Slides
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Earnings Conference Call Fourth Quarter 2024 January 30, 2025 – 8:00am CT
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2 Forward-Looking Statements and Non-GAAP Measures We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties and risks, including general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, and our ability to realize synergies from newly acquired businesses. We caution everyone to be guided in their analysis of Dover Corporation by referring to the documents we file from time to time with the SEC, including our Annual Report on Form 10-K, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. We would also direct your attention to our website, dovercorporation.com, where considerably more information can be found. In addition to financial measures based on U.S. GAAP, Dover provides supplemental non-GAAP financial information. Management uses non-GAAP measures in addition to GAAP measures to understand and compare operating results across periods, make resource allocation decisions, and for forecasting and other purposes. Management believes these non-GAAP measures reflect results in a manner that enables, in many instances, more meaningful analysis of trends and facilitates comparison of results across periods and to those of peer companies. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP and may not be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. The use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP. Reconciliations and definitions are included either in this presentation or in Dover’s earnings release and investor supplement for the quarter, which are available on Dover’s website. We do not provide a reconciliation of forward-looking organic revenue, segment earnings conversion, and forward-looking free cash flow to the most directly comparable GAAP financial measure because we are not able to provide a meaningful or accurate compilation of reconciling items. This is due to the inherent difficulty in accurately forecasting the timing and amounts of the items that would be excluded from the most directly comparable GAAP financial measure or are out of our control. For the same reasons, we are unable to address the probable significance of unavailable information which may be material.
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3 (1) Non-GAAP measures (definitions and/or reconciliations in appendix) (2) See performance measures definitions in appendix % of Revenue: All in: Organic growth(1) : $M: % of Revenue: Organic growth(2) : +7% +7% +60 bps to 22.2% +70 bps to 21.7% $429M $1,044M 22.2% 13.5% +1% to $2.20 +4% to $8.29Adjusted EPS(1): Prior year Q4 and full year benefitted from $0.25 of tax reorganization actions Organic revenue growth(1): +3-5% Y-o-Y Adjusted EPS from continuing operations(1): $9.30 - $9.50 Commentary Commentary ▪ Encouraging trends into 2025 with broad-based top-line strength across the portfolio ▪ Continued positive order trend trajectory; five straight quarters of year-over-year growth ▪ Q4 book-to-bill(2) >1 ▪ Positive mix impact from high margin / high growth platforms, cost containment, and productivity actions driving margin higher ▪ 2025 guidance in line with preliminary outlook from prior earnings call ▪ Double-digit adjusted EPS growth guidance in 2025 Q4 and FY 2024 Performance Highlights Q4 ‘24 FY ‘24 +0.3% Flat +1% to $1.9B +1% to $7.7BRevenue Bookings(2) Segment Earnings(1) Adjusted Free Cash Flow(1) Adjusted EPS from Continuing Operations(1) FY ’25 Guidance
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4 Summary Corporate Q4 and Full Year Results Q4 2024 FY 2024 Highlights Revenue change (Y-o-Y) All-in Organic(1) +1% +0.3% +1% 0% ▪ Q4 FX impact: -0.3%. Acquisitions (net of divestitures): +1% Bookings change (Y-o-Y) All-in(2) Organic(2) +8% +7% +7% +7% ▪ Fifth consecutive quarter of Y-o-Y organic bookings(2) growth Segment Earnings(1) Margin % Y-o-Y bps Δ 22% +60 bps 22% +70 bps ▪ Q4 Segment Earnings(1) up $17M Y-o-Y Earnings From Continuing Ops Reported Adjusted(1) $238M $305M $1.4B $1.2B ▪ Reported Q4 Y-o-Y change: -8% ▪ Adjusted(1) Q4 Y-o-Y change: -0.4% Diluted EPS Reported Adjusted(1) $1.72 $2.20 $10.09 $8.29 ▪ Reported Q4 Y-o-Y change: -7% ▪ Adjusted(1) Q4 Y-o-Y change: +1% Adjusted Free Cash Flow(1) (% of) Revenue Adj. Earnings(1) 22.2% 141% 13.5% 91% ▪ Q4 Adj FCF(1) down $12M Y-o-Y (1) Non-GAAP measures (definitions and/or reconciliations in appendix) (2) See performance measures definitions in appendix
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5 Segment Revenue ($M) / Y-o-Y Organic(1) ∆ % Segment Earnings % / bps ∆ Y-o-Y Revenue ($M) / Y-o-Y Organic(1)∆ % Segment Earnings % / bps ∆ Y-o-Y Q4 Performance Commentary DEP $288 +2% 21% +20 bps $1,202 +8% 19% +130 bps ▪ Growth in vehicle aftermarket and fluid dispensing. Lower volumes in aerospace & defense due to program shipment timing ▪ Consistent margin performance as productivity more than offset lower mix of aerospace and defense shipments DCEF $528 8% 20% +200 bps $1,937 +3% 19% +20 bps ▪ Strong shipments and new orders in clean energy (cryogenics, hydrogen, LNG) and above-ground retail fueling equipment. Positive growth inflection in below-ground fueling and vehicle wash ▪ Margin up on return to positive volume leverage, restructuring, and higher mix of below ground fueling equipment DII $289 +1% 27% +190 bps $1,137 +2% 27% +210 bps ▪ Growth in core marking & coding printers, consumables, services, and aftermarket ▪ Robust margin performance from productivity and ongoing structural cost controls DPPS $479 +3% 30% +230 bps $1,895 +1% 28% +70 bps ▪ Robust shipments and order rates in single-use biopharma components and thermal connectors. Solid growth in precision components and industrial pumps. Lower polymer processing shipments ▪ Margin up on higher mix of biopharma / thermal connectors and acquisition benefits DCST $348 -13% 13% -500 bps $1,580 -11% 16% -130 bps ▪ Record quarterly volume in US CO2 systems. Growth in US and APAC heat exchangers. Declines in European heat exchangers and beverage can-making ▪ Broad-based bookings growth (+16%) across all businesses (1) Non-GAAP (definitions and/or reconciliations in appendix) Segment Results Q4 2024 FY 2024
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6 (1) Includes stock-based compensation, deferred income taxes, and changes in other current and non -current assets and liabilities (2) Non-GAAP measures (definitions and/or reconciliations in appendix) (3) Cash taxes paid for the gain on the dispositions of De-Sta-Co in Q1 2024 and a minority owned equity method investment in Q3 2024 Note: Numbers may not add due to rounding Full Year 2024 Free Cash Flow and Adjusted Free Cash Flow ▪ Q4 ’24 Adjusted FCF(2) was $429M, 22% of revenue $M FY 2024 FY 2023 ∆ Net earnings 2,697 1,057 1,640 Earnings from discontinued operations, net (1,297) (113) (1,184) Gain on dispositions (598) — (598) D&A 338 305 33 Change in working capital (25) 131 (156) Change in other(1) (27) (160) 133 Cash flow from operations 1,088 1,220 (132) Capex (168) (183) 15 Free cash flow(2) 920 1,036 (116) Plus: Cash taxes paid for gain on dispositions(3) 124 -- 124 Adjusted free cash flow(2) 1,044 1,036 8 Adjusted FCF % of revenue(2) 13.5% 13.5% Adjusted FCF % of adj. earnings(2) from cont. ops. 91% 93%
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7 Broad-Based Bookings Momentum Into 2025 (1) See performance measure definitions in appendix 379 474 296 517 276 Q4 ’24 DEP DCEF DII DPPS DCST Q4 ’24 Bookings(1) Detail Q1 60% Q2 24% Q3 21% Q4 -5% Q1 -7% Q2 -11% Q3 -17% -5% 26% Q1 -16% Q2 -7% Q3 2% Q4 3% Q1 12% Q2 5% Q3 7% Q4Q4 2021 2022 2023 2024 +3% +17% -1% -3% +16% Double-digit growth in aerospace & defense Double-digit growth in clean energy components and retail fueling Stable book-and-ship business 100+% growth in biopharma and thermal connectors; Polymer processing down on order cycle timing Broad-based growth across food retail, heat exchangers, and beverage can-making Commentary Consolidated Y-o-Y Organic Bookings (1) Growth ▪ Five consecutive quarters of Y-o-Y bookings(1) growth ▪ Q4 ’24 book-to-bill(1) >1 Organic Growth(1) $M Note: Numbers may not add due to rounding
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8 (Part of DPPS) ~20% of Portfolio Expected to Grow Double Digits In Aggregate in ‘25 Clean Energy Components Precision Components Single-Use Biopharma Liquid Cooling CO2 Systems ▪ Tailwinds across broader gas complex, particularly LNG and H2 infrastructure ▪ Acquisition integration driving synergy capture ▪ Strong demand for liquid cooling applications in high performance computing and data centers ▪ Key partnerships with high- profile OEMs and contract manufacturers Recent Investments Recent Investments Recent Investments Recent Investments Recent Investments Aug ‘24 Jul ‘24 Jan ‘25 ▪ Resurgent US energy infrastructure investment ▪ OEM partnerships on energy transition applications (e.g., carbon capture, LNG, H2) ▪ Robust outlook in new biopharma therapies (e.g., CGT) driving continued long- term double-digit growth trajectory ▪ Broad-based national retailer adoption of natural refrigerants (e.g., CO2) ▪ Leading market position with largest install base Dec ‘23 ▪ Recent acquisition of attractive IP portfolio for sterile disconnects ▪ New product launches targeting novel therapies in high growth sectors ▪ Capacity expansions in heat exchangers and thermal connectors ▪ Integrated Systech serialization technology into manufacturing process ▪ 50% increase in North American capacity in last year, +300% since 2022 ▪ Recently launched largest capacity platform Jul ‘24
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9 2025 Segment Outlook Segment Commentary DEP LSD ▪ Growth in aerospace & defense. Stable volumes in automotive aftermarket. Performance levered to H2 on timing of aerospace & defense shipments ▪ Margin improvement on positive price-cost and operational execution DCEF MSD ▪ Growth in clean energy components, fluid transport, vehicle wash equipment, and retail fueling (above and below ground) ▪ Margin improvement on volume leverage, higher mix of below-ground fueling equipment, cost curtailment, and acquisition integration benefits (levered toward H2) DII LSD ▪ Continued steady outlook in core marking & coding equipment and consumables. Growth in serialization software ▪ Multi-year margin improvement runway from productivity and structural cost controls DPPS MSD ▪ Robust growth in biopharma components and thermal connectors. Solid outlook in precision components and industrial pumps. Stable full-year performance in polymer processing with a difficult H1 comparable period ▪ Margin up on higher mix of biopharma and thermal shipments and solid growth conversion DCST LSD- MSD ▪ Strong growth in CO2 refrigeration systems. Stable outlook in beverage can-making. Full year growth in heat exchangers against trough volumes in 2024 (levered toward H2) ▪ Margin growth on operational execution and mix Demand Trends Segment Margin ∆ Organic Growth(1) (1) Non-GAAP measures (definitions and/or reconciliations in appendix). LSD = Low Single Digit. MSD = Mid Single Digit
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10 FY 2025 Guidance in-line with Preliminary Outlook from Last Quarter Adjusted EPS from Continuing Operations(1) Other Items ▪ Segment Earnings Conv.(1): 40+% ▪ Effective Tax Rate: 20% - 21% ▪ Free Cash Flow(1) % Revenue: 14% - 16% ▪ Capex: $170M - $190M Organic Revenue Growth(1) 3% - 5% (1) Non-GAAP measures (definitions and/or reconciliations in appendix) (2) Excess cash excludes $300M minimum cash balance (3) Total debt / adjusted EBITDA (Non-GAAP measure) Dollar/euro exchange rate: 1.04 Prelim. ’25 Outlook from Q3 ’24 Earnings 2025 Guidance 3% - 5% ✓ 2-4% all-in growth $9.40 (midpoint) $9.30 - $9.50 ✓ GAAP: $8.16- $8.36 Year-End 2024 Dry Powder 1.5 1.3 ’24 Year-End Dry Powder Excess cash(2) Maintain 2.5x(3) target leverage Optional temporary investment grade leverage(2) for right opportunity $2.8B $ in billions Significant cash position provides optionality for value-creating capital deployment
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11 Appendix
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12 TOTAL SEG. EARNINGS NON-ACQ. D&A (1) ADJ. EBITDA (2) DEP DCEF DII DPPS DCST ADJ. EBITDA (2) NON-ACQ. D&A (1) TOTAL SEG. EARNINGS +60 bps (1) Relates to PP&E and intangibles, and excludes amounts related to purchase accounting expenses and restructuring and other costs (2) Non-GAAP measures (definitions and/or reconciliations in appendix) (3) FY 2023 tax expense includes the net income tax benefit of internal reorganizations executed in 2023. Q4 2024 Segment Earnings and Adj. Earnings from Cont. Ops. RESTRUCT. & OTHER / DISP PURCHASE ACC. EXP. ADJ. EARNINGS SEGMENT EARNINGS CORPORATE INT./TAX EXPENSE (3) ADJ. EARNINGS GAAP EARNINGS RESTRUCT. & OTHER / DISP PURCHASE ACC. EXP. GAAP EARNINGS Change in Adjusted Earnings from Continuing Operations(2) -$1M 258 16 32 17 8 -26 305 -38 -28 Q4 2023 Q4 2024 ($M) Note: $ in millions. Numbers may not add due to rounding 238 23.5% 22.2% Change in Total Segment Earnings(2) +$17M Q4 2024 412 448 6-8 429 ($M) 21 21.7% Q4 2023 -3725 -26 24.2% 46636 -30 bps16.1% 15.8% 306
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13 Organic Revenue Bridges
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14 Organic Bookings Bridges
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15 Q4 2023 to Q4 2024 Revenue and Bookings Bridges Note: Numbers may not add due to rounding
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16 Reconciliation of Earnings from Continuing Operations to Total Segment Earnings and Total Adjusted Segment EBITDA Note: Numbers may not add due to rounding
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17 Reconciliation of Earnings from Continuing Operations to Adjusted Earnings from Continuing Operations and Adjusted EPS from Continuing Operations Note: Numbers may not add due to rounding
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18 Reconciliation of Adjusted Free Cash Flow and EPS from Continuing Operations to Adjusted EPS from Continuing Operations Note: Numbers may not add due to rounding(1) Cash taxes paid for gain on dispositions of De-Sta-Co in Q1 2024 and a minority owned equity method investment in Q3 2024
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19 Definitions of Non-GAAP Measures: The items described in our definitions herein, unless otherwise noted, relate solely to our continuing operations. Adjusted Earnings From Continuing Operations: is defined as earnings from continuing operations adjusted for the effect of purchase accounting expenses, restructuring an d other costs, disposition costs and gain/loss on dispositions. Adjusted Diluted Earnings Per Share From Continuing Operations (or Adjusted Earnings Per Share From Continuing Operations): is defined as adjusted earnings from continuing operations divided by weighted average diluted shares outstanding. Total Segment Earnings: is defined as sum of earnings from continuing operations before purchase accounting expenses, restructuring and other costs , corporate expenses/other, interest expense, interest income, disposition costs, gain/loss on dispositions, and provision for income taxes for all segments. Total Segment Earnings Margin: is defined as total segment earnings divided by revenue. Total Adjusted Segment EBITDA: is defined as total segment earnings plus other depreciation and amortization expense, which relates to property, plant, an d equipment and intangibles, and excludes amounts related to purchase accounting expenses and restructuring and other costs. Free Cash Flow: is defined as net cash provided by operating activities minus capital expenditures. Adjusted Free Cash Flow: is defined as net cash provided by operating activities minus capital expenditures plus cash taxes paid for gain on dispositi ons. Adjusted free cash flow as a percentage of revenue equals adjusted free cash flow divided by revenue. Adjusted free cash flow as a percentage of adjusted earnings from continuing oper ations equals adjusted free cash flow divided by adjusted earnings from continuing operations. Organic Revenue Growth: is defined as revenue growth excluding the impact of foreign currency exchange rates and the impact of acquisitions and dis positions. Segment Earnings Conversion: is defined as the change in total segment earnings divided by the change in revenue. The tables included in this presentation provide reconciliations of the non-GAAP measures used in this presentation to the most directly comparable U.S. GAAP measures. Further information regarding management’s use of these non-GAAP measures is included in Dover’s earnings release and investor supplement for the quarter. Non-GAAP Definitions
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20 Performance Measure Definitions Definitions of Performance Measures: The items described in our definitions herein, unless otherwise noted, relate solely to our continuing operations. Bookings represent total orders received from customers in the current reporting period and exclude de -bookings related to orders received in prior periods, if any. This metric is an important measure of performance and an indicator of revenue order trends. Organic Bookings represent bookings excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of revenue order trends. Book-to-Bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand. We use the above operational metrics in monitoring the performance of the business. We believe the operational metrics are us eful to investors and other users of our financial information in assessing the performance of our segments.