Dover Aktie

Good morning, and welcome to Dover's First 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 of Investor Relations. After the speaker's remarks, there will be a question-and-answer period. [Operator Instructions] 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, Clay. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through May 14, 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 are forward-looking statements. With that, I will turn the call over to Rich. .

Thanks, Jack. Good morning, everyone. Let's get started on Slide 3. We're off to a good start in 2026. Revenue grew double digits in the quarter, driven by continued strength in our secular growth exposed end markets acquired company performance and constructive demand conditions across the portfolio.

Bookings were a key highlight in the quarter. First quarter bookings totaled $2.5 billion, up 24% year-over-year. Book-to-bill was healthy at 1.2% in the quarter with each of the 5 segments well above 1, providing improved visibility and confidence in our forecast. Our balance sheet remains strong and continues to provide flexibility for long-term value creation.

During the quarter, we continued to return capital to shareholders through opportunistic share repurchases while also investing behind high-return capacity expansions and productivity projects, our acquisition pipeline remains active as industrial M&A begins to pick up.

As always, we will remain disciplined with a focus on maximizing value creation through strong financial returns and strategic fit. All in, adjusted EPS of $2.28 per share was up 11% year-over-year. While we are keeping a keen eye on the geopolitical machinations, and the possible impacts to the macro environment, we believe we are well positioned to drive value creation for our shareholders given the underlying strength of our order books, the flexibility of our business model and the operational execution of our teams and our opportunities for capital deployment.

We remain committed to delivering double-digit adjusted EPS growth for the full year consistent with Dover's long-term performance trajectory. We have chosen to reaffirm full guidance for the year for the time being. But clearly, based on order rates, we are driving to the top end of the range.

We will revisit guidance next quarter. Let's go to Slide 5. Engineered Products revenue increased modestly in the quarter supported by strong underlying demand and healthy bookings in aerospace and defense components and industrial winches, along with improving trends in the global vehicle aftermarket business.

Clean Energy and fueling grew 11% organically led by strong shipments in new orders and clean energy components, fluid transport and retail fueling. We continue to see aggressive build-outs from national retailers in North America, which we believe is still in the early innings of a multiyear growth cycle and we are also seeing healthy improvement in Europe as well.

Margin performance was driven by volume leverage and operational execution with recent pricing actions expected to further bolster margin performance over the balance of the year. Imaging & Identification delivered stable performance across core marking and coding equipment, consumables and in serialization software.

Segment margins remained strong with some foreign currency translation headwinds in the quarter that should abate as the year progresses. Revenue in Pumps and Process Solutions declined modestly in the quarter as solid performance in artificial intelligence, energy infrastructure components and industrial pumps allowed us to lap a tough comp in biopharma, segment margins expanded on favorable mix and strong productivity execution.

Climate and sustainability technologies was a standout during the quarter, delivering 15% organic growth. Heat exchanges performed especially well across all regions, particularly in North America on the growth in liquid cooling applications and data centers. Food retail also delivered solid top line performance supported by continued double-digit growth in CO2 refrigeration systems together with the recovery in refrigerated door cases and services as forecast. Demand remains strong and the order book supports our confidence in the full year outlook as we are already booking into the second half. Margins were up in the quarter on volume leverage and a higher mix of CO2 systems and heat exchangers. I'll pass it to Chris here.

Thanks, Rich. Good morning, everyone. Let's go to our cash flow statement on Slide 6. Our free cash flow in the quarter was $131 million or 6% of revenue. This was a $22 million increase when compared to the first quarter of last year as cash conversion on higher year-over-year earnings was partially offset by higher capital expenditures tied to growth and productivity investments.

Our full year capital expenditure estimate remains at $190 million to $210 million. Consistent with prior quarters, we expect Q1 to be our lowest cash flow quarter of the year as our operating businesses make investments in inventory ahead of seasonally stronger volume quarters in Q2 and Q3. Our guidance for 2026 free cash flow remains on track at 14% to 16% of revenue. With that, let me turn it back to Rich.

Thanks, Chris. I'm on Slide 7. Bookings momentum continued to build in the first quarter. Bookings are up 12% over the last 12 months, reflecting broad-based acceleration across most end markets. Importantly, Trailing 12-month book-to-bill is now above 1, providing further visibility and confidence in the growth outlook. The acceleration in bookings and demand is driving longer lead times in certain growth markets.

We are seeing the most clearly in programs specific orders for aerospace and defense components and longer cycle components for steam and gas turbines and engines. And in retail refrigeration CO2 systems and in heat exchangers as customers work to secure supply of critical components for fast-growing applications such as liquid cooling applications.

Turning to Slide 8. We highlight several key end markets that are material drivers of our revenue growth in 2026 and beyond. We expect to generate over $1 billion in revenue from applications tied to artificial intelligence and power generation infrastructure this year. In data centers, increasing density of thermal requirements are necessitating a shift towards liquid cooling, which directly benefits our connector and heat exchanger businesses.

Our SIKORA acquisitions, which closed in June of 2025, expands our exposure to electricity infrastructure through measurement and inspection control solutions for high-voltage polymer-coated wires and cables a direct beneficiary of growing electrification trends and demand for customers for product quality assurance and improvement.

SIKORA is performing well ahead of its acquisition underwriting case. We are actively working to expand its geographic offering through our global channels and relationships. Natural gas remains the most visible option for scalable, reliable energy to meet the growing demands for electricity.

Our Precision Components business provides bearing seals and compressor components for gas and steam turbines, engines and midstream natural gas infrastructure. Demand for steam and gas turbine components remains robust, a reflection of OEM lead times that now extend multiple years.

While we have not seen a corresponding acceleration in midstream investment necessary to transport the gas to those turbines, early customer indications suggest a pickup in shorter cycle orders for midstream compression beginning in the second half of this year into early next year.

Our clean energy components business continues to build to see solid growth in valves and vacuum jacketed piping used in LNG liquefication, infrastructure, including export terminals. We are also seeing strong demand in space launch-related applications, which recently booked its single largest order ever for space launch infrastructure where growth rates remain firmly in double digits.

And biopharma customers continue to invest behind new therapies and increasing production rates driving long-term growth for our single-use connector pump and flow meter solutions; and finally, in CO2 refrigeration, we maintain a clear market leadership position in the U.S. supported by fully platformed product portfolio from our retrofitted plants in Condas, Georgia that provides strong competitive moats and product performance lead times and scalability, the shift to natural refrigerants has transitioned from a regulatory mandated demand to performance and productivity driven adoption as early installs have proven that the technology delivers improved operating performance versus legacy technologies.

Despite the strong growth we've experienced, North America remains in its early adoption of natural refrigerants with penetration still below 10%.

Let's go to Slide 9. Our organic investments remain our highest priority for capital deployment. Here, we highlight several most meaningful high-return capital projects planned for 2026. We continue to invest where demand visibility and returns are strongest while maintaining discipline around productivity and cost optimization. We also outlined a number of ongoing fixed cost reduction and facility consolidation initiatives. In aggregate, these actions are expected to generate more than $40 million of rightsizing savings in 2026 with an incremental carryover benefits into 2027.

The precise timing of these savings will depend on where able to finalize certain facility moves as we balance site consolidation with underlying demand trends in certain growth markets.

Let's go to 10. In Engineered Products, we expect low single-digit organic growth for the year, driven primarily by aerospace and defense, which continues to experience significant demand strength tied to electronic warfare and signal intelligence solutions.

We expect to see further stabilization of vehicle aftermarket businesses supported by recent booking trends. Clean Energy and Fueling is expected to deliver broad-based organic growth across clean energy components, fluid transport and retail fueling and retail fueling domestic demand from national customers remains strong.

We believe that this is a multiyear cycle. Our greenfield facility expansion and below-ground retail fueling is expected to support this growth cycle, particularly in our fiber like composite solutions business which is seeing accelerating adoption globally, including increased specification and data center-related infrastructure applications from hyperscalers.

We expect margin improvement in clean energy and fueling for the year on volume leverage, acquisition integration and productivity initiatives and positive price versus cost dynamics. Imaging and ID should deliver low single-digit growth driven by serialization software and marketing and coding hardware and consumables supported by strong order rates.

Pumps and Process Solutions should benefit from growth in industrial pumps single-use biopharma components, precision measurement solutions for electrification infrastructure and critical components for steam and gas turbine engines and midstream compression.

We also expect gradual improvement in our core polymer processing equipment is supported by improved quoting activity. Finally, we expect climate and sustainability technologies to deliver double-digit organic growth for 2026 driven by continued strength in CO2 reiteration systems and the anticipated recovery in refrigerated door cases and engineering services were national. Retailers are reengaging in maintenance and replacement activity following a period of tariff-related delays supporting a rebound from historically low volume levels in the previous year.

We expect the robust demand across all geographies for brazed plate heat exchanges to continue over the balance of the year with particular strength in North America tied to liquid cooling of data centers and other HVAC applications. Lead times for large and extra large heat exchanges have extended materially with additional capacity coming online as the year progresses.

We have a margin opportunity here from volume leverage and the fact that we are carrying redundant fixed cost in refrigeration as we complete our facility consolidation.

Let's go to 11. Full year guidance is on the left. We expect 2026 seasonality to be consistent with recent years. The operating environment still has a share of macro noise, whether it's politics input costs or policy-related uncertainty. That said, the demand signals we're seeing across the portfolio remain constructive and provide a level of visibility that supports our outlook.

We are staying disciplined in our operations in our response to demand conditions. We are investing behind the platforms where returns are most compelling and we have the balance sheet flexibility to opportunistically play offense with capital deployment to create long-term value for our shareholders.

With that, I'll pass it to Q&A. Jack?

[Operator Instructions] We'll move first to Nigel Coe with Wolfe Research.

Thanks quite a -- I think you got through at an hour's worth of prepared remarks about 15 minutes of well done. I think just want to kind of clear up the kind of the obvious question. I mean obviously, the orders -- this is a record order quarter. So just anything unusual supply chain of your concern people are getting ahead of maybe potential concerns around Middle East, et cetera? And have you seen the strength continue into April?

No, I don't -- we don't see any kind of prebuy. I mean, what we put in the comments about longer lead times is -- what you do see is customers ordering for later delivery periods than normal, just because demand is outstripping supply at the end of the day. So that's really what's driving up especially in brazed plate heat exchangers, CO2 systems and refrigeration cases. And you can see that in the portfolio. So overall, we don't say -- we don't see anything based on changes in tariffs or anything like that. It's just more the demand is there. And I think there's a recognition that you would need to get in line if you want deliveries because of capacity constraints.

Okay. That's great. And my follow-up on the tariffs. You mentioned tariffs, which a lot of inflation coming through on some of the base metals and steel. Maybe just talk about some of the countermeasures to that? And just maybe just clarify how the different tariff landscape is impacting Dover.

Yes. Well, with the diversification of the portfolio, we've been trying to run down literally tens of thousands of line items of input costs and the like, and I won't bore you with the details other than the fact that it kind of comes out relatively neutral at the end of the day.

So everything that we are planning on based on the last round of tariffs. Now with these changes, we kind of go 360 degrees and come out in the same spot at the end of the day. So there will be pockets where it may be detrimental, and there will be pockets where potentially, it's a strategic advantage because of the fact that we're mostly a build in the region to ship into the region kind of company at the end of the day. So net-net, after thousands of man hours of work it's solved nothing here.

We'll move next to Andrew Obin with Bank of America. .

Maybe a different angle on S232. You are largely domestic manufacturer. Will the change to Section 232 tariffs provide you? Is any competitive advantage versus importers of finished goods?

I hope so. Hard to tell, right? This is all new news. And like we saw the last time a year ago, it takes 4 to 6 months for these changes to work their way through because of the fact that you've got inventory changes and a variety of other things. I'm not going to talk about where we think we may have a strategic advantage, we'd just rather take advantage of it. But clearly, just like the last time we went through this, having relatively short supply chains has proven to be helpful. .

And I can't resist. I will ask this question. Organic growth, 5%, bookings in the mid-20s and you're guiding 3% to 5% organic growth? The comps don't get tough until Q4. It seems a conservative guide. .

I know. And if you remember, Andrew, we actually got questions about our guide when we initiated our guide. So this is -- and I think -- look, I think if you go back and read the transcript, I was pretty explicit they were driving clearly to the top end of the guide. We're 90 days into this. Well, what are we now 120 days into it or whatever. If bookings trends remain consistent through Q2, it's clear that we're going to have to revisit top line expectations. .

And booking in April bookings are just for April booking seems to be fine. .

Yes. Yes. So far so.

Thank you. We'll move next to Joe O'Dea with Wells Fargo. .

Rich, maybe just in terms of that comment on Nigel's question around the demand is there. trying to understand the triggers behind the demand being there because it's very broad-based when we look at the order strength. And so what what has shifted from sort of customer sentiment, what you're seeing out there around the confidence to order right now? And it sounds like that has persisted even through the geopolitical situation now. .

Well, look, I mean, when we gave our guidance for the year, we basically targeted both the clean energy and climate segments as the two segments that were going to drive the growth going into 2026 and here we are in Q1. And they are driving the top line growth, and they are the ones that are -- got the best order rates in terms of bookings.

So in a way we knew it was coming and there was a reason for it. I mean I don't want to rehash the whole issue of what we went through for a couple of years on underinvestment in both retail fueling and now we're seeing that during the corner and kind of the headwind that we had to overcome last year on refrigeration. So there's kind of the secular story of the CapEx cycle swinging in those particular markets.

The balance of it is generally either acquisitions or the growth platforms, and that is kind of widespread across the portfolio with the exception of DII. So it's a combination of a lot of things, whether it's a secular growth driver and a lot of -- we've been investing pretty heavily in capacity expansions and new product introductions over the last couple of years and knockwood they are gaining some pretty good traction in the marketplace. .

And then just shifting to M&A. Sound pretty constructive on the pipeline. Just I guess, confidence in getting something done this year. it doesn't look like multiples are moving any lower, and you've got a track record of discipline so how you're kind of navigating through that dynamic? .

Yes. Multiples are frustratingly high for sure. But we got a variety of different balls in the air. I would just got to see if we can get them across the finish line or not. So look, the good news is there's more product available, right, because the fact that equity markets are performing well and multiples paid are pretty high.

So that generally is a precursor to product becoming available. That's the good news. Can we find stuff that we like, hope so. We've got a couple of proprietary things going on. So we'll see. But better than it's been over the last couple of years, just in terms of the total environment.

We'll take our next question from Mike Halloran with Baird.

I'll ask both my questions in 1 shot, because my convention is a little poor. First, you saw the long-cycle orders roll through appropriately. Are you seeing any improvement sequentially as you work through the quarter into April on the short-cycle order side of the things? Did it mirror from a trajectory perspective, at least a long-cycle orders -- and then on the long-cycle orders, maybe just talk to how you think that plays out in terms of conversion to revenue, what it means for sequentials or first half, second half weighting, however you want to put it, as you work through the year?

Okay. The pace of the orders remained relatively consistent from Q4 into Q1. And that's just a broader base comment. Let's not get confused between long-cycle orders and kind of longer-cycle capital goods demand. What we're seeing is a phenomenon that we're getting what would have been reasonably short cycle orders being booked to reserve capacity. .

So it's -- that's why you see the order rates what they are. And if I showed you the expected delivery times, you would see that we're getting orders well into Q2, into Q3 in certain businesses that we wouldn't see that. And that's just because there's a demand supply constraint there. So over time, we would expect those orders to build, which is great. We have them, and then we kind of -- we'd see them probably normalize as we ramp up production to kind of -- to meet that demand.

So the good news is we got the orders and the pace of that rate sustained itself throughout Q1 and has sustained itself through April. So -- but it's not as if in polymer processing and can-making equipment, the stuff that's got really long lead times, those are not what's driving the order rate in the backlog.

We'll move next to Jeff Sprague with Vertical Research. .

Rich, maybe just kind of picking up on that then, the supply constraints that you're talking about are Dover internal, not kind of supply chain inputs. And I guess I sort of get that right? You've been waiting for growth. You probably kept your boot on the throat of some investment here when it wasn't growing. But maybe -- am I right on that? And maybe just a...

It's -- Jeff, it's more of that -- it's not that we haven't had any constraints, right? At the end of the day, when you're booking the way we're booking and trying to ramp and it's cost us quite a few margin dollars in Q1 trying to like ramp up to do everything here.

But it's more of like these data center projects. There's -- we operate in some markets with very few competitors, which is the beauty of the business model. So everybody understands that, so they're ordering advance to reserve the capacity. So it's -- and that's the same thing for a lot of the markets that we participate. And it's not a question of -- we would never ramp the capacity to meet what you see in terms of the orders as if we could get it out in Q1 anyway, right? All we're doing is -- the funnel is the funnel. We have ramped for sure. But the funnel is the funnel, and we're just working with the customers and saying, look, we're sold out in Q2, you got to start ordering for Q3.

That's what sound like you like you ramped down, and now we're doing a 180 and we're ramping back up. It's just...

No, no, no, no, no. We've never -- look, I mean, we're good at cost management at the end of the day, but it's not like we've taken plants out or anything as part of our consolidation. Those are all efficiency. We've not real fully taken out production capacity in the markets that we wish to participate in over the long term. .

Got it. And then just on the climate-related stuff, then this -- the strength in orders there and on the top line, is that pretty level loaded between the CO2 and the heat exchange or heat pump-related pieces of the portfolio. Could you just elaborate on that a little bit more?

Yes. I mean it's the law small numbers now, right? So you don't want to use percentages because the size of the business is different. But it is broad-based with the exception of Belvac, right? So the heat exchanger business is growing very well.

We're actually back to your capacity question, adding more capacity and heat exchangers? And on the refrigeration side, CO2, we are adding capacity there, right? So we've just been selling a new production line in ones a plant that was empty is now getting close to being full now.

And then on the refrigeration side, I mean, we beat that to debt last year. There was that delay that cost us 2 points of growth. That's all the orders coming through. That's where it's been quite the juggling act of taking leading customer demand almost in an inefficient way, because we're in the midst of a facility consolidation.

We're actually delayed in getting that project done because we had so many orders. We had to keep the plant open and that's cost us margin dollars. We're on path to get that all done probably by midyear. So I would expect the incremental margin in that segment to be robust in H2. We're probably going to have to carry it a little bit through Q2, but then we should see a pretty material inflection in margin performance if we can get this right.

We'll move next to Andy Kaplowitz with Citigroup. .

Which just in DPS, you mentioned you overcame tough comps and pump some process in Q1 and you didn't own biopharma and you didn't change your forecast for the year, but -- are you seeing business gas compression picking up? And obviously, your business is guest turbines from, but what's the outlook for the overall business? I would imagine maybe slightly stronger versus last quarter, but you tell me? .

Well, I mean, I think that we were pretty transparent even in Q1 last year that we had a great Q1 that we -- was going to set this up. We are very pleased actually with the performance of the segment despite that, particularly in terms of the margin performance, right? Because we not only had the tough comp, that's tough comp on the top line, but it's a tough comp in terms of a margin comparison, too.

And so not only did we do a great job in MOG in terms of margin preservation despite tough top line conditions across the balance of the portfolio in biopharma and thermal connectors and industrial pumps and precision components, the margin performance has been exemplary.

So I'm always trying to kind of manage expectations about margin performance. I think we actually did better than we would have expected in Q1. For the balance of the year, I think if you go back and look at the comments, yes, we've been doing really well on the turbine side for some time now, and that will continue to do well. What we're really looking for is the inflection on compression.

Signs are there, but if there's any upside to the performance of that segment in the second half, it would be in compression, but we'll know when we get the orders, that that's coming. .

That's helpful. And then maybe just on DII, you're still talking about low single digit organic growth and margin expansion for the year. But can you give us more color what happened in Q1, sort of any additional color on that business, I think, would be helpful. .

I mean, I don't think we have a lot of angst about 30 basis points of margin compression. That's a rounding error. It's FX, Andy. I mean we -- you know it's our most global business. And because of that, it's got a ton of FX running through it. So we're not worried at all. It's not a negative at all, the performance in the quarter. It's going to do it. This business is going to do what it does every year, right? It's going to deliver single-digit top line growth, very healthy margins and a ton of cash. .

We'll move next to Amit Mehrotra with UBS. .

Rich, I wanted to ask about Engineered Products. It was nice to see that business return to growth and book-to-bill was obviously very strong. I think you guys have a pretty decent defense business inside of there that's I guess, fortunately or really unfortunately quite relevant in today's geopolitical environment.

Can you just maybe talk about the growth you're seeing there. Is it really specific to that business? Or is it more broad-based? And then I guess with the book-to-bill, can we accelerate off of this and do you have enough capacity to kind of meet that opportunity? .

It is driven by the defense business in the segment right now, but that's not to say that the industrial wind side is actually doing quite well. And as we talked about before, on the vehicle service side, the headwind that we saw last year in Europe is abated.

So the management team is doing a good job there in terms of margin performance and the like. On the defense side, yes, I mean this goes back to this a long discussion about long lead times and everything else. We are working like mad to increase production capacity in aerospace and defense to get it done. It's just not something you can kind of throw money at, unfortunately. It in order to do it, it takes a lot of time to do it. So it's doing really well. And I would expect if we can get a little bit more production capacity online, we're probably going to be able to sell it in as we march through the balance of the year.

Okay. And then just as a follow-up. You had mentioned earlier this net impact of tariffs and I guess, Section 232. But I wanted to just double click on something you mentioned a little bit because I think you do have some competitors in certain specific business lines that do disproportionately manufacture in Mexico. I think they've been historically quite stubborn in cutting prices, but are you seeing any competitive behavior that either gives you an umbrella or an opportunity for share in those markets? If you can just give a little bit of color on what you're seeing? I know April 6 just happened. So maybe it's too early, but anything you could offer would be helpful. .

History would say that in that particular market that you're referring to is that they will not give up market share and just eat it. The success of our business is more predicated upon the significant investments that we've made in our own production processes that has enabled us to have best-in-class product lead times, meaning that we don't have to go grab market share on price. We can do it on lead times. That's the strategy. And knockwood what it seems to be working right now. .

We'll take our next question from Joe Ritchie with Goldman Sachs. .

So Rich, I'm wondering like how are you thinking about the TAM for both CO2 systems and liquid cooling? Obviously, CO2 systems still way underpenetrated relative to Europe and just got back from data center world and liquid cooling is growing like wildfire. So I'm just trying to think about like what the opportunity is for you guys. .

Well, we -- I think we can give you a much more intelligent answer about CO2 systems that we're going to be able to give you about liquid cooling because I'll leave it to much larger market participants to try to figure out what that TAM is. But clearly, it's growing. On the CO2 systems side, as we put in the notes, North America is 10% penetrated. So that's basically -- the math there is the installed base has converted 10% of the footprint, which doesn't include kind of growth, but our estimates in retail refrigeration and commercial refrigeration, it's kind of 1 for one. For every greenfield, there's probably a shutdown. So -- but if we just look at the installed base, we're at 10% penetration.

So that gives plenty of opportunity. The base couldn't if it wanted to convert in a short period of time. So the beauty of it is, if it's -- if we stay in front in terms of product line performance and we stay in front in terms of online capacity that we can kind of just run this run the table a little bit over a multiyear period. Well, at least that's what we're going to try to do. .

Got it. That's helpful. And then just maybe on that point, on the capacity piece. So it seems like you're expecting incremental margins to really to inflect, I guess, maybe in the second half of the year, I guess, in DCST. I guess I don't know how do we think about that? Like how much capacity you have available? Is it like -- do you think you've got like is it a multiyear capacity? Is it -- do you have enough through the end of next year? I'm just trying to understand it, because obviously, it has implications for the margin trajectory of those businesses. .

Yes. With the -- if you go to the slide in the deck where we're adding capacity is now is generally speaking for '27 demand at this point. So we're -- when any time we're adding capacity, it's not generally intra-year capacity. I mean sometimes you can do it. But generally speaking, it's kind of -- the CapEx that we spent 18 months ago is now productive capacity now.

So where we're adding is based on an even forecast, 3-year forecast evolving over time. So I think that we've got it right, I guess, is the best way to put it. But back to your question about the TAM about data centers -- if we were to install the capacity of some of the estimates of the TAM, there is never going to be enough capacity in the marketplace. So we're just going to have to see from what -- our interactions with our customers, we think that we're on the front foot of kind of rolling the capacity rollout based on the demand curve. .

We'll move next to Julian Mitchell with Barclays. .

Maybe, Rich, I know you've touched on this a couple of times, but I think it's sort of worth looking at just, because there's some various cross currents. So you said that the pace of bookings was sort of steady in the last several months, but you had very good bookings growth, which you said is a function not of pre-buy, but customers sort of placing orders with a longer lead time because of supply concerns later in the year. So maybe just to flesh that out a little bit I guess I'm most interested in the point around is that sort of view based on customer conversations that they're not placing the orders ahead of price increases?

And also, your point on the bookings sort of pace being quite steady, you didn't see a spike around when Iran started. Just sort of help us put some of those things together .

Sure. I think for the most part, as a general comment, all of our pricing was done at the beginning of the year. So it was all announced. I mean the argument would have been we drive orders in Q4 because they knew it was coming in Q1, and we've gone past that now.

So there's some exceptions as the vast majority of the pricing is out there now. No, we did not see any kind of spike. Like I said, I mean it's different by business, but kind of the pacing that we saw into Q4 just rolled right through Q1.

In particular, in the segments where we thought it was coming anyway, right? And so a lot of that is while that's coming, you're communicating with your customers about, okay, here's where we are in terms of product lead times. And they're beginning to stretch a little bit just because of the fact that we -- that capacity is being utilized.

So I don't foresee. I don't -- it was more of a secular growth in the areas that we had kind of bet on we're going to come anyway just came. Not -- it wasn't like we were surprised at all by any individual business other than, I think, like I mentioned before, the margin performance in DPS despite that having to change a pretty tough headwind there from a mix point of view, I think it was probably the only thing that surprised us.

And I think the other issue is, as I mentioned before, the demand in kind of retail refrigeration was a little bit stronger than we would have expected, and that's necessitated us to keep a plant open longer than we would have liked to. It's great. It drives the revenue, and we'll take it. But weirdly, it's a little bit dilutive in terms of margin conversion because we can't get that fixed cost out.

We'll get it out, but it's probably going to take us a a quarter longer than we would have expected. And that was my comment of if you think about the Climate segment, you've got brave plate heat exchangers, which is very capital intensive. So at a certain point, incremental margin flips over on the depreciation of all the investment, and we see in that growth -- and then once we get those redundant costs out of refrigeration business, we can expect incremental margin there to inflect positively also.

Yes, that was very helpful. And that was sort of where I was going with the second point, which you had, I think, 10% revenue growth all in, in Q1. EBITDA margins company-wide were up basis points, though. You've gone through sort of in DCST maybe why the operating leverage picks up later in the year. I just wondered, across the other segments in aggregate, kind of anything you'd call out that helps the operating leverage improve later in the year? .

I would think the retail fueling business will also inflect sequentially positive throughout the year on volume leverage and on product mix through the year also. We would expect this to be 1 of the lower margin quarters for us, right? Because if you think about the seasonality, if everything goes as planned, you've got volume leverage on that kind of bookings and growth, which we would expect would drive margins higher in that particular segment.

I think DPPS if we can stay where we are, I think we'd be pleased.

We'll move next to Patrick Baumann with JPMorgan.

Just -- just had a follow-up on the orders. So generally, looking historically, the first quarter orders convert at a similar level into second quarter sales. So I guess I'm just trying to get a sense on how to think about that $2.5 billion in orders versus the $2.2 billion in sales that consensus has for the second quarter.

And it would be helpful if you could, in that vein, maybe quantify what was, I guess, unusually longer-dated orders in magnitude within that $2.5 billion number?

Yes. You can do the math here and take the order rates and stuff it all into Q2 and get a pretty big revenue growth number. And I would advise you, that's why we had all these discussions around here about the machinations of describing longer-dated orders, right, to kind of prevent that at the end of the day. We'll -- seasonality, we will move up in Q2 for sure. But I don't think we get ahead of our skis here and trying to look at bookings of Q1 and say, well, wait a minute, if it's that much, let's go stuff that into Q2 because I think it's just not realistic from a capacity point of view.

So -- we are booking in certain businesses into Q3 now. So that is great for us, but let's not get get overly excited about the revenue growth in Q2. We will get as much as we possibly can get out in Q2. .

Is it like $100 million, $200 million of longer-dated borrowers? Is that .

Patrick, we're not going there. .

In, I would try. My follow-up on price expectations for the year now, based on what you're seeing from a commodities cost inflation perspective, do you still expect to be a kind of 1.5% to 2%? .

Yes. Yes. Right now, I mean, it's a moving target. We'll see what happens with input costs and metals and everything else. But right now, even if we see it, we won't see it in the back half of next year anyway because we've got everything else in inventory. .

Okay. So that guidance is unchanged for price then? .

If you want to give us price guidance, sure. .

And our final question comes from Chris Snyder with Morgan Stanley .

I just kind of wanted to follow up on some of the price commentary. Rich, I thought earlier in the call, you were saying maybe there is more price coming into Q2 to combat the cost inflation. I don't know if that's just maybe the earlier action being realized in Q2. So just kind of I guess, did you guys put more price in place since the start of the year just in response to the cost inflation? .

I'm sure we did anecdotally, but no. I mean, I think all the pricing that we put out started at the beginning of the quarter. .

I appreciate that. And then I guess just on Q2, I don't think anyone has asked it yet. I mean like is the expectation that Q2 is kind of still in this 10% EPS growth mid-single-digit organic growth range .

Okay. I haven't done the math. I know that we're driving towards over 10% EPS growth for the full year. I guess, seasonality says that our profits are generally highest in Q2 and Q3, and I'll leave it to you to do the math. .

That concludes our question-and-answer period and Dover's First Quarter 2026 Earnings Conference Call. You may now disconnect your line at this time, and have a wonderful day.

All right. There he is. We have Rich Tobin, CEO of Dover, who is zooming in because of flight complication. So really appreciate the pivot. And Rich, thanks for attending virtually. We appreciate it.

No problem, Steve.

I'll be working the presentation. So I'll make myself useful, but...

Yes. I mean the presentation is only there. If anybody has any questions about full year results last year guidance. So I'm not going to go through it. So if you want to put the guidance slide up, just to stick it up there. It's probably the most salient one and we can go to Q&A.

That one?

I can't see them. So all.

Okay. That's the guidance. And there's no -- we'll have to see if there's no changes. I think we're...

There's no changes, no.

I think we're good.

Yes.

So maybe just as a start, you're always pretty good at giving us a bit of an update on what's going on in the macro and orders and things like that. What are you guys seeing here since the last time we spoke?

Nothing really. I mean, I think it's a little bit early. I mean, clearly, we're preparing for higher energy costs. And for us, that's more freight cost than anything else, which I don't think is a hurdle that's going to be that difficult.

But in terms of our customer behavior, we've seen nothing so far. Maybe a little bit of rerouting of freight. Does that cause any supply chain issues, I don't believe so, but right now, we don't see anything.

And how is the -- I think you guys were somewhat bullish in January as far as how the orders were trending coming out of a pretty strong 4Q. What are you guys seeing on the orders front so far through the last turn of the cards, maybe February?

Yes. I mean orders are tracking great. So strong January, strong February. We're clocking through March. So we should come out at the end of Q1 from a book-to-bill point of view in really good shape for the setup for Q2 and Q3.

Can you maybe opine on what great means with more mathematics?

That's higher than 1, Steve, clearly higher than 1.

So I think seasonally, it has to be higher than 1, right, because you have a step-up from 1Q to 2Q. So I know last year was in kind of the 1.08, 1.07 range. Is that -- can it be a little bit better than that?

It can be better than that.

Okay. And I think you had said that on the last -- on the conference call that you were kind of watching these orders. And if you guys built a little bit of backlog and had a nice trend into 2Q that you would reevaluate the year to a degree. Is there enough going on in the world that with this uncertainty that you would say, all right, things are trending better, but probably not prudent given what's going on? Or is there enough visibility to maybe change the guide?

Hard to say. I mean, I'd like to close Q1 and see where we are in orders. I mean, clearly, when we do close Q1, we'll have a significant portion of Q2 booked and probably booking into Q3 in certain of the business lines, whether that will be enough for us to revisit the guidance or not. I doubt it.

I think we'd probably take another quarter or so because I know you and I have go back and forth about organic versus all-in growth. I mean, FX is going to be a big thing going from here. So we have a really good comp in FX in Q1, but that is fading now with the strength of the dollar.

So with all that going on, look, I think that if we close, we're concentrating in getting product out the door as quick as we can. So will we change guidance at the end of Q1? I doubt it, but I think we'll give a lot of color on where we are in terms of backlog by business for sure.

Right. As far as these orders, I know last -- second half of last year, there was a bit of a push. How much of this is catch-up from that? And how much do you think is real demand?

Yes. I mean I think what we talked about last year was in retail refrigeration. That cost us about 2 points of organic growth last year that had pushed right. You saw that the orders inflected very positively in Q4. So -- but our customer base can't absorb more volume, right? Because these are big installs or shutting stores down.

So it's not as if we're going to pick up the lost volume for last year and add it to this year. It's just basically going to come out at the pace that we would have liked to have seen last year because we got to time it for installs and everything else. So you'll see it demonstrably in the backlog for sure, but it will be an odd year where bookings, which is usually a short-cycle business, bookings will be in backlog for in excess of a quarter in that particular business.

And coupled with that, we started and launched our CO2 platform about 18, 20 months ago. I mean that's tracking to be a $300 million business. So it's not -- we've resized the retail refrigeration to base business, will probably be sold out in that business. The real top end growth that we'll see is in CO2.

Right. So that's a pretty strong rate. So that should be comfortably above kind of the company organic average for this year?

Yes, it's going to be a big piece to driving the top line in 2026 for sure.

And then you also mentioned clean energy and fueling as being an above-average grower. What are you guys seeing there, the various moving parts there?

Yes. I mean the fueling solutions, so the traditional business, which is retail gas station equipment has inflected positively in the back half of last year for the first time in probably 4 years now that we've got by the EVs are taking over the world cycle.

We think that, that because of the underinvestment that we've seen in the previous 3 or 4 years, plus the fact that there's a lot of CapEx going into that space because profit margins in retail fueling have expanded significantly over that time period that, again, we think that, that's probably a 3-year cycle only because kind of like what I mentioned in refrigeration, there's only so much equipment that can be absorbed by the marketplace because you're doing big installs and you have to time it out and everything. So -- and we like it that way.

We'd rather have it over kind of a steady 3-year grower as opposed to kind of getting it all in 12 months. So we feel really good about that side of the business. The other side of the business, which is the cryogenic components grew very well last year.

We expect that to do the same again this year. That's more of a margin story now because that's where we're doing a lot of the footprint consolidation, and that is where a material portion of the $40 million rollover of productivity is going to end up. So we like that segment just because of the dynamics of the top line, but what we're really concentrating is getting that segment to 25% EBITDA margin.

So the Fueling Solutions, the kind of core ICE business, I think that makes a lot of sense is a bit of a recovery from deferred CapEx there. The growth drivers for the other business, kind of the CNG, I guess, a little bit of LNG in there, what's driving that business? And is there anything that stands out there that can sustain a high level of growth?

Well, I mean, it's just the general infrastructure build-out of the gas complex itself. So it's CNG, LNG, propane, everything. So we're levered towards gas, not only in this particular segment, but in Pumps & Process Solutions also. That's why we invest in it because we think that, that is durable for a decade minimum. So that's what's driving that.

Yes. Is there some sort of space exposure in there or something I've been hearing.

There is.

That I haven't really talked about.

Yes, right? Data centers and space, maybe we'll put that on the cover of our presentation. Yes, there is. Because the fuel that goes into a space launch is cryogenic fuel. So we're a SIKORA material supplier into that space.

And I mean, could that be another growth driver? Or is it just too small?

Yes. Yes. No, it's growing quite nicely. It's not the biggest business in the world before we get all hyped up about it, but it is going to be relatively material exit this year for sure.

So DCF seems like it could also be nicely above the organic average.

Yes. I mean the 2 segments that we talked about are right now, as we sit here, probably going to be the biggest contributors to the top line and in absolute profit for '26 over '25.

And how much runway on the -- just stepping back to retail refrigeration, sorry, but -- how much runway do you have on CO2? I mean is that -- that's a $300 million business now? Can that continue to grow like solid double digits? I know you had a big order there a year ago or so?

Yes. I mean we hope so. I mean adoption rates are accelerating. I mean we -- I don't want to get into the whole mandate versus non-mandate. I think at the end of the day, the technology has now been proven. It's got a higher first-in capital cost, but over time, it pays for itself over the traditional solutions, and that's known now.

The other issue, the hurdle was training all the techs to service CO2. We spent an enormous amount of money and time doing that over the last couple of years. And so that hurdle has now been crossed. So I don't think anybody is waiting around anymore for different states to legislate it. It's more if you're a big national grocery chain, you're moving to CO2. So the runway should be significant.

And then the other parts of, I guess, of this business, on the heat pump side, Europe seems to have some signs of life, but the U.S. really seems to be inflecting now for you guys there. The AHR Expo, your business leader there was much more positive. It seems like that one is turning the corner, SWEP?

You've got the Swedes to be positive. That's good.

Jumping out of the...

Look, heat pumps are up in double digits right now, but it's coming off of a low base. And the size of that business is more or less half of what it was at its peak in terms of demand. So your guess is as good as mine as how that tracks from here and where it ends up.

What's really driving the top line of the business is the data center side, which is up about 100% from where it was. I think that we were early in terms of the build-out of the capacity. It's largely a duopoly that we participate in. So we pretty much can sell everything that we can make at this point.

And then just lastly on Belvac. Any signs of life on the can equipment side of...

No, Belvac is not going to shrink, but we don't expect a lot of growth CapEx cycle when it comes, everybody will kick it off simultaneously. But right now, it's relatively light.

Okay. Just moving to the other businesses. What's -- in the Engineered Products side, I know it's kind of small now, vehicle service...

Vehicle services is doing okay. I mean it did a fantastic job in terms of margin despite having a down year in terms of top line, which is largely due to Europe because that's got a pretty material exposure to Europe and Europe right now for anything around the automotive complex even in service is tough.

The military business should do very well this year for all the reasons we can understand. So this segment should post some decent top line growth because of the fact that the -- that MPG should do relatively well.

So that -- that's kind of a company average organic for DEP?

Probably lower now that the average is 4% to 6% is in the guidance. I told you that the 2 are probably going to be at the top end there. So it'll probably be at the lower end if we can squeeze it. Again, that one has got FX in it. So we have to be careful about what our assumptions are from there. But -- and TWG and the winches is up because what we believe is happening on the pipeline side. We've got material exposure there to the pipeline layer business, and that is growing for the first time in half a decade.

Sorry, the 4% to 6% is that that's organic or that's all in?

That's organic.

Okay. I think you said 3% to 5% in the...

Okay. All right.

Okay. Sorry. I know you don't care about organic growth.

We're all-in growth and all-in absolute profit, but anyway, go ahead.

Yes. On DII, the portfolio there, I mean, things have been a little bit slower than they've been in the past. Obviously, you have the textile business that's been tough, but any signs of life on that front or just pretty steady as she goes, low single-digit type growth?

Yes. I mean, did a fabulous job in the margin. We have been lapping that decline in the textile business that is 1/4 of the size that it was at its peak. That's largely -- we've lapped that now. We would expect that business to grow 3% to 4% depending on FX.

So kind of the low end of the organic range.

Yes.

What do you need to see that pick up? And how much of a drag was textile, like a point or 2 or...

I'd have to go back and look for '25, to be honest with you, Steve. I don't know what it would have been last year, probably 1 point at maximum.

Look, that business just got the way it grows. If you want to goose the numbers, you'd have to have build-out in consumer goods, basically new plants and new lines, and that generally doesn't happen too much. And then you could do it through pricing at the end of the day. How long you could get away with that remains to be seen.

I think that we basically take about 1.5 points of price every year and the balance and what you see intra-year about the movement, if we take FX out of it is when you have printer sales, volume goes up, then margin comes down a little bit. And when you have a bigger mix towards consumables, then volume is lower, but your margin goes up. And that's the way it's been for as long as I've run the company.

Right. But there's no real uptick in equipment sales because food and beverage, consumer good CapEx is kind of stable. So that's kind of what...

Yes. Yes. I mean at the end of the day, it's all volume, and we're levered towards consumer goods, a lot of which is food. So it generally just kind of runs.

Okay. On the pumps and process business, maybe like a bit of a swing factor here. What are the -- what's the outlook for the kind of different parts of this segment?

Had a great year last year. So it was clearly the biggest contributor to the top line and absolute profit and profit margin. So we had the return of biopharma, which was great. That has held in and continues to hold in. So the comps -- you're coming off a low base, so the comps are going to look a little bit funny this year, but in terms of just the absolute growth rate and the absolute contribution of profit, that looks in good shape.

Industrial right now is up, but it's up -- it's slow right now. We'll see what happens with that over the balance of the year. Precision Components is doing really well. So kind of mid-single digits grower last year. Expect that the same this year. That's compressor and turbine component part demand. That has Maag in it. Maag was slow last year.

Maag is going to be flat this year. SIKORA continues to do well. So that's kind of what basically masked the decline in Maag last year was the outperformance of SIKORA last year. So the acquisition was well timed.

Back to DPC, that's the area where we think we've got the opportunity to inflect positive in the back half of the year. We've been doing really well on the turbine side. So we supply the who's who's making these gas turbines.

These are the compressor component compression in that business?

No, these are the Vernova and the Siemens of the world and everybody else on the gas turbines. What we haven't seen is on the compression side, and that's the part that's more levered towards the distribution of gas, which is on pipeline build-out. And what we've seen from the MLPs in terms of CapEx, it's moving up quite a bit. So you've got to deliver gas to all these turbines that are being installed.

So we don't have it right now in our forecast, but we're we believe that we should see a material inflection in terms of demand in the back half of this year as that investment catches up.

So you effectively have kind of Maag stabilized. So that's not growing, but it's not getting worse. You've got the data center stuff continuing to grow pretty strong here. And then you've got this inflection on the compression side going along with power gen. I would think DPPS could be an above average -- above segment -- above company average grower there. Is SIKORA growing above the company average?

Well above-ish.

When does that go organic third quarter, fourth quarter?

June, you have to ask Jack. I think it's June.

Okay. So that should -- I mean, that should be an accelerator into the second half of the year for the segment?

Yes. Look, whether it's acquired growth or organic growth, it doesn't matter to me. But yes, it's -- yes, I mean it's adding -- I think it was adding an exit a couple of points to top line growth. M&A was last year and probably will until we lap it in June.

Right. But then SIKORA comes in and it's accretive to growth at that stage of the game, organic growth. So...

Yes. Yes.

Yes. So I don't really see a lot in these businesses that's like -- there's a decent amount that could be above the high end of the range and not too many that are going to be below the low end of the range on an organic basis.

And second half should be pretty good as an exit rate into next year. Is that the right construct if we're going to get a little bullish here?

Yes. Look, at the end of the day, it's going to be orders, right? And so we're pretty close to having exit, which we covered in terms of what we think book-to-bill is going to look like at the end of Q1. How that builds and ramps through Q2? You know how we do this at the end of the day. It's -- we build a lot of capacity, so we don't generate a lot of cash in Q1 as we ramp up production. We sell it in Q2 and Q3. And then depending on the order book, we'll make decisions about what we're going to do into Q4.

But right now, structural growth across the portfolio looks pretty good. There's a variety of reasons behind it just because of the complexity of it. But yes, but it's not as if we're pointing to the piece of the portfolio and say that's going to be a problem.

Invariably, somebody is going to overperform and somebody is going to underperform. But on average, we feel good about what we put out there for organic growth which benchmarks very well versus our peer set in terms of EPS growth, where I think we're probably top quartile.

So from a margin perspective, you mentioned DCEF, you talked about 25% EBITDA. I think at DPPS, it's always kind of that 30% marker. That should be pretty stable. Maag not growing very much is probably neutral from a mix perspective. So that business should continue to do pretty well, right? No risk on margins in DPPS?

Yes, I wouldn't worry. I mean I think we exited above 30%. I think at certain points last year, we're at 29% and change. It's all mix affected at the end of the day. 30% on average is probably a good number...

But Maag really seems to be the downside over.

Yes, Maag would be, but DPC coming in, DPC is probably in the mid-20s. And if that inflects positively, it may have a little bit of -- bring it down a little bit, but we're not talking bringing it down materially.

Okay. And then you're stable at DII, I would assume DEP...

Stable at DII, DEP...

DEP for margins?

Our margins were up on down revenue last year. I think we've got to be careful there. I think if we can hold margins there and grow the top line, I think we'd be in good shape. Where we're looking for the margin is in clean energy. I think we discussed because that's got some of the roll-forward benefit and it's got volume leverage, which we should start seeing as we ramp. And we'll see what we can -- SWEP should ramp in terms of margin. And let's see what we get out of Refrigeration. I mean God is my witness we're going to get to 20%.

20% is possible?

Yes, 20% is possible?

20% EBITDA possible in...

[ 20% ] EBIT possible. We've done EBITDA. We've done EBIT in quarters. It's possible to get that business to 20%.

In like 18 months this year, 2 years? Is that got a long.

Next year, if everything holds in.

Okay. That's pretty good.

Yes.

So when we think about the leverage this year, you're guiding to what you're guiding to with the cost savings from restructuring, your incremental on this growth seems relatively modest. Should we think about it that way? It sounds like there's enough positive drivers that with the restructuring that the incremental this year should be decently above trend.

We're going to finish talking up the revenue now to talk up the incremental margin on top of that. All right. Look...

I believe you said Miami at a competitor -- I don't know what competitor conference down there.

I don't go any competitor conferences, Steve, just yours. 35% is the number we can hold, right? And that gives me a little bit of room in terms of mix and assumes that every year, we've got roll forward restructuring savings, which I think that we should have next year again.

So yes, I mean, 25%, as I commented before publicly, I think 25% is not realistic anymore. I think that 35% is pretty much the target. Now we did well over that last year just because we had significant tailwind on mix and restructuring, but 35% is still a good number in terms of incremental.

Okay. Anything on the recent move in raw materials that we have to be aware of? And I think you guys guided to 1.5% to 2% of price with the inflation. Should we think about that trending more towards 2%.

Yes, look, we're futzing around with copper, and copper is kind of all hung up with the macro right now. I think that we're well positioned on steel and stainless steel. But on copper, I think we've got enough pricing power over time, we can deal with that.

Okay. And the 1.5% to 2%, should that be more like 2% given this incremental inflation?

I don't know, right? Because we just got -- I mean, between the business mix and the mix within the businesses, I think that 1.5% to 2% is probably a solid number. I don't want to talk that up.

Okay. Any questions on the business fundamentals out there that anyone has? I mean it seems to. Here we go. Go ahead. Just say it, I'll talk about it.

[indiscernible].

Well, I mean, I heard the question.

Okay. Great.

Yes. I mean, look, we could -- you could drill yourself in a hole here if you really wanted to. All I can do is react to what we see from the data and the conversations with our customers. Frankly, it looks like if it gets worse, it's more of an issue for Europe than it is for North America and our waiting in terms of of business mix and where we see the growth coming this year naturally just because the GDP alone is more North America focused.

I think that we tend to kind of forget that the changes in the tax law on bonus depreciation took a while to kind of work its way through the system, but there is a pretty good incentive out there for doing CapEx right now. Higher energy pricing globally, does that spur additional CapEx into the energy complex this year? Look, that's not for Dover to answer. That's more for the energy guys to answer, but -- and that generally has a long tail.

So look, could some shoot drop? Sure, it could. But you know what, we made it through COVID and we made it through tariff tantrum and we made it -- I mean, if you go back and look at our performance during those periods, we tend to do well. And you know what? And if it gets bad for whatever reason, our balance sheet is better than anybody.

So a dislocation in the market, we can take advantage of either from a capital return point of view or from an M&A point of view. So I'm not -- I can't prognosticate about something that may happen. I can only just go by the data on the ground that we see.

And you guys certainly aren't the most global company I cover. So the Middle East exposure, obviously, directly is probably pretty good.

Yes, it's manageable.

Yes, yes. That's a good segue to the balance sheet. You guys have -- are kind of -- every year, you seem to have a big war chest. You're adding here and there, but you're also buying back a decent amount of stock. How would you -- what would you place the odds on today between M&A as we move through the year, M&A and buyback as we're getting towards the midpoint of the year?

Yes. I mean the biggest mistake I made last year was buying $0.5 billion, I should have bought $1 billion, I mean, in retrospect. But at the time, we were looking at the M&A pipeline and kind of keeping our powder dry. So we move into this year, I think what I said during the conference call, the full year based on transaction multiples that we were probably biased towards capital return in '26 more than usual. So it's usually a 70-30 split, so 70% biased towards M&A and 30% towards capital return.

In late January, I think that we said our bias was 50-50. I think that's fair to say it's the same right now. The bad news is, again, that multiples are high. The good news is that because multiples are high, there are a lot more assets coming to market because everybody sees the multiples they're trading at. So your guess is as good as mine as were multiples high because of the paucity of assets and multiples come down when more assets come. Hard to say. I guess we'll see.

But I guess the good news is more assets are coming. So there's more opportunities to kick the tires on things that come. Generally speaking, I'd say that more than half of the M&A that we do is not assets brought to market that we get them ourselves. So we do have some opportunities that we've been working on in that regard. And we're looking at kind of some of the assets that are largely coming out of PE, we're looking at them. So we'll see what the prevailing multiples are for those assets when they come.

Are you wed to deals that bolt on to the current platforms? Or are there opportunities we had Dave Cody here yesterday from GP, GI, and their whole business model is basically providing kind of a permanent capital home for some of these businesses that are coming out of private equity and maybe the private equity guys feel a little bit more of an urgency to sell these days. Are you seeing some assets come out that would be attractive, not necessarily within one of your platforms today that you would move on as a new platform if the price was right?

Yes. I mean if it's not an adjacency, then it's very hard -- execution -- it's easy to spend the money. Execution risk is real, right? You need to know how to run the businesses. And I don't want to get on a soapbox of -- we went through this whole period of every industrial company becoming a software company as if you can just know how to run software companies. I mean I think that was a pretty far punt forget valuations at the time. So near adjacencies we'll look at.

SIKORA, we don't -- we're not in test and inspection in any meaningful way. But because it was an adjacency to a position that we had where we knew the customer base, then we said this is a move that we can make. It's the same thing when we got into cryogenic components. We knew the end customer.

So we had kind of a right to play and a lot of that is through distribution, and we know how to run distribution businesses. So there's checkmarks. So we're not an asset collector. We see things from time to time that kind of be nice to have because you think you can turn them around, but I don't know. I don't think anybody wants to see our portfolio get more complex than it is.

One would argue that it trades at a discount because of the complexity of the portfolio that we haven't been able to overcome. So I don't think we'd go the other way and make it more complex at this point.

Right. I think that makes sense. And are you seeing -- just as a follow-up, are you seeing a bit more urgency from private equity? Or are they still.

I said what I said before. I mean, look, I've been hearing private equity has got to monetize for 4 years now. But interest rates are heading the right way and multiples are heading the right way. So if you're not going to bring it now, when are you going to bring it?

Right, right. The last question I have is on this buyback. Have you thought about doing it in a more programmatic way because you tend to be unique in that you kind of like get to the end of the year, and then it's like a $500 million sudden ASR that you've done. Have you thought about maybe a little more programmatic? you just like having that optionality?

Yes. I mean we've thought about it for sure. I mean programmatic becomes a little bit funny because then everybody just models it in that you're going to do it every year. And then you do some M&A and you don't and then you kind of get all twisted up and it takes away the opportunistic nature of if you think that your equity is dislocated from a valuation point of view that you can act meaningfully as opposed to averaging it over time.

So yes, I mean, we discuss it every year about kind of what the stance is going to be. I think that -- I think we've proven when we've acted meaningfully, I think we're 100% in the money.

Okay. Well, I think as an editorial, you could at least raise the low end of the range by like a nickel. I think that would be differentiated when you guys report. So...

Thanks for that. I'll keep that in mind, Steve.

Everybody feels the same way in the room, too, just like...

Yes. I'm shocked.

If you could feel the energy here, you'd be blown away.

Well, you only get rewarded for beating and raising now. I mean that's the new mantra like give out terrible guidance and then just knock it up every quarter. But not us, we give you what we think. We'll see when we get to the end of the quarter though, depending on order rates.

We could talk for about 3 hours on this.

Yes. I'm sure, we could.

But we're out of time. Rich, thanks for making the effort on Zoom. We appreciate it.

Yes. Sorry for not being there, Steve.

No, understand.

See you soon.

See you.

All right. Bye.

Great. Well, thanks, everyone, for being here. It's my pleasure to have up next Rich Tobin, Chairman, President and CEO of Dover Corporation. .

So Rich, I think one thing that's sort of exercising a lot of people's minds right now is health of the U.S. industrial economy, a lot of optimism. Last year seemed to end strong. PMIs were good 2 to 3 weeks ago. What are kind of your perspectives? You've got a very broad portfolio touching a lot of different parts of the U.S. industrial economy.

Sure. It feels eerily similar than it did this time last year. I thought the setup was good going into '25 until we ran into tariff tumults in February and it kind of upset the apple cart. So the difference going into '26 than this time last year was interest rates are even lower than they were. So we were kind of betting on the come a year ago. But more importantly, we have seen an acceleration in orders leading into '26 that we did not have last year at this time. So we were kind of betting on the come of what we thought the economic environment was going to be in '25 and '26, we actually have hard data points that, generally speaking, in a normal year, we wouldn't have, right?

We're fundamentally mostly a short-cycle business. So in any given year, we would expect to see orders accelerate in Q1 for deliveries in Q2 and Q3. We actually had a lot of orders coming in Q4. So we go in kind of a credit position from a backlog point of view that makes us feel good for the setup for the year.

I realize it varies by product type and industry, but are there any kind of common threads when you talk to customers? Was it just a relief that tariffs were calming down? Was that a very big part of it.

Yes. I mean I think that we lost basically February to September last year with everybody dealing with not only the absolute economic impact from the tariffs, but the fear of the long tail of the tariffs. I mean -- so we just lost a lot of time and then we got a little bit of a squeeze into the end of the year. Generally speaking, we're a CapEx levered portfolio. And so you don't really see a lot of CapEx get kicked off in Q4, right?

Just like any corporate, you've got a budget, you get what you can do, you close up a lot of projects and then you roll them into the next year. So I think it was just a matter of a lot of lost time last year as everybody absorbed what the fear around the tariffs were, which generally knock wood didn't manifest itself into a lot of big problems. It just was -- made the water a little bit muddy.

Got it. And when you look across the various operating segments, which ones you kind of -- I think you're guiding for all of them to grow this year, which -- to pick 1 or 2 where you're most or least confident of that growth this year?

The 2 segments that should contribute the most top line growth and the absolute profit growth will be in clean energy, and we can discuss the components of that, and it will be in climate and sustainability. On the clean energy side, we've transformed that segment being what traditionally been the Fueling Solutions portfolio. We basically doubled the size of that business by doing a lot of M&A around the gas complex and cryogenic components. So half of the revenue -- I mean, we went through a period, I was just saying upstairs.

I remember being here in 2001 when ICE was uninvestable, right? EVs were taken over the world. Every auto OEM was going to build a battery plant. So get out of any exposure to ICE while the worms turned a little bit here. And the good news is because it was almost an uninvestable end market for a period of time, the deferment of CapEx is built up into the system. So not only has -- is there a requirement for refurbishment of the installed base, everybody woke up and discovered that profit margins on gasoline that Costco has proven has been pretty lucrative.

So there's a lot of -- in retail world, there's a lot of the adoption of that particular model. So we would think that we're likely going to go into a 3-year up cycle on fueling solutions. And that's a pretty profitable business for us. On the cryogenic components portion of the portfolio, that's more of a secular play. So it's -- we've made a relatively large bet on the gas complex. So LNG, all the way to propane, I don't need to tell anybody here about the amount of money that's going in and building up those positions.

So we feel really good about that. We've done a lot of restructuring there. So either -- in any given year, we have a lot of roll forward kind of non-revenue benefit of rollover of us working on the portfolio. We'll be complete with that. We did 9 acquisitions, I think, or 9 factories in cryogenic components, we're shrinking down to 4. We'll be complete with that footprint consolidation at midyear this year. So a good portion of our roll-forward restructuring benefit will manifest itself there. If I skip all the way to the other end of the portfolio in climate and sustainability, we've got the brazed plate heat exchanger business. I'm not going to pound away. It's got data center exposure. I think that we've invested in capacity expansion despite the rundown after the big heat pump wave, we continue to invest in capacity, and that's been proven to be the right decision.

So we're looking at between the heat pump market coming back somewhat and the adoption of brazed plate heat exchangers into district heating and into data centers, we're looking for some really good growth there. And on the refrigeration business. We've got 2 businesses in there now. So there's the traditional retail refrigeration units. I talked about it a lot last year. The retail customer was the one that bore the brunt of tariffs last year. So a lot of CapEx was deferred in '25. That's why we basically were saying in Q4, we're going to post a big number, and we saw the backlog. It just slid to the right.

Well, that has continued through Q4, and we expect to grow quite a bit on the retail refrigeration side going into '26. And we transferred a product a couple of years ago for CO2 kind of top of the source systems business. We brought that technology from Europe a couple of years ago. We've gone from 0 to over $300 million of revenue in that particular business over the last 18 months.

Perfect. And then maybe which of the segments you're most worried about if it was Engineered Products, there's some -- you had the vehicle aftermarket was tough.

Yes. I mean I think that vehicle aftermarket, I don't think it's going to shrink again this year, but it's levered towards Europe and Europe is -- it's hard to make an argument for retail demand in Europe right now or anything around the automotive complex in Europe is going through some tough times. But I don't think it's going to be nearly the headwind that we absorbed last year.

Other than that, I don't -- we don't have a business that we're projecting to cycle down, meaning coming off of doing really well through a 2- or 3-year period and coming off. We don't -- there's not a business in the balance of the portfolio that we see it that way.

Great. And I think one other feature has been -- a lot of companies have been talking about is the cost inflation environment. And you mentioned tariffs a few minutes ago. Do you see any signs of kind of price fatigue among customers or it's just harder to push up price because of what's already happened the last 5 years?

If you go look at our price/cost metrics over the last year, I think that we've been in a credit position, but we have not been a big price taker during this inflationary period. About 65% of our portfolio is subcomponents. So it's an industrial -- it's a B2B sale rather than a retail sale and the retail is where it's taken the brunt of the price increases. So I think that we're in pretty good shape. I think it's healthy that this is probably the first year in 3 where we would expect unit volume to be the driver of revenue growth rather than dominated by price.

And when you think about sort of operating margins, I think you're starting out the year pretty muted on expansion. They were up a lot last year, guided to be up this year. So maybe help us understand kind of why the slowish start and sort of what drives that improvement in margins the rest of the year?

Yes. I mean we -- our incremental margins over the previous 36 months despite having, I think, 1% top line growth have been pretty healthy. And a lot of that has been the restructuring roll forward that we've done in the past. And I think that we had a really healthy mix of revenue last year with biopharma and thermal components and those parts of the portfolio being disproportionate in driving the top line.

This particular year, the growth is more widespread across the portfolio. So we would expect incremental margin to come down a little bit. Margin of the total portfolio will move up, but less so driven by mix. Having said that, it's early days. So we'll see. So if you take our EPS guidance and you back out kind of the restructuring roll-forward savings and you do the math, the incremental margin on the additional revenue is -- it's good, but it's modest. Let's see how we do. I mean, predicting fixed cost absorption into the future is a little hard just with the variety of products that we make, but potentially, we have some upside there.

And you've done a lot of heavy lifting, as you said, and there's some roll forward cost out this year. As you go through the year, should we expect a sort of a refresh of that trying to get all the businesses kind of into the 20s-plus margin range?

Yes. I think what's different is because we get over the years of doing this of how many years can you take out those kinds of synergy benefits across the portfolio. I mean, understandably, in the early stages, it was cleaning up the legacy Dover portfolio. So a lot of what we did in terms of back-office consolidation and amount of footprint.

This past year was very much less on the legacy portfolio and very much on M&A, right? So when we do M&A, I mean, we don't -- we expect to extract synergies out of those targets. And like I said, I mean, in the cryogenic components, we knew we were buying a lot of small companies. We generally leave them alone for the first year because we don't want to break what we bought, and we want to manage the customer relationship and everything.

But in the background, we're working on do we need -- can we do something with the footprint, and we did quite a bit. So in the roll forward this year, 50% of the roll-forward is from prior period M&A. And so we always have that opportunity to the extent that we're doing M&A going forward here of extracting the synergy benefit that's baked into those deals.

Got it. And you mentioned data center a little bit earlier, sort of obligatory now to mention it. But maybe remind us the 2 or 3 major product exposures there, how large the data center exposure sort of Dover wide will be this year?

Yes. I mean the primary exposures that we have is in thermal connectors, which is basically bringing the water to the chip and in brazed plate heat exchangers, which are both at the CDU and in the general infrastructure of the building itself. They're both doing quite well. We expect both to grow going this year. But in the grand scheme of things, we're not an overly material supplier into the infrastructure. So I'm not the one to -- if you want to talk about how long the cycle lasts and that you're going to have to ask somebody else.

We find it very attractive. We've also got minor products that we ship into it because the infrastructure itself, and we're talking about billions and billions of dollars there. And I think we'll be opportunistic. But in terms of M&A, I'd find it highly doubtful that we'll participate in that purchase price multiples are kind of prohibitive.

Got it. And that's an area where there is a lot of capacity being added by you and your peers there. Is pricing still okay there? Or you just see such a wave of capacity?

I mean, we tend to our businesses occupy niche TAMs at the end of the day. So there's not -- the TAM is not big enough to attract a lot of competitors. The bigger the TAM, the more opportunity is for everybody. So by and large, what we're occupying right now fits that description. And so [ knock wood ], right now, pricing is pretty stable and everything else. But we're very cognizant about commoditization.

We've lived that before with your China exposure. And so I think that we're careful about it. But at the end of the day, a CapEx expansion for us, we're not betting the balance sheet. I mean these are projects that are $20 million, $30 million. They're not $1.5 billion, $2 billion. I mean that's the beauty of the business model. We can take hundreds and hundreds of small calculated bets as opposed to 5 massive kind of binary bets in the portfolio, and that's turned out to work okay so far.

And you mentioned cyclicality just now. heat pumps have been growing very well, then a soft patch. What kind of recovery do you think we could see there in SWEP, for example, in that part of their business?

Well, look, I mean, I would turn to the actual manufacturers, the heat pumps that are all basically calling the market up. I mean it's -- we're not going to return to the growth rates that we saw back in '22 and '23. I mean, look, regulated markets are markets that are incentivized through legislation. The beauty of it is when it's legislated, the volume is there. The bad part about it is the legislation change and it's not there. I mean there's no way that you cannot participate as the market is going up because you don't want to lose market share and nobody is clairvoyant enough to know when the market is going down.

So to me, you take the profit margin while it's there. And hopefully, to your earlier point, you don't overcapacitize yourself and/or do badly timed M&A during those cycles. But overall, it is a known product that delivers efficiency. It's probably not going to require the level of subsidization that it did in the past. And that's a good thing because then you just get stable growth over time as opposed to these flopping around when different countries are incentivizing the product line.

And then within DEP, kind of what's the priorities there? Kind of help us understand how you're thinking about through cycle growth for that business. There's been a lot of portfolio surgery done inside it since you became CEO.

Yes. I mean, arguably, if you care about sum of parts that it was arguably the lowest -- it was the more capital goods exposed portion of the portfolio. I mean it's down into the low teens in terms of the size of it in our portfolio now. So it's the biggest change that we've seen. I think that we made some well-timed exits out of the portfolio.

And we did that, I think that people don't understand is that if we didn't think that those businesses that we monetized were strategically going to come under pressure into the future, we wouldn't have monetized them. We got the right price for it because they're old assets in the portfolio, so the tax leakage is pretty high. So we need it at a pretty good multiple. But the reason that we monetize them is that looking over the horizon, we thought that in the future, we would have a difficult time protecting the probability, as opposed to, hey, you know what everybody thinks that, that's a low-value portion of the portfolio. So if you sell it, then magically your multiple is going to go up. We don't think like that.

We do everything -- we manage this portfolio on projected ROIC of the individual company, and then we look at the strategic positioning from both a product point of view and from a competitive point of view and whether we're advantaged or disadvantaged. That's the screen, not magic of sell your low-margin businesses because magically your multiple is going to go up. And we can -- we have businesses in our portfolio that are lower than consolidated margin, but the cash flow dynamic of those businesses, the ROIC is superior to what pieces of the portfolio that optically you would look at and say, well, that's worth a lot because the margin is high. I mean margin is great, but it's not -- it's a piece of ROIC, it's not all of it.

And when you look at that portfolio today, I mean, do you think you've kind of taken out most of what you wanted to with what you're assuming about kind of future growth and kind of structural changes?

Yes. I mean there may be some little minor pieces. But right now, we don't think that anything is structurally impaired from a product replacement point of view or from a market structure point of view. So it doesn't mean we'll double down and invest across the portfolio evenly, and we haven't. So if you look at our disclosures every quarter, we tell you where we're investing and why we're investing there. And I think that our track record, we have been investing in the higher growth, higher margin potential portions of the portfolio as opposed to pieces of the legacy portfolio.

And on that latter point on investments, it's a mix of organic and inorganic. I think inorganically, the M&A market for the types of deals that you look for has been pretty quiet for some years. Any sign of that kind of improving now? And if it doesn't, will you -- is it sort of tempting to step on the accelerator anyway?

No, I think that we've demonstrated in a lot of patience sitting on $1.5 billion of liquidity for 18 months. Look, in 2025, there was -- if you look at the M&A markets in total, you would say you read the paper and it's a record year, but the deals that were there were very large. There were corporate breakups and very -- dominated by very large deals. The middle market where we participate, there was very few.

Some deals came in '25. Unfortunately, the multiple on those deals was quite high. And we'll see if that's just because of scarcity value or have multiples just moved up again. I think it's too early to tell because the amount of deals that are done have been relatively low. But we go into a -- we go into '26 where the deals that were done in '25 went off at high multiples, discount rates are projected to come down more. Equity markets are up for the most part.

So the setup for -- if you're going to bring something to market in '26, it's green light. So the question is now what are prevailing multiples going to be. The early signal is they're going to be kind of high. But maybe with more deals coming, that will put some top line pressure on multiples paid, but it's February 16. So we'll see it over the next 180 days or so.

And the point would be if the prices for various reasons, stay high, probably stay patient and then a buyback towards the end of the year.

Yes. I mean, look, at the end of the day, you have to have the discipline of -- you can't get caught up in it. Well, we saw that movie in 2001 and 2002, right? I mean there's a lot of deals that prices were frothy and fear of missing out and all that stuff. And at the end of the day, capital return is always an option for us. And more than -- if that's -- if the economics say that that's the trade, then it's not as if we're going to -- even with the deals that we've done over the last -- we've financed the deals that we've done over the last 18 months with the disposals that we made. So our cash position and our liquidity position has actually improved by all of the cash flow that we generated last year. So that can't go on forever.

One business we haven't touched on yet really is pumps and process, extremely high margins. It's an area you presumably want to do M&A. It's one of those focus areas. Do you think there's a lot of margin runway left there? Or it's more just a question of mix?

I think it's more mix than kind of -- I mean we're north of 30% now. We'll take 30% all day long and just grow the top line as quickly as we can. I mean, if we were to do M&A in there, the likelihood it would probably be dilutive, I would imagine, because assets that generate margins north of 30% don't come available very often. And when they do, they're very expensive. So value creation is kind of tight, but we like the end markets.

There's a lot that we have in that particular portfolio, everything from biopharma to industrial pumps to polymer processing to components that go into turbine manufacturing. So I think that it's not like we have to go find a pump company that's accretive to the margin. That puts you in a little bit of a tight spot.

And so overall, I suppose, with a lot of the divestments having been made, when we're thinking about that kind of longer-term algorithm for Dover earnings growth, do you feel you're in a good spot now with the portfolio to get 4% to 6% organic annually? And then incremental margins, I guess, you had the old goal now a sort of 40s number, I suppose, seems the right...

40 is a bit rich and incremental. Again, I'd like to, Julian, but that one, we'll see.

Okay.

Yes. I mean we like the portfolio as it is. I mean we like to setup. We like the size of the company, right, that we have a highly cash-generative portion of the legacy portfolio that basically feeds our endeavors for CapEx and M&A on where we would like to grow into. So barring somebody coming in with a knockout offer to monetize a piece of the legacy, then we're more -- as long as it's not strategically impaired, we like that algorithm. I don't think there's an argument to make it -- to break the company and make it smaller.

I mean, I get it that it's all the rage now of deconsolidation and everything else. Okay, if you're a market cap of $100 billion up, that works. Go look at [ SpinCos ] at market caps sub $30 billion, $20 billion. It just -- you cannot become irrelevant from a balance sheet point of view. It becomes -- you put yourself in a very difficult position.

Good. Well, on that note, I think we'll switch now to audience response survey questions, please. So the first one is around do you currently own shares in Dover. So about 60% more opportunity there. Second question is around kind of general bias to the stock today. So slightly positive. Third question is around kind of EPS growth for Dover versus the kind of multi-industry average through cycle. It's about in line with the group.

Next question is around excess cash usage. So the usual sort of spread, but kind of 50s percentage for M&A. The next question is around the valuation that Dover should trade at on kind of 2026 PE. So about 20 -- 19, 20 times...

I will pick 5, sure. Okay.

Yes, that's a good result. And then the last question is around kind of what's the main headwind on the stock right now or anchor on the valuation multiple. With that uplifting note, thanks very much, Rich, for being here again. Thank you.

All right. Good to see you. Thank you.

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 Woenker, Senior Vice President and Chief Financial Officer; and Jack Dickens, Vice President, Investor Relations.

[Operator Instructions]. 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 19, 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 3. 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 5% in the quarter, the highest level of the year. Revenue performance for the quarter was driven by robust trends in 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 is dominated by proprietary opportunities.

Additionally, we initiated a $500 million accelerated share 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 5. Engineered Products revenue was down in the quarter on lower volumes in 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, 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 organically in the quarter-on-quarter growth in our core Marketing and Coating business and in serialization software. EBITDA margin performance remains very good in the segment at 28% the foreign currency translation and a higher mix of printer shipments 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.

SIKORA, 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 & Process Solutions 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 is -- which was expected based on the Q3 booking exit rate.

Demand for brazed 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 mix benefits from secular growth exposed 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. I'll pass it to Chris here.

Thanks, Rich. Let's go to our cash flow statement on Slide 6. Free cash flow in the fourth quarter was $487 million or 23% of revenue. The fourth quarter was our highest cash flow quarter of the year, in line with historical trends. We are encouraged by Dover's full year free cash flow result in 2025, which came in at 14% of revenue, an increase of nearly $200 million over the prior year.

This increase was driven by improved cash conversion on higher year-over-year earnings, which more than offset expected increases in capital spend on growth and productivity projects. Our guidance for 2026 free cash flow is 14% to 16% of revenue as we expect continued strong conversion of operating cash flow.

With that, let me turn it back to Rich.

Okay. I'm on Slide 7. Full year bookings were up 6% in 2025 after growing 7% in 2024. Q4 consolidated bookings were up over 10% over the prior year and a seasonally high book-to-bill above 1, continued the trend of bookings momentum we experienced in the last 2 years. All 5 segments posted bookings growth in the fourth quarter, signaling broad-based demand strength for 2026.

On Slide 8, we highlight the capital allocation results from 2025 with our priorities. Our highest priority for capital spending is organic investment, which has proven to drive the highest returns on investment. We stepped up capital spending by over $50 million in 2025 over the prior year with a healthy balance between growth capacity expansions behind some of our highest priority platforms as well as productivity and automation investments including some rooftop consolidations.

In total, we expect about $40 million of carryover profit from the previously announced productivity actions in 2026. Our next priority is growth through acquisitions in 2025. We deployed $700 million across 4 strategic acquisitions in high-end growth markets, 3 of which are in our highest priority Pumps and Process Solutions segment. These acquisitions are off to a tremendous start as we work to extract synergies through our center-led capabilities and leverage our global scale, channels and supply chains.

Finally, in 2025, we announced over $0.5 billion of share repurchases, including the accelerated repurchase program enacted in November. With robust cash flow generated in 2025, our dry powder in 2026 remains almost identical to the starting position from the previous year as we have self-funded our CapEx, M&A and share repurchases in 2025. We are in an advantaged position, and I would expect that we will be active in 2026.

Let's go to Slide 9. Engineered Products is expected to improve in 2026. Our Aerospace and Defense components business continue to experience significant demand tied to electronic warfare and signal intelligence solutions vehicle aftermarket, which declined by double digits organically in 2025 has shown some signs of moderating demand with constructive booking trends late in '25 and early '26 with the divestitures of the [indiscernible] Environmental Solutions Groups in 2024 and the growth of other segments of the portfolio, our Engineered Products segment now accounts for less than 15% of our total portfolio.

The outlook of Clean Energy and Fueling remains solid across most of the businesses. North American retail fueling is in the early innings of what we believe to be a new CapEx cycle and the outlook in fluid transport and clean energy components is strong with particularly robust demand in cryogenic applications. We expect the headwinds from the vehicle wash equipment and software to improve the headwinds in '25 to improve in '26.

Clean Energy and Fueling should be among the leaders in margin accretion in 2026 on volume leverage and integration benefits from Clean Energy acquisitions. Imaging and ID should continue its long-term steady growth trajectory given its significant reoccurring revenue base and solid underlying demand. We are encouraged by the recent uptick in printer shipments, building the global installed base for continued long-term reoccurring revenue attachment.

We expect demand conditions to remain constructive in Pumps and Process solutions in 2026. The outlook for Artificial Intelligence and Energy Infrastructure is robust, including thermal connectors for liquid cooling of data centers, precision components for natural gas infrastructure and in SIKORA's inspection equipment for high-voltage wire and cables.

Demand for single-use biopharma components remain solid, driven by production growth in blockbuster drugs and the ongoing shift to single-use manufacturing methods. As noted, we had a tough comp in the quarter in the first quarter in biopharma due to heavy restocking in early 2025, but overall, the Q4 exit run rate for the business should hold true for 2026.

Finally, climate sustainability technology should sustain its fourth quarter exit rate into 2026. CO2 refrigeration systems are expected to continue at a double-digit growth clip. We expect the recovery in refrigerated door cases and engineering services to continue with national retailers signaling the intent to resume maintenance and replacement upgrade spending follow-up -- following a period of tariff-related delays.

We are experiencing robust demand across all geographies for brazed plate heat exchangers with noteworthy growth in North America tied to liquid cooling of data centers where we were booked well beyond Q1.

Finally, let's go to Slide 10. Full year guidance is on the left, we'd expect seasonality in 2026 to be similar to the last few years with Q1 volume slowly ramping into peak product delivery periods in the second and third quarters. With the fourth quarter representing an early indication of next year's outlook. We are encouraged by the momentum in our top line performance, which marks an improvement over several years of organic growth belong our long-term standard, notably, even during that period of moderated top-line growth, our business model showed its strength as we successfully expanded profitability through disciplined cost management strong margin conversion and value-creating capital deployment.

The setup for 2026 is constructive. We anticipate solid volume leverage on incremental revenue as well as carryover benefits from prior period restructuring efforts and accretion from M&A. We are continuing our long term -- we are committed to continuing our long-term double-digit EPS growth trajectory into '26.

Finally, I'd like to thank our global teams for efforts to deliver these last year's results, and we look forward to serving our customers, partners and investors in the year ahead. And with that, Jack, let's go to Q&A.

[Operator Instructions] We'll take our first question from Steve Tusa with JPMorgan.

Price cost. What are we looking at this year? I know you guys buy a bit of steel. So how are you thinking about managing the raws?

Yes. I mean, I think right now, we should be doing what we've done every year, probably like 1%, 1.5% over. Now clearly, we're looking into commodity costs moving up going into the year. We can talk about incremental margin and what that means. So whether we've got to go back to the well or not, we'll see based on the trajectory.

Okay. So as of now, how much price you're embedding in the guide?

1.5% to 2%.

Okay. And then just 1 more question for you. You were pretty positive over the course of the quarter in your commentary. Anything you've seen in the last month or so or 2 months that would change that positive view and tone on just the general economy and business?

No. I mean, look, we were looking for the best organic growth quarter for the year, and we got it. We got the margin accretion that we looked for, considering kind of a little bit of the mix differential that we had in Q4 versus the previous couple of quarters and book-to-bill is over 1. So to me, I think that we hit the 3 kind of data points that we were looking for going into '26.

Our backlogs are good. Production performance should be pretty good in Q1. I think we got to don't get a little excited about production performance delivery because I think we'll really ramp the seasonality will be the same as usual. But overall, yes, I mean, we like the set up.

We'll take our next question from Julian Mitchell with Barclays.

Maybe just to start off with very strong margin performance. But when we're thinking about kind of mix for 2026. And I know there's a lot of different businesses, but I suppose you're guiding for the highest organic sales growth in these segments with the lowest EBITDA margin.

So maybe help us understand in DCEF and DCST, what sort of operating leverage you're aiming for this year? Are there sort of outsized cost savings tailwinds, for example, that mean they can have very strong operating leverage alongside the high volume growth?

Yes. No, you're spot on. I mean, what we're looking for in DCEF is the leverage on the revenue growth, plus that is the segment that will be impacted the most from prior period restructuring, so the rooftop. That will come progressively through the year. So I think that the margin enhancement that we'd expect to get there would be a little bit back-end loaded just because of the restructuring benefits.

The other one is DCST. You saw the margin jump in Q4 of 250 basis points comparatively. We'll see if we can get more on the volume going from there back to the question we had previously. That's where we're a little bit commodity exposed, particularly in copper. So do we bounce up the top line expectations a little there?

To cover that. We'll see as the year goes on. Right now, we've bought forward enough that we've got an idea, a pretty good idea of what we'll get probably in the first half of the year. We'll see if we need to take any pricing action there to cover any headwinds we've got on the input costs. But you're spot on in terms of the mix.

That's helpful. And maybe you've mentioned sort of seasonality, Rich, a couple of times as being sort of a normal year ahead. So should we expect, let's say, year-on-year EPS growth and sales growth each quarter to not be that different from the full year framework on Slide 10 is most...

No, Julian, that's right, right? And when we looked at consensus for the year, there is -- it was oddly high for Q1 despite the fact that I think for 12 months or not 12 or for 9 months, we've been saying over and over again, be careful about the biopharma mix in Q1. So look, the full year is the full year, we'll hit the full year, but the seasonality should be the same as it's been sitting in your models historically.

We'll take our next question from Amit Mehrotra with UBS.

Rich, good to talk to you. So just a quick question on growth outlook for this year, 4%. Obviously, that's a good number, certainly a better number than the last couple of years, but it's a bit lower then sort of where we exited that in the fourth quarter. So maybe you can talk about it, is that just prudent conservatism? Talk a little bit about that.

And then it looks like if I look at the margin expansion for this year. It seems like the entirety is explained by maybe that $40 million wraparound productivity benefit. Is that right? And maybe is that just the mix effect kind of offsetting some of the volume leverage?

Yes. I mean the answer is yes and yes. I mean, it's early in the year. I mean, if you remember -- I remember sitting here last year talking about our guidance and then we ran into tariff tumult. So there is an amount of prudence in terms of the top line and the incremental margin at the end of the day. We talked about input costs and a variety of other things. These are numbers based on what we've seen in the backlog that we can execute on.

Whether we can move them up or not, we'll see quarter-by-quarter, but bookings momentum has accelerated into the end of last year. So if we get that same kind of acceleration and we get the visibility as we move through the quarter, then I would expect, I think that -- we progressively moved up EPS last year based on our original guidance, we would expect to kind of look at doing the same thing.

Yes. That's helpful. And just related to that, so I know there was like $150 million drawdown in Refrigeration last year. Obviously, orders perked up in the third quarter and I guess, are continuing to move in that direction. Do you feel confident you're able to get all of that back from where we stand today?

We're sold out for Q1 that's what I can tell you. So we're booking and that is relatively short cycle business, and we're booking well into Q2. So, so far, so good.

Our next question will come from Jeff Sprague with Vertical Research Partners.

Rich, just back on the incrementals and everything. We've touched on this a little bit. But just cutting through all the different mix changes and the like. I just want to make sure there's not anything below the line I'm missing. It looks like you're sort of guiding an observed incremental as reported at about 35%. Is that right? Or is there something else in between kind of OP and the bottom line to be aware of?

There's nothing really on the bottom line, Jeff. So you're close on the number. You're right on the number, more or less.

Yes. And then secondhand, right? So I'll be careful. But there's been some chatter that you've made some noise about kind of transformative sort of deal, generational deal, something very large -- maybe just to kind of address your appetite for something really large? Or are you more inclined to stick with bolt-ons, anything you could add there?

Well, it's better than the retirement 1 from last year. So I'll take the -- I'll take the transformational deal angle. We were not going to talk about anything in the pipeline -- it's not been our history here. I mean we have a very keen eye about execution risk. I'm sure that we'll do some M&A this year. If we were to consider something transformational, it would have to be shareholder friendly to Dover at the end of the day.

So it's not as if that we look at the business and the business that we own and say that we've squeezed everything out of it, and now we've got to go do something to move it on. I think we've got a good algorithm here with bolt-on deals and growing the top line that we're not required to do anything, I guess, is the best way I can describe it.

Yes. And then maybe -- I'm sorry, a third one, Jack, don't get mad at me. But just back on revenues, you noted maybe there's some conservatism here. But just thinking about this order growth rate that's been ahead of revenues now for a significant period of time and the fact that things like SIKORA are coming into organic at like a faster rate? Like is it just anything that's more long cycle on the orders or something that doesn't convert quickly to kind of explain that apparent looking disconnect?

I mean at the end of the day, I mean 3 to 5 historically without getting over our skis here is a pretty good number. But you're right. If I look at the velocity of orders coming in, you could roll forward and see. Q1 is always kind of an interesting quarter for us because we have a lot of production performance, and then we ship a lot in Q2, Q3.

I think part of it is let's get into Q1, let's see if we're manufacturing backlog or we're replacing what we're taking in production performance with new order flow. And if that's the case, then we'll take a close look at the top line. And again, I don't want to repeat myself, we are cognizant about input costs moving up. And if we have to take pricing action, that will actually drive some top line growth also.

We'll take our next question from Joe O'Dea with Wells Fargo.

I wanted to start on the retail fueling CapEx cycle side of things. And just if you could elaborate on what you're seeing there, some details across regions, how you think that plays out over the course of 2026 in terms of any accelerating demand there?

It's very much a North American phenomenon. We've actually drawn down our exposures in both emerging markets in EMEA we haven't left, but we've taken -- that's actually been a drag in our top line over the last 3 or 4 years, and we've done 80/20 on the customer side. And other than that, it's look, since 2001-ish EVs were taking over the world, so there was not a lot of CapEx spent in retail fueling, and that was reflected maybe not in the margin, which I think we've done a fantastic job of, but on the top line, well, that's kind of turned the corner here.

And if you go look at someone like Costco and what margins are fueling are right now. I think it's woken up the market that spreads at the retail are as high as they've ever been. So -- and that's going to drive returns on projects.

And then just on the restructuring side, you've got the $40 million carryover from actions last year. I think in the past, you touched on there could be more to do there. And so just how you're approaching that when you would make any decisions around it, parts of the business that would see a bigger impact if you do decide to do more?

I think we got a pretty full plate on what we're doing now. So there's a lag time between looking at proposals and then enacting them. Like if you take refrigeration, we're actually going to carry extra fixed costs for the first half of the year as we're taking down 1 facility and building another one. So we don't really get the benefit of that until the back half of next year, and that's the same for Clean Energy to a certain extent.

But yes, look, every year, we've got a goal of attacking fixed costs -- so we'll update you as we take the charges, we'll tell you what they are and where they are.

We'll take our next question from Nigel Coe with Wolfe Research.

So Rich, I thought it'd be interesting to think about growth bifurcated between your the 20% of what you call secular growth markets, and that's been growing double digits. And then the trough markets that are, I don't know, 40%, 50% MAAG, [indiscernible], Belvac, BSG refrigeration. Just maybe just talk about what you're seeing in those 3 buckets in 2026?

Yes. The growth bucket is going really well. Really nothing to add to it. So anything that we've said over the previous 3 quarters of last year, that trajectory has continued as -- so we're good there. I mean, the ones that have been of a headwind, I mean, in Belvac, that's when it's easy, we're just going to have to wait for the CapEx cycle to turn in can making, at least the conversations are getting there, but we don't really see it in backlog yet.

On vehicle service group, that has very much been a European story. And that is why despite having the headwind on the top line, you don't see a lot of margin dilution because that's just reflective of the difference between the regions where we make high margins and not to a certain extent. I don't see that improving yet, but we're almost in year 3 of Europe being down there.

So 1 would expect that, that could turn hopefully during the year as we go forward. And Refrigeration was an anomaly. I mean, we discussed it at length at the end of Q3, it was deferment, but we showed you the backlog building in Q4 and then look at the revenue growth and the margin expansion that we got in Q4.

And as I mentioned to 1 of the questions, we're sold out for Q1, and we're booking well into Q2 now. So it doesn't look like there's only so much we can make in a given year, right, from a capacity point of view because we've actually taken a lot of capacity out there. But with real -- what we said about going into '26 is reflected in our backlog and was reflected in the revenue growth in Q4.

Okay. So Refrigeration is recovering nicely. It sounds like MAAG is still some headwinds there everything else fairly steady? Is that a good way to size that?

Yes. MAAG is going to -- MAAG will see it because -- and you'll see it in the backlog because the dollar value of MAAG's orders are so high you'll know when it's coming. And right now, it's fair to say that the European chemical market is not doing well.

Yes, that's no shock. And just a quick clarification on the incremental margins. Is the restructuring payback to sustain 35% type incremental margins given the mix pressures you've highlighted? So or could that be...

No, no. I think that when you do the math and you look at the incrementals, I think that there's more upside than downside there.

We'll take our next question from Scott Davis with Melius Research.

Rich, if you take a step backwards, as portfolio has changed quite a bit, since you've taken the helm here, but what do you think the entitlement -- the new entitlement kind of through cycle growth rate is of this portfolio you have now. Is it kind of right -- kind of in that sweet spot around 5%? Is it 4% to 5%...

Yes. It is somewhere between 3% to 6% depending on GDP and everything else, but clearly can do 5%.

Okay. That's what I would have thought. And yes, it's kind of been a while since we've talked about closed the case that whole nonsense thing that kind of went up and went down. And you've got a big installed base, and it's got to be aging out. Is there any way to think about the age of that installed base and kind of what -- and be able to just socialize maybe the pent-up demand how long those things last before they need to be replaced, et cetera?

Well, it's a little bit of that business is a little bit of a tale of 2 cities. There's the CO2 rooftop, which is a change in technology play, where Knockwood we are the North American market leader and we're a co-leader in Europe, and we're the North American market leader, and we're doing really well because for a variety of reasons.

And that I would put into the kind of the growth platforms and when Jack gives you those numbers, that CO2 business is in there. On the retail refrigeration door case business we've taken that business from somewhere around 7% or 8% margin up into the very high teens now. We're finishing the last CapEx. We put -- we basically rebuilt the entire industrial footprint there.

So what we end up is with like a core refrigeration business, which is around $0.5 billion-ish at very nice margins and extremely good cash flow because it doesn't hold any working capital. So it's worth significantly more today than it was back in the day, when it was a discussion element. We'll grow that business, but we'll grow it for profitability, and we'll grow the CO2 side as quickly as we can because that's -- we're in the early innings there, and we've got a leadership position.

We'll take our next question from Mike Halloran with Baird.

So first on the Clean Energy margins, on prepared remarks, you mentioned the mid-20% target. Maybe just some time line on when you think you can get there, Rich?

We're going to have to walk it up. So Knockwood should get into the low-20s this year and then walk it up from there. Can we accelerate it? It's going to depend on a little bit of mix. And I really want to see we still kind of in a transitional period on the footprint side. So what we really get out once we're done and what the benefit of the fixed cost absorption is once we get that done.

So we're still doing that now and will probably be completed by the end of the year on that. So just on the top line, we think we can get into the low-20s from there, it's going to be on the roll forward of the cost out and your guess is as good as mine. We're really excited about the longer-term opportunity on the cryogenic side, which is not a super large business for us, but becoming larger. If that growth rate and that opportunity continues to expand, then we're very excited about it.

Makes sense. And then you touched on it briefly there, but you've had comments about there's only so much capacity to drive the growth, at the same time, you're also doing some of these internal initiatives, managing capacity lower. How do you see that push/pull as you work through the year? Are there areas where you might be putting incremental capital to work to expand capacity? Or do we feel pretty good about the network as we sit here today? And then what's left on the peering side?

Right now, CapEx is coming down in '26 because of the basically, the completion of the expansion capacity and the restructuring capacity, so it's coming down. We feel good where we are. We are greenfielding a plant or beginning to greenfield a plant in North Carolina, that will probably take us into '27 by the time that's complete.

So we've got a flexible model. I mean we can kind of expand capacity relatively quickly. But -- so besides the ones that we had in slide that we detailed in Q3, the only new 1 that I would add to that is the greenfield plant in North Carolina.

We'll take our next question from Andrew Obin with Bank of America.

This is David Ridley-Lane on for Andrew Obin. I was wondering if you could talk about your exposure on sort of the natural gas power generation side. Do you supply components for just large turbines? Or is it small turbines or reciprocating engines as well. And then notably, over the last kind of 3, 6 months, there's been quite a number of capacity expansions by the equipment providers and just over participate in that?

The answer to your question is yes, yes and yes. So everything from large turbines to midstream to reciprocating compressors, the large turbine business is kind of front-running the market right now. And while capacity in percentage terms has moved up quite a bit. These are very, very big units. So the unit value is high, but the number of units is not dramatic.

We believe that there's going to be significant follow-on CapEx on the delivery side, meaning getting the natural gas to those turbines. We expect that to kick off hopefully, but expected to kick off in the back half of '26.

Got it. And just sort of clarify the thing from the slides. There's something about price cost in the fourth quarter for the Clean Energy and Fueling segment. Is that kind of onetime or...

You know what, you got me.

Yes, it's just -- it's a bit of a timing catch-up in terms of when the price comes in relative to the cost. So it's really just a timing thing we see in the fourth quarter.

We'll take our next question from Andy Kaplowitz with Citigroup.

Rich, you mentioned as you get better visibility than you could adjust revenue guidance. But given book-to-bill has been pretty good over the last couple of quarters and you still seem relatively positive about your markets, do you have visibility at least to continue that near-term book-to-bill out or over 1 that you've been delivering?

I don't know, right? As I mentioned in my earlier comments, right, that Q1 tends to be a production month and not much of a shipment month, right? So -- and part and parcel to having a discussion, I mean, I can't believe we're giving you our guidance, I'm talking about moving guidance already. But part and parcel to that is getting through Q1 and seeing whether we're eating into our backlog or we're neutral or a backlog building even in excess of production, which is basically what we'd have to add into the back half of the year.

So look, we were here at the same time last year and then [indiscernible] hit the fan in February. So let's get into the year, right now, all things look good in terms of trajectory -- exit trajectory and backlog trajectory and orders and everything, let's kind of walk it into Q1, and we'll give you an update when we get there.

That's helpful, Rich. And then I wanted to ask you about DII. Like I know it's kind of a GDP, maybe GDP plus business. But what, if anything, gets you going there a little bit more? I know the low single-digit forecast for '26. And you did mention in the middle of the sort of multiyear margin expansion progression and structural cost out. So where are you in that progression? Do you still have good margin upside in that segment?

We're actually deploying a bunch of CapEx into that business right now. Kind of some modernization and productivity. So if that all goes well, that will drive margin from there. It's consumer goods exposed. I don't follow consumer goods that closely. Well, whether we see capacity expansions there, which would drive kind of the organic growth higher than kind of normal.

But I mean, it's such a messy number because it's a global business, and it's got a lot of FX running through it. We try not to get above our skis. On kind of the longer-term growth rate because it swaps around. But it's a highly valuable business when you look at the cash flow dynamics of it.

We'll take our next question from Brett Linzey with Mizuho.

Question on the 20% of the business tied to the secular market. You've done a good job highlighting that over the last several quarters. Curious, post mortem, how did that group of businesses grow in 2025? And then are you still seeing a pretty solid double-digit type of rate here for '26 for that 20%?

Yes and yes.

Yes and yes. Okay. And then a follow-up on capital allocation. So Slide #8, the dotted bar stack frames the optionality on the flex leverage. Maybe just an update on the investment grade leverage ratio that's implied there.

I would imagine that it's calculated off of full year 2025 EBITDA and it is probably the max leverage with some wiggle room kind of to maintain investment grade. So it's just simple math.

We'll take our next question from Joe Ritchie with Goldman Sachs.

So I'll start by just asking -- I mean, I'll ask the flip side to Jeff's question from earlier. So not talking about big deals, but potential divestitures across your business. I know you look at your portfolio frequently. Just how are you thinking about the portfolio as it stands today and potentially addition by subtraction?

Well, I mean, we've got a fiduciary responsibility if someone wants to purchase a portion of the portfolio, we have to consider it, #1. Right now, we're comfortable with what we own. We do preserve optionality, if we were to lever to do deals that we could delever by monetization of the portfolio as an option per se.

But right now, we're fine with the portfolio as it is either organically investing in it or the portions that we've historically done more M&A.

Okay. All right. Good to hear. And then I'm not going to ask you to change guidance, you just gave guidance. But if you go back to that Slide 9 and you take a look at your organic growth expectations for the year, where across the portfolio do you think you have the biggest swing factors this year?

I mean they're all correct. And if you added 1 percentage point to all of the -- you know what I mean, it's -- there's no this 1 can double based on our expectations. It's more of do you get a point here, do you get a point here, do you get a point there, and when at the end when you hand it all up, it adds a couple of points to the top line. So I don't -- without getting over our skis here. I think that those are directionally absolutely right.

Our final question comes from Deane Dray with RBC Capital Markets.

Maybe just pick up on Joe's question there because I've been staring at Page 9, and I'm trying to remember the last time you had organic growth all green and all the arrows on margin pointing up uniformly like that. And just -- it begs the question, was there anything different about the planning process this year? Is this strictly a bottom-up aggregation of the -- of each 1 of the businesses -- or did you overlay in any way, haircut anything.

Remember, a year ago, the tariffs you decided that you did want to be a little more conservative. So is there any element of trimming or boosting here that you'd like to share?

Sure. I think it was in the comments. But I think that we were pretty upfront over the last 2 or 3 years of some of the longer-cycle businesses that had done extremely well we're cycling dent, right, because it was coming out of the backlog. So the MAAGs and the Belvacs of the world, we knew that we were exiting some businesses or some revenue in Europe in our Fueling Solutions business that was going to be negative that was incorporated into our guidance.

So meaning top line headwind, but margin up and then we did not have a -- I think that we had thought going into '25 that we were concerned about Vehicle Services Group in Europe, and that's the way it turned out at the end of the day. So I think what this shows here is that we don't have an identified headwind like we have, whether it's because of long cycle businesses cycling down and/or particular markets that we think were under duress.

That's helpful. And just a quick one. Backlog has come up a bunch of times in Q&A here. Just directionally, how much of '26 revenues do you expect are in backlog today, just kind of directionally? And how does that compare to the normal times?

I don't know in total, I can just tell you anecdotally, I think I mentioned it before, something like Refrigeration that grew heavily in Q4 were sold out for Q1, right? And that is not a normal state of affairs. We generally bleed historically in that particular business or most of our businesses actually bleed down backlog in Q4 and replace it in Q1, because we built so much backlog in Q4 of this year, the swing factor is going to be do we eat into it in Q1? Or does it just continue to build? And if it does, it's proactive for the back half of second half of the year, but we'll know that the next 60 days or so.

Thank you. That concludes our question-and-answer period and Dover's Fourth Quarter 2025 Earnings Conference Call. You may now disconnect your lines at this time, and have a wonderful day.

Okay. Hey, everybody. Thanks for being in the room and on the webcast. Rich Tobin, Chairman and CEO of Dover. He was just telling me that this was the event that he was looking most forward to this fireside chat. Obviously, he didn't say that to me. But nonetheless, we appreciate you, Rich, taking the time to talk about the business. My name is Amit Mehrotra. I lead the multi-industry franchise here at UBS. It's such an interesting time to be talking about industrials because it's really the tale of 2 markets with the AI infrastructure market improving, obviously, continuing to be very strong and then hopefully, the non-AI market showing some signs of life.

Certainly, with Dover, very interesting conversation because the company hasn't really grown that significantly this year, but it is projecting to grow a meaningful step up in the fourth quarter. So hopefully, Rich, you can offer some insights on whether you still believe that, what the drivers are. But why don't we just start actually talking about that and kind of what your latest and greatest thoughts are?

Yes, sure. Well, actually, if you look at the slide that I just put up there, I mean the top line growth is not terrible by any stretch imagination. I think we have a little bit of a fixation lately on organic growth. But as you know, we are an acquirer. So we're up 5% or up 3% year-to-date. And we expect from an organic growth point of view that the fourth quarter to be our best quarter for the year.

So despite having a variety of different market conditions during the year and tariff tumult and everything else, we're on track to hit the guidance that we put out at the beginning of February 2025, which was a good amount of top line growth, 4% to 6% and adjusted EPS being up in the teens.

So we're tracking pretty much -- if you listen to our third quarter call, we're tracking where we said we'd be. I haven't seen November close, but I don't -- I haven't heard anything -- would make me think it's either demonstrably better or worse. I think it's pretty much on forecast. So the results for the year all in, I think, are going to benchmark very well versus the multi-industrial space.

Can you talk about maybe -- the full year obviously is there, but then it's a tale of the first 3 quarters in the fourth quarter. Obviously, you had some refrigeration headwinds that orders started to improve in the third quarter. Is that what's bridging kind of this inflection back to the mid-single-digit organic growth number in the fourth quarter?

Yes. As we mentioned at the end of the third quarter, it's carved off -- about 200 basis points of the growth is, if we forecast anything wrong this year, it would have been a retail refrigeration demand. I think if we had read the tea leaves a little bit better, we would have figured out that the tariffs probably had a disproportionate impact on retail food because margins are thin. I think that there was a reticence to shut down any of the stores to do refurbishment.

And while we've been doing really well on the CO2 side, which is the big refrigeration systems on the top of the store and for warehousing, it's the in-store refurbishments kind of slid to the right. But as we mentioned in Q3, our book-to-bill in that business has inflected positively, and that's going to be a big driver of our organic growth in Q4.

And we were at dinner last night, and you right upfront mentioned your view on like what the impact interest rate cuts would mean on sentiment and psychology of the market and how that could turn into actually tangible activity.

We don't hear a lot of CEOs talking about that. Obviously, it makes sense, but there's still a debate about what the actual impact to activity would be from interest rate cuts, whether it's 25 or 50 basis points. Maybe just double-click on that and talk about how you view that market.

Well, I mean, the next cut better be '25 in December or all hell is going to break loose. But I mean, I think there's an argument for it to be higher than that for sentiment alone. I mean I think that sentiment, it plays an important role, and I'm not talking about the equity markets and valuations or everything else.

I'm just saying from a corporate activity point of view. So you went through a period where for the most part, industrial corporates came into '25. If you looked at the forecast for growth, it was okay. It wasn't great, but it was good. But then we ran into tariff tumult and a variety of other things and then kind of sentiment really swung pretty negative, especially after you had a little dislocation in the market in February, and then it's taken some time for that to gain steam.

Look, at the end of the day, for us, we don't supply into like so-called interest rate-sensitive end markets like housing or auto. But at the end of the -- but also, look, we'd like to see discount rates come down. And like I said, we're -- I believe that in a market with interest rates going down, which are already baked into equity pricing. But from a corporate sentiment point of view, I think we're probably going to get a little acceleration of CapEx that got deferred in '25 and an earlier start than we saw this year.

I guess lower interest rates are also coinciding with higher multiples. And for a company with $6.5 billion, $7 billion of firepower and growing probably will grow as you generate more cash in the fourth quarter. Valuations seem already pretty high to begin with. I assume this is in addition to kind of a lot of the AI back-office stuff, productivity stuff that you're doing, you're spending a lot of time focusing on the pipeline from an M&A perspective. How does that kind of -- how do you think about that? You're buying back more stock?

Sure. Look, if you look at the headline figures for M&A this year, everybody is making bonuses. But if you dig into the numbers, the vast majority of M&A deals that have been consummated in '25 have been very large deals and corporate carve-outs, breakups is what's really driving the market right now.

The mid-market where we play has been pretty benign. And whether it's because of a paucity of targets coming to market valuations that we've seen transaction multiples being quite elevated in the mid-market right now. So our bias has moved from more M&A into capital return.

We just announced an ASR. We're buying back $0.5 billion of our shares. We'll see going -- no deals are going to get really done between now and the end of the year. We'll see where we start out in '26. Maybe there'll be more assets coming to market and because there's a better amount of deal flow, we will put some kind of CapEx -- a lid in terms of multiples.

But then we'll see if, in fact, multiples remain super elevated, we'll do as we always do as a variety of proprietary deals where we generally don't pay elevated multiples. And if not, then buying back our equity further in '26 becomes a real option.

And I mean, I get a good word to describe whether you sell or buy something is patient. You've been patient. And -- but I guess, like a year from now, would you fully expect to kind of deploy that firepower? Or is it still TBD just given where multiples are in the pipeline?

It's TBD. I mean we're -- we've pretty -- we're patient, but I think restrict in terms of valuation and getting returns. It's easy to sell things. It's easy to buy things. It's not so easy to create value over time.

Coupled with the fact that multiples in multi-industry have come down quite a bit, it makes the trade-off between M&A and capital return more evenly balanced than it would have been a year ago.

So that sum of the parts lens in which you look at the business, it feels like your stock may be the most compelling right now as you look at it.

Proof is in the pudding. So like I said, we just bought back $0.5 billion. We're not liquidity constrained. We'll see -- we'll close the year. And depending on the health of the M&A pipeline, I think it's likely to do a mixed solution between M&A and capital return in '26.

Got it. That's helpful. So December 2, you've been really kind of front-footed and talking about the view for 2026. I don't want to reiterate what you've said, but there is not a rising tide that's lifting all boats right now as you look at '26. There's a lot of puts and takes.

It feels like your confidence on '26 is really coming from the headwinds that you've endured 2 years ago or last year and now this year and kind of what you're seeing on the orders that gives you confidence that you might get some of that back in '26. But maybe talk about how much of your '26 optimism is very Dover specific because of that dynamic or more kind of you're getting more encouraged around some of the macro dynamics?

Well, I mean, look -- again, if you look at the numbers that we posted year-to-date, you want to underwrite that Q4 will be our best organic growth rate for the year, pushing up the averages. We're pretty close to kind of a 4% to 6% top line algorithm. So it's not Herculean of what we've got to deliver in '26 versus '25.

I get it, everybody is concerned about price take in the marketplace. But I think that if you've gone back and looked over the previous 3 years, we're averaging probably 1.5% or 2% of price take across the portfolio. So if everybody is concerned about do we get into a more price-sensitive market going into '26, I think that's manageable for us relative to the comps, our trailing comps.

And the refrigeration, I mean, I understand the dynamics of tariffs and maybe pushing some of that replacement maintenance CapEx to the right. As a result, it feels like with the orders, what you saw in the orders, that's kind of now in the rearview mirror.

Have you seen that momentum continue? And I assume a lot of that, if not all of that is replacement, but just talk about kind of your confidence around getting a lot of that lost revenue that was really seemed like pushed to the right as opposed to lost indefinitely.

Yes. I mean, look, the fact of the matter is we called it wrong for the year, but we don't believe it's lost. We just think that it's shifted. If you look at book-to-bill for that particular segment exiting Q3, it was positive. And as I mentioned before, we'll translate that into organic revenue growth in Q4.

And so that particular business, I would expect to have healthy organic growth in Q4 and exit Q4 with a healthy backlog.

And so then we talk about kind of the growth -- the top line growth for next year and then we talk about mix and your -- what's that term you use non-volume or revenue cost? Is that what you see?

Yes.

We just call that idiosyncratic cost opportunity.

Okay. So that's $40 million for next year. Refrigeration growing, it's dilutive to margins, but maybe not as much given the good work that you guys have done on improving that margins of those businesses -- of that business.

And the growth platforms are obviously mostly accretive to margins. And then you've got the $40 million on top of that. So obviously, it sounds like the setup for margins is pretty good.

Yes. Look, I mean, if you go and look at our conversion over the last 5 or 6 quarters, it's north of 35% on incremental revenue. We used to have a band of 25% to 35%. It's probably stale now. We're pretty much locked in at the top end of that range.

So what you need to underwrite to get to teens increase in EPS, if you take the middle between 4% to 6% top line growth and incremental margins at 35% and factor in the share buyback, it's -- I'm not saying it's easy or it's in the bank, but I think you can craft an argument that says it's doable for sure.

In top quartile type EPS because that's the point you're making.

We always do top quartile EPS growth.

Can we talk about the 20% of your portfolio that's kind of these growth platforms. Every time you mentioned the word turbine or AI, your stocks go up. So let's focus those conversations on those words. But I think you made an interesting point yesterday talking about the sell-in into the power generation market and how there's a lag between kind of the orders of turbines and then ultimately, the power hookup that comes with that and why you're getting more optimistic that maybe that's a second half '26 growth driver for you guys. Maybe talk about that.

Yes. I mean, sure. We are component suppliers into gas and steam turbines, the large ones. So everybody's got the press and they're sold out for years on end and everything else. That's a great business. It's not a lot of volume. So it's high ticket price, but not a lot of volume because if you go look at the amount and of large steam turbines sold every year. It's not Herculean in terms of the amount, the dollar value is a lot, but the amount of units is relatively small.

So we'll take that business. It's great. We've got good relationships with that part of the market. We're actually larger in the midstream and downstream portion. So smaller turbines and the gas engines or the diesel engines that sit aside those, we've got a material position there. And we've also got a material position in gas distribution, so the pumping stations and reciprocating compressors that follow on there. And so what we've seen is very good demand on the large turbines, so very much upstream, but a lagging effect in terms of the gas distribution to serve those turbines.

So at a certain point, you can install a turbine, but you need to have gas delivery to it. So we're pretty hopeful in the back half of '26, we'll see a considerable amount of CapEx on that general infrastructure to deliver those -- gas to those positions.

And one thing that we don't associate with growth verticals, but it's like retail refueling, which you've talked about is kind of entering this like multiyear kind of CapEx inflection. Talk about what's driving that and what it means for the company. And there's some legislation about underground tanks that ultimately can help as well.

Yes. I mean I think most importantly, between '21 and '24, any business with ICE exposure was almost considered uninvestable because EVs were taking over the world and valuations, anything around ICE really suffered during that period. Well, I guess, thoughts have changed a little bit in terms of that transition away from ICE, number one.

Number two, because of that, there was not a lot of CapEx that went into that particular sector because even our customers were reticent in terms of building out the infrastructure with the exceptional few. So what you've seen since then is now everybody has brought down their view in terms of EV adoption over time, number one. Number two, you've seen some very successful deployment of retail fueling infrastructure.

Costco comes to mind and how that drives traffic. And so if you look at the market itself, you've kind of got a bifurcation where largely driven by private equity, you've got a lot of service types of businesses like the Pep Boys of the world, consolidating tire changing and a variety of those services and then you've got the Speedways and the Wawas and the Costcos figuring out that having retail fueling along with food delivery is actually very profitable.

So what the loser in the middle is the mom-and-pop gas station. So it's driving this kind of build-out of the infrastructure, and it's really got a 3- to 4-year kind of built-up demand of it because no one was doing anything for a period of time. There is a legislative aspect to it because on the underground tank side and being the 20-year vintage where you lose insurance, and that will drive some of it.

But really, it's -- I think that there's a business model now that's recognized by market participants that having fuel delivery, coupled with the retail operation is a very profitable business, and you see CapEx in that space inflecting meaningfully.

Is there anything -- we think -- we talk about mix from like a margin perspective, but I wonder if there's also a consideration from like a cash flow perspective if refrigeration grows, the cash flow dynamics of that business are pretty good. Just talk about kind of how cash flow is impacted by maybe some of the mix as well.

I think on the growth platforms, we were long inventory probably over the last 18 months. A, we want to have the availability of the product because that's a way to gain market share. In some particular businesses, we've been working a lot on our footprint. And so when you're consolidating fixed cost infrastructure, you actually have to build up a lot of inventory to accommodate that transition.

So we've done a lot of that in the clean energy side, and we've done a lot of that on retail refrigeration. We just announced that we're closing a pretty large plant in California and repurposing it back into Virginia. So there's been a lot of working capital associated with that transition, which is part and parcel to the $40 million of the carryforward restructuring.

So I think we've got room to grow on cash flow, but from a working capital efficiency point of view, but really the fundamental driver -- our cash flow metrics are improved year-over-year. The biggest driver of that has been margin mix as opposed to working capital.

Got it...

We bind it out on the working capital. It's margin that really drives it.

Before I move into the margin, I want to talk about SIKORA for a second. I mean you bought that business, I think, for over $0.5 billion. And I think the latest disclosures was it was up 30% year-over-year. And they obviously do electric infrastructure investment exposed to that market. That's been seemingly a very good acquisition and significantly above your underwriting plan, as you said. Can you just talk about what's happening under the hood there?

Look, we'd like -- we do those all day long. It was internally resourced. So we didn't have to go into a competitive auction there. It's a little bit of an adjacency. We don't do a lot of test and measurement. We do some, but that is sitting right next to our polymer processing business. We've got a fantastic management team.

We paid 15x EBITDA for it, but at that kind of growth rate and that kind of margin, we would argue that that's kind of a fair multiple. Well, that's kind of the sweet spot for us. I mean the medium-sized deals that we source ourselves that are adjacencies where the end markets know our brand equity. And so the integration risk is relatively low. So hopefully, we can do those all day long.

And do you have some of those in the pipeline that you think internally sourced that makes sense from a multiple perspective?

A few, yes. Yes. The funnel, I would say, right now is okay. Look, you can talk about funnels and say that they're huge because I can gather up everything that's private. But the real tangible actionable funnel of assets that are in play, so to speak, whether they're coming to auction, somebody is bringing it to market or whether we're self-source is decent right now.

But again, it's the end of the year also. So it tends to dry up at the end of the year and then it starts at the beginning of '26. So we've got some irons in the fire. We'll see if we can close them.

And you've made some well-timed to get divestitures, obviously, as well. Is that now completely in the rearview mirror? You're happy with where you are, and it's really about adding to the portfolio. Is that the right way to think about it?

We -- what's not -- look, it's easy to sell anything in the portfolio. When you're a multi-industrial, invariably, you get the questions, why don't you sell that or why don't you sell that? So monetizing things is relatively simplistic, but we take into account tax leakage when we sell something number one.

The ones that we sold actually were very good performing businesses within the portfolio, particularly our ESG business. I think we had doubled the profitability over the previous 3 years but we were looking at its strategic position at the time.

So we sold DESTACO, which was margin accretive to the portfolio, but it had a lot of exposure to auto OEM. I just said to ourselves, that's probably not -- it wasn't a value. It wasn't like the margin was a problem or sum of parts that was a problem for us. It was more just kind of the end market exposure.

And I think on ESG, it was more capital goodzy in our portfolio at the end of the day. I think that we had extracted as much as we could out of it and then we found a rational buyer. So are there other pieces of the portfolio that fall in the category? I guess it's maybe, but there's nothing of any consequence that we have in the portfolio that is kind of negative ROIC at this point.

So it's -- we're not forced sellers. I'm more than happy. As long as it's not strategically impaired, if it's mildly dilutive, but the ROIC is high, I mean, we'll keep them forever.

And then the part of the portfolio that is growing, obviously, like thermal connectors and the heat exchangers that go into the cooling distribution units and all that good stuff. Obviously, that's going to grow for the next 3 to 5 years, but it's a relatively small -- it was $100 million this year, something like that.

What is the growth rate associated with that business? And is it accelerating? Is it -- I mean, these are obviously -- they've already come from very small numbers to decent numbers now, but what are you seeing in terms of the growth percentage rates?

Yes, it's a tough one. We like our position into data centers because, again, it's critical components, and we're not doing built-up units. There's a lot of capacity coming into the market. So I think you've got to be relatively careful about profit extraction.

The capacity coming to the market, where exactly? It's data center...

When you've got that kind of capital going into a market, it's going to attract a significant amount of activity in terms of entry into the market. Now who's successful and who's not is -- I think it's early days right now. And how long the capital cycle lasts is -- I think it's too early to really tell.

I mean, we just went through a period of everybody announcing EV battery construction, and that kind of petered out relatively quickly. I think this is a little bit different.

Data centers are different than that...

Yes. But to us, the data centers, we like. We like our position on the critical components. We like the energy input portion. That's where we're larger. And I think in terms of total returns, we'll probably get it at the end of the day from the energy side, more from the internal components of data centers.

But what I think is interesting, too, is when I think about what you sell into that market, it's not -- I don't associate it with long lead times. Before you here on the stage or another room, there was a CEO of Eaton where over 1/3 of their revenue is sitting in backlog in the Americas business, long lead times. Vernova sold out until 2020 -- end of 2028.

So it feels like the focus right now, and I think you mentioned this last quarter is like get us on the reference platforms and then maybe all that growth can come when these things are ready for showtime.

Yes. I mean, look, I think we are early in terms of capacity expansion on both the thermal connector side and on the brace plate heat exchanger side. I think we're done on the thermal connectors. For the most part, I think we have adequate capacity for the next couple of years at least.

On the phrase fight heat exchanger, I think that we're done with the last capacity expansion at midyear of this year, and then we'll regroup and see where we are. But I think the part of our success has been that we had front-run that capacity expansion. So our lead times in both those businesses are best-in-class.

Which means that the growth maybe isn't to come.

If the demand is there, we're not going to be capacity constrained to follow the growth of...

Got it. Okay. Great. I want to move to margins because this has been an incredible standout. I mean there are some businesses that have been down and profits have been flat to up in dollar terms, which is hard to do. But you've done a lot of good job sort of centralizing a lot of the functions of all the different operating companies.

You put in this new slide last quarter, a lot of circles in it talking about AI and what you're doing. We are searching for like downstream AI usage. you're smiling, Rich, I don't know why.

Okay, go ahead.

Okay. I'm just trying to build a case. We always focus on upstream AI in terms of the factory of AI, but we're not focusing enough on companies and how they're utilizing it. Are you a believer in it? Or do you feel like it's still difficult to get all the data in one place and then leverage it? What's your opinion?

Yes. I mean I smile because it's always the next thing and God forbid, you didn't put something in your disclosures about AI then you're not keeping up with the cheerleading section. Look, we look at it as a productivity tool at the end of the day.

We've done a lot of work over the last 5 years of centralizing all of our IT infrastructure, which has been a contributor to the margin expansion, quite frankly. So the good news for us is we've got processing centers that do a lot of kind of key stroke portions of our business, AP, AR, general ledger, expense reports, which all lend themselves to automation over time.

So the low-hanging fruit for us before we get into the product end of it is pure productivity, and that's where we're working really hard in terms of AI tools is to extract those kinds of savings out of it. I think it's early days on the product side and who monetizes what from AI applications on the product side.

But I think what the work you've done is -- I think you're a little -- it seems like you're a little bit ahead of it in terms of focusing a lot of the last few years and getting the data inside of one silo that you can then apply your agent to, whereas that's not necessarily the case for a lot of companies. Talk about that technical or practical hurdle because for us looking outside in, we don't maybe appreciate that.

It is a ton of work. And in the early days, it's detrimental to profit margins. You're investing in advance of getting the benefit from the leverage scale of doing that. But we went through that process between '18 and '22.

So since '23, '24, '25, we've seen average transaction costs come down because we've basically got the full cost absorption on what we've done. So the amount -- when you think about the complexity of the portfolio and the size of our individual businesses, and we've been an acquirer, the amount of work that our IT people have done to consolidate that infrastructure to allow that all to be processed in one node is, a, it's thankless work; b, no one cares about it externally. But ultimately, if you do that work, it is a real money saver, and it's a way that we extract synergy value across the portfolio of the businesses.

So we've built all that between the data processing side and from the engineering side. And so when we do acquisitions, we're not making up the numbers about what the synergies are, and we're not telling you that we're going to get revenue synergies and cross-selling and blah, blah, blah. We've got a playbook that we can go in there and sweep all of those noncustomer-facing costs into these processing centers. What we get out of AI over time, I mean, it's $80 million of running cost right now, cut it in half, it's not immaterial.

And that's additive to kind of the ongoing work that you do your...

That's not even in the number.

Right, right. Okay. I wanted to just -- are there any -- if there are any questions in the audience, just raise your hand, we'll get a mic over. One of the things that is kind of interesting to me is when I look at all the companies within multi-industry, we cover 30, 35 of them, and we put a scatter plot between return on invested capital and valuation.

There's one company that sticks out this over thumb. And I would -- everybody in this room and then on the webcast just do that if you can, and it's Dover. And so that's an opportunity as well as a point of frustration, I'm sure. As somebody that constantly thinks about sum of the parts and valuation and comps, how do you deal with it besides getting upset and annoyed at the market for not appreciating the ROIC, but what are you going to do to kind of crystallize that or narrow that disconnect?

You deliver the results at the end of the day.

You've been doing that.

Okay. like the bottom line is if you go and look at multi-industrials, the sector has underperformed for 2.5 years or so. There's been a lot of capital that's flowed to thematics and pure plays, and that happens over time.

You can get frustrated. You can take big swings on the portfolio in or out or you can stick to your guns and just deliver year-over-year results and have a credible story of how you deliver them and that the markets turn over time between different thematics and value creation over time.

So we discuss that issue with the Board of Directors all the time. I mean you can't panic and start running scenarios of doing crazy stuff to get -- to change the narrative because you can go look at -- that's been tried before, and it's a better-than-average bet, it's a failure.

But does SIKORA give you a little bit of a sight into, hey, we bought it for x multiple. It's growing significantly faster than we thought. Does it make you want to -- does it make you open to like maybe going out a little bit, buying something a little bit more expensive that gives you a little bit more of that growth vertical beyond the 20%.

We don't look at the Dover multiple and say, well, we can't pay more than our multiple, right? And we've got -- look, there are certain parts of our portfolio that should -- on a stand-alone basis, should command a very high multiple because of market structure margin and growth rate. So you got to earn your way to pay. So there are certain markets that you're going to pay up.

And there are certain markets that you're not. Look, we're pragmatic about it. I mean we'll pay up if we have absolute believability of the end market and our ability to extract those profits, we will do turnarounds also.

So I'm not -- we're now at the point -- in 2018, we probably didn't have the right to do it, right, because this is much more of a -- we were severely underperforming from a margin point of view. That's not the case anymore. So would we go and do a dilutive deal if we thought we can turn that business around and do what we've done with the portfolio here, sure. Absolutely.

Maybe as a final question, opine about 2026. I know you have this really convincing line, and I think you know what I'm going to say. But talking about how, wow, first time in 2 years, no business is going to be cyclically challenged or something like that. I assume that's still the case. But sitting here today on December 2, like what would you -- how would you characterize the outlook for '26?

We like the setup, right? We're going to like the exit. So if I compare exit '24 to exit '25, we were not -- we were accelerating somewhat into '25. I think the acceleration this year into '26 in relative terms is better from a setup point of view. We had a couple of businesses that were not -- from a cycle point of view, we're not done cycling down that we had to overcome in '25.

We don't have that in '26. So putting the macro aside for a moment, like I said, if -- by the time we finish the year and you look at the all-in and you look at the organic growth, if we come out at 4% to 6% at 35% incrementals at a reduced share count, it solves for pretty easy. There's a ton of work behind it, right?

And we never know we'll get another February again like we got last February. But in terms of a positioning point of view, we feel great about that. And from a balance sheet point of view, we're severely underlevered. So in terms of what we can do from capital deployment, either from a capital return or from an M&A, we've got significant optionality.

And just as a last point on that on the share count point, you generate the most cash in the fourth quarter. We're not even going to be able to see it on the cash flow statement, the money you spent because you're going to replenish it.

And so does that give you another -- and the firepower is still multi, multibillion dollars. So does that give you another opportunity to do another -- you don't want to decapitalize the company at the same time, but does that give you another round of accelerated share repurchase early next year? Is that the way to think about it?

That's what I said before, right? I mean I think that our bias at the going into '25, everybody goes in being very hopeful, would have been -- there would be a lot of assets for sale, and we'd be a big contributor into that space. It never really happened at the mid-market. So we ended up building on a significant cash pile. We didn't like where the stock was trading in the back half of the year.

So we intervened on the stock price. But we're done between now and the end of the year now. We'll see -- we'll give out pretty healthy guidance likely for '26. We'll see where we are there, whether it's an ASR or whether we just intervene over time, as I mentioned before, rather than being 75% M&A, 25% capital return based on prevailing multiples in the marketplace, at least we enter into '26 50-50. And then we'll see what happens.

Great. Well, I wish you the best of luck. I hope you guys get credit for all the good work you're doing. Thanks, Rich.

Great. Thanks.

Take care.

Hi, everybody, Mike Halloran with Baird. Thanks for joining another session with us. We are in the Dover session. And Rich Tobin, CEO, Jack is in the crowd hiding -- he could have sat next to me, made the stage look a little more attractive. We're going to do a complete fireside chat. So we'll open with some portfolio stuff and vision for what's next, and then we're just going to kind of tick through all the topics. So any questions you have, raise your hand, I'll call on you or send a question through the e-mail that's in front of you on the cards, and I'll make sure to weave it in.

So Rich, thanks for your time. I know we've got some highlights on the screen here for people who want a reference point. But maybe we start high level, which is just when you think about the decisions you've made over the last few years when it comes to portfolio exits, portfolio adds, maybe just level set people on what you're trying to accomplish and what your vision is from a cohesiveness for the company on a forward basis?

They have been good overall, not brilliant, but not disasters, I put it in that category in terms of what we've done from an M&A point of view, both in and out. I think that we've been patient, especially with the out. We used to get back in the day when I first started a lot of -- why don't you sell X, Y and Z, and we said at the time that we didn't -- we would not consider selling anything out of the portfolio unless it was strategically impaired because we thought that there was value to be unlocked to the portfolio. So we spent 5 or 6 years doing that. So I think that we made our first really material disposal at the beginning of last year. And then we did a subsequent one at the end of last year.

We can talk about kind of the why. Look, we don't -- we're very much return on invested capital focused, and we're very much sum of parts focused. So I don't compare the individual businesses within the portfolio against each other. We compare them to their comps that we can find out in the marketplace just in terms of performance, right? So margin potential, growth rate, everything else. And we also have a lens of kind of a longer-term strategic view. So what is the competitive set? What's the technology look like? What's happening to the end markets? Are these assets going to become -- can we extract more value over a rolling 3-year period? Or do we think that we're going to run into an issue where they're going to become impaired, whether that's because of cycle or technology change and the like.

So we've had that view on the portfolio for some amount of time, and then we can bucket the individual companies into the kind of the growers and the changes and then some that we're harvesting for profitability, and then we can be opportunistic in terms of -- this is on the outside in terms of the selling. So because we do focus on ROIC and sum of parts, we had targeted 2 businesses in the portfolio, one that had Tier 1 OEM auto exposure, which we didn't think was attractive for the long term. So we monetized that in February of 2024, which is our automation business to DE-STA-CO at a very good multiple. And then later in the year, we sold our garbage truck body business that we had doubled the profitability of that business in the previous 3 years. But because of sum of parts multiple, we think to the extent that we can find a buyer that we should monetize that one, and we did at a very reasonable multiple.

So is there more to do there? Yes, but it's -- the devil is in the detail. Selling things are easy on the cheap, selling things and getting the right multiple for it take time and you need to be patient. On the M&A side, clearly, we want to get exposure to markets that we have conviction that they're going to grow over time. We like the competitive set in terms of the competitive stack. And we think that we can extract margins out of it. We've been buying a lot in our Pumps & Process Solutions segment over time. And I think to a certain extent, we've transformed our Fueling Solutions segment, which was overexposed to retail fueling, which if you guys remember 3 years ago, EVs were taking over the world and valuations of that business were relatively low.

We were making the argument that there's very few competitors and then we can extract a significant amount of value out of it. So we kept it during the time rather than selling it out of the portfolio. And then we transformed it by buying through M&A, a significant entry point into the, let's call it, the gas complex. So we're trying to mix up. We're trying to move into areas that we've got conviction that are growing and that Dover has a right reputation to operate.

I mean it feels like you're moving away from cap goods as a generic statement and moving far more into component businesses, small solution subsets. And even some of the more recent ones like SIKORA, you've got ways to combine these things into a maybe more unique way into the marketplace, right?

Well, I mean, I think that I would describe it is that we're not afraid of small TAMs. I mean you hear a lot of this thematic investing and I want to be in water, I want to be in electricity. Part of our business model is, we're not afraid of a small TAM. And we think that we can enter into a small TAM where, generally speaking, there's very few competitors and those competitors are small, that the advantage that we have of scale allows us to extract disproportionate profits out of it.

So you find niche markets like what we did in SIKORA, which inspects high-voltage cable power solutions. We like the end market for its growth aspects, and we like the market because by and large, the competitors were all relatively small private companies, which we think that we can effectively compete with.

That makes sense. And how do you think about -- we'll get it out of the way with here, right? I mean you announced an ASR last night, I think, post close. Why now? And what does that say about what the actionability looks like, much less how much firepower you have?

Far be it for me to be the first CEO to says that our stock is undervalued. But if we look at it from a competitive point of view, it is undervalued. So as part of the M&A process, we always look at, okay, we could do this with our capital and we could buy back stock. Right now, in terms of relative valuation that we think that for 2 reasons, we think the stock is undervalued, so that -- and we're very long liquidity right now from a balance sheet point of view from the sales that I described before in the previous year. And I guess more disappointingly, M&A so far this year has been dominated by very large transactions.

There hasn't been a lot of assets, lots of number of assets to look at, but actionable assets of medium scale, there hasn't been quite a bit. And I guess, disappointingly, valuations are very high. I think we're coming out of a period in industrial world where top line growth has been muted, for lack of a better word. Balance sheets are in very good shape in corporate America. So with a paucity of assets that are coming on to market so far this year, multiples look like they did back in the free money era, unfortunately. So when I compare prevailing multiples versus intervening on our stock price, that it looks better for us to continue to do so. So I'm not exiting M&A. SIKORA was not a public transaction. We did that on our own, and we can continue to do that. But the fact of the matter is the multiples in 2025, if anybody thought they were coming down, they're not.

But it's not like a $500 million buyback, which you've already completed -- is constraining you if that market changes at any level.

I think it took our firepower down from $7 billion to $6.5 billion. So I think that from a balance sheet perspective, we're in pretty good shape. If I go back and look between 2018 to today, we have self-financed all of our M&A through operating cash flow and disposals. So the balance -- the leverage on the balance sheet has not changed at all.

Yes. Maybe switch gears here and have a same -- similar thematic conversation, which is we just talked about what we're trying to accomplish with the portfolio. Maybe talk the same thing on the margin structure, which as you know, I'm of the opinion underappreciated with the trajectory you're on. But maybe talk what you're trying to accomplish, measures of success so far and what you think the end game looks like?

I think the business model that we described has worked and has runway to continue to work. There's no reason for Dover to exist unless we can extract synergy value across our portfolio. And by and large, we do that every year. So we've already announced $40 million of cost actions that we've taken this year that roll forward into next year. So I mean, I coined the term, it's non-revenue-related profit. Every given year, if we run this thing correctly, we should have an element of profitability that is not contingent upon revenue growth.

So in a year, so of our conversion, I think our old targets used to be 25% to 35% conversion. Well, that's stale now. I think for 5 quarters in a row, we've been in excess of 35%, largely because of the mix up of the portfolio, augmented by the cost takeout that we've done across the portfolio. I don't see that runway. I think we've been averaging between $30 million and $50 million of raw cost takeout every year. We're not at the end of the runway there. So both organic investment in new products and new entries into market, inorganic investment for by and large, everything that we've done is better -- either has been outgrowing the portfolio or it's been margin accretive to us on an inbound M&A and our ability to extract synergy value, I think, is something that's led to, on average, above 10% EPS growth every year.

I mean, if you think about the $40 million you just referenced as well as the run rate, the exit rate that 3Q performance and 4Q guide imply, it implies a pretty healthy run rate with more to come. And so you're going to get the incrementals. You've got the $40 million. I don't think you believe that's all you can extract next year. It's just what you've executed on. Is mix an issue as we move into next year? Or how should we think about that?

Yes, it's a funny one because you try -- you can't -- you have margin targets, but you can't manage to margin because the fact of the matter is we've got a variety of different margins in the portfolio, and it's not like we run around saying, stop growing because you're dilutive in any given year. As I look forward into this year, I mean, we've got our growth platforms, 4 out of 5 are margin accretive to the business. We expect the fifth one will be margin accretive, probably exit '26, maybe mid-'27. We should grow quite a bit in our core refrigeration business. The good news about that next year is while it may be margin dilutive, it will boost the top line from an organic point of view. And those of you who followed Dover for a long period of time and don't worry about 8% margins anymore, where our expectation is to do 20% in 2026.

Yes. No, that makes a lot of sense. And before we dig into some of the moving pieces, maybe just touch on how you think about the long-term growth algorithm and maybe put that in context of how you're looking at the cycle holistically as we start normalizing the end markets?

Yes. I mean, at the end of the day, from a communication point of view, I think that the error that I have made in the past is in working on the portfolio, some of the actions that we've taken has actually reduced the revenue, right? We've just basically -- if I think about fueling solutions for -- we've probably taken out between $150 million and $200 million of revenue over the past 4 years because the economics of that revenue were poor. And I think they probably should have been a little bit better communicating with that because everybody points to the organic growth rate and says it hasn't been genius, right? It's been relatively low over time.

I would say, conversely, the argument is despite having a lower top line because of the accordion effect of the portfolio, our earnings momentum hasn't changed at all. I think right now, sitting here today, I am unaware of any portion of the portfolio going into 2026 that is in cycle down. So that's kind of a non-macro, right? Let's not call the macro for '26 yet. Let's just talk about the individual end markets of the individual pieces. It's not as if we had in years past, the heat pump roll-off or the can making roll-off or the biopharma roll-off. We don't see that in 2026.

So if I take even over the last 3 years and I remove kind of the cycle-down portions of the portfolio, the core grows reasonably well with very good incremental margins. And that looks like the setup. We're going to see. I mean we got -- I mean, I know what October is, and October has been right on what we expected it to be. My expectation is that Q4 will be our best organic growth month or quarter of the year. And based on what we can see in bookings, I think we should be in good shape at least of getting an understanding of how we're going to enter into 2026.

That makes sense. Anything you would point to about the structural profile of the company that shifted over the last 2, 3 years? I mean, with the exit of selling ESG when you did was pretty well timed, bringing in what are probably higher growth platforms. Does that mix up with that growth? I mean you would have talked to 4% to 6% before. Does that move you to the upper end of that if the backdrop is normal? Or are you still kind of firmly in that range?

Yes, I think we'd like some latitude before we give out -- yes, I mean, the core growth of the business should be in the 4% to 6% range, right? But you're going to have volatility because of changes in the demand cycle. Strangely, with very few exceptions, we haven't had any markets where we've underperformed the underlying demand of the marketplace. But when biopharma kicks off, we need to extract as much profits as we can.

The fact of the matter is when it cycles down, you've got bad comps and then negative growth in those particular businesses. But I don't think we should apologize for so-called over-earning in periods of secular growth for whatever the underlying reason. As I mentioned before, though, we've known that in any given year of where we were in the cycle, and I think that we've reasonably forecasted that. This is the first year in many years that we can't point to a portion of the portfolio of exposure where that's probably going to cycle down next year.

Yes. And that's, I think, particularly encouraging thing going into next year, right, where maybe you don't know what the upside looks like, but you feel at least contained on the downside. You're planning for some volume growth. And then we'll see what the market bears from there.

Well, based on our margin based on the move in margin from '18 going into '26, you need significantly less top line -- you have to underwrite significantly less top line growth to extrapolate the earnings, at the end of the day is the good news. So the margin for error that we would have had back in '18, '19 and '20 has been reduced significantly because of the fact that the margin is so much wider and it translates into the cash flow of the business. So like I said, we used to give out 25% to 35% in incremental margin. I think that's probably stale at this time.

And order trajectory as you move into next year here, comment on 4Q being the strongest growth. I'm assuming that was more revenue? Or is that revenue and orders? And then -- well, I'll let you answer that and then I'll follow on.

Yes, it's revenue, right? I mean we didn't -- if you go take a look at the bottom on the revenue growth, we said 4% to 6% all in, right? And we're clocking at 1% organic year-to-date. So that implies that you're going to see a better organic number in Q4 for sure.

So when you look at the -- where you've been putting your capital dollars and where you've been focusing your growth, talk about the disparity of what you're seeing in those 4%, 5%, whatever it is growth of businesses versus what you're seeing in the remainder of the portfolio and examples, momentum, however you want to frame it?

Yes. I mean, look, at the end of the day, sometimes it's the law of small numbers, right? So you see numbers out there. We've entered into the thermal connector business, right, which essentially was sub-$10 million in revenue. It's significantly larger than that. So you get some pretty heavy percentages on that. You look at CO2 systems, that's a brand-new product that we brought from Europe to the United States, where we had virtually $0 of revenue in that 18 months ago. And now we're cruising to $200 million and exit this year. So those are both organic plays. On the inorganic side, knock wood, I mean, we entered into cryogenic components early arguably.

So we didn't have a lot of competition in buying some of those assets. Fortunately, everybody knows about it now. And that's growing really well. So if you look at -- I don't think we have the slide here. But if you look at our presentations, we give you some growth platforms and then we referenced the -- we're talking high teens depending on the size of the business. So they're doing reasonably well. The only headwinds that we've had this year has been in vehicle services. So that is business of 2 post lifts and wheel changes in that type of business. It's levered towards -- quite a bit towards Europe. That's been down just because of the whole auto complex is under duress.

And the call that we missed this year would be in retail refrigeration. So I'm not talking about the systems business, which has done incredibly well for us. I'm talking about the in-store. It's at a 20-year low this year. We had absolutely 0 indication that, that was going to happen at the beginning year. But logically, when you think about it, in terms of our customers, the ones that have suffered the most in terms of the tariffs has been retail food because it's put a squeeze on margin. And what's happened there is you had a deferment of CapEx. I don't think you're going to see that in Q4. So the good news is we think it's just been a deferment. And I would expect that's probably going to be one of our fastest-growing businesses in 2026.

So what are you worried about going into next year then?

I worry about everything. I mean it's a lot of balls to keep in the air. Macro aside, which we're not in control of...

I mean it feel like...

No, but what I worry about is by the time we get -- I would argue by the time we get to giving out guidance for next year, we'll probably be better than midpoint for organic revenue growth. We'll probably better than midpoint in margin expansion and probably top quartile in EPS expansion. There are some pretty lofty targets that we're probably going to have out there.

And you're framing that relative to benchmark or relative to your long-term targets?

Relative to benchmark.

Got it. Yes. Makes sense. So maybe let's go through some of those pieces. The biopharma side of things, we're starting to see the growth and really strong growth off a tougher base for a bit there. But what are you seeing on the biopharma side? And how do you think about the sustainability of that piece, at least tracking to normal?

I think that what you saw in Q1 of this year was almost an elevation that we went through being in a period of having too much inventory in the system due to COVID to an overcorrection in the drawdown on the inventory in the system. So you had a large spike in demand into the first quarter of this year. The good news is it went like this and then it's stabilized. So we've been clocking every quarter, and I expect to clock this quarter with growth in biopharma.

It's -- and what that means is because this is a single-use product is that the systems where our components attached to are running out there in the marketplace. So the Biogens in the world and the Lonzas of the world are just running their reactors and they're making their product and they're using our product, which is good news. What is still not returned yet is kind of venture capital biopharma because that is very much tied to interest rates. We would expect that to improve going into '26 and '27.

About a couple of the other growth areas. If you think about the 5 or so CO2, thermal connectors, biopharma, referenced those. What about precision components and then the clean energy components.

Yes. Look, I mean, I can go through all the growth platforms. You can see it in the slides. The percentages will come down because the law of small numbers of those businesses get bigger. But in terms of the trajectory of themselves, we don't see any slowdown in CO2 systems. We don't see a slowdown in biopharma. We don't see a slowdown in thermal connectors. We expect in precision components to grow quickly in the back half of 2026, and I'll explain why in a second. And in cryogenic components, we don't expect the growth rate or the demand to change, right?

So you've seen all the announcements of the LNG trains and everything else. That's kind of the ecosystem that we're selling into. The interesting one for us is you see a lot about power, the power complex. And so you see these -- everybody wants to buy turbines and everything else. Well, we're a supplier into that space on the internal components. And what's interesting is that we can see the demand from the turbine manufacturers, both steam and gas, and we're selling into that.

What we don't see yet is the demand for the infrastructure to deliver the gas to those turbines. And maybe it's come a leap because of lead times in the turbines themselves. So our expectation is that the next demand cycle, you've got to deliver the precursor, which is natural gas or steam to the turbine itself. And really right now, in terms of build-out of kind of the pipeline system to deliver that energy, it's lagging. So we're making a bet, and I think with pretty good belief that, that's on the come. And based on our market checks with the suppliers that sell into that space, it looks like back half of 2026, that should take off.

And that's part of what the growth initiatives within that broader fueling platform of yours has been tied to, right?

That's correct.

Yes. No, that makes sense. Any reason, any of the stressed areas don't see at least stabilization step up? You talked refrigeration lift. I mean it sounds like auto outlook looks pretty stable, all else equal, maybe a little downdraft in Europe.

I don't think it's going to get worse. We've done -- if you look at it, it's been a little bit of a headwind on the top line. But from a margin point of view, we've been taking cost actions in advance of that. So our margins are actually up a little bit in that segment despite having in both segments when we had some negative revenue growth.

And that's back to what I said before. If you've got non-revenue-related kind of synergy cost savings, you can kind of weather the storm with the volatility on the top line. If you don't, you're going to go up and you're going to go down and you're going to see incrementals and decrementals. Our incrementals are actually going up despite the fact that we've had some headwinds on the top line.

And a lot of the Baird analysts are asking a similar question here. I know you talked to thermal and you talked of the eventual catch-up on the gas side for you all. But when you think AI, what are you guys doing internally to implement it? Are you seeing any gains? Anything that you would point to that's relevant?

Let's put the product issue aside because we've got so many products, right? What I did is I put a slide in the last quarter, which probably is not well understood and is part and parcel to the margin expansion that we've shown here is we've done a ton of work of extracting synergy value across our portfolio. So we have swept away all of the noncustomer-facing activities of all these operating companies. So think about AP, AR, insurance, expense reports, tax, all of IT, we've swept that out of the operating companies into centralized processing centers.

We did that because we're more efficient because we want the people that are running these companies to spend 99% of their time making their product, engineering new product and working with their customers and not running around wasting their time with back-office keystrokes. The good news about that investment is, a, we've extracted the synergy value of doing that. The better news is we've centralized it. So we've got basically a way that we can introduce AI into centralized processing. It's very nice to say AI. But unless you've got it in centralized nodes, it's so fragmented, it's never going to work. So we believe that the low-hanging fruit for AI implementation for us is to adopt AI on what is generally just some very manual processes that we've got a lot of people working on.

Yes. No, that makes sense. And then the fueling piece here, maybe just talk to the traditional fueling piece and why there might be a little faster growth entitlement over the next couple of years than maybe people realize.

Well, we had a very long deferred capital cycle because everybody was struggling with EVs taking over the world. So if you were a retail operator, how are you deploying CapEx to an area where everybody was underwriting negative growth into the future? Well, I think that we're beyond that now, number one. And number two is everybody has gone and taken a look how profitable sales of fueling -- using fueling as a way to drive sales. So Costco is really the industry benchmark. Costco has been enormously successful by revitalizing their fueling points of driving revenue into their stores. And that is not lost on Walmart and Speedway and Buc-ee's and everybody else. So I think that we're in a pretty good cycle here.

Yes. Buc-ee's is coming to Wisconsin.

Buc-ee's coming to Wisconsin.

Yes, there you go. With that, please join me in thanking Rich and the Dover team for their time today.

Good morning, and welcome to Dover's Third Quarter 2025 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 of Investor Relations. [Operator Instructions]

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, Chloe. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through November 13, 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.

With that, I will turn the call over to Rich.

Thanks, Jack. Good morning, everybody. Let's get started on Slide 3. Overall, we are pleased with Dover's third quarter results. Revenue was up 5% in the quarter, driven by broad-based shipment growth in short-cycled components, continued strength across our secular growth end markets and very encouraging results from recently closed acquisitions.

Order trends continued to be positive momentum in the quarter, up 8% all-in year-over-year or 4% organically, providing good visibility for the remainder of the year and into 2026. Margin performance in the quarter was excellent, with a record consolidated EBITDA margin of 26.1%, up 170 basis points over the comparable period as a result of positive mix impact from our growth platforms, solid execution and our rigorous cost containment and productivity actions, all five segments posted margin improvements during the quarter.

All in, adjusted EPS was up 15% in the quarter and is up 17% year-to-date. Capital deployment remains a key driver of our double-digit earnings growth. This year, we increased our investments in high ROI capital projects, focused on productivity and capacity expansions as well as targeted footprint optimization.

Our balance sheet strength is an advantage that provides flexibility and attractive optionality as we pursue value-creating bolt-on acquisitions and opportunistic capital return strategies. We have a constructive outlook for the remainder of 2025 and into '26. Despite some macroeconomic uncertainty, underlying end market demand is healthy across most of the portfolio and is supported by our sustained order growth. As a result, we are increasing our full year adjusted EPS guidance from $9.35 to $9.55 to $9.50 to $9.60.

Let's go to Slide 5. Engineered Products revenue was down in the quarter on lower volumes in vehicle services, partially offset by solid performance in aerospace and defense components, despite the organic volume decline, absolute segment profit improved in the quarter on well-executed structural cost management, product mix and productivity initiatives.

Clean Energy & Fueling feeling was up 5% organically in the quarter, led by strong shipments in clean energy components, fluid transport and North American retailing, fueling software and equipment. Our recent acquisition of [ SiteIQ ] provide a remote site monitoring and fueling sites is off to a good start.

Margin performance, as expected, was solid in the quarter, up 200 basis points on volume leverage and a higher mix of below ground fueling equipment and restructuring benefit carryforward. Imaging and ID was up 3% organically in the quarter and growth in our core marketing and coding business and in serialization software, margin performance remains very good in the segment at 29% adjusted EBITDA margin as management actions on cost to serve and structural cost controls continue to drive incremental margins higher.

Pumps & Process Solutions was up 6% organically, with growth in single-use biopharma components, thermal connectors for liquid cooling of data centers and precision components and digital controls for natural gas and power generation infrastructure. SIKORA, which we acquired at the end of the second quarter is significantly outperforming our underwriting case. Segment revenue mix, volume leverage drove margin improvement on solid production performance and volume in secular growth exposed end markets.

Revenue was down in the quarter, employment sustainability technologies and comparative declines in food retail cases and engineering services, which were collectively down 30% year-to-date. Industry-wide shipments of door cases are at a 20-year low in part because of tariff uncertainty has caused customers to delay maintenance and replacement upgrade spending. These projects cannot be delayed indefinitely. And encouragingly, we saw a material acceleration in booking rates in the quarter, which signals volume improvement moving forward.

Meanwhile, the segment had record quarterly volumes in CO2 systems, as well as double-digit growth in heat exchanges and accelerating demand for liquid cooling of data centers and improving sentiment in European heat pumps. Despite the lower top line, the segment posted 120 points of margin improvement on productivity actions and a higher mix of U.S. CO2 systems and brazed plate heat exchangers.

I'll pass it to Chris.

Thanks, Rich. Good morning, everyone. Let's go to our cash flow statement on Slide 6. Year-to-date free cash flow was $631 million or 11% of revenue up $96 million over the prior year has increased year-over-year operating cash conversion more than offset an increase -- an expected increase in capital spending.

Free cash flow generation accelerated in the third quarter, in line with our expectations and with historical trends, and we expect a further step up in the fourth quarter, which is historically our highest cash generating quarter. Our guidance for 2025 free cash flow remains on track at 14% to 16% on strong conversion of operating free cash flow -- operating cash flow.

With that, let me turn it back to Rich.

Okay. I'm on Slide 7. Let's put a ride a little more detail on the bookings in the third quarter. Q3 consolidated bookings were up 8% in total and 4% organically from the prior year, I called out the 25% bookings growth in Climate and Sustainability technologies a welcome sign as we expect the segment to return to growth in the fourth quarter on broad-based volume demand.

On Slide 8, we highlight several end markets that are key drivers of our revenue growth in 2025 and beyond. We are benefiting from major investments in power generation electricity infrastructure and artificial intelligence across multiple businesses. We are directly exposed to data center build-out by hyperscalers and the secular shift from air cooling to liquid cooling of new chip technologies between our thermal CPC connectors, which primarily connect to the back of the server rack manifolds and directly to the chip as well as our large and XL heat exchangers from swept that are key components in cooling distribution units and chillers we expect to generate over $100 million of revenue in this year alone.

Our recently closed SIKORA acquisition expands our exposure to electricity infrastructure through measurement and inspection control solutions for high voltage, polymer-coated wires and cables, a direct beneficiary of growing electrification trends and demand for customers for product quality assurance and improvement. All this electricity has to come from somewhere and natural gas remains the most viable option for scalable, reliable energy for the foreseeable future.

Our precision components and OPW Clean Energy businesses participate across several points of the natural gas infrastructure value chain, including gas and steam turbine components, midstream gas pipeline engines and compressor infrastructure and valves and vacuum jacketed piping used in liquification and gasification of LNG. End market data and customer discussions indicate a very bright future for these businesses. Our single-use biopharma components platform has returned to its long-term double-digit growth trajectory on volume demand and new product launches continued advances in biological drugs and therapies, coupled with an industry shift towards single-use manufacturing processes are fueling sustained high-quality growth for our products.

In CO2 refrigeration, we maintain a clear market leadership position in the U.S., supported by a fully platform product portfolio and a retrofitted plant in [ Cones ], Georgia that provide strong competitive moats and product performance, lead times and scalability. Economic and regulatory tailwinds are driving the transition to CO2 systems as large national retail chains accelerate their adoption with a line of sight of continued double-digit growth into 2026.

A significant majority of the acquisition capital deployed in the past 5 years has been directed towards these high-end growth markets, which remain top priorities for continued investment. Collectively, these markets now represent roughly 20% of our portfolio and are contributing meaningfully to our margin expansion.

Moving to Slide 9. Our investments in center-led functions and ongoing focus on productivity improvement are key drivers of our margin expansion. We have made significant progress building out our shared back-office services, digital capabilities and internal engineering services through the India Innovation Center.

These center-led functions enable our operating companies to concentrate on what matters most. Serving customers driving new product development and responding to market-specific needs while leveraging Dover's global scale and balance sheet. This structure remains a core competitive differentiator of our operating companies, and we extract cost synergies from our existing and acquired portfolio companies.

Our Dover Business Services, Dover Digital and Innovation Center are now fully developed and integrated across the organization. With these operations fully built out, we expect meaningful scale and scope benefits as we continue to grow organically and through acquisitions, further reducing average transaction costs and driving attractive margin accretion.

We believe that our shared back-office services will be the largest nonproduct beneficiary of artificial intelligence implementation. An important part of our business model is to drive productivity through targeted efficiency and fixed cost reduction programs. On the right are some of the key ongoing projects that we had highlighted in previous quarters. including our recently announced transition of the Anthony glass door manufacturing from Sylmar, California into our existing Hillphoenix refrigerated case facility in Richard, Virginia. A move expected to deliver significant -- these initiatives are projected to contribute $40 million in incremental carryover benefit in 2026 with additional benefits extending into 2027.

Let's finish up on the outlook slide #10. We expect Engineered Products to improve sequentially in the fourth quarter on double-digit growth in aerospace and defense components and improving market trends and competitive dynamics within vehicle services.

Our outlet in Clean Energy & Fueling remain solid across most of the businesses. North American Retail fueling is starting another capital deployment cycle and the outlook in clean energy components is positive as well. Vehicle wash continues to experience some headwinds, although we would expect that to recover in -- Managing and ID should continue its long-term steady growth trajectory given the significant recurring revenue base and solid underlying demand with an additional upside from serialization software.

We forecast this segment to continue its double-digit or single-digit organic trajectory. The outlook for pumps and process solutions is strong and broad-based with attractive top line as forecast across single-use biopharma components, thermal connectors for liquid cooling of data centers and precision components for natural gas infrastructure, bookings and backlog trends in our long-cycle polymer processing, signal improving conditions and the business should return to growth in the fourth quarter for the first time over 2 years.

And finally, climate and sustainability technologies should grow in the high single digits organically in the fourth quarter on continued strength in CO2 refrigeration systems and heat exchangers, as well as growth in refrigerated door cases from improved booking rates. The full year guidance is on the left, we accept acceleration and we expect acceleration of our top line in the fourth quarter driven by our secular growth businesses and sequential recovery in certain capital goods end markets we are well positioned as we begin to transition into 2026, and our advantaged balance sheet provides attractive optionality to selectively play offense to continue driving shareholder returns. [ Ask ] back to you, Jack.

Okay. I guess, Clearly, before you get to the script on questions, if I can just interject quickly. We've had a lot of pickup in our analyst coverage over the last 12 months. So if we could please limit the Q&A to just one question, we would greatly appreciate that. I'll turn it over to you, Chloe.

[Operator Instructions] We'll take our first question from Andy Kaplowitz with Citi Group.

Rich, you mentioned an improving sequential outlook in vehicle services improved booking rates in refrigerated door cases. But did you see improving bookings came across Q3 for the company? And would you expect book to bill over 1x in Q4? And then do these improvements in relatively easy comps set you up for a better organic growth year in '26, at least closer to that algorithm that you've given out of 4% to 6% over time?

That's about five questions, Andy, but let us -- I know where you're headed. Look, the year-over-year reduction in refrigeration on the basic retail refrigeration equipment, has cost us about 1.5% to 2% of organic growth on a full year basis.

So the good news, is that we've been able to cover that largely because of our growth platforms and the margin improvement over year-over-year. And the good news also is which I called out in the press release, is that because booking rates have accelerated, particularly in there, and we will do quite well on the comparative top line in that business that we're looking at close to $140 million to $150 million revenue headwind that we absorbed this year. So do we get it all back next year? We'll see, but I think we're going to get a significant portion of it back if the Q4 trajectory holds as we go through the end of the year.

And we'll take our next question from Steve Tusa with JPMorgan.

It sounded like Andy was moving along there or something. I have -- surmised we get back to school, one question in 32 parts. But just the implied organic in the fourth quarter, I mean, you have a pretty wide range there. But the low end of that range seems to be in and around the mid-single digits for the fourth quarter? And then totally unrelated follow-up to that. Are you guys thinking about buying back stock? I mean you guys have a ton of cash and you sold probably a subpar asset for a multiple that's now above where your stock is trading? So any thoughts around a potential buyback as well.

Yes. I think if you go back and look in the transcript, you'll see the corporate speak for, we think our shares are cheap, and we're likely to intervene. Number one. And number two, yes, I think that from -- on an organic basis, Q4 should be our highest quarter in the year.

We'll move next to Jeff Sprague with Vertical Research.

Rich, just back to the sort of the restructuring. Is this the totality of sort of what you foreshadowed for us on the Q2 call? Or are there -- sort of other actions in place that could then even be additive to this? Or is this pretty much in [ flat ] what we should expect for 2026?

Well, we had a big debate in here, whether to not --

I don't know if that was my...

No. All right. I'll answer it again. That is -- look, we had signaled that we were going to give an update in Q3. So that's where we are in Q3 right now. I expect that number to increase as we close the year. It's just going to be a question of the timing, whether it's '26 or '27, but that number should go up.

And we'll take our next question from Nigel Coe with Wolfe Research.

I promise I'll keep just a one question. I promise, I probably -- I'll try.

Nigel, we get complaints are cutting people off despite the fact we have the longest conference call. But anyway, go ahead.

No, I know. I know. I know. You got a lot of -- you are a popular company. Any initial thoughts on '26? And I'm not asking for a range here, but it just seems that a lot of the business that are dragging today could well be meaningful tailwinds in '26? And if these secular growth businesses continue, then '26 organic could be quite acceleration. So just any thoughts as you see things right now for '26?

We'd like to set up in a strange way, we took the headwinds that we had not forecasted in Refrigeration based on our discussions with customers. But because of rollover restructuring and a lot of productivity and some really healthy mix where we've been able to absorb it this year. So the good news is that it's set up comparatively looks good there. I'm not aware of any business within the portfolio that's forecasting down revenue for next year.

Now clearly, somebody will get it right and somebody will get it wrong. But it's not like the situation that we had with MAG in the past where it was cyclical, and we knew it was going to come down. The rest of it, I think that we can look at the trajectory in Q4 if you put on just regular seasonality next year, I think the setup looks really good.

And we will move next to Amit Mehrotra.

Congrats, operator. That's a pretty good attempt on my last name. I appreciate it. Rich, if we go back 6 months, it looks like -- kind of a millennial ago, but you were kind of pressed by lopping $100 million in the back half -- kind of right off the top, and it looks like that's kind of been absorbed. As you think about rolling up the plan for '26, I mean, are you see the same -- I guess, the macro [ backdrop ] has gotten better, but do you still kind of feel like that kind of conservatism is appropriate as you think about '26?

And then just related to that, the margins have been incredible this year, I think, all-time record in the third quarter. It feels like margins can move up again in '26, just given all the restructuring we did, but I just want to understand kind of -- you're starting off of a very high base and would love to get your thoughts on margin progression into 26.

Sure. I'll deal with the margin one first. You do have an amount of mix effect within the segments. So I think we'd have to consider that to a certain extent. But absolutely -- profitably fine. I don't think that we're over earning from a margin point of view right now.

If I look at each individual product line, there's nothing esoteric in there that said, "Yes, well, we really killed it here. So I don't expect them to come down with the fact -- our business model, if we do things correctly, always has rollover restructuring and productivity. We [ do ] that thing we can do this every year for multiple years. And that's always a little bit of a hedge that we have for either volatility in the top line or kind of a negative mix change. So that's positive.

So to the extent that we get the product mix that we like and we're rolling forward another $40 million, that's positive to margins overall. So I think that we're good there. In terms of the setup, I think I answered it before. We took a pretty big headwind in refrigeration here. It's almost twofold percent points of growth of organic growth, we're at a 20-year low in terms of unit volume into that space this year. I mean, do we come all the way back. But again, I think that let's we've got a pretty heavy number in terms of organic growth for Q4. Let's get that under our belt and let's see where bookings are and everything else, but I'd like to set up, as I said before, we like it.

We'll move next to Scott Davis with Melius Research.

Can you guys give some context to your data center exposure and kind of terms maybe around content per megawatt or opportunity per megawatt. I mean, do you look at it that way? Or?

No. I mean, look, we have people that try to look at that way, but let's -- I mean, to be honest, in terms of participation. It's meaningful for us in terms of the volume and the margin. But in terms of the entire ecosystem and the billions of dollars being spent, we are who we are. Our focus is more getting the spec on the reference products for the reference customers. And that, I think, that we've been highly successful in doing that on both the [ brigade ] heat exchanger side and the thermal connector side. So to the extent that the market grows, the way we see it, we don't see a change in the competitive stack in those particular product lines. So if it grows, we'll get our fair share.

We'll take our next question from Joe Ritchie with Goldman Sachs.

Can you just give a little bit more color on that SIKORA acquisition. I think you said that it was significantly outperforming. So that's great to see. And then maybe just give us an update on your deal pipeline and have the potential to do more in the next 12 months?

Yes, sure. SIKORA, I think that -- we had a head start there because we had been working with SIKORA with our MOG polymer processing equipment business on our own for our own users and then we got to know each other. So we were able to close that because as we learned about the company, not only for our own particular use, but what they were doing and where their exposure was we really liked it.

And knock wood, it's really done fantastically in Q1, significantly better than our deal model would have incorporated for the base year. We are in the process of integrating SIKORA. So if you take a look at that back office slide that we put in there in all three areas, we're working pretty -- mention of assembly operations, pretty much done. So we're going to take what was a single site manufacturing site and probably expand it at least in two other different geographies over the next 24 months. So that's great.

In terms of the deal pipeline, if you look at the overall stats on M&A, it looks like M&A is up significantly, and it is, but it's really very large deals and corporate breakups and a variety of things, the mid-market where we kind of play has been slow.

In terms of pipeline, we've got an interesting pipeline there. In terms of valuation, valuations, I think that they're trying to find its footing and that's reason -- so we're being selective as usual. But we've got enough in the pipeline that I would expect that we'd close on a couple of things over the next 12 months.

We'll move next to Chris Snyder with Morgan Stanley.

I wanted to ask on orders. So a positive update here in Q3, up 8% or 4% organic. But could you provide some color or thoughts on the order to revenue, I guess, conversion for the company? Because you've had pretty good orders for a while now, and it hasn't really converted to the top line to the same degree that we've seen in orders. So I guess, any kind of thoughts on that? And it seems like going forward, you do expect better conversion, whether it's into Q4 or '26, so.

Yes. I mean the amount of attention that orders get an organic orders to extrapolate that into revenue as one of the great mysteries of life. But we continue to give the data -- that is more reflective than to me than orders kind of in terms of trajectory and everything. But you're right. I mean, look, at the end of the day, we would have liked organic growth to be higher this year. I think it's been really isolated in two particular businesses. We had an inkling on the vehicle services. We probably have a challenging year. We missed it on refrigeration.

Clearly, the good news about that is we don't believe that, that has lost revenue. It's just been pushed largely into '26 now, although we'll get a nice uptick next year. So orders are up portfolio is in pretty good shape. I mean if you see segments, we see it down to the individual operating company basis, as I mentioned earlier to an earlier question, we don't see a cyclical decline in any portion of the portfolio rolling into '26. And that's probably the first time that we can say that in a couple of years.

We'll take our next question from Joe O'Dea with Wells Fargo.

Rich, you made the comment about how you're not aware of any businesses in the portfolio that are forecasting revenue down next year. I guess I'm curious about which ones you're most excited about the growth potential, just when you think about coming off of the [ Magswep-Belvac ] kind of situation last year and now you get sort of cases and doors and the vehicle lift side. And so just thinking about what could be poised to sort of deliver kind of growth that you're getting excited about next year?

Sure. We highlight the growth platforms. So I think you can go take a look at that. We think that we are in what should be a 2- to 3- to 4-year CapEx cycle in the fueling business overall, inclusive of the cryogenic components and everything that we bought in that space.

So I think what was our growth this quarter, like 5 or 5 organics, which is pretty good overall, and we don't see that slowing for the foreseeable future for a variety of for a variety of reasons, whether it's customer CapEx or regulatory and everything else. Refrigeration, I think we've beaten that one to death at this point. We don't -- I don't know, Belvac is growing this year.

We -- I think it will grow some next year, but that's not going to move the needle in comparison to refrigeration and what's happening in [ brace ] heat exchangers, vehicle services, we'll see. I mean it's been a tough year because a lot of that is exposure to Europe. It's a little bit early to make a call on Europe, but I don't expect it to decline going forward.

And actually, the management has done a really great job on the cost structure, so even despite the top line headwind that you see this year...

You cut out at the end on me, but I heard it through management doing a great job on cost structure and vehicle lift.

Yes, yes. So what I'm saying is if it grows a little bit next year, the incremental margin should be positive.

We'll take our next question from Deane Dray with RBC Capital Markets.

Thank you. Good morning, everyone. On imaging, can you expand on the point about serialization software kind of size what the opportunity is in some context, please?

Sure. It's 16%, I guess, of the total revenue of the space.

Yes, it's about $60 million -- $70 million.

Anyway, yes, it's levered almost exclusively to pharma. So as pharma builds out production lines, that's when we sell the software and the recurring revenue associated with it. I think that everybody is pretty well aware of what's going on in kind of incentivized reshoring of pharma. And I think that we'll get our fair share of that.

We take our next question from Julian Mitchell with Barclays.

I just wanted to understand, Rich, a little bit better sort of how you've seen the demand environment play out because your tone is quite upbeat on the top line, but the revenue guide is reiterated. And so I guess to put a finer point on it, I wondered if any of the segment revenue assumptions for this year have changed since the figures you guided for in July and whether there had been anything in the bookings that had surprised you positively in the last few months or so.

Sure. clearly, we missed on retail refrigeration by a significant amount. All the customer information that we're getting, it was on the come. I think -- some of the commentary that we gave intra-quarter, when we can see that it wasn't coming, we were like, okay, now it's not coming, but we're chasing our tail a little bit. So the quantum of that loss on a full year basis is 1% or 2% of organic revenue growth that we had.

Now it's going to flex now because the orders popped, so at least optically, we'll have a good look. In Q4, -- sites were $130 million, $140 million of revenue that we've got to make up year-over-year. We'll take half of that growth for next year, Julian, at the end of the day.

The balance of the businesses, the trajectory is fine in terms of orders. We always have to be a little bit careful in Q4 because we're guessing about our customers' behavior on their own inventory at the end of the day. But I think that someone asked earlier about that -- someone did the math on the squeeze for revenue growth in Q4, and that's fair. So it stays within our window. It gives us a little bit of cushion just in case December is light in terms of shipments.

But overall, there's really -- the only significant change is that biopharma hung in there because there was some thought about, well, was this restocking? And clearly, it's not. We've run the numbers on that. So it's been pretty consistent in terms of demand and should be consistent in Q4. Same thing with thermal connector.

So overall, there's a little bit of cushion on the revenue side in Q4, but the trajectory and the only thing that's changed is we lost basically a quarter of retail refrigeration.

And I would now like to turn the call back to the presenters for any additional or closing remarks.

No, Chloe, you can wrap up.

Certainly, thank you, everyone. This concludes our question-and-answer period and Dover's Third Quarter 2025 Earnings Conference Call. You may now disconnect your line at this time, and have a wonderful day.

Good morning, and welcome to Dover's Second Quarter 2025 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. [Operator Instructions]

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 would 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 August 14, 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.

With that, I will turn this call over to Rich.

Thanks, Jack. Let's get started on Slide 3. Dover's second quarter results were strong, driven by excellent production performance, positive margin mix from our growth platforms and carryforward cost actions taken in prior periods. Top line performance accelerated in the quarter on broad-based shipment growth and short cycle components and outperformance over secular growth exposed end markets. Order trends continued to be positive momentum in the quarter, up 7% year-over-year bolstering our confidence in the second half outlook, with the majority of our third quarter revenue already in backlog. And as an anecdote, July orders are tracking really well going into the back end of the third quarter.

Margin performance in the quarter was exemplary with a record adjusted segment EBITDA margins above 25%, as a result of prior period portfolio actions, positive mix from the growth platforms and our rigorous cost containment and productivity actions. Adjusted EPS was up 16% in the quarter.

Our solid operational results were complemented by ongoing capital deployment actions. We continue to invest in high ROI organic capital projects, including productivity and capacity expansion as well as targeted footprint optimization. During the quarter, we also completed 2 acquisitions of attractive fast-growing assets within our high-priority Pumps and Process Solutions segment. Our balance sheet strength remains an advantage that provides flexibility as we pursue value-creating capital deployment to further expand our businesses in high-growth, high-margin areas.

We are approaching the second half of the year constructively despite some macroeconomic noise, underlying end mark demand is healthy and is supported by our sustained order rates. As a result, we are raising our full year adjusted EPS guidance to $9.35 to $9.55, which is plus 14% for the full year at midpoint.

Let's go to Slide 5. Engineered Products revenue was down in the quarter on lower -- volumes and vehicle services. We did see improving sentiment and vehicle services as the quarter progressed, most notably in North America where book-to-bill was north of 1. Margin performance for the segment was up on structural cost management and productivity.

Clean Energy and Fueling was up 8% in the quarter, led by strong shipments in clean imaging components, fluid transport and North American retail software and equipment. Margin performance was solid in the quarter, up 80 basis points on volume leverage, higher mix of below ground fueling equipment and restructuring benefit carry forward.

Imaging and ID was stable on growth in our core marketing and coating business, partially offset with timing of textiles. Margin performance remains exemplary in the segment at 28% adjusted EBITDA margin. Management actions on cost to serve and structural cost controls continue to drive incremental margins higher. Pumps and Process Solutions was up 4% organically on double-digit growth in single-use biopharma components, thermal connectors for liquid cooling of data centers and digital controls of midstream natural gas compression.

[Audio Gap]

pumps posted solid results as well, and as forecasted, the long-cycle polymer processing equipment business was down year-over-year. The quoting activity improved in the quarter and book-to-bill was ahead of 1.

Segment revenue performance, including the acquisition of Sakura and volume leverage drove margin improvement on excellent production performance and volume and secular growth exposed end markets. Revenue was down in the quarter in climate sustainability on the comparative declines in food retail cases and engineering services, which more than offset the record quarterly volumes in CO2 systems.

Heat exchanges was up sequentially and year-over-year on record quarterly shipments in North America, where we are actively increasing capacity to accommodate growing demand tied to liquid cooling of data centers. Shipments of heat exchanges for installation in European heat market, heat pumps was down slightly in the quarter but are expected -- in the second half of the year. Despite the lower top line, the segment posted 60 basis points of margin improvement against a difficult comp period on productivity actions and a higher mix of CO2 systems.

I'll pass it on to Chris here.

Thanks, Rich. Good morning, everyone. Let's go to our cash flow statement on Slide 6. Year-to-date free cash flow was $261 million or 7% of revenue, up $41 million over the prior year as year-over-year improvements in operating cash conversion more than offset expected increases in capital spend on growth and productivity projects. We expect cash flow generation to accelerate in the second half of the year, in line with historical trends as seasonal working capital liquidation in the third and fourth quarters should more than offset continued investments in productivity, capacity expansion, cost structure optimization projects, which are expected to generate meaningful benefits into 2026 and beyond. Our guidance for 2025 free cash flow remains on track at 14% to 16% of revenue on strong conversion of operating cash flow.

With that, let me turn it back to Rich.

Okay. Let me try as I might, on bookings. Let's give this one a word here. Here, we provide more detail than usual, although I guess the reaction is murky, in the second quarter. Q2 consolidated bookings were up 7% over the prior year. They were also up sequentially, marking a continued momentum across our business. Year-to-date book-to-bill is above 1 across all 5 segments, with particular strength in our highest margin and secular growth markets, an encouraging sign as we move into the second half.

Let's go to Slide 8. Slide 8, which highlights several of the end markets that are driving our consolidated growth forecast and our margin between end market data and our customer forecast and our own booking rates, we are encouraged by the outlook in the broader industrial gas complex with cleaner energy components and precision clean energy components single-use biopharma components, CO2 refrigeration systems and inputs into liquid cooling applications of data centers, which includes our large heat exchanger business. We have made significant organic and inorganic investments behind these markets, and they remain 1 of our highest priority areas for investment going forward, which we'll talk about in a minute. In aggregate, these markets now account for 20% of our portfolio and drive attractive margin accretion and expected double-digit growth, which I think we're on track as of the close of Q2.

Let's go to Slide 9. Our organic investments remain our highest priority of capital deployment. We are moving forward and, in fact, accelerating a number of organic investments despite the near-term uncertainty in the macro sentiment. Here we show some of our most meaningful and high ROI capital projects that we're undertaking in 2025. You'll see a healthy balance between growth capacity expansions behind some of our highest priority platforms as well as productivity and automation investments, including rooftop consolidations. So we put in the press release that we were tallying up these savings and provide an update in our next quarterly call as to the absolute quantum of the savings roll forward benefit into 2026. Suffice to say that given the scale of the projects, we expect the savings to be meaningful. This is in line with our goal each year to drive non-revenue profit generation through fixed cost reduction programs.

So we're kind of midstream, let's deal with the footprint projects and the reshoring. We're in good shape in terms of the timing. As Chris mentioned, that is going to be reflected in our cash flow or our CapEx projections for the year. So the timing of it and some of these projects are quite complex when we talk about going from eliminating 6 rooftops, for example. By the time we get to Q3, we'll have an idea of the timing of the roll forward of these benefits that are not -- will we catch a bit of it in Q4, maybe, but the vast majority of it will the non-revenue profit of these restructuring.

So what you're going to see between now and the end of the year is the CapEx inflect up and the restructuring charges come as we start to take down some of these operations. What was the total roll forward this year?

About $30 million.

$30 million of savings are reflected in this year's accounts, and that's why you see with at least year-to-date, not a lot of revenue growth. I think we've got easier comps in the second half of the year, but you see the margin accretion and meaningful contributor to some of those margins as last year's roll forward. I would expect that next year would be the same, if not better. The biggest single project that we have is one of the rooftop ones. We'll probably catch that in the latter half of next year. But let's go to [Audio Gap]

When we take a look at what we've taken every year in terms of margin expansion, I mean, it's close to 100 basis points a year. A good portion of that is revenue mix, a variety of things that we're doing in the portfolio, but a meaningful portion of that is, let's call it, productivity. And in our business model, continues at its current trajectory of improving the portfolio, upgrading the mix within individual segments, we also look and put goals on the businesses of meaningful productivity of which a lot of it is things like rooftop consolidation and the reduction of fixed costs. So can't give it to you now because I don't want to give you a number that's incorrect. But we think that at minimum, the benefit in '26 is going to be the same -- excuse me, the minimum that we're seeing in '25 will be '26, but the total quantum is going to be larger. That's what's in the pipe. It's just a question of, do we realize it in '26 or '27.

Okay. I got myself off the script. Sure, that's upsetting to ebony. You know what I'll take Slide 11. The bottom line is if you look at the margin accretion here, it's upgraded mix. I'm talking about '25 productivity, all the things I just talked about. There's the look for the back half of the year. So we're not calling for any margin dilution. But you can see in terms of what our organic growth rate is the year, the back half, largely because of the acceleration on our growth platforms and easier comps that we had in the back half of last year. That's why you see the organic growth estimate for the last year.

We will go to Q&A in a second, whether there's anything more meaningful there. Oh, I'm sure it -- what do we use for the back half for dollar or euro in the back half?

Yes, we have a range of outcomes, but one of them was carrying forward current rates.

Right. So look, we back-tested the volatility in the first half of the year and then use that for the second half of the year, you find it -- I can't predict FX, so using prevailing spot rates for the whole back of the year based on the volatility that we saw at the beginning of the year, I think, is a bit ambitious and FX rates, at least dollar, euro stays the same, then that's good for translation and maybe gives us 100 basis points of increased revenue in the back half. So I'm sure we can beat that to death in the Q&A. So why don't we go to Q&A? Jack?

[Operator Instructions] Our first question will come from Mike Halloran with Baird.

A couple of clarifying questions. First, talk about pretty happy with the trajectory through the quarter. Tough organic order comps. But could you just give us a sense for how you thought things played out sequentially through the quarter relative to previous expectations? And frame how things have changed from your perspective going into the back half of the year versus not. It seems like you're at or above the trajectory you would have been talking about entering the year with the original guide. We decided to deal with some volatility in the middle, but any context there would be great.

Look, generally speaking, with all the noise around tariffs and price cost and everything else, clearly, the margin performance through the first half of the year is slightly above expectation. Now having said that, we're beginning to lap comps on biopharma and everything else. So that's a big contributor to the mix benefit. I think the only portion of the portfolio that is a little lighter in terms of volume would be on cryogenic components because it seems to be a lot of notional backlog based on talking to our customer that's kind of sliding to the right, and I think that we commented that at the beginning of the year. And I think the traditional refrigeration case business is behind, and that's a pretty big business. So that is -- we would have thought that revenue performance there would have been a little bit better, but because of margin mix across the portfolio. Anecdotally, that business is not dilutive to our margins anymore, but it's 2 for 1 a little bit between the precision components and the data center business. So overall, I mean, I think our expectation in core refrigeration is clearly now going to be behind what we thought at the beginning of the year. But because the growth platforms are so accretive to our margins, 100 basis points there is 200 basis points refrigeration. So optically, on book-to-bill, it's $20 million. I think that's the difference for the quarter between, I guess, I should have stopped the last shipment of the month somewhere because then we would have been at 1, and then we won't be hammering that issue. -- year-over-year on H1 to the kind of on the sequential. We're still up overall on book-to-bill. And as I said, we went and polled everybody because we haven't closed July yet, but nobody said that the momentum on bookings was poor. So we're starting off Q3 on a bookings basis, it looks good. .

So maybe you could bridge the first half to the second half -- or sorry, what's changed in the guidance is maybe the better way to put it? I mean we...

Yes, we're ahead, right, on where we thought we would be, right? So all we're doing is rolling forward where we're kind of head into the back half. Now, the question is, and we deal with this every year, we deal with at the end of Q3, we will look where we are on bookings momentum, and then we're going to decide what we're going to do in Q4 of whether we cut production performance and maximize cash flow for the year, but we won't make that decision until probably mid this quarter based on bookings momentum and backlog.

If I put it in the context of what's changed, though, it's -- you took away the cautionary language from last quarter on the growth. You had Secura, maybe a little movement on FX. I don't really want to belabor that -- Yes. Bottom line is no real change to the momentum you would have been talking about other than removing the cautionary language.

Yes. I mean, look, I mean, we're -- EPS at midpoint is 14%. We're aiming towards the top of the range, which is 16% year-over-year, which will put us in time in terms of top quartile to our comps.

We'll take our next question from Chris Snyder with Morgan Stanley.

I wanted to ask about competitive dynamics in the market. You guys have a lot of North America production. You guys compete against a lot of smaller competitors. Are there any verticals where you're starting to see share shifts or maybe it's still too early for that? And is there any change you're seeing in the price environment post the escalation?

Okay. Well, I mean, clearly, on price total cost, we're in a positive position. So we would expect -- we don't see any particular headwinds coming either way, and we are pretty much out with our total pricing that we're putting out. So we expect some accretion in terms of the margin, and that's something unknown pops up in terms of price cost. .

Yes. I mean our business model is competing with smaller competitors, and that allows us ability to either extract pricing or manage input costs probably more effectively. I can't say yet about share because we won't -- because the dynamic of the restock at the beginning of the Q1 had a lot of kind of restock in there, and now you're just basically booking and shipping based on current conditions of demand.

Appreciate that. And then maybe just a follow-up on some of the prior questions around the back half. So there's a lot of moving parts here with price, FX acquisitions. Could you just kind of maybe level set. What the guide calls for in volumes in the back half of the year and kind of how that compares to where volumes have been tracking out in the first half?

There's no dramatic change. So we're -- we've made up kind of some headwinds. I've mentioned refrigeration, maybe some headwinds in terms of demand and vehicle services, at least in the first half. There is amount of rotation because I think that Q1 in biopharma was probably a that was -- that was a little bit of restocking, just because you can see from some of the market participants that are calling for kind of -- there was a restocking in terms of Q1 and now it's pretty -- the growth rate there is probably going to come down in the second half of the year, at least in terms of comps because biopharma and to a lesser extent, thermal connectors had begun to grow. So the relative outperformance will kind of flatten out in the second half of the year. And then some of the businesses that have not been as strong in the first half, will start to come back. That's model dilutive to consolidated margins, but not dramatically.

Our next question will come from Steve Tusa with JPMorgan.

So I just wanted to dig into the margins a little more. In the second half here, I mean, obviously, you're coming from a pretty good base. I think you had said on the last call or maybe in the follow-up of Jack, that the total segment incremental would be below -- just below $40 million because of these tariff dynamics. I think where you are today, kind of the jumping off point of the 2Q suggest something a little better than that. Maybe just some rough guidance around what you would expect for total segment incrementals this year for '25?

Yes, sure. I mean there's total incrementals, and then there's 5 business incrementals. And I think as I just said, because of the relative growth rates between H1 and H2, your incremental is going to come down because they are lower-margin businesses as opposed to -- we got off to a really good start in DPPS, for example. So that's going to just flatten out relatively based on the contribution of relative contributions to those revenues. But as you can see -- so it's mix at the end of the day. If you look at Slide 11, we're calling for everything to be up, but the incremental in aggregate is going to come down. That's kind of what we're looking at.

And look, you know this, I mean, we're a bit of a short -- the portfolio is more short cycle now than it was in the past just because of the contribution of the longer cycle businesses. And because really, there's no lack of capacity in the market for most of the products that we have. So lead times and visibility going forward on the portfolio is a little bit more difficult. So we're almost kind of guessing every 90 days of how cycle is going to go. We're not going to try to manage the total EBITDA margin of the portfolio. we do it at the business level on contribution margin, but we don't try to do it at the total. So could it be better, but I think the caution -- based on the forecast that we have today, of the relative contribution, it's more mix-related than pricing or input or anything else. All of that is covered in the full year EPS.

Right. It just seems to me though that you're -- I think you're trending like 22.6%, something in that range, first half. Your second half just kind of seasonally should be better than that, is my guess, on the second...

Well, but you need -- what you need to understand, and I hope it's not the case, but if we look and we think that we can catch up on our backlog in Q1 we'll dial down. It will flush as much inventory as we can and keep that production performance for 2026.

Okay. And then just one last question. You're going to be exiting, I think, like above a 5%, a mid-single-digit type of organic growth rate in the fourth quarter. You've talked about the cost savings. You got a little acquisition tailwind. I mean should we think about next year kind of the EPS algo being pretty similar to this year, maybe a little bit better?

I got to say, with the margin performance, and I don't see any reason for that to come down, a full year of this incremental margin plus a bigger cost savings target roll forward, we're very excited about what the incremental margin on revenue is going to track to in 2026.

Got it. That's not murky. That's crystal clear.

Our next question comes from Nigel Coe with Wolf Research.

Rich, pricing obviously really good and it sounds like price is pretty much set here, no surcharge rollback, et cetera. I think the one business that is lagging behind is probably CST probably because demand is quite big there. But I'm just wondering if there's scope for pricing at CST to improve through the year.

Let me say, how to pull this apart here. Yes. I mean the CST is more absorption right now because the core business is $20 million. And that is with a lack of Belvac, and I think we're just going to have to wait for Belvac volume to come back, and we're not even modeling that in at all for the balance of the year. And you were coming off a very big margin on heat exchanges during the tour days of heat pumps in Europe, that is slowly coming up as that market comes. That's a 25% EBITDA margin business. It's not there today, right? Because as it ramps back up -- and it's going to ramp back up for 2 reasons that heat pumps are coming back, but they're way below what they were at the peak. But we don't have a ton of dilution there because the data center portion of that business, which is accretive as a product line there comes back. So we believe, right now, making that margin considering the headwinds we had to peak and the fact that we brought back the traditional case business at the volume that we thought we were going to have this year, which I mentioned before, that is slow, that's 20% EBITDA margin. So it's just all mix right now. We've got plenty of room to move it up.

It's also a segment. Obviously, we talked about, we've done a lot of structural cost work. We've got a good tailwind from on our CO2 product line. So we see -- we're also seeing some positive trends there as well out...

The single biggest productivity project that we have on that Slide 9 is in that segment.

Okay. Yes. But the question is more about pricing. I think price was...

It's all at the margin.

Okay. Okay. And then a quick one, just going back to biopharma. You talked about the first half, second half with the restocking, et cetera. But there has been a bit of noise in some of the biopharma -- more life sciences than biopharma. Just wondering, are you seeing any project pushes, et cetera, because we are hearing a bit of noise in those markets?

Yes. It's really hard for us, I mean, we look at the same people that you look at their customers of ours. Remember that ours is more weighted towards in-use product than it is for new builds. As long as the machines that have been delivered are out there and they're running, it's consuming our product. It's not on marginal build of new product.

We'll move next to Andrew Obin with Bank of America.

So the question is, can you talk about any tariff uncertainty impact on orders in the quarter as best as you can tell? And what I'm trying to get to is that was there any pull forward or do you mainly see delays in pushouts?

More of the pushouts.

And is there a specific vertical or...

Yes. I mean it's on refrigeration. The non-CO2 portion of refrigeration has been lighter of projects that we had scheduled based on customer discussion slid to the right. And which is not -- it's the retail to the consumer portion of the market companies have more pressure at the end of the day. So to see it in retail food is not surprising overall. We look at -- yes. And we look at it as a kind of a proxy. We're shipping CO2 systems at a robust rate. You need cases when you do those systems. So it's just a lag effect.

And then just a follow-up on the pushout. And did you also on cryogenic, is at LNG that's being pushed out?

Yes. Mostly. The whole system, it's the infrastructure build is taking a little bit longer than we would have thought, and we're kind of some of the last things that go in there, including transport. So it's still good. It's just not as robust as customer communication would lead to.

Well, let me ask you a question about a business where they're probably a little bit more growth. What were bookings for data-centric exposed businesses and specifically thermal connectors and SWEP? You're adding capacity in both. So fair to say you believe in the data center build-out?

Yes. I mean, for our small portion of the billions of dollars going into it, yes. I mean what's our growth rate on Thermal connectors year-to-date?

50.

50. 50.

And SWAP?

Well, I'm sure the percentage -- but it's smaller. .

Smaller starting point.

We'll take our next question from Jeff Sprague with Vertical Research Partners.

Rich, one place where you did confuse me and maybe I haven't had enough coffee this morning, but just on the restructuring, just to be clear. So you're saying the wraparound actions from last year's work is a $30 million benefit this year. And at this point stuff that you're working on this year, you see at least $30 million next year, is that correct?

Yes. As before, I think the number is going to be bigger. We just want to get the timing of how much is captured in '26, and what the full roll forward is into '27. So you will be able to -- and you'll see it because you'll see it in our CapEx number and you'll see it in our cash flow when we do the restructuring.

And what is the sort of the uncertainty in your mind in kind of tallying up the current actions? Obviously, you would have undertaken those with a return expectation. Is there some really big variability in how these projects really manifest or the fruit that they bear?

Yes. The footprint ones are difficult. I mean these are building new factories at the end of the day. So we're very careful about the timing. It's not the return. The return is going to be material. It's just how much do we get in '26? And then you can't treat all of it as restructuring because you have to run redundant capacity. There's actually a negative cost as you're completing these things. But in terms of where we're tracking on the projects themselves, we're all -- I guess, we're more in front than we are behind. And that's why I think that we tipped up CapEx forecast for the year is to accommodate that.

Right. So the dust should settle on all that as we exit '26, and we should see sort of full run rate in '27 and that's the number you're going to provide for us on the third quarter?

Yes. I'm going to give you a best estimate this coming quarter and then when the timing is.

Okay. Great. And then I'll just pick the kit on the FX, just one more time, so I'm clear. So -- your prior revenue forecast of [ 2 to 4 ] assumed no FX, I believe, right? And the 4 to 6 now has one point of FX in it, is that correct?

Yes. Yes, that's correct. But the way to look at it and it's written down somewhere as -- we're basically taking average FX year-to-date and using that number for the second half.

We'll move next to Dean Dray with RBC Capital Markets.

Just want to circle back on this high-growth opportunity in data center. Can you size for us what it is today combined between the thermal connectors and heat exchangers, what percent of revenues? And would you ever set up like a dedicated team to go after this opportunity? I mean there's industry estimates that there's 9 years of backlog. It just seems like are you doing enough to capture your share of wallet?

I'm not going to monetize it for you, Dean, but I can tell you that we are the leaders in the connectors and probably co-leader in the heat exchangers for the market size. We've built out capacity and are building out capacity to accommodate what the projected volumes are. So I don't expect from a market share point of view that we're going to not be able to compete. I just think that we've got to be careful with this. We saw all those announcements about EV battery plants that turned out to be a lot lower. And I'm in no position to say. So we have dedicated teams for both those product lines. So we're known well. It's just very difficult to believe what the size of the capacity that's going to go in. I hope it's higher, right? But we are in front. We are overcapacitized in both those products.

That's really helpful. And then if we start thinking about pump margins going forward, how much like, I'll call it, project selectivity? Are you avoiding some lower-margin business and just being able to get a mix up in terms of the types of platforms that you're now targeting?

Yes. I mean if you go back to Slide 10, that's part and parcel to kind of the business model. What we've gotten out of you can't see what we've gotten out of inside those individual segments. But we've exited quite a few business lines or geographies based on returns over time. So -- and that is something that never ends, and then it becomes a question of at what point do you exit businesses like we exited Environmental Services group, that was actually accretive to our margin, but it just wasn't going to carry the valuation for us to be. So that's kind of what we do on the portfolio side. I think the cycle, the total cash flow of the business and then kind of if we do this correctly, rotate into higher margin portion of the portfolio.

Our next question will come from Brett Linzey with Mizuho.

I wanted to come back to tariffs. You had previously sized at $215 million annualized. I think there was $60 million from just the one product line. You're looking to reshore. I guess, first, any update on the $60 million? And then more broadly, did you remark the tariffs back to the higher rates? Or did you let it flow throughout these lower levels for the balance of the year?

Yes. I wish we made paper clips because it would be easy, right? There's a competitive dynamic. There is positioning. There's -- whether you want to grab market share and everything else. I think in terms of the reassuring, we are on track there. We actually subsequently to Q2 close, I think we put in some more pricing there because of the dynamics of the business, which I won't get into. It just gets to the point when you start trying to parse this across this portfolio. When we have the advantage in that particular market, we should be able to price in excess of any input costs. If it's hyper competitive, then we're going to have to mop it up.

In terms of productivity actions, and that's why having those productivity actions every year is a little bit of a hedge for the dynamics of the marketplace anywhere. So the reason we put a slide there, we could argue this thing into the dust. We don't think there's anything in the back half of the year, that's an additional headwind as it relates to tariffs, and you can see the margin performance through the first half and our margin performance on the forecast that we think that, that dynamic will continue. At that point, it's just going to be relative comps that you see outperformance and underperformance relative to H1.

Got it. And then just a follow-up on the July order strength encouraging to see. Are there any specific segment drivers? Was it fairly broad-based? And then I guess, is your assumption you'll grow orders year-over-year in Q3, Q4 this year?

With a margin of error of 100 basis points, please. Yes, right now, we're tracking -- that would indicate after July that book-to-bill is going to be solid.

Our next question will come from Joe O'Dea with Wells Fargo.

When you think about the demand impact of elevated uncertainty in tariffs and just as you've had conversations with customers over the course of the last couple of months and talking to your business leaders, what is it that folks are now looking at most closely that would drive some relief from the uncertainty overhang on demand?

Well, I mean, we deal with some incredibly large customers that I'm sure cost of capital is important in a variety of other things. And so one could argue that there's some very large projects that are waiting for cost of capital to come down to make the projects return higher. There are some customers that have significantly higher exposure to tariffs than we do, right? And then they're trying to manage that situation. So it becomes a very big plethora.

In any given year, when you have a mix of kind of consumable businesses and project businesses, they tend to run the same. There's really very few outliers. And I said that at the end of Q2 or end of Q1, that you could sense some reticence in bigger projects because of a variety of different reasons. It doesn't mean the projects go away, but there's just a little bit of a drift to the right. In our particular case, nothing really changes in the second half than we -- from our first half trajectory because we are not -- I don't think our expectations for retail refrigeration are going to be the same, right? There's only 6 months left, so that's going to drift to the right. But we have so many businesses with so many fingers and so many pies, there's no overriding nature other than just macro uncertainty, but we seem to be doing reasonably well. Like I said, the back -- the second half of the year is just an element of higher core growth rate just because of mix and comps.

And then just a clarification related to that. So the revenue growth, the 2 to 4 going to 4 to 6, that move is...

One point of FX, one point acquisition and then comps the other...

Okay. And so that is -- Yes, you haven't taken out the point of conservatism that you put in a quarter ago. It's FX...

Well, I mean, optically, yes, we have. But it is basically the same forecast in terms -- or one point -- it depends if you want to take bottom quartile or top quartile, it's 6 we added back.

We will take our next question from Julian Mitchell with Barclays.

Maybe just wanted to understand, again, I realize there's a lot of moving parts and so on. But is the broad brush organic sales growth assumption that you accelerated slightly from first to second quarter year-on-year on organic revenue firm-wide, a gradual acceleration in the third and then a sort of larger step-up in the fourth quarter. Is that the way to think about it. And I suppose the more back-end loaded type ramps are at DEP and DCST?

Generally, yes. I think if there's any conservative -- would you could call conservative in the back is we're going to get FX wrong and it's going to be what current spot is. Yes, it's in our lower-margin businesses, which, by the way, I mean, no one said anything that we hit 25% EBITDA in consolidation, which no one would have thought, not too long ago. Yes, it's just a little bit of mix relative to the total revenue.

I don't think we did leave ourselves some room in Q4, but we talk about this every year. We're going to make a decision in another month or two what the strategy is going to be. If we see an acceleration in order rates -- during Q3 leading into Q4, we may take production performance up in Q4, which is positive from a margin point of view.

That's helpful. And then just you -- we can see the sort of headline bookings number for the second quarter and you talked a little bit about July. Was the broad sort of sense of demand in recent months, the book-to-bill, I suppose, in the second quarter may be a touch below plan, but nothing to get worried about and overall demand was fairly steady across your sort of largest customer categories in recent months. I guess was there any sign of sort of volume elasticity as price started to move up anything like that, that sort of changed in the last couple of months?

Well, look, we've tried to pick a part this book-to-bill based on seasonality. And if you go back over time, it's actually down in Q2 and then ramps up in Q3. But -- the only one that I would say is that from bookings, we would have thought in Q2 that refrigeration would have been better. So we've taken out our full year forecast in refrigeration, just not the CO2 business because the margin was actually up but on just the standard case business, I think it's running out of time to meet our expectations that was built into the forecast. And then port, as I mentioned before, the portfolio arguably is more short term today than it was in the past. And we're not worried about bookings in the quarter and the fact that it's begun to ramp up. If you back test that over the last 5 years, it's doing what it has always been. So -- no, I don't think anything has changed in terms of booking. We always worry about we've had great bookings that does it just come down in the back half of the year as our customers clear the inventory, we don't generally. What we almost take it 90-day in increments from where we are. So based on what we see in July, we're encouraged by the trajectory of the bookings.

Our final question will come from Scott Davis with Melius Research.

Question last -- last but not least, I hope, but -- yes. The -- we just went through an entire call and no one asked about M&A, which I find kind of interesting because they're the portfolio itself, I don't think can drive 16% EPS growth forever without a healthy dose and velocity of M&A. So where the SIKORA deal looks interesting? Are there other SIKORA out there? Are there -- how do you guys kind of think about that? And do you disagree with my statement? I guess, too, because...

I'm glad you asked it. Yes. Look, I mean, at the end of the day, we never get any credit for capital deployment. So -- that's just the way it is to a certain extent at all. I will tell you that we've got close to $400 million in revenue under LOI, meaning that we've got letter of intent on a total of $400 million worth of revenue. Realistically, I can tell you I've got 50, but real M&A that gets consummated within 6 to 8 months. .

Will we transact on all of them? No. But can we transact between now and the end of the year on it? Absolutely, we can. So the -- so capital deployment is important to us. I think the nature of our capital employment is going to be what you've seen over the last 5 years. So no big swings, but part and parcel for us to continue driving the margin up of the portfolio M&A is a factor. There's been not a lot of deals out there. So this notion of what is customer expectation and the deals aren't coming to market because everybody is waiting for the cost of capital to come down, blah, blah, blah. But the deals that we have out there for the most part are proprietary deals. They're not auctions. Where the nature of the businesses are low in execution risk because of the size of the deals. So I feel pretty good despite the lack of deals coming to market. I like the ones that we've got in the piping.

Yes. That makes sense. I got to ask this question. I mean, you mentioned 20% of your portfolio growing double digits, but secular growth platforms that all makes sense. But -- what does that imply for the other 80%? And -- simple answer is always GDP, but not all our children can be above average. So how do you think about the other 80% in aggregate? And I guess maybe a different way to ask questions, what do you think your entitlement growth rate is in this new portfolio? Because it has -- Dover has changed a fair amount since you've gotten there.

Yes. I mean I don't want to back into the GDP one. I think what's important in terms of the platforms, is 4 of the 5 are organically driven. So in terms of what that growth 4 out of the 5 is a reflection of that we actually have stepped up R&D over the last 6 years. So that's the fruit kind of our own labor, which I think is sometimes lost in the conversation. The only one of those on Slide 8, that is largely driven by M&A as the clean energy component business, which has changed the dynamics of the value of what was the Fueling Solutions business.

So yes, I mean, I don't want to go through them one by one, but we have different business models that we're running here. We're running some that looks like they don't grow, but it's us just exiting portions of those portfolios that just are never going to reach the value that we want. So if you went back and looked over time of the clean energy business and you take away the acquisitions that were made there, we willingly shrunk portions of that business. Same thing with refrigeration.

We exited -- I would venture to say a couple of hundred million worth of revenue because it wasn't providing the returns that we wanted. And that's why you see the margin accretion. And that business go significantly higher than where it was in the past. So I know it's hard to read through because it looks like, hey, wait a minute, this thing doesn't grow. But we've been up until very recently, shrinking organically to willfully drive value within the portfolio by bringing the margins up, which I think we like the businesses that we have now. And I think go forward, you'll see the real organic growth rate as opposed to kind of us cleaning up the portfolio over time.

That makes a ton of sense. I appreciate the integrity of the answer in the honesty.

Thank you. That concludes our question-and-answer period and Dover's Second Quarter 2025 Earnings Conference Call. You may now disconnect your line at this time, and have a wonderful day.