Dover Q4 2025 Dover Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Dover Corp Earnings Call
Speaker #3: 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.
Speaker #3: We assume no obligation to update our forward-looking statements. And with that, I will turn the call over to Rich.
Operator: Good morning, and welcome to Dover's Q4 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. After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, press star, then the number one on your telephone keypad.
Speaker #4: Thanks, Jack. Let's start on slide three. Overall, we had a good close to 2025. Our fourth quarter results reflect broad-based top-line strength across the portfolio, with organic growth up to five in the quarter, the highest level of the year.
Speaker #4: Revenue performance in 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.
Operator: If you'd like to withdraw yourself from queue, you may press Star two. As a reminder, ladies and gentlemen, this conference is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. Thank you. I'd like to now turn the call over to Mr. Jack Dickens. Please go ahead.
Operator: If you'd like to withdraw yourself from queue, you may press Star two. As a reminder, ladies and gentlemen, this conference is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. Thank you. I'd like to now turn the call over to Mr. Jack Dickens. Please go ahead.
Speaker #4: Our strong bookings rates, which were up 10% in the quarter and 6%, support underlying momentum across the portfolio, providing confidence in the durability of demand as we enter the new year.
Speaker #4: 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.
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. With that, I will turn the call over to Rich.
Jack Dickens: 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. With that, I will turn the call over to Rich.
Speaker #4: 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.
Richard J. Tobin: 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 5 in the quarter, the highest level of the year. Revenue performance in the quarter was driven by robust trends in our secular growth-exposed markets, as well as improving conditions in retail fueling, refrigerated door cases, and services. Our strong bookings rates, which were up 10% in the quarter and 6% 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.
Richard J. Tobin: 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 5 in the quarter, the highest level of the year. Revenue performance in the quarter was driven by robust trends in our secular growth-exposed markets, as well as improving conditions in retail fueling, refrigerated door cases, and services. Our strong bookings rates, which were up 10% in the quarter and 6% 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.
Speaker #4: 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.
Speaker #4: With meaningful balance sheet flexibility, we're we remain well positioned to deploy capital behind opportunities to enhance long-term shareholder value. We are taking a constructive outlook for 2026.
Speaker #4: 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.
Speaker #4: 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 for our shareholders.
Richard J. Tobin: All in, adjusted EPS at $9.61 was up 14% in the quarter, beating our raised Q3 guide and 16% for the full year, a very encouraging result. Our solid operational results are 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.
All in, adjusted EPS at $9.61 was up 14% in the quarter, beating our raised Q3 guide and 16% for the full year, a very encouraging result. Our solid operational results are 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.
Speaker #4: Let's go to slide five. Engineered Products revenue is down in the quarter on lower volumes in Vehicle Services, partially offset by double-digit growth within Aerospace and Defense Components and Software.
Speaker #4: 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.
Speaker #4: 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.
Speaker #4: 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.
Richard J. Tobin: 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 of vehicle services, partially offset by double-digit growth within aerospace and defense components and software.
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 of vehicle services, partially offset by double-digit growth within aerospace and defense components and software.
Speaker #4: Imaging and ID was up 1% organically in the quarter on growth in our core marketing and coding business, and in serialization software, EBITDA margin performance remains very good in the segment at 28%, though foreign currency translation and a higher mix of printer shipments slightly weighed on the margin in the quarter.
Speaker #4: 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.
Speaker #4: SECORA, 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.
Richard J. Tobin: 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 IT was up 1% organically in the quarter on core growth in our core marking and coding business and in serialization 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 IT was up 1% organically in the quarter on core growth in our core marking and coding business and in serialization software.
Speaker #4: Pumps and process solution segment margin continues to perform at best in class levels. Climate and sustainability technology posted positive organic growth up 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 expect which was expected based on the Q3 booking exit rate.
Speaker #4: Demand for brazed plate heat exchangers, particularly for liquid cooling applications and data centers, continues to show robust momentum, with record quarterly shipments in the US in the fourth quarter.
Richard J. Tobin: EBITDA margin performance remains very good in the segment at 28%, though 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 Q2 in 2025, continues to outperform its underwriting case. Polymer processing posted its first quarterly organic growth since Q1 of 2024 due to timing of large deliveries out of our backlog. Pumps and Process Solutions segment margin continues to perform at best-in-class levels.
EBITDA margin performance remains very good in the segment at 28%, though 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 Q2 in 2025, continues to outperform its underwriting case. Polymer processing posted its first quarterly organic growth since Q1 of 2024 due to timing of large deliveries out of our backlog. Pumps and Process Solutions segment margin continues to perform at best-in-class levels.
Speaker #4: Margins were up 250 basis points in the segment on volume leverage, solid execution, positive mixed benefits from secular growth exposed end markets, with a book-to-bill of 1.21 in the quarter.
Speaker #4: The outlook for climate and sustainability technology is very encouraging for 2026. I'll pass it to Chris here.
Speaker #5: Thanks, Rich. Let's go to our cash flow statement on slide six. Free cash flow in the fourth quarter was $487 million, or 23% of revenue.
Speaker #5: 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.
Speaker #5: 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.
Richard J. Tobin: Climate and sustainability technology posted positive organic growth of 9% in the quarter on continued double-digit growth in CO2 refrigeration systems and significant volume improvements in refrigerated door cases and engineering services, which was expected based on the Q3 booking exit rate. Demand for brazed plate heat exchangers, particularly for liquid cooling applications and data centers, continues to show robust momentum with record quarterly shipments in the US 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.
Climate and sustainability technology posted positive organic growth of 9% in the quarter on continued double-digit growth in CO2 refrigeration systems and significant volume improvements in refrigerated door cases and engineering services, which was expected based on the Q3 booking exit rate. Demand for brazed plate heat exchangers, particularly for liquid cooling applications and data centers, continues to show robust momentum with record quarterly shipments in the US 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.
Speaker #5: 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.
Speaker #1: Okay, I'm on slide seven. 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 one continued the trend of bookings momentum we experienced in the last two years.
Speaker #1: In the fourth quarter, signaling broad-based demand strength for 2026, all five segments posted bookings growth. On slide eight, we highlight the capital allocation results from 2025 with our priorities.
Chris Woenker: Thanks, Rich. Let's go to our cash flow statement on slide six. 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.
Christopher Woenker: Thanks, Rich. Let's go to our cash flow statement on slide six. 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.
Speaker #1: 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.
Speaker #1: 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.
Speaker #1: We deployed $700 million across four strategic acquisitions in high-end growth markets, three of which are in our highest-priority pumps and process solutions segment.
Speaker #1: 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.
Richard J. Tobin: Okay, I'm on slide seven. 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, continuing the trend of bookings momentum we experienced in the last 2 years. All 5 segments posted bookings growth in Q4, signaling broad-based demand strength for 2026. On slide eight, 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.
Richard J. Tobin: Okay, I'm on slide seven. 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, continuing the trend of bookings momentum we experienced in the last 2 years. All 5 segments posted bookings growth in Q4, signaling broad-based demand strength for 2026. On slide eight, 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.
Speaker #1: Finally, in 2025, we announced over half a billion dollars of share repurchases, including the accelerated repurchase program enacted in November, with robust cash flow generated in 2025.
Speaker #1: 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.
Speaker #1: We are at an advantageous position, and I would expect that we will be active in 2026. Let's go to slide nine. Engineered products are expected to improve in 2026.
Richard J. Tobin: 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 four strategic acquisitions in high-end growth markets, three 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.
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 four strategic acquisitions in high-end growth markets, three 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.
Speaker #1: Our aerospace and defense components business continued 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 Disteco and Environmental Solution Groups in 2024 and the growth of other segments of the portfolio.
Speaker #1: Our engineered product segment now accounts for less than 15% of our total portfolio. The outlook for clean energy and fueling remains solid across most of the businesses.
Speaker #1: 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.
Richard J. Tobin: Finally, in 2025, we announced over half a billion dollars of share repurchases, including the accelerated share 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 continued 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 2025 and early 2026.
Finally, in 2025, we announced over half a billion dollars of share repurchases, including the accelerated share 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 continued 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 2025 and early 2026.
Speaker #1: We expect the headwinds from the vehicle wash equipment and software to improve in '25 and further improve in '26. Clean energy and fueling should be among the leaders in margin accretion in 2026.
Speaker #1: On volume leverage and integration benefits from clean energy acquisitions, Imaging and ID should continue its long-term, steady growth trajectory given its significant recurring revenue base and solid underlying demand.
Speaker #1: We are encouraged by the recent uptick in printer shipments, building the global installed base for continued long-term recurring revenue attachment. We expect demand conditions to remain constructive in pumps and process solutions in 2026.
Speaker #1: 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 SECORA's inspection equipment for high-voltage wire and cables.
Richard J. Tobin: With the divestitures of the Staco and Environmental Solutions Group 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 2025 to improve in 2026. Clean energy and fueling should be among the leaders in margin accretion in 2026 on volume leverage and integration benefits from clean energy acquisitions.
With the divestitures of the Staco and Environmental Solutions Group 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 2025 to improve in 2026. Clean energy and fueling should be among the leaders in margin accretion in 2026 on volume leverage and integration benefits from clean energy acquisitions.
Speaker #1: Demand for single-use biopharma components remains solid. Driven by production growth and blockbuster drugs in the ongoing shift to single-use manufacturing methods, as noted, we got a tough comp in the quarter in the first quarter in biopharma due to heavy restocking in early 2025.
Speaker #1: But overall, the Q4 exit run rate for the business should hold true for 2026. Finally, climate and sustainability technology should sustain its fourth quarter exit rate into 2026.
Speaker #1: CO2 refrigeration systems are expected to continue at a double-digit growth clip, and 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, following a period of tariff-related delays.
Richard J. Tobin: Imaging and ID should continue its long-term steady growth trajectory, given its significant recurring 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 recurring 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 Sikora's inspection equipment for high voltage wire and cables. Demand for single-use biopharma components remains solid, driven by production growth, blockbuster drugs, and the ongoing shift to single-use manufacturing methods. As noted, we got a tough comp in the quarter, in Q1 in biopharma due to heavy restocking in early 2025.
Imaging and ID should continue its long-term steady growth trajectory, given its significant recurring 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 recurring 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 Sikora's inspection equipment for high voltage wire and cables. Demand for single-use biopharma components remains solid, driven by production growth, blockbuster drugs, and the ongoing shift to single-use manufacturing methods. As noted, we got a tough comp in the quarter, in Q1 in biopharma due to heavy restocking in early 2025.
Speaker #1: 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.
Speaker #1: 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.
Speaker #1: 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 below our long-term standard.
Speaker #1: 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.
Richard J. Tobin: But overall, the Q4 exit run rate for the business should hold true for 2026. Finally, climate and 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 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.
But overall, the Q4 exit run rate for the business should hold true for 2026. Finally, climate and 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 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.
Speaker #1: 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.
Speaker #1: 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 and partners and investors in the year ahead.
Speaker #1: And with that, Jack, let's go to Q&A.
Speaker #2: Thank you. If you'd like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw yourself from the queue, you may press star, then two.
Richard J. Tobin: We'd expect seasonality in 2026 to be similar to the last few years, with Q1 volumes slowly ramping in into peak product delivery periods in Q2 and Q3, with Q4 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 below 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'd expect seasonality in 2026 to be similar to the last few years, with Q1 volumes slowly ramping in into peak product delivery periods in Q2 and Q3, with Q4 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 below 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.
Speaker #2: We ask that participants limit themselves to one question, and one clarifying question. We'll take our first question from Steve Tusa with JP.
Speaker #2: Morgan.
Speaker #2: Morgan.
Speaker #3: Hey, good
Speaker #4: Morning. morning.
Speaker #3: Geez, good afternoon. I guess.
Speaker #3: Kind of weird. I know.
Speaker #3: Yeah, I had to eat right. Lunch was a delayed lunch for you guys.
Speaker #4: Yeah, we'll go early in the morning next time.
Speaker #4: around. No, it's nice to
Speaker #3: Be able to avoid the other calls. That's helpful. 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?
Speaker #4: Yeah, I mean, I think right now we should be doing what we've done every year—probably like 1, 1.5 percent over.
Richard J. Tobin: We are committed to continuing our long-term double-digit EPS growth trajectory into 2026. Finally, I'd like to thank our global teams for efforts to deliver 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.
We are committed to continuing our long-term double-digit EPS growth trajectory into 2026. Finally, I'd like to thank our global teams for efforts to deliver 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.
Speaker #4: 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—
Speaker #4: trajectory. Okay.
Speaker #3: So, as of now, how much price are you embedding in the—
Speaker #3: Guide? One and a half to two. Okay. And then just one more question for you. You were pretty positive over the course of the quarter.
Operator: Thank you. If you'd like to ask a question, simply press Star, then the number one on your telephone keypad. If you would like to withdraw yourself from queue, you may press Star two. We ask the participants to limit themselves to one question and one clarifying question. We'll take our first question from Steve Tusa with J.P. Morgan.
Operator: Thank you. If you'd like to ask a question, simply press Star, then the number one on your telephone keypad. If you would like to withdraw yourself from queue, you may press Star two. We ask the participants to limit themselves to one question and one clarifying question. We'll take our first question from Steve Tusa with J.P. Morgan.
Speaker #3: In your commentary, is there anything you've seen in the last month or so, or two months, that would change that positive view and tone on just the general economy and business?
Steve Tusa: Hey, good morning or geez, good afternoon, I guess.
Stephen Tusa: Hey, good morning or geez, good afternoon, I guess.
Speaker #4: 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.
Richard J. Tobin: I know.
Richard J. Tobin: I know.
Steve Tusa: Weird.
Stephen Tusa: Weird.
Richard J. Tobin: Right.
Richard J. Tobin: Right.
Steve Tusa: Yeah. I had to delay lunch for you guys.
Stephen Tusa: Yeah. I had to delay lunch for you guys.
Richard J. Tobin: Yeah, we'll, we'll go early in the morning next time around.
Richard J. Tobin: Yeah, we'll, we'll go early in the morning next time around.
Steve Tusa: No, it's nice to, nice for you guys to avoid the, the other calls. That's helpful. 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?
Stephen Tusa: No, it's nice to, nice for you guys to avoid the, the other calls. That's helpful. 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?
Speaker #4: And book-to-bill is over one. So, to me, I think that we hit the three kind of data points that we were looking for going into '26.
Richard J. Tobin: Yeah, I mean, I think that, you know, 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.
Richard J. Tobin: Yeah, I mean, I think that, you know, 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.
Speaker #4: Our backlogs are good. Production performance should be pretty good in Q1. I think we got to not get a little too excited about production performance delivery because I think we'll really ramp in, and the seasonality will be the same as usual.
Speaker #4: But overall, yeah, I mean, we like the setup.
Speaker #3: Great. Thanks a lot.
Speaker #4: Thanks. Thank you.
Speaker #2: We'll take our next question from Julia Mitchell with...
Speaker #2: Barclays. Hi, good
Steve Tusa: Okay, so as of now, how much price are you embedding in the guide?
Stephen Tusa: Okay, so as of now, how much price are you embedding in the guide?
Speaker #5: Morning. 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 are a lot of different businesses—but I suppose you're guiding for the highest organic sales growth in the segments with the lowest EBITDA margin.
Richard J. Tobin: 1.5 to 2.
Richard J. Tobin: 1.5 to 2.
Steve Tusa: Okay, and then just one more question for you. You were pretty positive over the course of the quarter in your commentary. Anything you've seen in the last, you know, month or so or two months that would change that, that positive, you know, view and tone on just the general economy and business?
Stephen Tusa: Okay, and then just one more question for you. You were pretty positive over the course of the quarter in your commentary. Anything you've seen in the last, you know, month or so or two months that would change that, that positive, you know, view and tone on just the general economy and business?
Speaker #5: 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
Speaker #5: 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?
Richard J. Tobin: 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 one. So to me, I think that we hit the three kind of data points that we were looking for going into 2026. You know, our backlogs are good. Production performance should be pretty good in Q1. I think we gotta-- don't get a little excited about production performance delivery, because I think we'll really ramp and the seasonality be the same as usual. But overall, yeah, I mean, we, we like the setup.
Richard J. Tobin: 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 one. So to me, I think that we hit the three kind of data points that we were looking for going into 2026. You know, our backlogs are good. Production performance should be pretty good in Q1. I think we gotta-- don't get a little excited about production performance delivery, because I think we'll really ramp and the seasonality be the same as usual. But overall, yeah, I mean, we, we like the setup.
Speaker #4: Yeah. 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'll be impacted the most from prior period restructuring.
Speaker #4: So the rooftop. That'll 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.
Steve Tusa: Great. Thanks a lot.
Stephen Tusa: Great. Thanks a lot.
Richard J. Tobin: Thanks.
Richard J. Tobin: Thanks.
Operator: Thank you. We'll take our next question from Julian Mitchell with Barclays.
Operator: Thank you. We'll take our next question from Julian Mitchell with Barclays.
Speaker #4: 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.
Julian Mitchell: Hi, good morning. Maybe, just to start off with, you know, 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 know, you're aiming for, this year. You know, are there sort of outsized cost savings, tailwinds, for example, that, that mean they can have very strong operating leverage, alongside the high volume growth?
Julian Mitchell: Hi, good morning. Maybe, just to start off with, you know, 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 know, you're aiming for, this year. You know, are there sort of outsized cost savings, tailwinds, for example, that, that mean they can have very strong operating leverage, alongside the high volume growth?
Speaker #4: 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 pretty good idea what we'll get probably in the first half of the year.
Speaker #4: We'll see if we need to take any pricing action there to cover any headwinds we've got on input costs. But you're spot on in terms of the
Speaker #4: mix. Thanks.
Richard J. Tobin: Yeah. No, you, you, 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'll be impacted the most from prior period restructuring, so the rooftop. That'll 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?
Richard J. Tobin: Yeah. No, you, you, 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'll be impacted the most from prior period restructuring, so the rooftop. That'll 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?
Speaker #5: 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, I don't know, year on year, EPS growth and sales growth each quarter to not be that different from the full year?
Speaker #5: Framework on slide 10 is most.
Speaker #4: Yeah. No, Julian, that's right. Right. And when we looked at consensus for the year, it was oddly high for Q1, despite the fact that I think for nine months—maybe not 12, but for nine 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.
Speaker #4: We'll hit the full year, but the seasonality should be the same, as it's been sitting in your models.
Speaker #4: historically. That's great.
Speaker #5: Thank you.
Speaker #4: You're
Speaker #4: welcome. Thank you.
Richard J. Tobin: We'll see as the year goes on. Right now, we've bought forward enough that we've got an idea, pretty good idea 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 input costs, but you're spot on in terms of the base.
We'll see as the year goes on. Right now, we've bought forward enough that we've got an idea, pretty good idea 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 input costs, but you're spot on in terms of the base.
Speaker #2: We'll take our next question from Amit Mahotra with...
Speaker #2: UBS. Thanks.
Speaker #4: Hey, Rich. Good to talk to you. So just 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 than sort of where we exited at in the fourth quarter.
Julian Mitchell: Thanks. That's helpful. And maybe you, 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, I mean, year-on-year EPS growth and sales growth each quarter to not be that different from the full year framework on slide 10? Is, you know, most-
Julian Mitchell: Thanks. That's helpful. And maybe you, 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, I mean, year-on-year EPS growth and sales growth each quarter to not be that different from the full year framework on slide 10? Is, you know, most-
Speaker #4: 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.
Speaker #4: Is that right? And maybe, is that just the mix effect kind of offsetting some of the volume leverage? Yeah. I mean, the answer is yes and yes.
Richard J. Tobin: Yeah. No, Julian, that, that's right. Right, and when we, when we looked at consensus for the year, it was oddly high for Q1, despite the fact that I think for 12 months, or not 12, or for 9 months, we, 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, the seasonality should be the same as it, it's been sitting in your models historically.
Richard J. Tobin: Yeah. No, Julian, that, that's right. Right, and when we, when we looked at consensus for the year, it was oddly high for Q1, despite the fact that I think for 12 months, or not 12, or for 9 months, we, 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, the seasonality should be the same as it, it's been sitting in your models historically.
Speaker #4: 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.
Speaker #4: 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.
Speaker #4: These are numbers based on what we see 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.
Julian Mitchell: That's great. Thank you.
Julian Mitchell: That's great. Thank you.
Richard J. Tobin: You're welcome.
Richard J. Tobin: You're welcome.
Operator: Thank you. We'll take our next question from Amit Mehrotra with UBS.
Operator: Thank you. We'll take our next question from Amit Mehrotra with UBS.
Amit Mehrotra: Thanks. Hey, Rich, good to talk to you. So just 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 than sort of where we exited at in Q4. So maybe you can talk about it. Is that just, you know, 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?
Amit Mehrotra: Thanks. Hey, Rich, good to talk to you. So just 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 than sort of where we exited at in Q4. So maybe you can talk about it. Is that just, you know, 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?
Speaker #4: 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.
Speaker #4: We would expect to kind of look at doing the same thing.
Speaker #5: Yeah, that's helpful. And just related to that, I know there was like a $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.
Speaker #5: Do you feel confident you're able to get all of that back from where?
Richard J. Tobin: Yeah, 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. You know, we talked about input costs and a variety of other things. These are numbers based on what we see in the backlog that we can execute on. Whether we can move them up or not, we'll see quarter by quarter, but you know, bookings momentum has accelerated into the end of last year.
Richard J. Tobin: Yeah, 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. You know, we talked about input costs and a variety of other things. These are numbers based on what we see in the backlog that we can execute on. Whether we can move them up or not, we'll see quarter by quarter, but you know, bookings momentum has accelerated into the end of last year.
Speaker #5: we stand today? We're
Speaker #4: 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.
Speaker #4: So far, so good.
Speaker #5: Okay. Very good. Thank you very much.
Speaker #5: Appreciate it. You're welcome.
Speaker #4: Yep. Thank you.
Speaker #2: Our next question will come from JESPROC with Vertical Research Partners.
Speaker #6: Hey, thanks. Good day, everyone. Hey, 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.
Speaker #6: It looks like you’re sort of guiding an observed incremental as reported—about 35%. Is that right, or is there something else in between, kind of?
Richard J. Tobin: So if we get that same kind of acceleration and we get the visibility, as we move through the quarter, then I would expect, you know... 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.
So if we get that same kind of acceleration and we get the visibility, as we move through the quarter, then I would expect, you know... 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.
Speaker #6: OP and the bottom line to be aware of? There's
Speaker #4: Nothing really on the bottom line, Jeff. So you're close on the number, or you're right on the number, more or less. Hey, and
Speaker #6: Yeah.
Amit Mehrotra: Yeah, that's helpful. And just, just on, just related to that. So I know there was like a $150 million drawdown in refrigeration last year. Obviously, orders perked up in Q3, 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?
Amit Mehrotra: Yeah, that's helpful. And just, just on, just related to that. So I know there was like a $150 million drawdown in refrigeration last year. Obviously, orders perked up in Q3, 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?
Speaker #4: 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.
Speaker #4: 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?
Richard J. Tobin: We're sold out for Q1. That's what I can tell you. So we're, we're booking, and that is relatively short cycle business, and we're booking well into Q2. So, so far, so good.
Richard J. Tobin: We're sold out for Q1. That's what I can tell you. So we're, we're booking, and that is relatively short cycle business, and we're booking well into Q2. So, so far, so good.
Speaker #4: Well, it's better than the retirement one from last year, so I'll take the transformational deal angle. We're not going to talk about anything in the pipeline.
Amit Mehrotra: Okay. Very good. Thank you very much. Appreciate it.
Amit Mehrotra: Okay. Very good. Thank you very much. Appreciate it.
Richard J. Tobin: Welcome. Yep.
Richard J. Tobin: Welcome. Yep.
Operator: Thank you. Our next question will come from Jeffrey Sprague with Vertical Research Partners.
Operator: Thank you. Our next question will come from Jeffrey Sprague with Vertical Research Partners.
Jeffrey Sprague: Hey, thanks. Good day, everyone. Hey, 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, about 35%. Is that right, or is there something else, you know, in between kind of OP and the bottom line to be aware of?
Jeffrey Sprague: Hey, thanks. Good day, everyone. Hey, 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, about 35%. Is that right, or is there something else, you know, in between kind of OP and the bottom line to be aware of?
Speaker #4: 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.
Speaker #4: 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 it's not as if we look at that we look at the business and the business that we own and say that we've squeezed everything out of it, and then now we've got to go do something to move it on.
Richard J. Tobin: There's nothing really on the bottom line, Jess. So you're close on the number or right—you're right on the number, more or less.
Richard J. Tobin: There's nothing really on the bottom line, Jess. So you're close on the number or right—you're right on the number, more or less.
Jeffrey Sprague: Yeah. Hey, and then, you know, secondhand, right? So I'll be careful, but, you know, there's been some chatter that you've made some noise about, you know, 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?
Jeffrey Sprague: Yeah. Hey, and then, you know, secondhand, right? So I'll be careful, but, you know, there's been some chatter that you've made some noise about, you know, 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?
Speaker #4: 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.
Speaker #4: it. Yeah.
Speaker #6: Hey, 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 Sequoia are coming into organic at a faster rate, is there just anything that's more long-cycle in the orders or something that doesn't convert quickly to kind of explain that apparent-looking—
Speaker #6: Hey, 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 Sequoia are coming into organic at a faster rate, is there just anything that's more long-cycle in the orders or something that doesn't convert quickly to kind of explain that apparent-looking disconnect?
Richard J. Tobin: Well, it's better than the retirement one from last year, so I'll take the transformational deal angle. You know, we're 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 we look at the way that we look at the business and the businesses that we own and say that we've squeezed everything out of it, and then now we've got to go do something to move it on.
Jack Dickens: Well, it's better than the retirement one from last year, so I'll take the transformational deal angle. You know, we're 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 we look at the way that we look at the business and the businesses that we own and say that we've squeezed everything out of it, and then now we've got to go do something to move it on.
Speaker #4: I mean, at the end of the day, I mean, three to five, historically—without getting over our skis here—is a pretty good number.
Speaker #4: 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.
Speaker #4: I think part of it is, let's get into Q1. Let's see if we're manufacturing backlog, or if we're replacing what we're taking in production performance with new order flow.
Richard J. Tobin: 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.
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.
Speaker #4: 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.
Jeffrey Sprague: Yeah. Hey, and then maybe, I'm sorry, a third one. Jack, don't get mad at me. But just back on revenues, you noted, you know, maybe there's some conservatism here, but, you know, just thinking about, you know, this order growth rate that's, you know, been ahead of revenues now for a significant period of time, and the fact that things like Sikora were come-- are coming into organic at, you know, like a faster rate. Like, is it just anything that's more long cycle in the orders or something that doesn't convert quickly, you know, to kind of explain that apparent looking disconnect?
Jeffrey Sprague: Yeah. Hey, and then maybe, I'm sorry, a third one. Jack, don't get mad at me. But just back on revenues, you noted, you know, maybe there's some conservatism here, but, you know, just thinking about, you know, this order growth rate that's, you know, been ahead of revenues now for a significant period of time, and the fact that things like Sikora were come-- are coming into organic at, you know, like a faster rate. Like, is it just anything that's more long cycle in the orders or something that doesn't convert quickly, you know, to kind of explain that apparent looking disconnect?
Speaker #4: growth also. Right.
Speaker #6: Okay, great. I'll leave it there. Thanks, Rich.
Speaker #2: Thank you. We'll take our next question from Joe Day with Wells Fargo.
Speaker #7: Hi, thanks for taking my questions. I wanted to start on the retail fueling CapEx cycle side of things, and just ask if you could elaborate on what you're seeing there—some details across regions, and how you think that plays out over the course of 2026 in terms of any accelerating demand there.
Richard J. Tobin: 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 a 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, you know, we'll take a close look at the top line.
Richard J. Tobin: 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 a 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, you know, we'll take a close look at the top line.
Speaker #4: It's very much a North American phenomenon. We've actually drawn down our exposures in both emerging markets and EMEA. We haven't left, but we've taken—that's actually been a drag on our top line over the last three or four years—and we've gone and done 80/20 on the customer side.
Speaker #4: 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.
Speaker #4: 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.
Speaker #4: And if you go look at someone like Costco and what margins are fueling right now, I think it's woken up the market that spreads at retail are as high as they've ever been.
Richard J. Tobin: Again, I don't want to repeat myself, you know, 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.
Again, I don't want to repeat myself, you know, 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.
Steve Tusa: Right. Okay, great. I'll leave it there. Thanks, Rich.
Stephen Tusa: Right. Okay, great. I'll leave it there. Thanks, Rich.
Richard J. Tobin: Yep.
Richard J. Tobin: Yep.
Speaker #4: And that’s going to drive returns on projects.
Operator: Thank you. We'll take our next question from Joe O'Dea with Wells Fargo.
Operator: Thank you. We'll take our next question from Joe O'Dea with Wells Fargo.
Speaker #7: And then just on the restructuring side, you've got the $40 million carryover from actions last year. I think in the past you've touched on there could be more to do there.
Joe O'Dea: Hi, thanks for taking my questions. 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?
Joseph O'Dea: Hi, thanks for taking my questions. 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?
Speaker #7: And so, just how you're approaching that—one, how you would make any decisions around it, and which parts of the business would see a bigger impact if you do decide to do it.
Speaker #7: more?
Richard J. Tobin: 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, we've taken-- That's actually been a drag on our top line over the last three or four years, and we've gone and done 80/20 on, 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.
Richard J. Tobin: 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, we've taken-- That's actually been a drag on our top line over the last three or four years, and we've gone and done 80/20 on, 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.
Speaker #4: We've got a pretty full plate with what we're doing now, so there's a lag time between looking at proposals and then enacting them. 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 one facility and building another one.
Speaker #4: 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.
Speaker #4: But yeah, 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—
Richard J. Tobin: If you go look at someone like Costco and what the fueling margins 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.
If you go look at someone like Costco and what the fueling margins 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.
Speaker #4: are. Got it.
Speaker #7: Thank you.
Speaker #2: Thank you. We'll take our next question, yep, from Nigel Coe with WOLF Research.
Speaker #8: Hey, thanks. Good afternoon, guys. So, Rich, I thought it'd be interesting to think about growth bifurcated between the 20% of what you call secular growth markets.
Joe O'Dea: And then just on the restructuring side, you've got the $40 million carryover from actions last year. I think, you know, in the past, you've 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?
Joseph O'Dea: And then just on the restructuring side, you've got the $40 million carryover from actions last year. I think, you know, in the past, you've 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?
Speaker #8: And that's been growing double digits. And then the trough markets that are, I don't know, 40–50% margins—SWEP, Belvac, BSG, refrigeration.
Speaker #8: Just maybe, just talk about what you're seeing in those two buckets in 2026.
Speaker #4: Yeah, the growth bucket is going really well. Really nothing to add to it. So anything that we'd said over the previous three quarters of last year, that trajectory has continued, so we're good there.
Richard J. Tobin: 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 one 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 yeah, 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.
Richard J. Tobin: 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 one 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 yeah, 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.
Speaker #4: I mean, the ones that have been a headwind, I mean, in Belle Back, that's when ZZ— we're just going to have to wait for the CapEx cycle to turn and can making.
Speaker #4: 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.
Speaker #4: 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.
Joe O'Dea: Got it. Thank you.
Joseph O'Dea: Got it. Thank you.
Richard J. Tobin: Yep.
Richard J. Tobin: Yep.
Operator: Thank you. We'll take our next question from Nigel Coe with Wolfe Research.
Operator: Thank you. We'll take our next question from Nigel Coe with Wolfe Research.
Nigel Coe: Hey, thanks. Good afternoon, guys. So Rich, I thought it'd be interesting to think about growth, you know, bifurcated between your, you know, the 20% of what you call sector growth markets, and that's been growing double digits. And then the trough markets that are, I don't know, 40, 50%, you know, MAAG, SWEP, Belvac, BSG, refrigeration. Just maybe talk about, you know, what you see in those two buckets in 2026.
Nigel Coe: Hey, thanks. Good afternoon, guys. So Rich, I thought it'd be interesting to think about growth, you know, bifurcated between your, you know, the 20% of what you call sector growth markets, and that's been growing double digits. And then the trough markets that are, I don't know, 40, 50%, you know, MAAG, SWEP, Belvac, BSG, refrigeration. Just maybe talk about, you know, what you see in those two buckets in 2026.
Speaker #4: I don't see that improving yet. But we're almost in year three of Europe being down there, so one would expect that that could turn, hopefully, during the year as we go forward.
Speaker #4: 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.
Richard J. Tobin: Yeah, the growth bucket is going really well. Yeah, really nothing to add to it. So anything that we'd said over the previous three quarters of last year, that trajectory has continued as I'm... So we're good there. I mean, the ones that have been of a headwind, I mean, in Belvac, that's one's easy. We're just going to have to wait 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.
Richard J. Tobin: Yeah, the growth bucket is going really well. Yeah, really nothing to add to it. So anything that we'd said over the previous three quarters of last year, that trajectory has continued as I'm... So we're good there. I mean, the ones that have been of a headwind, I mean, in Belvac, that's one's easy. We're just going to have to wait 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.
Speaker #4: And as I mentioned to one 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?
Speaker #4: From a capacity point of view, because we've actually taken a lot of capacity out there. But what we've said about going into '26 is reflected in our backlog and was reflected in the revenue growth in—
Speaker #4: Q4. Okay.
Richard J. Tobin: 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 three of Europe being down there, so one 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.
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 three of Europe being down there, so one 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.
Speaker #8: So, refrigeration is recovering nicely. It sounds like MOG is still seeing some headwinds there. Everything else is fairly steady. Is that a good way to summarize that?
Speaker #4: Yeah, yeah. MOG's going to—MOG's will see it, because—and you'll see it in the backlog, because the dollar value of MOG's orders are so high, you'll know when it's coming.
Speaker #4: And right now, it's fair to say that the European chemical market is not doing well.
Speaker #8: Yeah, that's not a shock at all. And just a quick clarification on the internal margins: Is there a structuring payback to sustain 35% type of internal margins, given the mixed pressures you've highlighted?
Speaker #8: Or could that be
Speaker #8: something? I think
Speaker #4: When you do the math and you look at the incrementals, I think that there's more upside than downside there.
Richard J. Tobin: As I mentioned to one of the questions, we're sold out for Q1, and we're booking well into Q2 now, so it doesn't look like... You know, there's almost, 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 what we said about going into 2026 is reflected in our backlog and was reflected in the revenue growth in Q4.
As I mentioned to one of the questions, we're sold out for Q1, and we're booking well into Q2 now, so it doesn't look like... You know, there's almost, 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 what we said about going into 2026 is reflected in our backlog and was reflected in the revenue growth in Q4.
Speaker #8: Okay. That's clear. Thanks, Rich.
Speaker #2: Thank you. We'll take our next question from Scott Davis with MELIUS Research.
Speaker #9: Hey, good afternoon, guys. Rich, if you take a step
Speaker #8: Scott.
Speaker #9: Backwards, as portfolios 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?
Nigel Coe: Okay. So refrigeration is recovering nicely. Sounds like Marg is still, you know, still some headwinds there. Everything else, fairly steady. Is that a good way to summarize that?
Nigel Coe: Okay. So refrigeration is recovering nicely. Sounds like Marg is still, you know, still some headwinds there. Everything else, fairly steady. Is that a good way to summarize that?
Speaker #9: Is it kind of right? We're kind of in that sweet spot around 5%? Is it 4% to 5%?
Richard J. Tobin: Yeah. Yeah. Marg, Marg's gonna, you know, Marg's. We'll see it because, and, and you'll see it in the backlog because the dollar value of Marg'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.
Richard J. Tobin: Yeah. Yeah. Marg, Marg's gonna, you know, Marg's. We'll see it because, and, and you'll see it in the backlog because the dollar value of Marg'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.
Speaker #4: Yeah. I mean, it is somewhere between 3 to 6, depending on GDP and everything else. But clearly can do 5.
Speaker #9: Okay. That's what I would have thought. And guys, it's kind of been a while since we've talked about 'close the case,' that whole nonsense thing that kind of went up and went down.
Nigel Coe: ... yeah, that's not a shock at all. And just a quick clarification on the incremental margins. Is there a structuring payback, you know, to sustain, you know, 35% type incremental margins given the mix pressures you've highlighted, so or could that be?
Nigel Coe: ... yeah, that's not a shock at all. And just a quick clarification on the incremental margins. Is there a structuring payback, you know, to sustain, you know, 35% type incremental margins given the mix pressures you've highlighted, so or could that be?
Speaker #9: 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 the— and be able to just socialize maybe the pent-up demand of how long those things last before they need to be replaced?
Richard J. Tobin: Look, like, you know, I think that, you know, when you do the math and you look at the incrementals, I think that there's more upside than downside there.
Richard J. Tobin: Look, like, you know, I think that, you know, when you do the math and you look at the incrementals, I think that there's more upside than downside there.
Speaker #9: etc.? Well, it's a little bit of
Nigel Coe: Okay, that's clear. Thanks, Rich.
Nigel Coe: Okay, that's clear. Thanks, Rich.
Speaker #4: That business is a little bit of a tale of two cities. There's the CO2 rooftop, which is a change in technology play where, knock wood, we are the North American market leader, and we're a co-leader in Europe. We're the North American market leader, and we're doing really well because, for a variety of reasons.
Richard J. Tobin: Yep.
Richard J. Tobin: Yep.
Operator: Thank you. We'll take our next question from Scott Davis with Melius Research.
Operator: Thank you. We'll take our next question from Scott Davis with Melius Research.
Scott Davis: Hey, good afternoon, guys.
Scott Davis: Hey, good afternoon, guys.
Richard J. Tobin: Scott.
Richard J. Tobin: Scott.
Nigel Coe: Hey, Scott.
Nigel Coe: Hey, Scott.
Scott Davis: Rich, if you take a step backwards, you know, this 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%?
Scott Davis: Rich, if you take a step backwards, you know, this 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%?
Speaker #4: 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.
Speaker #4: On the retail refrigeration door case business, we've taken that business from somewhere around 7 or 8 percent margin up into the very high teens now.
Richard J. Tobin: Yeah, look, I mean, you know, it is somewhere between 3 to 6, depending on GDP and everything else, but, you know, clearly can do 5.
Richard J. Tobin: Yeah, look, I mean, you know, it is somewhere between 3 to 6, depending on GDP and everything else, but, you know, clearly can do 5.
Scott Davis: Okay. That's what I would have thought. And guys, it's kind of been a while since we've talked about, you know, CO2 case, you know, that whole nonsense.
Scott Davis: Okay. That's what I would have thought. And guys, it's kind of been a while since we've talked about, you know, CO2 case, you know, that whole nonsense.
Speaker #4: We're finishing the last CapEx we put in—we've basically rebuilt the entire industrial footprint there. So what we end up with is a core refrigeration business, which is around a half a billion-ish dollars, at very nice margins and extremely good cash flow because it doesn't hold any working capital.
Richard J. Tobin: Uh-huh.
Scott Davis: something that kind of went up and went down, and
Richard J. Tobin: Uh-huh.
Scott Davis: something that kind of went up and went down, and
Richard J. Tobin: Yeah.
Richard J. Tobin: Yeah.
Scott Davis: 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 the... And be able to just socialize maybe the pent-up demand, how long those things last before they need to be replaced, et cetera?
Scott Davis: 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 the... And be able to just socialize maybe the pent-up demand, how long those things last before they need to be replaced, et cetera?
Speaker #4: 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 we're in the early innings there and we've got a leadership position.
Richard J. Tobin: Well, it's a little bit of a, that business is a little bit of a tale of two 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's, that I would put into the kind of the growth platforms and, you know, 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. You know, we've basically rebuilt the entire industrial footprint there.
Richard J. Tobin: Well, it's a little bit of a, that business is a little bit of a tale of two 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's, that I would put into the kind of the growth platforms and, you know, 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. You know, we've basically rebuilt the entire industrial footprint there.
Speaker #9: Okay, helpful. Good color. Thank you. I'll pass it on. Best of luck this year, guys.
Speaker #2: Thank you. Thanks. We'll take our next question from Mike Halloran with
Speaker #2: Baird. Hey.
Speaker #9: Good morning—well, afternoon, everyone. So, first on the clean energy margins: in your prepared remarks, you mentioned the mid-20% target. Maybe just some timeline on when you think you can get there, Rich?
Speaker #4: I'm going to have to walk it up, so knock wood, should get into the low 20s this year, and then walk it up from there.
Speaker #4: Can we accelerate it? It's going to depend on a little bit of mix. And I really want to see—we're still kind of in a transitional period on the footprint side.
Richard J. Tobin: So what we end up is with like a core refrigeration business, which is around $ half a 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 where we're in the early innings there, and we've got a leadership position.
So what we end up is with like a core refrigeration business, which is around $ half a 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 where we're in the early innings there, and we've got a leadership position.
Speaker #4: 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 we'll probably be completed by the end of the year.
Speaker #4: 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 to the cost out.
Speaker #4: 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 it's becoming larger.
Scott Davis: Okay. Helpful. Good color. Thank you. I'll pass it on. Best of luck this year, guys.
Scott Davis: Okay. Helpful. Good color. Thank you. I'll pass it on. Best of luck this year, guys.
Richard J. Tobin: Thanks.
Richard J. Tobin: Thanks.
Operator: Thank you. We'll take our next question from Mike Halloran with Baird.
Operator: Thank you. We'll take our next question from Mike Halloran with Baird.
Speaker #4: If that growth rate and that opportunity continue to expand, then we're very excited about it.
Mike Halloran: Hey, morning. Well, afternoon, everyone. So, first on the clean energy margins, I prepared remarks. You mentioned the mid-20% target. Maybe just some timeline on when you think you can get there, Rich.
Michael Halloran: Hey, morning. Well, afternoon, everyone. So, first on the clean energy margins, I prepared remarks. You mentioned the mid-20% target. Maybe just some timeline on when you think you can get there, Rich.
Speaker #9: That 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.
Richard J. Tobin: We're gonna have to walk it up. So, you know, Knockwood should get into the low 20s this year and then walk it up from there. Can we accelerate it? It's gonna depend on a little bit of mix. And I really wanna 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 on the inventory is once we get that done. So we're still doing that now, and we'll 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 gonna be on the roll forward of the cost out, and your guess is as good as mine.
Richard J. Tobin: We're gonna have to walk it up. So, you know, Knockwood should get into the low 20s this year and then walk it up from there. Can we accelerate it? It's gonna depend on a little bit of mix. And I really wanna 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 on the inventory is once we get that done. So we're still doing that now, and we'll 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 gonna be on the roll forward of the cost out, and your guess is as good as mine.
Speaker #9: At the same time, you're also doing some of these internal initiatives—managing capacity, lowering. How do you see that push-pull as you work through the year?
Speaker #9: Are there areas where you might be putting incremental capital towards to expand capacity, or do you feel pretty good about the network as we sit here today? And then, what's left on the pairing side?
Speaker #4: Right now, CapEx is coming down. In '26, that's basically because of the completion of the expansion capacity and the restructuring capacity. So, it's coming down.
Speaker #4: We feel good where we are greenfielding a plant or beginning to greenfield a plant in North Carolina that'll probably take us into '27 by the time that's complete.
Richard J. Tobin: 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.
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.
Speaker #4: 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 flight that we detailed in Q3, the only new one that I would add to that is the greenfield plan in North Carolina.
Speaker #9: Thank you.
Mike Halloran: Well, makes sense. And then you touched on it briefly there, but you know, you've had comments about, you know, 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 towards to expand capacity, or do we feel pretty good about the network as we sit here today, and then what's left on the pairing side?
Michael Halloran: Well, makes sense. And then you touched on it briefly there, but you know, you've had comments about, you know, 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 towards to expand capacity, or do we feel pretty good about the network as we sit here today, and then what's left on the pairing side?
Speaker #4: Yep. Thank you.
Speaker #2: We'll take our next question from Andrew Open with Bank of America.
Speaker #10: This is David Ridley-Main on for Andrew Open. I was wondering if you could talk about your exposure on the natural gas power generation side. Do you supply components for just large turbines, or is it small turbines and reciprocating engines as well?
Speaker #10: And then notably, over the last kind of three to six months, there's been quite a number of capacity expansions by the equipment providers, just to over-participate in that.
Richard J. Tobin: Right now, CapEx is coming down in 2026 because of 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'll probably take us into 2027 by the time that's complete. So, you know, 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 flight that we detailed in Q3, the only new one that I would add to that is the greenfield plant in North Carolina. Thank you.
Richard J. Tobin: Right now, CapEx is coming down in 2026 because of 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'll probably take us into 2027 by the time that's complete. So, you know, 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 flight that we detailed in Q3, the only new one that I would add to that is the greenfield plant in North Carolina. Thank you.
Speaker #10: Thank you.
Speaker #4: 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.
Speaker #4: The market right now—and while capacity and percentage terms have 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.
Speaker #4: 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 expect it to kick off in the back half of—
Chris Woenker: Yep.
Christopher Woenker: Yep.
Operator: Thank you. We'll take our next question from Andrew Obin with Bank of America.
Operator: Thank you. We'll take our next question from Andrew Obin with Bank of America.
Speaker #4: '26. Got it.
David Ridley-Lane: Hi, this is David Ridley-Lane on for Andrew Obin. Was wondering if you could talk about your exposure on sort of the natural gas power generation side. All you supply components for just large turbines, or is it small turbines and reciprocating engines as well? And then, you know, notably over the last kind of 3, 6 months, there's been quite a number of capacity expansions by the equipment providers. And does Dover participate in that? Thank you.
David Ridley-Lane: Hi, this is David Ridley-Lane on for Andrew Obin. Was wondering if you could talk about your exposure on sort of the natural gas power generation side. All you supply components for just large turbines, or is it small turbines and reciprocating engines as well? And then, you know, notably over the last kind of 3, 6 months, there's been quite a number of capacity expansions by the equipment providers. And does Dover participate in that? Thank you.
Speaker #10: And just to sort of clarify a thing from the slides, there's something about price/cost in the fourth quarter for the Clean Energy and Fuel lane.
Speaker #10: Was that kind of one time, or?
Speaker #4: You know
Speaker #4: what? You got me. Yeah.
Speaker #10: It's a bit of a 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.
Richard J. Tobin: 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 expect it to kick off in the back half of 2026.
Richard J. Tobin: 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 expect it to kick off in the back half of 2026.
Speaker #10: Got it. Okay. Thank you very much.
Speaker #4: Thanks.
Speaker #2: Thank you. We'll take our next question from Andy Capowitz with...
Speaker #2: Citigroup. Good afternoon, everyone.
Speaker #11: Hey, hi, Andy. Rich. You mentioned as you get better visibility, then you could adjust revenue guidance, but given both the 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 at or over one that you've been...
Speaker #11: delivering? I don't
Speaker #4: 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?
Speaker #4: So, in part and parcel to having a discussion—I mean, I can't believe we're giving out guidance and talking about moving; that is, getting through Q1 and guidance already—but part and parcel to seeing whether we're eating into our backlog, or we're neutral, or is backlog building even in excess of production, which is basically what we'd have to add into the back half of the year.
David Ridley-Lane: Got it. Just to sort of clarify the thing from the slides, there's something about price cost in Q4 for the Clean Energy and Fueling segment. Is that kind of one time or?
David Ridley-Lane: Got it. Just to sort of clarify the thing from the slides, there's something about price cost in Q4 for the Clean Energy and Fueling segment. Is that kind of one time or?
Speaker #4: So look, we were here the same time last year, and then the S hit the fan. In February. So let's get into the year.
Richard J. Tobin: You know what? You got me.
Richard J. Tobin: You know what? You got me.
Chris Woenker: Yeah, it's just 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.
Christopher Woenker: Yeah, it's just 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.
Speaker #4: Right now, all things look good in terms of trajectory, exit trajectory, 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.
David Ridley-Lane: Got it. Okay. Thank you very much.
David Ridley-Lane: Got it. Okay. Thank you very much.
Richard J. Tobin: Thanks.
Richard J. Tobin: Thanks.
Operator: Thank you. We'll take our next question from Andrew Kaplowitz with Citigroup.
Operator: Thank you. We'll take our next question from Andrew Kaplowitz with Citigroup.
Andrew Kaplowitz: Good afternoon, everyone.
Andrew Kaplowitz: Good afternoon, everyone.
Richard J. Tobin: Hi, Andy.
Richard J. Tobin: Hi, Andy.
Speaker #11: That's helpful, Rich. And then I wanted to ask you about DII. I know it's kind of a GDP, maybe GDP plus business, but what, if anything, gets you going there a little bit more?
Andrew Kaplowitz: Hey, Rich, you mentioned as you get better visibility, then 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 one that you've been delivering?
Andrew Kaplowitz: Hey, Rich, you mentioned as you get better visibility, then 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 one that you've been delivering?
Speaker #11: I know the low single-digit forecast for '26, and you did mention you're in the middle of the sort of multi-year margin expansion progression and structural cost.
Richard J. Tobin: That, you know, I don't know, right? I... As I mentioned in my earlier comments, right, that, 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 out guidance and 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 is backlog building even in excess of production, which is basically what we'd have to add into the back half of the year. So, you know, look, we were here the same time last year, and then the S hit the fan in February. So let's, let's get into the year.
Richard J. Tobin: That, you know, I don't know, right? I... As I mentioned in my earlier comments, right, that, 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 out guidance and 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 is backlog building even in excess of production, which is basically what we'd have to add into the back half of the year. So, you know, look, we were here the same time last year, and then the S hit the fan in February. So let's, let's get into the year.
Speaker #11: So where are you in that progression? Do you still have good margin upside in that segment?
Speaker #4: 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'll drive margin.
Speaker #4: 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 normal.
Speaker #4: 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.
Speaker #4: On kind of the longer-term growth rate, because it flops around. But it's a highly valuable business when you look at the cash flow dynamics of it.
Richard J. Tobin: Right now, all things look good in terms of trajectory, you know, exit trajectory, backlog trajectory, orders, and everything. Let's, let's kind of walk it into Q1, and we'll give you an update when we get there.
Right now, all things look good in terms of trajectory, you know, exit trajectory, backlog trajectory, orders, and everything. Let's, let's kind of walk it into Q1, and we'll give you an update when we get there.
Speaker #11: Helpful, Rich.
Andrew Kaplowitz: 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 2026, and you did mention you're in the middle of the sort of multi-year margin expansion progression and structural cost. So where are you in that progression? Do you still have, you know, good margin upside in that segment?
Andrew Kaplowitz: 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 2026, and you did mention you're in the middle of the sort of multi-year margin expansion progression and structural cost. So where are you in that progression? Do you still have, you know, good margin upside in that segment?
Speaker #2: Thank you. We'll take our next question from Brett Lindsay with Mizuho.
Speaker #4: Hey, good afternoon all.
Speaker #11: Hi.
Speaker #4: Hey, question on the 20% of the business tied to the secular markets. You've done a good job highlighting that over the last several quarters.
Speaker #4: Curious, postmortem, 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%?
Richard J. Tobin: 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'll drive margin from there. You know, 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 flops around. But it's a highly valuable business when you look at the cash flow dynamics of it.
Richard J. Tobin: 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'll drive margin from there. You know, 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 flops around. But it's a highly valuable business when you look at the cash flow dynamics of it.
Speaker #4: Yes and yes. Yes and yes. Okay. And then a follow-up on capital allocation. So, slide number eight, the dotted bar stack frames the optionality on the flex leverage.
Speaker #4: 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 to maintain investment grade.
Speaker #4: So it's just simple math. Okay.
Speaker #4: Got it. I will leave it there. Thanks a lot.
Andrew Kaplowitz: Helpful, Rich.
Andrew Kaplowitz: Helpful, Rich.
Richard J. Tobin: Thanks.
Richard J. Tobin: Thanks.
Speaker #11: Thanks. Thank you.
Operator: Thank you. We'll take our next question from Brett Linzey with Mizuho.
Operator: Thank you. We'll take our next question from Brett Linzey with Mizuho.
Speaker #2: We'll take our next question from Joe Ritchie with Goldman Sachs.
Brett Linzey: Hey, good afternoon, all.
Brett Linzey: Hey, good afternoon, all.
Speaker #11: Hey,
Speaker #11: guys. Good afternoon. Hey,
Richard J. Tobin: Hi.
Richard J. Tobin: Hi.
Chris Woenker: Hey.
Christopher Woenker: Hey.
Brett Linzey: Hey, question on the, the 20% of the business tied to the secular markets. You've done a good job highlighting that over the last, several quarters. Curious, postmortem, 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 2026 for that 20%?
Brett Linzey: Hey, question on the, the 20% of the business tied to the secular markets. You've done a good job highlighting that over the last, several quarters. Curious, postmortem, 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 2026 for that 20%?
Speaker #11: So, I'll start by Joe. 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.
Speaker #11: I know you look at your portfolio frequently. Just, how are you thinking about the portfolio as it stands today, and potentially, addition by—
Speaker #11: Subtraction? Well, I mean, we've got a fiduciary—
Richard J. Tobin: Yes and yes.
Richard J. Tobin: Yes and yes.
Brett Linzey: Yes and yes. Okay, and then a follow-up on capital allocation. So slide number 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.
Brett Linzey: Yes and yes. Okay, and then a follow-up on capital allocation. So slide number 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.
Speaker #4: If someone wants to purchase a portion of the portfolio, we have a responsibility to consider it. Number one, right now we're comfortable with what we own.
Speaker #4: We do preserve optionality if we were to lever to do deals that we could deliver by monetization of the portfolio as an option per se.
Richard J. Tobin: I would imagine that it's calculated off of full year 2025 EBITDA.
Richard J. Tobin: I would imagine that it's calculated off of full year 2025 EBITDA.
Brett Linzey: Right.
Brett Linzey: Right.
Richard J. Tobin: And it is probably the max leverage with some wiggle room, kind of to maintain investment grade. So it's just simple math.
Richard J. Tobin: And it is probably the max leverage with some wiggle room, kind of to maintain investment grade. So it's just simple math.
Speaker #4: But right now, we're fine with the portfolio as it is, either organically investing in it or in the portions that we've historically done more M&A.
Brett Linzey: Yep. Okay, got it. I will, I'll leave it there. Thanks a lot.
Brett Linzey: Yep. Okay, got it. I will, I'll leave it there. Thanks a lot.
Speaker #11: 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 nine 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?
Richard J. Tobin: Thanks.
Richard J. Tobin: Thanks.
Operator: Thank you. We'll take our next question from Joe Ritchie with Goldman Sachs.
Operator: Thank you. We'll take our next question from Joe Ritchie with Goldman Sachs.
Joe Ritchie: Hey, guys. Good afternoon.
Joseph Ritchie: Hey, guys. Good afternoon.
Richard J. Tobin: Hey, Joe.
Richard J. Tobin: Hey, Joe.
Joe Ritchie: 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, you know, addition by subtraction?
Joseph Ritchie: 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, you know, addition by subtraction?
Speaker #11: year? I mean, they're
Speaker #4: All correct, and if you added 1 percentage point to all of them—you know what I mean? There's no 'this one can double' based on our expectations.
Richard J. Tobin: Well, I mean, we've got a fiduciary responsibility. If someone wants to purchase a portion of the portfolio, we have to consider it, number one. Right now, we're comfortable with what we own. We do preserve optionality if we were to lever to do deals that we could deliver 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.
Richard J. Tobin: Well, I mean, we've got a fiduciary responsibility. If someone wants to purchase a portion of the portfolio, we have to consider it, number one. Right now, we're comfortable with what we own. We do preserve optionality if we were to lever to do deals that we could deliver 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.
Speaker #4: It's more of, do you get a point here? Do you get a point here? Do you get a point there? And at the end, when you add it all up, it adds a couple of points to the top line.
Speaker #4: So, I don't—without getting over our skis here—I think that those are, directionally, absolutely right.
Speaker #11: Okay, sounds good. I hope you get that point as we progress through the year.
Speaker #4: Okay. Thanks, Joe.
Speaker #11: Good to talk to
Speaker #11: you. See
Speaker #4: you. Thank you.
Speaker #2: Our final question comes from Deandre with RBC Capital Markets.
Speaker #4: Thank you.
Speaker #4: Good day, everybody. Hey, Hey.
Speaker #4: Maybe just Dean, pick up on Joe's question there, because I've been staring at page nine, 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.
Joe Ritchie: 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-
Joseph Ritchie: 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-
Speaker #4: And it begs the question: was there anything different about the planning process this year? Is this strictly a bottom-up aggregation of each one of the businesses, or did you overlay in any way, haircut anything?
Richard J. Tobin: Uh-huh.
Richard J. Tobin: Uh-huh.
Joe Ritchie: Where across the portfolio do you think you have the biggest swing factors this year?
Joseph Ritchie: Where across the portfolio do you think you have the biggest swing factors this year?
Richard J. Tobin: 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, you know, this one 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, you know, and at the end, when you add it all up, it adds a couple of points to the top line. So I don't, you know, without getting over our skis here, I think that those are directionally absolutely right.
Richard J. Tobin: 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, you know, this one 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, you know, and at the end, when you add it all up, it adds a couple of points to the top line. So I don't, you know, without getting over our skis here, I think that those are directionally absolutely right.
Speaker #4: 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?
Speaker #4: Sure. I think it was in the comments, but I mean, I think that we were pretty upfront over the last two or three years that some of the longer-cycle businesses that had done extremely well were cycling down, right, because it was coming out of the backlog.
Joe Ritchie: Okay, sounds good. I hope you get, I hope you get that point as we progress through the year.
Joseph Ritchie: Okay, sounds good. I hope you get, I hope you get that point as we progress through the year.
Speaker #4: So the MOGs and the Belvax 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.
Richard J. Tobin: Thanks, Joe.
Richard J. Tobin: Thanks, Joe.
Joe Ritchie: Good to talk to you.
Joseph Ritchie: Good to talk to you.
Richard J. Tobin: See you.
Richard J. Tobin: See you.
Operator: Thank you. Our final question comes from Dean Dray with RBC Capital Markets.
Operator: Thank you. Our final question comes from Dean Dray with RBC Capital Markets.
Dean Dray: Thank you. Good day, everybody.
Deane Dray: Thank you. Good day, everybody.
Richard J. Tobin: Hey, Dean.
Richard J. Tobin: Hey, Dean.
Dean Dray: Hey, maybe just pick up on Joe's question there, because I've been staring at page nine, and I'm trying to remember the last time, you know, you had organic growth, all green and all the arrows on margin pointing up uniformly like that. And it 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 one of the businesses, or did you overlay in any way, haircut anything? You know, remember, a year ago, the tariffs, you decided that you did want to be a little more conservative. So is there any element of, of trimming or boosting here that you'd like to share?
Deane Dray: Hey, maybe just pick up on Joe's question there, because I've been staring at page nine, and I'm trying to remember the last time, you know, you had organic growth, all green and all the arrows on margin pointing up uniformly like that. And it 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 one of the businesses, or did you overlay in any way, haircut anything? You know, remember, a year ago, the tariffs, you decided that you did want to be a little more conservative. So is there any element of, of trimming or boosting here that you'd like to share?
Speaker #4: 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.
Speaker #4: 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.
Speaker #11: That's helpful, thank you. 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?
Richard J. Tobin: Sure. I think it was in the comments, but I mean, I think that we were pretty upfront over the last two or three years of some of the longer cycle businesses that had done extremely well were cycling down, right? Because it was coming out of the backlog. So, you know, 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 I think that we had thought going into 25 that we were concerned about Vehicle Service Group in Europe, and that's the way it turned out at the end of the day.
Richard J. Tobin: Sure. I think it was in the comments, but I mean, I think that we were pretty upfront over the last two or three years of some of the longer cycle businesses that had done extremely well were cycling down, right? Because it was coming out of the backlog. So, you know, 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 I think that we had thought going into 25 that we were concerned about Vehicle Service Group in Europe, and that's the way it turned out at the end of the day.
Speaker #11: Just kind of directionally. And how does that compare to other normal times?
Speaker #4: 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 was sold out for Q1, right?
Speaker #4: 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.
Speaker #4: 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, a second of the year, but we'll know that in the next 60 days or so.
Richard J. Tobin: 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 are under duress.
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 are under duress.
Speaker #11: Thank you.
Speaker #4: Thanks.
Speaker #2: Thank you. That concludes our question and answer period. And DOVER's fourth quarter 2025 earnings conference call. You may now disconnect your line at this time and have a wonderful day.
Dean Dray: That's, that's helpful. Thank you. And just a quick one. Backlog has come up a bunch of times, in Q&A here. Just directionally, how much of 2026 revenues do you expect are in backlog today, just kind of directionally?
Deane Dray: That's, that's helpful. Thank you. And just a quick one. Backlog has come up a bunch of times, in Q&A here. Just directionally, how much of 2026 revenues do you expect are in backlog today, just kind of directionally?
Richard J. Tobin: You know-
Richard J. Tobin: You know-
Dean Dray: How does that compare to other normal times?
Deane Dray: How does that compare to other normal times?
Richard J. Tobin: I, 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? That is not a normal state of affairs. We generally bleed in, 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? If it does, it's proactive for the back half of second half of the year, but we'll know that in the next 60 days or so.
Richard J. Tobin: I, 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? That is not a normal state of affairs. We generally bleed in, 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? If it does, it's proactive for the back half of second half of the year, but we'll know that in the next 60 days or so.
Dean Dray: Thank you.
Deane Dray: Thank you.
Richard J. Tobin: Thanks.
Richard J. Tobin: Thanks.
Operator: Thank you. That concludes our question and answer period and Dover's fourth quarter 2025 earnings conference call. You may now disconnect your line at this time and have a wonderful day.
Operator: Thank you. That concludes our question and answer period and Dover's fourth quarter 2025 earnings conference call. You may now disconnect your line at this time and have a wonderful day.
