Dover Corporation (DOV) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with increased EPS guidance, robust free cash flow, and positive order growth. The Q&A section highlights management's confidence in overcoming input cost challenges and strong recovery in refrigeration. Despite some uncertainties, the company's strategic investments and operational efficiency initiatives support a positive outlook. The lack of market cap information suggests a neutral to positive reaction, but the overall sentiment leans positive due to optimistic guidance and strategic growth initiatives.
Key Financial Performance
Organic Growth Up 5% in Q4 2025, driven by robust trends in secular growth markets and improving conditions in retail fueling and refrigerated door cases and services.
Bookings Up 10% in Q4 2025 and 6% for the full year, indicating strong demand momentum.
Segment EBITDA Margins Improved by 60 basis points in Q4 2025 to 24.8%, attributed to volume leverage and productivity initiatives.
Adjusted EPS $9.61 in Q4 2025, up 14% year-over-year, driven by strong operational results and capital allocation strategy.
Engineered Products Revenue Declined in Q4 2025 due to lower volumes in vehicle services, partially offset by double-digit growth in aerospace and defense components and software.
Clean Energy and Fueling Revenue Up 4% organically in Q4 2025, led by strong shipments and new orders in Clean Energy components and North American retail fueling software and equipment.
Imaging and ID EBITDA Margin Remained strong at 28% in Q4 2025, though slightly impacted by foreign currency translation and a higher mix of printer shipments.
Pumps and Process Solutions Revenue Up 11% organically in Q4 2025, driven by growth in single-use biopharma components, thermal connectors for data centers, and digital controls for natural gas and power generation.
Climate and Sustainability Technology Revenue Up 9% organically in Q4 2025, supported by double-digit growth in CO2 refrigeration systems and improvements in refrigerated door cases and engineering services.
Free Cash Flow $487 million in Q4 2025, representing 23% of revenue, with full-year free cash flow at 14% of revenue, up nearly $200 million year-over-year due to improved cash conversion and higher earnings.
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Operating Highlights
Clean Energy components: Strong shipments and new orders in Clean Energy components as well as North American retail fueling software and equipment.
CO2 refrigeration systems: Continued double-digit growth in CO2 refrigeration systems.
Brazed plate heat exchangers: Record quarterly shipments in the U.S. in the fourth quarter, particularly for liquid cooling applications and data centers.
Bookings growth: Full year bookings were up 6% in 2025 after growing 7% in 2024. Q4 consolidated bookings were up over 10% over the prior year.
Geographic demand for brazed plate heat exchangers: Robust demand across all geographies, with noteworthy growth in North America tied to liquid cooling of data centers.
Segment EBITDA margins: Improved 60 basis points in the quarter to 24.8% on volume leverage and ongoing productivity initiatives.
Free cash flow: Fourth quarter free cash flow was $487 million or 23% of revenue, with full year free cash flow at 14% of revenue, an increase of nearly $200 million over the prior year.
Capital spending: Stepped up by over $50 million in 2025 over the prior year, focusing on growth capacity expansions and productivity investments.
Acquisitions: Deployed $700 million across 4 strategic acquisitions in high-end growth markets, with 3 in the Pumps and Process Solutions segment. These acquisitions are performing above expectations.
Share repurchases: Announced over $0.5 billion of share repurchases, including a $500 million accelerated repurchase program in November.
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Risk or Challenges
Vehicle Services Demand: Decline in vehicle services demand, with double-digit organic decline in 2025, though some signs of moderation are noted.
Margins in Clean Energy and Fueling: Margins were slightly down in the quarter due to lower vehicle wash solutions, though overall margins improved for the year.
Foreign Currency Impact: Foreign currency translation and a higher mix of printer shipments slightly weighed on Imaging and ID segment margins.
Biopharma Components Demand: Tough comparison in Q1 2026 due to heavy restocking in early 2025, which may impact growth rates.
Refrigerated Door Cases Recovery: Recovery in refrigerated door cases and engineering services is dependent on national retailers resuming maintenance and replacement spending after tariff-related delays.
Vehicle Wash Equipment and Software: Headwinds in vehicle wash equipment and software impacted Clean Energy and Fueling segment in 2025, though improvement is expected in 2026.
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Guidance & Outlook
Adjusted EPS Guidance for 2026: The company is guiding for adjusted EPS of $10.45 to $10.65 per share in 2026, representing double-digit growth at the midpoint.
Free Cash Flow Guidance for 2026: Expected to be 14% to 16% of revenue, supported by strong operating cash flow conversion.
Engineered Products Outlook for 2026: Expected improvement driven by significant demand in Aerospace and Defense components and moderating declines in vehicle aftermarket.
Clean Energy and Fueling Outlook for 2026: Solid outlook with strong demand in cryogenic applications and North American retail fueling entering a new CapEx cycle. Expected to lead in margin accretion in 2026.
Imaging and ID Outlook for 2026: Anticipated steady growth due to a significant recurring revenue base and increased printer shipments.
Pumps and Process Solutions Outlook for 2026: Robust demand expected in Artificial Intelligence and Energy Infrastructure, including thermal connectors for data centers and precision components for natural gas infrastructure. Single-use biopharma components demand remains solid.
Climate and Sustainability Technology Outlook for 2026: Expected to sustain double-digit growth in CO2 refrigeration systems and recovery in refrigerated door cases. Robust demand for brazed plate heat exchangers, particularly in North America for data center cooling.
Capital Allocation and M&A Outlook for 2026: The company expects to remain active in capital allocation, with a focus on organic investments, acquisitions, and share repurchases. Approximately $40 million in carryover profit expected from prior productivity actions.
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Shareholder Return Plan
Share Repurchase Program: In November 2025, Dover initiated a $500 million accelerated share repurchase program as part of its disciplined approach to capital deployment. This program underscores the company's commitment to enhancing long-term shareholder value. Additionally, over $0.5 billion of share repurchases were announced in 2025, funded through robust cash flow generation.
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Key Q&A
Q:What is the expected price cost for this year and how is the company managing raw materials?
A:The company expects a price cost of 1% to 1.5% over, with commodity costs moving up. They are embedding a price of 1.5% to 2% in their guidance.
Q:Has anything changed in the general economy and business outlook in the last month or two?
A:No, the company achieved its best organic growth quarter for the year, margin accretion, and book-to-bill over 1. Backlogs and production performance are good, and the company is optimistic about the setup.
Q:What is the operating leverage expectation for DCEF and DCST segments?
A:DCEF is expected to leverage revenue growth and benefit from prior period restructuring, with margin enhancement back-end loaded. DCST saw a Q4 margin jump of 250 basis points and may adjust pricing to cover input cost headwinds.
Q:Should year-on-year EPS and sales growth each quarter align with the full-year framework?
A:Yes, the seasonality should align with historical models, and the full-year guidance will be met.
Q:Why is the growth outlook for this year at 4% despite being better than the last couple of years?
A:The 4% growth outlook reflects prudence due to potential input cost increases and other factors. Bookings momentum has accelerated, and the company may adjust guidance based on visibility.
Q:Can the company recover the $150 million drawdown in Refrigeration last year?
A:Yes, the company is sold out for Q1 and booking well into Q2, indicating strong recovery.
Q:What is the observed incremental margin guidance?
A:The observed incremental margin is approximately 35%, with no significant factors below the line affecting it.
Q:Is the company considering a transformational deal or sticking with bolt-ons?
A:The company is not required to pursue transformational deals and will only consider them if they are shareholder-friendly. They are comfortable with their current bolt-on strategy.
Q:Why does the order growth rate appear disconnected from revenue growth?
A:Q1 is a production-heavy quarter, and the company is monitoring whether backlog is being replaced with new orders. Input cost increases and potential pricing actions may also affect top-line growth.
Q:What is the outlook for retail fueling CapEx and restructuring?
A:Retail fueling CapEx is strong in North America, driven by high margins and returns on projects. Restructuring benefits will be realized progressively, with fixed costs being addressed annually.
Q:What is the growth outlook for secular growth markets and trough markets?
A:Secular growth markets are performing well with double-digit growth. Trough markets like Belvac and MAAG face headwinds, but Refrigeration is recovering strongly.
Q:What is the entitlement growth rate for the portfolio?
A:The portfolio's entitlement growth rate is 3% to 6%, with the potential to achieve 5%.
Q:What is the outlook for Clean Energy margins?
A:Clean Energy margins are expected to reach the low-20% range this year and improve further as restructuring and cost-out initiatives progress.
Q:How is the company managing capacity and capital expenditure?
A:CapEx is decreasing in 2026 due to completed expansions and restructuring. A new greenfield plant in North Carolina is planned for completion by 2027.
Q:What is the company's exposure to natural gas power generation?
A:The company supplies components for large turbines, midstream, and reciprocating compressors. Significant follow-on CapEx is expected in the back half of 2026.
Q:What is the outlook for the secular growth markets in 2026?
A:Secular growth markets are expected to continue growing at a double-digit rate.
Q:What is the investment grade leverage ratio for capital allocation?
A:The leverage ratio is calculated based on full-year 2025 EBITDA, maintaining investment-grade status.
Q:Are there any potential divestitures in the portfolio?
A:The company is comfortable with its current portfolio but remains open to divestitures if opportunities arise.
Q:What are the biggest swing factors for organic growth in 2026?
A:Growth factors are distributed across the portfolio, with no single area expected to double. Incremental growth in multiple areas could add a few points to the top line.
Q:How much of 2026 revenues are in backlog today?
A:The company has significant backlog coverage for Q1 and is booking well into Q2, but the exact percentage of 2026 revenues in backlog is not specified.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about potential divestitures, stating they are comfortable with the portfolio but did not elaborate on specific plans or criteria for divestitures.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Book bill
Clean Energy
Coating serialization
Demand plate
Energy shipment
Instructions Mr
Marketing Coating
Mr Vice
President Investor
Segment basis
Slide cash
Slide result
Sustainability Technology
Technology digit
acquisition opportunity
acquisition start
allocation acquisition
approach capital
backlog Pumps
benefit end
bill outlook
book end
capital opportunity
case acquisition
case polymer
case service
center momentum
component software
door case
increase
level
margin segment
market condition
productivity
underwriting case
volume leverage
DOV Transcript
Dover Corporation (DOV) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call reveals strong financial performance with increased EPS guidance, robust free cash flow, and positive order growth. The Q&A section highlights management's confidence in overcoming input cost challenges and strong recovery in refrigeration. Despite some uncertainties, the company's strategic investments and operational efficiency initiatives support a positive outlook. The lack of market cap information suggests a neutral to positive reaction, but the overall sentiment leans positive due to optimistic guidance and strategic growth initiatives.
Dover Corporation (DOV) Presents at UBS Global Industrials and Transportation Conference Transcript
Neutral12-2
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Neutral11-11
Dover Corporation (DOV) Q3 2025 Earnings Call Transcript
Positive10-23
The earnings call summary and Q&A reveal strong financial performance, optimistic guidance, and strategic growth plans. Raised EPS guidance, strong bookings, and positive momentum in key segments like clean energy and data centers contribute to a positive outlook. Despite some restructuring uncertainties, overall sentiment is positive, with management's confidence in margin improvements and shareholder returns through potential stock buybacks. The positive demand environment and strategic initiatives in high-growth areas further support a positive stock price movement prediction.
DOV Report
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