1. WACHOVIA – BOSTON INVESTOR ROADSHOW
B O B L I V I N G S T O N • PAUL GOLDBERG
BOSTON –OCTOBER 6, 2008
2. Forward Looking Statements
We want to remind everyone that our comments may contain
forward-looking statements that are inherently subject to
uncertainties. We caution everyone to be guided in their
analysis of Dover Corporation by referring to our Form 10K for
a list of factors that could cause our results to differ from those
anticipated in any such forward looking statements.
We would also direct your attention to our internet site,
www.dovercorporation.com, where considerably more
information can be found.
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3. ...
. . . a $7 billion global provider of innovative equipment,
specialty systems and value added services for the industrial
products, fluid management, engineered systems and
electronic technologies markets.
. . . focuses on growing organically 5-7% over a business
cycle and strategically invests in value creating acquisitions.
. . . returns value to shareholders through earnings growth
initiatives, annually increased dividends and strategic share
repurchases.
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4. Record Financial Results
Four Segment Structure Improves Clarity
Platforms For Sustained Growth
Strategic Capital Allocation
Outlook for 2008
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7. Geographic Revenue Mix (YTD June 2008)
Dover Growth Rate: 9%
9.2%
27.8%
5.2%
Growth in Asia was driven
7.6%
by increases in Electronic
Technologies and
Engineered Systems
YTD
Growth Rate
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8. Strong Free Cash Flow
Free Cash Flow as a % of Revenue
Source of Dover strength 12%
– Consistency
10%
– Outcome of metrics focus
– $728 million in 2007 8%
– 111% conversion rate in
6%
2007 (FCF / earnings from
continuing ops)
4%
Facilitates strategic
capital allocation 2%
2008 free cash flow is on 0%
2004 2005 2006 2007
track for another strong
year
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13. Industrial Products
Revenue Operating Earnings
Material Handling ($ in millions) ($ in millions)
•
– International and military sales
were strong
– Earnings gain despite raw
material cost increase
– Successful pricing initiatives
alleviate cost increases
↑ 2%
– Bookings up sequentially & YOY
Mobile Equipment
• ↑ 4%
– Revenue growth from continued
strength in domestic oilfield,
military and solid waste markets
and Rotary Lift acquisition
↓ 1%
– Earnings decline due to one-time ↑ 6%
gain from property sale recorded
in prior year ($5.3M); earnings
growth of 8% without prior year
gain
– Backlog up over PY; down
sequentially
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14. Industrial Products
Winch companies will continue to grow
– Military contracts
– Oilfield demand
Continued challenges in heavy construction
– Performance enhancing initiatives underway
– No market improvement expected
Waste handling will be strong
– Solid backlog
– Class eight chassis delivery improves
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15. Engineered Systems
Revenue Earnings
Product Identification ($ in millions) ($ in millions)
•
– Revenue increase driven by
double-digit gains in direct coding
business
– Earnings reflect cost efficiency
benefits from MARKEM•Imaje
integration, net of $2 million
related expense
↑ 10%
↑ 6%
– Bookings & backlog remains
strong
$539
Engineered Products
•
– Revenue increases in all
businesses except beverage can
↑ 3%
↑ 6%
equipment
– Earnings impacted by business
mix
– Refrigeration business continues
to diversify customer base
– Bookings moderated from strong
PY levels
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16. Engineered Systems
Significant improvements in Product ID
– Markem margins up 700 bps
– > 50% of revenue tied to fast moving consumer goods
– Recurring revenue > 50%
Food display equipment fundamentals are sound
– Growth will be driven by “sustainability” factors
– Well-developed plan to diversify customer base
Heat exchanger business will continue to expand
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17. Fluid Management
Operating Earnings
Revenue
Energy
• ($ in millions)
($ in millions)
– Results driven by continued
growth in global oil and gas
drilling and worldwide demand
for power generation
– Operational improvements
and product mix increased
earnings
– Bookings & backlog remain
strong
↑17% ↑24%
Fluid Solutions
•
– General strength across most
industrial markets
– Business mix and operational
focus improved earnings and
margins ↑23% ↑34%
– Backlog up 28%.
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18. Fluid Management
Continued strength in energy
– Broad product engagement in downhole
drilling, production and logging equipment
– Positive power generation trends
– Focus on globalizing revenue base
Pump and dispensing businesses remain consistent
– Global footprint
– Expanded product offerings
– Chemical, pharmaceutical and wastewater
processing capex budgets drive business
– Regulatory environment provides opportunity
– Consistent sustainable performance
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19. Electronic Technologies
Revenue Operating Earnings
Electronic Technologies
• ($ in millions) ($ in millions)
– Good business activity in the
quarter across the segment with
a positive book-to-bill and
organic growth of 5.2%
– MEMS microphones now being
sold to all Tier-1 handset
manufacturers ↑6%
↑11%
– Military programs continue to be
growth drivers of ceramic and
microwave product lines
– Impact of first quarter
restructuring (ECT) is showing
improvements in the results
– Inflationary pressures in Asia
↑13%
(principally China) from currency ↑12%
and other costs impacted
margins by 1%
– Bookings & backlog are up
sequentially and YOY
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20. Electronic Technologies
Cell phone market continues to grow 10%
annually
– Customer mix was improved
– Dominance in MEMS technology continues
New product applications in military, telecom
and audio result in broader markets
Revenues related to fabrication and testing of
semiconductors and boards are flat
– Adjustments being made to reflect current business
environment
– Margin improvement is a focus
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21. PERFORMANCECOUNTS
Target Q2 2008 Q2 2007
Inventory Turns * 8 6.9 6.5
Earnings Growth 10% 7% 11.5%
Operating Margins 15% 15.8% 15.6%
WC as a % of Revenue 20% 18.5% 19.2%
ROI (Operating) 25% 26.1% 25.8%
* Dover has improved inventory turns four
consecutive years
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22. Value Creation Continues
2005 - 2007 Going Forward
New Management Team Four Segment Structure
Portfolio Transformation Platform Development
PERFORMANCECOUNTS PERFORMANCECOUNTS
Refocus Acquisitions Capturing SYNERGY
Recurring Revenue Theme Minimize Volatility
Globalization Management Development
Capital Allocation Focus Strategic Capital Allocation
Best Financial Results in Continue Improvement in
Dover’s History Financial Performance
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23. Strategic Capital Allocation
Acquisitions
– Strategic add-ons to bolster existing platforms
– High pricing expected to gradually moderate
– 2009 should favor strategic buyers
Share Repurchase
– Two programs announced in 2007 totaling approximately $1 billion
• First program completed in 2007 (10 million shares)
• Second program completed 8/2008 (10.8 million shares)
• Reduced share count by 10% in a twelve month period
Long history of increasing dividend each year
– Increased 25% in 2008 ($1.00 per share on annualized basis)
– Long-term payout target of 28% - 32% of net earnings
We have the capacity to do all three
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24. Seeking Synergy
Overhead cost structure
Expanding role of Supply
Chain Council
Shared facilities
4% - 6%
Business system Earnings
consolidations
Improvement
Examples:
– Energy Platform
– Product ID
– Pump Group
– Components Group
Emphasis on Tangible Value Creation
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25. Second Quarter and YTD Overview
Net Debt to Capital Ratio
– 28.8%: up 15 bps over 2007 year-end, reflective of higher total debt level to fund share
repurchase program
Free Cash Flow
– QTR: $192.5 million; 9.6% of revenue
– YTD: $300.9 million; 7.8% of revenue
Effective Tax Rate
– QTR: 29.3%, up 220 bps
– YTD: 29.4%, up 170 bps
Prior year periods benefited from tax positions that were effectively settled.
Acquisitions
– Two add-ons in the quarter: Brady Mining & Construction Supply Co. (US Synthetic) for $12
million, net of cash acquired and Neptune Chemical Pump Company (Pump Solutions
Group) for $65 million, net of cash acquired.
Share Repurchase Program
– QTR: Repurchased 4 million shares for $198 million.
– Completed (August): Repurchased 10 million shares for $461 million
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26. 2008 Outlook – Full Year
Organic growth: mid single digits
Margin improvement: Full year up 25 – 50 bps
Capital expenditures: $150 – $175 million
Interest expense: $98 - $103 million
Full-year tax rate: 27% – 28% (quarterly variance)
Free cash flow for full year: 10% of revenue
Corporate expenses: $100 - $105 million
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27. … A Solid Growth Story with Record Financial Results
Metrics are Driving Improved Results
… New Organization Structure Driving Change
Growth Platforms Emerging, Operating Style Evolving,
Clarity is Improving, Focus on Synergy
… Strategic Capital Allocation Discipline
Balancing Growth and Shareholder Return
… Time Honored Value System Intact
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