DOV

Overall Quarterly Results

• Total company revenue grew 7% year-over-year (5% organic growth), with all five segments posting positive organic growth.
• Secular growth markets now represent ~25% of total revenue, up from 20% at the end of Q1 2026, and continued to lead top-line performance.
• Adjusted EBITDA margin expanded 80 basis points to 25.9%, with incremental margin reaching 38% (up from 25% in Q1), as operational volume gains offset input cost inflation and facility consolidation costs.
• Adjusted EPS was $2.74 per share, up 12% year-over-year, marking another quarter of double-digit earnings growth.
• Orders increased 16% year-over-year, with a consolidated book-to-bill ratio of 1.06, extending recent order momentum and improving visibility for H2 2026. All five segments posted year-over-year order growth, with a trailing 12-month consolidated bookings increase of 15%.

Capital Deployment and M&A

• The balance sheet remains a core competitive advantage, and the company continues to invest in capacity expansion and productivity improvement projects across the portfolio.
• Industrial M&A markets have improved in 2026, with more acquisition opportunities available in attractive end markets compared to recent years. Management maintains a disciplined approach to valuations and will deploy capital to acquisitions if appropriate-priced opportunities are found; excess capital will be returned to shareholders if no attractive targets emerge.

Secular Growth Market Exposure

• The company holds strong positions in multiple high-growth, technically demanding end markets, including: (1) Energy transition and power generation (cryogenic components for LNG, precision components for turbines, test equipment for electrification); (2) Data center liquid cooling (brazed plate heat exchangers, cryogenic cooling infrastructure, fiberglass trench systems, with demand outpacing current supply); (3) CO2 refrigeration systems (first-mover advantage with a full platform offering, accelerating adoption driven by total cost of ownership rather than just regulation); (4) Semiconductor and electronics manufacturing (cryogenic components, flow meters, specialized heat exchangers); (5) Biopharma (single-use connectors, pumps, flow meters benefiting from new therapy investment and shift to single-use manufacturing); (6) Space infrastructure (cryogenic components and microwave products, expected to generate $50 million in 2026 revenue with strong order momentum).

Operational Updates

• The company is actively expanding capacity for high-demand products, including a plan to double heat exchanger capacity for data center liquid cooling over the next 12 months.
• Polymer processing has a book-to-bill ratio above 1, signaling stabilization and an improved growth outlook heading into 2027.
• The refrigeration facility consolidation project is 75% complete; management is working to resolve throughput issues, with recovery expected in H2 2026.

• Management raised full-year 2026 organic revenue growth and adjusted EPS guidance, maintaining the company's commitment to long-term double-digit adjusted EPS growth.
• Full-year capital expenditure guidance remains unchanged at $190 to $210 million, and full-year free cash flow guidance remains unchanged at 14% to 16% of revenue.
• Management expects positive organic growth across all five segments for the full year, with secular growth markets continuing to lead performance, complemented by solid broad-based demand across other end markets.
• Cash flow generation is expected to accelerate meaningfully in H2 2026, driven by seasonal working capital liquidation in Q3 and Q4.
• Management did not provide quarterly guidance, and will revisit full-year guidance after the end of Q3 if order momentum continues.

1. Engineered Products: 2% organic revenue growth, driven by strong demand for aerospace and defense components, fluid dispensing, industrial winches, and stabilization in the North American vehicle aftermarket. Segment margin expanded 100 basis points due to favorable product mix and proactive cost containment.
2. Clean Energy and Fueling: 9% organic revenue growth, with broad strength across clean energy components and retail fueling equipment/software. The segment's order book grew meaningfully from cryogenic components for LNG and space launch infrastructure, and retail fueling remained healthy in North America. Segment margin expanded 170 basis points from volume leverage and integration benefits from recent acquisitions.
3. Imaging and Identification: 3% organic revenue growth, with growth across core marking and coding equipment, consumable spare parts, and serialization software. Segment margin expanded 150 basis points on productivity improvements and structural cost discipline.
4. Pumps and Process Solutions: Slight organic revenue growth overall. Strength was seen in AI and energy infrastructure components, single-use biopharma, industrial pumps, and precision components for steam/gas turbines, while polymer processing faced a tough year-over-year comparison that muted overall top-line growth. Segment margin expanded 170 basis points to 35% (a best-in-class result) driven by favorable product mix and M&A activity.
5. Climate and Sustainability Technologies: 8% organic revenue growth. Heat exchangers delivered their best ever quarter on strong demand for liquid cooling products for data centers, and European residential heat pumps saw a welcome recovery. The refrigeration sub-segment faced production throughput issues during a complex facility consolidation, which cost 100-150 basis points of consolidated organic growth in the quarter. Overall segment organic growth would have been higher without this operational issue.

• Geopolitical uncertainty, ongoing input cost volatility, and evolving trade and tariff policies are key external risks that management is monitoring closely.
• Production throughput issues at the refrigeration business during facility consolidation created delivery delays and reduced Q2 organic growth by 100-150 basis points, with near-term margin pressure from running redundant facilities during the transition.
• Capacity constraints in high-growth end markets such as data center liquid cooling and cryogenic components mean demand currently outpaces supply, limiting near-term revenue capture until additional capacity comes online.
• Quarterly revenue volatility can arise from the lumpy order profile of some segments (such as polymer processing) and timing differences in customer delivery take-down, even with strong overall order growth.

Q: The 1 to 1.5 percentage point organic growth impact from refrigeration throughput issues is on a consolidated company basis. Have these delivery issues caused customer disruption or market share loss, and is the original facility fully closed?

A: The growth impact is indeed at the consolidated Dover level. Some deliveries have been late, but industry-wide capacity is tight in this segment, so widespread customer issues have not occurred. To date, no market share has been lost. The facility consolidation is 75% complete, with the remaining portion expected to be closed over the balance of the year. Management is focused on resolving throughput issues to recover growth and margins in H2.

Q: Sequential absolute order value declined in Q2 despite commentary on broad demand momentum. Is this a signal of weakening demand, and what should be interpreted from this trend?

A: There is no cause for concern. As revenue grows, the baseline for monthly/quarterly bookings increases, and sequential declines from a strong Q1 were expected. The key positive indicator is that book-to-bill remains above 1 across all five business segments, which is a rare occurrence for Dover's diversified portfolio and confirms broad-based demand strength.

Q: M&A markets have improved recently. How is management balancing acquisition opportunities versus share repurchases, given Dover's current relatively low valuation?

A: More acquisition assets have come to market in 2026 compared to the past few years, when valuations were high and available assets were scarce. Management will continue to pursue acquisitions that meet its disciplined valuation criteria to add exposure to high-growth end markets. If no appropriate opportunities are found, excess free cash flow will be returned to shareholders via repurchases. The company's posture is more open to M&A than it was at the end of 2025.

Q: Why is 2x capacity expansion the right target for data center heat exchangers, rather than a larger increase, and what will be the margin impact of bringing this new capacity online?

A: Capacity expansion for this product is technically difficult, limiting how quickly it can be ramped. The company has already been adding capacity incrementally for 2.5 years in advance of demand, which created temporary margin dilution as fixed costs were added ahead of revenue. Now that demand has inflected, revenue growth is outpacing new capital deployment, so margins are already expanding as the new capacity comes online. The 2x target matches current visible demand without overbuilding capacity prematurely.