DOV Financial Analysis

Analysis Date: 1/31/2025

Business Model

Dover generates revenue through five operating segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies

Revenue Sources

• Engineered Products (15% of revenue): Vehicle aftermarket, fluid dispensing, aerospace & defense
• Clean Energy & Fueling (25% of revenue): Clean energy components, fueling equipment, vehicle wash systems
• Imaging & Identification (15% of revenue): Marking & coding equipment, consumables, software
• Pumps & Process Solutions (24% of revenue): Biopharma components, precision components, industrial pumps
• Climate & Sustainability Technologies (21% of revenue): Refrigeration systems, heat exchangers, can-making equipment

Revenue Distribution by Channel

• Direct sales and distribution through dealers/distributors varies by segment

Income Statement Analysis

• Revenue grew 1.3% driven by organic growth of 0.3% and acquisition contribution of 1%
• Gross margin expanded 90bps to 38.6% on favorable mix and cost controls
• Operating margin declined 70bps to 15.3% due to higher SG&A expenses

Balance Sheet Analysis

• Strong balance sheet with $1.8B in cash provides significant flexibility for capital deployment
• Reduced total debt by 15% to $2.9B
• Net debt to net capitalization improved to 13.5% from 37.3%

Cash Flow Analysis

• Q4 adjusted free cash flow of $429M represented 22% of revenue
• Full year adjusted free cash flow margin stable at 13.5% of revenue

Capital Allocation

Significant cash position of $1.8B provides flexibility for value-creating capital deployment through organic investment and acquisitions. Recently completed 2 bolt-on acquisitions. M&A pipeline remains robust with both proprietary deals and broader market opportunities.

Management Commentary

Encouraged by Q4 results with broad-based top line strength across portfolio

Five consecutive quarters of year-over-year organic bookings growth

Strong margin performance driven by mix and cost actions

Optimistic about 2025 with underlying demand strength continuing into January

Overall Sentiment: Confident and optimistic about growth momentum and margin expansion opportunities heading into 2025

Recommendation

Rating: Buy

Reason for Rating: Strong operational execution, robust order momentum, and significant M&A optionality support double-digit earnings growth outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 12:55:23 PM