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Date
Jan. 29, 2026 at 12:00 p.m. ET
Call participants
- President and Chief Executive Officer — Richard J. Tobin
- Senior Vice President and Chief Financial Officer — Christopher Woenker
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Takeaways
- Organic Revenue Growth -- organic growth up to 5% in the fourth quarter, the highest growth rate of 2025.
- Bookings Growth -- Fourth-quarter bookings increased 10%, with a full-year increase of 6% and a book-to-bill ratio of 1.02.
- Segment EBITDA Margin -- Improved 60 basis points to 24.8% for the quarter, attributed to volume leverage and productivity initiatives.
- Adjusted EPS -- $9.61 in the quarter, up 14%, and up 16% for the full year, both above prior guidance.
- 2026 EPS Guidance -- Management guided to adjusted EPS of $10.45 to $10.65, indicating double-digit growth at the midpoint.
- Free Cash Flow -- $487 million for the quarter, representing 23% of revenue; full-year free cash flow at 14% of revenue, nearly $200 million higher than 2024.
- 2026 Free Cash Flow Guidance -- Projected at 14%-16% of revenue, with expectations for continued strong operating cash conversion.
- Acquisitions -- $700 million deployed in 2025 across four acquisitions, with three focused in the Pumps and Process Solutions segment; acquisitions "performing above their underwriting cases."
- Share Repurchases -- Over $500 million repurchased in 2025, including a $500 million accelerated share repurchase initiated in November.
- Engineered Products Segment -- Segment revenue declined on lower vehicle services volumes, offset by double-digit growth in aerospace and defense components and software; margins increased over 200 basis points.
- Clean Energy & Fueling (DCEF) -- 4% organic growth in the quarter, led by clean energy components and North American retail fueling; margins slightly down versus prior quarter but up for the year.
- Imaging and Identification -- 1% organic growth, with segment EBITDA margin at 28%; foreign currency and higher printer shipments modestly pressured margin.
- Pumps and Process Solutions -- 11% organic growth, with first quarterly organic growth in polymer processing since 2024; segment margin remains at "best-in-class levels."
- Climate & Sustainability Technologies (DCST) -- 9% organic growth, with double-digit growth in CO2 refrigeration systems and record U.S. shipments of brazed plate heat exchangers; margins up 250 basis points, and Q4 book-to-bill reached 1.21.
- 2025 Productivity Actions -- $40 million expected carryover profit from prior period restructuring initiatives in 2026.
- Organic Investment -- Capital spending increased by over $50 million in 2025, focused on capacity expansions, productivity, and automation.
- Portfolio Shifts -- Engineered Products now account for less than 15% of the portfolio following divestitures and segment growth.
- Price Contribution -- Guidance embeds 1.5%-2% price increase for 2026, with commodity cost monitoring.
- Segment Mix Guidance -- DCEF and DCST expected to deliver operating leverage from volume growth and cost savings; DCEF margin gains to be back-end loaded, while DCST faces some commodity exposure risk, especially copper.
Summary
Dover (DOV 1.68%) reported its strongest quarterly organic growth of the year at 5%, with broad-based order strength and double-digit adjusted EPS gains, highlighting resilient demand momentum across strategic end markets. Management emphasized robust free cash flow generation, aggressive capital deployment into acquisitions and share repurchases, and improved operating margins across multiple business segments, positioning the company for further earnings growth in 2026. Guidance for double-digit adjusted EPS growth and continued high bookings suggest sustained favorable conditions, while management noted supply chain and input cost monitoring as ongoing considerations.
- Richard J. Tobin stated, "We are guiding for adjusted EPS of $10.45 to $10.65 a share in 2026, which represents double-digit growth at the midpoint."
- Pumps and Process Solutions segment organic growth accelerated to 11%, with acquisition Sokora continuing to outperform its underwriting case.
- Management highlighted that all five reporting segments posted bookings growth in the fourth quarter, supporting a broad-based positive outlook into 2026.
- Christopher Woenker disclosed, "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."
- The Engineered Products segment accounted for less than 15% of the total portfolio after divestitures and portfolio optimization activities.
Industry glossary
- Book-to-Bill Ratio: A measure of orders received (bookings) divided by products shipped and billed, with values above 1.0 indicating upward demand momentum.
- Accelerated Share Repurchase (ASR): A method by which a company buys back a large block of its shares quickly, typically in a single transaction with an investment bank.
- Brazed Plate Heat Exchanger: An industrial device used for heat transfer, notable here for application in liquid-cooling data centers within the DCST segment.
- Sokora: Acquired company integrated into Dover's Pumps and Process Solutions segment, cited as outperforming its acquisition case.
Full Conference Call Transcript
Richard J. Tobin: 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 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 and refrigerated door cases and services. Our strong bookings rates, which were up 10% in the quarter and 6% for the full year, continue to support underlying momentum across the portfolio, providing confidence in the durability of the demand as we enter the New Year.
Book to bill was seasonally high for the fourth quarter at 1.02. Segment EBITDA margins improved 60 basis points in the quarter to 24.8%, on volume leverage and ongoing productivity initiatives. All in, adjusted EPS at $9.61 was up 14% in the quarter, beating our raised third-quarter guide and 16% for the full year, a very encouraging result. Our solid operational results 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, we remain well-positioned to deploy capital behind opportunities to enhance long-term shareholder value. We are taking a constructive outlook for 2026. Demand trends are solid and broad-based across the portfolio and are supported by our order book, with no individual end market presenting a material headwind based on current visibility. Our balance sheet optionality enables us to dynamically respond to market conditions and opportunistically play offense. We are guiding for adjusted EPS of $10.45 to $10.65 a share in 2026, which represents double-digit growth at the midpoint, consistent with our long-term trajectory and commitment to driving sustainable value creation for our shareholders. Let's go to slide five.
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. Despite the organic volume decline, absolute segment profit improved in the quarter with margins up over 200 basis points on well-executed structural cost management, product mix, and productivity initiatives. Clean energy and fueling was up 4% organically in the quarter, led by strong shipments and new orders in clean energy components as well as North American retail fueling software and equipment. Margins were down slightly in the quarter due to lower vehicle wash solutions but still up materially for the year as we track towards our goal of 25% margin for the segment.
Imaging and ID was up 1% organically in the quarter on core growth in our core marketing and coding business and in serialization software. EBITDA margin performance remains very good for the segment at 28%. The foreign currency translation and a higher mix of printer shipments slightly weighed on the margin in the quarter. Pumps and process solutions were 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. Sokora, 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 '24 due to the timing of large deliveries out of our backlog. Pumps and Process Solutions segment margin continues to perform at best-in-class levels. Climate and sustainability technology posted positive organic growth of 9% in the quarter on continued double-digit growth in CO2 refrigeration systems and significant volume improvements in refrigerated door cases and engineering services, which 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, and positive mix benefits from secular growth-exposed end markets, with a book to bill of 1.21 in the quarter. The outlook for climate sustainability technology is very encouraging for 2026. I'll pass it to Chris here.
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 Corporation'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.
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 at seasonally high book to bill above one, continuing the trend of bookings momentum we experienced in the last two years. All five segments posted bookings growth in the fourth quarter, signaling broad-based demand strength for 2026. On Slide eight, we highlight the capital allocation results from 2025 with our priorities. Our highest priority capital spending is organic investment, which has proven to drive the highest returns on investment.
We stepped up capital spending by over $50 million in 2025 over the prior year, with a healthy balance between growth capacity expansions behind some of our highest priority platforms as well as productivity and automation investments, including some rooftop consolidations. In total, we expect about $40 million of carryover profit from the previously announced productivity actions in 2026. Our next priority is growth through acquisitions. In 2025, we deployed $700 million across 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.
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, 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 nine. Engineered products are expected to improve in 2026. Our aerospace and defense components business continues to experience significant demand tied to electronic warfare and signal intelligence solutions.
Vehicle aftermarket, which declined by double digits organically in 2025, has shown some signs of moderating demand with constructive booking trends late in '25 and early '26. With the divestitures of the STACO Environmental Solution Groups in 2024 and the growth of other segments in the portfolio, 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 business. 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.
We expect the headwinds from the vehicle wash equipment and software to improve the headwinds in '25 to improve in '26. Clean energy and fueling should be among the leaders in margin accretion in 2026 on volume leverage and integration benefits from clean energy acquisitions. Imaging and ID should continue its long-term steady growth trajectory given its significant 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 our artificial intelligence and energy infrastructure is robust, including thermal connectors for liquid cooling of data centers, precision components for natural gas infrastructure, and in Secours inspection equipment for high voltage wire and cables. Demand for single-use biopharma components remains solid, driven by production growth and blockbuster drugs and 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. 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.
We'd expect seasonality in 2026 to be similar to the last few years, with Q1 volume slowly ramping into peak product delivery periods in the second and third quarters, with the fourth quarter representing an early indication of next year's outlook. We are encouraged by the momentum in our top-line performance, which marks an improvement over several years of organic growth 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 are committed to continuing our long-term double-digit EPS growth trajectory into '26. Finally, I'd like to thank our global teams for their efforts to deliver these last year's results, and we look forward to serving our customers, partners, and investors in the year ahead.
Jack Dickens: And with that, Jack, let's go to Q&A.
Operator: Thank you. If you would 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 two. We'll take our first question from Steve Tusa with JPMorgan.
Steve Tusa: Hey, good morning. Good afternoon, I guess. I know. I'm weird. Right. Yeah. Had to eat lunch, delay lunch for you guys.
Richard J. Tobin: Yeah. We'll go early in the morning next time around.
Steve Tusa: No. It's nice 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 are you thinking about managing the raws?
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, one, one and a half percent 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.
Steve Tusa: Okay. So as of now, how much price are you embedding in the guide?
Richard J. Tobin: One and a half to two.
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 month or so or two months that would change that positive view and tone on just the general economy and business?
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 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 '26. You know, our backlogs are good. I think production performance should be pretty good in Q1. 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 like the setup.
Steve Tusa: Great. Thanks a lot.
Operator: Thank you. We'll take our next question from Julian Mitchell with Barclays.
Julian Mitchell: Hi, good 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'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 DCS what sort of operating leverage you're aiming for this year. You know, they're 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: 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. 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 two hundred and fifty basis points comparatively. We'll see. If we can get more on the volume going from there back to the question we had previously, that's where we're a little bit commodity exposed. Particularly in copper.
So do we bounce up the top line expectations a little there? To cover that. We'll see as the year goes on. Right now, bought forward enough that we've got a pretty good idea what we'll get probably in the first half of the year. 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 mix.
Julian Mitchell: Thanks. That's helpful. And maybe you've mentioned sort of seasonality, Rich, a couple of times as being sort of a normal year ahead. So should we expect, let's say, year-on-year EPS growth and sales growth each quarter to not be that different from the full-year framework on Slide 10 is, you know?
Richard J. Tobin: Yeah. Most No, Julian. That's right. And when we looked at consensus for the year, there was Despite the fact that I think for twelve months, it was oddly high for Q1. or not twelve or for nine months, we've been saying over and over again, be careful about So, look, the full year is the full year. We'll hit the full year, but they The biopharma mix in Q1. the seasonality should be the same as it's been sitting in your models historically.
Julian Mitchell: That's great. Thank you.
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 a quick question on growth outlook for this year, 4%. Obviously, that's a good number, certainly a better number than the last couple of years, but it's a bit lower than sort of where we exited at in the fourth quarter. So maybe you can talk about it. Is that just prudent conservatism? 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?
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.
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.
Amit Mehrotra: Yeah. That's helpful. And 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 the third quarter and, I guess, are continuing to move in that direction. Do you feel confident you're able to get all of that back from where we stand today?
Richard J. Tobin: We're sold out for Q1. That's what I can tell you. So we're booking, and that is relatively short cycle business. And we're booking well into Q2. So, so far so good.
Amit Mehrotra: Okay. Very good. Thank you very much. Appreciate it.
Operator: Thank you. Our next question will come from Jess Brock with Vertical Research Partners.
Jess Brock: Hey. Thanks. Good day, everyone. Hey, Avery. It's 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, Just wanna make sure there's not anything below the line I'm missing. It looks like you're sort of guiding it 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?
Richard J. Tobin: There's nothing really on the bottom line, Jeff. So you're close on the number or right. You're right on the number, more or less.
Jess Brock: Yeah. 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, kinda transformative sort of deal generational deal, something very large. Maybe just to kind of address your appetite for really large, or are you more inclined to stick with bolt-ons? Anything you could add there?
Richard J. Tobin: Well, it's better than the retirement one from last year. So I'll take the I'll take the transformational deal angle. You know, we're not gonna 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 Corporation at the end of the day. So it's not as if it's not as if we look at the way 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. 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.
Jess Brock: Yeah. Hey. And then maybe I'm sorry. It's 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 this order growth rate that's been ahead of revenues now for a significant period of time and the fact that things like Secora were coming into organic at, you know, like, 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.
Richard J. Tobin: I mean, at the end of the day, I mean, three to five, 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's always kind of an interesting quarter for us because we have a lot of production performance and then we ship a lot in Q2 Q3. I think part of it is let's get into Q1. Let's see if we're manufacturing backlog or we're replacing what we're taking in production performance with new order flow. And if that's the case, then, you know, we'll take a close look at the top line.
And, again, don't wanna 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.
Jess Brock: Right. Okay. Great. I'll leave it there. Thanks, Rich.
Operator: Thank you. We'll take our next question from Joe O'Dea with Wells Fargo.
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?
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 taken that's actually been a drag on our top line over the last three or four years that we've gone and done eighty twenty on the customer side. And other than that, it's look. Since February, EVs were taking over the world. So there was not a lot of CapEx spent in retail fueling. And that was reflected maybe not in the margin, which I think we've done a fantastic job of, but on the top line. Well, that's kind of turned the corner here.
And if you go look at someone like Costco and what margins are fueling are right now, I think it's woken up the market that spreads at the retail are as high as they've ever been. So and that's gonna drive returns on projects.
Joe O'Dea: 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. 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?
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.
Joe O'Dea: Got it. Thank you.
Operator: Thank you. We'll take our next question from Nigel Coe with Wolfe Research.
Nigel Coe: Rich, I thought it'd be interesting to think about growth, you know, bifurcated between your, you know, the 20% of what you call secular growth markets and that's been growing double digits. And then the trough markets that are, I don't know, 40%, 50% you know, Marks, Web, Bellback, BSG, refrigeration. Just maybe just talk about, you know, what you're seeing in those two buckets in 2026.
Richard J. Tobin: Yeah. The growth bucket is going really well. You have 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 a headwind I mean, in Belvac, that one's easy. We're just gonna have to wait for the CapEx cycle to turn in can making. At least the conversations are getting there, but we don't really see it in backlog yet. On vehicle service group, that has very much been a European story.
And that is why despite having the headwind on the top line, you don't see a lot of margin dilution because that's just reflective of the difference between the regions where we make high margins and not. 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 could turn hopefully during the year as we go forward. And refrigeration was an anomaly. I mean, we discussed it at length at the '3. It was deferment but we showed you the backlog building in Q4 and then look at the growth and the margin expansion. We got in Q4.
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 you know, there's always there's always so much we can make in a given year. Right? We're from a capacity point of view because we've actually taken a lot of capacity out there. But with real what we said about going into '26 is reflected in our backlog and was reflected in the revenue growth in Q4.
Nigel Coe: Okay. So refrigeration is recovering nicely. Sounds like MOG is still you know, still some headwinds there. Everything else fairly steady. Is that a good way to summarize that?
Richard J. Tobin: Yeah. Yeah. Mogg's gonna, you know, Mogg's will see it because and you'll see it in the backlog because the dollar value of Mogg'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.
Nigel Coe: Yeah. That's not a shock at all. Just a quick clarification on the internal margins. Is there a structuring payback to sustain 35% saving of raw margins, given the mix pressures you've highlighted? So or could that be No. I mean, I 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.
Nigel Coe: Okay. Clear. Thanks, Trish.
Operator: Thank you. We'll take our next question from Scott Davis with Melius Research.
Scott Davis: Hey, good afternoon, guys. Scott. Hey, Scott. Rich, if you take a step backwards, you know, his portfolio has changed quite a bit since you've taken the helm here, but what do you think the entitlement the new entitlement kinda through cycle growth rate is of this portfolio you have now? Is it kinda right we're kinda in that sweet spot around 5%? Is it four to five?
Richard J. Tobin: Yeah. I mean, you know, it is somewhere between three to six, depending on GDP and everything else. But you know, clearly can do five.
Scott Davis: Okay. That's what I would have thought. And, guys, it's been a kinda been a while since we've talked about you know, closed the case know, that whole nonsense thing that kind of went up and went down. And Yeah. Are would you've got a big installed base, and it's gotta be aging out. Is there any way to think about the age of that installed base and kinda what the and be able to just socialize maybe the pent-up demand how long those things last before they need to be replaced, etcetera.
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. We're knock wood. 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 seven or 8% margin up into the very high teens now.
We're finishing the last CapEx. We put you know, we've basically rebuilt the industrial footprint there. So what we end up is with, like, 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. So it's worth significantly more today than it was back in the day when it was a discussion element. We'll grow that business, but we'll grow it for profitability and we'll grow the CO2 side as quickly as we can because that's we're in the early innings there, and we've got a leadership position.
Scott Davis: Okay. Helpful. Good color. Thank you. I'll pass it on. Good luck this year, guys.
Richard J. Tobin: Thanks.
Operator: Thank you. We'll take our next question from Mike Halloran with Baird.
Mike Halloran: Hey, good morning. Well, afternoon, everyone. So first on the clean energy margins, prepared remarks, you mentioned that the mid-twenty percent target. Maybe just some timeline on when you think you can get there, Rich.
Richard J. Tobin: You're gonna have to walk it up. So, you know, knock wood, should get into the low twenties this year. And then walk it up from there. Can we accelerate it? 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 is once we get that done. So we're still doing that now and will probably be completed by the end of the year. On that. So just on the top line, we think we can get into the low twenties.
From there, it's gonna be on the roll forward of the cost out. And your guess is as good as mine. We're really excited about the longer-term opportunity on the cryogenic side. Which is not a super large business for us, but becoming larger. If that growth rate and that opportunity continues to expand, then we're very excited about it.
Mike Halloran: That makes sense. And then you touched on it briefly there, but you know, you've had comments about 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 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?
Richard J. Tobin: Right now, CapEx is coming down in '26 because of the basically, the completion of the expansion capacity and the restructuring capacity. So 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 '27 by the time that's complete. So, you know, we got a flexible model mean, we can kind of expand capacity relatively quickly, but the only new one that I would add to that is the greenfield plan in North Carolina. So besides the ones that we had in flight that we detailed in Q3,
Mike Halloran: Thank you.
Operator: Thank you. We'll take our next question from Andrew Obin with Bank of America.
David Ridley Lane: Hi. This is David Ridley Lane on for Andrew Obin. Wondering if you could talk about your exposure on sort of the natural gas power generation side. Do you supply components for just large turbines, or is it small turbines and reciprocating engines as well? And then notably, over the last kind of three, six months, there's been a number of capacity expansions by the equipment providers and to still participate in that. Thank you.
Richard J. Tobin: The answer to your question is yes, yes, and yes. So everything from large turbines to midstream to reciprocating compressors, that 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 going to be significant follow-on CapEx on the delivery side, meaning getting the natural gas to those turbines. We expect that to kick off hopefully, but expected to kick off in the '26.
David Ridley Lane: Got it. And just a sort of clarify a thing from the slides. There's something about price cost in the fourth quarter for the clean energy and fueling segment. Is that kind of one-time? Or
Richard J. Tobin: You know what? You got
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.
David Ridley Lane: Got it. Okay. Thank you very much.
Richard J. Tobin: Thanks.
Operator: Thank you. We'll take our next question from Andy Kaplowitz with Citigroup.
Andy Kaplowitz: Good afternoon, everyone. Hi, Andy. 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?
Richard J. Tobin: That, you know, I don't know. Right? As I mentioned in my earlier comments, right, that Q1 tends to be a production month and not much of a shipment month. Right? So and part and parcel to having a discussion I mean, I can't believe we're giving 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 get into the year. Right now, all things look good in terms of trajectory, you know, exit trajectory and backlog trajectory and orders and everything. Let's kind of walk it into Q1 and we'll give you an update when we get there.
Andy Kaplowitz: That's helpful, Rich. And then I wanna ask you. Know it's kind of a GDP, maybe a GDP plus business, but what if anything gets you going there a little bit more? I know the low single-digit forecast for '26 and you did mention you're in the middle of the sort of multi-year margin expansion progression and structural cost out. So where are you in that progression? Do you still have, you know, good margin upside in that segment?
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.
Andy Kaplowitz: Helpful, Rich. Thanks.
Operator: Thank you. We'll take our next question from Brett Linzey with Mizuho.
Brett Linzey: Hey, good afternoon all. Hi. Hey. Question on the 20% of the business tied to the secular market. You've done a good job highlighting that over the last several quarters. Curious 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: Yes and yes.
Brett Linzey: Okay. And then, a follow-up on capital allocation. So slide number eight, the dotted bar stack frames the optionality on the flex leverage. Maybe just an update on the investment-grade leverage ratio that's implied there. I would imagine that it's calculated off of full-year 2025 EBITDA. Right. And it is probably the max leverage with some wiggle room kinda to maintain investment grade. So it's just simple math.
Richard J. Tobin: Yep.
Brett Linzey: Okay. Got it. I will I'll leave it there. Thanks a lot.
Operator: Thank you. We'll take our next question from Joe Ritchie with Goldman Sachs.
Joe Ritchie: Hey, guys. Good afternoon. Hey, Joe. 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 across your business. I know you look 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?
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 delever. By monetization of the portfolio as an option per se. But right now, we're fine with the portfolio as it is. Either organically investing in it, or the portions that we've historically done more M&A.
Joe Ritchie: Okay. Alright. Good to hear. And then I'm not gonna 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, 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 one 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 you get a point here? Do you get a point here? Do you get a point there? And, you know, when at the end when you add it all up, adds a couple points to the top line. So I don't know, without getting over our skis here, I think that those are directionally absolutely right.
Joe Ritchie: Okay. Sounds good. I hope you get I hope you get that point as we progress through here.
Richard J. Tobin: Thanks, Joe. Good to talk to you. See you.
Operator: Thank you. Our final question comes from Deane Dray with RBC Capital Markets.
Deane Dray: Thank you. Good day, everybody. Hey, Dean. 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 each one of the businesses? Or did you overlay in any way, haircut anything, remember a year ago, the tariffs you decided that you did wanna be a little more conservative. So is there any element of trimming or boosting here that you'd like to share?
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. Because it was coming out of the backlog. So, you know, the mogs 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 gonna be negative. That was incorporated into our guidance. So meaning top-line headwind, but margin up. And then we did not have a I don't know.
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. 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.
Deane Dray: 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 just kind of directionally? And how does that compare to other normal times?
Richard J. Tobin: 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. Right? And 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 because we built so much backlog in Q4 of this year, in Q4 and replace it in Q1. The swing factor is going to be do we eat into it in Q1, or does it just continue to build? And if it does, it's proactive for the back half of the second of the year, but we'll know that in the next sixty days or so.
Deane Dray: Thank you.
Operator: Thanks. Thank you. That concludes our question and answer period. End of Dover Corporation's Fourth Quarter 2025 Earnings Conference Call. You may now disconnect your line at this time, and have a wonderful day.