DOV - Earnings call transcript Q3 2019

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Operator

Good morning, and welcome to Dover's Third 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 speaker's 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 to 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

quarter which included of this and reconciliations materials, will morning and to available and three Thanks, website on between in adjusted call our website. supplement call. non-GAAP months. presentation Stephanie. portion Dover's GAAP Dover be Good provides third our on audio investor The XXXX are our welcome are for archived measures earnings and information

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

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

Richard J. Tobin

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

Let's portfolio a get The last across ship allowing at slide broad-based to was than revenue rate the impacted was growth the organic the X% us QX for year was improved up particularly production quarter. positively product by segment. performance started QX in Fluids higher and X. on

improvement and the inflation. volume more productivity Bookings over and to controls XX% $XXX in labor organic Engineered X% comparable one. results and driven on in mix the Fluids leverage segment quarter offsetting XXX earnings increased margin operating improvements conversion These cost million point unfavorable were than strong continued were growth by Systems period. and revenue cost basis above with in solid with to Adjusted posting book-to-bill contributing

adjusted of up was $XXX million a diluted year-over-year. Adjusted QX share XX% to earnings EPS were up XX% $X.XX and

is period, data. provide new at structure. mentioned report last during we'll in year we the under comparative segment QX, full investor the structure the which and Starting report legacy September this will our meeting As using

with results quarter and encouraged nine XXXX. the are months in third first Overall, we of the

and Our organically increase are revenue increased yielding robust has by in rightsizing improvement cash resulting year-to-date margin comparative free flow. and operational actions our X.X% with

last of order backlog our And margin of we from as and solid entering strong execution across as XXXX full quarter with our towards $X.XX share. are per momentum are well end as a year range targets. the We to the our businesses tightening top EPS adjusted result $X.XX to our all guidance a

here. I'll pass Brad it over to

Brad Cerepak

Good morning, Rich. Thanks, everyone.

our revenue slide by starting X% Let's driven go All-in XX% to Engineered Systems to X. segments. EPS GAAP the strong demand through Fluids details throughout grew was on and billion and $X.X $X.XX. increased

results. Moving to non-GAAP

As EBIT initiatives. mentioned, up in accretion reflecting productivity points strong and we over conversion continued achieved volume prior execution segment adjusted of quarter the the with year basis increased XXX margin on significant

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

slide to Turning X.

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

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

foreign our and negatively exchange see revenue bookings. can you rates As impacted

our million Asia. with the $XX FX was a and notable Europe levered earnings X.X% $X most had or revenue, businesses million on a on impact headwind for to which impact

$XX Fluids growth the expect grew in Systems headwinds to X%, these Engineered million million or while organic From grew approximately persist fourth XX%. or FX an We $XX quarter. perspective

At increased and all Engineered impacted approximately million, in Equipment increased organically or strong X% Food by & $XX bookings process were X% revenue decreased $XX declined organic increased by negatively driven solutions Refrigeration million FX. order by also and the and Food million. printing Systems X.X%, $XX in organically or Refrigeration fueling digital transport strong X%. $X growth Bookings with were in in intake million, Solutions & Bookings – the and in or Fluids markets. Environmental Equipment Bookings and Group.

book-to-bill at by year QX geographic of backlog and partially the finished end Equipment. offset this time & From & and Engineered in higher grew X% than by Refrigeration at performance Engineered X.XX, X% market driven our by Food our Fluids, U.S. Finally, Equipment. Food Refrigeration organically while last the perspective Systems Systems a was driven largest strong

with all which up particularly a X% quarter Europe and was growth nearly strong was from organic segments Fluids up XX%. posting

All at XX%. of with growth Asia grew X% China driving the organically

in Asia overall X% in Our businesses. growth the process solutions was Fluids strength retail fueling XX% on with and nearly business China up both of

was Systems was slower Equipment down Engineered to the mid-teens, heat region. exchangers in Food demand & whereas primarily due Asia for Refrigeration up in XX%

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

XX%, higher The from and higher earnings by excluding higher discrete improved taxes. rate Going prior tax on tax XX for is by operations a earnings, effective bottom continuing than $XX basis. offset points driven the segment comparable or basis benefits approximately year XXXX, to primarily the chart. partially XX% costs corporate Adjusted million

flow X. Slide a year. $XXX million last free on Now Year-to-date was over improvement million, cash $XXX

revenue versus the at Our in period. cash flow was XX.X% the quarter strong comparable prior XX.X% in of third

drove through net topline capital a focus year-over-year. on efficiencies our working year, Despite improvement growth the strong

will objectives. the quarter, environment, our uncertain our fourth given the macro cash we As manage attention schedules our meet we production to turn to flow

quarter. year. is slightly year-to-date, last expenditures The cash of fourth quarter our $XXX Capital were traditionally flow ahead strongest million

to expenditures do XXXX. carry While XXXX our we the for capital of into we ramp over planned to expect our several quarter, in fourth expect investments

it back me that Rich. With let turn to over

Richard J. Tobin

Thanks Brad.

of Systems growth by industrial organic Engineered driven our segment the X.X%, topline delivered platform. to largely move Let's slides.

growth you can digital the in was see the strong trucks incremental and have on businesses. across As refuse as to well printing margin efficiency in XX% continued volume we exceeding gain bridge and converted

& Printing digital weaker order X%, of by pipeline China. driven printing platform environment Our the ITMA organically Overall, coding trade out digital than shipments ID in increased in heels has printing performed coming with and offset in strength the of demand particular marking where a Asia the from in activity on strong the platform by grew show more June. in well

industrial The platform X% posted growth. organic

business year-over-year. with deliver remained demand double-digit Our over as waste for equipment digital both growing to XX% solutions business strong traditional growth handling and continued software

MPG in business aftermarket in OEM has in quarters. X% the stronger on the posted experience of service Europe vehicle growth sector to significant the conditions backlog few as Our timing which quarter a for demand a due was for specific slow defense demand past defense remain demand orders carry flat continued to program, and been automotive in continues to DESTACO constructive. slow but

businesses Bookings handling remained book-to-bill printing All in particular but backlog. strength with orders one several at two for Systems above strong posted Engineered replenishing large waste which solid. digital booked and

growth XX% last margins. quarter all strong nearly footing ID platform to largely on the & by The entered is consolidated solid segment, for organic we which continued businesses. accretive the with of for Printing the segment strength Overall, quarter Fluids driven posted across

productivity XX%, mix. by driven points to than in excess geographic XXX volume increased improved offsetting margin of incremental and margin EBITDA XX.X%. segment margin with more and increased basis Adjusted leverage Adjusted negative product

to and the business Our pumps plastics in third QX a had process posting deliveries which quarter in loaded of solutions and quarter excellent growth Europe organic Asia in had polymer strong an and Maag back-end XXXX. X%. were markets

management the environment. growth quarter. Biopharma weakening industrial macro components demand continued during thermal and robust deliver despite to our markets double-digit for Shipments business precision and pumps the remained

China the and with demand underground of underground stages which aboveground remained organic as growth for upgrade of posted Fueling across strength geographies all particular is going through cycle. its robust systems transport final and piping equipment XX% both in

albeit markets, slowing as of has demand projects. environment but significant a enters grew Bookings constructive EMV to we organically term was the year-over-year comparable the U.S. The end contributor segment macro but and skewed longer comparable QX in some remain remained flat in more in growth. the a signs sequentially, not over with backlog segment roughly shown the period. X% improved choppy towards

Equipment as we costs down XX.X%. X% of was margins margin adjusted and footprint revenue our to volume & The organic EBITDA restructure frictional and lower continue manufacturing Refrigeration were segment. Food pressured this by in

mixed. Activity Systems new remained services in year-over-year food retail store decline to remains continue activity as and subdued. projects

growth line retail's remodels. food case sustained retailers double-digit revenue as -- largest in store case continued and core investing backlog in product door Our

contracts business activity enter the weakness and for flat of enter in in by SWEP SWEP in signed to on to X% posted offset organically shipments rebound comparative the in segment systems revenue demand a in several and in demand in Asia. increase backlog We retail a European outlook mainly Belvac due with constructive QX an business. large backlog. last we a book quarter. lower continued QX for two-thirds with heat food against declined refrigeration exchangers quarter Bookings

to sources disaggregates accretion Moving slide Slide of quarter. EPS key XX XX. the this

growth. actions the of for Solid and XX% yield Incremental operational growth the was continue margin driving the conversion quarter majority to XX%. of the results EPS strong

comparable high guidance guidance setting the Fluids. of in We the growth period XX% and Engineered organic year. Fluids are for our for Systems a upward revenue Recall reiterating QX posted tightening for XXXX, this comparable for -- watermark

Food & X% post to market in remodel Equipment resetting an demand. decline driven flat Refrigeration revenue to stabilizes after XXXX We in after expect the as XXXX

growth so encouraged are this deliver we far organic conversion. robust margin Overall, we with the as year continue performance to and

are customers sustain and cost We productivity initiatives growth. working are and our on executing closely well with to

sentiment conditions some most businesses in Demand constructive visibility and across cautious but sectors. remain are

with lot inorganic several between of have XXXX. and on but an interesting on we pipeline the remain end plate projects now capital We focused the our a major closing underway and out year

year are well-positioned year such to deliver a environment, of per So strengthening as range revenue close solid and the the we tightening a full end share. flow a cash dollar to our U.S. up $X.XX QX to guidance comp, earnings. macro are challenging $X.XX uncertain from for despite both we the And the to to wrap and top

move on let's that to with, Q&A. the Andrey? And

Andrey Galiuk

let's Stephanie Q&A. open the

Operator

[Operator first of from line Andrew question America. Bank comes the with Our Instructions] Obin of

Andrew Obin

Rich. morning Good

Richard J. Tobin

Good morning, Andrew.

Andrew Obin

X, everybody Hi, at I night. landed good last else. morning

in were of & quarter of. by third that helped Those Printing Look, you does investors the very in still And up. you quarter, wake me bookings. of bookings of one-time were you tough it how because A, trying questions good. seem got happened -- have second the sort some you got given that third sort we QX; quarter from comps on lot let maybe ID? think I’m refrigeration I ask of much to Sorry, did the in stuff happened in the a

you think can one-time how positive QX? So in terms in of much bookings stuff you in robust deliver have you XQ And bookings? did of can

Richard J. Tobin

Well, we right? you I where on lot don't based think we end a I'll like bookings. that order performance to some want I to A did extent up production end. of color QX what see comment that certain to on give -- QX on timing. and in comparatively was We'd But

year the out were remember backlog we was last but having time just where segment the you last that at year. if was trouble coming out our by period Fluids a driven were So getting that product this in of fact we high

the production was significantly margin than both last this delivery. the drove Our line in year year, and revenue retail fueling performance it better which was

the Solutions our QX particularly in in that to year in QX. addition, delivered MAAG, basically and Process last we business, In Pumps

it systems out product production the comp related the was it. and matter have The fact the it of the difficult go So we to year. get the because in is let's than would our even QX out more makes if these QX beginning but at estimated to of even are of got that ready it's we great ship

ability But I opposed look us in longer-term are as the lot In and next especially in I and of you the cycle backlog because happy be go production. sets the is we're fact Those of the mean shipping to of in look to into don't components that XXXX the just if year. long to able in and matter backlog, we're well. convert flowing into to of them terms contracts, be great. going our we'd precision it of to our XXXX which the at systems you But have ESG, comments, It think back because that convert is a if backlog, is MAAG nature QX so also. up

Andrew Obin

question on the into any sizing into cost you. And labor then Refrigeration? around Thank the to OpEx What's And the of happening XXXX? way planned Refrigeration. investment XQ in automation and

Richard J. Tobin

struggle into se. cost, ends the the not cost real rate but -- It's labor it's up issue in having time, of over per is of cost rolling is labor is labor The bigger so availability. the availability the Refrigeration which that up, we're more it's not net-net up ends labor

trying out that process to of resolve what the the the in the So negatively running at a overtime to a automating But is product the get margins. bunch of future amount is and the out. impacting we're end significant it day labor taking and hoping of by

P&L, driven the rate. at amount but by labor that looked costs running. driven be it's the you up by not if of So It's OT we're will

Andrew Obin

Brad made you. look it Thank Rich, you this quarter. easy

Richard J. Tobin

Thanks.

Andrew Obin

Congratulations.

Brad Cerepak

Thanks.

Operator

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

John Inch

everybody. morning Good

Richard J. Tobin

Good morning, John.

John Inch

MAAG forward Fluids, Is core went high look for right at pull some I that I if the timing so digit. it think you through organic implies on Rich, the guide, forth. So year, right and something Fluids for your firstly, of the is revenues based down -- quarter? versus there today? going business actually down is about the else else of could the core fourth boost Or it? there in And that on am that high expectations maybe kind single-digit I single that something for

Richard J. Tobin

at the because Fluids trying QX tell to Well everybody the look, year. all was in XX% going tough day, I in the Okay. of the I in that segment we've end comp to that QX last think been year be we grew mean

the which you've going there short-cycle look it's got what kind those go and new in of interesting we we of to kinds businesses which two would demand revenue, projects. because be and biased on to different going is of And because, you kind demand. think, then longer-term and MAAG when you've backlog longer-term I really at but got demand it's have when is, like be segments fueling long-cycle up, is toward systems DPC bookings are

quarter, a this This year, known solutions that is able bad the a the is we done we've say had terms last the have backlog to of And self-induced product fact in matter -- margins. being a that but is and not in performance that all year the going job fourth we've the not better because that out. production to we to fueling get much which shipped is a of lot along, above reflected

differences going nothing really timing on production there's So, speak performance. to so other than on

John Inch

next the too. so, part that Well, I three and prospectively were I some have compares realize quarters issue kind first of going right tough fourth else similarly growth guess is literally All that to the timer’s we're does of one -- of there in through into year the equal, subdue quarter.

Richard J. Tobin

haven't estimates backlog 'XX, Look, topline and if for out given for it, we growth I an I we for look issue that on at think right have don't if will guidance today I based our at but any 'XX look now.

John Inch

it. Got

Richard J. Tobin

a And Well, to be is kind Fluids a But bunch notion the QX, was read the QX. going QX. tough QX. reports, of clearly -- us beat research of I've this topline moderate the of missing that comp assumption got to in so pretty we we've clear and just for been you've

John Inch

show it improvement, on I so deteriorated clear. RF&E that's mean so No, sequential sequentially. didn't the segment, it margins The

sort I Do in that explained think is of and -- to margins you to outlined path Rich the... retail think see obviously the I that a automation question The you picks XX% still stuff XX% back. in refrigeration you that.

Richard J. Tobin

based into the the we I because think of 'XX. to news in terms of increased consolidating and door news is I is which door case quarters. on should the to some now going are us good going least some do. worst I have of right in three midst one footprint. we're volumes at we of what bookings throwing of transitional to terms QX, terms some causing QX, backlog the it's in see some that consternation up in I five I getting case we're that. Look, good UB's do to leading money do. out But fact can despite product in in labor And in lining we're on costing have some think platform usually But seasonality terms at of the from and the costs

John Inch

-- did companies. September month August and there July, how you anomalies for did very see economy, out through Were you? as you went September a given third the quarter right like strong you play industrial ended Traditionally, and last, as the is for Just choppy most October?

Richard J. Tobin

is there caution year. amount everybody that there their that's end of inventories think an through out I about through distribution to the manage the especially trying of

of and I the I think to out, we on job we pulling this because than the product underground -- guys Fluids side of QX piping, away 'XX. that extent. but think kind performed in better that a transition slow the environment knew was that And the did to the especially that's that going getting segment fantastic with so we certain into regulatory the on of a from expected,

as but year. last we're the sentiment clearly is So, maximizing performance, good time it market this not as was

John Inch

quarters, It's you. not refreshing company just shipped. Thank actually appreciated. to the getting much hear Very stuff a but managing

Richard J. Tobin

welcome. You're

Operator

Andrew Your next from with question is Citi. Kaplowitz

Andrew Kaplowitz

guys. morning Hey good

Richard J. Tobin

Good morning.

Brad Cerepak

morning. Good

Andrew Kaplowitz

Rich, as of in talked to gone are to strong be XX% at solutions incremental now opportunity at in point to the the you it, through so continued Or just to the you've margin the margin Day that opportunities? strong the incrementals near-term continues DFS? restructuring really you that business margins a And for fueling Are have found enhancement. food through growth a function you've XX% you And margin have had? got rise. you that that Analyst basically

Richard J. Tobin

can that has amount was aboveground portion significant year-over-year a margin -- pieces that you tell solutions. when fueling we don't accretion if I Well think referred of that the is I I margin catch-up that there's the And you we of think to from. number, to two on the come where it, right? but disclose that opportunity,

of that. done on job in has good terms a So the executing really team

that's I pure side, gained in share belowground that the been volume, market had in well. they've I arguably that And believe we've leading side segment. belowground margins just and we've On think particular the right? executing that

think aboveground So, we've extracted that from the everything I that portion. don't can we

need improve overall, pleased, we're mentioned as feel in that of our EMEA think I end the reasonably that we September, to I think we but the don't in we're back runway. -- But think that that I I at margins the region.

Andrew Kaplowitz

weak China just it. China. very just to talking obviously a about then, continues the Obviously, mentioned and quarter a was And bit your this inflection underground But last strong. has regulation you you Europe Got quarter. be had strong performance, in regionally for

So, those going forward. maybe and you what businesses for stability instance like you can talk regions have you weaken? in any about they to continued see see particular China? MI Or in Did

Richard J. Tobin

rate the is okay. static that of in think relatively I weakening last MI quarter, to

better. it So it didn't worse any get any didn't get and

I that think expected of of pull forward. fueling than well and in portfolio a on we be Fluids little the underground better that bit solutions performed may a

know, digital that always an of that a example, expected. number, like is you but there best as output quarter, messy you've -- for the a XXX% of printing, We That we've for to is globe. euros had export business a EMEA, trying we excellent got got revenue, exported but recognize us, it's as is some businesses that recognized in lot. substantial our because do around

-- number the if euro or our you more So always MEA me. our is E, than follow EMEA it's

Andrew Kaplowitz

Yeah. Nice Thanks quarter. guys.

Richard J. Tobin

Thanks.

Operator

next Research is Partners. Jeff from with Your question Sprague Vertical

Jeff Sprague

of really we're the on thinking OPW in just improvement that kind there. you of you Or as runway better we and and fully up hear surprised just wasn't what sits call maybe among integrate would Thanks. this trying got that. Rich, and said rolled But it Tokheim today? seeing, just was Hey, execution you fruits think about fueling better Good more Not just back guys. still business seeing together? the I and prior stitched morning, really operational kind years maybe of to are Wayne to

Richard J. Tobin

-- of fully More year we Right? issues of the I lot not rectified. that some So lot that a the a think it but had former. have of has been is last been operational

of production referenced improved what So really when about. issue the talking Q-to-Q performance I'm I that's

terms phenomenon And in really we've I for of integration, the but need think really part. work to the to on. progress that's we a lot most that's a European initial of continue that made what

really that harmonization that and think it on yet. That's work a preparation I think seeing Tokheim I platforms for there's Wayne of been in done we're don't but in Europe, to the of between lot benefit of come.

Jeff Sprague

not growth contribute grow did growth. didn't EMV it segment? different rate that to Or grow? it didn't at that said you Does mean And than a the

Richard J. Tobin

impact It grew, did but not the QX. it in materially growth rate

Jeff Sprague

one, doors last saying catch cases Were double-digit? one really that. up were just didn't you I doors. And versus just

Richard J. Tobin

now It's case. No. integrated door It's offering an almost.

Jeff Sprague

Yes.

Up in quarter? digit double Okay. the

Richard J. Tobin

Yes.

Jeff Sprague

you. Thank Okay.

Richard J. Tobin

Welcome.

Operator

is Nigel Coe from next with Your Wolfe question Research.

Nigel Coe

morning, Thanks. guys. Good

Richard J. Tobin

morning Good

Brad Cerepak

morning Good

Nigel Coe

being So, lumpy. is great, cash bit And the obviously little cash so free a flow quarter. in free

is called got in can growth of there. Number cash free the Brad therefore, towards surprise You've from guidance. you cash in seasonality margin free do comfortable sequentially that in end you But And Normally strong one, grow range you what higher. no feel XQ. terms flow XQ? you out of the upper impact the flow pushing did the XQ cash be I'll

Brad Cerepak

Yes.

frankly, we're fourth capital, I think, great to QX. we're into quite those the also, out our -- progress first with in the execution time calling quarter. the continuing actions that actually it's on that see. working made we've Okay. And is We're which Well, here pleased

we fourth to invested year, quarter. see quarter is set strong that said stronger continue to going which be we again Having this thing into delivering to have up and out year-over-year. and a the fourth means the did spend I is, in that we'll say more point still be CapEx heavily cash we're The a that,

flow feel cash for So we confident year. the about our

Nigel Coe

Okay.

great a that's if into needs improve. dig think the of then extremely like to of kind obviously, strong. sort conversion sort just quarter enough. gross of margin what critical, had of in I was came metrics most good be If I I – And to not

improves and in – gross maybe think, margins getting in what was better? that impacted of I margin just Rich, what that Kind year-over-year. unpack of terms maybe the XXXX that converted it decline, So price/cost then, mix? gross And

Richard J. Tobin

inflation If of better else. kind the and of we we're unpack – better we're in labor anything mix tariffs, it input really can't than end price, versus than cost It's you control. more at between than And mix neutral. headwinds mix the was It day.

I was but mean, growth, line time at down It's -- pick a like rectify, think all an company of over product VSG if some some. one, that's but let's gross because we something that the with posted a we excellent that associated related, top look it's ramping that. like you specific we're mix can with that that's dealing line the kind and of costs margin up

you talked like. the there's – we up questions So quarter. margins they market I a It's margins pretty a not about upfront go geographic back of some mix. And building EMEA to and but the revenue, lot of that negative in let's going our new driven. of transitory before good not be and that of if had it's on different the mix Fueling Solutions' product initiatives are at pretty price to going and lines negative issues that We're were share, terms will look take and would buying some are consolidated kind

as the the negative as take take out and we'll So a comes the -- we'll but it earnings, in absolute negative revenue mix.

can't we control. mix the So really

I manage margin. pricing things. But other and disciplined a to want that gross to terms off trying shut line the of trying to think don't variety of in be you we're top

Nigel Coe

much. you Absolutely. Thank very

Operator

Mitchell Julian from is question next Barclays. with Your

Julian Mitchell

Thanks a Good lot. morning.

organic segment? But you or you maybe last case think we in ask term, in as cycle you do QX door really Maybe to XXXX & think versus about or Food overall bookings of on Refrigeration are first whatever. QX, spending even said, for be that customer door year, a do wanted sales environment? sales you versus down Equipment replacement this – How say. a the so demand, is question just or much let's think where flat flattish customers? medium case around X%. year This floor sort the Just not for And the for around for

Richard J. Tobin

the case is market which towards the transitioning what's the And door it's expected now that refurbishment that's way portion good. is it, of that driving the repair, think that I we meaning driven volume.

systems. greenfield to weak, negative think has it's so the build-out I to continued a be

to that there. systems So piece it's encouraged out demand part from case say. But in slightly big of of we're at see hard terms a intervening box cost it's door a damn mean, now, the of and pretty one It's a don't right the in greenfield of the string. in getting that's of we here, is going lot least terms because how which low demand, are its business of the expansion we structure. on is bulk terms the I

side. have good we what XXXX we I call, -- systems the we about that can closed on -- earlier now. based right to feel now So think and that and QX, sets case at I should which alluded right up as on better in during see in hopefully the would some news I bookings XXXX hope door than we're the floor

Julian Mitchell

Refrigeration for sales, the in what slightly you've margins, mean, year flattish margins & probably Food I for about year. got this think that you if means And down

XXXX, sales had If we can you margin be flattish do performance the better? in think

Richard J. Tobin

the be execute going business. I of that to lot hope of on a we so. on Hillphoenix predicated automation of the is startup I our side how mean the on

next would I but margins I I in we think -- hiccups going So post I to have line we're overall expecting post increased year. can big project, QX it's mean, that pretty we're on and QX. increased top think to some that the margins expect that a

Julian Mitchell

and Thanks. be $XX low. very And so Buyback think just spend capital million period around deployment. my last then second very, I in nine-month the would topic

that Maybe do M&A mentioned at just can year rolling out remarks you're are prepared how opportunities. thinking you the and that flesh whether XX% in some think attractive I three there rate. a hurdle about that you've still lot opportunities of

Richard J. Tobin

interesting. Well, it's

can opportunities last just price execute but at to have them the tough. be got remains has of of purchase But would've QX pricing we than a last got a a that bid minds pipeline the lost is on day. -- think that much of We amount get and but we in got it, meeting think end of -- the the the that the let's that, in valuation I better terms to significantly out we seen did months, having say done. the liked out six better we year, if I environment increased one still said we've over

that think I some of we there. that that good based increased So activity the feel see attractive just opportunities you'll on number

Julian Mitchell

Great. Thank you.

Operator

is Davis from Your next Scott Research. with Melius question

Scott Davis

morning guys. good Hey,

Richard J. Tobin

Scott. Hey,

Brad Cerepak

Good morning.

Scott Davis

bodies there board? anything you in differently of real you you're filters the guys been M&A the process that how on doing any Richard the -- since Kind or or came has processes? the change whether or

Richard J. Tobin

say. It's I've guess I've hard considering here been we've it walk never the the think away a right back pricing environment. same We process but at pretty from robust years and the to I a that unfortunately for that's retrospectively bit processes quite me the for been I now. that X.X in looked got past, the for

got we have the So to discipline.

just spent the and and mentioned on quarter we that's one in sometimes. money on lot lost that I we of just life time a out due Like valuation to

I just So here are the is that I businesses. past say that can't have confident evaluating that can we these process. the speak team objectively to the of we in

Scott Davis

guys sponsor opportunities are stuff? cultivating Are out Is on to the are that, where mean, of that are Just… combination they your share or I the come all? from? a there? Are lion's just follow-up stuff And of they that it you -- internally books

Richard J. Tobin

combination It's of a of It's a all. combination all.

Scott Davis

Fair you guys. enough. Thank

Richard J. Tobin

Scott. Thanks,

Operator

Your JPMorgan. next with Tusa Steve question is from

Pat Baumann

very call. Oh, guide in high at so year-to-date conservative. rate so in segment it's But down First the I maybe it hi. guide? just taking you actually just seems look like on it it trend is of that timing? part is guidance kind looks the Baumann this quarter. like characterize look call my Steve that Tusa. Thanks you and is the for curious But beginning at be you Is repetitive. for and I if terms Good of the is single-digits Fluids question to least fourth Pat the all read or right morning apologize growth going how exit at just to the the for organic of just as of guys. that? comps would A the missed going at Like for numbers, This

Richard J. Tobin

because in some of recognized again, timing the business on that that timing been that year just there in so were last that we've guiding was QX line that shipments do way XX% No. will we year-over-year. we a It's going year top we growth QX our solution XX% grow that process to and that group correct issue. which of it's was all no It's grew what

And a in the out a matter had the product this inability done of get much of backlog and year. fact better which job we've we last our the fueling year, to solutions self-induced

been more revenue our has So blended. evenly growth

difficult So be it's going comp. to a

that think line what headline is can that absolute think despite quarter-over-quarter figure we're difficult to I but I is, top the that increase confident going earnings comp. we be it

Pat Baumann

you then And Understood. those kind what out comps? year ends to like comp tough next in year of looks of the than ultimately do context there? just given expect Or next start a slower start

Richard J. Tobin

get to don't into haven't guidance -- that given sequential next going not out next I want for guidance I'm to year give look we and year. for

XXXX. deal can we let's year, seasonality of close with wait So the until we

Pat Baumann

follow-up then... the second the savings -- of is. us terms cost my just what incremental number number I then incremental XXXX what And total the just you remind sense. but expected that of changed would wouldn't savings And that's remind Make be, just Okay. could us cost think for that in

Richard J. Tobin

famous I a the $XX Yes, question. $XX mean You Pat. knew, it's finally Congratulations got we'd million? million.

Pat Baumann

guide And that but -- want you year, million. for $XX next to gave should I So, know number. like don't then you

we So the just thinking about curious, should year other... the X.X that weighted to versus if be of

Richard J. Tobin

all the stop you? got. you've can is yourself Thanks All can't million You with Pat. seasonality $XX right.

Pat Baumann

Thanks guys.

Operator

from comes Josh Stanley. Pokrzywinski Morgan question next Your with

Josh Pokrzywinski

good guys. Hi, morning

follow-up Rich, the core is Earlier good would've of of in think quarters the what self-help the year, conversion. was number. I a quarter, past some been conversion kind you kind think isolate of a could on said the tried to margin and the core conversion you what was all-in very in Just Obviously XX% this the better. I have core

those Just different you in kind quarter. wondering how the pieces of grade

Richard J. Tobin

on the and aside it year-over-year. as and numbers, it's better. It's noise get better better lot just of based out take a gone of continues the performance is improved a getting -- we've to there. And of production that through variety Mix

currency positively that case really that reason FX translation is profit do it of which getting messy, we line headwinds on is got cost were we because now movement on year we and in the especially line. which going the a the it of SG&A impacts for because offset core SG&A disaggregating kind is Now our right, because to you've stopped said by

knew looks like we So as it now. through develop was we're We the year. coming SG&A this overcooking watched FX

So overall, look we're never completely satisfied.

about. I or feel improve overall, to think year. that But we've I been the think conversion we the operating we conversion good open margin need where about gross next

Josh Pokrzywinski

way so that kind of I of to on the totality wrong? the helpful. few a some for the have on the made no Any confusion one quarter? That's it. various mention fourth size times revenue revenue number that And for Got know kind of pulled you it forward to Just been moving sake gets pieces of of timing. the might then

Richard J. Tobin

problem the be the to own Yes. harder. QX imagine we the we The that we closing going try became We relates can to is process -- and as get is, internal of beat it. estimates can quarter explaining of in ready knew door extent solutions this the and it for and you not Fluids made the when -- we and were the to this squeeze our product crazy be fact were to knew revenue actually only manage QX as it we We'd number. ship that out matter especially QX

think and We the especially QX QX in self-induced in expect underground would the that QX again year not and in this it's in was Maag aboveground whole year. we've QX fact to on I an beaten that side. between that Fluids we last QX and excellent that So in processes do China, very and comp pumps the that on performed solution, bad recognize the had we well issue last that

Josh Pokrzywinski

anything And doesn't that's matched Got that it's longer of But that macro just Fluids not seem more maybe cycle of some kind side it, really that's pumps numbers? something out given minor one that one, there? this agita it. helpful. then you it's It saw, like of the on of apparent the in

Richard J. Tobin

Yes.

the us. continued that well think I to systems for business longer-cycle book

on the at pumps QX. into I going some weakening saw end of the think we business, QX

Josh Pokrzywinski

the quarter appreciate guys. it Good Got color.

Operator

Goldman Ritchie Your next is with Sachs. from question Joe

Joe Ritchie

guys. good Thanks morning

implied So like Fluids for the the on & Fluids. it Refrigeration guide XQ. flattish the in growth XQ Equipment, talked the seems for organic about year extent Maybe just XQ to mid-single-digit about we've it about implies guide thinking some Food

backlog And in so short just you curious just better get how your that have much number. versus order to to cycle meeting hit that in of already

Richard J. Tobin

got that I the backlog. majority in it of would think we've

Joe Ritchie

about I is you enough. cycle clearly the next next then and do own in kind how coming great Okay. of side specifically And think China fueling rate an to in an maybe year guess been and fueling our I the transport thinking regionally on And very guess thinking China you Good business guys for on aware All should you we're a right. side, have but upgrade be of we XXXX? that headwind planning growth about year? the about the end. of there as mentioned

Richard J. Tobin

the But up to We're that Yes. on in the expect the on plans a that to working because the into belowground China be headwind year. underground other at a next clearly we would in of We it got end runoff going regions environment. think make specifically portion the of has day. regulatory side, the of headwind

Joe Ritchie

overall fueling your China year? expectation point it. the this that on next Got is Is growth at still side

Richard J. Tobin

of side side. versus but on early the aboveground think catch-up whether little so, tell to a what -- hope underground I I too it's the the quantum the

but of planning. So that's -- let's don't we our kind know yet

Joe Ritchie

Got it.

guys. Thanks Okay.

Operator

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

Deane Dray

some Hey Thank improved doing to over you in call specifically are you've everyone. streamline and now of production -- bottlenecks, this differently added? SKUs? versus performance multiple totality year? Rich especially that Is What is Fluids color you. used out this for more hear term what that. in characterization last performance? you I it times would like around improved you've morning take production Good love automation this changed us Did Just give

Richard J. Tobin

our I our pretty Fluids year-over-year has think were operations, the extent upfront North to fluid with solutions a best and improve XXXX think with to rectified. that struggling not struggling in we American we have were that we that group felt Europe that year-to-date And to done operations room certain planned I the we meaning had that we consolidation year in arguably need improvement last -- or were improved be both the but year-over-year. struggling,

we working the basically that's measure what overtime. frictional – a reductions it's performance. so there's in manifesting it's We're of It's it different – So no variety – terms. A that lot cost, of capital not in is. itself ways

a not and had this It's we growth squeezing year. the us. parcel QX helped same into getting the which more because it We're in and sustained it's So it fashion backlog out just year revenue last to happened. part year-over-year

re-platforming. more So than it's that

future. doing a would a I work good is lot that's think group that expect on the in that but re-platforming benefit we I of see the

Deane Dray

figure impressive, great. we've some fact there China a just in which all of on to had the the the as XX%. more That's follow-up And seen geographies, being is considering segments Europe, then growing I'm up slowing or in trying anxiety out that you

and there Europe, seen balance Just geographies. those segment start of that the in of with growth we've in the terms weakness recent

Richard J. Tobin

almost It's not our mean, into too and I But everything headwinds that Europe, the perform else. And wrote I think that Europe. Western is bad comment. inexplicably, consider would in the to mentioned despite EMEA are I comments right? an it earlier, there. continue we As we well what old I And remember necessarily macros there

DESTACO We a run that OEM greater auto a that both extent to OEM on made are we've & into shipping lot and headwinds of on auto that European through certain we've offset our Printing in volume up and VSG ID EMEA.

the se. of per East and it's that Middle shipped is A lot it a lot Germany Africa. of being So like shipped into product into is being not

timing some there's think on I overall VSG. differences So

Europe on on the pumps that down of quarters. And it previous is segment ID and was the off up, the balance I the of side. actually mostly two think & biopharma Printing in

Deane Dray

friction of sign then China, trade fallout? no And

Richard J. Tobin

kind the pumps offset signs day the friction and No. think end the digital fallout But Markem-Imaje. of There's in at of think trade printing Fluids weakness of I that group all in I and MI sure. for

Deane Dray

Very you. helpful. Thank

Richard J. Tobin

You’re welcome.

Operator

Your comes with Baird. Dobre Mig final question from

Mig Dobre

Thank you. Good morning.

don't I this Can pre-buy? of that but benefit to you've from know ahead had help the the call Just wanted how regulatory discussion. to on else size China follow Fluids changes. maybe it up you

Richard J. Tobin

better growth it seen. QX than out to of transition. into of going of terms I just some be the QX, No. in remains timing. can't our end Whether it can because XXXX you we headwind squeeze But estimates to a can for it. would be I more in did size have we just the that thought consider tell we we But

Mig Dobre

segment I the mean about materiality wondering all overall. the that business to specific we're of

Richard J. Tobin

different variety cycle the get I the the segment of going once is cycle structure with good short long unpack side. got new the us first we a able we've that portions be to it's Fluids of No to And all, it. you're – – to go for news of

So there. you a we'll transparency lot more give

you putting and caution and before segment the cycle taking So the of you percentage would to wait to start going I long headwind old basis the and QX total why you, some then entire cycle. larger on see split short a you're it between don't the

Mig Dobre

the year. ESG, on seen pretty some we've lastly throughout And Okay. order then good volatility

In bit there Is here? first some I the rollout? just sort in think from this And of what's customers? specific going going orders lumpiness half. a for timing kind setup you is quite of product were large forward? the of the in it What's on Obviously, terms up third quarter. down made

Richard J. Tobin

kind you've got It's we come the of the particular of latter, timing with large runoff. right? that customers are high-value large So that business orders from to in deal recognize in that the there blanket that

this of the backlog. bring that's for to our positivity is had ESG quarter XXXX reflected orders that that is backlog and we part in So in the fact beginning

Mig Dobre

thanks. Okay,

Operator

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

Andrey Galiuk

and our a forward call. you your speaking Have next This quarter. thank Thank conference concludes in look to you. Dover interest good to for you day. We

Operator

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

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

Dover (DOV) 17 Oct 192019 Q3 Earnings call transcript