Dover Corporation

Hello, good morning, and welcome to Dover's first quarter 2020 earnings conference call. Speaking today will be Richard Tobin, President and Chief Executive Officer, Brett Staropak, Senior Vice President and Chief Financial Officer, and myself, Andrey Galyuk, Vice President of Corporate Development and Investor Relations. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, press star and then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key on your telephone keypad. As a reminder, this conference call is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. This call will be available for playback through May 12th, and the audio portion of this call will be archived on our website for three months. Dover provides non-GAAP information and reconciliations between GAAP and adjusted measures are included in our investor supplement and presentation materials, which are available on our website. We want to remind everyone that our comments today may contain forward-looking statements that are subject to uncertainties and risks, including the impact of COVID-19 on the global economy and on our customers, suppliers, employees, operations, business, liquidity, and cash flow. We caution everyone to be guided in their analysis of Dover by referring to our Form 10-K and Form 10-Q for the first quarter for a list of factors that could cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law. With that, I will turn this call over to Rich Tobin.

Thanks, Andre. Good morning, everyone. We're going to take some sage advice and briskly go through what was a solid first quarter and get straight to where we are from a market demand perspective and what actions we are taking with our operations cost structure and balance sheet to adapt ourselves to this extremely challenging environment. I'm not going to read the next slide, but we'll mention that the urgency and magnitude of the present challenge is not lost on us, and we're working through these times with resolve and a sense of responsibility to our employees customers, partners, shareholders, and local communities where we operate. We understand our role as a supplier into many critical societal functions, like food packaging and retail, fueling, waste removal, and many others. Moreover, our businesses supply directly into projects aimed at fighting the outbreak, such as commercial cleaning, masks, hospital bed and ventilator production, as well as biopharmaceutical therapy development. Let's go to slide four of the quick summary of the first quarter results. We recognize that these results are looking into the rearview mirror. Given the pace of change in the last few weeks, rest assured that despite solid Q1 results, we have zero complacency given the progressively challenging outlook into Q2. To sum up Q1, our ability to remain largely operational coupled with the work we did on our cost structure And productivity initiatives more than offset the beginning headwinds of COVID-19, which largely impacted our businesses in China and Italy in the quarter. Let's go to slide five and briefly look at segment performance. Engineered products, organic sales declined 2% as demand in auto-exposed businesses has slowed down. The vehicle aftermarket business also experienced operational interruptions in their China and Europe-based facilities. Waste handling continued to grow... Strong backlog, digital sales in the waste business were up nearly two times on a year-over-year basis. Pricing, cost containment in response to lower volumes as well as productivity actions resulted in 100 basis points, higher adjusted EBIT margins for the segment. Moving on to fueling solutions saw robust activity in North America driven by demand for EMV-compliant solutions, whereas Europe and Asia declined due to COVID-related production. and supply chain interruptions and project deferrals. Additionally, manufacturing our vehicle wash segment in the US was shut down in March due to local government mandates. Segment delivered 500 basis point margin improvement as a result of favorable geographic and product mix, productivity actions, and cost controls, as well as pricing. Imaging and ID declined organically 4% in the quarter. Marketing coding was approximately flat on strong demand for consumables due to surge in production volumes of consumer goods. in March, which offset the challenging conditions in Asia in Q1. Our digital textile printing business had a difficult quarter as all of our operations are in the Lombardy region of Italy, which bore the brunt of the COVID-19. This was further exasperated by the sudden and significant impact of the crisis on the global textile and apparel markets. Margin in the segment declined only 80 basis points as our cost containment actions and favorable mixed impact of consumables largely offset the significant volume drop in our digital printing business. Pumps and process solutions, top line decline 1% organically. Strong performance in our hygienic and biopharma pumps as well as in plastic and polymer systems and components largely offset slowing market conditions in industrial pumps and downstream oil and gas complex. The segment delivered another quarter of strong margin improvement driven by cost containment and restructuring actions as well as pricing, more than offsetting negative impact of COVID inflation and FX translation. And finally, refrigeration and food equipment. Organic sales declined 4%, primarily driven by weaker demand for heat exchangers and food service equipment, both as a result of governmental actions to combat the COVID around the world. Core food retail business declined less than 1% as grocers began to postpone remodel projects later in the quarter. Segment margin declined due to COVID-related production curtailments in Asia and in Europe in SWEP as a volume reduction and as volume reduction in food equipment. From there, I'll pass it on to Brad. Thanks, Rich.

Try it now.