Dover Corporation

Please stand by, your program is about to begin. If you need audio assistance during today's program, please press star zero. Good morning and welcome to Dover's first quarter 2022 earnings conference call. Speaking today are Richard J. Tobin, President and Chief Executive Officer, Brad Serapak, Senior Vice President and Chief Financial Officer, and Jack Dickens, Senior Director, Investor Relations. After the speakers' 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. As a reminder, ladies and gentlemen, 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. Thank you, and it is now my pleasure to turn the call over to Mr. Jack Dickens Sir, please begin.

Thank you, Chelsea. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through May 12th, and a replay link of the webcast will be archived for three months. Dover provides non-GAAP information. Reconciliations between GAAP and adjusted measures are included in our investor supplement and presentation materials, which are available on our website. Our comments today will include forward-looking statements based on current expectations. Actual results and events could differ from those statements due to a number of risks and uncertainties which are discussed in our SEC filings. We assume no obligation to update our forward-looking statements. With that, I will turn the call over to Rich.

Thanks, Jack. Good morning, everyone. I'm on slide three. which shows the detailed US GAAP and adjusted quarterly results. So let's go to slide four and take a look at the performance highlights. Our results in the first quarter were in line with expectations, our expectations. The demand for our products and service continued to be robust across the portfolio, and the management teams of our operating companies did a solid job of navigating various challenges during the quarter. Going into the quarter, we had appropriately forecasted the supply chain and input inflation headwinds, but we did not forecast significant geopolitical destabilization, nor the return of pandemic challenges in China, which negatively impacted some businesses in our portfolio from a demand and supply chain perspective. We were able to largely offset these unexpected headwinds through robust production performance, particularly late in the quarter on the back of our backlog strength. Let's move to the notes. Organic revenue was up 9% year-over-year in the quarter on strong demand across the majority of the portfolio. Backlogs remain at record levels, up 54% year-over-year, and 5% sequentially was booked to bill above one in all five segments. Operating margin performance in the quarter was below our expectation. Planned volume leverage, productivity, and tight cost controls were able to dampen the forecasted negative impact supply chain constraints and negative price cost embedded in older backlogs, in older orders in the backlogs of certain businesses. But our actions were short of fully offsetting unscheduled production interruptions caused by supply chain constraints and severe weather events, which negatively impacted volume and cost absorption and had an unfavorable mix effect on margins. We expect this to be recovered over the balance of the year. During the quarter, we continue to invest organically in capacity expansions and productivity initiatives to drive revenue growth and operational success. We recently acquired a unique intellectual property portfolio used in electric-powered and hybrid waste collection vehicles, which we plan to showcase a fully electric refuse vehicle built for one of our municipal customers at Waste Expo in May. Our first quarter performance demonstrated again the strength of our diversified portfolio of businesses and our commitment to continuous improvement and operational rigor. Due to the dynamic environment in which we are operating, quarter to quarter results will be noisy, which I'm sure we'll discuss at length during the Q&A. But keep in mind that we have a robust backlog and that the businesses that face challenges in the back half of 2021 are positioned to drive robust performance as we get through the tougher comps of the first half of 2022. Despite the macro headwinds, we are well positioned to deliver our full-year revenue guidance of 79% organic growth and adjusted EPS of $8.45 to $8.65 a share. Let's go to slide five. Engineered products, Revenue is up 15% organically in the quarter. Demand continues to be robust across much of the portfolio, and we have considerable visibility as a result of our robust backlog position. Comparable operating margin was down largely as a result of price cost and supply chain challenges, but sequentially improved as production performance ramped up and older backlogs shipped. We expect this dynamic to continue for the balance of the year. Clean energy and fueling was flat organically as the expected roll-off of EMV demand in North America retail fueling was offset by growth in other businesses. Demand was strong across the balance of the portfolio of businesses with particular strength in clean energy components, vehicle wash, blow ground, and fueling components. Let me unpack the margin performance here before we make this an EMV only story and draw the wrong conclusions of the projected margin trajectory for the balance of the year. As we previewed last quarter, we incurred roughly 20 million in new acquisition related depreciation and amortization in the quarter driven by our clean energy acquisitions in late 2021. This represented a 400 basis point headwind to segment margins in the quarter. The balance of the margin dilution was the result of product mix, which is EMV driven, and Q1 supply chain and production challenges. Unfortunately, we lost a week of production in March due to a weather event at one of our main production facilities in Texas. Setting aside acquisition accounting, we expect the segment to deliver robust, absolute revenue and profits for the full year. Sales in imaging and ID declined 1% organically as volumes in our core marking and coding business were constrained by component shortages as well as China lockdowns and reduction in business in Russia, more than offset growth in our serialization and brand management software businesses. Digital textile printing continued its gradual recovery. Q1 margins in imaging and ID were down to lower volumes and higher input costs. Pumps and process solution posted another strong quarter at 13% organic growth. So strong volumes across all businesses and geographies. Demand remains strong in core biopharma activity where drug R&D projects, which that were sidelined during COVID came back strongly. But we did see normalization and order rates for COVID driven biopharma components as demand for COVID-19 vaccines and therapies moderate. Margin performance was solid in the quarter on strong volumes, fixed cost absorption, and favorable. Top line results in climate and sustainability technologies continued to be robust, posting 17% organic growth and strength across all businesses and major geographies. Margins were up in the quarter as robust volumes, solid operating performance, and improved price costs offset cost inflation and input shortages. I'll pass it on to Brad from here.