DOV - Earnings call 3 2023 | Dover Corporation

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Operator

Good morning, and welcome to Dover's Third Quarter 2023 Third Earnings Conference Call.

Speaking today are Richard J. Tobin, President and Chief Executive Officer; Brad Cerepak, Senior Vice President and Chief Financier; and Andrey Galiuk, Vice President, 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.

If you don't agree with these terms, please disconnect at this time. you. Thank

like sir. to now Please Andrey call ahead, go to would Mr. over Galiuk. I

Andrey Galiuk

Angela. morning, of you, November webcast call be Thank will Good on XX, today. joining you available for link An our and for be a audio of website archived version our this replay will everyone, call through and the thank days. XX

of events due will on are our current forward-looking results to number and based to which include statements expectations. update those statements could and forward-looking today from discussed comments SEC Our assume differ uncertainties, filings. our risks a no Actual in statements. We obligation

With to Rich. that, over turn I this will

Richard Tobin

Okay. in inventories, improving -- Revenue normalizing and and Thanks, in and geographies. results environment the lead to posted order times several across end what a encouraging seasonality. rates improved markets return quarter dynamic normal and Andrey. on sequentially is across markets end We very demand operating our different

Our we in backlog continued to lead books. longer-dated from shipped times quarter, our with tandem orders normalize in the as

& structural margin productivity, have XX Broadly by going reaching Solutions. over all-time product exceptional, margin an the the which are in was months proactive we dives the than version quarter forward. driven negative mix Pumps in support paying disciplined The strong offset controls high more cost and cost should actions performance pricing, last Process undertaken speaking, and

and of businesses De-Sta-Co year at towards portfolio attractive portfolio recent higher growth the our FW the earlier moves, Murphy Our followed Day at portfolio and in the sale acquisition and return evolution valuations. the we Investor priorities Andrey higher intent continued that reiterated of

a provide acquisitions cash optionality flow balance continue as favorable evaluate return environment [ Our attractive and in M&A to strategies. capital ] pursue opportunistic position are strong we and and bolt-on more sheet

for a expected towards happen carrying cost result the biopharma liquidation previous continued general segment second supply guidance trend year, specifics across that in to and is supply I'll half we temporary prohibitive of that chain uncertainty the a end targeting low the cover range. issues and EPS the are inventory our to guidance recovery by in and as lag of year later the commentary. and in the of full macro upon now reduced This have We expand chains driven the

Overall, demand macro plentiful portfolio, across good remains the considering negative the headlines.

carrying new end of growth all lead on product inventories and demand, that of areas and the help fourth channel inventory prevailing our Our track, will we and by capacity launches XXXX. production quarter while identified costs additions our posture expect balance and times are

increasingly be results pricing We inventory that will are convinced position critical XXXX. financial into the dynamic to moving and

in into year growth markets, structural value XXXX, cost end actions, our next foundation, expect secular an and growth bookings in elevated Between XXXX. select business and see and our demand carry backlog we creation we businesses. in see outlook, flexible into exposed we to recovering good to by expect model driven Going in-flight

were X% against up our and despite resulting performance Let's of a highlights in times strong X Bookings down sequential year-over-year, X of the organically reflecting Page to out Consolidated growth in better lead in sequentially down the revenue was move shipments on longer-dated quarter segments. X.XX, X. but X% orders. on book-to-bill

but a remains to result, backlog to continued our normalize, levels. As elevated prepandemic relative

lower positive quarter. improvements to able spin than a and as in portfolio since broadly were volumes. were than more up the more was with cost offset together record EPS based margins dynamics, $X.XX execution, XX.X%, productivity And the Apergy basis containment X% XX to mix. Adjusted biopharma [ actions, price/cost points to Segment up offset strong ]

and up offset organically Engineered were with General more strong the Asia, in the lower and shipments shipments vehicle was XX% year-over-year revenue, in down together driven capacity Order driven waste X. reservations rates better to waste [ mix segment aerospace in of by by price/cost and at a Turning investments in in quarter. well in hauling. take points which X% into recurring ] service, up is business, handling XX% in and Europe the and the primarily aftermarket made weakness basis previous defense record were Products quarter, Slide productivity quarter to XXX organically in periods. XXXX. Margins

is mention the De-Sta-Co, divest agreement operating Engineered the within I'd Products to valuation. like to to segments performance, units -- but [indiscernible] of announcement This the our not one related and operating have believe quality businesses. the performance typical and the of businesses have -- goods less we class margin cyclicality and strong than valuation been to achieved the capital we proven underscores of that

accretive components margin revenue Fueling to in on highly fueling the solid Margins progress. and hydrogen than [ opposed more offset quarter. retail flat and in at components above-ground markets. EMV fueling, the and for ground & saw business Energy were organically growth LP up points were were led project in -- recovery LNG growth activity the basis which as to unforecasted in And returned an slower XX cost execution our rates channel actions in in High We in business resulted the below fueling wash in has to ] Clean up quarter negative and is nickel XX%, structural interest segment. mix. destocking was double-digit are pushouts retail

China the high and offset all-time and and ID in strong marking coding ID down Imaging consumables in down professional quarter. X% was was Margins the comparable in though of shipments & marking comparable and printer growth a and as the against -- demand coding XX%, for serialization segment period more difficult & at record in services. an Imaging slowing organically than year-over-year

the revenue. continued Process polymer Pumps more in another posted Segment were margin was dosing down XX% of of processing down growth, Precision excellent the mix and in the Industrial stable but in of Solutions Components the systems quarter quarter. quarter. offset were X% organically and than by was to biopharma. & pumps hygienic softness lower biopharma

remained is America performance the North though organically. of food margin. a XX% XX% headwinds demand and segment The up of robust business X% business Heat growth Technologies with COX Sustainability strong systems exchanger in double-digit & Europe, the its at or Climate beginning in we posted retail operating in margin our line Asia. strong refrigeration continued Top shipments quarter in experienced trajectory.

The mix as have steady and productivity been margin noteworthy conversion. has trajectory positive excellent investments improvement in margin driven refrigeration

We segment. expect the margin improvement to trend for the continue whole

I'll here. to Brad pass it on

Brad Cerepak

exchange Rich. I'm acquisitions line the X% below-ground perspective, $X.XX LPG Thanks, a for X. in expect FX the Slide top the positive Based the our down is down positive in in Asia service, be quarter. X% shows fourth down X% half was FX, The Both and was of which revenue Asia China, our a we headwind U.S., of the was has past of and fueling. shipments quarter. From impact Europe top been Good in the headwind on contributed represents rate, in the now quarter down to X% geographic X%. largest which organic components years the EPS X%. about quarter. revenue the movement vehicle in quarter. in due organically morning, biopharma, to FX to retail market, base to in $X.XX in euro-dollar lower everyone. decline translation $X.XX on a our resulted X.X and bridge recent

against times On and shipments the lead due down bottom, normalization bookings were backlogs. of elevated strong year-over-year to

$XXX cash of year-over-year. represented XX% nearly an Now X. flow million of or Slide increase cash in Year-to-date, on our million $XXX at statement, revenue, came free flow

balance chains our have to trend improving, We as in reduction actively plan with working third continue we the previously, levels the balances of As discussed accelerated year. the quarter we inventory capital working and by supply to our end XXXX. begun the to our liquidate in expect inventory

in historically fourth year. quarter. again, the has quarter flow generation expect we Free cash And the to flow peaked fourth cash finish strong

XX% of Our for forecast to free flow XXXX cash revenue. XX% is

Rich. it turn me back to Let

Richard Tobin

I'm X. Slide right. on All

in in Products weigh our We Meanwhile, the auto expected which fourth the 'XX expect to in remained OEM a truck be to generate recent Engineered Aerospace in several defense is strike robust and on near impacting quarter term. Growth quarter. the deliveries. will at in term major will fourth into growth waste reduced business, the strike by near be handling moderate strong. businesses

in lower record interest expected year higher on ability service to previous shops versus be Shipments rates weigh to CapEx. aftermarket vehicle a on finance

quarter improve productivity capital the We on from expect and our tailwinds investments. price/cost recent to benefits positive margins in

remain & LNG energy, continued EMV to Energy hydrogen trajectory robust Fueling post and their expected continued steady. Clean fueling order components point and Clean is aboveground retail to recovery. in trends

expect rate-driven and channel through and components headwinds segment, We interest destocking in below-ground LP maintain the vehicle to fueling year-end. wash

actions wash volumes. offset containment margin aggregate $XX lower and cost fueling from should lower car negative as million in below-ground structural stable expect retail We performance the in mix

trajectory textiles. should by ID segment. period to & attractive slowing Imaging expected comparable at difficult Margin levels for ] continue [ its should on performs organically [ growth a new ] down demand against subdued software a this be driven in at customer conversion. Derealization Asia and is remain outlook

in flat for are year. Pumps despite And enough & have to Precision energy is levels, end recovered recovery. inventory below channel Polymer levels Process organically in has processing now biopharma The components growth Components demand very should booked been not XXXX prepandemic subdued. indicating the customer projects. although from roughly continue growth earlier is recovery transition tailwinds the fourth expected to remain quarter. drive forecast

ramp and is We the for 'XX. inventory as short-cycle business, our generally in of This have reduced rates in will the a levels remain can appropriately year. we production and posture balance this order recover and

margin We on mix biopharma. in expect headwinds year-over-year negative

& Climate fourth is to heat growth, abruptly Sustainability in line the top in due as pumps. QX impressive uncertainty of expect slowed Technologies for quarter years several moderate demand in heat European exchanges After to near-term

allow fourth COX during for and continue demand refrigeration and As efforts Traditional its season. go-to-market appropriately. the production we a for reduced refrigeration cleared quarter. our But result, with be holiday levels demand reducing will robust the systems to inventory ramping see production are we're to in retain up to activity seasonality

margin on We mix. improvement through gains improved expect year-end continued and productivity year-over-year

XX. Going to Slide

acquisitions, reflects demand the changes and in Our our the chain integration near-term guide in supply updated costs and isolated to temporary divestment activities. EPS posture, issues production related and and

rate regulatory result driven lower of as headwinds these be in partially a changes. upcoming activities expect tax tax reorganization by offset QX We a to effective by

posture we operating prioritizing production and XXXX and highlighted, operating cash to dynamic flow critical inventories to As I've where changed the volume expand reducing over can margins. environment we believe outlook and on maintain reaction operating focused setting in our up is

the Slide quarter. we Let's during that the go take XX -- a at made to look quick inorganic and

well exposure the transaction align reoccurring -- we and margin reducing China. two our that and portfolio priorities quality overall Here, enhance recently and while uplift, our portfolio revenue automotive the all growth summarized to of through with announced

De-Sta-Co We for were De-Sta-Co deployment significant after-tax sale a options. our valuation of able additional to balance acquire Murphy, the and FW proceeds more lower FW multiple than from capacity preserving for pay sale Murphy, the than sheet

of part Pumps rationale provides to on position Bio our Process highly FW Murphy, compression on Slide a as for Precision color solutions offering uptime optimization remote Solutions FW lower XX segment. Components & reciprocating mining, capitalized reduce of existing brings advanced product and is more complementary improve acquisition unit, to the operating in growing -- Murphy customers emissions. of costs, the seek FW. solutions the Murphy's industry control adoption which

best-in-class combination value for proposition valve industry our clean a into leading FW global In we transition hydrogen, in in energy offers including the with our technology alternative robust and energy investments. where compelling position Murphy demand technology from acquisition applications, see sealing and a

funding announcement recent to of for are to and provides investment federal of $XX a been XX. of acquisition private interest Slide sustainability-driven plenty highlight, in participants. our of in industry a into multiple billion funding the around in regional is attract that on -- which expected blue has hydrogen Murphy FW in starting $X the developments good roster recent markets, There a hydrogen chip result also topic, The as hubs billion segue

a position offers liquid of control supplies refueling established in sites. Acme, for hydrogen hydrogen the and Lecal acquisition has turnkey ], Dover XXXX components which [ with hydrogen flow which

compression in in gas invested to applications. components, is participate compression. organically are hydrogen there gaseous we In Additionally, economy extending short, without no hydrogen DPCs,

with the and collaboration the value OEMs. end-use storage have and equipment transport whole gas in and participate to We through great industrial through aim with throughout chain relationships hydrogen players

in a technological compliance for growth high on with We industry focus and positioned on high are well regulatory capitalize safety and with hydrogen to participation. requirements

installation we a finalized We is our to leading Moving have lower to for new to COX of The European double-digit for January compliant the be the Slide business. growth with under of a market we its requirements XX. systems a enjoyed had a EPA by clear refrigeration AIM GWP rule Act this over recently in XXXX. with believe COX where position decade steady And systems rule tailwind trajectory. deadline

the enjoy to We early installed largest a lead were we transplanting technological U.S. in and currently where this differentiated have offering. the based mover technology broadest the and

of investing our expanded proactively drive growth have [ our and process. and product a to We customers, -- quality ourselves thereby have for standardization, product and anticipation costs and strategy sales addition behind the ] reducing platform-based capacity improving been market in in supplying

million business about for track is global for approximately COX in our applications. we're are ] pump -- offerings have and we but in market business in is Our pipeline days, revenue, this heating new innings, active our orders. of $XXX in is early excited growth early It's industrial XX% [ heat also XXXX on and district COX-based the an We

our latest since on it a views And exchangers finally, on battleground has XX topic. heat Slide shows become

most heat plate is currently Our heat technology sustainable which brace exchanger the business technology, for supplies commercialized fluids. transfer

as heat attention lot beneficiary hydronic key [ participation recently sustainability of the tailwinds ] our supplier clear the of various a and pumps. climate been a from have across to with applications drawn We

emerged residential [ hydriatic of to global primary of ], is as heat recent heating. significant rely on Heat pumps houses for pumps a as decarbonize which to water-based a have choice retrofit that emissions years a heating responsible in technology portion with technology

conversion as select European boiler Legislative and volumes, Recent European are initiatives have earlier. in weighed with in fossil uncertainties of individual subsidies pumps. countries heat about on fuel driving countries the Union I indicated near-term

Our such, remain or any customer to for as and growth OEMs across they're pumps our over-indexed multiple geographies, heat technology. not product concentration and We confident long-term risk. the about prospects exposure and

of represent to business. our important that heat European It's note X/X exchanger pumps heat residential only

tailwinds share from to gains solid and driven exchanger heat by continue several You technologies. other legacy sustainability growth see vectors

in expect have we proactively with robust slow down. albeit growth dynamics continued We Europe in heat exchanges, lower -- our capacity trajectory near the as expanded as in slightly term various

Q&A. my thanking the by our during prepared for quarter. for close it's I time And driving financial global teams performance strong remarks our

Operator

Steve with Instructions] [Operator JPMorgan. comes from question Our Tusa first

C. Stephen Tusa

or for since level macro more just So organic a more world view, could positive a a so. September little the been cautious more to you kind next It looking changed case don't kind in talking year ahead, that. like next set recouple lines bring about strongly little the you've are I a us But early month year changed thinking discuss over just little fourth there this trend where trend in weaker. as orders bit the then. assumption quarter as comes perhaps for it year. the when low-end is world's on recoup think growth a to the you Like understand Because cautious your a bit What's to for the lines next margins, of were outlook guidance, things about Dover? or a seems than perhaps trend. have of maybe that then just would for view what of last Maybe

Richard Tobin

wrong from Okay. -- I were on just take a actually That's see nascent it turned I let's there we order that going forecast biopharma. about Steve, frankly, upticks, did was it some for a mean, lot the if recovery. to never think give Look, if we but this. look much. at our customers our quite I we We year, were to getting be into some just indications try.

that's a So back we different bit were in than little September.

we to in think have and on it the biopharma I [ just demand pushed XXXX. throw gets towel ] to

We'll We to right? it's in be what thought market as being unfortunately, QX. a is QX, into didn't betting quite not out in ESG on car dynamics good were ship limited have plans. quarter sector. the And robust UAW of able it We our this of actually be trucks, but to heavily in terms on was expect going would in we

exchangers. heat happen really abrupt a and think I mentioned didn't an almost was That of reversal bit little of the QX. end until the I on

need little up days from chain pivot there. So understand reduced there's to -- I until supply the is And finished of about in we looked think XX of ago. a a that be good Everything got as a goods there. we've what bit lot

So cash question. drive into to think question, to I leads at next positioning think we're and into protect day, I our -- is We because And touching XXXX be next then start some it is the the revenue, start we're you 'XX around way driving discussions of to which able the that revenue of but there. a the touching like had not going here now to and in margins slowed like be about and the end on long lot price on things terms, inventory. incentivizing you not going things payment

look think demand, that our of into I think if strategy with inventory next I strategy of at year, What -- And protecting of you lot talked the was day. is demand quickly market with it and done the mean exactly end we we to down handled had seen the this year. at previous to before. of I we it's the efficiently over years have bring how we've about that mean, the margin hope the a adapt we've demand. unitary I what the X not

pricing a going saw lot into the system. of You

there's going and the came of year we terms managing, that but and I in oversupply a is on is not some reflected So for into probably -- over going be less demand, think that that our this that which saying, year-to-date, we've price unitary year. we're important to SKUs little next in terms bit of to our take getting margins and inventory managing done in and

bail make Do to to going in of there's wait government this I being call that. problematic notion I liquidity out show headwinds on we're year? you somewhere. coming, soapbox, want to the personal lot up is a going a that of spending next think the amount going strategy. of but with withdrawn I of to on find government on have wait a because to Clearly, want the all system. get on we're that us me the market to that's is to this a don't And

all now policy think to the allow next for end is I the So and of going year, it triggered us monetary which into predict by going growth year. to to be between is

in we have not situation of tell playing what are I if that to will inventory, price you planning to headwinds we're a kind doing we QX, is to if where line there be into What going on start we're do can get going growth. to we're top not long drive and

C. Stephen Tusa

for about like next So point think just starting a flat year? should we as

Richard Tobin

think I so. No, don't

of ahead supplier we're that end think at the right? a I curve. industries, we're first the So of end component market we're into the Remember, day.

think So get got the that this we've top a some presentation. covered investment growth our And that in pretty terms of next in I of I at reason that we benign those kind even right, growth. can we if year, line of I macro part of environment, think that's of growth end vectors drive we the think the

Operator

The with Research Sprague next comes question Partners. Jeff from Vertical

Jeffrey Sprague

restructuring and on Rich, thinking maybe fueling particular. in a question

I year-over-year about lot issues of QX, like think of speak Maybe you absorption basis. on Could there? some looks had the but a inventory, restructuring you're there for the color you trajectory love flat, guiding you're more guess, of it a talking to I some margin on on planned it's kind that? margins but

Richard Tobin

Sure.

to portion took the because protect I where mix think into seeing and headwinds in the normal says ] year allow draw performance argue poor protect it that production go even accretive the [ script, point, margins because be you between question at would below-ground is position to a the of segment, Fueling what next of end we're year. and the that -- forecasted taking we've down let's at QX the we the been Solutions into and even we now the levels back Steve's to answer is heard have below look basically, in is margins. inventory if for you actually QX there, this is we We're me highly of going and basically restructuring

QX. restructuring So is actually the that protecting margins -- the done restructuring benefit we've into

Jeffrey Sprague

what visibility right, of might inventory now, some the of pumps, up kind and it was biopharma the bit? maybe And how your the would what's on understanding equation whether a demand customer at level, of square kind right comfortable of level you year, of is other earlier on little these this when questions just pockets, or customer heat kind turn

Richard Tobin

Yes.

we've position. of where within we At better. think getting a we just visibility, material I lot we're levels. day, can a OEM much position relying end pretty see distribution, becomes OEMs difficult. sell have right, because of basically the the through the day, At At got so the distribution, lot the a we on we're to own us tell it level, end stocking the more their

days the that of and got take give So exchangers. deficit capacity a now markets tried come of because it of a all a chain I is to still XX let's bled us off. need to recognition reasons was to sudden, halt goods heat there's then a until seemingly ago, the be Up cover, of that everything lot the finished a demand for you've in

it's just said, I pretty good take we from When -- think distribution, it. like So a them. signals it's on OEM, I handle from got the got if that we've to

Jeffrey Sprague

Brad. Does a to back expect next what XX-something bounce should sorry, for year? we forward? one going I'm quick the tax Or just rate

Brad Cerepak

in not things Jeff, into year. Yes, we're taxes, next into carry will seeing QX QX on and the here

we earlier that said gave differently, rate to XX% our this in going to when XX% guidance, we be saw I like So year somewhere 'XX is in rate. much tax think

Operator

with The Obin Andrew next question of Bank from comes America.

David Ridley-Lane

Obin. kind revenue on you need? this at Ridley-Lane would for you'll David how the how Andrew into backlog kind time, bookings is the see trends you of of point excess kind that interplays This in the that of versus characterize Rich, and

Richard Tobin

and Mag, excess a of the I it. backlog, backlog that mean, longer of don't end year have by the think which Belvac I anymore. -- drawn particularly lot have -- drove cycle that down in I we're our think we

will but anything -- back of portfolio to if as last up terms aggregate, portfolio of bit years, general to and go related higher in a over you it its opposed think look being else. little kind than average X end mix is I that on the more

inventory of we'll would end that reduction between that said, I year, customer either -- distribution our the done inventory, the be business the at done our and the expect in long-cycle by end we to of So the be backlogs year. the balance like be think I to

David Ridley-Lane

Got quarter then sequentially bookings then? it's to but the know it. you tough increasing see in bookings, ask do And I about fourth

Richard Tobin

I got say about I high I a value bookings mean, take we If frankly, booking back just I because it because flat. go think where coming that lot would to supply right in and into would quite particular at are a of call dollar ESG look. from, we're business got well 'XX in constraints. Flat, I now.

think an the macro caution -- with I have times been everybody reduced. lead recognizes there's overall that vastly that

acceleration think there's QX. I we in a that So be for of bookings QX, expect large ] going hurry but to would -- lot [ in

Operator

The next Halloran comes from Mike with Baird. question

Michael Halloran

Two here.

first, you channel fair inventory Or of your pace more your amount you the on have you at inventory channel than a you're the in what the your down do we're aggressively, bringing hearing the when partners? drawdown? side, elsewhere. sense obviously Do inventory they're think pretty look of so So urgency lagging same

Richard Tobin

No.

I think the cases, carry certain interest that holding pattern. in our channel And is normal with below because cost of of rates. that partners are,

are working us about capital, working X%. So QX bit now would dynamic where down to capital liquidate is a in $XXX have would to through argue by now, capital cut or little just the a that's of incentivize loan either ago included, in going everybody through We're inventory have of X revenue we and right? So that's we own that we're markets able of of because sit because trying we'll distributor 'XX rates interest was working inventory, harvesting demand higher a probably And just the our certain of been production not if the into in of into into there's tight terms. They're to that's cost 'XX. paying you but standoff way. think million or price low, that X% too going months probably XX they system a got that end because typical to a

Michael Halloran

and it the comments having to in order made not part that a or that just positive comment channels. normalizes if a flush previous little should made through more, I'm channel first essentially inventory bit you you you a quarter, about levels to certain are the chance of normal by have the question inventory better the So the given throughput, guessing where year-end, in turn lease is

Richard Tobin

have not correct. end at revenue It's mean, end line That's some you demand. minus take a in destocking demand you our trajectory into if to market reflection it. of I market That's of businesses, look top the destocking.

Michael Halloran

then maybe the kind have creating the piece, a next And on parse a little the Great. pieces continued on out in easy year, comps just sensitive. pretty bit of of other side, there. some the more are the DPPS you Obviously, biopharm pieces destock moving but lot IP your

on So some side. you're seeing of maybe pieces the just talk about moving that

Richard Tobin

record while reduction. underestimated, Well, that we're I of. think extent pretty I quarter, the biopharma proud eating I on the overall, profit at it's pretty think that think sandwich in -- the clocking that margins amount bad we're To frankly, of the here, loss that we've this quite had

of pushed of that next comps into into extent So to end it's get the QX easy get damn pretty the the 'XX, we day, the once year. at

FW you on betting we're balance be gas business, look, we total rates Components, good. underlying in transition. We're Murphy, bought name expect really where the energy Precision there, to of basically we The it. LNG behind hydrogen, Order

of and Murphy offset probably and Mog going some lot completely DPC gets FW driven by I I on that probably down to business amount and we've a one backlog. bio. think but plastics polymers, that's weaker That's think by year, next of it be ] [ the

Operator

The with comes Kaplowitz Andrew next Citigroup. question from

Andrew Kaplowitz

your do ] resilient erode margins difficult, you in the Rich, Have would of of moving were opportunities kind the fearful expect you you you you've talked that have about what industrials stay expect being then beginning do you any seen markets? And erosion proactive regarding year of [ any QX? can cost Or in or if still out pricing kind ]. in economics [ to at erosion cost deliver just a somewhat the delivered But you might bit. price forward?

Richard Tobin

of end day. efficiency We're and at always working structural on takeout the cost

a performed how of So part flex the than model to to I to, during we driven view. don't demand demand here. environment, want cost kind and point just the in period, business point from that's ability parcel back if not other and the COVID we Look, to structure, dire the efficiency of a productivity not

As the as now fundamentally I hard the and that not between through as 'XX. go margins margins. a be why and relates medicine incredibly We've the year comment bit think is action, here, position back it of it look, demand of script, into of here you keeping pricing we're important taking to to to little look pricing, end the it hard goes then we're inventory of these we work is to the relates going and if done that in right? up And believe pricing moving of lot a incentivize that's

Andrew Kaplowitz

just you're takes Rich. maybe a more DCST. into little seeing Helpful, and And then puts in color the

mentioned report a you you slowdown still and the potential of margin. growth DCST 'XX? in deliver systems, how margin mentioned for exchangers, see You you QX? you you as segment And in terms in as Do assess the COX the here just but what strong you strength in in heat would well, did from

Richard Tobin

that had if exchanger is went a that was know Look, month I it think through high clocking of demand. but demand I I mean, we I heat don't were we there. very until incredible temporal, this think the ago, amount right? we up

thing. of a inventory is I clearing just think this bit an little

of out exchanger growth next expect we the business year. So

in we're that here. in margin the our we quarter X there. don't last We think think going that, refrigeration years -- did that's to back give I highest

the margins. there there, recall, amount down margins of margin which impact though, to trajectory all COX, right? that have year. refrigeration, on But seasonality we to due accretive, on with has would coupled QX, production Now just expect take we that So to is some next increase

Clearly, -- input offset and its a in going year Belvac, backlog we're will to down likely bit that a we the will run which off expect of year next negative little XXXX. from have

Operator

with Joe comes Goldman Ritchie question next The Sachs. from

Joseph Ritchie

normalize takes typically the longer inventory. a based It I what doing Just you've on inventory Rich, dynamics few a than we've just been a this quick while. because, to seen, it follow-ups -- mean, on quarter typically

And by year? of a confidence being into color your the is you kind the likelihood end spills so inventory on to of to able some on Or good need where be that XXXX? of there just this get

Richard Tobin

in we're That in total that when own which Well, cash inventory. up inventory, capital is I we're the chunk of liquidation, big control inventory, which mean, reflected about signing flow talking that our a for, we're working right? we're talking of, about takes

and of now that you allow modifying lot before, we're I inventory, talking posture -- a rather reduction. When at clear commercial And year. chunk in channel is and the channel the ] of adopting to our only in material to inventory way if of to was been the conditions, about into end inventory progressively not flow that in the that markets to cash over start can look our quarter, we're that. inventory down a the now and than I OEM has try do doing inventory businesses coming between channel the revenue either we're we're certain said year free the because inventory [ you push or we've -- $XXX million like own a of think been end

of clear, like markets we're trajectory of build should But and so So year. most in then we'll the of and is in foot there becomes next we that in how does the year how balance we front it about we're it of end growth the much by believe look what the confidence the how quickly of markets end back. kind on. be on I feel channel just our and that think they it end And much question a here, good

-- that end-of-the-year on demand current an based rates. phenomenon it's So

Joseph Ritchie

it. Got

on Okay. And one then quick real a XQ I DPPS. just That's in just helpful. guess

called you in growth the segment. flat out think I So

a down the is I'm similar for XQ -- little margins bit. for margin just a curious standpoint, from revenue sequentially, So XQ? think about similar DPPS? do you How revenues margins in

Richard Tobin

down, They're will immaterial be it to... either -- subject or right, up

Operator

from next Brett question The comes Mizuho. Linzey,

Brett Linzey

a we maybe way are ask to M&A on under episodic, understand shuffle? comparable you of certainly percent to quantify you consider what I just but be portfolio is And wanted sized to guess review? think offset? additional how this should question to could is about find a seeking Or there as portfolio. acquisitions revenue the pruning, I

Richard Tobin

got business review over million no. orchestrate think a $XXX gone $XXX time. lot $XXX Brett, one million portfolio a priorities I Look, we've the -- don't revenue. we are. that under all whole that's portfolio and that. go million The No can our Look, go to buy the let's we've where say, around But got is revenue, about

To that positive. portfolio touching I --, a the did extent without is to our our that we could make a think, change we

be out in do differences the the subject that that repeatedly, lot both end extent is a day. but great, of could would the that at we to timing that So and of to

overall But do we like M&A this comment, do ] quarter [ an we'd in is progressively every what just year. as what would to

Brett Linzey

sense. Got it. Makes

heat have and near more slow to And level of there guess, destock this standpoint? of at what rollout term thinking [ or of I your from some the imbalances take your about does a Just visibility those and additions away negatively in shifting terms skewed least maybe capacity ] back the Europe then in of the that Asia. capacity is exchangers -- these here?

Richard Tobin

No, I on coming automated highly plants. sequentially. are is These capacity think the

So employees. -- day. blackout it's It's the at like we've they're almost end got of -- plants the not

standing needed heat XX% is we So the revenue. the capacity. exchangers of Remember,

of lot that's it, getting get it's we I headlines, So address to and why wanted a it.

I OEM an as visibility Our great is us. not is, for it's mostly because sale mentioned,

that the find days last been year the the slowdown to down, the and balance up itself we so. manifested to they of So that's out want we've they XX out. the point decide for slow called over And where or what

been fundamental. always over that bit that's in So are We a capacity grow It's the massive time. we to There's is technology worried investment? heat the about been implausible. It amount little a not. announced. seems pumps of going Absolutely think capacity

of is the So going I much the reset exchangers. on not of day, goods, the the on consumption at market the heat think end to the finished be so

Operator

question with next Mitchell comes from Barclays. The Julian

Julian Mitchell

in cash is guide. inventory around to flow element free to circle discussion One the margin just wanted I context back the of

down very good still that the that little think and I high move progress So a inventory that's it's for QX. on cited bit liquidation this you in year, the despite but maybe

cash just been flow, free has around and volatile. sort maybe the very inside it any color moving parts So of

next it's more as sort So maybe normalized? months on any sort of XX of thoughts

Richard Tobin

to it's of Well, basically sheet an amount of had that there. balance been expansion everybody's And view. meet because from that only of of the volatile to demand, an demand you was inventory point

said out down. that to year, market basically when that the bring guidance in put we think a inventories going this we more normalized we're now that were I we

really on we're progress making materials. think I raw good

we cutting of WIP then in QX, by think should clear about all and to here finished I goods, production receivables the end year. from it's the

Julian Mitchell

I see.

receivables margin was so the change free And guide? kind delta in cash the main of the on

Brad Cerepak

go Well, what to of the the as -- but continuing at it's that went it. of course indicated we been But has back year, down, QX. commentary you inventories part if that our in see look bring over it's we've we into tough We and QX. did

we look actual a the given performance in the in built As of and good back, quarter bit. sales, receivables, the actually QX, timing

strong. already very seasonally taking, that I on quarter. in actions given even in robust always the So I think fourth see the more think But here that liquidation is with come fourth robust flow quarter that line And be again, will the it we provided we'll based we're is due to guide. our commentary cash

Richard Tobin

flow the in cash we're position. and disposal, a of very the we'll proceeds which receive Between cash QX, in Yes. healthy

Julian Mitchell

of question just And follow-up sort the makes sales on around the That outlook. to maybe sense. the

revenue sort and recently, take to under inventories the make year year. of it's next partners low recently? the that comment orders the very the into so that's take movement, sure in what sales has in like, the been that the So make the improvement a channel despite short-term, channel you selling does inventories we channel, doing you've done? sort seen I sort of you entering to than plus plus backlog of you're right do outlook the low of clear backlog of confident have better determinant you if figures orders that new should thing When into the of growth has And perhaps sort around the some sort think early what

Richard Tobin

that right for I the everything we're of that's Yes. taking our move. mean I XXXX, end -- think the control at the day, in

a to they're day, anything of grow just So are end the right, there. reason rates The managing right, we general that point of of macro, vectors we discussed those the going those that from channel, got view. not the that kind some or sentiment interest that they've are of growth demand subject despite the inventory we to think else or at investments, highlighted an businesses because

how about So going wood, XXXX look, we've XXXX. continue on positive I our yes, we're will -- we're mean, into feeling and based setup manage managed knock to

Operator

with question RBC Dray Capital The Deane next from comes Markets.

Deane Dray

between that to some higher be get ground, you was below and you please? above to there some those, But weren't the ground, the can a fueling. of color but a It just destock, retail hoping above sounds bit seeing Was like ground. on the rates square just ground, effects disconnect of below seem maybe

Richard Tobin

ground below Sure. year and -- a we bad above in had XXXX, great had ground. We in a in year

kind time and then you this kind capacity build finished got the sites, the built to they had the you sites think if refurbishment of it takes or top of about year. on So that job

year that want a a a labor think so. bit it's now working loans and those you to loans because is longer fact problem is probably Below like anymore, of going going cost retailer a is fact or fueling installation. in quintupled go the of that if no a to It's of headwind then availability. the order site those projects and And of in contract no at contractors capital retailer, the in ground is spec product these a the the over the it's that longer part now they and about to the last product do need

baseline. X%. a It is was would talking X% very everybody be nice about for

or paying X contractor, you XX. a capital you're working You're loan, need a

basically is inventory two, down example I a number and done, of at general And [ that has is chain getting business, comment, a the that see terms over cost inventory up lot little so lead the of work bit, And bit as it of sold of just our gave of times through know low. you putting one. number in almost a gone that that a are before, despite ] quite underground in a least distribution, drag the an liquidation the of portion revenue they that carrying because recurring

they taking want their inventory So down don't they're because carrying the pay to cost.

through and point, that terms the We'll come some deal not get system. into when the to back to inventory incentivizing or that's we're we price got give, into that on At push XXXX. with

Deane Dray

follow-up there? maybe just surprised All a What side macro just be X%. right. felt did. surprises U.S. on down But seeing were helpful. you're and That's on then the some you what -- to And the the really the you geographies, was of begin

Richard Tobin

I thinking look, more be robust. one year no this going It it's that and Europe more was to been. into -- came think hasn't

inventory up actually systems think COX well. said, XX I COX issue, much that in of make you recognition to like heat heat exchangers argument. came The couldn't a them are chain. enough here a and to heat demand quite that supply the that is ago, just think days halt pump quite until I there's I that performing counter running and too in to exchanger

it's carrying cost In raise second you and U.S., And the the -- the I you seeing gave We effects think poor. the not and in hopeful rates just to what general and I the we're at we're that's answered, doing has can't I the about knock-on a just in very China of example China, now. rate U.S., ago. what were terms been not have

Operator

Nigel Our with comes final from Wolfe Coe Research. question

Nigel Coe

one the of a parlor about I to De-Sta-Co mean, to noncore not those going the So review, assets. of going assets But trying cuts back which kind the forward. game wasn't portfolio obviously, guess meet there's might

seen already noncore. as think potentially I

growth, the being sold? led that asset curious it that what decent margins, to was So good given just very I'm obviously,

Richard Tobin

market market exposure least both I growth find in and at tenure attractive. -- the was we did the exposure, okay, The end the end from exposure, think geographical my here. that not

Nigel Coe

I assume? Europe Too much

Richard Tobin

much too and auto Asia. much Too

Nigel Coe

Too much Asia.

Brad Cerepak

yes. China, much Too

Nigel Coe

on did then you just buybacks, year. And an ASR Okay. last

levels? got buybacks You've at any your balancing thoughts as I cash on get mean, flexibility amount if a fair the sale these you free of well. with forecast flow

Richard Tobin

mean, stock these very levels buying attractive. look, at has Yes. become I our back

on of in here and got we've flow. that moving cash right the And fourth an inbound think acquisition on a parts disposal. I an quarter of the we've the delivering terms got then lot and outbound on the

the After a to we'll healthy all is sure I'm that that sheet clearly will in return And balance forefront. come very position. discussion capital be settled,

Operator

period That question-and-answer Dover's and our you. Quarter XXXX Earnings Thank Call. concludes Third Conference

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

Dover (DOV) 24 Oct 232023 Q3 Earnings call transcript