Slide 1: Earnings Conference Call Third Quarter 2023
October 24, 2023 – 9:00am CT Earnings Conference Call Third Quarter 2023
Slide 2: Forward-Looking Statements and Non-GAAP Measures
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
Slide 3: Q3 2023 Key Messages
Q3 2023 Key Messages ▪ Q3 performance – Revenue and bookings(2) improved sequentially in the quarter – All time high quarterly segment margin(1): cost containment, pricing discipline, and productivity offset negative biopharma mix – Cash flow generation robust on inventory drawdowns and improvements
Slide 4: Q3 2023 Performance Highlights
Q3 2023 Performance Highlights Organic Revenue(1) -2% Y-o-Y Organic Bookings(2) -4% Y-o-Y 3% sequential growth in revenue 4% sequential growth in bookings Book-to-bill(2): 0.93, reflecting better lead times and strong shipments against longer-dated orders Total Segment +50 bps Y-o-Y to 21.7% Backlog
Slide 5: Summary Corporate Q3 Results
Summary Corporate Q3 Results Q3 2023 Highlights and Comments Revenue change All-in 0% ▪ Sequential growth in four out of five segments (Y-o-Y) Organic(1) -2% ▪ FX impact: +1%; acquisitions +1% Bookings change All-in(2) -3% ▪ Q3 book-to-bill(2): 0.93; reflecting better lead times and strong shipments
Slide 6: Segment Results
Segment Results Q3 2023 Revenue ($M) / Segment Earnings Segment Performance Commentary Y-o-Y Organic(1) ∆% % / bps ∆ Y-o-Y ▪ Strong volume in waste handling and aerospace & defense more than offset by lower demand in $504 20% Asia / Europe and lower shipments in vehicle service DEP -3% +260 bps ▪ Ma
Slide 7: Revenue & Bookings
Revenue & Bookings Q3 2023 Revenue Change in Organic Revenue(1): -$51M, or -2% ’23 Organic Rev Growth(1) Q3 YTD ($M) 2,158 -16 -1 -10 -32 8 25 21 2,153 US 55% -7% -5% Q3 2022 DEP DCEF DII DPPS DCST FX ACQUISITIONS Q3 2023 Organic Q3 2023 Bookings(2) Change in Organic Bookings(2): -$86M, or -4% EUROP
Slide 8: Year-to-date 2023 Free Cash Flow
Year-to-date 2023 Free Cash Flow $M YTD ‘23 YTD ‘22 ∆ Net earnings 761 802 (41) D&A 237 231 6 Change in working capital (90) (393) 303 Change in other(1) (88) (173) 85 Cash flow from operations 820 467 353 Capex (132) (166) 34 Free cash flow(2) 688 301 387 FCF % of revenue(2) 11% 5% FCF % of adj. ea
Slide 9: Remainder of Year End Market Outlook
Remainder of Year End Market Outlook Q4 Outlook (Y-o-Y) Organic Segment Segment Revenue Margin Commentary ▪ Growth in aerospace & defense and waste hauling equipment, systems and software. Lower shipments in DEP vehicle service vs. record 2022 ▪ Margin improvement on mix, positive fixed cost absorpt
Slide 10: FY 2023 Guidance
FY 2023 Guidance Through-Cycle Adj. EPS(1) Revenue ▪ Growth Rate(1): ~Flat $8.75-$8.85 ▪ GAAP EPS: $7.51 - $7.61 +12% CAGR $8.45 $7.63 ▪ Adjusted EPS(2): $8.75 - $8.85 EPS and other $5.93 $5.67 ▪ Effective Tax Rate: 18% - 19% $4.97 ▪ Free Cash Flow(2): 13% - 15% of Revenue Cash Flow ▪ Capex: $175 -
Slide 11: Recent Transaction Announcements Support Portfolio Priorities
Recent Transaction Announcements Support Portfolio Priorities Acquisition Divestiture ▪ Acquisition of FW Murphy and divestiture of De-Sta-Co align with the portfolio priorities reiterated at the investor day in March Expected Close Q4 ’23 H1 ‘24 ─ Adding within the highest priority Pumps & Process
Slide 12: FW Murphy Acquisition Brings Highly Complementary Products
FW Murphy Acquisition Brings Highly Complementary Products Complementary offerings focused on improving compressor efficiency and reducing emissions Acquisition Rationale Smart compressor / Devices and Instruments Control panels digital twin technology ▪ Attractive growth profile (DD historical, MSD
Slide 13: Positioned to Participate in Hydrogen Build-out
Recent Organic and Inorganic Investments Position Dover to Participate in Hydrogen Build-out Positioned to Participate in Hydrogen Growth ▪ “Regional Clean Hydrogen Hubs (H2Hubs)” to H2 Production Transport & Storage Utilization receive $7B in federal investment under IIAJ (1), coupled with ~$40B in
Slide 14: Differentiated CO2 Business Capitalizing on Regulatory Tailwinds
Differentiated CO2 Business Capitalizing on Regulatory Tailwinds Full-range CO2 Offering ▪ EPA posted AIM1 Technology Transition Final Rule on October 6th Developments ▪ Deadline for new supermarket system installations to use clean (max GWP 150) refrigerants is Jan Small condensing Small centralize
Slide 15: Brazed Plate Heat Exchangers Benefitting From Energy Efficiency Initiatives
Brazed Plate Heat Exchangers Benefitting From Energy Efficiency Initiatives Across Multiple Sectors Select Drivers of Growth ▪ Near term: softer demand in Asia; EU heat pump demand Hydronic HP’s replacing fossil boilers for residential heating in EU (& globally) lowered by channel overstocking, resi
Slide 16: Appendix
Appendix 16
Slide 17: Q3 2023 Total Segment Earnings and Adjusted Net Earnings
Q3 2023 Total Segment Earnings and Adjusted Net Earnings Change in Total Segment Earnings(2) +$8M 23.4% 22.8% +50 bps 21.7% 21.2% ($M) 459 34 493 11 3 -4 -11 9 504 38 466 TOTAL SEG. NON-ACQ. ADJ. DEP DCEF DII DPPS DCST ADJ. NON-ACQ. TOTAL SEG. EARNINGS D&A (1) EBITDA (2) EBITDA (2) D&A (1) EARNINGS
Slide 18: Organic Revenue and Bookings Bridges
Organic Revenue and Bookings Bridges Segment Growth Factors Revenue Bookings Q3 2023 Q3 2023 Organic Engineered Products (3.0) % 11.6 % Clean Energy & Fueling (0.2) % 3.5 % Imaging & Identification (3.6) % (5.4) % Pumps & Process Solutions (7.3) % (15.6) % Climate & Sustainability Technologies 1.8 %
Slide 19: Q3 2022 to Q3 2023 Revenue and Bookings Bridges
Q3 2022 to Q3 2023 Revenue and Bookings Bridges Revenue Bridge by Segment ($ in millions) DEP DCEF DII DPPS DCST Total Q3 2022 Revenue 517 464 282 434 463 2,158 Organic Growth/(Decline) (16) (1) (10) (32) 8 (51) FX 4 4 4 9 5 25 Acquisitions/ Dispositions — — — 21 0 21 Q3 2023 Revenue 504 467 276 431
Slide 20: Reconciliation of Net Earnings to Total Segment Earnings and Adjusted Segment EBITDA
Reconciliation of Net Earnings to Total Segment Earnings and Total Adjusted Segment EBITDA 2023 2022 ($ in millions) Q2 Q3 Q3 Net earnings 242 290 286 Provision for income taxes 58 65 67 Earnings before provision for income taxes 300 354 353 Interest income (3) (4) (1) Interest expense 34 32 30 Corp
Slide 21: Reconciliation of Net Earnings to Adjusted Net Earnings and Diluted EPS
Reconciliation of Net Earnings to Adjusted Net Earnings and Diluted EPS to Adjusted Diluted EPS Note: Numbers may not add due to rounding 21
Slide 22: Backlog
Backlog Segment Backlog ($ in millions) Q3 2023 Q3 2022 Q3 2019 Engineered Products 842 743 416 Clean Energy & Fueling 318 368 223 Imaging & Identification 218 242 122 Pumps & Process Solutions 598 680 361 Climate & Sustainability Technologies 675 1,140 263 Intersegment Eliminations (1) (1) 0 Total
Slide 23: Reconciliation of Free Cash Flow and EPS to Adjusted EPS
Reconciliation of Free Cash Flow and EPS to Adjusted EPS Free Cash Flow 2023 2022 ($ in millions) Q3 Q3 YTD Q3 Q3 YTD Net cash provided by operating activities 383 820 265 467 Capital expenditures (43) (132) (65) (166) Free cash flow 340 688 199 301 Free cash flow as a % of adjusted net earnings 102
Slide 24: Non-GAAP Definitions
Non-GAAP Definitions Definitions of Non-GAAP Measures: Adjusted Net Earnings: is defined as net earnings adjusted for the effect of purchase accounting expenses, restructuring and other costs/benefits, Tax Cuts and Jobs Act, gain/loss on dispositions, gain/loss on extinguishment of debt and gain/los
Slide 25: Performance Measure Definitions
Performance Measure Definitions Definitions of Performance Measures: Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends. Organic Bookings represent total orders received
Slide 26: Dover