Dover’s 2025 Ends Strong, But 2026 Guidance Hints at Prudence

Date of Call: Jan 29, 2026

Financials Results

• Revenue: Organic growth up to 5% in Q4, highest level of the year. Full year bookings up 6% after growing 7% in 2024, Q4 consolidated bookings up over 10% YOY.
• EPS: Adjusted EPS $9.61, up 14% in Q4, beating raised third quarter guide, up 16% for full year.
• Gross Margin: Not explicitly provided.
• Operating Margin: Segment EBITDA margins improved 60 basis points in Q4 to 24.8%. Pumps & Process Solutions segment margin performing at best-in-class levels. Clean Energy and Fueling margins down slightly in Q4 due to lower vehicle wash solutions, but up materially for the year.

Guidance:

• Adjusted EPS for 2026 expected to be $10.45 to $10.65, representing double-digit growth at the midpoint.
• Free cash flow for 2026 expected to be 14% to 16% of revenue.
• Expect about $40 million carryover profit from prior productivity actions in 2026.
• Outlook for all segments is positive with broad-based demand strength, no individual end market presenting a material headwind.

Business Commentary:

Revenue and Organic Growth:

• Dover Corporation reported a 5% organic growth in Q4 2025, marking the highest level of the year.
• The growth was driven by robust trends in secular growth markets and improving conditions in retail fueling and refrigerated door cases.

Segment Performance and Margins:

• The Pumps and Process Solutions segment showed an 11% organic increase, with contributions from single-use biopharma components and thermal connectors.
• The segment's margins were maintained at best-in-class levels due to volume leverage and productivity initiatives.

Bookings and Backlog:

• Q4 bookings were up 10%, and the book-to-bill ratio was a seasonally high 1.02.
• The strong bookings rate and backlog provide underlying momentum and support for demand across the portfolio.

Capital Allocation and Acquisitions:

• Dover deployed $700 million across four strategic acquisitions in 2025, with three in the Pumps and Process Solutions segment.
• The acquisitions are performing above their underwriting cases, and the company initiated a $500 million accelerated share repurchase to enhance shareholder value.

2026 Outlook and Guidance:

• Dover is guiding for adjusted EPS of $10.45 to $10.65 in 2026, representing double-digit growth at the midpoint.
• The outlook is supported by solid demand trends, a strong order book, and balance sheet flexibility to respond to market conditions.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated: 'Overall, we had a good close to 2025.' 'Our strong bookings rates... continue to support underlying momentum.' 'Segment EBITDA margins improved 60 basis points in the quarter.' 'All in, adjusted EPS at $9.61 was up 14% in the quarter... a very encouraging result.' 'We are taking a constructive outlook for 2026. Demand trends are solid and broad-based.'

Q&A:

• Question from C. Stephen Tusa (JPMorgan Chase & Co): Price cost. What are we looking at this year? I know you guys buy a bit of steel. So how are you thinking about managing the raws?
  Response: Management is embedding 1.5% to 2% price increase in the guide, with potential for more if commodity costs rise.

• Question from Julian Mitchell (Barclays Bank PLC): Maybe just to start off with very strong margin performance. But when we're thinking about kind of mix for 2026... what sort of operating leverage you're aiming for this year?
  Response: DCEF expected to see margin enhancement from volume growth and prior restructuring benefits, back-end loaded. DCST saw 250 bps margin jump in Q4, with potential for more volume growth, but some commodity headwinds.

• Question from Amit Mehrotra (UBS Investment Bank): So just a quick question on growth outlook for this year, 4%. ...is that just prudent conservatism?
  Response: Guidance includes prudence due to input costs and tariff risks, but bookings momentum accelerated late last year, providing potential upside.

• Question from Jeffrey Sprague (Vertical Research Partners): Just cutting through all the different mix changes... I just want to make sure there's not anything below the line I'm missing. It looks like you're sort of guiding an observed incremental as reported at about 35%.
  Response: Incremental margin is around 35% with nothing significant below the line offsetting it.

• Question from Joseph O'Dea (Wells Fargo Securities): I wanted to start on the retail fueling CapEx cycle side of things. And just if you could elaborate on what you're seeing there...
  Response: Retail fueling CapEx cycle is a North American phenomenon driven by high spreads and EV adoption turning the corner, with no major exposure in EMEA.

• Question from Nigel Coe (Wolfe Research): So Rich, I thought it'd be interesting to think about growth bifurcated between your the 20% of what you call secular growth markets... and then the trough markets...
  Response: Secular growth markets are performing well. European vehicle services are a headwind but moderating. Refrigeration is recovering nicely, with backlog building.

• Question from Scott Davis (Melius Research): What do you think the new entitlement kind of through cycle growth rate is of this portfolio you have now.
  Response: Through-cycle growth rate is between 3% to 6%, with the portfolio capable of 5%.

• Question from Michael Halloran (Robert W. Baird): So first on the Clean Energy margins, on prepared remarks, you mentioned the mid-20% target. Maybe just some time line on when you think you can get there, Rich?
  Response: Target is to get into low-20s in 2026, with potential for acceleration depending on mix and completion of restructuring.

• Question from David Ridley-Lane (BofA Securities): I was wondering if you could talk about your exposure on sort of the natural gas power generation side...
  Response: Exposure spans large to small turbines and reciprocating engines. Significant follow-on CapEx on gas delivery infrastructure expected in back half of 2026.

• Question from Andrew Kaplowitz (Citigroup Inc.): You mentioned as you get better visibility than you could adjust revenue guidance. But given book-to-bill has been pretty good... do you have visibility at least to continue that near-term book-to-bill out or over 1?
  Response: Visibility is limited as Q1 is typically a production month. Will assess backlog and orders progression after Q1 to determine guidance.

• Question from Brett Linzey (Mizuho Securities USA): Question on the 20% of the business tied to the secular market... Curious, post mortem, 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?
  Response: Confirmed that the secular growth markets grew well in 2025 and are expected to continue double-digit growth in 2026.

• Question from Joseph Ritchie (Goldman Sachs Group): So I'll start by just asking -- I mean, I'll ask the flip side to Jeff's question from earlier. So not talking about big deals, but potential divestitures across your business...
  Response: Currently comfortable with the portfolio; would consider divestitures if approached, but no plans at present.

• Question from Deane Dray (RBC Capital Markets): Maybe just pick up on Joe's question there because I've been staring at Page 9... was there anything different about the planning process this year?
  Response: Guidance reflects incorporation of known headwinds (e.g., cycling down long-cycle businesses, European exposure), but this year has no identified major headwinds, showing solid demand across portfolio.

Contradiction Point 1

2026 Organic Growth Guidance and Backlog Recovery Timeline

Guidance appears to shift from expecting a strong rebound to incorporating prudence.

Is the 4% organic growth guide's slight dip from Q4's exit rate a prudent conservative approach, will the entire 2026 margin expansion rely on the $40 million carryover productivity benefit with mix offsetting volume leverage, and are you confident in recovering the prior year's refrigeration order backlog? - Amit Mehrotra (UBS Investment Bank)

2025Q4: The 4% organic growth guide is slightly below the strong Q4 exit rate. Is this prudent conservatism? - Richard Tobin(CEO)

Did Q3 bookings improve, will Q4 book-to-bill exceed 1x, and are these trends positioning for 4-6% organic growth in 2026? - Andrew Kaplowitz (Citigroup Inc., Research Division)

2025Q3: The setup for 2026 looks favorable... we expect to regain a significant portion of the ~$140-$150 million revenue headwind from this segment in Q4 2025 and into 2026. - Richard Tobin(CEO)

Contradiction Point 2

Margin Outlook and Incrementals for 2026

The expected total segment incrementals for 2026 shift from a conservative expectation to a very promising one.

Is the 4% organic growth guide's slight dip below Q4's exit rate a prudent conservative approach? Is the 2026 margin expansion entirely driven by the $40 million carryover productivity benefit, with mix offsetting volume leverage? Are you confident in recovering the prior year's refrigeration order backlog? - Amit Mehrotra (UBS Investment Bank)

2025Q4: The $40 million productivity benefit is a factor, but the math shows more upside than downside in incrementals. - Richard Tobin(CEO)

What guidance do you have for total segment incremental revenue in 2025 and expected EPS growth for next year? - Charles Stephen Tusa (JPMorgan Chase & Co.)

2025Q2: Total segment incrementals are expected to come down in the second half due to mix from lower-margin businesses catching up... For next year, with sustained margin performance and larger cost savings roll-forward, the incremental margin on revenue for 2026 looks very promising. - Richard Tobin(CEO)

Contradiction Point 3

Outlook on Pricing and Cost Management

The company's stance on its ability to manage pricing/costs evolves from a position of strength to acknowledging potential pressures.

What is the expected price-cost outlook for the year, including raw material cost management, pricing embedded in guidance, and any recent changes affecting the positive economic and business outlook? - C. Stephen Tusa (JPMorgan Chase & Co.)

2025Q4: Expecting 1% to 1.5% inflation on top of prior commodity cost increases. Will monitor and take pricing action if needed. - Richard Tobin(CEO)

Are there verticals experiencing share shifts and changes in the pricing environment since the escalation? - Christopher M. Snyder (Morgan Stanley)

2025Q2: The company is in a positive price/cost position and does not foresee specific headwinds. Business model allows for effective pricing or input cost management... - Richard Tobin(CEO)

Contradiction Point 4

Business Volume and Growth Outlook

Contradiction on growth guidance prudence versus confidence in execution.

Is the 4% organic growth guidance conservative given it's lower than Q4's exit rate? - Amit Mehrotra (UBS Investment Bank)

2025Q4: Yes, there is prudence due to potential input cost pressures and the need for execution visibility. - Richard Tobin(CEO)

Which businesses are you most confident in to accelerate organic sales growth between Q1 and the full-year target? - Julian Mitchell (Barclays)

2025Q1: Backlog levels are strong for Q2, providing confidence. The adjustment was made to the back end of the year due to visibility concerns, not because of a slowdown in bookings or orders. - Richard Tobin(CEO)

Contradiction Point 5

Segment Margin Expectations (Clean Energy & Fueling)

Contradiction on the expected margin trajectory for the Clean Energy & Fueling segment.

When will Clean Energy & Fueling reach the mid-20% margin target? - Michael Halloran (Robert W. Baird & Co.)

2025Q4: Expect to reach the low-20s in 2026, with potential acceleration. - Richard Tobin(CEO)

Why is Clean Energy & Fueling (DCF) forecasted at mid-single-digit growth despite earlier comments about double-digit cryo growth? - Andy Kaplowitz (Citigroup)

2025Q1: DCF has both flow and project components... The margin setup and cost actions provide confidence regardless of back-half project dynamics. - Richard Tobin(CEO)