlog, tariffs piece building is fact what kind bit that that worried which we right. it is, contributing is I related a is tariff mentioned of the tariffs. Everybody the of

plans driven have what's we the order book So the good feel somewhat contributing demand CapEx XXXX, plans for customers that to we have. plans that's that

In productivity our and expectation XXXX. able and to will on impact be we pricing that's terms view cover tariffs of with our tariffs, the for

Deane Dray

and oil gas? And

Richard Tobin

the low of relatively Our exposure spinoff with now is oil and gas Apergy.

Deane Dray

any But that you still have there? a shows color midstream, residual in oil up

Richard Tobin

overly distribution. our work hard is sold the day, at not to lot guess we do It's business can mean of material quite a the the end I and of through I number pumps because it. an frankly it's parse but

Operator

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

Joe Ritchie

first guess how from you're my CapEx is the on and are Rich I just expected pay investments back thinking So question the those about investments?

Richard Tobin

they two of much because What little a day. NPVs bigger out we different them the I wouldn’t had we be end them positive right. doing the and bit the at on profiles, got ones called of

and in was it do the on is believe I positive the growing the business, was what we it CapEx colder which only both to in segment business, in connector group. fastest will business fastest terms consider XXXX, the or our the maybe second we big to in So, projects. was place of margin message that of is One growing kind had

good in we are that's to going pretty capacity expansion candidate. a So if invest

business So, grow and the terms that were on of to we in ability like footprint. we dynamics our based chockablock getting our of

that one the doing model as terms different of than long in terms are And of them kind of of dynamics how we productivity return that NPV of rather correctly. The positive the other retail we is what in put bucket. both have very expansion refrigeration by and in both let’s kind execute bucket driven as but the we're

Joe Ritchie

think savings linear pretty one my year, should one. how Should were actions just you the the through million all be $XX that about that incremental taken And and helpful. -- you guess this coming given follow it are be about When I That’s through? in then just XXXX? that come thinking SG&A

Richard Tobin

linear. it, where that’s we about think Yes,

Operator

we And ladies question. have gentlemen, and do one more time for

question final of the Stanley. from line will Joshua Our Burzynski of come Morgan

Joshua Burzynski

so get term of size What the of but been is for some Rich kind Just far. of bit, two-third what's at just that at so XX it's looked the and know that's a consolidation some footprint of thinking evaluated XX%? at about the probably longer just looked percentage you sense the optionality. really savings it, to far. premature footprint Is I so first business, blush question first trying least a million to of the you comprises? looked the at of gotten on

Richard Tobin

footprint, at operating an by we've a our identified I that individual company. look taken Then them but of group and kind not ability a we’ve in of order opportunities then the cursory by operating -- entire think so view company. of to both in terms put execute as

force we on that. rank so, them based And

higher others. of relatively a got others. and execution we've but a than It's point margin pipeline, need higher lot is than than some to some They view. do So, enhancement from risk it long

think challenge I from September we two of signaled margin segments the a are that point that in view.

facility XXXX but in there So to be matter fact act group's then record But in through to the our execute, comes we're is bringing not track of resources doing accelerate XXXX. it first, our and in would consolidation kind the back organization's bias to the is ability way to the great. of

begin successful of to projects and relatively momentum So, we deliberate roll. be some to then want get and

Joshua Burzynski

with then, descent of you've an at But added guidance questions easy of high one end. to easy now appears maybe maybe with of you be organic And not this. trying even comp Just Fluid EMV of you've up really and or off work of of couple pulls high X% fourth the in through earlier that maybe clearing first I the range pretty that business there? quarter? Is made stay X% how bookings, and that within and the some should guess comment think about I you what is probably it this end you've in the big as nip I a the it the think of edges through quarter the do comp quarter, visibility things range the good some was as above that had the the more coming there. the remarks backlog pent-up to Is kind a as of within prepared to calibrate

Richard Tobin

there's I the around dialogue in We that and have how what here we affected else. between and having Yes, versus our the that don't not stories guidance of top feel the and range, everything we them. for businesses what happened no lot there's about horizon very the us QX. our keep of be top year, can they but a I these a at that mean, level conversion there's are the been up market in performance a to good was that secular don’t to be that the saying the slowdown nature, quite through not have lot, small great end reason behind going are so versus in but line think

So, enough sequentially in we we top for this to the the took on can view. rolls kind the will just difficult the to that is demand of quarters. been visibility push We right just that the then to as But have well thing bit don’t based say, take it as middle-of-the-road And us end, there I extent have would little QX hard our backlog, a now. through and 'XX. think to

Joshua Burzynski

kind soft you than starting baked fair. from of like more that's guess point? it seems elsewhere. Is is a landing rest business a perspective I of in the question to think I No, a relative of the macro that there

Richard Tobin

That's fair.

Operator

And question-and-answer the over would closing Mr. Galiuk like period. for remarks. thank back turn to that call you, our to I now concludes

Andrey Galiuk

Thank Dover This in to interest next you you concludes quarter. speaking to we'll your and our conference for call. look forward

Operator

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

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

Dover (DOV) 29 Jan 192018 Q4 Earnings call transcript