Bookings Sustainability
Q: Are positive bookings sustainable, and what's the outlook?
A: Management expects bookings to remain positive throughout 2024 based on their current outlook. They believe that hard work on channel inventory has led to an inflection in bookings, particularly in biopharma and Fueling Solutions. Unless there is an unforeseen recession in 2024, they do not expect the positive trend to reverse.

Biopharma Recovery and Inventory
Q: Is biopharma recovery included in guidance, and what about obsolete inventory?
A: Dover has very little earnings accretion from biopharma in their guidance, despite orders beginning to pick up. They prefer to position themselves cautiously and will update quarter by quarter. They do not expect biopharma to be down year-over-year but have not included significant operating profit growth. Some biopharma inventory will become obsolete due to FDA regulations, which management confirms.

EPS Growth Cadence
Q: How will EPS growth progress through the year?
A: Management expects growth to start slowly, with Q1 similar to Q4 due to difficult comparisons. The majority of earnings accretion is anticipated in Q2 and Q3 as production ramps up. Q4 performance will depend heavily on production rates adopted.

Inventory Levels and Heat Pumps
Q: Are inventory levels balanced across the portfolio, especially in heat pumps and clean energy?
A: Dover feels good about inventory levels across the portfolio, except for heat exchangers used in heat pumps. Demand for heat exchangers declined suddenly in mid-September, leading to cautious expectations for 2024. They anticipate heat pumps to be down year-over-year but believe this may be conservative. They expect growth to return after inventory flushes in Q1 and Q2.

Geographic Sales Volatility
Q: Can you discuss the geographic sales volatility, particularly in China and Europe?
A: China's revenue was up 14%, but this is only 6% of total revenue and can be volatile due to large shipments. The base business reflects the not-so-great Chinese economy. Europe was down 16%, exacerbated by a sudden demand drop in heat exchangers for heat pumps. European demand is expected to improve year-over-year due to the prior year's idiosyncratic headwind. Majority of growth is North America driven.

M&A Outlook
Q: What is the outlook for M&A in 2024?
A: Dover anticipates being more active in M&A due to improved cash flow and balance sheet capacity. They have closed three acquisitions in the last five months and have a pipeline of similar opportunities. They are willing to pursue larger deals but have return hurdles; if these aren't met, they will return cash to shareholders.

Sales Growth Drivers
Q: Is improvement driven by destocking ending or underlying demand?
A: Improvement is driven more by investments in specific products and end-market exposure rather than just destocking or overall GDP growth. Underlying growth is higher than the 1–3% headline, offset by headwinds in cyclical parts of the portfolio like can-making and polymer processing equipment. Positive volume growth is expected, except in Q1 due to an idiosyncratic issue.

Price and Volume Outlook
Q: What's the assumption for price and volume growth this year?
A: Dover assumes price increases of about 1 to 1.5 points, with volume growth roughly the same, making it 50-50 on price and volume. They believe that managing inventory levels helps protect pricing.

Industrial Pumps Outlook
Q: How is the industrial pumps business performing?
A: The industrial pumps segment is seeing decent performance without significant headwinds from stocking or destocking. Demand is driven by fundamental factors, with some caution in the back half of 2023 due to interest rates. They expect some growth but nothing extraordinary in 2024.

Margin Impact from Production Cuts
Q: Did production cuts impact margins?
A: Yes, production reductions, particularly in clean energy, impacted margins. The company managed production to balance inventories, which affected margins to a degree.