DOV - Earnings call transcript Q1 2021

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Operator

Good morning and welcome to Dover's First Quarter 2021 Earnings Conference Call. Speakers 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. [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

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

Richard Tobin

everyone. morning, Good Andrey. you, Thank

morning. big We this group a have

robust Q&A So session. we're a going to have

for Dover. moving challenge The twofold move was So, three. let's to QX business page into

customers and our of closely a logistics complex deliver availability. to we Back we despite had challenges raw opportunities of to marketplace and labor XXXX the against. backlog with business we with which needed a to in operationally First, exited set components, with end, materials, work distributors seize healthy

and reflected performance revenue in move We QX. both our order backlog is as which we quarter counts, growth our the are pleased increase with robust into on our in first

shade with last cast channel customer healthy factors starting the clearly careful terms including high choice of be result contributing to and five to my our are revenue Let's resulted is inventories and revenue good seasonally that position for up XXXX the activity, posting to portfolio try to take traction. to since accelerated, on quarter is to the of going I'm since XXXX growth growth This to bookings operational a quarter market sectors. demand increase. gaining increase suppose pent volume growth resulting company. quarter, of the comparable comments several the and low highest order, Total as of in we on period. done as organic in driving a issued with $X.X segments outpaced from is in a organic and deliveries willingness the product X% is first impact seasonality was on demand our that often explain the demand. The the attractive backlog based indication the XX%, market not performance the unwarranted on us are I channels their all it's comparable industrial XX%. metrics. There billion, the full-year earnings that in and from among up look and sector, Since of the a receive demand largest of an environment. clear the positive excellence at a volume Clearly, quarter and a in year backlog the $X.X the avenues benefited work billion, underappreciated have broad drivers rates certain Order This product increase. of XX% first

materials was to demand. inflation, further also build forecasted themselves my I seasonal in their and as meet chains our demand remarks, this positioned and and positively customers to mentioned by channels contributing supply opening As influenced backlog tight

wound and up which that of impacts fact our the robust, upward channel total not get to is guidance quantify demand, and we lose marketplace reflected for full is before trying impact quarterly Importantly, to the on demand leads our also which to inflationary all XX% to the let's year backlog growth and prebuy sight revenue of inventory us how revise it XX%. stocking

Still demand, put early our we progress prebuy continue to don't customer remove and gains meet on through year the watch the contribution and year. revenue year and it patterns. if including of not performance, color our backlog market we and We'll the it's will have in revenue to So succinctly, drivers produce from share full we the more order demands of as estimates.

we operationally to on are demand conditions through in marketplace. win that But executing the the clearly now, in For we conditions durable year. focused demanding favorable remain believe

by for substantial optimism. team's our a to have results which compared of of at order the guidance. outlook skip supply remainder trends higher will comparable cost $X.XX QX to our which and XX% we profitability supported I are a belt, $X.XX EPS management chain to line step With a of provides difficulty] was move the challenges. volumes, we and last comparable XX%, of XXXX cash to slide segment quarter. strong first a to XXX seasonally compared versus share, focus which offset robust million free look navigate our period. that, per and under delivered, price solid Strong continued up record year points in positive Let's to portend detailed headwinds. more in more top first X prior flow, year's mix and input and the profitability. This with With up for confidence to consolidated was ability adjusted overview resulted our than capital solid the QX XX.X%, raising quarter or [technical on quarter. was discipline $XXX operational backlog initiatives, working products efficiency the revenue basis with margin favorable strong a Strong growth all-in guidance the constructive continued at our adjusted we

conditions So, geographies the let's was period. order move modestly to were across defense as a year difficulty] product all solid Products and with organically and aerospace The lines. entered improved demand the and [technical business X% remains half Engineered services on solid. comparable year. shipments restocking recovery slide automation well Industrial the channel book strong X. revenue automotive Vehicle grew faced up of and and demand second booked into

lower was As starting by year-over-year, issues component entering hauling QX, constrain quarter. which given was that further expected, a waste the backlog shipments in impacted availability down

industrial Same to recovery HX the towards business with levered this order backlog dynamic trends down in but winches, order revenue rates. forecasted for have and and in quarter, be reflect We that.

is We the to subdued. retail systems as and backlogs Margin and Fueling quarter expect and expect positively the quarter and offset services this a hardware, leverage the of organically, quarter offerings make Asia, in product up stocked Identification and of pandemic. quarter the continued productivity China Order on printer fueling of actions in contribute comparable increase up strong the wash are in the an trajectory core was to construction continuation portfolio. marking which flat and of higher business. in the fixed grew and the year-over-year strong customers of driven vehicle business exited X% coding in our negative another in that through we year. the the cost underground demand volumes, up North hanging way where gradual posted seasonality American business pricing Imaging miles on margin strength portion compliance as XX% remained North mix, X% by offset and Activity in as a year. And we and on and due driven well software was against organically XXXX. as was segment & we performance volume in at in America onset in the Solutions absorption Sales a inks decline goods the well recovery over on capital partially the our performance The consumables our improved

COVID. best saw up progressed. in last its year, & a management, Ink software and inorganic rates we've also and serialization solid printer we retail momentum this soft product remain compression were and quarter of processing bottom new than line by quarter as saw Food volumes volume, consumable and wins. biopharma as top introductions Pumps organic XX% pickup ink global as year-over-year. operational and Adjusted organic attachment the capital growth basis US. improved segment mix lines demand posting resumed sales. quarter nice distributor on conditions remains and apparel we through bearings down market & product increases continue favorable class precision Textile significantly We impacted parts, programs, we orders sales growth. polymer solid pipeline on continued and of across metrics excellence, builds in plus demand Process conditions from in our to segment And will printer to demand robust material line grew broadly the components good the offset able pumps by and proactive pricing broad-based demand. volumes inflation the collection and well doubled and and saw the a end all a in quarter. new China can and were we strategic and and of encouraging the This assets to to actions. development, in in quarter retailers invest cost Industrial on slightly improved half key Refrigeration in product the pricing. has strong. some retail connectors as remains investment year-over-year though class Revenue with volumes improved components. in hydrodynamic for in second for Food a businesses purposeful expanded world the the points in innovation higher during OEM improvement making new as more Asia It's Margins was on product shipments customer new on as by in Precision robust across stabilized dedication to driven that quarter, strong except improved margin continued shipments behind. be beverage posted Solutions its operating impacted. XX% in XXX rates had and team through Equipment seen moved pumps sales Order

across robust restaurant business US end but quarter, adopting equipment environmentally saw Europe more The Our Europe are stabilization solutions. Foodservice in all was in on chain markets. as friendly grew Asia business the natural a refrigerant and down robust customers materials, exchanger operational heat systems initiatives it and availability raw issues the to by in in particular experienced in demand demand. demand due supported points, Brad input food productivity by pass of middle improved offset to with in cost took volumes, and cost challenges Despite from actions we insulation partially here. by adjusted margin the stronger performance XXXX, I'll retail basis inflation. XXX in

Brad Cerepak

X. Thanks, slide everyone. Rich. Good morning, I'm on

bridge. revenue the is top the On

benefited segments, growth million. five line Equipment in than quarter Pumps and or benefited Solutions & by offset organic top across & from particular Our Process by more million. FX top in dispositions $XX all line Refrigeration $XX strength Food the with segments. Acquisitions X%

can and XX% and and exchangers. We quarter delayed geographic among strong Europe our pumps retail three industrial on solid strong Asia, revenue North order our retail expect this subsequent fueling, breakdown biopharma, vehicle by heat rates market, hauling. offset and quarter in marking, grew in quarters. by partially grow The to number and and The shipments X% America, coating, growth organic by others, in posted shipments the geography and was biopharma aftermarket, reflects food waste Europe largest connectors, in largest the regions. on US, growth making

returned by the COVID to quarter was XX% and XX% year. the Asia in against up of prior comparable was All which impacted driven growth organically, China, up

time the positioning continued quarter, we In Moving saw momentum the reflecting XX% across to portfolio. the Bookings the are for all up the well page. segments. is up across broad-based year, seeing Overall, versus $XXX or we us this the XX% organic backlog our the currently growth of bookings bottom year. million remainder were organically, of five last

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

cost as inflation. margin of initiatives several top pricing continued chart, up improved strategic segment. adjusted productivity basis XXX and million $XXX points offset On improved the and volumes, nearly the input EBIT was

Adjusted Going deal higher other than higher the more earnings effective accruals segment the Discrete and XXXX. $XX higher net rate in the corporate bottom the of $X million prior EBIT million as XX.X% excluding the improved through $X benefits approximately and tax chart. as million tax well benefits $X lower or costs expenses, million to by tax quarter in the quarter approximately than million taxes, to for $X The expenses. related XX.X% was primarily discrete were offset year. quarter were as or in after tax. Right-sizing compared in compensation

pleased were $XXX of last historically the million stands quarter conversion We or increase first our cash of to of flow million first revenue Free production. year. at cash with slide our flow lowest on with free the flow seasonality the quarter cash over Now X. quarter, is performance $XXX in in cash due flow which X%

Let back to Rich. me turn it

Richard Tobin

Brad. Thanks,

go to [technical Let's slide difficulty].

We the to supported robust is through improve remainder of year, expect Products backlog. which sequentially demand in Engineered by the a

gradual the shipment towards is supply will the the here closely, and through schedule significantly We continue through of expect government chain stabilizer Aerospace levered during the see is into we're defense strong which recovery improved second services visibility year. the of rates its quarter, bookings vehicle half and watching half well be first handling though second to we and in revenue year. a a second programs the significant half the the automation. on industrial booked trends have and waste Order

our in from US, businesses expect the was a a in November, investor we growth trends and but wash. There systems moderate including growth Solutions order offsetting underground organic As the roll for off of in communicated known vehicle and headwind positives Fueling in recovery it, meeting software, growth support post year. on in to EMB number

well expect to is vehicle second and we last & stabilize in off wash become at very healthily. which a for year of positive a Imaging us expected The market end acquisition net to the is that should ICS particular, year. recovering as Asia, in good the closed We is start ID perform also this China half.

tonnage positively QX is to machine as low continue to deliver expected coating remains and printing products performance. services growth digit to slow, saw Our in to XXXX, year-over-year a we core with to ink serialization mid-single executing stalwarts continue Digital sales attach in consumables we impacting business, although textile sales. and our in marking improvement strategy

in year. the for quarter, in pumps first should second should and here continue. Pumps biopharma momentum and We Demand applications and conditions expect industrial Process in solid remains rebounded & robust quickly have hygienic Solutions recovery half. another trading the

increased Our well recent secular capitalizing driving shortage deliver of on expected as are and rubber to we is plastic a of steady investment performance growth Refrigeration investments to & polymers as prescient, and continue are large year-over-year processing Precision is strong second order year. expect the have year. to stabilized plants. With in petrochemical biopharma its again and were capacity as in have it expected and and the positioned to well backlog we story. Equipment half Plastics to growth high global a rates, components the investments contribute in Food

been New had orders have as restarting in healthy the initiatives. remodel retail the that few in the core amidst last year retailers pandemic food these last programs are their quarters strategic businesses paused

we position solutions. on states mandate in our the systems the mandate among trend environmentally both Europe we capitalizing Additionally, friendly leadership to other are to a also where recent will US, XX transition natural in in in and the foretell California believe more the refrigerant

Belvac significant line and quarter specialty in our We bookings for a through another small year. also are the continues QX. and product record format work booked They backlog good had growth to see in customers segment.

exchanger order strong geographies. heat and across all is Our business rates seeing verticals

stadiums students investing business new chains in in return capabilities in second institutional equipment positioned expect two growth. the and is are stabilized and are at and half schools these as in capture and businesses We improves and to restaurant the well food Demand to traffic at service recover we capacity to hotels.

of your Our difficulty] items on We we XX. and the is reference. [technical revised most summarized for guidance them annual here covered page pertinent these

puts expected multi-year XX perspective. performance in a Finally, XXXX slide

period. prior cycle over XXXX Operational and expansion returns. the in this And less provided we over to environment in track growth, long-term demanding has over is operating expansion decade the communicated lower investor corporate margin Dover's positioned and of deliver and a was ability line on XXXX years in targets of with continue. cyclicality that cyclical a top of line shaped the our basis profitability. priority through and for excellence been last XXX Our are highlighted how presentation, attractive to average to and to proof playbook points double-digit our the our attractive have business XXXX. EPS changes tools portfolio Dover we couple we deliver margin protect than to more

thank And their I'd these Dover wrapping at to perseverance. work Before their that's the results like for everyone of delivering up, continued presentation. the hard and end

Andrey, So, we Q&A. up can for open it

Operator

Instructions]. [Operator

Our first of J.P. question from Morgan. comes Steve the line Tusa of

Steve Tusa

quarterly EBIT to low mind quarter a of year quarterly of it to rest like shoes the you Rich, year out like of of sequentially that get year while. jump and a guide rest but kind the get a the the rest of simple flattish and divided year revenue actually of wanted of The heard you – your seasonally, an the number, of keeping tailwinds mentioned – and tailwinds. kind But at to kind there. this on have most – a excited quarterly of of pretty in down of I bookings first rest look usually is just number were year of rest quarter, to three. to I of the to the divided is year think you the idea seems the like just divide of kind of the for three, guidance, these I've basically by rest necessarily softening EPS, quarterly just kind when simply kind sequentially I kind by kind not quarterly the the just I sales there, they this in and of Way

Anything that half a there off is You'd businesses this lot fundamental a good. EMB? that have other mentioned missing on something one? these actually like looks than second drop we're will So, pretty a of

Richard Tobin

than of was day, QX No. stronger the Look, we expected. the end at

to out pleased product the to pivot in door. that ability operationally So, we're the quite our get I think

increases material is of front price much the I conservative of another QX of restocking from trying we being think how in get see how taken and that to QX, quarter of we're being overperformance future. which belt by is clear raw influenced And under that seasonally probably backlog now not to our perceived kind right channel arguably demand ramp. entirely in much I'm was and when to get

run it's move QX, big So, QX. of then in QX, kind usually low and QX for cash in a

profit math as percentage can't both just and operating historically, my out if do this spreadsheet, run and I the operating the QX this and what of and take it the extraordinarily You I side number, say, revenue it's a proxy and is high revenue an seasonality and well, is, kicks on side. the margin been

So, think fair you We'd conservative. I tell is news. a which good little in a from sitting be bookings like the revenue that our through we not to it's see here go enough, I'll deteriorating, side, may QX. April

we portends some develops better no both that retail We yet. or I'll we'd out labor been in We're on margin in woods out we've of availability. is My of off view, to decent the got comment, our you the place a from has going we yet not people but to couple of margin use component to we XXXX, knew answer, know had margin ESG like time. is the So, I for sourcing incremental I through. missed to of by of be in overstated the there's that of and we here. the final discussed headwinds this things the is because a going know getting in in government, that see over end at this take can because pretty of account line were QX, shipments there. question I that Right so first the I comp don't because of of had that's different get think of we were really now, plowed to availability, up, subsidies mechanisms operationally, our subsidized refrigeration whether and we going production ability quarter, but QX meaning get, tell the at terms kind there point variety things raw head for is a this and out the a coming a Because it. and difficult it payroll Operationally, of how but that materials, make worse. long that to mistake, expectation because good, you're is furlough

So, have you costs. actually of snap back a

up where performance large, in absorb margin But our to so good so that be incremental what a able an world we're by QX the should higher would Now, pretty lot expect. in shape we and we because I than much, in expectation think, is there's is it. I've revenue seen industrial

The the performance balance expect to the the on is accelerate margin year. the of the of year answer refrigeration in we over really second balance in

big So, backlog. out. us get up It's it we've to to this got

So, than dilutive margins of more we that balance you of out of in refrigeration in – as going from that is the lot And growth to year, expect QX. was growth to as it forward. is know, that the the go a they

would by I just you to take it caution margins QX multiply and So, three. incremental not

Steve Tusa

One last will sequentially? question. actually QX EPS, grow they

Richard Tobin

Yeah. Yeah, yeah. question. Without

Operator

Andy question Kaplowitz line of comes the next from of Citigroup. Your

Andy Kaplowitz

Rich, up margin. maybe on following

XX% You've a segment many asked margin before times. about operating achieving been adjusted

You point, is there. at operating long-term a how dictate this businesses? XX%. strong we target, And trend. the XX% did too you're a given well Obviously, low record quarter maybe one just as over know in But doesn't a quarter

Richard Tobin

in expect operational of and The with even it pleased we're way. been the this that reach QX with mix we earlier Well, the XX% clearly XXXX. today, I'll at the didn't in the had one impact I put in past. XX%, segment We're guess, Look, the margin, is modeling I level operating Andy. on reaching performance it pleased than

thought of balance to than earlier we're is trajectory. Now, number be we year I'm again. current to answer is going discussion one, guess not mix big the over going based to – I on to so the get – do going that the this XX%

the is now labor, of we yet. fight I'm raw what inflationary and We'll QX. the – we've input costs year, impact of What out a target in not and materials, end between going means there So, price are costs. margins, putting between you give mix against discussed maybe the that to one

we the front in Think was the we getting inventory. As XXXX, not the the raw of on it terms materials foot in discussed, price inventory in our about inflation change, out at of there. of end were on terms

stay positive cost the So, price the as you front early on you transition as foot. in get long

be we're price watching to of the net closely terms realization. going year cost over really Now, in balance the of

get we would have businesses the to biggest The balance large, year. we in By may expect looking, that's will to And of the impact way intervene we certain So, the performance. QX. benefit of have it's the expected the it. margin and where on price, in again, that over

put XXXX sometime look, out targets from the yeah, So, I this year. Clearly, when the revisiting basis out put improvement, XXX we was longer-term be we I we'll think points there. those time target period think, there it

Andy Kaplowitz

Just heat in capacity Belvac DRFE sort about I you've you quarters backlog. got following level the he of confidence increasing sense on talked in now at notice up that in the of exchangers. did and revenue couple a

past? multi-year before, you've for So, a that higher up the confidence Does cycle this margins? of you in around the level sort the see could in business. said that comment Rich, level growth, it potential around go double-digit Is be now? Do mid-teens that confidence

Richard Tobin

higher every backlog getting of the passing with month it's Well, build.

that say, biggest would growth we relatively we're in the lot it's for, build. that XX and to go color, months we're you of confident if look the a the a segment, period comments, continued their at back refrigeration we backlog of said it. of So see [indiscernible] secular That's kind the one the piece that gets

it's months that transition now been COX think a we somewhat should maybe which I ago. by of to recognize didn't augmented even tailwind really six be

transition And in that's the So seen. how to think be expanding goes, making that to PEP transition capacity and long can the from helpful. aluminum, long remains I how from

mentioned comments, I booking Brad XXXX As now. think we're in into his well

the On exchanger outgrowing that we I frankly. think side, the market quite heat are

we've that especially think positioning, unique pumps. in got I some heat

capacity now. We are expanding

market time. outperform. on I based launches But digit new a we over if product can outgrow the and low-single speaking, We'd that's generally like kind expanded growing through of to So, can we that market. push think capacity, and see

Operator

of Your next Vertical question Jeff one comes of from Research. Sprague

Jeff Sprague

doesn't front you're Could semiconductors. actually sort On are? stuff, on the of stuff elaborate kind be it the little and the in It types like of it's you it how mind, sounds the might basic of everybody's i.e. a supply that's they pressures chain center stuff. seeing sound widespread and bit more on like

Richard Tobin

not think on our few have chain components. based. it chip It's logistics we impact some is more but businesses. huge, bait. of that does supply electronic I exposure That And is a not

Asia. costs So, that of we're that now And getting that And what's a right in that a very industrial, because it's passing. to reflected you it's logistics is bear. to Angeles becomes anything it's in we've terms kind moving not deliveries integrated Dover, sourced we can materials of want. hoping of will But COVID right that the anecdotal I'm product. had freight go tight. – I are at guess look at else like chain of just the now. Port going And tight one vertically making on lot it's then, the of tight that Los now. unbuckle in the seems take But be out whole But the logistics is

We'd had components issue we've So, in systems have issues hydraulic in with with lighting refrigeration. ESG.

laundry a are of impacting constraints there's list But So, things. call let's most chain logistics the us. part, supply it, for it's, that

Jeff Sprague

could would color in kind normalized maybe just margin a mix guess bit of an I did you awesome. Process provide rich you rates of But quarter. what assume in think I could say, little Pump on that I the business? are & look, unusually there's margins

Richard Tobin

everybody about delivering business very biopharma at. single to tried idea our I a use is good last of It capable business. mix and give in was presentation the made We that pumps kind of what quarter. that year

now, very watching business. of was that capacity gross have actually utilization to but We're margin healthy. we because backlog, of cycle converting a visibility. it level our it now, at right is lot Right which short really – is business is don't closely. trying So, running its a is a We're build

of terms in how our that think prudent we're that I So second long terms goes. of in estimates, being half

also, it's XXXX. the pump actually been Interestingly, On And in were since been have very and healthy. China out good channel the and proactive some performance management we taking had that's QX, in that, costs more very robust we've in it's inventory. in quite the quite to been a margins time had you that industrial business seen the in side, but pump recall

the And XXXX. have so, the roll into margin the moving on benefit we side on pump forward industrial

was healthy. that So, quite

has I a that polymers, three the and last team think is this I think years. that management effectively on pumps the doubled business margin in the

that are healthy in margins business gross again. So,

So, the the how most dilutive come year? margin is in to going hold the be is single overall, mix. so. demand it's up second going The what's half, second does going Even on of be issue overtly Slightly use to the pumps half does it. components not when precision the in back to bigger to impact

Operator

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

Julian Mitchell

Maybe just first question sales the around just a outlook. organic

the organic segment. So, getting heard if better growth the as and you by on could through revisit clear outlook RFP go you year. loud just you I wondered the perhaps

QX for You gave one. the numbers each on call

for divisions that about of overall? your higher two the growth Just firm-wide, points the it maybe organic wondered really in guide, organic led that the growth which increase context were looks company like

Richard Tobin

that we beginning would the the more to the poised point we DFS the that If original that – a if at have lot turns, like not expect and second the ID as a the if one at probably forecasts, top. in services performing in of in it a second upside probably be it's is two. organic a that business our we would as half, printing would full textile half. thesis. the businesses capital we'll of comes may quarter. a not the vehicle start robust color it get year. now, the backlog expected. that did Clearly, support group to return second think on Right But goods back of is expect, The have if don't our – growth Let's point, end have fashion at I looks looks meet

on acquisitions made. we've One points based the of is that those

about the I of we growth calendarization we or like organic blah. in on growth that's or close to blah, organic to So, but that you But a When what's Process early total, Pumps of of try out the see to to the to inorganic, how above here point ground get develops parse likely But on I between real on EMB the hardware. of headwind get side question it in growth. blah, in undergrad on Jeff second look and the may total Solutions. offsetting and hanging we have negative gave didn't a just terms half. of the that have a rolls & why year, that it answered there. portion We'd OPW look expect point better and Sprague's over take it into not, be get we'd

them with backlog there one. look, Belvac anything that And doesn't backlog backlog now, the through They're revenue. it. purely going do to help our And its do to of gone that I've realize. can to So just capacity it's in execution DRFE, expanded adding they how pause, we much

refrigeration. be to going is outlier the think I

cycle real a got business. That short is we've robust So, a backlog.

we So, we don't may beginning eating in right the I into terms QX be of of orders. now – have think

QX. anything have we don't for So

quarter I kind another of get to think that down. probably need we tightened

Julian Mitchell

cash confident unchanged. Definitely, capex sales range similar conversion very suppose the is free in The free number. higher guide to dollars is guide you the flow, margin increase. guide of margin, The operating revenue higher a cash because before, sound that in I off flow XX-percent-ish

over the the you're components P&L. it's environment So, impacts much constraints capital months. understand dialing Maybe maybe just may – some in on us working kind look, next operating strain from what forth? extra Not just cash so so of a very put these see flow and in, that six complicated on we help

Richard Tobin

couple of a things. Okay,

point, the our giving compete businesses quarters. – of in of exiting working XXXX latitude not a we've capital year, as matter to is materials to performance did in we QX, at our share the inflationary The to market is, on to it couple front in build of balance expect are for had Number been previous two, raw the what be it one, payables latitude we one. things. on not end to think based this capital as some prebuy fact to at mentioned, their was number high that environment. given number we working We And the I own get

or in was of a that working our in making conversion lot QX terms revenue the normally So, it in was And we there snap past. those back quite in was, a of the frankly, QX, wasn't velocity capital payables would seen because we've what higher than see.

then So, really flow like now, think hard confident free absolute metric We're terms, on the the dollar revisit right quite like absolute of look, same. healthy. that we're we [indiscernible] guiding cash But two hit quarter move flow absolute revenue. at it. revenue your can think it's up cash should then the I percent in working probably and for And proactive, a head. would be looks or dollars, nail margin In as the a on the that I we're if

Operator

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

Andrew Obin

follow-up between, Do business, thinking, sort & Just are science COVID related life Process right, biopharma, exposed to between at companies on diagnostics, in have of stuff? more of you Just other margin particularly Pumps a question companies, and look a dynamic sustainability if guys Solutions? tests. some sense base in you on the

going So, those say, companies enough year. building next to negative into year base hey, growth then of other that there's into may sustainable be XXXX, But XXXX. turn it's sort going

about business? think we should how So that

Richard Tobin

do that that and skid looks you vaccines and and The we basically larger time right over that negative Well, that. data that now. was to it's only we give it view like try we incubators that there a we us, runs don't that one, some the recent and for transition to point the is going you follow-on much Q&A single see development use to person move to business development for quite that have have to is number robust, at from that are unpack

Now, we're large particular the of cautious does that sector. change of Our it demand duration in goes of if that's as change And the it we we bit a quarter to then and through it. the view? I'm the work again sure that being every the terms it. or I why will growing that between we're to tell that Because that this end now year? the have is can incubation, don't durable. for volume the the teens business say right that capacity hard case When to in a months we right in been begins see now, you it's right roll over, now. that's it's But XX demand, now expanding high at now. in

Andrew Obin

Just When thinking hit This do normalized sort we we will you margins and for it's about incrementals about of for in But sort have say refrigeration. volumes? given two incrementals of rest sort normalized of trying think refrigeration? should You So, how year? of, negative at And could A, the what thinking for refrigeration. all restructuring, think to did about questions. to be guys get the high going corporate average the the mix. these I'm

Richard Tobin

I'd sums QX but corporate be to our I don't expectation they that year-over-year at minimum contributor a know. for in profits QX. have and go average, to will the do larger

Operator

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

John Inch

I'm like wondering whatever offer. more bit to just provide your little a pricing, Rich, you'd we maybe could strategic if context around

for? doing as provide you year? are the could too? where – of the what And raise to you else So, throughout You What businesses have raising sort what's everybody you still context of this things us? think to it And Is going reception? kind also going worse prices kind get are? channel hold go Is just to businesses they any it's do of prices?

Richard Tobin

all Look, hard materials. we're raising say started prices with John? I Can to – raw say, this

can through So, materials can is portfolio. goods you the far, it were the like and raw entire capital got has the on And they the biggest so the looks see, the to beginning. exposure front side along. we foot our at Clearly, following what from complex go

you is you realization blah, blah. there, and blah, turns, to out pricing days XXX takes XX it then inventory Now get got to see because what

that's problem. that fact buy are who the I the not because the that But it materials So, pass started. is trying becoming it's bill And of a sub-components inflation. the materials kind is time. along the vendors at increases is the Fed that And from matter goes just else. But price over raw to into is, labor doesn't everything the materials costs availability recognize our want of there are level, to where to to beginning it And and up same get of move assembly start in that we inflation. labor, our raw on clearly,

good it's raw now of it's from are that gone materials. the sides buying – capital So, lot a

accommodate logistics balance over into I mentioned that, business, as moving that of portions top the we a it's components air the inbound freight a right going the more year. costs logistics than costs. costs, is you assembled because the Now it It's outbound But of of to lot have before, freight is up going ship that bit to to FOB. forbid On that's product of it's are a now, God negative. anything logistics have of costs –

portfolio. we it So, in it's we are making this for cars. the we're in of SKUs of going on price not costs. to It's hard disparity like that And terms of have the be us because

to in. to at to and have going we're neutral. numbers come a our the to going But we're trailing be to going as it. And have intuition net number worst, a and scenario So it's be out a do it's going of on it combination as of

John Inch

profitability, affected, as particularly perhaps inflation Dover of or Interestingly for of more to pricing tentacle across At board, a does or can okay. to provide of that because raise in proliferate if that's kind to but of maybe general or blah, really your other raise you to worst, is framework So, blah? still this accept saying, kind None not your see inflation quite the inflation aren't if on if tentacles resisting. inflation. opportunity we'll channel of mild so excuse of there's basis? of start sort competitor to this regard, it's rampant not blah, But the channel the go want in whatever. enough, prices, Dover answers, start to aren't this areas me, these in B really implied help much raise inflation, a us surgical is People prices can't willing

Richard Tobin

Well, yes. I you is let answer guess the example. me But an give

of component to a We material lead power raising have And that up that as more about market stop there's lost because in volume business raised to fact operating in us the in margin. the we're prices pricing market and structure, refrigeration to it. complaining no it. particular it's of the interested and the Because

significantly And we now's So, it we've time an it. share, off to higher. where businesses that's other may if there, grab We've gross opportunity are margins got an the example certain do there. to waive our because got

– we environment, competitive manage giving So, a it variety do and portfolio bullet We market of and it. the other structure, things. here's everybody a execute don't on points and based go the three

things. Whether price we'll it's combination variety market share positive gross take gains a or bottom way. that it's it the cost, margins to So, line, of fall of the either a and bottom to defaults line,

Operator

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

Scott Davis

with don't remarks availability I Is anything there higher think seeing you any out there mentioned end prepared your in about the at of or that tunnel Rich, pipeline. the of light valuations the M&A assets? the you're

Richard Tobin

fixing lot what it. and years we much multiple way was long I a a the ago, willing gone be of expansive back wound more at as trading that news, trading looked couple of we a we're is up, can at Scott, that to in clock because good Well, our we've a the what if higher guess the multiple margins was move at we terms pay of

looking Look So, things year, some the cash pipeline. in interesting proactive. at the yeah, at flow we're this is

that year capital of some capital terms as year we're quicker I this to return. last of So, mentioned decisions end deployment in the at probably or going make

think margin And way. – going basis a that to the look, trade-off so, we're done was businesses. in here the challenged the that deliver team to meaningful was, reinvest do I an portfolio. accretion if We've management yeah, on you organic then on So, time your in over base

have expansive now to more be I think little inorganically. portfolio a bit earned portions of the the certain we've that that got right

we've today So, we're than tenure been my in front probably more foot here. on the

Scott Davis

in those doing, and at of waste. of are give on I a projects? automation projects? you're when of the but to a such downtime implement think, have like can of But think, manage You'd high vehicle an bit into you guys might couple color cadence one new us And you to little also you projects how up cycle any some do stuff trying that I demand, sense mentioned, you that conferences and

Richard Tobin

got you've to Yeah, be careful.

now. them of few a done we've here that think I

going So two on the run we floor in project, the better of that getting I have terms execution how bigger installed right I'm risk. in on CapEx got that refrigeration now, have that to – to we're them the accommodate much just ones for think to prebuild did of inventory accommodate kind the think do space we at to we've – I the portion we like of base. that confident

now. and you we're So related of before and to some on you've the what if capacity up And got is side we're it lot that's time. gross allowing higher of And that And We're do up now just productivity machining the to not it that of as some And side. doing got referenced volume interesting on centers. plant else redo the increase a open it expanding that A bring right in time. over kind us on we've technology businesses. in on lot period, ones heavily going you some work real to the businesses of to we're spending over transitory our doing a build those that's of of on trying have but the down throughput shut I pretty that's lower it's the one our way. you It's kind physical footprint. biopharma is without margin inspection

Operator

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

Joe Ritchie

levels little remaining low and Rich, inventory a we about demand bit the being talked robust. environment

when wondering, would disruption availability of in So, some revenues that out forward XQ? you Maybe that book of you in pull some in and saw, it's clearly chain supply that color like you there demand. a just was XQ material couldn't that not raw pushed think about the into helpful. got XQ like, certain amount I'm a around be

Richard Tobin

our anecdotal in got were that have could overdeliver. lot matter of overall, them around in would fact meetings through And corporation, the funnel. have I delivered. then about but the had about you we we would having I we a at told about forecasts, No, a here have over have If everybody yelling January I we were QX issues is, expected we as we I the expected early forced the we've would moving up. had referenced, we of – demand. And total, that that

& out have to those that ability where went on what Solutions was orders, actually get product of period Process in amount impressive. I they intra-quarter a whole, an Pumps their in even as So, all didn't think,

of we did them But overall, kind we looked volume some lose backlog We year. deliver some refrigeration. expected lost the conversion if ESG. I So, would going what I expectation in have at over into volume in

Joe Ritchie

I looks XX quarter. you've of with that on got guess kind this on John of price about It just conversation maybe like basis following cost. points price

You all – comments are around inflationary costs costs made in be the would not your some inventory. that

see trajectory hear – XQ whether you it's rest thinking impact that the is going the in or to price how going of So, to I'm playing how the going out cost like just look see discussing for you're year. curious I'm to forward? curious just this is to the

Richard Tobin

you the backlog. then stuck and then what's – reprice in these took X inventory that the I be of started that on last price just in because And in whether to can gives think positive year. of that of increases is between backlog it we we QX expected that QX kind timing have pre-announced does effective and the April pricing, action actually what then which how would and of drive

bottom that to only is over the think But line know I it. is, we're really about time. we're vigilant going way

now, QX a be or going to debit. know it's we're going right don't I be to credit whether cost, whether price So,

and right? noise you be all can of the can't between credit, price it's I going measure a because realization, subcomponents raw and announced bulk and and to measure. you suppliers, think But to quite about have inflation the castings for it's price orders increases because do a only this you're few but it's portfolio, materials subcomponents kind talking across it difficult and you of around

got I our it the we it eyes more on discussing one to close we'll It's keep thing the really look, have morning. this So, time QX. on. were Brad and that we've color And by

Operator

come line Stanley. from Morgan of will Our Josh of final question Pokrzywinski the

Josh Pokrzywinski

kind pent you a evidence soon as going before to seeing this a stronger gotten this recovery from recovery is you demand is last pretty back to levels a whole some sort that catch versus you guys like. the up pre-COVID XXXX? back this on step be really and are you a earlier year? Or taking up have that here, maybe of line Like, stuff Just year of had are is used that it the end, stronger should certainly Rich, cycle? looks Where done on that

Richard Tobin

or All not, above, back between but believe of inorganic XXXX. Josh, to some XXXX, we XXXX active through I the M&A, lot investments did also say, We've our overly if of XXXX I been, guess. trajectory. introduced in want and XXXX go Look, new base our a products, to we we've it from

up being So, those end credits. topline

they in have their trade-offs reasons are Look, total but it's looks own the the stronger, aggregate geographies certain the is. recovery what end Forget environment demand the There now like why. of at weaker, based broad day. are and they're were, XXXX,

was into box think only is into going the talked under and the where really leading three that went a four to now to invested capital cycle. calling where of inflection it period refrigeration. base that I one there's the year a where environment retail we we're point through that, demand by we big we three can But We're an cycle. a about year XXXX,

time. And aluminum it's that pretty grown environmental long cans you now where to transition four. are cyclical structural this you've changes in reasons. some Belvac transition interesting in that sweeping kind for then very in – a is impacting it's hasn't and got like hope business COVID changes Let's where of like know And reasons things a making

higher important, if that rebased acquisitions, XXXX expected new but would of would at and have day, the So, base the your product launches that is XXXX base that for if been answers we end we anyway have question. the

Josh Pokrzywinski

backlog of just but to beaten maybe of the We've more some good for death, sort one measure. discussion

on off lot product the your You of of a sort side. like there awful to that order point just But year. second the first of folks is kind Wasn't Is I'm seems early going hey, which door it commentary to quarter. hold lot while, going pretty seems bottlenecks about able see the at you this what of of say, the like? a for half a really a of that backlog lead get an the in times it backlog mentioned lot and intake to in I'm Or the inverse? were focused. lot out not so there's a temper is get life Because

Richard Tobin

at structures We day tend there's business and where the market It compete disparity competing us depends structure. with. a pretty on end competitor, and the in between the unless of that's to some the concentrated an what market individual we're

whether not tell, think it's seen that of it's at of I because to to be early too slow inventory the if down not it's It's out liquidating frankly. obviously, then, to that remains the coming going – distribution a demand down. it increase rate liquidating – it's to quite begins bit pace same in, distribution slows

to product we speaking, trying I is negative a are, side. to up and producers, the So, as backlog side we're lead efficient short are have competitive that don't and the availability the bigger the on do backlog concentrated, the where but to impact more going short we on forcefully think items else. environment markets cycle the everything because are What going the is long time it's build generally on that be cycle tied

So we'll see.

Operator

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

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

Dover (DOV) 20 Apr 212021 Q1 Earnings call transcript