Dover Corporation (NYSE:DOV) Q2 2020 Earnings Conference Call - Final Transcript

Good morning and welcome to Dover's Second Quarter 2020 Earnings Conference Call. Speaking today are Richard J. Tobin, President and Chief Executive Officer; Brad Cerepak, Senior Vice President and Chief Financial Officer; and Andrey Galiuk, Vice President of Corporate Development and Investor Relations. [Operator Instructions]

I would now like to turn the call over to Mr. Andrey Galiuk. Please go ahead, sir.

Thank you, Laurie. Good morning everyone and thank you for joining our call. This call will be available for playback through August 12 and the audio portion of this call will be archived on our website for three months.

Dover provides non-GAAP information and the reconciliations between GAAP and adjusted measures are included in our investor supplement, presentation materials which are available on our website. We want to remind everyone that our comments today may contain forward-looking statements that are subject to uncertainties and risks, including the impact of COVID-19 on the global economy and on our customers, suppliers, employees, operations, business, liquidity and cash flow. We caution everyone to be guided in their analysis of Dover by referring to our Form 10-K, Form 10-Q for the second quarter, for a list of factors that could cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law.

With that I will turn this call over to Rich.

Thanks. Andrey. Good morning everyone. Let's begin with the summary of the results on Page 3. We expect Q2 to be challenging and in preparation, we reinforced our cost program earlier in Q1, so we were in some sense prepared for the battle. We ended the quarter with a comprehensive set of actions to manage through the turbulent times and focused on what we can control, our operations, costs and importantly safety of our employees. From an operational point of view, we are not out of the woods yet, but a significant majority of our facilities are up and running moving into Q3 which is positive to operating leverage as compared to this quarter.

Top line trends are very much in line with our expectations entering the quarter. Revenue declined 16% organically and bookings declined 21%. Trends have improved in the quarter and we saw a material sequential improvement in June. We still carry a strong backlog across all segments and that increases our confidence for the second half. Margin performance for the quarter was acceptable considering the state of business activity in April and May. After profitability gains in Q1 on lower revenue, we targeted 25% to 30% decremental margin for the full year. Thanks to the broad-based cost control efforts to offset under-absorption of fixed costs and steady execution of $50 million of in-flight initiatives, we achieved 27% detrimental margin in Q2, a quarter which we expect to be the trial for the year. That puts us on track to exceed our initial full-year target.

In addition to the tight cost controls