Dover Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeff Sprague - Vertical Research Partners LLC - Analyst : Hey, thank you. Good morning, everyone. Yeah, Rich, let me start the dead horse beating here. Just on the tariff side, I wonder -- I guess this question is, is there going to be some fungibility, right, in what you do on cost. But I'm trying to kind of get a sense of what you're doing new incremental to offset tariffs versus what you already had in flight. I mean, it sounds like the $60 million reshoring thing you called out is one of them. But just thinking about sort of the cost versus pricing dynamics that you're doing here. And again, how much might have been sort of in the plan now and is going towards tariffs as opposed to potentially upside that we could have had to 2025?

Question: Jeff Sprague - Vertical Research Partners LLC - Analyst : And then just -- and understood. Thanks for clarifying that. And then just to kind of pick up then as you'd mentioned kind of on the conference circuit, right, through January and February, things seem to be progressing better. It sounded like March was okay or maybe better than okay given the book-to-bills, but maybe just kind of talk about how you exited the quarter. And did you see any sort of behavior change anywhere from your customer base kind of post the April 2 announcements?

Question: Andrew Obin - BofA Global Research - Analyst : Yeah. Thanks so much. So just a question about bookings. You've highlighted six consecutive quarters of year-over-year bookings growth. But second-quarter comp is tougher, and I do appreciate that on a two-year stack, it's maybe not as tough. But how should we think about just sustainability of bookings growth? And I do appreciate that there may be an air pocket of bookings related to tariffs. But maybe near term, how do you see that?

Question: Andrew Obin - BofA Global Research - Analyst : Got you. And as we think about just sort of your -- just pure math on removing percentage point of volume, but then also EPS impact. If you put it together with the beat, we sort of get decrementals on revenue sort of around 40%. And obviously, then there is FX cushion. So it's just -- should REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 1:30PM, DOV.N - Q1 2025 Dover Corp Earnings Call we just think it as sort of margin of safety that you've built in to forecast? Or are there sort of signs to this 40% decremental number? More precise signs. Okay.

Question: Scott Davis - Melius Research LLC - Analyst : Hey, good morning, guys, and welcome, Chris, to the call.

Question: Scott Davis - Melius Research LLC - Analyst : Rich, the other kind of second derivative of all this chaos is potentially M&A valuations getting a bit lower. Is that something you're kind of -- I mean, it's probably a little too early to say you're seeing signs of it, but is it something you're anticipating?

Question: Scott Davis - Melius Research LLC - Analyst : Yeah. That doesn't surprise me. Hey, not to climb out of minutia here, but would you be willing to share the actual growth rate in the thermal connectors that you had in the quarter?

Question: Scott Davis - Melius Research LLC - Analyst : You did say that? Okay. All right.

Question: Scott Davis - Melius Research LLC - Analyst : Okay. That's a big number. All right. I'll pass it on. Thank you, guys. Good luck.

Question: Steve Tusa - JPMorgan - Analyst : Good morning.

Question: Steve Tusa - JPMorgan - Analyst : Do you -- can you opine on like what your second-quarter internal plan roughly looks like?

Question: Steve Tusa - JPMorgan - Analyst : Does it look like it's around consensus?

Question: Steve Tusa - JPMorgan - Analyst : Okay. And then just on the -- on your kind of tariff mitigation, I mean, everybody is kind of giving a little bit of color on the split of what they're planning to do. I mean, should we think about it as -- first of all, how much of a hit will it be in the near term? And then I assume you're going to kind of work through it in the third and the fourth quarter. And then how much of that is price and how much is kind of these mitigation activities?

Question: Steve Tusa - JPMorgan - Analyst : Okay. And then just one last one. You said it was kind of like a top-down approach. I mean, $0.10 is kind of a rounding error in the end. How did you -- what is your macro assumption to a degree? Like, why not $0.20? Why not $0.30? Like, what is your -- I'm just trying to get a gauge of how well you can manage in the context of like a downside economic scenario? Like what are you actually thinking from a top down? Or was it just like, hey, you know what, $0.10, let's just strip it out.

Question: Steve Tusa - JPMorgan - Analyst : Got it. I won't ask about the torpedo reference. But thanks a lot.

Question: Julian Mitchell - Barclays Capital Inc. - Analyst : Hi. Good morning. Maybe I just wanted to push you a little bit, Rich, on the organic sales assumption because I understand you've taken a more cautious view, but you're not seeing anything yet that's concerning from customers. But in the first quarter, your organic sales were up overall around a point, and the full year is guided at the midpoint up three. So I understand you've sort of lowered the original assumption for organic sales growth for the year. But it's still an acceleration versus the first quarter. So maybe help us understand, which businesses you're most confident in, will see that step up in growth, please?

Question: Julian Mitchell - Barclays Capital Inc. - Analyst : That's helpful. Thank you. And then just a second question on the operating margins and the tariffs. So just to understand, is the main assumption that the net dollar tariff effect for the full year is around zero? And just if that's a firm-wide number, is there any aspect whereby you may be a negative in a given quarter? And any color on which segment you think might have the biggest tariff risk?

Question: Julian Mitchell - Barclays Capital Inc. - Analyst : That's great. Thank you.

Question: Michael Halloran - Robert W. Baird & Co. Incorporated - Analyst : Good morning, everyone.

Question: Michael Halloran - Robert W. Baird & Co. Incorporated - Analyst : So could you just give any thought process on if you're seeing any difference between your OpEx, steady-state consumable-type businesses, versus more of your CapEx longer cycle type pieces in terms of orders or commentary from customers at this point?

Question: Michael Halloran - Robert W. Baird & Co. Incorporated - Analyst : And is the implication there is that you're seeing a little bit of drift in the CapEx piece or you just worried that the drift will come?

Question: Michael Halloran - Robert W. Baird & Co. Incorporated - Analyst : Yeah, no. Makes sense. And then just on the inventory side of things, how would you characterize your inventory and then your content in the channel and how would you characterize that inventory level? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 1:30PM, DOV.N - Q1 2025 Dover Corp Earnings Call

Question: Nigel Coe - Wolfe Research, LLC - Analyst : Thanks. Good morning. So look, in the spirit of sweating the small stuff here, if we look at the top-line guide, the point cut to the top line, if we decompose that between price and volume, is there like a two-point cut to volumes and maybe a point higher price to offset the tariffs? And then if we then take that thought a little bit further, would that mean maybe a three- to four-point cut to the volumes in the back half of the year? Just trying to judge how conservative the opposition in the back half of the year.

Question: Nigel Coe - Wolfe Research, LLC - Analyst : Okay. No. That's very clear. Thanks, Rich. And then just a couple of quick ones. PPS margins obviously were great. Normally, 1Q was the low point. I realize mix is an issue, but would you expect 1Q to be the low point for PPS? And then did we detect a glimmer of hope in European heat pumps? Just any thoughts there.

Question: Nigel Coe - Wolfe Research, LLC - Analyst : The PPS margins.

Question: Joe O'Dea - Wells Fargo Securities, LLC - Analyst : Hi. Good morning. Can you just expand on the proximity manufacturer considerations here, where in the business you would have some of the bigger advantages? Any positions where you would view yourself as being a little bit disadvantaged?

Question: Joe O'Dea - Wells Fargo Securities, LLC - Analyst : And then on vehicle lift, just to expand on that dynamic a little bit to try to understand how much is -- you're managing the timing of demand for moves in the manufacturing base versus underlying CapEx demand trends where there's a little bit of a pause, it doesn't sound like you're seeing much pause in the businesses. But just trying to understand how you're managing the timing.

Question: Joe Ritchie - Goldman Sachs & Company, Inc. - Analyst : Hey, good morning, guys. So I know you don't want to give us a 2Q guide, but let me just kind of ask a question on organic growth because it is the one quarter that you guys have a great deal of visibility on. So is it fair to say that the growth rate you're expecting at this point in 2Q would be above the 2% to 4% range for the year?

Question: Joe Ritchie - Goldman Sachs & Company, Inc. - Analyst : Okay. But within the range or not?

Question: Joe Ritchie - Goldman Sachs & Company, Inc. - Analyst : Okay. And then I wanted to just ask the question. I know we don't usually spend a lot of time on DII. But I think I heard you say that you expect it to be the greatest margin expansion story from the segment perspective this year. Just talk us through some of the structural cost actions that are occurring in the business and maybe what the ballpark expectations are for margins this year.

Question: Andy Kaplowitz - Citi Investment Research - Analyst : Hey, good morning, everyone.

Question: Andy Kaplowitz - Citi Investment Research - Analyst : Rich, just following up on DPPS, you mentioned a tough comp at margin Q1 and Pumps and Process still put up 7% revenue growth on over 30% margin. So I think given my comps get easier now in Q2, does Pumps and Process potentially continue to accelerate here? And I think you said in the recent past that biopharma was trending up higher than your low teens forecast for '25. I think today you talked about thermo connectors up triple digits. Are those businesses going to continue to run hotter for the rest of the year you think?

Question: Andy Kaplowitz - Citi Investment Research - Analyst : It's helpful. And maybe just looking a little more closely at DCEF because I think in the recent past, you've mentioned you expect your cryo-related businesses not [having] to grow double-digits. What are you seeing there? I know you -- you're forecasting mid-single digit for the year. Last quarter, you started at 2%. That's obviously not bad. But is there anything holding that business down on the revenue?

Question: Brett Linzey - Mizuho Securities USA LLC - Analyst : Hey, good morning. Thanks. I just want to come back to price. So the incremental price not fully baked in the guide, but I guess, in terms of what you've announced to the channel and customers, do you have all the price out there that you need to mitigate the tariffs for this year?

Question: Brett Linzey - Mizuho Securities USA LLC - Analyst : Yeah, makes sense. And then maybe just shifting back to FX. So headwinds flipping to a tailwind here. And understandably, there's the gyrations you don't want to mark-to-market. But I guess if you were to strike the line today, how are you thinking about the net impact with all the hedges and everything in terms of the tailwind at today's rates?