Dover Corporation

Good morning and welcome to Dover's fourth quarter and full year 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, Sr., Director of Investor Relations. After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during that time, please press star and then the number one on your telephone keypad. If you'd like to withdraw your question, please press star 2. 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. I would now like to turn the call over to Mr. Jack Dickens. Please go ahead, sir.

Thank you, Gretchen. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through February 21st. and a replay link of the webcast will be archived for 90 days. 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. 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'll turn the call over to Rich.

Thanks, Jack. Let's get started with the performance highlights on slide three. Dover delivered strong organic revenue growth of 9% and margin improvement at 150 basis points in the fourth quarter. Volume mix, price cost, and prior period cost reduction actions all contributed to the positive performance. As we've been forecasting throughout 2021, the relationship between supply chain constraints and bookings has continued to play out in the Q4. The majority of the labor and component availability and logistics constraints have dissipated, resulting in production lead times returning to pre-pandemic levels. Importantly, our 4% annualized through-cycle organic bookings growth rate reflects the continued secular demand strength across our businesses. Our order backlog remains elevated compared to normal levels and provides us with a good offline visibility going into 2023. Our continuous efforts to improve productivity and efficiency, principally enabled by advances we achieved in e-commerce adoption, back office consolidation, and SKU complexity reduction resulted in robust margin accretion in the quarter. We expect benefits from our research efforts to further accrue in 2023. We continue to deploy capital toward portfolio improvement, organic growth, and production efficiency in 2022. Our capital expenditures in 2022 were the highest in recent Dovid history, and we continue to invest in manufacturing productivity projects and proactive capacity expansions to fuel our top line growth and margin improvement capabilities. We also completed five attractive bolt-on acquisitions in 22 that provide exposure to high growth technologies and end markets. And finally, we took the opportunity to return capital to our shareholders including the completion of our $500 million accelerated share repurchase, which was completed in quarter four. We entered 2023 with a constructive stance. Demand trends remain healthy across our portfolio, and we have a significant volume of business and backlog entering into the new year. Expected revenue growth, price actions, and productivity measures from 2022 lay the foundation for margin accretion in 2023. If high confidence endeavors in markets, flexible business model, and proven execution playbook continue to deliver earnings growth. Our strategy for robust through-cycle shareholder value creation remains unchanged to combine solid and consistent growth above GDP, strong operational execution generating meaningful margin accretion over time, and value-added disciplined capital deployment. As a result of this, we are forecasting full-year revenue guidance of 3% to 5% organic revenue growth and adjusted EPS of $8.85 to $9.05. I'll skip slide four, and let's move on to slide five. Engineered products revenue is up 16% in the quarter, continuing the trend of double-digit top-line growth through the year. Revenue growth was broad-based across the portfolios, a particular strength in North America. Margins continued the sequential build throughout the year, finishing key 20% at 620 basis points year-over-year, primarily driven by improving supply chains and price-cost dynamics, products mix, as well as investments and productivity initiatives. Clean energy and fueling finished the quarter and the year roughly flat on an organic basis. Revenue performance in the quarter was up in clean energy components, vehicle wash, fuel transport, and below-ground retail fuel, offsetting the comparable decline in dispenser and EMV card reader demand in the period. Margins in the quarter were up 170 basis points on positive price-cost and the mixed impact from both organic and inorganic investments that we made in clean energy components and vehicle wash. This was augmented by further cost reduction actions initiated in the third quarter, and the full year carryover of these actions will continue to accrue in 2023. In imaging and identifications volumes for our marking and coding printers, spare parts and consumables were strong in all geographies with the exception of near-term softness in China due to the COVID impact. Our software businesses continue to perform well with penetration of key customer brand accounts with strong growth in SAS portion of our serialization software. FX remained negative headwind to absolute revenue and profits in the segment given its large base of non-U.S. follow-up. Q4 margins in imaging and ID were very strong at 25%, improving 250 basis points on stronger volumes, pricing actions, and product mix richness. This business has delivered exemplary margin improvement in the last few years as it utilizes our productivity tools for e-commerce, back office consolidation, and offshore engineering. Pumps and Process Solutions was up 4% organically for the year, but posted a 4% decline in the fourth quarter, driven principally by post-COVID transition in the biopharma space. The non-COVID biopharma business has continued to grow, and our overall biopharma business is well above its pre-pandemic level. New orders for biopharma connectors inflected positively in the fourth quarter after several quarters of sequential declines. All other businesses in the segment posted solid organic growth in the fourth quarter with particular strength in polymer processing equipment and precision components on the back of improved conditions in energy markets. Operating margin for the quarter was 29% as comparable for every new mix of product delivered. Climate and sustainability technologies continued its growth in the fourth quarter, posted 27% organic growth across all business geographies. Demand trends remain particularly robust in heat exchangers and CO2 refrigeration systems, driven by the global investments in sustainability. Our capacity expansion programs in both these businesses remain on schedule and will continue to allow us to continue to meet growing customer demand. Margins were up 450 basis points in the quarter and over 300 basis points for the full year on improved productivity, improved retail, and strong volume growth and good mix of product delivery. I'll pass it on to Brad here.