Why Dover Shares Are Sliding Today

Dover Corp DOV reported a Q2 2023 revenue decline of 3% Y/Y to $2.10 billion and +3% Y/Y organic, missing the consensus of $2.20 billion.

At the end of the quarter, the order backlog was $2.81 billion versus $3.33 billion a year ago. 

Booking totaled $1.93 billion versus $2.11 billion in Q2 2022.

Adjusted EPS declined 4% Y/Y to $2.05, missing the consensus of $2.20.

ERP system upgrade in the quarter disrupted transient manufacturing and shipment in the company's vehicle services group, which reduced revenue and EPS by approximately $50 million and $0.10, respectively.

Gross profit declined to $758.8 million from $781.3 million a year ago. 

Total segment earnings margin contracted to 20.2% from 20.6% a year ago.

Adjusted segment EBITDA declined to $460.5 million from $477.4 million, and the margin contracted to 21.9% from 22.1%.

Dover generated cash from operating activities of $195.3 million, compared to $178.8 million a year ago. 

Free cash flow stood at $155.2 million vs. $128.6 million a year ago.

2023 Guidance Revised: Dover expects adjusted EPS of $8.85-$9.00 (vs. consensus of $8.98 and vs. $8.85-$9.05 prior); and revenue growth of 2%-4% (all-in and organic vs. prior outlook of 3%-5%).

"We had forecasted softer comparable margins in the first half of 2023 primarily due to business mix and lower volumes in biopharma and EMV payment systems. We prepared for this by proactively intervening on our cost structure starting in the latter half of 2022, and have continued these structural cost reductions in 2023. We expect the roll forward of these actions, demand seasonality and backlog shipment timing to drive sequential and comparable operating margin improvement in the second half."

Price Action: DOV shares are trading lower by 3.35% at $147.00 premarket on the last check Tuesday.