Dover Corp Q3 2024 Earnings Call Summary

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

Question: Jeff Sprague - Vertical Research Partners - Analyst : Thanks. We're all tongue tied this morning.

Question: Jeff Sprague - Vertical Research Partners - Analyst : Good morning. Yeah, it's early. It's early but it feels like hey, Just on the comment on climate sustainability, Rich, that you made as you were going through kind of the opening comments. The comment about materially higher in '25, was that a total segment comment, a heat pump comment? Can you just maybe elaborate on the moving pieces within that segment in particular?

Question: Jeff Sprague - Vertical Research Partners - Analyst : And then I appreciate the bridge here, it's definitely helpful. Just thinking about that $0.50, right, that's tied to sort of cash on hand. Obviously, the deal impact can vary depending on what you pay for stuff and the light, right multiples. Do you foresee a scenario where it's less than $0.50 because you're more active on the M&A front. How should we think about that?

Question: Jeff Sprague - Vertical Research Partners - Analyst : Right. And also you got additional leverage to deploy if you want to. Great. I appreciate it. Thanks. I'll leave it there.

Question: Julian Mitchell - Barclays - Analyst : Hi, good morning. Maybe a lot of good color on the slides. Maybe one thing I wanted to touch on was just the overall organic growth backdrop. Your tone sounds pretty confident. I think bookings up mid-single digit organic is sort of broadly what you expected. Just wondered sort of what your impression was of the broader environment in terms of customer activity, anything notable moving around? And tied to that, when we look at your segments, say in Q3, very, very wide spread of organic growth outcomes. One division up low double digit, one down high single digits. When we're thinking about the 3% to 5% framework you have on Slide 10 for 2025, is the core assumption that the sort of variability across the five segments is much narrower and kind of all are contributing to growth?

Question: Julian Mitchell - Barclays - Analyst : That's very helpful. Thank you. And then just maybe one quick follow-up on one of the segments. DII doesn't often get much attention, but superlative margin performance again in that business in Q3. You've seen that in the first half also. So maybe sort of clarify. I know there's a mix commentary as a tailwind for DII. But is that something, I don't know, structural changing in the mix in terms of kind of how you've repositioned that business or it's simply just the consumables versus equipment dynamic and that may flip around next year?

Question: Julian Mitchell - Barclays - Analyst : Thanks very much.

Question: Scott Davis - Melius Research - Analyst : Hey, good morning guys. Hey, I wanted to follow up a little bit on the M&A question. I think it was Jeff. It seems, the deals we've seen in the last couple of years is that in the multiple ranges, the only deals that are kind of working are the ones where there's a fair amount of synergies. Is that, is this something, when you guys look at your existing portfolio, is there a wide enough net there to be able to buy things that bolt-on to make you kind of the, what I'll say, the best owner of that asset? Or do you think or multiples come down to the level where that's no longer the case? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 1:30PM, DOV.N - Q3 2024 Dover Corp Earnings Call

Question: Scott Davis - Melius Research - Analyst : Okay. That's good color. Hey, guys, maybe a dumb question. But when you're selling these thermal connectors, who's specing in the product? Is it the cloud guys? Or is it the cooling guys? And I still get, want back in your good go (inaudible) .

Question: Scott Davis - Melius Research - Analyst : Right. But the point is kind of once it's speced in, if it needs to be replaced to preventive maintenance or whatever, it's like-for-like, right?

Question: Scott Davis - Melius Research - Analyst : Okay. Fair enough. Thank you guys. Good luck. Passing on.

Question: Deane Dray - RBC - Analyst : Thank you. Good morning, everyone.

Question: Deane Dray - RBC - Analyst : Hey, on the biopharma, the recovery underway in the single-use, is what are the green shoots you're looking for? We saw results that would suggest that from Danaher in particular. So is there anything broader going on in terms of how you think, because it's been the most extended destocking period for everyone, but just any color there would be helpful?

Question: Deane Dray - RBC - Analyst : Good. And, now you'll have doubled the amount of imaging questions that you typically get. Your primary competitor made a lot of noise about broadening our platform, what they call from source to shelf. They're more vertically integrated than you guys. But is that a broader platform that you all would be interested in participating in. And do you have aspirations there, they paid up pretty sizably for a SaaS business?

Question: Deane Dray - RBC - Analyst : Yes. But then

Question: Deane Dray - RBC - Analyst : Great. Thank you.

Question: Nigel Coe - Wolfe Research - Analyst : Thanks, good morning and thanks for the '25 kind of help out there. So it sounds, Rich, like you're pretty, sort of like the base case would be the organic range you laid out there. So you'd encourage us to kind of use that range. But what I'm kind of curious of is when we look at the, look at the '24 performance, what impact did you have from the capital businesses, Maag, Belvac and the (inaudible) European businesses? If we assume that those are bottoming out this year, maybe (inaudible) next year, what is the mechanical impact of those businesses?

Question: Nigel Coe - Wolfe Research - Analyst : Okay. I completely missed them. So again, so if that then flattens out, your 3% to 5% seems. I don't know, no improvement in the rest of the businesses. Is that the right way to react? (Laughter) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 1:30PM, DOV.N - Q3 2024 Dover Corp Earnings Call

Question: Nigel Coe - Wolfe Research - Analyst : Okay. That's a good boilerplate response, Rich. And then just on, just a quick clarification on the 4Q guide and then I'll pass it on. The 4Q, sorry, the full year EPS, the, so I'm guessing there's about $0.10 of interest income coming through in the fourth quarter from the ESG divestment proceeds. So is that wrapped into the [102], or is that sort of within the $0.05 kind of bump up to the low end? Just any help there.

Question: Nigel Coe - Wolfe Research - Analyst : Yeah. Okay. Thanks Rich.

Question: Joe o' Dea - Wells Fargo - Analyst : Hi, good morning. Thanks for taking my questions. Just wanted to touch on fueling and the comments around belowground fueling, inflecting positively and any sort of context or perspective in terms of the cycle trends there and what you're seeing now in terms of how early on we are in seeing some growth?

Question: Joe o' Dea - Wells Fargo - Analyst : I appreciate that. And then just wanted to circle back on the restructuring. I think you talked about as you head into next year, $25 million of carryover but also made some comments that there could be more. And so I just wanted to make sure I heard that correctly in terms of, are there additional sort of planning efforts underway and where we could see more of that happening across the business?

Question: Joe o' Dea - Wells Fargo - Analyst : Understood. Thank you.

Question: Steve Tusa - JPMorgan - Analyst : Hey, good morning.

Question: Steve Tusa - JPMorgan - Analyst : I'm going to ask an even dumber question than Scott. What is the actual revenue kind of guidance for this year, like the absolute kind of rough number you're guiding to for this year?

Question: Steve Tusa - JPMorgan - Analyst : Right. But off of like, is it like a $7.6 billion number, something like that comes out to?

Question: Steve Tusa - JPMorgan - Analyst : I'm kind of, (Laughter) I guess it's not a dumb question.

Question: Steve Tusa - JPMorgan - Analyst : I think it's [77 ], by my math, just wanted to double check that. So how big are the headwinds?

Question: Steve Tusa - JPMorgan - Analyst : Sorry, like total top line absolute sales, kind of important, I think. Don't you think?

Question: Steve Tusa - JPMorgan - Analyst : Like don't people ask you like cocktail parties, like how big the company is you run and you kind of throw out $8 billion and stuff like you should know that, right?

Question: Steve Tusa - JPMorgan - Analyst : The headwind businesses, as we'll call them, how big are those this year? Are those about like $3 billion in total?

Question: Steve Tusa - JPMorgan - Analyst : [Billion]. Something like that?

Question: Steve Tusa - JPMorgan - Analyst : Yes. I mean just like what were, like the $300 million was off of like what base, like

Question: Steve Tusa - JPMorgan - Analyst : Yes. Okay. Got it. And as far as like your outlook next year for pricing, is it a little more normal? Is it anywhere that you're seeing any kind of price pressure? Or is it kind of modestly positive or maybe even like a point or something like that for next year?

Question: Steve Tusa - JPMorgan - Analyst : Okay. And then just one last one for you. For the other businesses, kind of the mixed bag businesses outside of DII, of course, any of those in there that are kind of like on watch for like declines next year? And any that worry you out of the other, not the secular growth, not DII and not the headwind businesses like the other business?

Question: Steve Tusa - JPMorgan - Analyst : Right. Okay. That's all I got. Thanks a lot.

Question: Joe Ritchie - Goldman Sachs - Analyst : Hey, good morning guys. Tough act to follow there. The, so I'm going to ask Steve's question maybe slightly more positively or glass have full. If I, we're getting to, hopefully, election certainty sometime in the next month or so. Project financing is arguably, hopefully getting better because of interest rates. You've had one of your competitors call out the fact that, that's really impacted their carwash business. As you kind of think through like that macro element, which is both election and interest rates, like, where could you potentially see a benefit to your business? And how do you see that kind of playing out in 2025? And know that you don't have a crystal ball, so your best guess at this point.

Question: Joe Ritchie - Goldman Sachs - Analyst : Okay. Fair enough. And then we talked a little bit about the recovery in biopharma, which is awesome to see. The next kind of logical question is like when can we get the margins back up to that 30-plus range. And I know that you're feeling good about the recovery of that business into 2025. And so just kind of any thoughts around getting back to 30% next year.

Question: Joe Ritchie - Goldman Sachs - Analyst : Good to hear. Great. Thanks guys.

Question: Andy Kaplowitz - Citigroup - Analyst : Good morning, everyone.

Question: Andy Kaplowitz - Citigroup - Analyst : Rich with the understanding that you aren't giving out '25. Gus, as you just said, you did say that you could do 40% incrementals with some restructuring talent and mixed benefits. And as you know, you've talked about 25% to 35% long term incremental. So should we get more excited at this point that with accelerated portfolio transformation door is really making that transition to a higher incremental margin capable company or is that a bit premature?

Question: Andy Kaplowitz - Citigroup - Analyst : Love it. Okay. And then just another question you love around bookings. Just one clarification, like was DCST really the heat exchanger stuff, the big difference in what you thought versus that book-to-bill of one. I know you mentioned macro is maybe still holding some projects back. As you look at Q4, do you see book-to-bill getting closer to one if CST does begin to show some life on the heat exchanger side?

Question: Andy Kaplowitz - Citigroup - Analyst : Got it. But it's coming in the next couple of quarters, just a question of when.

Question: Andy Kaplowitz - Citigroup - Analyst : Helpful. Thanks, Rich.

Question: Mike Halloran - Baird - Analyst : Hey, good morning, everyone. So couple quick, couple of quick ones. Just on the comment of managing capacity utilization, I don't think this is of the scale that you would have talked about fourth quarter last year. Is this just tied to the heat exchanger piece? Or is there anything broader? And any comments on inventory levels in the channel?

Question: Mike Halloran - Baird - Analyst : Makes sense. And not beating a dead horse here. I just want to make sure I understand. The 25% margin comments for DCF, that was applicable to the whole segment, not just the gas piece or something more insular (inaudible).

Question: Mike Halloran - Baird - Analyst : (inaudible) the jump. Thank you. Appreciate it.