Dover Corporation Q1 2009 Earnings Call Transcript

| About: Dover Corp (DOV)

Dover Corporation (NYSE:DOV)

Q1 2009 Earnings Call

April 22, 2009 8:00 am ET


Paul E. Goldberg - Treasurer and Director of Investor Relations

Robert A. Livingston - President and Chief Executive Officer

Robert G. Kuhbach - Vice President, Finance and Chief Financial Officer


Nigel Coe - Deutsche Bank Securities

Stephen Tusa - J.P. Morgan

Scott Davis - Morgan Stanley

Shannon O'Callaghan - Barclays Capital

John Inch - BAS-ML


Good morning and welcome to the first quarter 2009 Dover Corporation earnings conference call.

With us today are Bob Livingston, President and Chief Executive Officer of Dover Corporation, Rob Kuhbach, Vice President of Finance and Chief Financial Officer of Dover Corporation, and Paul Goldberg, Treasurer and Director of Investor Relations of Dover Corporation.

(Operator Instructions)

I would now like to turn the call over to Paul Goldberg. Mr. Goldberg, please go ahead, sir.

Paul E. Goldberg

Thank you, [Kelly]. Good morning and welcome to Dover's first quarter earnings call.

With me today are Bob Livingston, Dover's President and Chief Executive Officer, and Rob Kuhbach, our VP of Finance and CFO.

Today's call will begin with some comments from Bob and Rob on Dover's first quarter operating and financial performance and 2009 outlook. We will then open up the call to questions. In the interest of time, we kindly ask that you limit yourself to one question with a follow up.

Please note that our current earnings release, investor supplement and associated presentation can be found on our website,

This call will be available for playback through 11:00 pm May 6th and the audio portion of this call will be archived on our website for three months. The replay telephone number is 1-800-642-1687. When accessing the playback you'll need to supply the following reservation code: 93619966.

Before we get started I'd like to 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 uncertainty. We caution everyone to be guided in their analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statement. We also undertake no obligation to publicly update or revise any forward-looking statements 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 this call over to Bob.

Robert A. Livingston

Thanks, Paul. Good morning, everyone, and thank you for joining us for this morning's conference call.

Today Dover reported first quarter earnings per share from continuing operations of $0.33, down 57% from last year. First quarter revenue was $1.4 billion, down 26% from last year, and net earnings from continuing operations were $61 million, down 59%.

Our first quarter results reflected $0.12 EPS in restructuring costs. Dover's 26% quarter revenue decline was the result of a 22% decline in core revenue, coupled with a 4% negative impact of foreign exchange. Revenue declines in Europe and Asia were generally more severe than in North America.

Bookings for the quarter were $1.3 billion, down 36% over the prior year, but strengthened sequentially through the quarter. Our first quarter bookings were net of $63 million of cancellations.

First quarter backlog was $1 billion, down 34% from last year and down 11% sequentially.

The first quarter proved to be more challenging than anticipated, with significant declines in activity across most of our end markets. These challenges required us to take more aggressive restructuring actions than originally planned and we did. Restructuring charges in the first quarter were $35 million, $15 million above our initial estimates.

Operating margin for the quarter was 10.2%, down 390 basis points over the prior year, and reflected significantly weaker volume and our restructuring charges.

Once again, our performance was led by strong margin results and [break in audio] management. We achieved working capital to sales of 18.9%, a 10 basis point increase over last year. Our inventory turns were 6.8, which compared favorably to the prior year of 6.7.

We generated free cash flow of $83 million in the first quarter, 6% of revenue. This percentage is flat with last year. Recognizing the first quarter is historically our weakest cash flow generation quarter, we expect full year free cash flow in the neighborhood of 10% of revenue.

During the quarter our companies were very focused on internal operational improvements. Restructuring, synergy capture and supply chain initiatives continued to be a primary focus of our management teams and will be a tremendous source of value as we move through this current recession.

We continued to be disciplined in our capital allocation decisions. CapEx of $31 million was in line with our full year expectations.

We expect no changes to our long-standing dividend policy.

We had no share repurchase activity in the quarter and did not close on any acquisitions; however, we are encouraged by the targets in our pipeline. We continue to see add-on opportunities and signs of moderating pricing as valuations align with business conditions. We remain hopeful that we'll be able to announce a solid strategic add-on acquisition during the second quarter and a few more as the year unfolds. Acquisitions have been and will continue to be a key part of our value creation strategy.

Now let me turn the call over to Rob for comments on our segment performance.

Robert G. Kuhbach

Thanks, Bob. Good morning, everyone. I'd like to quickly run through our first quarter segment performance and then cover some additional financial information.

At the Industrial Products segment, sales were $435 million, down 30% from last year, with earnings of $35 million, down 56% from the first quarter of '08. Bookings were down 50%, including cancellations of $50 million at the companies serving the infrastructure market. Operating margin was 7.9%, down 490 basis points from last year largely driven by weak conditions across most end markets and restructuring charges of roughly $6 million. Adjusting for the effects of restructuring charges, operating margins would have been 9.4%.

Within Industrial Products, sales in our material handling platform decreased 35%, while earnings dropped 72%, resulting in platform margins down 800 basis points. Platform margins would have been down 550 basis points adjusting for the effects of restructuring. Our aggressive cost reduction activities, including significant reductions in work force and facility consolidations, partially offset weak dynamics in essentially all end markets. Given the low first quarter book-to-bill of 0.63, we expect this platform to remain challenged for the next few quarters.

The mobile equipment platform reported sales and earnings declines of 25% and 34%, respectively, while margins held up fairly well, down only 200 basis points. Solid performance at Heil Environmental and a strong military business at Sargent helped to offset weakness in the bulk transport and auto service markets. Bookings trends stabilized as the quarter progressed, suggesting the trough has been reached in this platform. Internal initiatives combined with market stabilization should result in modest improvement in mobile equipment's performance as the year unfolds.

Turning to the Engineered Systems segment, sales were $401 million, down 20% from last year, with earnings of $43 million, down 31%. For the quarter, operating margin was 10.8%, down 180 basis points over the prior year period. This margin decline was principally the result of lower volume and restructuring costs of $8 million. Adjusting for restructuring charges, segment margins would have been 12.7%. Bookings, backlog, revenue, earnings and margin improved through the quarter for this segment.

Our product identification platform began to see signs of improving demand as it exited the first quarter. For the quarter, sales were down 23%, reflecting a 17% core revenue decline and a 6% FX impact. Earnings were down 39% and margins dropped 320 basis points, of which restructuring accounted for 210 basis points.

This performance reflected generally weaker global demand, a January and February continuation of destocking activities, and restructuring initiatives in our bar coding business. We successfully implemented SAP across all MARKEM Imaje locations and expect to see both operational and cost benefits resulting from this unified ERP system. Additionally, our direct marking business is seeing a healthy pipeline of business opportunities among several global consumer products companies.

The engineered products platform posted decreases in both sales and earnings year-over-year of 17% and 20%, respectively. Margin performance was relatively strong, with operating margin down only 60 basis points despite significant restructuring charges. Excluding restructuring charges, operating margin improved 120 basis points over last year on a 17% revenue decline.

Both Hill PHOENIX and Unified Brands delivered earnings growth on modest revenue declines, partially offsetting weak performance in the food packaging end markets. Here as well as, bookings strengthened as the quarter progressed, indicating improving demand off of low levels. Innovative products and healthy supermarket renovation activity continued to provide a favorable climate for Hill PHOENIX.

Turning to Fluid Management, demand softened across all end markets, especially oil and gas. For the quarter sales declined 18% to $331 million and earnings were $75 million, a decline of only 11%. First quarter operating margins were 22.8%, up 160 basis points over last year. While though some degradation is likely, we still believe we will maintain strong margins throughout the year.

Our energy platform, closely linked with North American recount and oil and gas pricing, saw reduced demand in its sucker rods and drill bit inserts. First quarter revenue declined 17%, while earnings for the platform only decreased 13%, resulting in margins on a par with first quarter 2008 results. We expect to see demand for our energy products to continue to decline for the next couple of quarters as storage levels of oil and gas remain relatively high and recount continues to fall.

The fluid solutions platform posted a revenue decline of 18% and an earnings decline of 24% caused by weakened global demand across the majority of its end markets. Productivity gains and synergy activities helped fluid solutions maintain strong margins throughout the quarter. Additionally, bookings improved as fluid solutions exited the quarter and there is growing optimism that destocking behavior has stabilized.

Lastly, Electronic Technologies continued to feel the effects of the global slowdown. Revenue was $214 million, down 39% from last year, and we lost $12 million in the quarter inclusive of $19 million of restructuring charges. Excluding these restructuring charges, operating margin would have been 3%.

Our electronic assembly equipment companies, namely ECT, DEC and OK, experienced a tremendous drop off in demand as their customers continued to experience very low factory utilization rates. In total, revenues were down 66% for this group of companies. We are taking the opportunity during this significant market downturn to substantially restructure our electronic assembly equipment group and are moving more production capacity to Asia, which will allow us to better leverage the market when it turns.

Knowles and the ceramic and microwave products group, now known as CMP, both experienced solid quarters with earnings leverage reflecting innovative product designs serving the military and cell phone markets. This segment's bookings improved each month during the quarter, leading us to believe that January and February represented the trough, though we are not anticipating a material recovery in demand in the second and third quarters.

As this summary indicates, Dover's first quarter results reflected weak demand across the majority of our end markets as well as normal seasonality and the effects of significant restructuring. Markets displaying strength were military, food and refrigeration systems equipment, and our growing presence in MEMS technology.

Having reviewed the segments, I'd like to briefly provide some additional financial data.

Regarding geographic sales, Dover experienced a higher percentage of sales from North America in the first quarter. North American sales were 60% as compared to 55% last year, reflecting weak electronic assembly markets which are essentially Asian and European. This change in revenue mix impacted our quarterly tax rate, which I'll discuss later.

First quarter net interest expense was $22.4 million, down about $1 million from last year, reflecting lower commercial paper costs and a favorable investment mix. We continue to have good access to the commercial paper market and our outstanding CP balance at quarter end was $112 million. Our net debt to total capitalization was 24.8%, essentially flat with last year.

Turning to taxes, our first quarter rate for continuing operations was 35.1%, up 560 basis points from last year, reflecting an adverse change in the mix of domestic and foreign earnings. We do expect the rate to moderate as the year unfolds, with discrete quarterly events potentially causing some significant variability. Overall, we believe our mix of U.S. to foreign earnings will be greater than originally anticipated. As a result, we expect our full year tax rate to be in the range of 29% to 30%.

Corporate expenses for the first quarter were $24.7 million, a $5.3 million reduction from last year although slightly higher than our estimated run rate for the full year. We are consciously accelerating our supply chain initiatives and anticipate full year corporate expenses to be roughly $20 million less than last year.

With that I'd like to turn this call back over to Bob Livingston, who will update you on our key initiatives.

Robert A. Livingston

Thank you, Rob.

As we mentioned during our last earnings call, we came into the first quarter fully expecting a challenging business environment. Unfortunately, it was more difficult than expected. We saw unprecedented drops in demand in all geographies and in most end markets.

During the year end call we committed to maintain strong operating margins and cash flow. Based on our original forecast, we expected to incur $20 million in first quarter restructuring charges and $40 million for the entire year to right size our businesses.

Our business leaders quickly realized the true dimension of the demand decline and reacted aggressively. Their actions resulted in $35 million of first quarter restructuring charges, with $73 million now planned for the entire year.

Even after significant restructuring charges, we ended the first quarter with an operating margin of 10.2%. Our aggressive cost cutting now puts us on a good path to deliver solid double-digit margins for the full year.

Before I provide some details on our restructuring I'd like to update you on three important initiatives - synergy capture, our global supply chain, and our corporate development review.

Synergy. As a reminder, in late 2007 we committed to $40 to $60 million of earnings improvement in the '08 - '09 timeframe from leverage and synergy initiatives. Last quarter we reported that we exceeded the low end of our two-year goal in year one and improved earnings $0.15 in 2008. We also stated that through additional programs we would be able to generate another $0.10 to $0.13 of EPS improvement in 2009. For the first quarter, all synergistic activities, including business integrations, resulted in $0.04 EPS benefit net of cost. We believe our synergy and business integration activities will end up at the high end of our $0.10 to $0.13 range.

I also want to update you on our global procurement initiative. This was designed to take a holistic view of Dover's global procurement and spending patterns and best supply chain practices. This initiative is estimated to save between $75 and $100 million in the 2010 to 2011 timeframe.

We have completed the analysis and prioritization phase and have launched several projects to leverage our procurement and sourcing activities. We are now building the infrastructure to support it and have named Jim Moyle as Dover's first Vice President of Global Sourcing and Supply Chain. Jim was formerly the CFO of our Fluid Management segment. His mission is to lead the effort to strategically source and leverage a significant amount of our aggregate spend. We have scheduled our first preferred global supplier conference in May.

With respect to our corporate development review, the executive management team, with some outside expertise, has been analyzing our existing businesses and market spaces across a framework of measures including long-term profitability, acquisition opportunities and competitive position. This work is progressing well. It is guiding our current acquisition interest, and we intend to share results of this review at our fall investor day.

While we are encouraged by the pace and progress of these initiatives, we realize we must remain focused on the current business climate. Accordingly, market dynamics caused us to take significant restructuring charges in the first quarter.

In the first quarter we incurred restructuring costs of $35 million that yielded first quarter savings of approximately $12 million. Roughly half of the first quarter restructuring costs were absorbed in Electronic Technologies. We reduced our work force by 12%. We closed 12 manufacturing facilities. For the full year 2009 our capacity rationalization efforts and work force reduction of 15% is expected to result in a $73 million restructuring charge. The anticipated full year 2009 benefit of these actions will be approximately $125 million.

In summary, our restructuring activities over 2008 and 2009 will cost about $100 million, with an associated net work force reduction of 20%. These actions have yielded $32 million of cost reductions in the first quarter of 2009 and will yield another $180 million during the balance of the year.

In conclusion, our key business improvement initiatives, including synergy capture and global procurement, will allow us to leverage our restructuring efforts when the market rebounds and our corporate development review will improve the focus of our capital allocation process.

Unfortunately, we don't see the market rebounding quickly. While we are modestly encouraged by recent order trends, we are hesitant to project a meaningful recovery for the balance of 2009. The global recession has been more severe than we originally anticipated, especially in electronic assembly equipment and infrastructure-related markets.

At the beginning of the year we forecasted an 11% to 13% decline in revenue for the full year. Based on our most recent analysis we now forecast an 18% to 20% decrease in revenue for the full year. We expect Electronic Technologies and Industrial Products to experience revenue declines greater than our overall sales decline, Engineered Systems should outperform, and Fluid Management should perform at about the overall forecast level.

Based on our reduced revenue forecast, we now expect 2009 EPS to be in the range of $2 to $2.30. This guidance does not contemplate any acquisitions or additional share repurchases. It also assumes a 29% to 30% tax rate for the whole year. From an earnings distribution standpoint, we still believe the first quarter will be the weakest due to normal seasonality and significant restructuring costs. We are committed to protect margins. If market conditions dictate additional restructuring is required, we will do so.

I am very encouraged by the way our leadership teams and company presidents have responded to the current business environment. They have shown leadership through voluntary compensation reductions and other cost-saving initiatives. They have been proactive, realistic and balanced on both short-term performance and long-term growth. They also remain focused on product innovation and superior customer service. I am proud of their determination to weather this economic storm.

Lastly, I want to sincerely thank all the Dover employees who have endured a very difficult start to 2009. Many have seen friends and coworkers leave the company and some have experienced reduced compensation through furlough programs and other initiatives. Through all these challenges they have worked tirelessly and delivered results. I'm confident their dedication will pay off as we emerge from this recession.

With that I'll turn it back to Paul for questions.

Paul E. Goldberg

Thanks, Bob.

At this point I'd first like to remind you that if you can limit your questions to one with one follow up, we'll get everybody's questions in.

And at this point, [Kelly], if you can compile the questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from Nigel Coe - Deutsche Bank Securities.

Nigel Coe - Deutsche Bank Securities

A question on margins. I thought the underlying margin performance was very, very good during the quarter. Anything you think about in terms of sustainability of that kind of margin performance? You know, [DEC MEM] was about 18% overall if you take out restructuring. Anything we need to think about in terms of whether that run rate sustains?

Robert A. Livingston

Well, we believe it is sustainable and we actually believe our margin performance will improve slightly during the year.

Nigel Coe - Deutsche Bank Securities

What about pricing during the quarter? We didn't talk about pricing. What sort of trend do you see there, specifically within your energy businesses?

Robert A. Livingston

Price management overall for Dover has received a fair amount of attention, increased attention, over the last couple of years. That attention and focus has, I would say, been even a bit more at the forefront in the fourth quarter and during the first quarter. We are seeing some moderate price pressure around Dover. Input costs have been coming down for the last few months.

Within the energy group specifically, the price pressure has probably been a little bit more severe than in other parts of our business, but Nigel, take a look back at the margins that we have posted here for Fluid Management in the first quarter. I think we're doing a very good job of managing both the price and our output cost delta.

Robert G. Kuhbach

Nigel, I would add one comment. I would say in general in the industrial space, not just Dover but I think most industrial companies, recognize in this climate of severe economic downturn that for most of them they're willing to accept a lower volume, lower revenue levels and maintaining margin rather than thinking of pricing as a weapon to engage in higher sales levels or maintaining sales levels.

So in general I think the pricing environment we have experienced, while it's still challenging, has been somewhat more encouraging from the standpoint that there are not as many people out there who think that they can slash price and maintain share or maintain sales levels.

Nigel Coe - Deutsche Bank Securities

So just to recap, price inflation was positive during the quarter. And does that stay positive for the rest of the year?

Robert A. Livingston

I think the focus has been on maintaining our margins and the delta between input costs and pricing. That delta remained positive in the first quarter. We expect that delta to remain positive for the first half.

Our plans right now show the second half to be neutral on that delta. We do expect to see some continued price pressure through the year.


Your next question comes from Stephen Tusa - J.P. Morgan.

Stephen Tusa - J.P. Morgan

Just on sticking with energy a bit, you talked last quarter about kind of a range of margins in, I guess, mid-teens to mid-20s; pretty good margin performance this quarter. Any kind of recalibration of what you would think to see out of this business through the cycle? I mean, are we going to be at above 20 now through this energy cycle?

Robert A. Livingston

I think the response at the end of the fourth quarter with respect to margins wasn't so much about energy. We were responding to the margin expectations on the segment, on the Fluid Management segment.

Stephen Tusa - J.P. Morgan

I guess you can just talk about that and that's fine if you just want to talk about.

Robert A. Livingston

We still expect margins for the Fluid Management segment to be as we guided in the first quarter, somewhere around the 19% to 20% range.

Stephen Tusa - J.P. Morgan

And then through the cycle, is the cost structure of this business and the dynamics you're seeing out there in the marketplace such that you're going to maintain this kind of level even if we continue to see depressed activity through the end of this year and the next year?

Robert A. Livingston

Well, I'm going to respond to our outlook for 2009 and take a pass on 2010 right now.

Our first quarter margins for the Fluid Management segment were 21% plus a little bit. Again, we're giving you some input that our margin outlook for that segment for the year is in the 19% to 20% range, so we do expect some margin degradation as we move through the year. Most of that margin degradation is going to be felt at the energy platform.


Your next question comes from Scott Davis - Morgan Stanley.

Scott Davis - Morgan Stanley

I wanted to talk a little bit - you have $3.3 billion of goodwill on your balance sheet; is there any risk of an impairment? Particularly I think about Paladin here.

Robert G. Kuhbach

No, we've been quite thorough, Scott, in reviewing that. As you know, we're required to do it fully once a year. We've actually been doing that every quarter and we're very comfortable that the amount of goodwill we're carrying on our books is sustainable by the business environment that we currently have.

Scott Davis - Morgan Stanley

And when you think about - a couple of small questions here - but when you think about the share repurchase versus acquisition question now, a little bit of a challenging one because there's probably some cheap acquisitions out there, I notice you have about $500 million of cash on the balance sheet. When do you kind of throw in the towel on acquisitions if you can't close something and instead start buying back stock?

Paul E. Goldberg

Well, we're not ready to throw in the towel yet, that's for sure. We do have a lot of - well, I wouldn't say a lot, but we do have more than one attractive acquisition in our pipeline and we do believe we're going to be able to close on a couple of things this year.

But what we do do is reassess it every quarter and as we get further in the year and cash continues to pile up and for whatever unforeseen reason we have not closed an acquisition, we would be more likely to do a share repurchase.

But at this point right now, I don't think it's likely based on what's in our pipeline.


Your next question comes from Shannon O'Callaghan - Barclays Capital.

Shannon O'Callaghan - Barclays Capital

In Electronic Technologies the backlog was up sequentially, book-to-bill improved. You're still talking cautiously about 2Q, but what do you make of that incrementally positive trend in terms of the end of destocking or how encouraged are you by it?

Robert A. Livingston

Well, with respect to Electronic Technologies, the distributor or customer destocking was not really an issue within Electronic Technologies. The real issue in Electronic Technologies in the electronic assembly equipment companies has just been their customers are just not adding capacity and are not spending.

If you look at the trends during the quarter, we were pretty shocked by how low our order rates were with those three companies in January. February was a little bit better, but not much. March order activity was significantly better.

And I think if you look at the details within Electronic Technologies, I believe that most of the backlog increase during the quarter was actually the result of increased order rates at Knowles.

Shannon O'Callaghan - Barclays Capital

And then what about in product ID and Hill PHOENIX, in that segment you had some improvement in the book-to-bill. You mentioned, I think it was product ID, you said, order rates improved at the end of the quarter. Can you just give a sense of why you think Hill PHOENIX is holding up and what you make of the improvement at the end of the quarter in product ID?

Robert A. Livingston

All right, well let me speak to product ID first. I think we commented on this on the January call. Frankly, we were pretty surprised at the drop in order rates somewhat in November, but especially in December. And that decline, that softness in order rates in December, continued into January. A little bit of an improvement in February. Relative to January, a significant improvement in March, in fact, March order rates were probably closer to what we were experiencing in late October/November timeframe.

So here is a situation where we do believe there was significant destocking, especially of consumables, by both the distributors and some end customers. That appears to have passed in the December, January and February timeframe, so we believe that we have some sustainable business performance activity now within product ID.

Hill PHOENIX, we came into the year expecting a pretty solid performance from Hill PHOENIX not only in the first quarter but for the year. We've had a good mix of business in the first quarter. We've had some great productivity improvements that were benefiting here in the first quarter from some actions that were taken in the second half of last year. And remodel activity here in North America with the grocery stores continues to be pretty healthy.

Shannon O'Callaghan - Barclays Capital

It looks like you're probably gaining some share there, too.

Robert A. Livingston

Can't confirm that rate at this moment.

Robert G. Kuhbach

Hill PHOENIX had probably their best booking month in March for the last 18 months, so they actually showed some nice uptick.


(Operator Instructions) Your next question comes from John Inch - BAS-ML.

John Inch - BAS-ML

I'm trying to parse the moving parts here. It looks as if you think on a net basis restructuring is going to add another $0.18 for the year, yet you're taking the guide down pretty substantially, 26% at the midpoint. You gave the guide at the end of January and you say in your release that order rates are more severe on the downside than you anticipated, yet your call is sprinkled with all of this discussion of things improving. I guess I don't really understand what exactly since the end of January got better or worse since your expectations and what ultimately is the crux of why the guide is so much lower versus really only the end of January?

Robert A. Livingston

Let's start with the revenue guidance. The order rate decline in the first quarter was significantly lower - significantly greater - than we were expecting coming into the year. We believe that as we exited the quarter we were at the bottom or a slight recovery from the bottom in most of our end markets, with two notable exceptions, those two being the energy business and our infrastructure business, which for us is primarily in the material handling platform of Industrial Products. I think the continuing order declines that we would expect from the energy businesses and activity and the infrastructure activity is weighing a bit heavily on the guidance we're giving for the year on revenue.

John Inch - BAS-ML

Okay, so it's energy and infrastructure. Then I guess, Bob, as you think about the year - and I think you mentioned even the seasonally weak first quarter; I'm just looking historically, it looks like the first quarter's kind of 20% to 22% of the year - you annualize $0.33, that's $1.65, maybe add $0.20 for net restructuring. I still don't see how do you - what are you assuming gets significantly better to get to over $2 for the year versus something that's closer to $1.80?

Robert G. Kuhbach

I think we expect some improvement in the Engineered Systems space. I think we have some caution in the Fluid Management segment, particularly in energy. And I think Industrial Products and Electronic Technologies are more problematic.

So we do see some improvement directionally as the second quarter unfolds, more in the Engineered Systems space and we think Fluid Management will hold up. The two question mark areas in our minds are still when is Industrial Products, particularly in material handling, going to show some improvement, and Electronic Technologies we think is pretty much near the bottom of its space, so it's a little hard for us to get a lot of visibility given the order rate decline.


(Operator Instructions)

Paul E. Goldberg

If there are no more questions, we appreciate you listening to us this morning and we look forward to speaking to you next quarter and delivering our second quarter results.

Thanks again and certainly if anybody has any follow up questions they can call me after this call. Thanks.


Thank you. That concludes today's first quarter 2009 Dover Corporation earnings conference call. You may now disconnect your lines at this time and have a wonderful day.

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