Dover : Q4 2021 Earnings Presentation Slides

January 27, 2022 - 8:30am CT

Earnings Conference Call

Fourth Quarter and Full Year 2021

Forward-Looking Statements and Non-GAAP Measures

We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties and risks, including the impacts of the novel coronavirus (COVID-19) on the global economy and on our customers, suppliers, employees, operations, business, liquidity and cash flow, supply chain constraints and labor shortages that could result in production stoppages, and inflation in material input costs and freight logistics. We caution everyone to be guided in their analysis of Dover Corporation by referring to the documents we file from time to time with the SEC, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements.

We would also direct your attention to our website, dovercorporation.com, where considerably more information can be found.

In addition to financial measures based on U.S. GAAP, Dover provides supplemental non-GAAP financial information. Management uses non-GAAP measures in addition to GAAP measures to understand and compare operating results across periods, make resource allocation decisions, and for forecasting and other purposes. Management believes these non-GAAP measures reflect results in a manner that enables, in many instances, more meaningful analysis of trends and facilitates comparison of results across periods and to those of peer companies. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP and may not be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. The use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S.

GAAP. Reconciliations and definitions are included either in this presentation or in Dover's earnings release and investor supplement for the fourth quarter, which are available on Dover's website.

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Q4 and 2021 Highlights

Revenue

	Q4 '21	FY '21
All in:	+12% to $2.0B	+18% to $7.9B
Organic(1):	+11%	+15%
	Free Cash Flow(1)
	Q4 '21	FY '21
$M:	$277M	$944M
% of Revenue:	14%	12%
	Diluted EPS
	Q4 '21	FY '21
GAAP:	+99% to $2.49	+65% to $7.74
Adjusted(1):	+15% to $1.78	+35% to $7.63

Portfolio Activity

~$1.1B deployed in 2021 towards acquisitions; completed nine deals

Completed divestiture of Unified Brands on 12/1/21

Bookings(2)

		Q4 '21	FY '21
All in:		+23% to $2.4B	+35% to $9.4B
Organic(1):		+22%	+32%
Book-to-bill(2):	1.20	1.19
		Segment EBIT Margin(3)
		Q4 '21	FY '21
GAAP:	+1,060 bps to 26.8%	+490 bps to 21.0%
Adjusted(1):	+60 bps to 17.7%	+220 bps to 18.9%

FY '22 Guidance

EPS: $7.45 - $7.65 (GAAP); $8.45 - $8.65 (Adjusted(1))

Revenue growth: 8% - 10% (7% - 9% Organic(1))

Segment Names Updates

"Fueling Solutions" → "Clean Energy & Fueling"

"Refrigeration & Food Equipment" → "Climate & Sustainability Technologies"

	(1)	Non-GAAP measures (definitions and reconciliations in appendix)	(3)	Refer to definition of total segment earnings (EBIT) margin in appendix
3	(2)	See performance measures definitions in appendix

Summary Corporate Q4 and Full Year Results

		Q4 2021	FY 2021	Highlights and Comments
Revenue change	All-in	+12%	+18%	 Q4 Y-o-Y organic growth in all segments but DCEF
(Y-o-Y)	Organic(1)	+11%	+15%	 Q4 FX impact: -1%; acquisitions (net of divestitures) +1%
Bookings change	All-in(2)	+23%	+35%	 Q4 Book-to-bill(2): 1.20
(Y-o-Y)	Organic(2)	+22%	+32%	 Backlog(2) of $3.2B is up 84% Y-o-Y
Segment EBIT margin	Reported(3)	+1060 bps	+490 bps	 Q4 volume/mix offset input cost inflation and supply chain
improvement (Y-o-Y)	(1)	+60 bps	+220 bps	constraints
 Absolute full year earnings growth across all segments
	Adjusted
Net Earnings	Reported	$363M	$1,124M	 Q4 Y-o-Y change: Reported +99%; Adjusted +15%
Adjusted(1)	$259M	$1,109M	 FY Y-o-Y change: Reported +64%; Adjusted +35%
Diluted EPS	Reported	$2.49	$7.74	 Q4 Y-o-Y change: Reported +99%; Adjusted +15%
Adjusted(1)	$1.78	$7.63	 FY Y-o-Y change: Reported +65%; Adjusted +35%
Free Cash Flow	Revenue	14%	12%	 Q4 FCF(1) down 26% Y-o-Y on higher inventory investment
Adj.
(% of)(1)	107%	85%	 FY FCF(1) up 1% Y-o-Y
	Earnings(1)

2022 Guidance

 EPS: $7.45 - $7.65 (GAAP); $8.45 - $8.65 (Adjusted(1))

 Revenue growth: 8% - 10% (7% - 9% Organic(1))

	(1)	Non-GAAP measures (definitions and/or reconciliations in appendix)
4	(2)	See performance measures definitions in appendix
(3)	Refer to definition of total segment earnings (EBIT) margin in appendix

Segment Results

	Q4 2021(1)		FY 2021(1)
	Revenue	Adj. EBIT %	Revenue	Adj. EBIT %
Segment	($M) /	/ bps ∆	($M) /	/ bps ∆		Q4 Performance Commentary
Organic	Organic
	Y-o-Y	Y-o-Y
	Change %	Change %
	$463	12.5%		$1,781	14.7%	 Top line growth and strong order rates across all businesses
DEP		 Margin pressured by absenteeism and input shortages, higher
+16%	-300 bps	+14%	-160 bps
		logistics costs, and negative price / materials spread
						 Activity in NA and LatAm above-ground lower on customer
DCEF	$411	14.9%		$1,648	16.7%		construction delays (vs. strong comparable quarter); Strong
-4%	-280 bps	+6%	+20 bps		bookings / demand in below ground retail fueling and clean energy
							Margin headwinds from lower volumes and mix, absenteeism in EU

DII	$292	20.6%	$1,163	20.9%
+3%	+40 bps	+8%	+170 bps

• Strength in marking & coding consumables and serialization software; printer sales impacted by input shortages. Textiles continued its recovery but remains below pre-COVID levels
• Margins improved as mix more than offset input costs / shortages

DPPS	$447	31.8%	$1,709	32.0%	 Robust growth across all businesses and geographies
+30%	+740 bps	+27%	+790 bps	 Margin improvement on strong volume, productivity, and mix
					 Strong demand for heat exchangers across all end markets. Food
	$376	8.0%	$1,608	10.2%	retail growth led by US / European sustainable systems and strong
DCST	demand for cases. Slower quarter in can making due to order timing
+13%	-30 bps	+22%	+230 bps
	 Margin pressured by absenteeism, input shortages and production

stoppages in food retail case business

1. Non-GAAP(definitions and reconciliations in appendix)

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