DOV - Earnings call transcript Q2 2019

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Operator

Good morning and welcome to Dover's Second Quarter 2019 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 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 Andrey turn would to now the Galiuk, go Galiuk. please over ahead. Mr. Mr. to

Andrey Galiuk

months. second our with comments for will The Rich Good welcome of morning open portion Thank will telephone and through be August access website playback call be from earnings questions. When the you, for begin to available archived call and the Christy. code, three you'll for Dover's supply XXX-XXX-XXXX. X We'll is call. this on playback, quarter we need replay and then Brad XXXX will call number audio XXXXXXX. the the and accessing to following This

guidance. our GAAP included on provides measures are supplement adjusted investor our Reconciliations between which Dover such website results information non-GAAP are in and presentation as and materials, adjusted available dovercorporation.com. and EPS

Our those in by comments that uncertainties. a from forward-looking everyone to results law. any to contain statements XX-K Form caution to list update revise cause that analysis in any subject intrinsically for of their statements are we our today no to publicly to our or may be differ of statement. guided We obligation required as referring could by except forward-looking undertake forward-looking factors Also anticipated Dover

I that, to would With like to over turn call Rich. this

Richard J. Tobin

for for morning's this thanks us everyone, joining Andrey. and morning, Thanks, Good conference call.

revenue by were that forecasted able platform X% contributing digital industrials was started the markets offset Engineering at into in timing nearly growth to driven with the segment in organic get I'll later driven X. comparable strong up X% QX presentation. to by get performance in Fluids than Let's more business and our the our on in slide which quarter, Systems, for print continued slowdown conditions all trading solid within

projections as Refrigeration for Asia of demand. a as refrigeration heat trading well exchangers & short Equipment result as was conditions systems Food principally of tougher in

the refrigeration XX% earnings retail in basis us case improved in contributing by of segment XXX million, particularly leverage, operating for mix, conversion improvements tight Fluids an product driven coupled $XXX and were revenue labor wins in half than These comparable customer and recent second a Systems cost Engineered over increased volume good productivity in confidence offsetting give to with and improvement on margin more period. Adjusted and cost controls, raw material demand Forecasted results point to door year. inflation. the and strong

million EPS QX $X.XX Adjusted earnings $XXX up XX%. a to XX% at and adjusted was up were share

a completed critical All-Flo for manufacturer applications. position we of Co., the positive of This strengthens transfer acquisition fluid specialty of growing acquisition growing Pump in pumps pumps. As displacement leading announced, the segment our

quarter we're of across second by portfolio. the the remains first Overall, results the encouraged and Demand much XXXX. constructive the of half in

adjusted entered operational of yielding margin by and wins rightsizing augmented well half $X.XX $X.XX per guidance are top we Our to Dover share. the towards improvement. robust result, And and execution second year actions margin customer range recent half solid previous tightening EPS the as with a are momentum our and a backlog full strong as targets. as order to

Now back with come opening to that's I'll pass the color. segment it it Brad and the for comments. then

Brad Cerepak

Thanks, Rich.

was XX% in Engineered driven to to platform GAAP billion move Revenue X% slide industrial in our increased $X.X by Fluids X. $X.XX. Let's to strong grew and and by Systems. demand EPS

initiatives. of quarter achieved EBIT in reflecting the results: over margin adjusted significant Moving points the XXX execution with up productivity accretion prior continued we mentioned, to As non-GAAP year, segment basis

year SG&A all announced we Our and expected. are savings we complete actions are delivering intents for last the

on and were million The for by EPS year. non-GAAP the par was in of and the margin tax $X.XX of this results or with EBITDA was quarter amortization prior $X.X acquisition-related a supported increase $X.XX segment benefits XX.X%. second expenses. Adjusted a rightsizing adjustments quarter $XXX benefit other million, of Key discrete

Now slide X. moving to

and the our a more on detail results bookings bit in get quarter. little Let's into revenue

Engineered As partially and by our driven mentioned Equipment. offset & Refrigeration in summary, Food organic and by solid at was Systems growth X.X%, Fluids

negatively see, Engineered As significant $XX was $X demand our revenue which being revenue, can headwind EMEA a foreign and Asia. driven impacted most you exchange to and FX largely by notable the had earnings levered and identification rates on million or impact bookings. an impact million printing for X.X% in with Systems,

and in the approximately of moderate where dollar year. to the exchange Europe the by half average impact the we The declined headwind expect FX two against Based current the rates rates, China, second largest contributors to X%. were on

used and euro We the full $X.XX forecast. for in the have a year $X.XX a rate RMB our for

$XX Systems grew Fluids Refrigeration organically From by organically as by X.X%. Engineered X%. million $XX Equipment's perspective, a impacted FX. revenue or grew Food or and we're also decreased million & million approximately negatively mentioned, X% And segment X%. declined $XX Bookings previously or

digital Bookings provide million in activity the across and Environmental order and or $XX individual due Group. X.X% book in by $XX X% declined information or in by increased declined Food $XX businesses in more with Equipment to bookings organic Refrigeration million. few on the segment. Solutions & Systems, approximately Engineered printing Fluids order a Bookings strong activity minutes. Rich million will the At slower

a year, organic Fluids, mid-single quarter X% over backlog finished driven Food Engineered largest our growth with time overall a was and From was Finally, digit Europe X% which particularly market from offset Equipment. grew by a in by the in higher organically, strong overall EMEA. the this XX% segments by up primarily of was up & Systems Refrigeration Fluids, book-to-bill and order growth partially all QX solid at U.S., posting at Engineered while X% last driven geographic than X.X, Systems. perspective, end --

China All of X% Asia was with organically down down X%.

mid-single retail to Engineered strength activity slower business growth double-digit solutions and the were was Our both in Refrigeration China down on the Asia due in in Systems Fluids process the in economic businesses, with up overall of Asia fueling digits whereas and region.

of Engineered Fluids' growth X. top. EBITDA of $X slide the offsetting earnings and largely segment improved FX. Let's from million, productivity than robust a Equipment bridges margin acquisitions. Systems' by more activity decline improvement to food Food go The lower and & retail. fueling million, and initiatives, $X in in $XX retail volumes million slower headwinds combination driven continued reflects adjusted for volume at the reflects Refrigeration growth, Starting SWEP on on

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

Now Year-to-date on revenue. of as $XXX cash million, was improvement in a terms is absolute percent an flow and slide which year over last free X.

of year. X% -- last favorably X.X% revenue versus The second quarter in particular compared favorable at

inventory line capital to with which in of in was convert working by growth of top as $XXX strong supported half cash quarter Year-to-date the million, well increases strong the in year, to investment back volume QX. anticipation as a we built the of expect

quarters traditionally quarters. cash-generating fourth are and strongest our third The

below $XX Capital slightly last year-to-date expenditures year. million were

expect the still We up year. execute pace ramp in our our previously our guided to to investments second CapEx flows growth line and organic in half are in of with on cash seasonality the

me Let it Rich. turn back to

Richard J. Tobin

Brad. Thanks,

growth to industrial top on driven line organic by of platform. slide largely move X.X% X. Systems the Engineered delivered Let's

XXX% bridge, points. incremental in XXX was negative volume translation, the margin segment conversion you growth adjusted FX can the on leverage. and see As basis over gains by the Despite productivity margin in quarter, driven organic increased

to expected four activity slower declined and ITMA ID double-digits & earnings that in by platform approximately in making in before due from trade the driven happens latest the investments. was where customers in printing review revenue revenue X%, and in by Printing the printing quarter assess organically the full that years, digital Our impact XX% to that the show every down put grow To year. XX% in a for business perspective, forecast digital comparable we technology

of trade performed industrial experienced of printer into from continued half. show, the especially by orders and coming well in second We the while in the line LaRio the business Europe, Overall, are slowing the platform to out encouraged QX. pipeline expect Asia reaccelerate our

posted industrial organic Our growth. platform X%

Our traditional XX% software waste-handling and by strong business software, by to equipment growth remained in growing as continued with ramp both double-digit for significant over installations. driven deliver demand

automotive negatively vehicle DESTACO. the constructive. quarter trading highest exits business as many with order was sector our in timing, its in space, backlog the more demand conditions the the posted due impacting remain trading down service X.X% defense from but conditions years Despite challenging comparable automotive QX OEM offsetting shipment growth to demand in and difficult general the MPG in conditions

to record Going which bookings notable posted solid driven a Printing Systems Most QX, the businesses exception of the solid. margins. we and & where enter second quarter. in orders platform, into Engineered on comparable businesses the backlog one is for by around segment accretive largely versus ID for remained half comps footing book-to-bill high consolidated with waste-handling were slower Overall, our of

segment growth margin of for organic increased to segment all the slide. Adjusted margin quarter, basis across of Fluids businesses. with improved margin to the product points conversion driven next strong strength with leverage, increased on organic incremental posted The XX.X%. Adjusted productivity EBITDA volume XXX mix. and by the Moving continued XX% X.X%

filtration growth and another pumps components process for remained robust equipment equipment posting X%. quarter organic Our pumps, and of pumps and compression industrial business polymer solution rotating systems. gas Demand had and for for excellent renewable natural energy

deliver all this thermal and is signs forecast systems. continued to we double-digit underground point XXXX posted to X% adoption both for equipment a capacity trajectory organic current remained in geographies as continue all growth to levels. the significant transport ready and demand across robust activity choppy quarter, of demand for beyond markets to continuing growth Fueling and at management be aboveground EMV Biopharma during business. as expansion as

and the our meeting grew year in the business. organically broad-based margin in particular and polymer businesses. and comparable of with strength we for Margin conversion to objectives strong balance the that track the in equipment The quarter, biopharma on segment over volume period. Solutions Bookings the as trend the the is continue stated we in X% was plastics growth expect Fueling towards

down revenue X.X% for margin-accretive margin Refrigeration & exchanger heat of X% XX%. notably was in organic Food Equipment, at most the was EBIT the Demand adjusted Asia. business SWEP quarter In in down

systems food retailers and retail case slow. as in modestly And on rollouts decline restarted to revenue were Belvac a while formats revenue year. were orders challenging last increased Brands food the our growth despite grew refurbishment. Activity year-over-year; comparison investing in-store door booked shipped retail's bookings posted largest year modestly line large however several United in with prior backlog projects chain and posting double-digit service a as mixed and was product

The poor retail with the struggled by ramp in in by further and Richmond. constraints refrigeration, on site chain our heat exchanger and reduction mix availability production volume system at shipments effect supply was exacerbated principal driven costs of which margins labor

are our on deliver to volume door our demand in for is earnings encouraged by on we While it project core we turnaround automation retail case products, deliver need that and absolutely food the in conversion. clear to

decline, second organic improved equipment. customer XX% in slower outlook segment posting us confidence Bookings In due Retail, year activity Food the were to time systems businesses last half. revenue lower this for the refrigeration the versus about can-making mainly and quarter this in give recent wins

Moving XX of for a margin to the to quarter. was the slide mix negative XX. be sources effect cost to this on announced in for is conversion the & for Slide EPS of the Incremental accretion Printing and high-margin the the platform deliver quarter. expected percentage XX% on year Dover actions. as continues quarter result at Identification key lowest disaggregates a

Moving on.

the and are based on we growth Equipment systems lowered are have forecasted Asia and half. ID, for in and Systems cautious on Printing guidance in We Food revenue books & demand as reiterating Engineering & our Refrigeration and second Fluids order

Overall, in with encouraged good half growth performance year. margin the X.X% we Organic is are conversion. the the first of with

our well guidance environment, Despite and but and profit sectors. visibility portion remain the most as remains executing of across cautious of share. sentiment some year-over-year macro productivity our a year we change, tightening and to we supportive range $X.XX per on are Demand initiatives. are on are to $X.XX control in We businesses, such, cautious cost in significant full

more Dover announced our information Lastly as on previously initiatives of will on host a that mid-September We'll in progress strategy. soon. we an Day targeting our and are portfolio a Chicago, to provide update note, provide review on we a where

So the presentation. that's

Let's move on to Q&A.

Operator

for The is Vertical questions. you. [Operator Your Instructions] Partners. Research now is Thank open Jeffrey Sprague question from floor of first

Jeffrey Sprague

Thank all. you. Good morning,

Richard J. Tobin

Good morning, Jeff.

Jeffrey Sprague

Hey.

thanks of you look little now for orders can see we color on a First effect. ought I on Markem-Imaje the kind kind there? conversation to businesses us big if bit what color of and of can give also? the the kind product printing But that the just bump then order to of additional a you on piece in like expand ITMA Do the ID of that segment wonder, QX? And also business about

Richard J. Tobin

normalize quarter to in were we organic of a our little – point If revenue of of excess growth. Sure. through printing was effect the Okay. the printing X.X bit the digital of on quarters,

So, coming was I mean, we – knew this

Brad Cerepak

For the total corporation.

Richard J. Tobin

Yeah.

knew you not the we corporation feedback was in the orders is this For the that I that total we that very the encouraging. terms coming. is Look, just in segment. get of can tell pipeline

we of that segment, very bookings equipment. recognize in are think pieces conservative how I million of talking about but that we dollar we're – euro two particular

So in place and letters begun to QX. can credits before of QX in decent ship a that, expect tell put we'll I would we of wait until portion them have in into things we book particular other we've backlog. in of I you But that variety sector. already we that, that a

segment confident in terms why second that's bulk we're on – in half. margin of the we're the the of So impact

had slightly good Asia. had QX. total, in another month good good another largely month QX a Europe. it MI very in slower driven to As by MI was or quarter very relates It in They

to year is margin to MI, for Our be second the in back full accretion but expectations in growth modestly half. robust come

Jeffrey Sprague

And as could. if second I a question,

on Just Refrigeration.

about sounds refrigeration a not your just that. – comment a food comment recent comment clarify customer like But So it's to wins

Richard J. Tobin

ahead. That's comment, but a go refrigeration

Jeffrey Sprague

is a comment. refrigeration that So

there's guess could period. orders there's a Your volume else a struggle? bit of the in you're the volume elaborate suggest you right? of seasonal you're just don't strong – normal Or on something about suggesting that obviously there's kind with what bit I that little struggling of a So kind little And that? Is but ramp-up, ramp-up, a seasonality comment

Richard J. Tobin

No. for refrigeration What slow. component we're Look what side into the of have – to its – been is separate the let's is systems this a that's So we saying think way have put heat I right? segment business to we on parts, moment. the exchangers

decline the door. significantly bookings in So the on significantly case bookings. and case and our other The on up are in amount hand of that production ramped is disproportionate door up and the has

Unfortunately, during that comes cost quite product the that coupled because that had the with that and in we labor ramp line, with volume the a the went of transition. quarter middle of intensity supplier some belly that a up significant we is of frankly – at struggled

$X So million I call million overall think it approximately let's with the frictional cost to that ramp-up. $X of kind us costs quarter in the

that of that, forward case. compete going from at with will marketplace. here. end our pleased ramping think pleased in and day, the the We I is But do to better in order the the we're door volume ability We're

clear So retail automation to refrigeration order of aspect the is we've actually moving this got business, up right now, to but get this it's in absolutely profitability change complete.

So of the of going run a in of going It's market component margin business management terms SKU trigger. we're some case. we accretion that's significant door so how gaining what's where associated have business and with volume. But the change to the don't two to kind way think commonality until balls we really the some get like We in we parts keeping that. increase margin cost, air We'll the in come accretion, lot moving. we're of is absolute at this on profit I share and

Jeffrey Sprague

it leave I'll Thanks. there. Great.

Richard J. Tobin

Okay.

Operator

you. Thank

Steve question next Your from of Tusa JPMorgan. is

Steve Tusa

Hey, guys. Good morning.

Richard J. Tobin

Good morning.

Brad Cerepak

morning. Good

Steve Tusa

execution an environment. kind Good of uncertain in

U.S. a On with? lot those the anything kind product of Are and kind there given bit along channel cross-border than products of a the expected down bookings of more you small line in machine Europe that, ID into were kind in of you kind is mentioned machine that may side, there's that the the of go choppy selling builders seeing builder Asia. in guys activity for are same your the that

Richard J. Tobin

have know the guys to to to markets question. individual the the don't go see sell back of that I'd Steve, they that we'd segmentation into. have and I

Steve Tusa

Okay.

Richard J. Tobin

overall... that think just I

Steve Tusa

Would Asia – that a issue kind to core and digital still be that of common in was Asia? that be MI core seem printing more for into segment? a Or a of

Richard Tobin

Yeah, it's core Asia. more a of into MI

those of demand in versus end next at the several the years proactive terms digital proportionality particular the which On it market, looks price for our -- the is space, of side the of machines. printing in ticket very of top just the

mentioned issue. full timing revenues a that's we as double expect And grow that's for think digits business a I by the to I before that year.

we is confident up all as as the to So get long be. on the on think that credits lined based everything going side what we letters and can we're of backlog

side the On little MI it was bit a choppy.

points don't I India So China was during I think X% think that that -- couple a I quarter. and percentage that down down was think the

what's segmentation of that customers on to at that that. have I'd think reflection don't the MI any in on a China is their get color have in but real of I going China. I

Steve Tusa

problem. No Okay.

You're it. plenty so busy don't about worry

the quarter? cost, that headwind needed from little cost where thought biggest the have this to cost? to probably price in get price kind have the get you from really you or which inflation Or that didn't material headwind a tariff do price On of offset price would saw Was I more segment. not of business, impacts refrigeration a price kind you the

Richard Tobin

have on it, cost retail counting not frankly. to disaggregate frictional that's probably refrigeration that's the go because I -- Not self cost I'd inflicted and but think neutral. it's quite

I I'd all to segments. their look to go difficult exposures neutral in lot got one the go think of refrigeration. FX a sorted were it's take SWEP it's euro-based, a get because retail is so we but other So out a translation. that we'd have at probably China have with

Steve Tusa

you a long give lot. Thanks to to-d-list. Sorry, a

Richard Tobin

problem. enough. No Fair

Operator

Thank you.

of Bank of Your next America. question Obin is from Andrew

Andrew Obin

morning. good Yes,

Richard Tobin

morning. Good

Andrew Obin

Just a question cash free on flow.

wide fairly to for target year the X% a gave you think I XX%.

CapEx half movements that than capital ahead working You think that guys the year. do And performance be any should sort big seem second aware? given of other we within in out to you are come Where in range to going you last be well of year-to-date? running the

Richard Tobin

So foremost. we target the and first should hold, working of then think which in last year. seasonality range, okay? on I mean hit spot And middle that exactly capital the that's to is I Well, did is our the

behind a the full versus don't running bit CapEx so number year. it's range end But overall. year I little entire in think for think something on of the working the changes, guidance, probably but are that the it's We lower to our anything I capital that we're full tracking swing versus CapEx look

turns But We At us of of the on what what across down looks said kind day second half is of the to -- we liquidation working swing the second profile the for reaccelerate come industrial a it's portfolio. you at the inventory down. end the half the or working growth If grinding it we end percentage in as capital going before. we're increasing same won't day last we the can what's of really or liquidating, QX. then we rate year would the expect in the that year like. don't If then we of revenue showed

Andrew Obin

Food a a just it on operations at Equipment runway And if the about inefficiency And on you. any relating for follow-up broader just us and guys at Any targets us forward question a cost ability year, that and not provide And you've provided broader Dover to you feel & operational next update. specific color, changes going takeout now Thank give that for I just can you ramp-up. Refrigeration restructuring just have How you to making? been of you for while. are do but appreciate execute? to

Richard Tobin

And change we've That and not as at margin retail before, basically in of how other commonality as on Sure. business refrigeration business. this allows the of us to automation the installing production and gave of said is The the is management, variety relates footprint. that we a process requires September, changes components run just is equipment that underway. working particularly for The the it things, future. intervene they which to some that holds. for a fundamental on But target business SKU

case. at chicken we kind we door be the when egg announced to demand of bit that of the because and and that to market think we going time of bottom the were the going we terms at were in function the for said it's a investment I a little make, of

into we run that that is back the until traditional share now market we the in market we have we're stood business. coming get amount intensive to going labor But of protect and to got up. protect we've volume and business more fundamentally changing it’s And going the need everything to need way to

the it. excuses So for the at not of any end I'm day, making

belly think cost are. employment market the up in with struggled or they I in money. us It's which of getting middle the beginning quarter, we And tough. us some labor we I rates available mentioned a the had that with as go the the on what supplier

over fundamentally labor our what's we So performance basically our business process. how how QX changing to I would that but is going manage and in much in we expect change improve SKUs this really is this content

Andrew Obin

Thanks.

Richard Tobin

Yeah.

Operator

Thank you.

of Gordon Your Haskett. next from question is John Inch

John Inch

everybody. morning Good

Richard Tobin

morning. Good

Brad Cerepak

Good morning.

John Inch

of Rich overall put if look Asia a it you it. I jumbled How detracted Asia that about to say in you selective or from of bucket. to however still Maybe not a much of and if Brad, to were and you'd Obviously detraction. think would implications but characterize parts into we at -- talked sort big Asia like you sequentially the helpful company results?

Richard Tobin

Well, total that what mentioned think look translation in I think his that comments was. I impact Brad --

the the the quarter. loss a $X incurred geographic million So right? translation Asia, to calculate of distribution on you in percentage which million piece of So of based component that there's it's out we can FX the $X

piece. that's So a

the And right? then what but it of mostly, you of some in profit impact, that the I the printing gave think at is unpack you But see I need terms of day, know you MI I was. end Asia-driven MI to quarter-over-quarter digital but can't color from that

Brad Cerepak

a quarter. And you have offsets retail good Right. fueling from then the having really

Richard J. Tobin

Yeah.

Brad Cerepak

China. And quarter continuing a have good to in

not the for together would that say front revs, in all exact data of pull still I us. remains the slightly having down in China positive earnings me, you if So but

Richard J. Tobin

in $X I million, $X million so Yes. SWEP quarter. $X between probably and was somewhere mean, million the

John Inch

to one few the you market companies I got you few there That's little of Dover Okay. might that? you any with is to the that do opportunities? fact helpful. this out? expand List that some Could bit how -- would be benefit from EPG, is these a on And that. tariffs. Where exactly be to playing Rich, three perhaps share you? you the alluded exactly way sustainable at very Like, that's a questions benefiting on think thought

Richard J. Tobin

participation are just Well, Number beneficiary benefit markets on largely versus chains I of component a with of the that I'm supplier positive price positive, you the our the this the Conversely our and critical levered because we supply every the I number tariffs. mean, that tariffs I'm components can just take day I not paper at in people two, in because we're about think American of that's it's to day, don't been our North end production. the readdressing as cost a conflict -- one. to read want has

that can we -- here, a American Asia volume then as little been just slowdown those of our the view a of But that our think it just a from in streams of price of both been to But the North from becomes and appropriately, in positive revenue ultimately the I it a on business, realization point point a negative significant that it's view. business side then cause been positioned nature of results have Asia. had on you because we've see tariffs extent the far. the so bit of

John Inch

kind your about like doing I things on Maybe Fluids broad-based of think another a a you biopharma of maybe very niche softening. just sort you has How But overall obviously to talk do compares got think? against strong portfolio just backdrop conviction of well sustained to put able to the being of in guess quarter. robust basis. can this The up lastly, growth realize we some think ex the elements global which a in portfolio, still we cadence should put it. I can about Fluids up

Richard J. Tobin

it been a Look. variety it businesses and I of business for high-growth going on, got it of some right? let's call is growing in of in biopharma there's high and that's has sitting that's collection things We've period with teens, mean, a a time.

both think the competitive a high so portion you've of that growth got to a portfolio. you've got that high have franchise compete So of and growth pumps and able from We that point view. a we is margin, macro

So calculate the a an of despite the side. there dispersed share that share very marketplace is those that gain element in We believe fact in to difficult. trying that in -- is we're gain, business particular winning

of the would that business, year, side as underground say we Fluids share. basis -- we're most the I we've and last margins improved gaining growth a best-in-class quarter-to-quarter. by driven comparable that There highlighted and got is our I franchise importantly regulatory by also business aboveground on think that probably had points And XXX market margins

So basically, what on said we are track by year. this we exit to meet

got a So got high-growth franchises. you've you've element and niche then some

got business winning and you've one are of We big improving the in piece marketplace the that is their dramatically. margins

John Inch

your so to returns deals And space Rich and forth? pricing criteria do meet would and a of that this runway is there in

Richard J. Tobin

I hope so.

John Inch

more Appreciate you Thank I hear guess, that. September. much. I'll very in

Operator

Thank you.

question from Your next is Citi. of Andrew Kaplowitz

Andrew Kaplowitz

kind the starting you very question they're on answered to quarter. comments Obviously, it their the track. get incremental there? did XX% that something XX% on said Did EPG to a strong in of just that the the year. would DFS you make did that change? bottom probably I of that you nothing's act year, Is EPG. just better but mean, DFS of all and mentioned together But you for those kind Rich, John's you reach range margin

Richard J. Tobin

a get and of the team -- But think comparison, towards bottom. a are. the comp end for accretion comparable At or the there, XXX to to Can I we quarter we we're from I to that so think got a it's that The not range see exit But point we're trajectory And because the I the woods tracking point is comp we midterm I that that me is but Look when basis we were effort for business a great some and margin we even competition, let's on exit, those can. is so think the backlog where particular is beat out. to against meet target the of had about that in pleased of But we've with is day it. it XX%. so numbers. we puts before good excited the another supportive. very out XX% of exit is us said, Sure, go. particular that that room the Yes. clearly, it at and view quarter to far, business, we the grind it? it the walk through so on

Andrew Kaplowitz

That's decent great. mentioned QX, how the business under had year. And to but your visibility quarter you fare belt in then ESG in you last business would needed quarter see into Rich the that particular, the for you in another

are you bookings year? thinking at do kind visibility you of about and second half how particular the for this And revenue point? have of what in So ESG the growth

Richard J. Tobin

Look ESG year. we good feel for about the

we're don't through that backlogs. much down, we QX. slow clearly think I So pretty when waiting think to it's to for orders the looking booked We're few and going of a on this that year. business We're end

pleased not That this out that we going be we'd of on would XX that. installs, leverage So margin full up the the the significant because just software that solidify particular of noted even has the piece the it's the backlog And XXXX. with very go to expect on into will yet, hopefully that we grown business days again we're XX%. franchise, getting accretive another actually to so but it's in stay growth time year. We're do the probably which by slightly,

Andrew Kaplowitz

Thanks guys.

Richard Tobin

Thanks.

Operator

you. Thank

question Mitchell next Julian Barclays. of is from Our

Julian Mitchell

acquisitions spend first on year, capital a the deployment. closed All-Flo Maybe morning. a and no buyback question first Good There of around six of in months couple small Pump. Hi. the you was

thinking specifically us year time. deployment. about eight we'll how hear you're some term at the capital medium least maybe in about I weeks' this understand So, for on give update

Richard Tobin

general basically mean in Well, capital I terms we return. by before organic bias Our said it's investment all Julian investment going what right? to for followed inorganic is

develops sure. we'll months. I we'll that on close inorganic the the dry think then see that to few a on relatively to powder got of keep we've issue our over side, return those, If we revisit pipeline so capital unable the for how robust are next

Julian Mitchell

I see.

we expect M&A, by can see more a we year-end? don't buybacks So, in step-up if big

Richard Tobin

going sure. at At it. carry for a don't some sit prefer cash the calendar at of point. not terms I we it. for on We expectation a an going on to have of point, year. significant in pile some not cash We're -- But flow deploy to want to to negative we're put

Julian Mitchell

would flattish Thank productivity that at on the aggregate you. And a we whole? expect XXXX the Food is to efforts? in Richmond Or be dependent should site Refrigeration be the follow-up as year-on-year then division for that does Understood. -- profits the & my just in Equipment, looking just profitability

Richard Tobin

is and Our be up to revs expectation year-over-year. for profits

Julian Mitchell

Thank you. Perfect.

Operator

you. Thank

Wolfe Your next Research. is from Nigel of question Coe

Nigel Coe

growth of in pretty half rate? backlog moving year. flat. first of sort a half conviction Julian. & Thanks. growth the second already, touched What X% is the Backlog modestly. Good morning. We degree in organic is the X% XQ We've down up on in The from question last a I we've to slight a pick Refrigeration want organic in but the lot on burned the do of got to Food,

Richard Tobin

that calendarization end Well, at day. you end the have of the one We liked the In from mean down to that but the in of high. I look book think by the conviction for quite a actually of of food I the of would've moved order at view. we our think end day missed okay? can't retail I point growth segment June, book been we have is to the able point until order at

Brad Cerepak

That's now. coming in

Richard Tobin

so in And coming now. it's

QX, proceed as we to bookings constructive you just there. again quite give So, color we're on some into

there. For got SKU mid-XXXX. the but on I that labor said and the of aspirations amount need we in working conversion terms change to that that us before, business management in of margin benefits as that dynamic we reducing some of in think We've the content, that particular it's come until issue But the don't segment. of --

it think in second we're of maximize demand case. the So, to What's for of going in terms of in to it's and half kind the profitability of I pleased on dynamic marketplace the that out year. overall door up the us

Nigel Coe

CapEx towards alluded color. field is the last maybe quarter. end the have full channel hearing the And some the of for the characterize to organization distributors Thanks. spirit partners. just in U.S. of And June your the customer That's of what kind great question from lower And been of talking then the behavior that your of end of in year. through change you you're really kind about

pulling investment And Any dialing loaded in a plans. the your I'm back because great. on back color be back bit that or wondering would a spend if backend more maybe year you're bit little the little of in that half I on was think

Richard Tobin

to the the start and Yes, second back first. go I'll with

it time think a time no I aspirations other it about when deploy CapEx. what three of then back money up work not pulling think it you've happens getting we -- just the actually got and our new you're spend for you Minneapolis months to we're this then and always timing. through building takes doing variety and on because to in as behind It's things, CPC, plant by with permits we're

capital of end timing be will going to think of it's is I overall So, it that XXXX probably capital the the I think just at piece of but deployed -- because into day. that a slip

of So, did we're -- it But then calendarization look point and we the things view. of the going we're out not pulling aspirations. to a a probably range again way back now give from bottom of and come the on

a quarter own things have the the general as in issue the Well, can we at of get other was our messaging through the shipment the I a worried a quarter at -- that with April the both marketplace. variety more businesses -- -- back of in then in we you bit tell and negative of quarter. than accelerated were that comment imagine actually the we we just from and amount and about of backlogs went different actually portfolio, of so it in beginning kind backlog. end the types was terms plethora the with little the you We our this sentiment of the mixed performance of that can that that

do that's what in of on forecasting. terms tell how shape. on; to I the there to to developed and get little you if odd down our out situation bit control convert of range at top a what's can based into and look that the it's need to of the A, kind our going that So, that's just what think an you marketplace we leaving we're of the quarter squeeze, hearing we're good I end the in in from

Nigel Coe

Rich That's the -- luck. you're right that's thanks a color very Well, odd and Thanks. good for environment.

Richard Tobin

Thanks.

Operator

Thank you.

question is Scott Your from of Melius Davis next Research.

Scott Davis

guys. morning good Hi,

Richard Tobin

Hey Scott.

Scott Davis

or this were I something of what crossed Pump? it year hurdles but Is kind can't at you that mention EPG yet? by or mentioned that? for you you the not remember double-digit All-Flo Or that this like if return not four did

Richard Tobin

It's XX% by year three.

Scott Davis

three. by XX% year

sales you question. while your Okay. on a And don't to and business then for The covered know your I software this. I share is. what that just recall memory can't environmental the answer stock I I mentioned have you're solutions Can what selling? and you

Richard J. Tobin

the interesting. a the excellent. an some there That couple made technology for major but adoption called safety, camera last rate around now guy is that principally was have Xrd over Dover years quite acquisition ago months managed independent sells what been Eye. expand driver And it doing had of it's carriers to six that

Scott Davis

it business? Is -- enough mean, I size move needle? Is can to that that the big you

Richard J. Tobin

tell time. think ESG. me so enough hope the can move mean, future. about in -- it's Yes, needle I relatively it a I the of to I let that off you context the big just in over

Scott Davis

into mean, in I question, have the Refrigeration, is there I in years be further now portfolio divestitures? on but you at are this imagine this portfolio some Okay. got just And last -- out get mid-September, Rich? look -- know years to happy you and just likely two if you've but five reasonably is Dover from then now, challenges Day we with we'll I

Richard J. Tobin

presentation its five of is the Nothing in it than going to years get present. our The want is the Well big answer capital yes. at to different destroying look But now, portfolio I September. from today? is in ahead don't portfolio is

Scott Davis

right. We’ll see you Thanks in All Okay. September. guys.

Richard J. Tobin

See you Scott.

Operator

you. Thank

Your Baird. comes Mig question from of Dobre next

Mig Dobre

thanks Yes, good morning. and

to trends seems but the minutes maybe bit that of your to and it want weaker, go about portions being Just understand else two ago business well. mean, Asia quarter. in I I back to through on is little pretty your there me from on a comments trending comments everything the just

April guess upside? if what was And in of better of So maybe quarter, help a bit little theme, is instance, if things for than us anticipated in if uncertainty, get where at maybe where would against macroeconomic that a I this you anything the did you of through can understand there it? slowed you held point you kind time

Richard J. Tobin

would Well, expect entire I the is performing than better segment we think in slightly Fluids it. --

pleased and did heat have we with the I FX. the expect we're the on We the for in the exchangers topline would of slowdown earnings the did expect think that during think we -- trajectory second quarter, I demand sure. nor not

during million quarter. two, to million So, between cost profit those that $X the in probably us $X

we the were those did of place. expected slow and in quarter. portfolio OEM But of at had automotive first have to that forecast we end year in to full the So exposure unexpected. last that slow the the we the There's that portions year during certain small it modeled like fact our into

had. not we that to due beaten supplier think unavailability I that forecast that's to that so we've cost in the of frictional in that the Richmond So, issue we expected DDP fact a surprise. labor we have as and would death, a not quarter, the

FX two business better backlog. liked I the think at had at versus that would've We bit the exchanger the the that kind little the the is to where when a we the translation on look quarter and beginning and take are. do of of we areas what forecast quarter a heat other we

feedback in I we in we my further -- orders to June. you mentioned that we're QX did DDP back color that were liked just didn't that DDP. I we look in as the the and trade some would've book before, we that but think side, at comments, tell on we I have, I we and you had show as go pleased a get with anything really mean can And if couple coming

there. extent to the expect bounce interest can to would in a bookings we into So, that convert good we back QX, that see

Mig Dobre

with the All ABB And you last night Dover saw my I partnership announced Fueling. right. then, follow-up, for for That's helpful. maybe

you give the thoughts what the of see infrastructure? So, existing maybe the the you game might here What's plan? how some be, to opportunity, as model growth can do revenue us retrofit

Richard J. Tobin

But moving we'd chargers resell be incorporated for that direct to effect, all it customer distribution somewhat into spare yesterday. into over said we've the with that Europe our that, there's and parts. EV just for can be network of purchasing Well contract We we'd it purchasing we've and dispenser recognize be look, right both you where future going a I then factor chargers, But, on would to can't that size the signed our in now. monetize We that. be always is. what ABB a signed time we of fact kits debate and

scale, to the attractive OEM too partnerships have our very to customers. we're charging early So that stations because I access start and that say size but we of was manufacturers to and size because it develop we to think and important distribution of network

Mig Dobre

operate with to go changes the of base your term better opportunity? having or Or make you Do need terms on of is it to anything you this Do be foresee to to last operation? lack -- to way install in order question. market a for sort you capture any able of just in or the really

Richard J. Tobin

The latter.

Mig Dobre

Thank right. All you.

Richard J. Tobin

welcome. You're

Operator

Thank you.

Your from next is Joe of Goldman Ritchie Sachs. question

Joe Ritchie

All right. guys. Thanks. Good morning,

Richard Tobin

Good morning, Joe.

Joe Ritchie

you've guys you It probably Hey. of so regard guess, $X.XX Obviously, I have second. think through we the about I we're benefit be like as rightsizing Maybe a get far this had XQ. going just we're -- seems it, touching year. that well and on in benefits a executed into for to most

and bit guidance the the puts out about of the second thinking how as to leverage of your getting think order volumes are you of kind little of of in about kind the your better And organic your into hit year, the a there? are of guidance what so, you half importance takes composition

Richard Tobin

We Yes. No, I was question. got you. a that knew

said Dover look likely at back we and the that margin conversion the my go the for comments, If QX in year. is lowest for to be you full

and end and go impact of take at QX would baked side expect to to QX in of the I to think and that relative all look that and to if we we the So, conversion need up our go mean, SG&A do the QX QX slowly But EPS unwind. you the we conversion, of -- into reach back I that guidance. a EPS what believe that's top to

Joe Ritchie

Go I ahead, Brad. mean sorry. – I'm Got it.

Brad Cerepak

Yes.

on referring XX% chart. the the So, Rich is to

You see with going the in the XX% improve to but SG&A, XX% is there back half. the

Joe Ritchie

other is Got in with moving come hearing up guys E&S? the drivers it. And to biggest of back you RF&E Or in there picking going and parts? are I'm printing correctly, if that, then potentially digital

Richard Tobin

Systems. Well, platform I Engineering think, -- that we Systems expect & within ID Printing Engineering by for for clearly, driven

I aboveground to even consolidated the is continue that when be going going side. have be we're think to margin the to systems on dilutive would fueling then, RF&E, it in conversion make improving margins. performance, continue which, And to very in thirdly, good we strides to

Joe Ritchie

sure sense. make whole that I I guys the And here, XX quick Yes, basis growth impact maybe think, my just in that understand had roughly to you the points the of to had guess, on quarter, makes I Okay. right follow-up ITMA portfolio, then, segment to so, about growth it, XXX maybe expectation? X% point say, to XXX our Is it on the the XQ within that's call would've way like think more been call it segment. and then, actual starting the

Brad Cerepak

higher is that. It than

Richard Tobin

rounded Yes. We would have Joe. up

it end would day So been have or -- the but the X.X% of at --

Brad Cerepak

-- or X%.

Richard Tobin

excess X%. X.X% Or slightly to of in

Brad Cerepak

Yes to X%.

Joe Ritchie

in about Engineered specifically All right. was talking I Systems, right?

Brad Cerepak

about. speaking were we what that's Yes,

Richard Tobin

Yes.

Joe Ritchie

improvement for it. an XQ All right. would point kind of Okay. you like And that? starting expect the on Got guys and that's

Richard Tobin

Yes.

Joe Ritchie

All all -- right. That

Richard Tobin

in that year. in the a Well, excess business full of for grow we the to kind expect be of XX% would like normalized

Joe Ritchie

you. Got

Okay.

think you. Thank it. I got I

Richard Tobin

Good.

Operator

you. Thank

Deane Dray RBC Capital Your next question is of Markets. from

Deane Dray

morning Thank Good you. everyone.

Richard Tobin

Hi.

Deane Dray

on that did up just product that managers Or The create you want the idea digital demand? the would talk at when is was orders? products any you ordering. pocket, follow of about But to no line printing. just catch-up here and Hey, incremental is it a purchasing were same comment on so some last new trade normalizing, there show on out launch

Richard Tobin

solutions products we package software couple We a LaRio. consumable product a different did a Mini of And of then launch launched with big a and bundling printer. a

different But had things. because of happens would not a we've the So had demand we just four have -- the same we only launched if way the anything, every dynamic, show launched that's years. series even

So the what holds everybody a launched until and products latest things. But... and of environment other see what's variety is off the pricing they

Brad Cerepak

back with customer the the show, our go them I until take lined Rich our we what if but showing credit we're was bookings very base. said, And get that order to not good at up in

of we're we ship. for we You all can those being conscious what and over very paid the imagine, ship globe

So we up that first. line

Deane Dray

Is a what clarification Got would $X times. of this point falloff slowdown uncertainty? demand? any came But to think That size on it. trade the I attribute loss? exchangers. share it, you in just said The what or you there the a million. And then, heat Was there? number you of up do But

Richard Tobin

can Yes. I I any mostly non-refrigeration of -- of businesses HVAC. macro line or What mostly always is product and our having shy being that tell away a was you driver. it was China it

Brad Cerepak

non-HVAC. Yes,

Richard Tobin

line, Non-HVAC product industrial so applications.

Deane Dray

Thank Got it. you.

Operator

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

Andrey Galiuk

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

Operator

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

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

Dover (DOV) 18 Jul 192019 Q2 Earnings call transcript