Dover Corporation

Good morning, and welcome to the Dover's Fourth Quarter 2025 Earnings Conference Call. Speaking today are Richard J. Tobin, President and Chief Executive Officer, Chris Wonaker, Senior Vice President and Chief Financial Officer, and Jack Dickens, Vice President, Investor Relations. After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, press star, then the number one on your telephone keypad. If you'd like to withdraw yourself from queue, you may press star, too. As a reminder, ladies and gentlemen, this conference 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'd like to now turn the call over to Mr. Jack Dickens. Please go ahead.

Thank you, Stephanie. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through February 19th. and a replay link of the webcast will be archived for 90 days. 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. And with that, I will turn the call over to Rich.

Thanks, Jack. Let's start on slide three. Overall, we had a good close to 2025. Our fourth quarter results reflect broad-based top-line strength across the portfolio with organic growth up to five in the quarter, the highest level of the year. Revenue performance in the quarter was driven by robust trends, and our secular growth exposed markets as well as improving conditions in retail fueling and refrigerated door cases and services. Our strong bookings rates which were up 10% in the quarter and 6% for the full year, continue to support underlying momentum across the portfolio, providing confidence in the durability of the demand as we enter the new year. Book-to-bill was seasonally high for the fourth quarter at 1.02. Segment EBITDA margins improved 60 basis points in the quarter to 24.8% on volume leverage and ongoing productivity initiatives. All in, adjusted EPS at $9.61, was up 14% in the quarter, beating our raised third quarter guide and 16% for the full year, a very encouraging result. Our solid operational results were complemented by our capital allocation strategy. The acquisitions that we closed in 2025 are off to a very good start, performing above their underwriting cases. Our current acquisition pipeline is interesting and has done much dominated by proprietary opportunities. Additionally, we initiated a $500 million accelerated share purchase, repurchase in November, underscoring our disciplined approach to capital deployment with meaningful balance sheet flexibility where we remain well positioned to deploy capital behind opportunities to enhance long-term shareholder value. We are taking a constructive outlook for 2026. Demand trends are solid and broad-based across the portfolio. and are supported by our order book with no individual end market presenting a material headwind based on current visibility. Our balance sheet optionality enables us to dynamically respond to market conditions and opportunistically play offense. We are guiding for adjusted EPS of $10.45 to $10.65 a share in 2026, which represents double-digit growth at the midpoint, consistent with our long-term trajectory and commitment to driving sustainable value creation to our shareholders. Let's go to slide five. Engineered products revenue is down in the quarter on lower volumes of vehicle services, partially offset by double-digit growth within aerospace and defense components and software. Despite the organic volume decline, absolute segment profit improved in the quarter with margins up over 200 basis points on well-executed structural cost management and product mix, and productivity initiatives. Clean energy and fueling was up 4% organically in the quarter led by strong shipments and new orders in clean energy components as well as North American retail fueling software and equipment. Margins were down slightly in the quarter due to lower vehicle wash solutions, but still up materially for the year as we track towards our goal of 25% margin for the segment. Imaging and ID was up 1% organically in the quarter on growth in our core marketing and coding business, and in serialization software. EBITDA margin performance remains very good in this segment at 28%, though foreign currency translation and a higher mix of printer shipment slightly weighed on the margin in the quarter. Pumps and process solutions was up 11% organically with growth in single-use biopharma components, thermal connectors for liquid cooling of data centers, precision components, and digital controls for natural gas and power generation infrastructure. Socorro, which we acquired at the end of the second quarter in 2025, continues to outperform its underwriting case. Polymer processing posted its first quarterly organic growth since Q1 of 24 due to timing of large deliveries out of our backlog. Pumps and process solution segment margin continues to perform at best-in-class levels. Climate and sustainability technology posted positive organic growth of 9% in the quarter on continued double-digit growth in CO2 refrigeration systems and significant volume improvements in refrigerated door cases and engineering services, which was expected based on the Q3 booking exit rate. Demand for braze plate heat exchanges, particularly for liquid cooling applications and data centers, continues to show robust momentum. with record quarterly shipments in the U.S. in the fourth quarter. Margins were up 250 basis points in the segment on volume, leverage, solid execution, positive mixed benefits from secular growth exposed to end markets. With a book-to-bill of 1.21 in the quarter, the outlook for climate and sustainability technology is very encouraging for 2026.