DOV - Earnings call transcript Q3 2021

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Operator

Good morning. And welcome to Dover’s Third Quarter 2021 Earnings Conference Call.

Speaking today are, Richard J. Tobin, President and Chief Executive Officer; Brad Cerepak, Senior Vice President and Chief Financial Officer; and Andrey Galiuk, Vice President of Corporate Development and Investor Relations. After the speakers’ remarks, there will be a question-and-answer period. reminder, and gentlemen, to your of call. a is conference our As this recorded being participation Instructions] ladies this and call recording [Operator implies consent

at agree now would to Please turn to terms, If go And over like with call Andrey do Thank you. not please you disconnect Mr. this the ahead, time. I these Galiuk. sir.

Andrey Galiuk

our be and playback everyone, joining be three our and audio call reconciliations in materials, will supplement included Thank website. through will for call. for our between are website XXth you you. and presentation available and Good are archived our thank which months. on the non-GAAP morning, portion Dover GAAP October on information investor measures This for adjusted provides and available

could will XX-K are and that recent today our comments analysis subject or this that to undertake guided statements publicly Form I forward-looking We Form law. turn risks. to for to that, Dover anticipated to list in those include our and over statements obligation no statement. from update uncertainties of any With to be of differ forward-looking any as in their required everyone factors caution a We forward-looking will most except by XX-Q our Rich. call referring to revise cause results by Our

Richard Tobin

Thanks, Andrey. Good morning, everyone.

coupled our a Let’s attractive topline go strategies, to ongoing continued The flow cash investors. our quarter. solid had stats margin its Dover performance that growth, Corporation companies page and to product with three. productivity operating accretion indicate our to and deliver initiatives

diluted margins X. XX% share. product, GAAP drove high increase in topline of operating broad-based comparable Demand the we Revenue each our and U.S. outpace year-over-year backlog, product book-to-bill XX% ongoing over and pre-pandemic initiatives while quarter in bookings positive was posting continued comparable earnings and resulting growth revenue Our growth growth productivity in up, increased and strength with record a sequentially mix bookings exit growth the as above period. a per segment posted a and to levels

cash reap strong made our free activities. the increase, we financial performance of was processing despite begin centralization an to investments we’ve with flow the year-over-year XX% Our benefits of in in investments inventory, as significant

and three enhance in and of several our the to with foodservice acquisitions last continue completed our the improve week. portfolio months We commercial business announced last divestiture

are Our organic providing us projects investments the building productivity topline capacity blocks expansion. the on and growth and and expansions future margin for track,

the on front discuss foot we operating the report end quarter one challenges, be to of our the constructive time multi-industrials to pleasure of Q&A. because here by As the environment that to and labor chain we the exposures, so and each providing some inputs, bellwether, for let’s first XXXX have in have color the environment on wide demand so market inflationary get supply

concerned we’re Let to start particularly run headwinds, U.S. by the take me policy in that been and have duration. We that deal these the to been segment the policies and upon issues bear forecast the that all expand into to satisfaction I review. these telegraphing which of businesses that during incorporating brunt extending fact, no many there no in and incorporating -- fact particularly their risk these we’ve of the challenges, the proposed them discernible saying changes will year our the with

decisions. given and our the demand market demand demonstrate the that by into that have the product services our been duration appropriate current fact the the that for have to reflected breadth these opportunity economic resilience moving of a proactive business protecting our and and are that results. the constructive be quarterly very headwinds about we optimistic will the and the are XXXX in offset policy remain are geographic We strong To exposure ultimately these recognition of we we of and clear, strength taken to there XXXX model products environment actions of be needs comforted

guidance full as of our year strong our raising are a We year-to-date result EPS performance.

environment Our updated nor forecast do not quarter. operating the in challenging deterioration fourth the material any incorporate improvement of

supporting health customers Our the remain to our the provides quarter. for slide same, and with for review of detailed products skip the welfare employees. and long-term, and four, will more services a our priorities results I third which our the of

Environmental and year-over-year posted five. unfortunately and So strong up Group result was was year-over-year, and Aerospace expected we as changes with topline indicators what quarter decline the in shipment moving let’s China. a digits program Defense margin Automation progress a age was Industrial occur quarter posted revenue into from continuing actions. through with its activity in of organically year. to remains XXXX. The performance double Vehicle a average revenue timing. move recovering Products portion miles and to vehicle significant market we positive, with was up Americas in demand Engineered vehicle largely remain Services increase. Services backlog up XX% the a the to pricing slide driven to and growth strong strong

previously, a of as goods supply chain and has raw of exposure materials, complexity. percentage Our to the assembly cost we’ve discussed largest Products Engineered segment, labor as

such, intermittently manufacturing As performance. where the just necessitated quarter. to exasperated that numerous the curtail in issues is a to system component production it us stabilize cost more even margin equilibrium price It an drives supply than is issue, by negative

to a XXXX, is important confidence the Fuel recent in China are move relationships moderate profit Wash that materials is Transport particularly Vehicle by above-ground negative mix Activity the gains actions uncertainty pricing. from absolute and cross-selling team bounce volumes quarter, ICS the doing the acquisition. related We times productivity, exactly subdued, some the can schedule managing the Fueling negative the from profitability driven were supply. organically price short-term, the share near-term have in remains encouraging of management what production rates. in of container believe supply materials as the below-ground raw seen in expect and offset improve was we category. constraints raw North shipping headwinds to constraints demand declined in than chain ground retail futures in customers. and Components America margin we believe taken this subcomponents up points would stabilizing conversion our as forward. with our solid and another above-ground higher impacts COVID in moving delivery the will chain our Margins and and while to customer that quarter posted X% as result basis for lasting be in energy and quarter Solutions on with strong expect we Our but for protect quarter, benefits into in more fueling. and and I segment strategically segment as and already in of driving back XXX the them as supply

Software our organically. We forward. also and have grew Serialization to we consumables. working well going solutions. Sales & here taken X% of ahead are add software these as the headwinds Imaging brand appropriate acquired actions volume pricing continuing resources core & gradual significantly up and is and & by year-over-year to pricing we Digital The business expectations integrate improved management in Imaging and Margins Printing points leverage, in recovery. growth. solid comparable at was input against XXX and offset more ID continue low cost Process its organic Textile Pumps pumps XX% productivity and biopharma as quarter bar a basis strong. for Solutions posted into another additional demand grew grew Blue Coating quarter recently printers Identification to on inflation. business Marketing Bite initiatives The the counter Demand for good be than connectors on

meet absorption, Topline favorable on industrial Refrigeration equipment as their was acquired & and connectors Revenue customer beverage in late residential in to year. mix prior in in Equipment due period positive XXXX based Pumps remained recovery. orders in growth. can down demand lines. the expand with exceed geographies robust in outlook product cost led was demand capacity heat we a and basis by though from our were we order organic results and wins recovery very Processing business points broad-based XX% volume, new markets commercial moving pricing. year, pumps compression OEM the continue biopharma end in and and and grew aftermarket up with intakes Food quarter a are quarter. elevated into to and We the clean exchanger and businesses ability a can-making demand. posting continue HVAC product The continued bookings global across and meters, third shipment capacity remains taking fixed Industrial additional by the up all our the to Food for is combination robust biopharma flow Order XXX on are two the by Polymer Margins single-use in and XXXX. booked in our strong XXXX. remained of The which in all doubled heating that quarter timing encouraged to expanded strong backlogs Components Retail into strong rates ship, Precision on robust for ensure in quarter we to we particular strong, China. XXXX. room Amtech geographies, strength end so is a demand specification last adding Demand in in is forecasted business year-over-year

one operational logistics, production time has with demands here. meeting we I constraints, However, despite intermediate performance labor cost revenue Brad in straddling in it XXXX. it deferment of their the case, much were customers, largely which excellent refrigeration in is and and of to quarter comes curtailments, and supply, Products offset a business, in like headwinds but as Belvac our clearly operating our have with a Again, difficult subcomponent a into significant delivery and flat Engineered particular, Margins will and necessitated cost pass swept actions recovery cost. smaller management base.

Brad Cerepak

Thanks, everyone. Rich. Good morning,

to slide six. go Let’s

is the bridge. top the revenue On

America & by Engineered Pumps topline Equipment FX demand quarter biopharma $XX quarter, posting XX% strong growth can and revenue in solid on impact in market, conditions topline the million. marking, shipments breakdown in North by our making in and our all the the or the about XX% Asia and quarter with the strong growth across segments industrial of posted organic Process in Solutions from in year-over-year by our Europe, growth revenue The geography segments. coding, on growth, Acquisitions organic & Our Europe modest no dispositions. The of biopharma was regions and benefited U.S., increased and revenue XX% largest There five Food pumps, automation, exchangers. and and largest rest reflects X% Refrigeration trading with added and heat in $XX retail, can two quarter. industrial the grew by world. making. the million strong Products,

which organically year-over-year below-ground our represents approximately exchangers, partially polymer heat up and industrial of X% by up retail growth All organically China, was processing, fuel on fueling was offset and X% Asia pumps in biopharma of in and in half Asia the transport. business of declines quarter.

saw Bookings broad-based Moving to the the XX% up momentum the page. we across growth the of the all In segments. across continued five quarter, reflecting organic portfolio. were bottom organically,

slide Let’s on go earnings to seven. the bridges

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

third tax our reduction full approximately were Going XX%. effective to the compared and the $X as a estimate expenses ongoing the or Deal QX adjusted pre-discreet Discrete EBIT the Rightsizing million approximately in year. tax was our $X.XX productivity quarter a the million, higher and rightsizing in rate to than for taxes. prior quarter $XX chart, expense tax discrete a more effective unchanged bottom initiatives. higher by benefits And more as and adjusted million cancellation were related EPS benefits at rate of the in offset XX.X%, than lower corporate million $X improved quarter to offset recovery earnings higher costs one-time other year-over-year impact. XX% the $X for XX.X% net excluding XXXX settlement for remains $X segment year were quarter, to million. than The and or to tax in earnings

Now on slide eight.

million -- cash last performance year, of with flow a increase XX% far with working revenue over conversion the free despite investment a $XXX cash pleased flow $XXX $XXX year-to-date, of capital. million in this free cash cash We’re stands with at nearly thus year, million,

next are we we and year we delivering meet order can last strong levels we discussed into rest ensure year. inventory on As for the high of demand quarter, rates current focused customers our to against the and carrying remain

Let to me Rich. back turn it

Richard Tobin

has report which businesses. I aligned remain since logistic Brad. well our of is to that Thanks, will I nine, used slide core Investor bolt-ons Day activity the and growth then our our support am inorganic adding pleased priorities that during to a long-term format familiar on am we in the with growth we priorities. describe logical busy XXXX those

are complements signal Aerospace solutions. our is which the but year-to-date journey As products towards software-driven on priority aligns acquired disciplined we an highest asset We emerging mature. high solid that prices our that you with growth, and our adopt and most modest deals the time, have acquisitions technologies and our today’s across green is challenging these an that of transaction investment intelligence revenues in that Each in digitizing in can emphasis The we which our software, which and LNG LIQAL, to in have high and portfolio, remain and priorities. solutions. business, SP, recent remain and a return with our solutions two acquisitions are for visualization approach these to on hydrogen well see leader platforms one to an scaling investing over hunt CDS, portfolio third-party bolt-on in businesses, We very as despite meet seven gross about the in our Dover portfolio costs. the including week. XD Defense and dispensing margin we pipeline the highlighted addition a innovative up environment, we positive investments EPS industrial the also lowering and last and excited to quarter front-end aggregate grow third acquisitions strategic our impact were criteria, M&A closed in in expect transaction the

We like also is to the equipment in and Unified for close of negligible X% to XXXX represents many thank a and Brands Dover Brands, October took service overall the its a of fourth Food sector the the sell professional deal was impact operators. foodservice to business our market adjusted will for and on the recent in in EPS. activity employees Equipment early revenue of expected years quarter. our family. have cooking of less would than Brands advantage commercial management The Unified sale I announced in Unified

growth a growth profit cash the expect revenue, favorable we strong As capital remains to flow, and operating backlogs the remain allocation. the combination year, bookings in to and across majority we disciplined with in robust through robust on Overall, to look of of deliver of returns outlook post portfolio, we QX. end year the track demand remain organic and strong this coupled

environment out this year also laying what and XXXX. We to to foundation be look for closing believe the forward we in a positive demand

input from that into that have the of and We progresses environment profitability inflationary supply in them conditions have queue disruption the incurred conviction nature as can clarity to about to QX due and we costs challenging we calendar turn and the in operating the here. improve QX we tailwinds and expect

Before their And like today’s accomplishments wrapping all to would up, Q&A. thank environment. Dover executing in I to with for let’s turn it preservers that, and

Operator

with ahead, your is Research. Sprague question Jeff We from Please Vertical will line open. first our [Operator Instructions] take go

Jeff Sprague

Thank Good everyone. morning, you.

Richard Tobin

Hi, Jeff.

Jeff Sprague

here. Hi. Great color Hey. Hey.

sounds overcome Rich, and getting like inflation, did of price the the in little it it bit and cost. just supply of challenge a -- was address more in a cost-neutral disruptions on more that kind much factories price were than Can relatively what you just your quarter? First, you to

Richard Tobin

operating the quarter not dilution in the where can price cost you see margin. were at the We in the neutral segments

dilutive price equilibrium, So increases, is Where not the two-fold driving margins. the it’s a in the story. to operating where because that’s price little impacted with only bit topline, driving most, we’re of getting a getting even you most we’re

kind So negative XXX-point in get a when you’re dilution. a you of position,

QX down not begin to news in go in in deteriorate From don’t bad equilibrium QX. into we conditions if is here moving positive we’re that squeeze XXXX. and the So

Jeff Sprague

revenue the relative and but backlog. to at looks midpoint, and unrelated than what about pointing then it has of here And you’re backlogs the be QX which guided sequentially, high, especially the X% seems kind to would normal, down like QX, more certainly, in your

situation So the what give uncork little these maybe could you on how be might visibility and color look normal that able us you backlog and address would a like? and a to more backlogs just

Richard Tobin

Yeah.

hopeful EPS, went despite not only QX our end that that -- cash think can projecting the in here. in revenue I we’re but we’re But towards driving it’s not get what over in Clearly, the top flow. and the guidance. out we’re the we normal Brad

We run will for somewhat the of cash end at the year.

We seasonal Thanksgiving of have that then Christmas. in are production just days we that certain don’t much lose because businesses deliver December and and

QX into growth we’re talking about double-digit get out, going So to we’re it endeavor Jeff. quarter-over-quarter and to

Jeff Sprague

Great. Thank you.

Operator

with ahead. question will we from next Please go Morgan. J.P. our Steve Tusa And take

Your line open. is

Steve Tusa

morning. Hi. Good

Richard Tobin

Hi.

Brad Cerepak

Steve. Hi,

Steve Tusa

Hey.

said on inflation price like in Do had X.X% clarify pricing one, so quarter? of neutral, on million mean than I Just basis was, that cost favorability. that, something you you roughly more that that kind think, an cost $XX kind absolute or to you last of so of the

Richard Tobin

Yeah. see that I materials, reflected The mean the lost. a in million of cost lower that compresses of and line. what raw a is there’s majority was $XX you in then business and quarter interruption the the incurred in quarter. conservative and million That There somewhere in chain, QX is in vast negative right? $XX three during that revenue is there’s on buckets, we the logistics segments costs there’s EBIT to of supply the view can impact order

Steve Tusa

from said, the kind disruption That’s Right. of like disruption… you like,

Richard Tobin

That’s all three.

Brad Cerepak

That’s all it.

Richard Tobin

That’s all three.

Steve Tusa

Okay.

it be that wouldn’t so if be why price why positive the that’s then wouldn’t cost, -- So case?

Richard Tobin

it backlog and role the the when on inventory, still based when you the on in is inventory got so raw through. in Because took orders orders that you’ve depending got they lot you’ve and got of you’ve a cycle materials and

So…

Steve Tusa

Right.

Richard Tobin

not positive. all neutrality raw it but up the logistics point I gave positive just it logistics view, from the get QX. have, getting materials, here, we you, the narrows number Without price think, does cost three side. that a From businesses total, on effective total portfolio we I in categories may but most including granular two that not that … on pick in of are get in

Brad Cerepak

Right.

Steve Tusa

of Got stuff really the into guess, are I really and you going be dealing resolution of, kind twosies of quarter on question it. of these with kind these are stands year there And is components could is this onesies timing is that out next mean, like, any constraints, I things. visibility give ultimately, million we there view? then out, anything there to still going like of second and stands on supply that the in or your are something dollar

Richard Tobin

I carrying we’re Brad look, all Well, liquidate of mean, mentioned, as that in QX. won’t inventory, the we so

So to component certain a lightening bit little components. a hydraulics over back It a beginning the it’s of side certain its extent extent, ordering of whackable. That’s QX. now and up just QX the of we and a at are on to because was in electronic

forward think But a that am ourselves, we constructive. prognosticate think and QX to that piece on I materials that, So unfortunately, of how guess I worse. worse. short certain takes getting the in like we’ve curves announcements about pricing I the getting all don’t been a believe that are am it’s It here. better modulate. forward not concerned a am fact demonstrable because of that missing I having over I it it what is other roll positive a ordering say myriad faith quite to ready is in lot seems a making in got based but I QX have run, stuff, one much saying. we’ve But it’s -- into to not about impact it it’s port than the activity about it decisions of bit gets policy should frankly. raw I extent

Steve Tusa

lot. Thanks the Great. Appreciate a color.

Richard Tobin

Thanks.

Operator

our take from next go question Citigroup. Please ahead. And with we Andrew Kaplowitz will

is open. line Your

Andrew Kaplowitz

guys. nice morning, Good Hey. quarter. Rich,

Richard Tobin

Thanks, Andy.

Andrew Kaplowitz

projecting range incrementals your to recording up It’s in QX something kind close or your range of still you’re close ended to you to QX. So XX% and that in that mid-XX% of XX%. in

in incrementals confidence out the turn, have? you into you XX%, starting given it DP. talked versus You’ve XX% deliver you XXXX, about give projects productivity above projects at price how to does got So you ongoing much cost all to of you look could that or as

You’ve structural about. got talk you always cost that that

you these performed how quarter? more do have this So you’ve well confidence, given with headwinds

Richard Tobin

that in the think believe we that I is we inflation in structural -- of nature are that what labor. is the terms I think

turns, somewhat comments, if and the effect of offset bring we as and back in that constructive mats margin So the mentioned believe, that the at year, my lagging In impacted down of we’re we with inflationary about biggest price we I have. we’re profile business constructive the raw inputs coming given factory level any about increases productivity. to can that expect we inventory

do a little to but got bit just labor that we’ve doable. that inflation more of Now that’s think because of I the

Andrew Kaplowitz

about We then And I specifically in maybe know that. building DPPS. it. can you you’ve about out been ask Got capacity you’ve biopharma, talked

some improvement got over in up you’ve with XXXX segment up backlog this think But XX% that’s a XX%. Precision versus I cyclical is Components.

people are eventually DPPS I So some worried running think people about -- comps. difficult into more

you So segments on your you margin maintain can would own investments, performance does now growing recent your one DPPS had? fastest -- you’ve say of the based and that you stay organic that how

Richard Tobin

Well, we and the answer yes. every quarter asked is this get

talked we wouldn’t have about mix? going of into material? doing a XXXX. is due it if call, environment we’re Maybe, we demand and fade Do No. proactive bit that, get to -- little be to we the we weren’t about in capacity the margin As expanding we be going but

roll from other Back that a we can this we of forward So we of the look profitability in year-over-year group. that that this of material change in lot what question level been portfolio rely next ammunition. profitability understand I way. the we’ve No. has on at about your We think forward here? Would moving terms it we think of the But got year. to that

kind don’t of earnings to in relative the change year, size pickup this next need the we just So of that year.

Andrew Kaplowitz

Rich. Appreciate it

Richard Tobin

Thanks.

Operator

from our Please will ahead. Scott Research. take Davis And question with go we Melius next

is open. Your line

Scott Davis

the and two, Hey. being thanks bold stupidity, but being Good and nonetheless… one morning for first of guys of reporting for

Richard Tobin

Okay. Scott, go ahead.

Scott Davis

of customers’ how are certain strategically channel’s a inventory that in your getting Is some you’re chance building there you SKUs? talked the little a about fat little too? Rich, building strategically inventory, a Yeah. bit

Richard Tobin

Not been year. wants in becoming discussing year influenced? are Look, to difficult. so mean so Is influenced, big inventory. thing next it’s large. the the that all supply No chain I of we’ve because backlogs the question. Sure, one live are with a constraints it’s being is being one that

product that’s a out the aware times extent. screaming am backlog in lead are we’ve carrying any and out stretching will around that the take. the Pretty out to and about channels that certain the get reflected here are So inventory. can right much and yelling I got distributors excess the goes not on that door, customers getting on now, everything and we based that our door,

Scott Davis

labor production. Okay. Rich, about mean, curtailing and that I talked understand means. such mean, costs adjustments time-off? a eating like shutdown what you week about, period it what’s and just full talking and I And everybody this time help for down there in shift understand, give Is just paid that of can logistically, or are a here you there? the that with and Are regard? Did are in when something do you extent you you us made are shut that a help some you

Richard Tobin

Yeah. bag. mixed It’s a

units. We half or built point three-quarter have a have can’t at you certain -- built

need logistics. the just You

you they it where you ESG make reworking to think those stop. really parts math those of complicated pieces doesn’t just bodies, the in putting If you about units, and then cost as arrive, gets truck just about point say the refrigeration you component vehicle and to think we need of get sense you lifts, about goods, the think last

Sometimes days. stop or for two you three

if for it warehousing that size else. about about -- shift of space Sometimes, it on you I got you’re I way. would we’ve But it goods, to a inventory pump, by a you of lot take thinking -- tell is deliveries would a that. driven and everything you can think like stop the if depending enough the you mean, that it

two about or down you’re just -- you machine If so, do refrigeration thinking days most truck point whole where the taking all the labor about to three you you’re bodies better but you days. refrigerated thinking of And the get it. units, you carry don’t for off carry and when you’re

negative would So expect. the is you absorption what

Scott Davis

XQ. Okay. Thanks, luck in Good guys.

Richard Tobin

Thanks.

Operator

with go Julian And we question from will our Barclays. Please Mitchell take next ahead.

Your line is open.

Julian Mitchell

Hi. sort of morning. back, just wanted net cost this price topic. Maybe of circle Good unfortunately, to to

Richard Tobin

Yeah.

Julian Mitchell

the benefit sort a real year What’s back $XX of And about dollar Stepping come full next your those of there headwind, year, of price you down, cost reflected back that range? in that it? if that from think from quarterly of in? we sort hang then kind as relative of forward to what type XXXX, normalization see should when forth, year million lag cost is for and think the pricing see is we net do so it in coming curves maybe ability costs we the that’s to cost next Dover

Richard Tobin

Okay.

more that productivity. in there get last want labor material said we in where into Okay. about at clock and here, price the we we’re going Then raw to cost, The a inflationary of QX but year us in raw three time, to don’t It’s started went I and -- right? we be QX components would to even that talking, we I not but we to rewind the have when up just offset of to labor inflation, logistics, problematic from neutrality, supply and even chain it. am terms environment talking

$XX are, segments think see the quarter. you I million number, of to you dilution the it million was I negativity we where the in in So $XX that gave and two

you relative QX and pricing dated one We the that revenue forward expect compress older is fact backlog. us a QX things, as to off which is work the in got QX, you’ve some on two in to and by driven roll that the catch-up

all a becomes before, the don’t year, I into it moving worse assumption remains structure, market we is which QX that going it get the because by asked was that So today, back older pricing that negative the the backlog that as question believe from the the re-prices positive as to, becomes under itself I things assumption way. here as was through it’s taken structure it market -- actions and to in -- being under things pricing the the a equal, of dated

Julian Mitchell

Got it.

through do efficient where the of sort so think spread or next that do too you And that? is get for you year market

Richard Tobin

And to Well, fight to backlog and having not it that lot we’re pain we’ve re-pricing customers we’re have them a the we’ve been Julian. in make with taken deliveries of instances. discussions out going to to our

sequentially So prices backlogs are XX% re-pricing the metals the our growth. we’re also we through despite which it up have that P&L, future and we backlog also means not are having down, as come actually that taking the of so fact

but be it’s that’s to managing the easy not way kind that of going we’re So process. the

Julian Mitchell

That’s very a next slightly up your down first quarter assume on point, year that third the by today it’s again? quarter. lot just half, first gross up we things margins year-on-year one as look the And in this in helpful. last year-on-year a Should so

Richard Tobin

gross for negative would I Year-on-year for negative know not the I again, topline segmental to what don’t are the assume am of portfolio mix. you -- But that year. aware our in grow I the projections have head. majority of margin QX mix the my next

expect So on would alone absorption that. we

Julian Mitchell

great. you. That’s Thank

Richard Tobin

welcome. You’re

Operator

from And ahead. of Andrew Obin Bank we will take our with next go question America. Please

open. is line Your

Andrew Obin

morning. Hey. Yes, Good guys.

Richard Tobin

morning. Good

Brad Cerepak

Hi, Andrew.

Andrew Obin

Hey.

quarter what of we in talked all third folks chain if it, up quantify same with the showing should in mean, delayed these the in I Just issues delayed I disruption supply about and on revenue supply quarter? but shipments? magnitude happens and these XXXX, of terms you remained could about chain mean, fourth think shipments

Richard Tobin

our incorporates more guidance we of shipped our forward, we Number QX? happens foremost, in two, number and have could could view Clearly, first going have. what one. Well,

claimed supply demand this lost argument that is I tight. are I because market everybody, suppose, an about participants is because lost all and one, interesting revenue revenue, constraints high think

of a is as our QX. monetizing QX would to out could fool’s have lost materially. I that reduced backlog my it slightly in bit have and game. It shipped a So little us more more We in don’t that would is believe ship allow presumption

Andrew Obin

changes maybe quarter, Got through for on market touch in little and you. but early And end fourth bookings looks as any quarter of more the can bit third here just robust, I mean, a you went color? the you feel cadence clearly, the

Richard Tobin

we it they’ve was will -- quarter. in that, because was month essentially, would always we’ve in posted. a did and through August clarity so we I on into the is have My a part. basis said we is think as run more August Clearly, the choppy time that for that went last backlog the on bookings, this based October got September most for that, QX they going expectation results and already slow better QX the we rate

Andrew Obin

a Got lot. makes Thanks you. sense. That

Richard Tobin

you. Thank

Operator

take go And Joe will Goldman from with our ahead. we Please Sachs. next Ritchie question

Your line open. is

Joe Ritchie

everybody. Thanks. Good morning,

Richard Tobin

Hi, Joe.

Joe Ritchie

to Rich, So, back here. bigger the maybe chain for a picture maybe just little supply bit, discussion hey, going a question

of from the trying ease supply announcements at they’re to XXxX hearing You have you’re that I like a point, you I I correctly that to issues by from that the to model at government latest some ports. an going really is this getting am that chain improvement seeing on much the like am but had like point? What not sure the make want data

Richard Tobin

Yeah.

Joe Ritchie

would proactively you policy very change then just curious this some decisions, if do try you burden? ease what like to to you do of to had And would like, what do,

Richard Tobin

Going make if and have the overnight that employees operations you XXxX all is parts moving just to announcing of all naive. as happen and the

performance best. the think a go been string I intent long, prices any if there. back not at It’s piece inflation, too manageable have I inflation for year corporates the look you blaming is We’ve of is corporates in if naive at going an It’s transitory an that is demonstrable our priced has having comments how and this -- used -- notion a year. all long argument. think car change that and complex there’s been of but been there’s I the am end and believe of to economist. be But of between don’t now just ecosystem. we as

that So sure proposed lot a thought strategy a one that could cause out. additional agenda of coupled conceivably port items and with other well not entirely would that’s congestion, am I inflation say that’s

Joe Ritchie

Got it.

on year, helpful. of can re-price the great sure maybe is And pricing, the to into in meet next to I beyond. guess, market Okay. margin in that backlog going where and re-pricing That’s there the are kind XXXX the concern what shape? potentially you there’s or your I look backlog. or just cost feel guess into of pricing good should is that portfolio, more little any your environment at maybe the about kind on concern as this and even backlog the bit make like a get super ability your in shape looks is Clearly, backlog so thinking you areas good backlog maybe we portions going backlog of the

Richard Tobin

backlog the not group. re-pricing in of materially portion are any We

doing the actually We’re quite opposite.

out backlog the as of margins a more believe our through progress about having orders year. we and new because demand customer strategic our the forcing re-pricing to is favorable push the all customer we door, destruction actually than re-pricing product that -- relationships We’re in we’re as backlog holding pricing preserving fights equation we not when detriment the the

that ends getting unless an where from being baseline So right a credit up about XXXX scenario, rolling the worse assumption into inflationary one to only make wants inputs the now. is negative going

Joe Ritchie

you. Thank helpful. Super

Operator

will we Morgan with ahead. question And Please next our from Pokrzywinski Josh take Stanley. go

open. is line Your

Josh Pokrzywinski

Hi. Good morning, guys.

Richard Tobin

Josh. Hi,

Josh Pokrzywinski

next are first At bottlenecks out but maybe you I based of just XQ get the for you the up think guys that that terms able of high that couple is what the well, or in seasonality comes line can to in Rich, of next backlog the to you and you what you way past role now on get what a see imagine some sight is plays are watermark what some of seeing. thinking about do mix, quarters? on point, just that of right business have of you these sort door? guys kind something as can

Richard Tobin

Delta I going look, the are one the mean, Remember I comment our allowed positive make at margins of QX end manage mean, largely had There’s struggle. COVID of little which for It’s our behind. that’s Difficulty] in time output. going we [Technical bit still we’re changed nothing fundamentally by a on absenteeism that this. we’re remaining driven was deconstruct to a ability tough, up the am since all I been the guess, here. quarter-to-quarter with I to day, for Yeah, at to that,

we guess, were quite as We it better of we the it I I were, QX the projected QX, but a get think to labor bit difficult. disappointed exited and a better months little bit little got couple equation. materially in on that first had

some So high I to footprint for XXXX not revenue to am and the concerned and got ability overly relatively to robust our we’ve get got growth we’ve deliver projections on for watermarks it.

So, least believe we’re on inventory we’ve again, unless just front foot. we start don’t side, the by which assumption over want think from here, the supply then ordered on the that deteriorate an I off positioned appropriately to we constraints at that make fact we that

Josh Pokrzywinski

is missing business backlog that normal Got it. have specifically double a know like a anymore, grow but Solutions. do like get a I but Pumps And business on what it then & mean, seems what you I on intake order don’t I guys more in down that what’s isn’t the just of equation? a with, maybe sort to doesn’t backlog like and than I you slowing. that just if and has digits know Process to normal long really next that got mean, little to cycle of like mean, mountain It seem you level is early there. year. XXXX, you backlog

Richard Tobin

before. it mentioned we think, I Well,

positive and and drop, to and We’re right? about going to and Because supply XXXX everybody lead logistics backlogs all going we’re if input you costs panic get to chain, going shrink is and into going times are are to shouldn’t.

us is that and these constraints, our proportionally, XXXX, segment year by good I backlog rates total that’s going into will a -- but I that backlog am out expectation my give good, the comments. not of So, lot to as I actually going because gives mentioned a growth sign. of backlog for visibility is, in that the bottomline fade think, it

up looks top think constructive. is portfolio our I which view, of we’ve that wide a done and we’re to at be from point early setting think line I what XXXX is

Josh Pokrzywinski

Got it. Thanks, Works for Rich. me.

Operator

take Nigel And Please Research. Coe with Wolfe questions. your with we go our all ahead will from next question

Nigel Coe

everyone. morning, Good Thanks.

Richard Tobin

Hi, Nigel.

Nigel Coe

Hey.

So, the ratios have the obviously, backlog, book-to-bill the backlogs, scale. the been not so much off

backlogs, such changed been do the really to quarters. as what which what’s I the strong this last have address you address, about times so well? you’re components. And do anemic, So the three understand same doing what you is what’s has very extent but buffering talked thing driving want strength different maybe of and think recovery the question the think for impacting you book-to-bill I couple, been you how versus of lead last customers the or now maybe your some pretty or then To here? four are preordering about just

Richard Tobin

fade will, order rates down has to the elevated order time. Clearly, I topline now the our -- and good. that backlog that’s right I the the over why channel here. growth order aware continue question I Nigel, elevated a not to has think, we over are of over and reflection despite want in again backlog checks our of don’t build being and markets. that any backlog the Okay. rates come fact myself of are be It products and inventory end been do will like, not answered of before we repeat

couple lot a things. it of the different I a in think a past. I what’s that the was portfolio the think So recovery? driving is of than From Dover point view,

in but proactive a about we’re quite markets. into end that We our that we clearly past think getting before, compare. like had that biopharma seems, example, think exposures I can’t the and moving you a it discussed we’ve platform CapEx energy got some refrigeration for are with complex, cycle looks the the of we’ve that that I in market lot

a capacity that I overall, combination So, growing. think, of in are we’ve expanded it’s markets

we’ve the the meaningfully over end last available got So -- markets at of years. changed the and profile product has five that and the Dover

Nigel Coe

I cycle trying the was get to is what at. Great. CapEx But

cadence kind then of really when add mean, the one little but I that’s a CapEx been bolt-on each -- confident You do in sound cycle, with but aggregate? two And great. type helpful, deal meaningful. has the portfolio you pretty they’re flies to was bit, we think radar or a this that M&A happy down because be your by slide were the you So larger smaller could together, road? them maintain there opportunities deals are in you additive maybe

Richard Tobin

interest, of in that bigger value terms difficult. these been problem pricing the Dover, the for of scale more attracts because has high becomes it that all look opportunity, look and The have created the effect bolt-ons of If with larger We where it’s just returners. at Dover opportunities opportunities, value the we larger at so network historically, time. been the use

the don’t we think that a I of that like to deals priced would out we’ve think conviction the would. I Sure, to there. So, stop will appropriate doing ones, we just lot We bigger ones? find But got ever we because need some small process. behind do

Nigel Coe

That’s Rich. Thanks, great.

Operator

RBC Markets. with last our come question go Dray Please from Deane Capital And will ahead.

Your line open. is

Deane Dray

you. morning, Thank Good everyone.

Richard Tobin

Hi, Deane.

Brad Cerepak

Good morning.

Deane Dray

with will Maybe Hey. divestiture side. M&A on but stick the we

Richard Tobin

Okay.

Deane Dray

away & put just Is might the or one-off start Food a pivot a Brand in of be maybe divestiture. divestiture the And selectively Refrigeration Equipment? opportunistic it from truly in it Unified context

Richard Tobin

that it be to Unified extract owned has we more within able that, structure. believe the family all was We in evaluate annually the to market Equipment scale three is our structure Foodservice for a participation by just participate to value market Brands of four did in going The by Dover someone structure variety companies. has changed appropriately matter of over operating not the last that of to years that years and reasons the and the the fact was

Deane Dray

you’re to I pipeline Could understand, maybe of does divestitures, that you’re helpful. not pruning going but potential just that where doing, -- does stand? give how the That’s specifics, that

Richard Tobin

we where to then actively [Technical a that value excess or create annually. the it piece looking There’s each would multi-industrial, were if right of request inbound equal have that lot, an We’ve now of to value a a we But value take embedded paid at. evaluate the But that not the we we a at the look creation it. is that’s we’re said, Difficulty] in could to portfolio. in right? I think Like as get view we got

Deane Dray

go one, then Got it. to just on back And last pricing.

Richard Tobin

Okay.

Deane Dray

increase that pushback the you in quarter you about start fourth during result could this that actually a price felt Rich, talked demand some destruction. to

the fourth price But re-pricing not seeing you increase are sort businesses, that broadly answered You through a backlog. question within be just where the problematic? price elasticity coming of might

Richard Tobin

It Deane. depends,

that, chain. we have not re-pricing commercial due to to our commitment against we having said because not seriously we accept those take of labor terms. we materials much accept have and price backlog, an on because that been moving on so when We But primarily a raw deliver aggressive supply order been sequentially

Deane Dray

helpful. That’s Thank you.

Richard Tobin

welcome. You’re

Operator

And conference you. our Dover’s XXXX concludes question-and-answer third call. Thank period earnings that quarter and

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

Dover (DOV) 19 Oct 212021 Q3 Earnings call transcript