Dover Corporation

and a member of our team will be happy to help you. Thank you.

¶¶ . . . . . ¶¶ ¶¶ . . . .

. . ¶¶ ¶¶

. . . . . . . . . Thank you for watching! and more. . . . . .

Thank you for your patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you.

Thank you. ¶¶ ¶¶ . . . .

. . ¶¶

© BF-WATCH TV 2021 . . . . ¶¶ Thank you. ¶¶ ¶¶ Please stand by, your meeting is about to begin.

Good morning and welcome to Dover's second quarter 2026 earnings conference call. Speaking today are Richard J. Tobin, President and Chief Executive Officer, Chris Woenker, 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 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 star 2. As a reminder, ladies and gentlemen, this conference call is being recorded, and your participation implies consent that 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, Katie. Good morning, everyone, and thanks for joining our call. An audio version of this call will be available on our website through August 13th, 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 filing. 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. Let's get going on slide three. We delivered another strong quarter with results that reflect the breadth of demand across the portfolio. All in revenue grew 7% or 5% organically with all five segments posting positive organic growth. Our top line performance continued to be led by our secular growth exposed markets which now represent Approximately 25% of the portfolio, which is complemented by broad-based constructive trading conditions across most of our other end markets. Margin performance was solid. Adjusted EBITDA margin expanded 80 basis points to 25.9% as operational execution on incremental volume, more than offset input cost inflation and facility consolidation costs during the quarter. Incremental margins were 38%. from 25% in Q1, the healthy product mix driven by our growth platforms. Adjusted EPS was $2.74 per share, up 12% year-over-year, marking another quarter of double-digit earnings growth. Bookings were, again, the highlight in the quarter. Orders increased 16% year-over-year and outpaced shipments. We've booked a bill at 1.06, extending strong order momentum of recent quarters and improving our visibility into the second half of the year. Our balance sheet remains a competitive advantage and we continue to invest capital behind our businesses. During the quarter, we advanced capacity expansion projects to support growth as well as productivity investments to drive margin improvement across the portfolio. Industrial M&A markets have improved this year and our acquisition pipeline has a number of interesting opportunities in attractive end markets. Given our first half performance, the momentum in our end markets, and the visibility we have in the second half, we are raising our full-year adjusted EPS guidance. We are committed to delivering double-digit adjusted EPS growth consistent with Dover's long-term performance trajectory. Let's go to slide five. Engineered products was up 2% organically. Growth was driven by strong demand in aerospace and defense components. Fluid dispensing and industrial winches along with continued destabilization in the North American vehicle aftermarket. Margins expanded 100 basis points on favorable mix and proactive cost containment actions. Clean energy and fueling grew 9% organically with broad-based strength across clean energy components and retail fueling equipment and software. Within clean energy, our order book has expanded meaningfully from cryogenic components used in LNG and space launch infrastructure, driving momentum in that business. Retail fueling also remained healthy with particular strength in North American dispensers, software, and below ground equipment. Segment margin expanded 170 basis points on volume leverage and the integration benefits from recent acquisitions. Imaging and identification grew 3% organically with growth across core marking and coding equipment, consumable spare parts, and serialization software. Segment margin expanded 150 basis points on productivity and structural cost discipline. Pumps and process solutions grew slightly with strength in AI and energy infrastructure components, single-use biopharma, and industrial pumps. Precision components benefited from robust demand for bearings tied to steam and gas turbines. Polymer processing had a tough comp in the quarter, which muted this segment's top line. We expect the business to return to growth in the second half of the year. Segment margin expanded 170 basis points to 35%, I think a record or a best-in-class result driven by a mix of products delivered and augmented by M&A activity. Climate and sustainability technologies grew 8% organically. A bit of a tale of two cities here. Heat exchanges delivered their best quarter ever with particularly strong demand tied to liquid cooling. For data centers, we are actively working to double capacity for these products over the next 12 months. We also continue to see a welcome recovery in European residential heat pumps. We had a tough quarter in refrigeration. Demand was strong across all the product lines, particularly CO2 systems, which is great. But raising output proved difficult in the midst of a complex facility consolidation while simultaneously ramping labor. While we knew that there was going to be some margin pressure from running redundant facilities through the transition, we frankly did not expect to fall short on our production throughput targets. That's on me. and it cost us on the top line in the quarter probably a point to a point and a half of organic growth. We'll get this fixed over the balance of the year and I expect it to be reflected in the revenue growth rate and margin in the second half. Pass it over to Chris.

Thanks, Rich, and good morning, everyone. Let's go to our cash flow statement on slide six. Year-to-date free cash flow of $320 million or 8% of revenue was up 23% over prior year. This improvement was primarily driven by operating cash conversion on year-over-year earnings growth, which more than offset working capital investments tied to accelerating top-line growth. Consistent with historical trends, we expect cash flow generation to accelerate meaningfully in the second half, driven by seasonal working capital liquidation in the third and fourth quarters. Our full-year CapEx estimate remains $190 to $210 million, and our free cash flow guidance remains 14 to 16 percent of revenue. With that, let me turn it back to Rich.

I'm on slide seven. Broad-based booking momentum continued in Q2 with all five segments posting year-over-year growth. On a trailing 12-month basis, consolidated bookings are up 15% and book-to-bill is well above one, providing further visibility and confidence in our outlook. The breadth of our order growth is important and points to continued top-line strength in the second half. We are seeing particular strength in the areas we have highlighted as secular growth priorities, Aerospace and Defense, components for steam and gas turbines, and broader power generation infrastructure, single-use biopharma, CO2 refrigeration systems, and heat exchanges for liquid cooling of data centers. Where in many cases, demand is outpacing supply and extending lead times, and we are actively expanding capacity in those areas. We are also seeing order improvement in parts of the portfolio that have recently been pressured, refrigerated door cases and engineering services continued to recover from 20-year lows as national retailers re-engage in maintenance and replacement activity. In polymer processing, a book to bill above one in the quarter is an early signal of stabilization and a better outlook for that longer cycle business as we look towards 2027. Turning to slide eight. We highlight the breadth of our exposure across multiple secular growth and markets. These markets, which now represent approximately 25% of our 2026 revenue, up from 20, I think, at the end of Q1, are becoming increasingly visible across all five segments. Across the energy transition and power generation markets, natural gas remains the most viable option for scalable, reliable electricity. We participate in the natural gas ecosystem through cryogenic components such as valves and vacuum jacketed piping for LNG infrastructure and through precision components for reciprocating compressors, engines, steam, and gas turbines, where OEM lead times now extend for years. Our acquisition of Sikora a year ago continues to meaningfully outperform its underwriting case, providing test and measurement equipment for high voltage wires tied to electrification and increasingly for polymer-coated fiber optic cables tied to the data center build-out. In data centers, the density of thermal requirements of new chips are driving a shift towards liquid tooling, as we all know, which directly benefits our connector and heat exchanger businesses. Through SWEP, we participate across multiple parts of the liquid cooling ecosystem, supplying brace plate heat exchangers in both coolant distribution unit and chiller OEMs, Our OPW business is also capitalizing on this growth, supplying couplers, adapters, and cryogenic cooling infrastructure as well as fiberglass trench systems, which were originally designed for retail fueling and are increasingly being specified for data center applications by hyperscalers. Demand tied to data center infrastructure remains exceptional, with customers securing capacity well ahead of need. In CO2 refrigeration, We hold the first mover advantage of fully platform product offering and a recently retrofitted plant in Georgia that gives us differentiated scale and product performance. Importantly, industry adoption is no longer driven by regulation, but rather by economic payoff and the total cost of ownership versus legacy refrigerants. We are also seeing robust growth across our exposures to semiconductor and electronics manufacturing where cryogenic components flow meters, and specialized heat exchanges position us well against a durable multi-year investment cycle. In biopharma and medical, our single-use connectors, pumps, and flow meters continue to benefit from investment behind new therapies, increasing production rates, and secular shift towards single-use batch manufacturing. And finally, we have a growing exposure to space through our cryogenic components business, particularly vacuum-jacketed piping and valves for launch infrastructure. as well as through our microwave products group which supplies radio frequency filters amplifiers and switches for satellites. All in we expect to generate 50 million in revenue tied to space this year with order rates signaling significant momentum going forward. These are the types of markets where Dover tends to win, technically demanding applications with mission critical components, strong customer relations and differentiated product performance. These are the hallmarks of a Dover business and support durable competitive positions, attractive margins, and long growth runways. As a result, the majority of our acquisition capital over the past five years has been deployed in these areas and they continue to represent the most attractive opportunities in our M&A pipeline. Okay, finally, let's go to slide nine. Our updated full year guidance is shown on the left and reflects the raise of our organic growth and adjusted EPS outlook. for the full year. We expect positive organic growth across all five segments. Similar top line trends that we saw in the first half of the year. The second secular growth exposed markets should continue to lead the way, complemented by solid broad-based demand across most of our other end markets. The operating environment is still its share of uncertainty. Geopolitics input costs and evolving trade and tariff background are factors we are managing closely. That said, demand signals remain constructive across the portfolio and the strength and duration of our order book gives a level of visibility that supports the guidance increase. We are staying disciplined in our operations, investing behind platforms where returns are most compelling, and maintaining balance sheet flexibility to play offense on capital deployment. That combination, operating execution, durable demand, and disciplined capital allocation is what gives us confidence in the outlook and our ability to continue creating long-term value for shareholders. With that, Jack, let's go to Q&A.

Thank you. If you would like to ask a question, simply press star and then the number one on your telephone keypad. If you would like to withdraw yourself from the questioning queue, please press star two. We ask that participants limit themselves to one question and one clarifying question. will pause for just a moment to allow everyone the chance to queue. Thank you. Our first question will come from Jeff Sprague with Vertical Research. Your line is open.

Hey, thanks. Good morning.

Hey, Rich, on the refrigeration-related issues, I guess throughput issues, that point-to-point-and-a-half you're talking about, is that on a Dover-consolidated basis?

And then really the The bigger part of my question, has that caused a disruption in deployment at the customer? You know, your customer expecting stuff to deliver and it's not at the store and creates some competitive issue for you?

Yes, it's a consolidated basis. Yeah, look, we've been late on some deliveries. I think that demand in certain categories is outstripping some capacity of the industry. so I don't think we've caused that many problems but yeah but truly look we knew that we were going to have margin pressure because this was quite the project to close one plant and fit it into another one so we thought the redundant capacity and the training of the workforce was going to pressure the margins a little bit I think the disappointing part was the throughput has been disappointing we've got all hands on deck to catch up in Q3 and Q4 and I'm not aware of us losing any market share to date, but it's clearly a situation that nobody likes to do these projects. I think for the long term, it's the right thing to do, but these projects are hard.

And that other plan is now closed?

Not totally. I'd say three quarters.

And then just on pump and process, How weak was Polymer? Because it sounded like everything was good except that, you know, and it was enough to make the segment flat. Was there some issue there, too, in the quarter?

It just tends to be lumpy. If you remember Q4 of last year, Polymer is what drove the big beat we had in revenue there, so we weren't expecting much, but, you know, it just tends to be lumpy, and it was detrimental to the top line, but Having said that, if it had delivered more, it would have been detrimental to the consolidated margin. So even with the loss of the revenue, the profit actually came in slightly above what our expectation was. The good news is that Polymer is north of one in book-to-bill exiting Q2.

Got it. Okay. Thank you.

Thank you. Our next question will come from Scott Davis with Milius Research. Your line is open.

Hey, good morning, guys.

Scott?

Richard, I haven't heard you flog yourself in a call for a while, and you don't make a lot of operating mistakes, so kudos to you to own it. Look, I got to ask, is the EPA mandate that pushing the CO2 stuff out to the right, is that changing anything for your customers? Are they Are they more likely to kind of delay or pause, or are they just too far down the road now?

No, we were unable to meet our delivery obligations in CO2 during Q2.

Yeah.

So it's not pushing it out. I think we talked about this last quarter, Scott. I think that for us, We're not losing any market share. Our backlog looks terrific. The adoption rate is actually accelerating. We actually are pleased that there's not a time-based mandate. I don't think the industry could have met it even if it was there. So now this turns into something that is over a multi-year period. It's actually better for us.

Okay. I understand. So I'm looking at this cryogenic cooling opportunity on the data center slide. I don't remember you talking about that in the past, but again, these quarters kind of blend into each other, so maybe you did. What is that product, and can you explain the opportunity there for us a bit?

Well, if you think about our legacy, well, there's two things.

We bought a bunch of companies in the cryogenic space.

that specialize in valve connectors and piping. Because of the amount of cooling that's needed in data centers, a lot of those products are becoming viable in data center applications. Now, we bought them because of natural gas and LNG kind of where we live, but we're pivoting now, recognizing the opportunity there. So it's relatively new, and that's probably why we haven't talked about it before.

Sounds good. I'll pass it on. Thank you, guys. Appreciate it. Good luck. Thanks.

Thank you. Our next question will come from Amit Marocha with UBS. Your line is open.

Thanks, operator. Morning, gentlemen. Rich, I wanted to ask about orders. Obviously, book to bill of 1.06 is great in the context of a typical 2Q, but it was down in absolute dollars sequentially. which is not something that I would sort of triangulate with early innings of ISM recovery, momentum, and some of the structural growth which now make up over a quarter of your business. I'd love to get your perspective on that. Am I reading too much into it? Are orders still good? Or how do you sort of translate, you know, a lot of the commentary on momentum building with actually down sequential absolute orders?

Well, I don't want to get into the mathematics of book to bill and everything else, but remember as revenue rises, You know, the bogey becomes larger, right? So, you know, what we've highlighted in Q1 is that it was going to come down because you had all these, it's the beginning of the year, you have all these come in and that we'd said, let's not panic as if it drifts down from Q1 as long as it stays above one. So to us, we're above one and we're above one across the entire portfolio, which doesn't happen often. I think historically within Dover. So it's as broad base as it's going to get.

I understand the map around book to bill. I guess the point I'm trying to make is that the numerator of that calculation actually went down sequentially and I don't know if there's something more to read into that or not.

I think that we're just picking at issues. Right now our book to bill is solid and like I said before In the context of Dover, because we touch so many different end markets, it's rare that we see it above one across the portfolio. It is, by definition, broad-based.

Okay, that's fair. And then just a quick follow-up. The capacity increase you're doing in Schweppes, can you maybe quantify that? Because it definitely seems to be a capacity-constrained market, and maybe just kind of quantify that in terms of How much capacity? When is it going to come on? And maybe that'll help us translate to some revenue opportunities.

I'm going to talk in general terms because there's a competitive aspect about capacity. So it's coming on sequentially over the balance of the second half of the year into 2027.

And would growth in the second quarter have been higher if that capacity increased?

Was there, I assume, the answer is obviously yes to that?

Yeah, yeah, yes. Okay. All right. Thank you. Appreciate it. Thanks for the question.

Thank you. Our next question will come from Nigel Koh with Wolf Research. Your line is open.

Thanks. Good morning, everyone. So, Rich, thanks for quantifying the impact of the production issues during the quarter. Just, you know, is it fair to assume that, I mean, it sounds like you're all hands to the deck to try and get that back in the second half of the year. Do you think it's realistic to assume it comes back in the second half of the year? And then any kind of guess on sort of the total margin impact of production, deal, running of plants on the segment during the quarter? And I'm just curious, you know, again, the recovery in those margins in the back half of the year.

Yeah. Our expectation that throughput will increase sequentially over the balance of the year and that throughput will be reflected in the fixed cost absorption directly into the margins. I prefer not to quantify it, but I think that we've given you an idea before what our expectation is of, we're talking about the refrigeration business now in terms of margins. So as we increase throughput and we close down the last of the redundancy costs that we have out there, naturally those margins will lift. So our expectation is from our profitability point of view that H2 will be materially different than H1.

Okay. And then just, you know, you kind of beat yourself up on this one issue, but if you look at the other four segments, Incremental margin performance was a lot better than I think even your plan had the 2Q. So maybe just self-assess on where you are performed or over-delivered versus your plan. Mixed productivity, price-cost would have been helpful, but maybe it was. And then are you confident with the refrigeration recovery? It sounds like there's going to be some restructuring savings coming to the back half of the year. Are you confident there's a pathway to, you know, mid 30% plus type incremental margins in the back half of the year?

Okay, where to start? I'd point to slide three in the deck. I mean, I know we can, we can, my job is to focus on the parts that we can improve. But if we step back for a moment, that's green lights the whole way down the P&L all the way down to EPS. So I don't think we have anything to apologize for there. Yeah, we had a missed opportunity in refrigeration on the top line, but that's why people don't have the guts to do those projects, because you've got to pay in the short term for the long-term benefit, and we're convinced that our plans will be fruitful once we get done with this transition. The incremental margin's up from, what did I say, 25 up to, what is it in this quarter?

38. 38.

That is more a reflection of everything else. We take away the drag of refrigeration right now. Everything else in the portfolio is up. So that's because every portion of the portfolio has got a plan to deliver earnings growth year over year. There's a variety of different ways we're going about it. So if you look at engineered products, for example, it's got a little bit of a muted top line. because we're doing that ourselves. We are not chasing dilutive sales in vehicle sales group. And I think the management's done a great job of maximizing profitability as opposed to we were looking for the turnaround for all of the restructuring that we did in the cryogenic components business, which is in clean energy, and look at the margin expansion that we're getting there. And we expect a lot of those themes just to continue as we go through the balance of the year. So to me, when we catch up on refrigeration, we're going to get a top-line bump, and it's going to be a little bit diluted to consolidated margins, but that's not how we run the company and try to protect that. So if I look objectively at the trajectory of the portfolio right now, sure, we've got a couple things to fix, but I don't think anybody was ever counting on DPPS delivering 35% margins.

Yeah. Okay. Thanks, Rich.

Thank you. Our next question will come from Dean Dre with RBC Capital Markets. Your line is open.

Thank you. Good morning, everyone.

Dean, we're going to miss you.

Go ahead. I appreciate that. Appreciate it. Maybe just circling back on the heat exchangers, how do you land on 2x capacity as the right number? I mean, we've seen some of the folks in liquid cooling quadrupling capacity. Is 2x the right number? And is this brownfield? Is it greenfield? And just this is an extended question. I apologize. But everyone's focused on what the margin impact is. You bring on new capacity is because it's never at peak efficiency on day one. So have you calibrated what sort of impact that will have on incrementals? I know there's a lot there. Thanks.

That's okay because it's actually a very good question. Number one, the beauty of the business is that it is very hard to ramp capacity in it. And so there's very few companies that can do it. So the defensive nature of that business is it's hard to ramp capacity, number one. We've been ramping capacity into this demand cycle over the previous two and a half years, let's say. And so our margins have actually been lower than they could have been because you're adding fixed costs in advance of revenue recognition, right? So that's dilutive to margins over time. So if you go back and look over the previous two years, and I was to show you margins in heat exchangers, You'd say, you know what, I see the top line growth, but it's not converting. Well, the reason was you're deploying capex in advance of that volume. What you see now is the volume demand is inflected so much that you're actually getting both. So the margins are expanding because the revenue is accelerating in excess of the capital we're deploying.

That's really helpful. And I'm going to end it there on a good question. And I wish you all continued success. Thanks.

Good luck, Dean. Thanks, Dean.

Thank you. Our next question will come from Andy Kapowitz with Citigroup. Your line is open.

Good morning, everyone.

Andy?

Rich, you mentioned the industrial M&A markets have improved. Maybe you can double-click on what that means. Do you think you can find good targets at reasonable valuations this year? And then your stock obviously seems relatively inexpensive. So how do you weigh the opportunity to do repurchases and other ASR versus acquisitions?

No different than we do any year, Andy. My comment on its assets... coming to market has improved over the previous two or three years. So just, you know, the big question was, why were multiples so high? Was it because a dearth of assets, which is driving multiples up, or corporate balance sheets or blah, blah, blah. But you know, if we strip out all that noise, there are more assets. Can you create value depending on what the prevailing acquisition prices remains to be seen. But We're looking at a variety of different things that if we can get it for the appropriate price, we're happy to execute on it. If we can't, I don't know. Our stock is, from a multiple point of view, cheap. If we don't do anything in M&A, we're not going to sit on another year of consolidated cash flow and then we would cycle back and do something related to capital return. But I think that our posture has changed since the end of last year where we said we were more inclined to do for capital return and the reason for that was there were very few assets available and the multiples that were prevailing in the market were very high. What's changed since then is there's more assets coming available and so we'd like to keep our powder dry to see whether we're going to choose to participate in that.

I'm just curious if you could talk a little bit more about clean energy, sort of what you're seeing between retail fueling and gas-focused businesses. You mentioned space launch already, right? So organic growth has obviously stepped up pretty significantly over the last couple quarters. Where's that step up been most concentrated? Is it in things like space launch? Do you see good durability still of the retail fueling cycle? More color I think would be helpful.

Let's go to the retail fueling since it's been in the portfolio for some time. It's broad-based across the board. I think that I'm very, very pleased for management. They've done a lot of work in terms of 80-20 and getting the portfolio the way they want it. And I think in terms of they've been rewarded for during the down cycle that we had several years ago, they continued to invest in their product. and we think that we've got an advantage now and we're seeing that in terms of the demand. On the other part of the portfolio, which is mostly made up of acquisitions that we made over the past couple years, I'm pleased for that group also. There was an incredible amount of heavy lifting that we had to do in terms of facility consolidation. You heard my comments about refrigeration. These are not easy to do. and that's been a multi-year effort. So we're not only seeing the bet on the end market demand inflecting the way we want it, we're also seeing the margin, which has been disappointing during that transition period, beginning to inflect up. So both sides of the house are doing quite well.

Helpful call, Rich.

Thanks.

Thank you. Our next question will come from Andrew Obin with Bank of America. Your line is open.

Hey, good morning. Hey. Can we just talk a little bit about what's happening by pharma orders in second quarter? How are you different than Danaher and other capital equipment providers?

Yeah, we get that question all the time, Andrew. I think you could ask Danaher and who is our customer and Thermo Fisher and Sartorius, the ones that basically are material participants in the marketplace. From our part, we're doing well because the management teams have been doing great in terms of new product introduction. And you have to realize that the vast majority of our revenue stream is either replacing an existing product, but it's a consumable. So it's not selling new systems so much. It's as long as the systems are running in the marketplace. So it's two things going on. There is activity in the space and those systems are running and they're consuming. So if you look at kind of the OEMs, they're saying that their consumable business is good. That's our stream there, number one. And number two, I think we've introduced over the last and just this week, as a matter of fact, we've introduced a variety of new products into the space that have been very successful.

Thank you. And then just maybe a simplistic question. If I look at your year-over-year bookings growth starting in third quarter, sort of high single digits around 10, 20s, teens, why isn't there more sort of torque in revenue growth to sort of what's happening on the booking side?

that's an interesting question in itself I'm not talking up revenue right bookings because here we are sitting here and we're getting feedback well it's disappointing on the top line well it's well within the band that we gave in guidance so if I talk up the revenue and we can explore possibilities of beating the top line of revenue for sure I'm not going to get in a situation where Estimates outrun basically what we're telling you. What we're giving you now is an upgrading on our estimates for the full year. Let's stick to that. You know what? If we get to the end of Q3 and orders are continuing to chug along at the pace that they're coming in at, then we're happy to revisit it at that time.

So maybe I'll just stick one in. So how is July on orders?

You know what? I don't know. I don't think we've closed it. So hard to say. Thank you.

Thank you. Again, as a reminder, that is Star 1 if you would like to join the queue. Our next question will come from Mike Holleran with Baird. Your line is open.

Okay. Good morning, everyone. Hi. So two questions here. Let's just kind of stick with the last one. Maybe, Rich, talk about how you're seeing lead times. How aggressively are those extending across the portfolio here? You know, that's part of your visibility in the second half of the year, then stretching in the next year, and maybe just put it in the context of history.

our lead times overall are in balance except where we've had execution problems where that's let out so if you look at book to bill there's an argument to be made that that number is a little bit helped by the fact that we couldn't get the product out right so it's sitting in backlog to a certain extent and more orders are coming in because people are afraid we're trying to get it out I think the only area where we see elongated orders starting to move into 27 is the long cycle portion of the portfolio. It is not material in terms of our total backlog. But in areas like heat exchangers, people are trying to out there to secure supply. So you're beginning to see it. So it's not a reflection of our lead times. It's a reflection of demand outstripping supply capacity in the market in total.

Okay, that makes sense. And then maybe just a higher level question. How are you thinking about the durability of the cycle? Obviously, you know, a lot of your comments have been about how you don't see green across the portfolio as often or very often like you are right now. What are the factors that give you confidence there's durability once you get past the second half of this year and we think about out years?

The cycles that we're participating in clearly have visibility into 2027. So it's a question of how long's durability, the durability question. So I know, you know, look, we can, you know, in the grand scheme of things, you know we're not a data center play we participate in data centers but proportionally it is what it is with the portfolio it's kind of like space launch infrastructure it's kind of like biopharma has been in the past five or six years you know I'm not aware of any kind of business right now where it looks like it's short cycle demand that may end in 26. So we're getting ready to do our strategic plans around here in August and September. I fully expect the numbers or the velocity of the trajectories may change some, but I don't see anybody going negative moving into 27. Thanks, Rich.

Appreciate it. Thanks.

Thank you. Our next question will come from Joe Ritchie with Goldman Sachs. Your line is open.

Hey, guys. Good morning.

Joe? Hey, Joe.

So I had the same question as Obin on the order conversion into revenue. I guess maybe I'll ask it this way. Is there any reason to believe that the conversion won't translate into much faster earnings growth or organic growth given what you see today, assuming that the trends can stay fairly consistent?

Well, I mean, the problem with that question is that on a 12-month basis, One could take the figures and say, here's the conversion and here's what I get. We always have to be a little bit careful because a lot of what we have is short cycle, while over a rolling 12-month basis, it will meet the trajectories that we expect. There may be quarterly volatility for thousands of different reasons. So that's why we always have to be a little bit careful of getting ahead of our skis. We're not making paperclips here. right so yeah I mean look at the bottom line is we're really pleased with the orders it's up to us to convert on the orders and we'll maximize the revenue within days not weeks not months not quarters right now that's telling us this is what if we look at the math and we've got to rely on these businesses and what the forecast is this is what it looks like but guess like I said to Andrew but we're going to get to the end of Q3 and if orders continue to surge and book the bill remains what it is, then we'll revisit that to the extent that we can convert it out of the manufacturing base. So I think we have to be careful about just doing the maths on backlog as if there's excess capacity sitting there waiting and then there's a timing difference of when somebody actually wants to take delivery on something.

Fair enough. And then I guess just given the issues that you've already talked about on the refrigeration side, I'm just curious what your level of concern is on the capacity ramp in SWEP.

Well, we always have concern, but less so. SWEP is the highest automated business that we have in the portfolio. and the issues that we've had in refrigeration have been largely driven by labor ramp.

Super helpful. Thanks, Rich. Thanks.

Thank you. Again, as a final reminder, please press star 1 now to join the queue. Our next question will come from Chris Snyder with Morgan Stanley. Your line is open.

Thank you. I think you guys talked about in Q1 that customers started placing orders for brazed plate heat exchangers further into the future than maybe they were in 25. Did that continue here into Q2? And then can you just maybe talk about your plans to add capacity there? What is the timeline for that capacity to come on? And would you expect that those lead times start to come in as that capacity comes on over the next 12 months or whatever that may be? Thank you.

Hello?

Please hold on the line.

Hello?

We have now moved to the backup.

Yes, we moved to the backup. I guess this is the last question, so let me answer it real quick here. The answer to the question is yes, and the capacity will come on sequentially over the back half of 26 going into 2026.

Thank you. And if I could squeeze in a follow-up on this backup line. Is there anything you could talk about on Q3? Is it fair to assume similar to the full year, low double-digit EPS growth? And is it also fair to assume that Q3 organic is better than Q4, just given how much more difficult that Q4 comp is? Thank you.

Yeah, we don't give out quarterly guidance, so I'm going to have to pass on that one.

Fair enough. Thank you.

Thanks.

Thank you. This concludes our Q&A period and the Dover's second quarter 2026 earnings conference call. You may now disconnect the line and have a wonderful day.