DOV - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to Dover’s Third Quarter 2020 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 with please these at If you. Thank like call I turn would to now the over Mr. to Galiuk. Andrey Please sir. ahead, go

Andrey Galiuk

and Form customers, and quarter the Form guided in third operations, business, economy our We everyone by global joining our the Dover and XX-K that audio Thank list which website. cause thank of non-GAAP included this I measures over our could will as forward-looking from morning, to those information obligation supplement are Good no be for in portion three available revise our of to a our our archived employees, our referring this months. will turn to With liquidity, on update everyone differ caution any or for available provides materials, our suppliers, including contain on uncertainties to and want GAAP on be today and adjusted undertake and COVID-XX their be you, We risks, law. that, by forward-looking that We publicly and statements, of flow. statement. required factors call cash for investor for impact call. any reconciliations playback remind to everyone are for anticipated between call to may This website Laurie. except presentation you of and Rich. and the will the XX-Q comments analysis call in Dover forward-looking results subject statements that

Richard Tobin

Andrey. Thanks,

results X. the with Let’s summary of Page begin on

internal and in were back continued through September, September. trends guided positive As dynamic we our were exceeding This August forecasts. we July,

two and in we improving manufacturing tangible the benefits encouraged chain QX. had solid demand the performance to supply very operation our were execution The addition in In environment, by quarter. operations

drove for top line. increased quarter. bookings positive to the from in carry month through and most comparable The pumps portfolio. vary next the And and I'll into not businesses and traction half quarter despite than backlog woods in at the the capacity for is delivered see of mix, geographic impact and with to of of day we a going multi-year improved focused and biopharma in solutions performance recent and we quarter and We're improvement year the highlighted further by efficiency the particular. of margin which backlog on and but healthy some continue gaining our fourth positive to more quarter operational business encouraging to quarter to by driven year-over-year trajectory lower initiatives, achieved We the strong posting and our date. investment We business segment growth of the the our that, margin diverse yet, sequentially is trajectory a as year. out in but September. process it revenue mixed end improve clearly continues the you downturn. robust by the deliver expected Demand and market companies higher than fixed a the margin positive combination it volume us continue posting long to our First, market about flat more an Revenue to performance third exposure bookings absorption trends across and our and to cycle the second, talk in are X% declined cost asset our operating a and organically of the

in and generated last free to period over for Year operating to management year, robust expect XXX conversion more revenue, flow adjusted of results on of and XX% date, the date, deliver a million strong owing the and flat conversion consolidated XXX% in have our the the at towards flow earnings. cash net was margin we adjusted now over margin driving to to quarter Cash year. achieving a target strong With we are capital comparable the full-year discipline.

As per solid on raising to backlog, in a the year We're the first and guidance the of quarters to of share]. in are the our [$X.XX we not our performance $X.XX markets, annual clear performance materialize. and order and we to three a result to adjusted we believe will possession backdrop in date remains but fourth macro uneven that performance quarter the enable dislocations between possible have levers should our us any [absorb] our the they EPS in

Let's for capital in by and industrial in industrial industrial automation, products spending driven subdued QX Slide remains decline a XX% X. softness CapEx an handling. and move General levered resulting to engineered winches, waste organic

the period had largest a ever it the challenging making year Additionally, quarter benchmark. comparable business our last waste in handling

operational textile to improving through good Margin recovering the weathering invest and and prompt to in new in side, in on and the insufficient volume materially achieved equipment vehicle America wall whereas activity, couple regulatory We've Demand aftermarket defer segment in companies North was offsetting digits of cost saw cost National lower and improved difficult and globally. still sequentially China our robust printers fabric was compliance On declined testament demand weakness and however, strong business uncertainty. aerospace seen and to in mix organically performance a favorable continued EMV from In team of in and double albeit of has productivity volumes. remains double the minimize fueling offsetting impact sequentially spending and positive mix a actions, in construction shipments very actions, continued continued Productivity erosion subdued absorption. for than textile to machinery. recovery quarters. printing. nearly more and And improvements, but regional replacement volumes, mandate. has the and backlog under below-ground the equipment after favorable been Reflecting the printing imaging defense digital margin consumables. controls, to quarter for due restarted, growth and capital slower as identification above-ground we've Sales printing X% focus grew ongoing and Oil management the amidst solutions, seen activity a of in capability China, roll-off we're the

in We we healthy U.S. Despite for overall lingering in activity remain and marketing the more the on which some activity quarter the continue This the several Asia its components conditions backlog, solid result margin prior in with customer and initially than ship QX, Strong the month’s upstream shipped despite remained comparable be to for to incremental expect from weaker to is midstream. of but large applications. segment, site balance to digital below with improved process and as orders margin U.S. exemplary in volumes, performance of volume in solutions and polymers another Pumps in year-to-date. and to continued in and positive it and to Compression a XXXX flat were for provide last performance getting the slated consumables slower margins has as cost aftermarket base Industrial slightly medical, which and strong demonstrate highlighted quarterly operational Marking second and difficulties of Analyst its consumables posted undertaken sign textiles in of was revenue absorption and organic activity year's and continued the year. equipment we sequentially. welcome challenged which hygienic of effect saw was revenue by coding XXXX, exiting since and a expansion pumps is demand last in-line in of portfolio. on mix productivity favorable printing periods, a offset by of pricing, food improved lower controlled service more also delivery. and volume of broad coding the on points its recover. biopharma, Moreover, the Refrigeration growth quarter than a driven some early being impacted driven segment margins basis fixed down recovery margin access product first which cost based Investor efforts portfolio, Day. and that which Plastics at relative the growth flat resilience and XXX and quarter. the initiatives mix and broad-based. businesses,

accretion. due Commercial offset Our earlier largest this innings trend. service business, activity applications, in which from its semiconductor large and backlog, in in continued the while weakness server similar began and including well actions grew activity the early more food in venues, at shipping remain headwinds by industrial segment, as medical equipment, weakness we restarted organically taken believe exchangers in demand against Heat our the than appreciable schools, residential and efficiency flat making in to record of institutional strength approximately improved improved, and Cost and remodeling volume continued impacted food margins year, but recovered. growth margin chains a cooling. secular Belvac, retail business as were food offset resulting is the can slowly have HVAC in with and supermarkets. demand and

here. our We Brad I'll in expect the profits pass it longer-term segment to with continue plan. to from improved delivering in-line turnaround comparable

Brad Cerepak

everyone. morning, Good Rich. Thanks,

Slide to go Let's X.

is On the bridge. top revenue the

by each plastics against & remarks, which segment third including mentioned its growth beverage top rich dispositions top over line organic opening to businesses, the quarter, mid-XXXX, and or strengthening euro quarters. by prior principally benefited in the the the from for had XX net a flipped offset driven million. growth continues with posting As improvement its quarter sequential X Several of positive QX. biopharma FX, in been trajectory Acquisitions than our food in headwind while since revenue his and more in strong million, dollar. of recovery us making X% continued retail our return line can polymers, quarter the by

our breakdown revenue major geographic and number strong driven can Europe. trajectory industrial We reflects organically, by North grow and XX% market food others. fueling, components, beverage each retail to winches by a and in declined retail material America and by hygienic, compared but polymer offset sequential plastics improvement Europe subsequent to constructive X% U.S., due organically waste The in and area in encouraging and among by by businesses. marking our quarters. businesses largest ground geography, declined a handling above and activity our expect decline to partially precision biopharma X% pumps, a particularly in softness improvement is QX in the in making, this coating, in quarter The

China in half year-over-year of declined our Asia All posted while XX% representing of Asia, approximately X% an business organically, decline.

the in in retail replacement due fueling headwinds underground and [indiscernible]. local mandate face China. to of continue Outside fueling, national demand saw solid We the slower in equipment a the of growth we exploration from retail China

across ship improvement bookings declines reflecting primarily we particularly businesses. food the the all page, down Note the record by nearly or year, million XX% momentum currently driven across a XXXX. four segments, our saw XXX making equipment segments. in can our that which bottom the XXXX. a in higher in Overall, business. into In intake our compared for our us and federation was mostly for decline sequential large quarter, to approximately our order positioning driven orders to making material can portion XX% in QX, organic strong increase continued organically time is XXXX were and that to to by of a of And well relate compared above. flat to of mentioned across segment orders remainder the last year-over-year, the projects year of backlog but Moving projected are booking These X% business I this backlog

Let's go on to the earnings X. bridges Slide

of improvement. flat our year-over-year, a a revenue to in top quarter, adjusted XXX million of and help that able the XX containment segment points keep EBITDA despite our testament were basis to margin decline cost the approximately On we proactive adjusted productivity chart, initiatives drive the earnings

the recent into XXXX. supporting margins of will Some continue initiatives

accruals, this for interest other the and Right prior earnings same partially XXXX. on the bottom quarter-over-quarter lower related as in the tax tax new X were by benefits to in the earnings. Discrete effective Going excluding costs relating costs Adjusted higher substantially million, containment X to the expense approximately corporate by discrete is initiatives lower approximately rate forward principally net to we lower taxes lower into The pulled driven tax were several permanent and fees deal benefits million cost X sizing that offset expense million by year. declined and quarter, XX.X% quarter year. chart.

Now on Slide X.

of cash million We last or million, a are year. pleased flow with XXX [indiscernible] free year-to-date cash XXX with performance the

environment. uncertain we have rebuilt good job capital more going that, year. of today, to sequential third businesses this quarter, our to Our capital me been some cash managing quarter, Rich. Free year traditionally improving teams with which customers. flow With back and the strongest actively the cash revenue has stands the flow revenue And working quarter trajectory fourth support in now the done at a of in turn let the XX.X% it our into

Richard Tobin

Brad. Page X. on Thanks I’m

in have on Products, Let's a Notably, segment we XXXX. QX is very pent to go but is haulers, mostly in but Engineered waste the In vehicle aftermarket business comp private for picking up placed orders demand. we QX tough up by are which as to due third excellent Activity deliver accept performance similar segment. some able is this had with handling a has quarter XXXX. the campaigns, promotional for as business good prospects a

for volume constructive is expect on remain Municipal space the XXXX. year. business in for Demand overall the to We balance the solutions and subdued reaccelerating we outlook digital the of this are for into

We and steady, defense Aerospace particular forecasts. most material next and automotive industrial we in are automation to upside seeing in expect don't quarter from encouraging backlogs. and markets October. We downside be is some signs in of plan to our deliver and/or the in continues the segments what OEM

XXXX. and by due seasonality. to volume QX to modestly solutions constructive demand the be into remain year margin negative largely expect impacted Fueling We to and relative mix finishing

the comp in expect to due adjusted a of period. productivity operating pricing the Despite absolute our as hold profit discipline. to in top year-over-year As efforts all line line tough product volumes year, QX we've been record headwinds, a have on we done comparable harmonization we result guiding and

is quarter also and the We as the picking higher volumes. and inks and a businesses coding improving solution vehicle demand on We is we remain print, wash. third business corner printing turn has space exiting demand expect digital to in which and nicely. below last sign for activity for In year and Activity fluid in year. backlog good up, our serialization ID’s ground of up XXXX Imaging the ground above constructive picked steady. and software and software robust is transfer saw trends remain a the marking be than

to are normal We trends the within more precision processing new and in Pumps trajectory levels, pumps plastics with projects the and this likely market. we Solutions, exposed current in as quotations continued for supported components in continue to defense select solutions levels pumps a we the particularly In in at are is to quarters mid-and-downstream seeing expect this to and a normal [indiscernible] see & be pickup to year. industrial more machines, recovering segment expect that but continue we Process few in before biopharma applications. what QX point Overall, continue maintenance product Compression we weaknesses lines had by process to aligned last and is outlook backlog deferred. returned

segment Refrigeration on Food & to get last Equipment. Let's the

can food in cans are secular margin driven the home beverages. spike at multi-year innings we what retail teens backlog backlog as evidenced the we to from to making consumption by in XXXX converting believe In of demand margin and baseline for a as a aluminum capacity, the our plastic us First, transition by our QX said reach low early we be and containers build-out of providing to aspirations. our for deliver food on also

moving build to beginning is backlog into Our XXXX.

this is all seasonal know, you As a business.

and volume and And from all QX declines good absorption progress. QX. here So, fixed XXXX about in QX cost a frankly of sign was it's

in market. constructive exchanges are a and this robust heat and We have backlog

and capacity completed products new in have pipe. interesting the some Our expansion being projects we are

large food institutional are forecasted margins despite revenue in comparable for strong weakness but to margin side. profits date, chain to year-over-year approximately the activity, the base. to fully this intend into adjusted up margin lower year, deliver period. QX offset be commercial segment and Overall on should continue With we a to flat service, the performance in will for support segment, the Finally, not comparable

down structural a [action entailing reductions program may you reduction of the resulted million recall, permanent we'll approximately more a our view this benefit payment at come Investor As We of initiatives, the multi-year million we our which XXXX the with report when of XXXX more] in multi-year leaving structural into entered on with program in journey. We XXXX. portion we that part quarter. $XX annualized in year improvement margin Day. cost a our as update cross XXXX And carryover highlighted as million XXXX, on fourth to $XX $XX

we're solid between flow to margin approximately up $XXX year on cash year should guidance end free back flow expenditures Capital year, of flow XX%. the generation in EPS prior per of the XX% upper share date cash and of at with outlays front and on bolt-ons the for remain range We tally quarter. the cash raising In expect adjusted We top our most this of $X.XX target last to capital summation, full deployment larger robust end to us. the foot our $X.XX guidance for above year our guidance. the behind the posture several with to closed

hope to in on at And perseverance to go Dover uneasy and with these and continued I the opportunities hopper, those let's up, Q&A. for soon. to the we as report everybody in want times. before their multiple usual Andrey, And thank have wrapping work that, We

Operator

[Operator line of Steve first JPMorgan. question Instructions] Tusa you. comes Our Thank of from a

Steve Tusa

Hey, guys, good morning.

Richard Tobin

Steve. Hi

Brad Cerepak

Steve. Hey

Steve Tusa

XQ Just guide trying in hear that, mean, really of materially you be segments, I that there refrigeration there is was any to rates are the here, is tax when missing you these at like the total year-over-year. going understand guide really know going but decline you know, didn't I walked [eye suggested there? a a or to and to backlog down EPS. Yet your, wasn't or the least XQ of know, we're seasonal bit like, I reconcile the most higher, $X.XX in pretty usually segments little through mean, kind maybe anything $X.XX, I one think And implies strong. be poppingly] that that's I there anything you

of we're is missing conservatism? this anything a or just bit So,

Richard Tobin

would that for we've moved QX we we have neither. have would be. what the up quarter the did got to of were have and estimates and hoped thought QX we would the that was would in of the pretty hoped moved QX middle have we forthright when I going And down that that Well, Day Investor

but [myth, is to the great, QX QX here is be going a So comes narrative]. a

Steve Tusa

me, to not That's from be clear. just

Richard Tobin

No, at a not That at that was was you general aimed comment. all.

have comp been a We issues we've which last year. orders of a in So look, that highlighting DFS, if bunch recall, operational you all and know, the some QX. fact year, had you we we had bad because of just the

So, been in delivered group, in reason out better lot over lot that forecast we vehicle the a we of services to in shipped hanging our is there. always year's ton a a this QX, which did QX. that's We

We pent-up So, if of had we poor quarters. lot a think about had you a automotive really aftermarket, couple demand.

think I we'd and out forecast expect be. what park of delivered the hit our operationally to we the delivered over and ball

So a [XXXX the backlog that million going figure gives is into is on would the I caution the refrigeration, us sort comp building QX. for you backlog deliveries] backlog that have think impacted $XXX deliveries. of worth over of that Belvac, which backlog refrigeration and we Despite materially I negative while segment we're backlog at and by

So, know, you particularly we're know, and finally, reports, getting still in Europe. COVID you

team, our CapEx businesses, the higher like industrial product management and I've we got amount rate. of confidence facilities Clearly, frankly, with an bad and but getting that in don't XXXX. So, take QX, we demand our waste going I of prudence in cycle? quite think in year So, get that start think to management, regions some we at know, let's impacted for about, Are news I down? absolute you up our build be a next manage build going from there inventory to is it's all, to certain we're have Europe high orders are of absorption, could

on there from there COVID there? until market operate conservatism stance, some that in So trajectory worse that, terms to anything in going Absolutely this is side of but overall, that we of the not. will and other continue now? on any under is on the is getting issue, get particular Sure, it's there

Steve Tusa

Yeah.

a follow Just on that. up specific

know, year-over-year clear comments within it that Belvac, range? that be said is DFS you hold that's was business? And for flat we'll to or profit think I in then pretty hey, just, profitable at does still that mean XQ, your absolute a, hold a you just on

Richard Tobin

for profit was full-year comment the of absolute The DFS.

margin outweighs top So, decrease. benefit line

Steve Tusa

Okay.

Richard Tobin

to is it the margins. accretive on segment Belvac, And

We of to are a higher to projects. a do beginning turnkey transition mix

So, pass through revenue. there's some

take little approved it's a of – segment be about it'd careful bit think assumptions it for it's the the because, but frankly, we'll I quite to accretive So, sure. Belvac,

Steve Tusa

Right.

Okay. lot. a That's Thanks it.

Richard Tobin

Thanks.

Operator

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

Scott Davis

guys. morning, Hi. Good

Richard Tobin

Scott. Hi

Brad Cerepak

Good morning.

Scott Davis

M&A Richard opportunities with out an might markets your there about all if or just valuation us. in or wonder didn't share at update a that remarks, talk of activity you there's on or prepared anything bit you're either I seeing

Richard Tobin

It's continues not end at it of the there reflective opportunities lot was to markets. a I different mean of be some the public are Valuation than QX. there. out

despite, private to through be know, know, and paid trying even see want every, XXXX to So, downturn of companies the on you XXXX. you are

pricey that, some out [niche we're it's terms lot of having competition the more on there. equity, feeling there. but that So, good A all we of said opportunities in of private some about those of opportunities] have,

which we Process Pumps Some did we highlighted that & mid-month. during day of Solutions the

we're to a longer you And overpay. taking going these is I So good imagine, of diligence not a of list got pandemic think know, deals under difficult. but are because we've pretty as candidates, due bit can some that you know, and you

Scott Davis

it sure is. I'm

the kind cheap. So, I’m there's And, capital your on to know I on, invest a but you same obviously, time there, of you of just on you you spending, know, got recovery, ahead lot of the curious know, at middle election, uncertainty that, time, pandemic out a – got a better suppose. money's moving that, no in you opinion of

do So, think see bit are or little be there's and down Is your higher just this And quick kind a little normal of given corporate spending? you delay things a out bit a delaying perhaps and there? customers people that any recovery noise further, a other tax capital rates we'll cycle sense that's response? different, could

Richard Tobin

of of I a in it there's our year. can to do of QX from some QX next of a associated which if I commentary desire because some is the makes like our particular, just seasonality. I'm businesses general my what up customers kind with textile not of bit on it, Look, which speaking to our I in guess project The going spend in has is, And exclude overall XXXX XX% comment CapEx, we're headwinds digital productivity hearing generally which secular portfolio. about print, is are do

you So, can we’re XXXX start the budget. and do going as the to to imagine, forecasting into beginning

You know, lot a about we feel businesses. of good our

you could hands now our they like and at to – it their what right sit our think want, budgets build until on sector, something backlog do for handling private to now the we like any there's XXXX, beginning I take we but hold we the don't capital, if off see if high are the now, think and of I their we'll think municipalities so, waste are out year just that going reason but manage at our powder build working the dry, rates. come on

Scott Davis

luck. Rich. Thank Okay. Good you,

Richard Tobin

Thanks.

Operator

from next Your Vertical question comes of Research. Sprague Jeff

Jeff Sprague

you. morning, Thank everyone. Good

Richard Tobin

Hey, Jeff.

Jeff Sprague

Two things, Rich. Hi.

on I extraordinary. mean, First margins pumps, were the

think, of, pulled little a mentioned bit revenue I forward. You

there You volume should forward? or margins going we was know, there? segment in of And mix dynamic think some additional how kind the this about

Richard Tobin

margin Group promising Yes, of careful from [MOG]. things. But operational here. because and Timing my growth. a the just in of about in dealing particularly got be we the commentary, statement, the is those QX with was guess comments But difficult revenue the I was and quarter variety take there always I excellent. that of orders think is as revenues the of size performance a I general credits long-cycle letters on opening side, you're of the which my we to think accretion absolute look, – it on

this beginning portfolio. I really we're think the some across to traction get is and that

paid MOG on, on efficiency chain, it what built and operational working we've terms door were to was been of and the and ready we In out go and product, the supply it goes. look,

fact and you and here. biopharma you on speaking, the on and the get the performance that that, So margin accretive, the with that that couple is generally see continues you – side trajectory margin

Jeff Sprague

Obviously, today, Interesting. strong And particular, but Albertsons DRFE, the some seeing, know, then, are on you you that you see maybe And point? you could, you change seasonality, know, the So, if know, dramatically more actually? kind out? just I out you seeing results thinking very got I how customer Is at this the plastic, on, actually. actually, of with you Belvac, a kind know, any little – guess playing did then, a just your food something access base issue bit of there conceptually, unusual we're know, in two-parter do don't we've of I flipped aluminum, being of really of to know, on here? switch retailers,

Richard Tobin

Sure.

first, It with a deal was Belvac get about here in [indiscernible] coming, in and demand. Capacity demand now, terms I would some at I in the into COVID for look for tight. of consuming XXXX, keg you answer. about has so right? one's going. say time, them period year comes flip We've so been and it pricing flipped cans, it's extremely been These drove of that beer, a projects, if the go up Think I’ll capacity the demand. Let's the bottlers, to canned beer, there's the they've been flipped them think known about all tight some No wave. are COVID big but And really over then, can terms surge function. of so planning the

terms more in at a home, all kind variety issue with you issue COVID will. Overarching to things. of you have transition if and the PET of of this got you've So the recyclability other and that,

a an an So that think is it's shorter-term think environmental have the of this from terms advantage which can-makers in demand secular But that's cycle. view. they because driven that tell why, being got they by capacity you point expansion of know, the pull they you've that believe would forward you announced, massive I

us, ran better. We in to by of of terms we know be Back secular we the refrigeration, we capacity particular us, trend got is, side. bar of else. that access on and know, two year low rights this demand for look, for you the in think everything COVID So, negatively function minimum, this to the terms three in years a machinery to and QX. because it's in I impacted a expected

doing, As of in did loaded. about level is business. capable which good this the margin portion of my refrigeration all business, for we of of comments, piece I terms what a teens a the it's there's harbinger low QX, seasonality mentioned we're

the refurbishments Christmas, You it's a be do think generally season store because stay-at-home into Christmas to don't clearly. I going going

to So, infrastructure. But their comments, some here. in in they're I we about for under see my mentioned going protect all as backlog build absorption beginning it's but delivery a now, XXXX for QX, us are to so XXXX you'll

Jeff Sprague

thanks. Great,

Operator

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

Julian Mitchell

Hi, good morning.

You little the know, million now, the you you Rich, that X, – a into agree, savings carry $XX year. you maybe mentioned you and bit suppose, cost that Slide know, and about it's all fully give on know, point, XXXX over of just I next on color

Just there'll saving know, probably earnings. to cost temporary on any – about cost-outs year? not on measures also, are for that some semi-permanent, try next perhaps top and just that size a that return magnitude hear QX know, those we you of understand that of that the be to way clarify extra of any you And

Richard Tobin

say in of million, that going absolute enough get got kind million That's we on into your work the To said were the calendarization of pipe $XX forward to year, the we cost year. – fact I it, we we'll carry you $XX carried can hard million the that – XXXX. extent were in a we're roll we about what a pulled takeout. terms forward first $XX structural get can that the over. so we'll in was of and confident to the question, of calendarized program, that a the million we've matter $XX is, We've this it a get three-year forward But

revenue volume, need can legislation we okay. the think On XXXX of that so at the a here. hope build dependent be but moment. expect [T&E] other and the so what do side, Look, going revenue the And available, to temporary is SG&A side. the other profile of I lot a XXXX. is put a temporary on not think that to for the clearly, on no what on under is But the be for was furlough of I I of would temporary important aside comp, based back things, of back some day, let's rest careful The kind end to and levels, that's was the we come that morale around or controllable to call for us to hand, that because we headwind, in matter that's

end you don't XXXX, of give a guidance SG&A it’s day, to of XXXX comp but full embedded whatever look, to Julian, the snapback we at going So we kind the for in expect be levels.

Julian Mitchell

And you say? anything, should Rich, assuming on revenues that dramatically, next but understand. not are of at Dover I leverage remind we normal year could around let’s operating kind us up, expect

Richard Tobin

starting and then a range on profiles between Yes, of to its look, the – is, we the have is the different. be margin wide what point businesses leverage going depending

to you segment, and So going of a heard – before not and, to out solution, that particular accretive. fair know, the that at highly lot margins question revenue think it's but get you're you about get going any say I fixed that current is absorption process to pumps be cost we of gross

a textile very to So, where as printing, we think that of you've level. that gross when to this leverage, had margin We way year. that excess look the at is particular that time operational difficult comes in be opposed back, going it digital business, for

of and bit a between a it's bag mixed depending XXXX current trajectory So, the on XXXX.

Julian Mitchell

makes the QX, tough tough quarters, question I two have that year. then in just get DFS, revenue next but outlook been for you and again a around U.S. That for next brought always probably the on good line think year, have I EMV marks suppose for those maybe And bookings, you mentioned you'd up. sense. know, that

but too specific on focus good much don't why DFS maybe next piece, year? maybe topline know, the feel you us you that remind about So, help

Richard Tobin

you be one year, were we to do concentrate question as Investor Pumps which announcing strengths this did hopefully the we going mentioned, that and another all on Day we another glad that Fueling because for Solutions we of shortly will asked & we think we'll the virtual Investor Process business what the Day, is. your Solutions business questions about that and trajectory XXXX answer I'm

Julian Mitchell

Understood. Thank you.

Richard Tobin

Thanks.

Operator

Andy Citi of Your next question comes Kaplowitz Group. from

Andy Kaplowitz

good Hey, morning, guys.

Richard Tobin

Andy. morning, Good

Andy Kaplowitz

talked color progress more you've of before making pandemic, that us Rich, At one into can been XX%. the give margin? about terms in in the you you hitting Refrigeration point

margin in double-digit backlog? hit in nice You set talked can what You of in get looking quarter continued terms margin improvement and you from for a over segment execution have of that sort and first you seen for that them year. XXXX, have out so about enough yourself? into you Belvac, in goals you the have you those did the But in time

Richard Tobin

not not without low-teens We're the quarter there the margin to of all that. labor the yet. content, the We're benefits the terms of getting way automation in in got we so actually

So, everything's pointing up.

business be function of be proactive can we customer, What it's or hear now for think to to for profile of from we XXXX. going the see what our I is the going think it right XXXX. demand I a purely

So like next for that of both should of barring and COVID, get revenue wave operational benefit productivity the looks the year it meaning another the and leverage. rise we'll Refrigeration

not we're know, here. of based in we're bag you what optimistic in seen it's in that from not I yet, leverage XXXX the we're about to cautiously negative I about – just would but that it's said, not we've panic get because all the QX, and QX always So, going Like all on segment.

Andy Kaplowitz

Rich, you're it. that mean, Got if pretty constructive but have sound step you growth you to as And DFS have XXXX. you I XX% about back, mentioned, then, you Day, Analyst mentioned, you going backlog

segments pretty that you businesses any other as at than even Or DFS more actually out, maybe than in are this growth you're of most So about? toward backup have look better do you good in XXXX? average point, worried your visibility there

Richard Tobin

I I But them mentioned about worry think all. few. a We

municipal the cars the capacity out about in a really know, pipe we XXXX there. think into that this productivity We feel and XXXX. got of initiatives I prudent amount cutting management XXXX so leverage driven, positive – miles the in used issue, amount would vehicle been for on] some I mostly [faced coming from in that we've expect ESG you negative just great really has to fleet leverage proactively the think are of good of in services because by early of carry group that lot

Refrigeration, want one. Let's one to all through by don't I them go see, I mean, we talked about.

digital Pumps You that is of trajectory printing, a upturn. be half absolutely that's if that can And – probably continue & XXXX at know, satisfactory. just we'll of that be second in to on, they're and the Solutions going Process look terms cautious on if

we're know, out the of you woods. not So,

a You are know, good see, the next productivity but, that in wait we leveraged CapEx. in we've rollover you we're about the we initiatives going It's and little function into business year. good process the feel and bit got know, forecasts feel about of terms some and demand of of highly our a towards doing XXXX

Andy Kaplowitz

guys. Thanks. it, Appreciate

Operator

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

John Inch

said retail Good Rich, on back kind so originally, you. labor had everyone. was project morning, the reduce to Hey, here, automation Thank on notes went picking XX%. hours up think going over you Refrigeration, the food some answer of by I

to to from SKUs going XXX You're XXX. cut than less

on were that's talking you would objectives base on permutations. in – a any parameters labor the mentioned about Have that you of helpful? really timing changed, whatever that, that or that dramatic more the automation expectations that You [come the matter does in so realized? those necessarily color project because] just declines kind wasn't or know, perhaps it's cost-out be or the for mean of been And XX%

Richard Tobin

of the so site, getting the of sell kind and the get because but the Sure. function access little terms time just behind because somewhat the that that our bit. process a the day. a gummed SKU the of the mean, those of to a are or automation of the you're automation we you also a that couldn't management, in in that because good automation making benefits convincing customer need of to your cycle ones at the to of change is SKUs demand end period We're up function kind us into of progress contract up for I we are of slightly terms

account, we're – would that taking conditions. XXXX think it know, into a you I So we look, more that it QX would halfway answer where under I we're guess that expect normal been I have can probably way.

John Inch

sense. makes that No,

little demand and or Assuming the from continues, perhaps you cost is trajectory or Is point getting say, a get say, benefit contribution done bore full mid-next do sometime variable uplift? of all that future where that you're the productivity the automation right, year the where the earlier? drivers you to toward, volume now

Richard Tobin

this would is it be so a would – the – It to reverse see of barbell, know, and QX where benefits. we tangible you it's XXXX a be would expect QX bit of

John Inch

I Okay. about want did And to Wayne Tokheim. you ask then,

and they talked just XXXX about [indiscernible] EMV. went for year is know, You public the peak

the So very about like would about Wayne the doesn't say, strategically thoughts, out, got considering, profit Tokheim XXXX but, with this that, are to with Like, strong being this look drop sharing you a footprint your it into I [indiscernible]? or greater as curious EMV revenue far to on if about is how a ChargePoint. extent? but It absolute petroleum you [EV] quarter talked sooner discount did. it and are an thinking you've they later? what there's worry I Rich, just mechanism realize is stuff know, strategically You vehicle I'm and off you electric with revenue that? concur diversify know, branching is infrastructure alliance markets versus and

Richard Tobin

to all the in November, John, right for the should is that answer Investor from Day undertaking now which to just that the questions management asked. take team of you I effort of away prepare don't want this all

North some thing for our phenomenon was between our that exposure the and that there and I the in only think you you the terms would size below-ground is market of XXXX. that caution is say I will than different think American is so appropriately have headwind sizing I significantly to EMV above-ground mix a about that American and I that – different. talk product that North

the ground [doubled-wall] carrying when else. but headwind below you a year, right? into market COVID rights and for everything we've with for guidance been this China construction year, the talked we ran on weak gave We had pretty then, this and know, You about around access

the end of at the up. know, you So, sure, margins day, are

by topline. that the here EMV productivity want improvement accretion but is sure, away the that from I for done demand has driven despite has don't that management driven Some of the to margin take

the is XXXX. returns business what So, thoughts in below-ground in to are is to our I'll that the November. it we that to When XXXX, manageable to it growth EMV leave extent the get headwind

John Inch

Thanks Day. Investor the for stuff again. EV the leave I'll and Perfect

Richard Tobin

you. Thank

Operator

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

Andrew Obin

Hi, morning. good

Richard Tobin

Andrew. Hi,

Andrew Obin

of your bit Just a as see you businesses But mean of will sort normalize, were that, well? think get sort format, stronger the How get portfolio it's well and weak, but things during in things structural know, have revert i.e., a that little and and the post you been COVID? you are see trying XXXX? asked in doing much sustainable do you do in rates COVID to question changes how just think be businesses longer-term of things weaker do within been growth doing different or

Richard Tobin

and it today mean, look, that because if this a but portfolio is materially tangibly that benefiting. is only look, we but COVID this the you. it's terrific, you overly from benefit, business The that the biopharma, all are It's we away more – of I sized the growing Belvac for going just business mean, issue believe I from structural it's in think Let's up weighted be that of to have and not than is here, but would recyclability COVID-related – I that's know, benefiting see that PET. great. that's one fantastically. margins we moving

that embedded think back. which tailwind business, that on purely a the question a the portions we COVID anywhere ones have our are coming are it's of of portfolio ones So, so you the suffering, know, we are don't suffering,

in and which that's one subdued the But to close or our that the maintenance look that the levered that or that that say to fair the downstream, most in it's is midstream not like portfolio weather overly whether can demand storm. and business, taking think we're is XXXX is to compression terms not. CapEx significant I remains we a one of again,

reasonably will that trajectories that will pressure expectation so our to more ones and portfolio end the the is their know, you different are based well do of come under doing the markets. have back continue parts that on been So, on

Andrew Obin

asked, textile apologize disconnected. getting and sort it’s it, I Alright, thank you of question printing, if on I've been a you. weakness. been printing CapEx, textile digital the And printing, ID, just printing On highlighted and know, follow-up you on

what's a in happening would surprised weak, there? can bit as this to strength provide spending, just the be detail little just business Given you consumer that more

Richard Tobin

wouldn't were flat… it I consider to be I revenues mean, weak.

Andrew Obin

Okay.

Richard Tobin

goods, great. which mean, yeah, margin a because business up. the business still that still right service consumable mean, is the I printer bit business requires is choppy is …and was I rights… with tracking and the access consumer

Andrew Obin

Okay, okay.

Richard Tobin

everything …and locations and else. customer

Andrew Obin

pretty So, straightforward. it's

Operator

Joe from Goldman Ritchie comes question Sachs. of next Your

Joe Ritchie

guys. morning, Good Thanks.

Richard Tobin

Joe. Hi,

Joe Ritchie

a Rich, do we Hey, know, revenue. and pretty its to go and about your Equipment? asked XXXX, Food between know, you And how you the you one-for-one back the the years backlog pretty is think if – in like – reason I the XXXX, your type Refrigeration orders conversion is, question few of ago, relationship

XXXX and converts of how backlog the how I do revenue in project. that automation you couple clearly, part are your so, the of XXXX, know, length I the know And orders and rate and run that much next in of better years? what over is think like like, But than about the

Richard Tobin

Yes.

think about me this. Let

think that – because I there, give backlogs somewhat. and distorts Belvac that are in which size backlog look, segmental the portion that's we We we of

in the know, is cycle. short business Refrigeration relatively particular You

to that getting actually for XXXX early. the orders So, is extent we're

of through ago, capacity. a well, them. the been markets it generally that it's just would kind Now, which you a month is hoops over to that deliver good secure capacities call run they – speaking, let's and don't food retailers have believe orders to have because it sign They place early, so just been it forever,

early, And expect saying about be is own that in what our on we our that's up the news, wouldn't because data it the think got little and programs backlog XXXX. you've CapEx material. very a their getting point is so other I based for which disaggregate to So, good and it's the now, good good I early, news bit segmental Belvac but customers to that orders we're try is, maintenance is technically are in there XXXX

Joe Ritchie

Got it.

prioritizing are you deals you your that capital guess quarter. are this the million question like seem I guys maybe Okay, you guys, kind I didn't [$XXX now? thinking just It you like follow-on mentioned, know, investment much where know, million] the guys that quarter. like makes sense. one did of right And would just know, that reinstituted like – versus you you then last you be you know of about type around buyback How to deployment. kind $XXX

Richard Tobin

smart a outlay still to of We've at would the $XXX that that we'll particular do on it's been convert to had like walk from if of the the parameters prioritizing free be be we've going see. into have and the But And wait a capital, has and excess They laid end deploy of an that so away capital to we're out. changed inorganic a decent in right? the just inorganic. cash within We're little We'd We to discussion. they and issues be in – to investment. quarter that will plans million, that Look, for the because day, have one have I'm to bit. not a got sure not, pipeline. return revisit deals then

We have next the board meeting week.

Joe Ritchie

Okay, good to know. Thanks, guys.

Operator

from Pokrzywinski question the Your line comes Josh of next of Morgan Stanley.

Josh Pokrzywinski

Hey, good morning, guys.

Brad Cerepak

morning. Good

Richard Tobin

Hi, Josh.

Josh Pokrzywinski

Any think get to normally the what way people you're proportional the this focus you know, Rich, the guidelines So kind on of visibility time that. you into want comment ground the we’ve know How of with first year I trying XQ. around, would clearly, back quarter comfort covered of XXXX a normal. to earlier to lot relative I size totally But, the that? and another I mean, I some on half you you over already. versus have? put visibility would to come backlog first to

Richard Tobin

of that length backlog would and that of We shipped I mind build there. certain year know, On off the a about our We off into as up. in it's seen think Refrigeration half roll in DPC, that and we're we've if falling Belvac extent. as, expect we a heavily comes we've backlog businesses MOG, the to MOG to and cycle talked not you to talked then you second hole. longer bigger projects at it deplete about

just the the depleting portfolio digital news because is quarter they had that but to we're is price I heavy and balance in particular and vehicle those a an cycle. of is, printing XXXX. businesses. operational of of despite not XXXX prior shipments outside bad at promotional communication group think service excellent bit all increases, some in very who delivery generally about performance. short comp QX They've a terms in are there in The running the for – things terms QX, seeing MOG I speaking, is backlog dealer in little is which is, got of mentioned last good high year that's good So, shipments that just times rate, what of a because of

the So, signaling I our we're we're comment I think this no perspective. there's getting but it's anecdotal, so think you overall for real general for is XXXX portfolio that wide, know, –

Josh Pokrzywinski

Got it.

just XQ hey, know we little XXXX is awesome, else not a anything phenomenon weaker and about where, January it's [indiscernible]? don't So and but a is

Richard Tobin

product XXXX in XXXX negative like I capital. If that in we meet As for like think delivery confidence got mentioned the got in the a about and backlog mean, business right? QX, you make before, business product I ESG, positive build they've I've deliveries, working could that to date. which absorption,

So, setting to us, as we've is ourselves here, around XXXX. about for always generation and QX up done cash

Josh Pokrzywinski

components? cost the there next that or, that Got And components, beyond of, could automation be you out portfolio precision automation across another kind of Refrigeration, you the it. of reduction? we kind noticed that evangelizing technology expect the kind should know, of of I some And then I of is wave something announced guess precision guess, in I project know, spread more, any

Richard Tobin

There's automation. of to our lend themselves a few businesses increased that

a Day than is and Solution Process tour force doing de our the mentioned, portfolio. Pumps to during Investor the more on rather we Virtual As cadence that on of expectation get of the those

that things is is one would expect have of around that is and discussing a some one two candidate of of the to vehicle in under we outreach one services QX that big construction investor which So, completed in is we're projects, group do we XXXX. that more

Josh Pokrzywinski

leave Right, it thanks. I'll there.

Operator

from the of will Your Research. of come line Nigel Wolfe Coe final today question

Nigel Coe

in Yes, know, we some thanks go side is [indiscernible] to can not just typical? whole you is run weakness more [trends] manufacturing headwinds we've just in you flip squeezing to lot that, me than chemicals the in. you forward, but back for of There's – therefore know, structural seen seen know, structural polymers is through so in, going Belvac, in a plastics, face the some of the here, that

Richard Tobin

sure know listen talk guys little Belvac, making. how You Belvac know, the I and about Nigel, I'm chuckle when I can about at themselves to

you're the ask world our Based for going the to that bridge both on hear I PET, the chemical we what can from the me So, on into have to think on makers over machinery to else. of PET somebody that there's customers, up terms in portion that. structural the design believe I’ll the how demand, bottlers impacts the to from and leave change chemical answer producers making, can a underway, it to that of we

Nigel Coe

then, enough. And good That's answer. just Fair exchangers. quickly on a heat the

the think I you in exchangers enough you strength see seen both and into I commercial know, you've you markets, heat sell couple times, specifically where you of think in caught industrial up markets? uptick

Richard Tobin

where are than the expansions. anything pump on that capacity is material some in else. we More heat and of our strength particular That's where the completing side is midst

exchangers because of installed market, you the systems the huge getting is If of that heat very European pretty back size are these know large about on are anything legislation. these specially being that

coming from. demand function is So really that's us for the where

Nigel Coe

Rich. Thanks, Okay.

Richard Tobin

Thanks.

Operator

Thank question-and-answer XXXX Dover's concludes and period quarter our call. third you. That earnings conference

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

Dover (DOV) 20 Oct 202020 Q3 Earnings call transcript