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DATE

Oct. 22, 2026

CALL PARTICIPANTS

• President and Executive Chief Executive Officer - Richard J. Tobin
• Senior Vice President and chief financial officer - Christopher Woenker
• Vice President, Investor Relations - Jack Dickens

TAKEAWAYS

• Revenue -- $2.2 billion, an 8% increase driven by growth in secular markets including artificial intelligence and energy transition.
• Adjusted Diluted EPS -- $2.88, a 10% increase year over year.
• Organic Revenue Growth -- 7.1% for the third quarter, led by strength in the Climate & Sustainability Technologies and Clean Energy & Fueling segments.
• Bookings -- $2.3 billion, a 16% increase reflecting growth across all five segments.
• Backlog -- increased 35% year over year, with approximately 50% of the total scheduled for shipment in 2027.
• Climate & Sustainability Technologies Revenue -- $481.5 million, an 18% organic increase driven by demand for liquid cooling in data centers and record CO2 refrigeration system output.
• Clean Energy & Fueling Revenue -- $606.0 million, a 12% organic increase supported by North American retail fueling and cryogenic component shipments.
• Imaging & Identification Revenue -- $304.7 million, a 2% organic increase led by double-digit growth in serialization software.
• Pumps & Process Solutions Revenue -- $568.5 million, a 1% organic increase with growth in biopharma and artificial intelligence infrastructure.
• Engineered Products Revenue -- $274.9 million, a 2% organic decline as strong aerospace and defense component demand was offset by lower European vehicle services volume.
• Imaging & Identification Segment Margin -- 31.2%, representing an expansion of 390 basis points.
• Climate & Sustainability Technologies Segment Margin -- 16.7%, compared to 18.6% in the prior-year period, reflecting costs associated with production ramps and facility consolidation.
• Free Cash Flow -- $383.3 million in the third quarter, representing 17.2% of revenue.
• Adjusted EPS Guidance -- narrowed to a range of $10.60 to $10.75 per share for the full year.
• Organic Revenue Guidance -- 5% to 6% for the full year 2026.
• Capital Expenditures Guidance -- raised to a range of $200 million to $220 million to support organic capacity expansions.
• Share Repurchases -- $330 million in the third quarter, totaling $400 million year to date.
• Secular Growth Markets Revenue -- accounted for over 25% of total revenue, an increase from 18% in 2024.
• Food Retail Costs -- $40 million year to date, reflecting investments in production ramps and redundant labor costs during footprint consolidation.
• Acquisition Deployment -- approximately $80 million committed to the Clarin and Lichtung bolt-on acquisitions.
• Cash and Liquidity -- over $3 billion in dry powder available at quarter end.
• Asia Organic Revenue Growth -- 15.1% in the third quarter.
• U.S. Organic Revenue Growth -- 12.6% in the third quarter.
• Book-to-Bill Ratio -- 1.03 for the third quarter, with a trailing 12-month ratio of 1.08.

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RISKS

• Tobin stated, "Margin was roughly flat as volume leverage was offset by production ramp in cryogenic product lines where demand is running ahead of capacity," noting current infrastructure constraints in the Clean Energy & Fueling segment.
• Tobin warned that those gains in heat exchangers were offset by the cost of ramping production simultaneously across CO2 systems, specialty cases, and refrigerated door cases, which impacted margins in the Climate & Sustainability Technologies segment.

SUMMARY

Dover Corporation (DOV -2.28%) reported organic revenue growth of 7% in the third quarter, supported by demand in secular growth markets that now account for 25% of total revenue. Management reported a 16% increase in bookings and a 35% rise in backlog, providing visibility for shipments into 2027. The company is actively doubling its global capacity for large heat exchangers to meet demand from data center cooling while completing structural footprint consolidations in the food retail sector. Capital allocation remained focused on organic reinvestment and share repurchases, with a raised capital expenditure forecast to support ongoing infrastructure expansions across its five operating segments.

• CEO Tobin noted that customers in certain segments are securing capacity well in advance of historical norms, stating, "The duration of the demand is a good indicator because customers are basically getting in line to reserve that capacity."
• The company completed the consolidation of door frame production in Sylmar, California, and expects carryover restructuring benefits to contribute to margin improvement in 2027.
• Management highlighted the India-based Lichtung acquisition as a strategic move to establish a low-cost cryogenics components manufacturing presence to serve global markets.
• Tobin indicated that the company has accelerated pricing decisions to stay ahead of inflation, stating, "I think we are actually probably a full quarter in front of getting in front of that."
• Capacity expansions for large heat exchangers are being sized for multiyear demand, with Tobin noting, "We would never capacitize a new site for the next 12 months unless because you never get the return on capital there."

INDUSTRY GLOSSARY

• Book-to-bill: The ratio of orders received to units shipped and billed for a specific period.
• CDU: Coolant Distribution Unit, a device used in liquid cooling systems for data centers.
• CO2 Refrigeration: Natural refrigerant systems used as a sustainable alternative to traditional hydrofluorocarbons in food retail.
• Cryogenics: The production and behavior of materials at extremely low temperatures, used in LNG and space launch infrastructure.
• Maag: Dover's polymer processing platform specializing in extrusion dies and feed blocks.
• Secular Markets: Markets driven by long-term fundamental trends rather than cyclical economic shifts.
• SWEP: Dover's business unit that manufactures brazed plate heat exchangers.

Full Conference Call Transcript

Operator: Thank you for your continued patience. Your meeting will begin shortly. If at any time you need assistance, please press 0, and a member of our team will be happy to assist. Good morning, and welcome to Dover's Third Quarter 26 Earnings Conference Call. Speaking today are Richard J. Tobin, President and Executive Chief Executive Officer Christopher Woenker, Senior Vice President and chief financial officer and Jack Dickens, Vice President, Investor Relations. After the speakers' remarks, there will be a Q&A session. If you would like to ask a question during this time, press star and then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2.

As a reminder, ladies and gentlemen, this conference call is being recorded, and your participation implies consent to our recording of this call. If you do not agree with this term, please disconnect at this time. Thank you. I would now like to turn our call over to Mr. Jack Dickens, Please go ahead, sir.

Jack Dickens: Thank you, Leslie. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through November 12, 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 Richard.

Richard Joseph Tobin: Thanks, Jack. Good morning, everyone. Let's get started on slide 3. Overall, it is a solid quarter. Organic growth accelerated to 7% led by our secular growth markets. And supported by durable demand across the majority of the portfolio. Bookings were the highlight in the quarter. Orders were up 16% year over year, with growth in all 5 segments. Book to bill was 1.03 for the quarter. Our backlog is up 35% versus this time last year. Which supports our confidence in the forecast and provides very good momentum heading into 2027. Adjusted EPS was $2.88 per share, up 10% in the quarter. We remained active on the capital--on capital deployment, announcing 2 bolt-on acquisitions that add complementary capabilities.

Low cost manufacturing, and geographic breadth to our businesses. We also repurchased over 330 million of our shares in the quarter. We are narrowing our full year guidance towards the upper end of the range with organic growth of 5% to 6% and adjusted EPS from $10.60 to $10.75 per share representing double digit growth consistent with our long term algorithm. Let's go to slide 5. Our secular growth markets now represent over 25% of our total revenue, up from 18% in 2024. Across the top of the slide, we show our expected growth rates in each of these markets this year.

In total, markets are a material driver of our overall revenue growth in 2026, and we expect that trend to continue in 2027. We have purposely built these platforms through R&D spending and new product development in our legacy businesses as well as through targeted M&A. Our business model is unique. It allows us to pursue a variety of high growth business opportunities across a range of secular themes, several of our businesses participating in more than 1. We have been able to deliver this growth by proactively adding capacity and advance the market, which has allowed us to capture leadership positions.

This has been particularly important in energy transition and power generation, CO2 systems, data centers, and cryogenic components serving the energy and space markets. We have continued to invest in additional capacity in 2026 behind this demand strength, some of which we will detail in a subsequent slide. These organic and inorganic investmentss have delivered high returns and invested capital despite the proactive upfront investments as the result of high growth rates and margin profiles of these sectors. These businesses are technically demanding mission critical applications where Dover tends to win.

The vast majority of our acquisition capital over the past 5 years has been deployed in these markets and they remain our top priorities from both an organic and inorganic investments. Going to slide 6. This slide underscores the breadth and duration of our order book Trailing 12 month bookings were up 16%, well ahead of revenue growth at 8% and trailing book to bill has climbed to 1.08. Every segment has grown bookings faster than revenue over the past 12 months, That sustained order momentum has underpinned the top line acceleration we are seeing in 2026, and it gives us confidence in our outlook going forward.

Importantly, our backlog is 35% higher than it was at this point last year and is up sequentially from Q2 with roughly half scheduled to ship in 2027. This gives us a solid foundation heading into next year with revenue visibility well ahead of where we would expect to be at this point in the planning cycle. Moving to slide 7. Engineered Products was down 2% organically. Demand for aerospace and defense components remained strong but was more than offset by lower volumes in European vehicle services. Margin was stable on favorable mix and cost controls.

Clean Energy and fueling grew 12% organically, with solid shipments and new orders in clean energy components, fluid transport, and North American retail fueling, which posted its strongest quarter in years. Demand for our cryogenic components in LNG and space launch infrastructure remains healthy. with several recent high profile project wins. Margin was roughly flat as volume leverage was offset by production ramp in cryogenic product lines where demand is running ahead of capacity. We are actively expanding that capacity with additional output coming online in the first quarter of 2027.

Imaging and ID grew 2% organically led by double digit growth in serialization software and solid performance in core marking and coding consumables and equipment margins expanded 400 basis points to 33%. Driven by volume leverage on largely fixed cost base and software growth in consumables, favorable geographic mix, and foreign currency translation. Pumps and Process Solutions grew 1% organically with growth in AI and energy infrastructure single use biopharma and industrial pumps, that was partially offset by lower volumes in polymer processing equipment where quoting activity is high. Margin expanded 70 basis points to 34% on solid conversion in industrial pumps and precision components and a higher mix of biopharma revenue.

Climate and sustainability technologies accelerated to 18% organic growth in the quarter, Shipments and order rates in brazed plate heat exchangers remain robust across all geographies and major end markets with notable strength and liquid cooling for data centers, which was initially concentrated in The US, but we are now seeing meaningful acceleration in Europe and Asia. Lead times remain extended, and we are actively investing to double our global capacity for large heat exchangers through 2027. CO2 refrigeration systems posted quarterly revenue and posted record quarterly revenue with September reaching its highest output of the year in refrigerated door cases. The investments we have added in the Richmond Virginia facility are ramping up.

Line rates exiting third quarter were 15% higher than the second quarter. We expect an another sequential increase in line rates and output in the fourth quarter. We also completed the consolidation of the door frame production in Sylmar, California at the end of the quarter. Segment margin was 18%. Margins in heat exchangers were robust as volumes outrun the significant investments in capacity build with direct labor less than 10% of its cost basis, this business converts incremental volume exceptionally well. Those gains in heat exchangers were offset by cost of ramping production simultaneously across CO2 systems specialty cases, and refrigerated door cases, ahead of higher demand and shipment rates in 2027. Which is reflected in our backlog.

Heat exchangers should continue to benefit from volume leverage in 2027 with a good portion of Q1 revenue already in backlog. In food retail, we have absorbed $40 million in costs year to date from investments and extra labor costs associated with the production ramp along with duplicate fixed costs of running 2 facilities for the throughput of 1. As line rates continue to ramp, and as the roll off of fixed costs accelerates in the balance of the year, margins in climate and sustainability technologies are poised to improve meaningfully in 2027. Pass it over to Christopher.

Christopher Woenker: Thanks, Richard. Good morning, everyone. Let's go to our cash flow statement on slide 8. Year to date free cash flow was $703 million or 11% of revenue, up $72 million over the prior year. Driven primarily by increased operating cash conversion which more than offset working capital investments to support accelerating top line growth. Third quarter free cash flow was $383 million or 17% of revenue. We have taken up our full year CapEx guide for the year to reflect the organic investments we are making behind demand strength. Free cash flow accelerated in the third quarter consistent with historical trends and we expect a further increase in the fourth quarter which is historically our highest cash generating quarter.

Our full year free cash flow guidance remains on track at 14% to 16% of revenue. With that, let me turn it back to Richard.

Richard Joseph Tobin: Okay, I am on slide 9. Organic investment remains our highest return use of capital. On the left, are our most meaningful projects. In support of our organic revenue trajectory, we have greenfield expansions underway in below-ground retail fueling cryogenic components, and flow meters in The US, and single use biopharma components in Asia along with capacity investments in radio frequency equipment for space, printer and ink production, and specialty cases in CO2 systems and large heat exchangers. Many of these projects will be online by the end of the first quarter of 2027.

On the productivity side, we are optimizing our vehicle services footprint, extracting synergies from our polymer processing acquisition, and have now completed the footprint consolidation in food retail. These actions generate substantial carryover restructuring benefits which we will quantify when we provide full year guidance in January. On the right side of the slide are the bolt on acquisitions we announced in the quarter. Clarin, which we closed in August, adds extrusion dies and feed block to our Maag polymer processing platform along with more than 300 thousand square-foot of US manufacturing capacity close to The US petrochemical and space launch infrastructure.

Lichtung, which we signed and expect to close in the fourth quarter, gives our clean energy segment a low cost state of the art cryogenics components manufacturing presence in India. Both businesses carry excess capacity that other Dover companies will leverage as manufacturing hubs in highly strategic locations. Moving to slide 10. Our balance sheet remains a competitive advantage and our capital allocation priorities are unchanged. Organic investment generates our highest returns, and we are guiding full year CapEx of $200 to $220 million with the capacity and productivity projects I just covered delivering attractive returns into next year.

We have committed approximately $80 million to our 2 announced acquisitions and our pipeline remains active for bolt on opportunities in high priority markets. We have also repurchased approximately $400 million of shares year to date, including $330 million in the third quarter. With over $3 billion of dry powder at quarter end. We have the ample flexibility to play offense and capital allocation. And a near term bias towards returning capital to shareholders. Let's finish with slide 11. We are moving our full year guidance towards the upper end of the range. Our focus is on finishing the year strong and our order book gives us confidence in the forecast with momentum carrying into 2027.

Alongside a constructive demand backdrop and a strong order book, we will benefit from carryover restructuring savings contributions from completed acquisitions, a lower share count, and a roll off of transition costs in food retail. We look forward to closing up the year strong and are confident as we enter 2027 from a position of strength. Over to you, Jack.

Jack Dickens: Leslie, we can go right to the Q&A.

Operator: Thank you. Star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. We ask that participants limit themselves to 1 question and 1 clarifying question. Our first question comes from Steve Tusa with Wells Fargo. Please go ahead. Your line is now open.

Steve Tusa: Good morning, guys. Steve. Just on the backlog, I think it is, like, a little bit above $3 billion now if I kind of go back and do the math. and I think you said 50% of that is, like, shippable for next year. Is there anything in kind of the non backlog business that you look out to next year that you would be like, worried about being unsustainable or dropping off at all?

Richard Joseph Tobin: I would characterize it this way, I guess. Where we have been capacity constrained is what is driving the backlog into 2027. So the duration of the demand is a good indicator because customers are basically getting in line to reserve that capacity. It is not overly influenced from some of our more traditional long cycle businesses. Mods pretty much is a bottom, same with Belvac. So it is not those numbers are not influenced by those 2 businesses. So that is actually upside. To backlog build as we go into 2027.

And then our traditional, short-cycle businesses we do not have a lot of visibility into next year, and we will just book and ship as we normally do between now and the end of the year.

Steve Tusa: Right. And is there any reason for the growth to slow materially in Q4? I know you kind of guided that. Number. The midpoint is a bit of a slowing. Is there anything that stands out? I mean, orders have been pretty good. Book to bill above 1.0 seasonally.

Richard Joseph Tobin: Yeah. Not really other than the fact that Q4 is not always in our control. Right? We have got the orders. We can make the orders, then it becomes a question at the end of the year. Whether those orders get called off by our customers or is everybody play a kind of a managing the working capital game at the end of the year. So we are always a little bit cautious because December could go almost either way in any given year, but there is nothing based on the trajectory that we see that. that is any slowing. it is pure calendarization.

Steve Tusa: 1 more. Just on the buyback, you have done $100 million or something like that. Are you done with that? Or is there still some of that to do? You have ton of cash, ton of capacity. Can you chew through some of that?

Richard Joseph Tobin: I think in-- I think in corporate speak, we said that our bias was still on capital return. So take that for what it is.

Steve Tusa: Brett. I do not understand all corporate speak, but that. that is pretty clear. So I appreciate that. Thank you.

Richard Joseph Tobin: Brett. Thanks.

Operator: Thank you. Our next question comes from Nigel Coe Wolfe Research. Please go ahead.

Nigel Coe: Thanks. Good morning. Rich, maybe Rich, can you just kind of give us a little sense on the dual cost you called out, I think, $40 million of investment and dual cost that is now behind us.

Richard Joseph Tobin: Maybe give us a sense on how you see CST margins in the fourth quarter, but more importantly, going into 2027. And you said a 20% margin target in the past for that segment.

Nigel Coe: Are we on track for that in 2020. Yeah.

Richard Joseph Tobin: Just for clarity's sake. it is the year to date headwind costs of the plant closure and the redundant labor that we have had to run as a result of that, and that is year to date. Okay? So that number will actually go up between now and the end of the year because as line rates come up, we will absorb that extra labor and then we will begin to flip it over into productivity. So that is the $40 million.

Nigel Coe: Yeah.

Richard Joseph Tobin: I mean, I think that we are well on track to meeting the targets that we put on that sector because of 2 things. Number 1, that the carryover of not having those costs of consolidation between the 2 years is an add-back. The volume across the segment goes up. And so the incremental margin of the fixed cost goes up along with it. So I think that. that is why I said that we can expect a material change in 2027 in the margin of that particular segment.

Nigel Coe: But no numbers. Oh, come on. Nigel, we are gonna give you guidance when we get to the to the end of the year, but it is material.

Richard Joseph Tobin: Okay.

Nigel Coe: You have said 20% in the past. Just trying to get a sense on? But maybe can we just talk about the PPS orders Not PPS, CST orders. Been strong for a long time now. no sign of a slowdown. I am just wondering maybe if you can just, like, try and give us another second level detail on SWEP versus CO2 versus core refrigeration. And I do want to get a sense on 1 number, which is 3% growth in data center this year is impressive. But I would think it would be even more impressive just given the growth in the market.

And I am wondering if there is any capacity constraints within SWEP that maybe gets released in 2027.

Richard Joseph Tobin: Well, yeah. I mean, I think that if you go on the slide of our capital investments and if you go back and read the transcript of what I said, yeah, we have been capacity constrained all year. It does not seem to be preventing the actual build outs but everybody's trying to get in front of securing the supply. there is a lot of signaling effect in there. But we are basically ramping to double capacity into the main product line that is been growing. This is SWEP now. that is been sent into data centers That will change over time.

Because there will be a shift between the central cooling system demand, which we see it now, into more CDU mix into the future, and we are taking that into consideration. In terms of the backlog, I do not wanna say 50, but it is dominated by CO2 systems demand and SWEP. Okay, thanks, Richard.

Nigel Coe: Thanks.

Operator: Thank you. Our next question comes from Mike Halloran with Baird. Please go ahead. Your line is open.

Mike Halloran: Hey. Good morning, everyone.

Richard Joseph Tobin: Hi, Mike.

Mike Halloran: Hey. So back to the backlog. Question on some level. what is the normal conversion ratio at this point? You know, half your backlog shippable next year, what does that normally look like? And maybe any thoughts on the times you are seeing in the industry and if those are starting to extend?

Richard Joseph Tobin: If it is higher than average that we would see at this time. So let me go back and read the transcripts. We would expect in a, let's call it, normal year for book to bill to come down in Q3 just because the order of magnitudes of shipments. But because of the secular growth nature of some of these businesses, some of these businesses that we are in, that customers in certain segments are securing supply, so trying to secure capacity. And so that they are ordering well in advance of what we would normally expect.

And that is why we gave you the backlog figures, and that is why we tried to monetize how much of that is 2027 because that in general terms, would not look like that except for the pace of the growth rate in some of those segments.

Mike Halloran: No. That makes sense. And you know, on the buyback side, M&A side, obviously, certainly makes sense that you are pushing more on the capital return side short term. But maybe what is just happening on the M&A side of things Are you getting priced out of deals at this point? Has the activity slowed? Maybe just thoughts there.

Richard Joseph Tobin: Yeah. I mean, the activity naturally slows in Q4. Very little comes to the market at the end of the year. So whatever has come to market is. Has come to market. Not to get into certain deals. Look, we have got return criteria that we stick to. So there are some things that we did not get that we would have liked to get, but the purchase price that those assets sold for were above that criteria. At the end of the day, we will see in 2027, but we have got a ton on our plate of organic investment which is probably gonna drive as much revenue growth as kind of bolt on acquisitions would do.

So we retain a posture of optionality, meaning that we will participate in M&A. We got a. We have got some interesting stuff in the pipeline. But with all the cash that we are producing, we carried into this year, all the cash that we are gonna produce this year, that clearly that our stance is now on capital return.

Mike Halloran: Thank you. Appreciate it.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Joe O'Dea from Vertical Research.

Joe O'Dea: Hi. Good morning. Could you talk a little bit about pricing and what might be in the pipeline just with respect to the inflationary backdrop? Looks like the price this quarter was pretty similar to the second quarter, maybe a little bit tougher comp. But are you out in the market and need to do anything more on the price side?

Richard Joseph Tobin: I mean, depends. Next year Yeah. It depends, Joe. I mean, we are actually. Have moved up pricing decisions this year. And have been introducing pricing which in a stable year of low inflation environment, we kind of wait to the beginning of the year. We have actually accelerated that in certain instances. Depending on exposure to a variety of different things, whether it is commodity group metals or other things. So, I think we are on the front foot of getting ahead of what anybody's view about price cost is going into 2027. I think we are actually probably a full quarter in front of getting in front of that.

Joe O'Dea: And then just another 1 on the food retail and the production ramp costs. As we think about full year being somewhere above $40 million, how much of that can we think about as being nonrepeat? Is there is there carryover associated with it or do you think that those are all kinda contained costs that you will be able to leverage next year? It will--

Richard Joseph Tobin: So that the speed is coming down as the volumes go up Right? You get the fixed-cost. Fixed cost absorption benefit. The balance of it is productivity. So it is just winding out extra labor costs as you stabilize the line rates. So we would expect that to progressively get better over the balance of the year. And then probably finish up by the end of Q1. But I do not expect you know, the 40 the 40 or whatever it ends up being at the end of this year flows through in total. Going into next year. Unless volume drops. And based on our backlog right now, we see no indication of volume dropping in 2020. Got it.

Joe O'Dea: Thank you.

Richard Joseph Tobin: Welcome.

Operator: Thank you. Our next question comes from Scott Davis with Melius Research. Please go ahead. Your line is open.

Scott Davis: Hey. Good morning, guys.

Richard Joseph Tobin: Scott?

Scott Davis: Rich, what happens in retail fueling when prices. When fuel prices are up this much? Does that create a little bit more cash flow for these for these guys to invest in their businesses? Seems like that you know, it is been a while since we have had a big jump like this. But what does what does $6 diesel and $4 gas do for these folks.

Richard Joseph Tobin: Yeah. Not to talk about our customers, profitability, which many of which are publicly traded. You know, at the end of the day, earnings spread on fueling products have been up substantially over the past 18 to 24 months. And I do not expect that to narrow. The better news. So that is-- so that is great. We like healthy customers that are that are making a lot of money. Number 1. And number 2, the good part of what we have seen about the CapEx is there is supply constraints in that particular market.

And that is just lengthening the duration of what we believe the demand cycle is So we knew we were coming into a CapEx cycle for a variety of different reasons. We now believe that is going to extend we called it out a year and a half ago as a 3-year cycle. it is probably gonna we could probably argue that it is gonna be at least 4.

Scott Davis: And is that an area where you are able to get price because of that supply chain dislocation?

Richard Joseph Tobin: it is it is. In terms of the amount of market participants, it is a market that we like. Yeah.

Scott Davis: Makes sense. All right. Thank you. Best of luck.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question comes from Andy Kaplowitz Citigroup. Please go ahead. Your line is open.

Andy Kaplowitz: Good morning, everyone.

Richard Joseph Tobin: Hi, Andy. So Richard, DII margin, I think, was the best margin that segment has recorded. I know you mentioned mix productivity effects, but I think you have been working on structural cost actions in that segment. So we think about DII's margins even more sustainable you know, closer to Q3 rates or maybe it was more of a onetime bump? Look, I would look at year to date at the end of the day because it is our most global business. there is a lot running through that some of our other businesses do not have to deal with, especially FX. And then mix because of the disproportionate difference in margin between the consumables and the equipment.

So it will move around for that, having said that, if you go back and take a look over a 3- to 5-year period, we have steadily marched up the margin in that business through a variety of different measures. We are making some pretty significant investments We built a brand new plant in Poland. This past year, and we are gonna finish up on basically rebuilding our ink production in 2027. So we expect some productivity to come out of that. So. Yeah. I mean, I would not get all excited about this quarter's margin, but if you look at on a year to date basis, that is entirely sustainable.

Andy Kaplowitz: that is great. And maybe a similar question on clean energy and fueling. If I look at Q3, year over year margin was a little bit more difficult than the first half. I know you talked about Cryospace production ramp impacting margin. But maybe update us on the platform you have created in that business, that journey. I think you talked about 25% margin. Where is that?

Richard Joseph Tobin: Look, we are tracking there, but we have been the opportunities that we found on the cryo side, over the past 18 months which is driving the top line is requiring a lot of investment on our part. So that has got a little bit of a dilutive effect, but we will take that trade off any day. Right? Because it is driving the top line and there are these are businesses with secular growth that once we go through the build phase, we can expect what we saw in SWEP over the last couple years where we had margins that were down because investment was running ahead of the revenue. Now we have got the revenue in SWEP.

And so the incremental margin is robust. We would expect that same kind of trajectory, and that is the reason that we put that slide in. About all the organic investments that we are making is it is not only to kind of explain what we think about the durability of the revenue increase, but to give you a signal that we are gonna invest here. there is some cost of making those investments. But we believe over time, the return on invested capital there, will be excellent.

Andy Kaplowitz: Appreciate all the color, Richard. Thanks.

Operator: Thank you. Our next question comes from Brett Linzey, Mizuho. Please go ahead. Your line is open.

Brett Linzey: Your line is open.

Operator: Think we have to move on. We will move to our next question. Our next question comes from Amit Mehrotra with UBS. Please go ahead. Your line is open.

Amit Mehrotra: Thank you, operator. Hi, Richard. I just-- maybe 1 quick 1. Schwepp lead times, last time I checked in, they were, like, 25 weeks. Is that still the case? And I think that is where most of your copper exposure is. Obviously, copper's come off a little bit, but sort of hit all time highs in September. I think you have a material pass through on that, so no issue on price cost. Maybe you can enlighten me on that. But maybe there is a margin issue as copper rises in that business. Maybe you can talk about those 2 things.

Richard Joseph Tobin: Yeah. Alright. Let's deal with copper first. I think that it is. We do have copper exposure there, but it is built into the pricing mechanism with our supplier contracts. In SWEP. I do not know what lead times are off the top of my head. I mean, we are bringing on additional capacity. Sequentially through the year, but with a with a pretty big jump this quarter going into Q1. Then it becomes a big debate of, well, the lead times keep going out because the orders keep coming in advance of capacity build. Does that wind down in 2027? Hard to say. Right now, we do not see it.

But we are bringing on more capacity because the fact that we have. We believe in the durability of the demand.

Amit Mehrotra: But it is not measured in years. it is measured in quarters. Right?

Richard Joseph Tobin: Yeah. Yeah. No. No. We are not. it is not it is not in this.

Amit Mehrotra: So I guess just my follow-up question, my clarifying question is then If I think about the order in dollar terms, over the last 3 quarters. So this year, sort of averaged $2.3 to $2.4 billion depending on the quarter. that is about 9% to 10% higher than the average quarterly revenue of this year. I. I am sure you are gonna tell me to curb my enthusiasm, but is that the wrong way to think about maybe the organic growth opportunity next year?

Richard Joseph Tobin: Let me answer it this way. We have given you book to bill against my own advice. We gave you the number of the backlog increase We. To get into the high level math, when you do not know what the duration is of the timing of those orders, Yeah. it is a fool's game. I am sure Jack can give you all kinds of clarifying questions. But I cannot go there right now.

Amit Mehrotra: I guess that was my question that was my question about lead time. Right? So, I mean, lead times are Look.

Richard Joseph Tobin: I mean, we are we are not losing share because of lead times. Right? Because we. Generally speaking, we are in very concentrated markets from a supply base. So those who bring on the capacity proactively tend to win. And that is why we have been investing in advance of some of this demand to the detriment of margins, by the way, But it is. But they end up being good investments once they roll over and absorb the fixed cost. So we can see that in SWEP. Right now. Excellent.

Amit Mehrotra: Okay. Thank you for answering my questions. Appreciate it.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Andrew Obin, Bank of America. Please go ahead. Your line is open.

David Ridley Lane: This is David Ridley Lane on for Andrew. Clean energy and fueling, there is a comment that you are planning a greenfield expansion in below-ground retail fueling. Know that there is a regulatory or replacement cycle there for underground tanks, but adding capacity expansion suggests that you think this is a kind of a multiyear durable cycle. Is that the right interpretation?

Richard Joseph Tobin: Yeah. I think I answered it a minute ago to Scott. There is capacity constraints underground equipment to come into compliance on tanks. And that and because there is capacity, which by the way, we do not supply, what that is doing is lengthening the duration of the demand because you cannot get the tanks to do the work. Right? What we are expanding in is all of the products that are around that, where we see robust demand and our margins are quite good. So that is the way I would answer it.

David Ridley Lane: Thank you. And, just a quick follow-up. Have you been hearing any impact from higher interest rates from any of your more capital planning type businesses. Is that something that is come up to your level?

Richard Joseph Tobin: None.

David Ridley Lane: that is very clear. Thank you very much.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Joe Ritchie with Goldman Sachs. Please go ahead. Your line is open.

Joe Ritchie: Thank you.

Richard Joseph Tobin: So, Rich, look, slide 9 is great. Right? Gives you gives you a lot of detail on your capacity expansions, organic investments, etcetera. I guess the question I have is as we are getting closer and closer to 2027, like, how much does this set you up for growth beyond 2027 based on what you know today? Or do you think there is going to possibly be additional capacity expansion beyond what you have already announced? Well, I hope we have additional capacity expansion. But the capacities that we are laying in are for multiyear, especially the greenfields. Right? I mean, we are building greenfield is a building a new site.

And we would never capacitize a new site for the next 12 months unless because you never get the return on capital there. So they have all been sized on the initial investment for a multiyear duration. So in a way, if we have the same slide again next year, and there are additional capacity on top of it, it is a great sign because it is just more demand than we have sized the initial investment. So right now Yeah. that is these investments, we believe that we can capture our share of the market of the growth rates that I think that we showed you on slide 5.

Joe Ritchie: Got it. Okay. that is that is super helpful. And then going back to the question earlier about the $40 million potentially going higher as the year progresses. I guess quick math, right, taking a look at your revenues year to date in CST, I would play that equates to roughly 300 basis points if I am doing the math right. So I guess the question I have the question I have is you get into 2027. When would you expect to see a turn in CST margins and starting to. Obviously, you know, you have been taking on these extra costs this throughout the year and will continue.

But I am just curious when you would expect the return based on what you know today.

Richard Joseph Tobin: I think that we will beat our comp in Q1. Okay. it is best. that is that is absolute.

Joe Ritchie: Okay. Thanks.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Andrew Buscaglia with BNP Paribas. Please go ahead. Your line is now open.

Analyst: Hey, guys. Thanks for taking my question.

Richard Joseph Tobin: Sure. If you could, you know, just kinda tying this all together, I get sort of get the sense. You know, your outlook for 2027 and. Or your confidence in 2027 has proven and improved in the last few months. I mean, just based on some of these higher growth markets and, like, the visibility you have Is-- am I am I right in that is the core reason you are kind of sounding better on 2027 or sounding positive on 2027? Or slide 6 sort of suggests, like, your underlying just kinda core markets are seeing some improvements cyclically. So I guess where is more of the confidence coming from?

Is that high-growth stuff or, like, that core business Yeah. Well, I mean, the slides are put in there for a reason, and it is the trajectory growth rates on where we have been investing, have I mean, we are looking at, I do not know, what did we say? 500 basis points of improvement over the over the past 24 or not even 24 months, 20 months. Yep. So that we are good there. And we have a data point in terms of orders and backlog earlier this year than we would have in a normal year. So growth, you know, where we have chosen to participate those markets are performing well.

And the customers that we have across the broader portfolio are beginning to order into 2027 for a variety of reasons. That we usually are kind of cautious until we get into you know, giving full year guidance because usually, we do not have that kind of visibility. Yeah. that is the sense I get. Okay. And then, just on the heat exchanger side, you know, you talked about. You sort of said you hope you have more capacity investments because that means things are probably going well.

What are what are capacity requirements for heat exchangers, in your opinion, And then just given them really strong growth we are seeing in that data center cooling side, what is the competitive dynamics there? that is that is always been sort of a risk that you know, you are not alone in identifying this growth in and Sure. Yeah. So can you kinda comment on that too, please? Yeah. Everybody wants to be in data centers. I see the M&A presentations all the time. Look. This is a. that is a highly automated process. You need to make capacity decisions 18 months in advance before them coming online. So this is not a.

This is not a hire a bunch of people and get bigger throughput. it is actually very few people in the process. And so it is a very highly engineered probably 1 of the most highly engineered products that we have in the entire portfolio. it is a very concentrated market. But those competitors that we have if you went and looked, are also announcing capacity expansion. So I do not you I think that we have done a very good job of proactively investing in capacity in advance of the market to the detriment of margins in the past. So we will get our fair share here. But I cannot disagree with you.

I mean, everybody wants to be in data center, so you gotta be we are going to find out altogether about the duration of the demand. Right? Now, I do not think we are getting over our skis just because our backlog says what it is, and we believe there is gonna be a conversion into more CDU mix than we see now. But I think that we are positioned competitively and from a capacity point of view appropriately. Fair enough. Thank you.

Operator: Thank you. Our final question comes from Brandon Noss, Morgan Stanley. Please go ahead. Your line is open.

Analyst: Hey, good morning, everybody.

Richard Joseph Tobin: Brandon, good morning.

Analyst: Just a quick follow-up on CST margins. So I know you said it is going to be stronger. Growth from flat You have got a lot of that--

Operator: Brandon, we are having a hard time hearing you. Are you far away from the microphone?

Analyst: Hello?

Richard Joseph Tobin: Can you hear us, Brandon? Yeah. Can you hear me? Yes. We can hear you now. Alright. Go ahead. I am seeing CST-- you saw strong growth accelerate there margins went down when these are-- Brandon. Hey, Brandon, you are cutting-- Hey, Brandon, you are cutting out. You know what? Give Jack a call. He will get to you. But you are cutting in and out.

Operator: Okay. I think we can wrap up the call, Leslie. Thank you. That concludes our question and answer period and Dover's third quarter 26 earnings conference call. You may now disconnect your line at this time, and have a wonderful day. Good morning, and welcome to Dover's Third Quarter 26 Earnings Conference Call. Speaking today are Richard J. Tobin, President and Executive Chief Executive Officer Christopher Woenker, Senior Vice President and chief financial officer, and Jack Dickens, vice president, investor relations. After the speakers' remarks, there will be a Q&A session. If you would like to ask a question during this time, press star and then the number 1 on your telephone keypad.

If you would like to withdraw your question, please press star 2. As a reminder, ladies and gentlemen, this conference call is being recorded, and your participation implies consent to our recording of this call. If you do not agree with this term, please disconnect at this time. Thank you. I would now like to turn our call over to Mr. Jack Dickens, Please go ahead, sir.

Jack Dickens: Thank you, Leslie. Good morning, everyone, and thank you for joining our call. An audio version of this call will be available on our website through November 12, 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 Richard.

Richard Joseph Tobin: Thanks. Jack. Good morning, everyone. Let's get started on slide 3. Overall, it was a solid quarter. Organic growth accelerated to 7%, led by our secular growth markets and supported by durable demand across the majority of the portfolio. Bookings were the highlight in the quarter, Orders were up 16% year over year with growth in all 5 segments Book to bill was 1.03 for the quarter. Our backlog is up 35% versus this time last year. Which supports our confidence in the forecast and provides very good momentum heading into 2027. Adjusted EPS was $2.88 per share, up 10% in the quarter. We remained active on the capital. On capital deployment announcing 2 bolt-on acquisitions that add complementary capabilities.

Low cost manufacturing, and geographic breadth to our businesses. We also repurchased over 330 million of our shares in the quarter. We are narrowing our full year guidance towards the upper end of the range. With organic growth of 5% to 6% and adjusted EPS from $10.60 to $10.75 per share representing double digit growth consistent with our long term algorithm. Let's go to slide 5. Our secular growth markets now represent over 25% of our total revenue, up from 18% in 2024. Across the top of the slide, we show our expected growth rates in each of these markets this year.

In total, these markets are a material driver of our overall revenue growth in 2026 and we expect that trend to continue in 2027. We have purposely built these platforms through R&D spending and new product development in our legacy businesses as well as through targeted M&A. Our business model is unique. It allows us to pursue a variety of high growth business opportunities across a range of secular themes, several of our businesses participating in more than 1. We have been able to deliver this growth by proactively adding capacity and advance to the market, which has allowed us to capture leadership positions.

This has been particularly important in energy transition and power generation, CO2 systems, data centers, and cryogenic components serving the energy and space markets. We have continued to invest in additional capacity in 2026 behind this demand strength, some of which we will detail in a subsequent slide. These organic and inorganic investmentss have delivered high returns and invested capital despite the proactive upfront investments as the result of high growth rates and margin profiles of these sectors. These businesses are technically demanding mission critical applications where Dover tends to win.

The vast majority of our acquisition capital over the past 5 years has been deployed in these markets and they remain our top priorities from both an organic and inorganic investments. Going to slide 6. This slide underscores the breadth and duration of our order book. Trailing 12 month bookings are up percent, well ahead of revenue growth at 8% and trailing book to bill has climbed to 1.08. Every segment has grown bookings faster than revenue over the past 12 months. That sustained order momentum order momentum is underpinned the top line acceleration we are seeing in 2026, and it gives us confidence in our outlook going forward.

Importantly, our backlog is 35% higher it was at this point last year and is up sequentially from Q2 with roughly half scheduled to ship in 2027. This gives us a solid foundation heading into next year. Revenue visibility well ahead of where we would expect to be at this point in the planning cycle. Moving to slide 7. Engineered Products was down 2% organically. Demand for aerospace and defense components remained strong but was more than offset by lower volumes in European vehicle services. Margin was stable on favorable mix and cost controls.

Clean energy and fueling grew 12% organically, with solid shipments and new orders in clean energy components, fluid transport, and North American retail fueling, which posted its strongest quarter in years. Demand for our cryogenic components in LNG and space launch infrastructure remains healthy with several recent high profile project wins. Margin was roughly flat as volume leverage was offset by production ramp in cryogenic product lines, where demand is running ahead of capacity. We are actively expanding that capacity with additional output coming online in the first quarter of 2027.

Imaging and ID grew 2% organically by double digit growth in serialization software and solid performance in core marking and coding consumables and equipment margins expanded 400 basis points to 33%. Driven by volume leverage on largely fixed cost base and software growth and consumables favorable geographic mix, and foreign currency translation. Pumps and Process Solutions grew 1% organically with growth in AI and energy infrastructure single use biopharma and industrial pumps, that was partially offset by lower volumes in poly polymer processing equipment where coating activity is high. Margin expanded 70 basis points to 34% on solid conversion in industrial pumps and precision components and a higher mix of biopharma revenue.

Climate and sustainability technology accelerated to 18% organic growth in the quarter. Shipments and order rates in brazed plate heat exchangers remain robust across all geographies and major end markets with notable strength and liquid cooling for data centers, is initially concentrated in The US but we are now seeing meaningful acceleration in Europe and Asia. Lead times remain extended, we are actively investing to double our global capacity for large heat exchangers through 2027. CO2 refrigeration systems posted quarterly revenue and posted record quarterly revenue with September reaching its highest output of the year in refrigerated door cases. The investments we have added in Richmond, Virginia facility are ramping up.

Line rates exiting third quarter were 15% higher than the second quarter. We expect an another sequential increase in line rates and output in the fourth quarter. We also completed the consolidation of the door frame production in some market California at the end of the quarter. Segment margin was 18%. Margins in heat exchangers were robust as volumes outrun the significant investments in capacity build with direct labor less than percent of its cost basis, this business converts incremental volume exceptionally well. Those gains in heat exchangers were offset by cost of ramping production simultaneously across CO2 systems, specialty cases, and refrigerated door cases, ahead of higher demand and shipment rates in 2027. Which is reflected in our backlog.

Heat exchangers should continue to benefit from volume leverage in 2027 with a good portion of Q1 revenue already in backlog. In food retail, we have absorbed $40 million in costs year to date from investments and extra labor costs associate with the production ramp along with duplicate fixed costs of running 2 facilities for the throughput of 1. As line rates continue to ramp, and as the roll off of fixed costs accelerates in the balance of the year, margins in climate and sustainability technologies are poised to improve meaningfully in 2027. Pass it over to Christopher.

Christopher Woenker: Thanks Rich and good morning everyone. Let's go to our cash flow statement on slide 8. Year to date free cash flow was $703 million or 11% of revenue up $72 million over the prior year. Driven primarily by increased operating cash conversion which more than offset working capital investments to support accelerating top line growth. Third quarter free cash flow was $383 million or 17% of revenue. We have taken up our full year CapEx guide for the year to reflect the organic investments we are making behind demand strength.

Free cash flow accelerated in the third quarter consistent with historical trends and we expect a further increase in the fourth quarter, which is historically our highest cash generating quarter. Our full year free cash flow guidance remains on track at 14% to 16% of revenue. With that, let me turn it back to Richard.

Richard Joseph Tobin: Okay. I am on slide 9. Organic investment remains our highest return use of capital. On the left, are our most meaningful projects. In support of our organic revenue trajectory, we have greenfield expansions underway below ground retail fueling cryogenic components flow meters in The US, and single use biopharma components in Asia, along with capacity investments in radio frequency equipment for space, printer and ink production, and specialty cases in CO2 systems and large heat exchangers. Many of these projects will be online by the end of the first quarter of 2027.

On the productivity side, we are optimizing our vehicle service footprint, extracting synergies from our polymer processing acquisition, and have now completed the footprint consolidation in food retail. These actions generate substantial carryover restructuring benefits we will quantify when we provide full year guidance in January. On the right side of the slide are the bolt on acquisitions we announced in the quarter, Clarin, which we closed in August, adds extrusion dies and feed blocks to our Maag polymer processing platform along with more than 300 thousand square-foot of US manufacturing capacity close to The US petrochemical and space launch infrastructure.

Lichtung, which we signed and expect to close in the fourth quarter, gives our clean energy segment a low cost state of the art cryogenics components manufacturing presence in India. Both businesses carry excess capacity that other Dover operating companies will leverage as man. Manufacturing hubs in highly strategic locations. Moving to slide 10. Our balance sheet remains a competitive advantage and our capital allocation priorities are unchanged. Organic investment generates our highest returns we are guiding full year CapEx of $200 to $220 million with the capacity and productivity projects I just covered delivering attractive returns into next year.

We have committed approximately $80 million to our 2 announced acquisitions and our pipeline remains active for bolt on opportunities in high priority markets. We have also repurchased approximately $400 million of shares year to date, including $330 million in the third quarter. With over $3 billion of dry powder that quarter end, we have the ample flexibility to play offense and capital allocation. And a near term bias towards returning capital to shareholders. Girish with slide 11. We are moving our full year guidance towards the upper end of the range. We are our focus is on finishing the year strong. And our order book gives us confidence in the forecast with momentum carrying into 2027.

Alongside a constructive demand backdrop and a strong order book, we will benefit from carryover restructuring savings contributions from completed acquisitions, a lower share count, and a roll off of transition costs in food retail we look forward to closing up the year strong and are confident as we enter 2027 from a position of strength over to you, Jack.

Jack Dickens: Leslie, we can go right to the Q&A.

Operator: Thank you. Star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. We ask that participants limit themselves to 1 question and 1 clarifying question. Our first question comes from Steve Tusa with Wells Fargo. Please go ahead. Your line is now open.

Steve Tusa: Good morning, guys. Steve. Just on the backlog, I think it is, like, a little bit above, billion now if I kinda, like, go back and do the math. I and I think you said 50% of that is, like, shippable for next year. Is there anything in kind of the non backlog business that you look out to next year that you would be like, worried about being unsustainable or dropping off at all?

Richard Joseph Tobin: I would characterize it this way, I guess. Where we have been capacity constrained is what is driving the backlog into 2027. So the duration of the demand is a good indicator because customers are basically getting in line to reserve that capacity. It is not overly influenced from some of our more traditional long cycle businesses. Mods pretty much is a bottom, same with Belvac. So it is not those numbers are not influenced by those 2 businesses. So that is actually upside. To backlog build as we go into 2027.

And then our traditional, short-cycle businesses we do not have a lot of visibility into next year, and we will just book and ship as we normally do between now and the end of the year.

Steve Tusa: Right. And is there any reason for the growth to slow materially in Q4? I know you kind of guided that number. The midpoint is you know, a bit of a slowing. Is there anything that stands out? I mean, the order has been pretty good. Book to bill above 1.0 seasonal is Yeah.

Richard Joseph Tobin: Not really other than the fact that Q4 is not always in our control. Right? We have got the orders We can make the orders, then it becomes a question at the end of the year whether those orders get called off by our customers or is everybody play a kind of a managing the working capital game at the end of the year. So we are always a little bit cautious because December could go almost either way in any given year, but there is nothing based on the trajectory that we see that. that is any slowing. it is pure calendarization.

Steve Tusa: Alright. 1 more. Just on the buyback, you have done, 300 million or something like that. Are you done with that? Or is there still some of that to, know, ton of cash, ton of capacity is can you chew through some of that?

Richard Joseph Tobin: I think in-- I think in corporate speak, what we said that our bias was still on capital return. So take that for what it is.

Steve Tusa: Brett. I do not understand all corporate speak, but that. that is pretty clear. So I appreciate that. Thank you.

Richard Joseph Tobin: Brett. Thanks.

Operator: Thank you. Our next question comes from Nigel Coe. Wolfe Research. Please go ahead.

Nigel Coe: Thanks. Good morning.

Richard Joseph Tobin: Maybe Rich, could you just kind of give us little sense on the dual cost you called out, I think, $40 million of investment and dual cost that is now behind us. Maybe give us a sense on how you see CST margins in the fourth quarter, but more importantly, going into 2027. And you said a 20% margin target in the past for that segment. Are we on track for that in 2020. Yeah.

Nigel Coe: Just for clarity's sake.

Richard Joseph Tobin: it is the year to date headwind costs of the plant closure and the redundant labor that we have had to run as a result of that, and that is year to date. Okay? So that number will actually probably go up between now and the end of the year because as line rates come up, we will absorb that extra labor, and then we will begin to flip it over into productivity. So that is the $40 million.

Nigel Coe: Yeah.

Richard Joseph Tobin: I mean, I think that we are well on track to meeting the targets that we put on that sector. Because of 2 things. Number 1, that the carryover of not having those costs of consolidation between the 2 years is an add-back The volume across the segment goes up. And so the incremental margin of the fixed cost goes up along with it. So I think that. that is why I said that can expect a material change in 2027 in the margin of that particular segment.

Nigel Coe: But no numbers. Oh, come on. Nigel, we are gonna give you guidance when we get to the to the end of the year, but it is material.

Richard Joseph Tobin: Okay.

Nigel Coe: You have said 20% in the past. I was just I was just trying to get a sense on? But maybe can we just talk about the PPS orders Not PPS, CST orders. Been strong for a long time now. No sign of slowdown. I am I am just wondering maybe if you can just, like, try and try and give us another second level detail on SWEP versus CO2 versus core federation. And I do wanna get a sense on 1 number, which is 3% growth in data center this year is impressive. But I would think it would be even more impressive just given the growth in the market.

And I am wondering if there is any capacity constraints within SWEP that maybe gets released in 2020 Well, yeah.

Richard Joseph Tobin: I mean, we have. I think that if you go on the slide of our capital investments and if you go back and read the transcript of what I said. Yeah. We have been capacity constrained all year. It does not seem to be preventing the actual build outs but everybody's trying to get in front of securing the supply. So there is a lot of signaling effect in there. But we are basically ramping to double capacity into the main product line that is been growing. This is SLEP now. that is been sent into data centers That will change over time.

Because there will be a shift between the central cooling system demand, which we see it now, into more CDU mix into the future and we are taking that into consideration. In terms of the backlog, I do not wanna say 50, but it is dominated by CO2 systems demand and SWEP.

Nigel Coe: Okay, thanks, Richard.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question comes from Mike Halloran with Baird. Please go ahead. Your line is open.

Mike Halloran: Hey. Good morning, everyone.

Richard Joseph Tobin: Hi.

Mike Halloran: Hey. So back to the backlog. Question on some level. what is the normal conversion ratio at this point? You know, half your backlog shippable next year, what does that normally look like? And maybe any thoughts on the lead times you are seeing in the industry and if those are starting to extend?

Richard Joseph Tobin: If it is higher than average that we would see at this time. So let me go back and read the transcripts. We would expect in a kinda. Let's call it a normal year for book to bill to come down in Q3 just the order of magnitudes of shipments. But because of the secular growth nature of some of these businesses, some of these businesses that we are in that customers in certain segments are securing supply so trying to secure capacity. And so that they are ordering well in advance of what we would normally expect.

And that is why we gave you the backlog figures, and that is we tried to monetize how much of that is 2027 because that in general terms, would not look like that except for the pace of the growth rate in some of those segments.

Mike Halloran: That makes sense. And you know, on the buyback side, M&A side, obviously, certainly makes sense that you are pushing more on the capital return side short term. But maybe what is just happening on the M&A side of things are you getting priced out of deals at this point? Has the activity slowed? Maybe just thoughts there.

Richard Joseph Tobin: Yeah. I mean, the activity naturally slows in Q4. Very little comes to the market at the end of the year. So whatever has come to market is. Has come to market. Not to get into certain deals. Look, we have got return criteria that we stick to. So there are some things that we did not get. We would have liked to get, but the purchase price that, those assets sold for were above that criteria. At the end of the day, we will see in 2027, but we have got a ton on our plate of organic investment which is probably gonna drive as much revenue growth as kind of bolt on acquisitions would do.

So we retain a posture of optionality, meaning that we will participate in M&A. We got a. We have got some interesting stuff in the pipeline. But with all the cash that we are producing, that we carried into this year, all the cash that we are gonna produce this year, that clearly that our stance is now on capital return.

Mike Halloran: Thank you. Appreciate it.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Joe O'Dea from Vertical Research. Please go ahead. Your line is open.

Joe O'Dea: Hi. Good morning. Could you talk a little bit about pricing and what might be in the pipeline just with respect to the inflationary backdrop. It looks like the price this quarter was pretty similar to the second quarter, maybe a little bit tougher comp. But are you out there in the market and you do anything more on the pricing side?

Richard Joseph Tobin: Deane, if you are carry over into next year? Yeah. It depends, Joe. I mean, we are actually. Have moved up pricing decisions this year. And have been introducing pricing, which in a stable year of low inflation environment, We kinda wait to the beginning of the year. We have actually accelerated that in certain instances. Depending on exposure to a variety of different things, whether it is commodity group metals or other things. So I think we are on the front foot of getting ahead of what anybody's view about price cost is going 27. I think we are actually probably a full quarter in front of getting in front of that.

Joe O'Dea: And then just another 1 on the food retail and the production ramp cost. As we think about full year being somewhere above $40 million, how much of that can we think about as being nonrepeat? Is there is there carryover associated with it, or do think that those are all kind of contained costs that you will be able to leverage next?

Richard Joseph Tobin: It will it will it will. So that the speed is coming down as the volumes go up Right? You get the fixed court. Fixed cost absorption benefit. The balance of it is productivity. So it is just winding out extra labor costs as you stabilize the line rates. So we would expect that to progressively get better over the balance of the year. And then probably finish up by the end of Q1. But I do not expect you know, the 40 the 40 or whatever it ends up being at the end of this year flows through in total. Going into next year. Unless volume drops.

And based on our backlog right now, we would see no indication of volume dropping in 2020. Got it.

Joe O'Dea: Thank you.

Richard Joseph Tobin: Welcome.

Operator: Thank you. Our next question comes from Scott Davis with Melius Research. Please go ahead. Your line is open.

Scott Davis: Hey. Good morning, guys.

Richard Joseph Tobin: Scott?

Scott Davis: Rich, what happens in retail fueling when prices. When fuel prices are up this much? Does that create a little bit more cash flow for these for these guys to invest in their businesses? Seems like that you know, it is been a while since we have had a big jump like this. But what does what does $6 diesel and $4 gas do for the. For these folks?

Richard Joseph Tobin: Yeah. Not to talk about our customers, profitability, which many of which are publicly traded. I you know, at the end of the day, earnings spread on fueling products have been up substantially over the past 18 to 24 months. And I do not expect that to narrow. The better news. So that great. We like healthy customers that are that are making a lot of money. Number 1. And number 2, the good part of what we have seen about the CapEx is there is supply constraints in that particular market. And that is just lengthening the duration of what we believe the demand cycle is.

So we knew we were coming into a CapEx cycle for a variety of different reasons. We now believe that is going to extend we called it out a year and a half ago as a 3-year cycle. it is probably gonna we could probably argue that it is gonna be at least 4.

Scott Davis: And is that an area where you are able to get price because of that supply chain dislocation?

Richard Joseph Tobin: it is it is. In terms of the amount of market participants, it is a market that we like. Yeah.

Scott Davis: Makes sense. All right. Thank you. Best of luck.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question comes from Andy Kaplowitz Citigroup. Please go ahead. Your line is open.

Andy Kaplowitz: Good morning, everyone.

Richard Joseph Tobin: Hi, Andy. So Richard, so DII, I think, was the best margin that segment has recorded. I know you mentioned mix, productivity effects, but I think you have been working on structural cost actions in that segment. So should we think about DII's margins even more sustainable, you know, closer to Q3 rates or maybe it was more of a onetime bump? Look, I would look at year to date at the end of the day because it is our most global business. there is a lot running through that some of our other businesses do not have to deal with, especially FX.

And then mix because of the disproportionate difference in margin between the consumables and the So it will move around for that. Having said that, if you go back and take a look over a 3- to 5-year period, we have steadily marched up the margin in that business through a variety of different measures. We are making some pretty significant investments. We built a brand new plant in Poland. This past year, and we are gonna finish up on basically rebuilding our ink production in 2027. So we expect some productivity to come out of that. So. Yeah.

I mean, I would not get all excited about the quarters this quarter margin, but if you look at on a year to date basis, that is entirely sustainable.

Andy Kaplowitz: that is great. And maybe a similar question on clean energy and fueling. If I look at, you know, Q3 year over year is a little bit more difficult than the first half. I know you talked about Cryospace production ramp impacting margin, but maybe update us on the you created in that business, that journey. I think you talked about a 25% margin. Where is that?

Richard Joseph Tobin: Look, we are tracking there, but we have been the opportunities that we found on the cryo side over the past 18 months which is driving the top line is requiring a lot of investment on our part. So that has got a little bit of a dilutive effect. But we will take that trade off any day. Right? Because it is driving the top line and there are these are businesses with secular growth that once we go through the build phase, we can expect what we saw in SWEP over the last couple years where we had margins that were down because investment was running ahead of the revenue. Now we have got the revenue in SWEP.

And so the incremental margin is robust. We would expect that same kind of trajectory, and that is the reason that we put that slide in about all the organic investments that we are making is it is not only to kind of explain what we think about the durability of the revenue increase, but it is to give you a signal that we are gonna invest here. there is some cost of making those investments, but we believe over time, the return on invested capital there, will be excellent.

Andy Kaplowitz: Appreciate all the color, Richard. Thanks.

Operator: Thank you. Our next question comes from Brett Linzey, Mizuho. Please go ahead. Your line is open.

Brett Linzey: Your line is open.

Operator: We have to move on. We will move to our next question. Our next question comes from Amit Mehrotra with UBS. Go ahead. Your line is open.

Amit Mehrotra: Thank you, operator. Hi, Richard. I just-- maybe 1 quick 1. Schwepp lead times, last time I checked in, they were, like, 25 weeks. Is that still the case? And I think that is where most of your copper exposure is. Obviously, copper's come off a little bit, but sort of hit all time highs in September. I think you have a material pass through on that, so no issue on price cost. Maybe you can enlighten me on that. But maybe there is a margin issue as copper rises in that business. Maybe you can talk those 2 things.

Richard Joseph Tobin: Yeah. Alright. Let's deal with copper first. I think that it is. We do have copper exposure there, but it is built into the pricing mechanism with our supplier contracts. In SWEP. I do not know what lead times are off the top of my head. I mean, we are bringing on additional capacity. Sequentially through the year, but with a with a pretty big jump this quarter going into Q1. Then it becomes a big debate of, well. But the lead times keep going out because the orders keep coming in advance of that capacity build. Does that wind down in 2027? Hard to say. Right now, we do not see it.

But we are bringing on more capacity because the fact that we have. We believe in the durability of the demand.

Amit Mehrotra: But it is not measured in years. it is measured in quarters. Right?

Richard Joseph Tobin: Yeah. Yeah. No. No. We are not. it is not Okay.

Amit Mehrotra: it is not it is not in So I guess just my follow-up question, my clarifying question is then If I think about the order in dollar terms, over the last 3 quarters. So this year, sort of averaged $2.3 to $2.4 billion depending on the quarter. that is about 9% to 10% higher than the average quarterly revenue of this year. I. I am sure you are gonna tell me to curb my enthusiasm, but is that the wrong way to think about maybe the organic growth opportunity next year?

Richard Joseph Tobin: Let me answer it this way. We have given you book to bill against my own advice. We gave you the number of the backlog increase We. To get into the high level math, when you do not know what the duration is of the timing of those orders, Yeah. it is a fool's game. I am sure Jack can give you all kinds of clarifying questions. But I cannot go there right now.

Amit Mehrotra: I guess that was my question that was my question about lead time. Right? So, I mean, lead times.

Richard Joseph Tobin: Look, I mean, we are we are not losing share because of lead times. Right? Because we. Generally speaking, we are in very concentrated markets. From a supply base. So those who bring on the capacity proactively tend to win. And that is why we have been investing in advance of some of this demand to the detriment of margins, by the way, But it is. But they end up being good investments once they roll over and absorb the fixed cost. So we can see that in SWEP. Right now.

Amit Mehrotra: Excellent. Okay. Thank you for answering my questions. Appreciate it.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Andrew Obin, Bank of America. Please go ahead. Your line is open.

David Ridley Lane: This is David Ridley Lane on for Andrew. Clean energy and fueling, there is a comment that you are planning a greenfield expansion in below-ground retail fueling. Know that there is a regulatory or replacement cycle there for underground tanks. But adding capacity expansion suggests that you think this is a kind of a multiyear durable cycle. Is that right interpretation?

Richard Joseph Tobin: Yeah. I think I answered it a minute ago to Scott. There is capacity constraints underground equipment to come into compliance on tanks. And that and because there is capacity, which by the way, we do not supply, that is doing is lengthening the duration of the demand because you cannot get the tanks to do the work. Right? What we are expanding in is all of the products that are around that. Where we see robust demand and our margins are quite good. So that is the way I would answer it.

David Ridley Lane: Thank you. And, just a quick follow-up. Have you been hearing any impact from higher interest rates from any of your more capital planning type businesses. Is that something that is followed up to your level?

Richard Joseph Tobin: None.

David Ridley Lane: Very clear. You very much.

Richard Joseph Tobin: Thanks.

Operator: Thank you. Our next question is from Joe Ritchie with Goldman Sachs. Please go ahead. Your line is open.