Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dover Corp (NYSE:DOV) achieved an all-time high segment margin performance of 22.6% in Q3 2024.

• The company reported a 5% organic increase in consolidated portfolio bookings, with strong performance in clean energy, external connectors, CO2 systems, and biopharma components.

• Adjusted EPS from continuing operations increased by 6% to $2.27.

• Dover Corp (NYSE:DOV) completed the divestiture of its Environmental Solutions Group, reducing exposure to the capital goods sector and enhancing capital deployment opportunities.

• The company has a strong balance sheet, providing significant optionality for capital deployment and shareholder-friendly strategies going forward.

Negative Points

• Aerospace and defense volumes were lower due to shipment timing and difficult comparables, impacting gross margin.

• Clean Energy and Fueling segment saw a 1% organic decline, with lower volumes in vehicle wash and retail fueling equipment in Europe and Asia.

• Climate and Sustainability Technologies faced tough comps in beverage can-making equipment and weak demand in the broader HVAC complex.

• China, representing about half of Dover Corp (NYSE:DOV)'s revenue base in Asia, experienced a 17% organic decline.

• The company faced higher corporate costs related to acquisition deal costs, impacting below-the-line items.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Sign with DOV.

Q: Can you elaborate on the climate and sustainability segment, specifically regarding the expected material increase in 2025? A: Richard Jay Tobin, CEO: The comment was primarily about bookings. We had hoped to see an increase in bookings for brazed plate heat exchangers for European heat pumps, but that didn't happen. We've adjusted our production accordingly. We expect bookings to inflect positively in 2025, particularly in heat pumps and CO2 systems, based on market feedback.

Q: How should we think about the impact of M&A on your EPS guidance for 2025? A: Richard Jay Tobin, CEO: The base model assumes zero organic growth in 2025. If we model 3% to 5% organic growth, we get an additional $0.55 to $0.90 of EPS. We have significant liquidity for potential M&A, and while we expect to deploy capital, the exact impact will depend on the timing and nature of any deals.

Q: What is your outlook on organic growth and the variability across segments for 2025? A: Richard Jay Tobin, CEO: We don't see any indication that our growth platforms will slow down. We expect to lap the headwinds from long-cycle parts like beverage can making and polymer processing. We anticipate a more balanced contribution to growth across segments.