Dover Corporation Q4 FY2025 earnings call

• Overall, had a good close to 2025 with organic growth up to 5% in Q4, highest of the year. Revenue driven by secular growth-exposed markets and improving conditions in retail fueling and refrigerated door cases and services. Bookings up 10% in Q4 and 6% for full year, book to bill 1.02 in Q4. Segment EBITDA margins improved 60 basis points to 24.8%. Adjusted EPS $9.61 up 14% in Q4, 16% for full year.
• Capital allocation: Highest priority organic investment, stepped up capital spending over $50 million in 2025. Deployed $700 million across four strategic acquisitions in 2025. Announced over half a billion dollars of share repurchases in 2025, including $500 million accelerated share repurchase program in November.
• 2026 outlook: Guiding for adjusted EPS of $10.45 to $10.65 a share. Engineered products expected to improve, clean energy and fueling outlook solid, Imaging and ID to continue long-term steady growth, Pumps and process solutions demand expected good, Climate and sustainability technology outlook encouraging with CO2 refrigeration systems growth and refrigerated door cases recovery.

Engineered products

• Revenue down in the quarter on lower volumes of vehicle services, partially offset by double-digit growth in aerospace and defense components and software. Absolute segment profit improved, margins up over 200 basis points. Now accounts for less than 15% of total portfolio.

Clean energy and fueling

• Up 4% organically in the quarter, led by strong shipments and new orders in clean energy components and North American retail fueling software and equipment. Margins down slightly in the quarter but up materially for the year, tracking towards 25% margin goal.

Imaging and ID

• Up 1% organically in the quarter on core growth in core marketing and coding business and in serialization software. EBITDA margin remains very good at 28%, slightly weighed by foreign currency translation and higher mix of printer shipments.

Pumps and process solutions

• Up 11% organically with growth in single-use biopharma components, thermal connectors for liquid cooling of data centers, etc. Sokora (acquired end of Q2 2025) outperforms underwriting case. Polymer processing posts first quarterly organic growth since '24. Segment margin at best-in-class levels.

Climate and sustainability technology

• Up 9% organically in the quarter on continued double-digit growth in CO2 refrigeration systems and significant volume improvements in refrigerated door cases and engineering services. Demand for brazed plate heat exchangers robust. Margins up 250 basis points, book to bill 1.21 in the quarter.

• 2026 adjusted EPS guidance: $10.45 to $10.65 a share, double-digit growth at midpoint.
• 2026 free cash flow guidance: 14% to 16% of revenue.
• 2025 free cash flow: $487 million or 23% of revenue in Q4, full-year free cash flow 14% of revenue, increase of nearly $200 million over prior year.

• Commodity cost fluctuations could impact margins.
• Market conditions changes may affect business performance.
• Macroeconomic uncertainties could have an impact on operations.

Q: Steve Tusa asked about price cost and what's being embedded in the guide for 2026 and the general economy impact.

A: Richard J. Tobin said they are looking at 1.5 to 2 price embedding and no change in positive view on general economy yet as they hit key data points like best organic growth quarter, margin accretion, and book to bill over one.

Q: Julian Mitchell inquired about mix for 2026 and operating leverage in DCEF and DCS.

A: Richard J. Tobin said DCEF will have leverage on revenue growth plus benefits from prior period restructuring, and DCST has margin jump in Q4 with consideration of commodity exposure like copper and potential pricing action.

Q: Amit Mehrotra asked about growth outlook for 2026 being 4% and margin expansion explanation.

A: Richard J. Tobin said it's a mix of prudence at the start of the year and numbers based on backlog visibility, expecting progressive movement up in EPS as the year progresses.

Q: Jess Brock asked about incremental and transformational deals.

A: Richard J. Tobin said they are open to transformational deals but won't discuss pipeline, focusing on execution risk and current bolt-on approach.

Q: Joe O'Dea asked about retail fueling CapEx cycle and restructuring carryover.

A: Richard J. Tobin said retail fueling is a North American phenomenon with EVs previously affecting CapEx, and on restructuring, there's a lag between proposal and enactment with carryover benefits in later half of 2026.

Q: Nigel Coe asked about growth in secular growth markets and trough markets.

A: Richard J. Tobin said secular growth markets are doing well, trough markets like Belvac and vehicle service group have headwinds, but refrigeration is recovering with backlog building and Q4 revenue growth.

Q: Scott Davis asked about the entitlement growth rate of the portfolio and installed base of certain business.

A: Richard J. Tobin said the portfolio growth rate is between 3 - 6%, and the CO2 rooftop and retail refrigeration door case businesses have different growth and margin characteristics.

Q: Mike Halloran asked about clean energy margins timeline and capacity push-pull.

A: Richard J. Tobin said clean energy margins expected to get into low twenties this year with mix and cost out roll forward, and CapEx coming down in 2026 with a greenfield plan in North Carolina beginning.

Q: David Ridley Lane asked about exposure on natural gas power generation side and price cost timing in clean energy and fueling.

A: Richard J. Tobin said they supply components for large turbines, midstream, reciprocating compressors, etc., and Christopher Woenker added price cost in clean energy and fueling in Q4 is a timing catch-up issue.

Q: Andy Kaplowitz asked about book to bill visibility and margin expansion progression.

A: Richard J. Tobin said Q1 is a production month, and they'll update on progress after going through Q1 as all things look good currently but need to see into Q1.

Q: Brett Linzey asked about growth in 20% secular market businesses in 2025 and 2026.

A: Richard J. Tobin said yes, the 20% secular market businesses grew well in 2025 and are expected to have solid double-digit growth in 2026.

Q: Joe Ritchie asked about portfolio consideration and organic growth swing factors in 2026.

A: Richard J. Tobin said they are comfortable with the current portfolio and organic growth swing factors are directionally correct across the portfolio but hard to pinpoint specific big swings.

Q: Deane Dray asked about planning process difference this year and backlog contribution to 2026 revenues.

A: Richard J. Tobin said they were upfront about longer cycle businesses cycling down in previous years, and backlog contribution to 2026 revenues will be seen after going through Q1 as it depends on whether backlog is eaten into or continues to build.