Dover Corporation (DOV) Q3 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to the Third Quarter 2013 Dover Corporation Earnings Conference Call. With us today are Bob Livingston, President and Chief Executive Officer; Brad Cerepak, Senior Vice President and CFO; and Paul Goldberg, Vice President of Investor Relations. [Operator Instructions] As a reminder, ladies and gentlemen, this conference call is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. Thank you. I would now like to turn the call over to Mr. Paul Goldberg. Mr. Goldberg, please go ahead, sir.

Thank you, Laurie. Good morning, and welcome to Dover's third quarter earnings call. Today's call will begin with some comments from Bob and Brad on Dover's third quarter operating and financial performance and follow with our outlook for the remainder of the year. We will then open the call to questions. [Operator Instructions] Please note that our current earnings release, investor supplement and associated presentation can be found on our website, www.dovercorporation.com. This call will be available for playback through October 31, and the audio portion of this call will be archived on our website for 3 months. The replay telephone number is 1 (800) 585-8367. When accessing the playback, you'll need to supply the following reservation code: 74383862. Before we get started, I'd like remind everyone that our comments today, which are intended to supplement your understanding of Dover, may contain certain 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 Forms 10-K and 10-Q for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statement. Also we undertake no obligation to publicly update or revise any forward-looking statement except as required by law. We would also direct your attention to our website, where considerably more information can be found. And with that, I'd like to turn the call over to Bob.

Thanks, Paul. Good morning, everyone, and thank you for joining us for this morning's conference call. I was very pleased with our third quarter results, which were driven by strong conversion on broad-based revenue growth, highlighted by 13% growth in Engineered Systems. I was also pleased to see organic growth across all segments. In all, we generated 3% organic revenue growth, achieved record margin and grew adjusted EPS 23%. From a geographic perspective, our North American markets were quite positive. Our China markets remained solid, highlighted by active Printing & Identification markets. And lastly, our European markets were improved and showed solid growth after several quarters of contraction. I would not describe Europe as recovered, but we were encouraged with our third quarter results in our early-cycle businesses. Now some specific comments on our third quarter. At Communication Technologies, our consumer electronics growth was driven by new OEM product launches. These launches provided Knowles the opportunity to supply all acoustic product categories to this key OEM. Our volume was lower than forecasted, driven by 2 factors: the launch occurred later than anticipated, and late OEM product specification changes limited our output in the quarter from initial expectations. In our Energy segment, we saw significant growth in our drilling and downstream businesses. Drilling benefited from share gains and increased activity in China, and downstream continues to serve a healthy global retail fueling and transportation market. Within production, artificial lift grew organically at 3%, primarily driven by international activity, but was offset by a weak winch market and the timing of shipments and soft U.S. activity. Within our Engineered Systems segment, refrigeration and food equipment markets were seasonally strong and our business performance again was excellent. Regarding our fluids markets, our solid results were driven by our broad-based pump businesses, which more…

Thanks, Bob. Good morning, everyone. Let's start on Slide 3 of our presentation deck. Today we reported third quarter revenue of $2.3 billion, an increase of 7% over the prior year. Organic revenue grew 3%, while growth from acquisitions was 4%. Earnings per share were $1.53. Adjusting for $0.03 of discrete tax benefits, a $0.06 impact related to spin-off costs and $0.02 benefit from other onetime gains, adjusted EPS was $1.54, an increase of 23%. A reconciliation of our adjusted earnings per share is in the appendix of our presentation deck. Segment margin for the quarter was 19.4%, up 100 basis points. This result was driven by excellent execution, the benefits of prior restructuring and cost reduction activities. The performance was broad-based as each segment reported significant margin improvement. Bookings increased 9% over the prior year to $2.2 billion. Again, these results were broad-based, with growth of 13% in Energy, 11% in Engineered Systems, whereas bookings increased 5% in Printing & Identification and 3% in Communication Technologies. Overall, book to bill finished at 0.96, slightly improved from last year. Backlog increased 2% to $1.5 billion. In the quarter, we generated $283 million of free cash flow, representing 13% of revenue. Our full year forecast for free cash flow remains unchanged at approximately 10% of revenue. Now turning to Slide 4. Communication Technologies, largely driven by new product releases in the consumer electronics market, grew 4% organically. Energy, Engineered Systems and Printing & Identification all exhibited broad-based organic growth of 3%. Overall, our organic revenue growth was 3%. Acquisition growth was 9% in Engineered Systems and 1% in Energy. Now let's turn to Slide 5, in our sequential results. Revenue increased 1% from the second quarter. New smartphone releases helped drive 3% growth in Communication Technologies. All other segments displayed sequential…

Thanks, Brad. As I mentioned earlier, I am very pleased with our third quarter performance as we delivered strong results in a low-growth macro economy. I am very encouraged by our continued execution on our growth strategies and productivity initiatives. In particular, over the past 5 years, we have seen the positive impact of our increased focus on expanding our activity outside of our core North American and European markets. The focus is a bit different for each segment, recognizing their uniqueness and opportunity sets. Let me share a couple of data points as illustration. Within Energy, there has been a focus on the expansion of their drilling activity into China, growing their production business in the Middle East and Australia and building their downstream position in all developing economies. Overall, Energy's revenue outside of North America and Europe has more than doubled over the last 5 years and is almost $400 million on an annualized basis. In refrigeration, Hill PHOENIX has focused on expanding their business from their core U.S. markets to Canada, Mexico, the Caribbean and now into South America. Over the last 5 years, refrigeration's revenue outside the U.S. has grown from 10% to 21%. These growth initiatives have been supported through our acquisition activity. Most recently, the announcements of Finder, SPIRIT, KPS and Fiberly [ph] all bring complementary products and technology to help foster this global growth. In addition to executing on our growth strategies, we continue to do a great job on productivity and our operational excellence initiatives. We expect to continue our outstanding performance as we consolidate our manufacturing footprint and share infrastructure across our segments. In all, I remain very confident with our positioning and long-term prospects. In closing, I'd like to thank our entire Dover team for their continued focus on serving our customers and driving results. Paul, let's take some questions.

Thanks, Bob. At this time, I'd like to turn it back over to Laurie. [Operator Instructions] Laurie, can we have the first question?

[Operator Instructions] Your first question comes from the line of Scott Davis of Barclays.

Bob, when we look at our variances, it just looked like your margins were very, very strong this quarter. And can you help us understand a couple of things? I mean, one, given how strong the margin performance is, I mean, I understand the top line is coming a little soft. But is there any reason to expect those margins will come down in 4Q that indicates the guidance would come down a little bit? Because there seems a little bit of a disconnect there. And then just as an aside on that, you seemed a little bit more cautious on 4Q. Is that an indication that you saw something in October that scared you a little bit? Or is it just -- are you just being cautious?

Well, let me take them in order. So your first question, Scott, was about the continuation or sustainability of third quarter margins into the fourth quarter?

Yes, sir. That's correct, yes.

So historically, our -- we have so much seasonality in a couple of our segments that the fourth quarter, both revenue and margins, have historically been less than what we achieved in both the second and the third quarter. So you will see the margins come down in the fourth quarter. But I think maybe embedded in your question was, is there anything unusual in the third quarter that benefited our margins? And the answer is no. We have been executing not just this year, but last year, on our productivity initiatives. Scott, we're going to have about $30 million of restructuring charges for the full calendar year of '13, and it was very much front-end loaded. I think 2/3 of those charges occurred in the first half. And I think what you're seeing here in the third quarter, we'll see some more in the fourth quarter. We'll continue with this in 2014. You're seeing the benefits of some of those productivity initiatives. The second question, am I being cautious? For the fourth quarter, did I see something -- have we seen something different here in October? We haven't seen anything different in October. I would tell you that when you look at our revenue, our revenue guidance, and you go from the top end of our previous guidance of 3 to 5 to our current guidance of 3, I'll throw out a number. Let's just say we're talking about $130 million to $150 million of organic revenue. Scott, from an internal goal perspective, I would say that the bulk of that reduction is a result of third quarter revenue not meeting our internal expectations. We saw a little bit of a miss in Energy, especially in production; a little bit of a miss even with an outstanding quarter with respect to our internal goals. Hill PHOENIX is off a little bit. And then we have the issue at Comm Tech, Communication Technologies. We were probably off, oh, maybe $25 million from our internal goal in the third quarter due to the late product launches. And we're probably going to be about $20 million off our internal goal in the fourth quarter due to some lower volume that we're now seeing at Nokia and RIM -- or I'm sorry, BlackBerry.

Your next question comes from the line of Nigel Coe of Morgan Stanley.

Just -- obviously, you provided some good color in terms of the impact from Nokia and BlackBerry in 4Q. But can you just spend a bit about the $0.06 growth in similar charge between handsets and other fee?

Okay. I don't have -- I'm not sure I have that data for the third quarter. I can tell you how we look at it for the year, Nigel. We're looking at, in consumer electronics, a growth year-over-year for the full year of about 13%. But it is interesting. Within consumer electronics for the year, that growth of 13%, embedded in that is handset growth of about 20%. So that sort of begs the question, if handset is growing at 20%, what's not growing? And I would say we're relatively flat in other areas in consumer electronics like components for earbuds, notebooks. And I -- the tablet market has been rather flat, a little bit of growth this year. But I would also point out that we're about ready to see the launch of some new products in the tablet market that we have pretty strong participation in, that will benefit Communication Technologies as we go into 2014.

Now tablets traditionally been quite a weak area for you guys. I mean, would there be share gains?

Would you repeat that question?

Yes. I mean, the tablet hasn't a been strong area for Knowles traditionally. So would those represent share gains?

Well, I would say we've had strong participation in the tablet market, but probably not as strong of a share position in the tablet market as we have had in the handset market. I actually believe as we exit this year going into '14, you'll see these guys with a stronger share position in the tablet market than we've had historically.

Okay, that's helpful. And then just a follow-on. Post-Knowles, you're obviously going to have a good-sized contribution from Energy in the portfolio. We're starting to see some weakening on the production side in North America. Can you maybe just talk about some of the changes that you've experienced and seen on the production side in North America? And are you content to have such a large proportion of your EBIT driven by Energy going forward?

The changes we see in North America? Let me give you a comment on the third quarter. I would -- I'd circle a number. I'd circle a number of about $25 million that I feel we were short of with respect to our internal goals for production in the third quarter. Nigel, $8 million of that was actually shipments scheduled for the third quarter that were ready, that were shipped, and we had a deferral on revenue recognition. I'm blaming Brad on that, okay? But we did have a little bit of a slower start in Canada as we came out of the spring thaw. We saw activity a little softer there in July and August. But I would say that the activity in Canada in September and so far here in October has been back to normal levels, and we're quite happy with the activity level. The one comment I'd share on the U.S. market, and this is sort of the reason why I have my comment about softer U.S. activity, it's very, very specific to a couple of Texas basins or Texas fields. The Permian Basin for -- I guess in particular, was down for us, not only down against last year but down against expectations. The other basins around North America, especially in the U.S., were actually solid to strong. But there was a shortfall in the Permian Basin.

And what would have caused that?

I think most of it is inventory adjustments.

Your next question comes from the line of John Inch of Deutsche Bank.

So I just wanted to make sure I understand the Comm Tech context, because some other tech firms have been reporting weaker China emerging markets this earnings season. So it sounds like, Bob and Brad, that, that's not really what you're experiencing. This was more Dover specific, or is the 3-point reduction, is there any aspect of the market that you are seeing that may not have to do with your own timing of orders?

No, I wouldn't -- I would not label the change in revenue at Communications Technologies as having anything to do with the geographic market. As I commented, it was all about the OEM product launches that were a few weeks later than we had anticipated, not only the beginning of the year, but I would also say at the end of the second quarter, and continuing, I would say, a continuing struggle that we're having with lower volume, especially here in the fourth quarter at Nokia and BlackBerry. It is interesting, I -- you mentioned China. I'll share another interesting data point. You look at our 3 largest geographic markets, and I'll label them as North America, Europe and then Asia, including China. John, we had 4% organic growth in all 4 markets. We -- it was -- I commented in my prepared script about the growth in Europe. We had 4% growth in Europe. We saw some early signs of that as we were coming out of the fourth quarter -- or the second quarter. But we had a very strong quarter in Europe, especially in 2 or 3 of our early-cycle businesses.

So Bob, the performance then of the segment, and I mean you called out a little bit of the issues, was there a difference as you kind of looked into the segment in the fourth quarter between MEMS and non-MEMS business of the segment?

In the fourth quarter?

Well, in the third quarter and that leads you to obviously your commentary around the fourth quarter in the slightly lower reduction of target.

In the handset market? No, not really. We obviously have a stronger position with MEMS in the non-high-handset piece of the consumer electronics market. But I made a comment about late spec changes by the OEM. That was not on just one product. That was on a couple of products. It was MEMS as well as speaker boxes.

Okay. And then with respect to share repurchase, what are your thoughts -- particularly at Knowles, I'm presuming it's going to pay the parent, you guys, a dividend. What are your thoughts toward extending possibly share repurchase next year based on that, or just the success of the program this year?

John, I'll wait and comment on that in the first quarter.

Okay. Last question, Bob. Was there any benefit? The margin expansion was very impressive. Was there any benefit from -- I mean, you called that restructuring, right? That was front-end loaded this year. Was there any benefit from the supplier sourcing initiatives that Dover had begun under your leadership a few years ago? Or has that, for the most part, tailed off and this is...

No, I wouldn't say it's tailed off. In fact, it's been rather steady for the last couple of years. I don't have a separate data point to pull out of that. But yes, that has been part of it, and continues to be part of it and will continue to be part of our operational excellence and productivity initiatives for next year.

So it sounds like you feel pretty good about the runway, particularly if volumes begin to pick back up again?

I think we're very, very well positioned for any pickup in volume.

Your next question comes from the line of Shannon O'Callaghan of Nomura.

Bob, so can you just explain a little bit more what drove these required spec changes and I guess why they came so late? And have you experienced this type of requirement before? And just -- you talked about some market share losses. Are those recoverable or temporary in the quarter? Maybe fill that out, too.

Oh, gosh, Shannon. If you're asking me to give you a technical explanation of those spec changes, I could probably do it and be wrong, okay? Is it normal? We don't see it on every product launch. Does it happen on occasion? Yes, and so I wouldn't label this as an unusual occurrence, but it does happen on occasion. And when I say a late spec change, if memory serves me correctly, I think we were dealing with a specification change like 3 weeks, 4 weeks prior to the OEM's product launch. It was that late in the cycle.

And the losses, the market share losses you're talking about, I mean, are those permanent losses? Or what occurred there?

No. Actually, I will tell you, as we came out of the third quarter and here in October, we are shipping on all of our acoustic products to the OEMs that we're qualified with according to our share award. And furthermore, I would tell you that we're shipping just about everything we can build.

Yes, that's what I would have said. We're shipping everything that we can make.

And just over on Energy then, on the drilling business, I mean, it was up 12%. Obviously, the comp probably is starting to get really easy there. But you talked about China drilling. I mean, are you actually expecting sort of strong growth to resume in drilling? Or was that kind a comp-related pop this quarter?

Well, you are right. We did have a bit of an easier comp, but I've got to give some credit to the business guys here. It wasn't just an easy comp. The share gains that I mentioned, I would label that activity around our core customers here in North America. But there has been a growing and a building of activity and expanding their customer base outside of the core customers here in North America, and they've started to have some success over the last couple of years in China. The success has been building this year. And the activity in the third quarter was significant enough for them in China, that I wanted to point that out.

Your next question comes from the line of Julian Mitchell with Crédit Suisse. Julian Mitchell - Crédit Suisse AG, Research Division: Yes, I just had a question on the fluids business inside Engineered Systems. At the beginning of the year, there were some customer deferrals. I think those went away. But obviously, one of the major pumps guys came out with some sales reduction this morning. I just wondered organically within your fluids business, what are you seeing? So I think some numbers you mentioned had acquisitions included.

Okay. So organically in fluids, gosh, Brad, help me. I think it was 4%?

Yes, the fluids, as we defined it, was more than pumps.

Yes, but within the platform, I think it was 4% organic. But it's interesting, we've got 3 businesses in our fluids platform. The pumps business that you're referring to was the best performing on a comp basis in the third quarter. In fact, the other 2 businesses in fluids actually had negative organic growth. My comment earlier about our growth in Europe, I will tell you, did not include these 2 businesses in fluids, which is our heat exchanger business and our dispenser business. Both were down in Europe in the third quarter, which is a key market for both. But our pumps business is performing pretty solid around the globe, not just in Europe. Julian Mitchell - Crédit Suisse AG, Research Division: Got it. And then on the restructuring and the kind of productivity savings, I mean, you pushed up by a few cents the kind of productivity savings you expect to get this year. Does that reflect any kind of acceleration in restructuring spend? Or are you just getting a better payback on the plans that you had outlined at the beginning of the year?

Well, I think we may be getting a little bit better payback now, but I'm not sure that's the significant item. I think we have found opportunities, as the year has progressed, to increase our productivity actions. I actually think coming into the year, maybe our restructuring charge number for the year may have been low 20s, $20 million or $22 million.

$22 million, yes.

We're going to end the year at ...

Almost $30 million.

Almost $30 million. So we have able to find additional opportunities that we didn't have on our activity plans at the beginning of the year.

Your next question comes from the line of Jeff Sprague of Vertical Research Partners.

Just back to Energy and your confidence in Q4 or perhaps uncertainty on Q4. If we go back to the Q2 discussion and if we would have left that Queensland order in Q2 where it belongs, the book to bill was 1.3. But if we leave that guy over in Q2, it puts the Energy book to bill at only 0.9 here in Q3. So I'm just wondering now, as you look actually at your Q4 revenue forecast, are there substantial kind of book-and-ship type activities that you need to see happen here in the fourth quarter to reach that forecast? Or is it kind of in backlog at this point?

No, I would -- for the businesses within Energy that I would say actually sort of manage their activity driven by a backlog, I would say the backlog is there for the fourth quarter. Jeff, the bulk of our -- aside from this Queensland order that we referred to a couple of times, the bulk of our activity in artificial lift, and I would say even within drilling and for probably half of downstream, it may not be booked and shipped in the same month, but it's a pretty quick cycle business. The activity -- I'm actually fairly confident with our outlook for Energy for the fourth quarter. I think we'll see a pretty strong recovery in production in the fourth quarter, both here in the U.S., as well as our increased activity in our geo-expansion initiatives. And we're looking for a fairly solid performance again in the fourth quarter from downstream.

Right. I'm just wondering on back to Comm Tech and the pressure from Nokia and BlackBerry, I think in the Knowles Form 10, only Samsung was called out as being above 10% of sales. I may be incorrect on that. But obviously, Nokia and BlackBerry have been shrinking for a long time. Are they collectively over 10% of sales? Or how big are they at this point?

Oh, gosh. I wasn't -- I didn't brief myself on the Form 10 coming into this call this morning. I don't believe -- you're asking if Nokia and BlackBerry together represent 10% of Comm Tech's revenue, the answer is no, not even close.

Okay. So that bleed then starts to kind of burn off, right? I mean, obviously, there's some channel disruptions from BlackBerry's failed launches and everything, but...

Yes, yes.

I agree with that.

Right. Okay. And then just finally, and I'll pass it. Bob, you said Hill PHOENIX came in a little bit light of your expectations. Was there anything in particular that stood out? Was it project timing? Anything of note there?

If I had to point to 2 things, Jeff, I would say we continue to see softness in the U.S. market in the Northeast. And we saw that through the first half of the year. I would say that it was probably a little bit softer in the third quarter than even we saw in the first half of the year. But I also think that what we're seeing here in the second half of the year is a little bit of a reduced expectations in Mexico for Hill PHOENIX.

Interesting. And Anthony is not in your organic...

With respect to Mexico, that is timing.

And Anthony is not in the organic yet, right? But how is it actually -- Anthony performing?

We're very happy with Anthony's performance. The earnings that they're going to deliver to Dover and to us this year is right on our acquisition model and on our forecast.

Your next question comes from the line of Joe Ritchie of Goldman Sachs.

So just going into Energy for a second. The comps going into Q4 for drilling also are pretty easy. And so thinking back to Brad's comments earlier about the margins being 24% plus, that's a pretty wide range into the fourth quarter. Can you describe your confidence in your ability to maybe drive 25% margins based on the mix and productivity issues that you've undertaken thus far this year in Energy?

Let me just clarify. My comment was in excess of 24% for the year.

That's right.

And we did point out that in Energy, there'll be pressure on that margin in the fourth quarter due to these late in the year deals we've just completed in the downstream side. In fact, if you think about how we've guided and you look at the bridge on acquisitions, you'll see that our acquisition expectations for the year have come down just a bit, $0.02 to $0.03. And that's really the deals taking place in the fourth quarter. You can argue that's part of the reason we've come off the top end of our range. $0.06 on a performance basis includes completing these deals and then they'll be accretive into the next year. To just clarify, we do see some pressure on the margin in the fourth quarter because of the amortization and deal costs associated with closing those deals.

Okay, great. That's helpful...

So Joe, if I were to add anything to that, and that's on the top line in drilling, we do expect to see fourth quarter revenue to be down sequentially from the third quarter. But yet when we look at the fourth quarter year-over-year, the growth is going to be high single digits.

Okay, great. And then one other question on Engineered Systems. I know that the organic growth forecast for the year is now 2%. It still implies a pretty meaningful acceleration in the fourth quarter. And you have some headwinds with seasonally weak refrigeration revenues. The order rates haven't been great. And so talk to me a little bit about the confidence that you have in hitting that mid-single-digit number for 4Q.

I feel pretty confident with the fourth quarter forecast across all the segments, especially DES. My comment about some of the -- I call it revenue miss with respect to internal expectations in the third quarter, with respect to Engineered Systems, it was almost all at Hill PHOENIX. And I think we've actually taken a fairly conservative view in the fourth quarter forecast for Hill PHOENIX.

Okay. Even though you're still continuing to see some weakness in the Northeast, are there pockets geographically where you're seeing some strength as we enter the fourth quarter?

Especially outside of the U.S.

Your next question comes from the line of Charley Brady of BMO Capital Markets.

Can you just talk a little bit about -- I mean, just in terms of emerging markets? I mean, obviously, China sounds as though it's probably stronger than I would have guessed, given the comments I heard from other companies. But just outside of China, in other kind of emerging markets, I mean, are you seeing any kind of tapering of growth there? And then can you also kindly speak in terms of what pricing and raw material costs are looking like? Are you getting any kind of benefit? Because it sounds like raw materials are coming in for [ph] a little bit better than kind of budgeted.

Okay. So I shared my comment on Asia. Other emerging markets, gosh, Charlie, the ones for us that are meaningful is our activity in the Middle East and Australia. Those markets, we continue to see growth in, we'll see growth there in the fourth quarter. We expect more growth out of those 2 markets in 2014. If we look at South America as an entire market, the third quarter activity was lighter than we expected. But I would take that back to my comment around Hill PHOENIX and some deferrals of order, mostly around timing activity in Mexico. But we feel that the emerging markets for the fourth quarter and going into 2014 continue to provide a very nice growth opportunity for all of Dover. I'd like to see the growth continue in Europe.

Right. Can you just talk about sort of pricing kind of across the board, across the segments?

Well, yes, to your question on materials, we did see a little bit of favorability in terms of material input costs in the quarter. Not a substantial change...

Pretty modest.

Pretty modest coming off of Q2. And I would say some of the pricing that we have put in place related to materials earlier quarters have started to come down a bit. So the net spread on as we track price as it relates to materials sequentially really is pretty flat off the second quarter.

Not a major change.

Your next question comes from the line of Jamie Sullivan of RBC Capital Markets.

I have a question about -- you talked about the Queensland orders and that may be a little bit of a comp headwind as we go into next year. Can you kind of frame that for us and how we should think about that in 2014?

No, okay. So from a bookings point of view, it's always a bit difficult to actually peg exactly when we get the order. It's not a steady monthly drumbeat of orders there. They tend to be an annual award or a semiannual award. So from a -- on any individual quarter, there could be a negative on the comp with respect to that activity. For the year, we expect our activity in Australia and specifically around the Queensland project to be up in '14 versus '13.

That's helpful. And I guess similarly on the margin side, you talked about some of the restructuring expenses going from 20 to 30 this year from original plan. Is -- should we think about the 20 as kind of the ongoing sort of spend? Or is it more of a benefit to the margin as we go into next year?

No, I -- look, I'm not prepared to start giving 2014 guidance. But with respect to that specific question, I think you should continue to expect us to execute on $20 million plus of restructuring activity in 2014.

Your final question comes from the line of Steve Tusa of JPMorgan. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Is the Anthony seasonality similar to Hill PHOENIX?

In the U.S., it's almost identical. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Okay. And year to date...

There's a little bit of a difference outside of the U.S., but in the U.S., it's almost identical, Steve. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Right. And so I just wanted to make sure I'm baseline correct here. But year-to-date, I've got revenues of about $210 million for Anthony?

I don't have that detail. I don't have the detail, Steve. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Okay, okay. So you guys don't know what the run rate of the -- I mean, you're saying close-the-case has gone well, so it's growing but...

Close-the-case is going well, yes. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: So how do you track that without the Anthony revs?

No, we have the Anthony revs, Steve. We just don't have them right at our fingertips at this moment. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Oh, got you. Okay, okay. That's helpful. An then -- and then -- yes, okay. And then...

I mean, we do [indiscernible] close-the-case very, very closely. And I would say coming into the year, we had expectations for close-the-case. And our view right now is we're right on track where we expected to be with that program, and it's providing some nice growth for Anthony. I don't have it in front of me, but Paul could ...

We also had a fairly aggressive forecast for Anthony for close-the-case, and they're hitting it. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Right. And then just on the margin front, I mean, you guys -- you said 24 plus for Engineered, so that's -- and Energy, that's helpful. Can you maybe just kind of baseline us for the year on some of the other segments? Maybe a little bit of a range, just so we can -- because there's a -- you guys blew it away this quarter. But you said the total margin will be below the second quarter, I guess. Is that kind of the -- from reading the code correctly, is that the way to think about it? Now we're kind of back into the other? Are there any other moving parts in the segments that we should be aware of, I guess, third to fourth quarter here?

Well, no. I guess from where we were last time, I would answer that question as no, no significant changes related to where we thought we would end the year. We originally said we would growth 30 to 40 basis points. I think we're on track to do that. I would expect DPI to be a little bit weaker in the fourth quarter not because of the revenue but because we are doing some -- Bob talked about restructuring. There's a lot of benefits flowing through, but you will hear us talk about another restructuring activity in our Printing & Identification business in particular in the fourth.

Yes. And I know the timing of that may seem odd, but we actually want to get this done in the fourth quarter, not just for margin improvement for next year, but for some, I would call it some customer-facing activity that we want to be executing on going into 2014.

I think you'll see DES seasonally, seasonally down. DE We talked about. And in Comm Tech, you'll see a little bit of a reduction going into the fourth quarter as well. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Okay. Just one last very quick housekeeping item, I guess just going back to this Anthony question. I think in the press release, it was a $310 million business last year, you said in the press release, I guess, when you acquired it?

Okay. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: If you divide that by the last year's revenues you're getting to about 9% acquisition, 9% contribution of revenues, and you guys are saying it's an 8% acquisition contribution. I just want to make sure that there's not a -- you guys are reporting, maybe reporting a part of the business differently, and maybe there was like some runoff revenue that's not included because there are some acquisitions in there this year, right?

Not in -- this year in refrigeration? No. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Or in just Engineered, total Engineered?

Yes. I think Paul could take this question offline. But I do think if I recollect the $310 million number, when we acquired Anthony, as I think we pointed out, they were a supplier to Hill PHOENIX. And so that's probably why you're asking the question is that there -- the way we think about it now, is we do not think about Anthony with that internal supply... Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Yes, there's a lens, there's a lens. That answered the question.

If memory serves me right, Steve, I think the -- I call it the intercompany activity between Anthony and Hill PHOENIX was in the $30 million to $40 million range.

That's right. That's right. Charles Stephen Tusa - JP Morgan Chase & Co, Research Division: Okay. So that would get you like the 2 -- okay, yes, that makes a ton of sense. That makes a ton of sense. Perfectly.

That concludes our question-and-answer period. I would now like to turn the call back to Mr. Goldberg for closing remarks.

Thanks, Laurie. This concludes our conference call. We thank you for your continued interest in Dover, and we look forward to speaking to you again in January. Have a good day.

That concludes today's Third Quarter 2013 Dover Corporation Earnings Conference Call. You may now disconnect your lines at this time and have a wonderful day.