DOV
#Hi, Shannon.
About $25 million.
I think it's going to be dependent upon energy trends.
I think we are ---+ there may be a pocket here or a customer somewhere who still has some inventory that they want to burn off but I would tell you that the destocking of inventory we think is essentially done.
We saw a little bit of that in the third quarter.
We expected a little bit of that to continue in the third quarter, we did see that, but I think that's behind us.
I think, again, the best leading indicator that we have been sharing with you here for near-term activity in our energy business is the rig count.
And you see that almost as quickly as we do.
(laughter)
If rig counts ---+ if we continue to get pressured in our energy fundamentals, we still believe we've got opportunities to take some cost out.
Though, Shannon, I am going to be real direct here.
It becomes more difficult as we go into 2016.
But it will become ---+ in 2016, it will truly become a trade-offs being lowering cost and maintaining what we would define as appropriate service levels.
But we do know we've got additional opportunities to tackle in 2016 if need be.
I am not so sure I would agree with the other part of your statement that the bulk of our opportunities in 2016 are still within energy, <UNK>.
I think we do expect our restructuring activity to be less in 2016 than they were in 2015.
But the discussions we are having across the board, we have restructuring opportunities that we have identified, some of which we'll tackle here in the fourth quarter, some of which are lined up for the first half of next year, across all four segments.
Hi, Jeff.
I don't want to give you the individual customers, Jeff.
As we talk about share gains and business wins, I will tell you what's not included in that would be any change that we would expect to see next year with our customer that we have been talking about all year long, which is Walmart, any downward change.
But when you look at the business wins and the share gains that we have experienced and benefited from here in the second half of this year and look at the carryover into 2016, I would label them mostly regional retailers.
And we think we are going into 2016 with about $30 million worth of incremental business from wins that we have earned this year and partly have some of the revenue in the second half of this year.
But about $30 million of incremental business into 2016 for this ---+ for these new wins and share gains.
10% to 12%.
And almost all of the, I would call it the hit or the down cycle in oil and gas is restricted to some of the upstream oil and gas activity that our pumps business participates in.
As <UNK> said in his script or in his prepared comments, the down guide on fluids is principally oil and gas but it's not all oil and gas.
We are seeing some softness in Europe and China in fluids as well.
We'll see how the fourth quarter shakes up.
The third quarter concerned me a little bit in China.
If we were to pull out our project activity, which as most of you know can be lumpy from quarter to quarter, if we pulled out our project activity from both the third quarter of 2015 and third quarter of 2014, revenue was down in China double digits in the third quarter.
Not expecting it to be down as much in the fourth quarter.
In fact, October and September are telling us it won't be, but I am still being pretty cautious with respect to expectations in China here in the fourth quarter.
Our business is down almost 15% in the third quarter in China.
Well, we have ---+ I am not so sure I've got exact numbers that I can recall for the Middle East.
I know we have ---+ goodness, more than ---+ we're participating in more than 50 tenders right now in the Middle East and Southeast Asia, as well as South America.
Jeff, three years ago the number would have been eight.
The change has been that significant for us.
And I would say more than half, probably two-thirds of these tenders, I would describe as Middle East opportunities.
And the area that has been the most significant for us in the Middle East over the last three years has been our base of activity in Oman and then the areas in the Middle East that we service from our base in Oman and that continues to be quite attractive both here in the second half as well as expectations for 2016 and 2017.
Good morning, <UNK>.
I will start but <UNK> is going to have to help me here.
As I look at it, <UNK>, I call it some of the self-help going into 2016.
I have already commented that our restructuring charges in 2016 should be less than we have incurred in 2015 and 2014.
I'm not going to give you that number until we finish some work, but I think we'll be prepared to share that delta with our investors and the analysts at our dinner in December.
But on the restructuring activities that we have executed on in 2015, I think the carryover that we are looking at is about $50 million, <UNK>.
That's correct.
I'll give you some color on that to help you with your modeling.
The energy margins for the year is going to be a little bit better than 12% and this is all in.
Restructuring, this is not adjusted.
This is all in.
A little better than 12%.
I think one of the earlier questions was about the decline in revenue in the fourth quarter.
In energy, it's about $25 million.
Our margins in the third quarter all in were 13.5%, and we'll be about 100 bps below that in the fourth quarter.
No, there wouldn't be anything unusual to call out.
Good morning, Dean.
For the two deals that, as I said, the two deals we expect to close this year, there would be no financing related to that.
It would be cash on hand and cash flow in the fourth quarter.
And just to reiterate, on the Tokheim deal, depending on where we close next year, what we said would be $300 million to $400 million in financing, most likely I view that as using CP.
In 2016.
I would say the run rate, as you know in earlier quarters, we talked about this current year has impacted our compensation accrual, so I would expect to see some of that come back across that corporate number into next year.
So no, I would expect it to go up slightly.
Good morning, <UNK>.
I am not giving guidance on 2016 yet, <UNK>, so you're going to have to ---+ I'm going to preface my comment by saying we're still doing a lot of work on that.
But I will tell you, at sort of the high-level assumptions we are making is that the next couple of quarters are probably going to be pretty reflective of what we're seeing here as we end the third quarter and move into the fourth quarter.
I would label that as stability but at a much lower investment rate and spend rate with our customers.
It's a little bit more difficult to call right now the second half of next year.
We'll give you a little bit more color on that at our dinner in December.
But for the first half of next year, it is without any doubt, we are not planning for any recovery beyond our current run rate in the energy market.
But I would also say we are not expecting or planning for another 10% down, either.
Your second question was around pricing.
I would tell you that I'm not sure pricing was going to be much different.
I think as we go into 2016, we would continue to see some pricing pressure, especially in the first half of 2016.
I am not sure our guide would be much different than we were providing at the beginning of the year for the energy segment in total.
Maybe a 3% price down pressure.
And again, you're going to see it scattered around different product lines and regions where some price pressure will be greater than others.
Now, I am going to preface this ---+ my response again by telling you, give us the opportunity to spend some more time on this between now and our investor dinner in December.
I think this time allows us to come to grips with a little bit of what we are going to be expecting and planning for in the second half.
Now, to your question about margin expansion.
As we sit here today, we actually see the opportunity in all four of our segments to see margin expansion.
It will be varied.
But I think that we can in our core business, if you exclude the acquisition activity and aside from JK, the other two acquisitions we have announced do bring with them much lower margins than what we have as a Dover average.
But in our core business for Dover, we do clearly see the opportunity for margin expansion in 2016.
Do you want to add any color to that, <UNK>.
The only thing I would add is it gets back to what we were talking about before.
We would expect sitting here today, not as much restructuring spend; that's part of that answer.
And the carryover benefits obviously are quite significant going into next year at $50 million.
So that gives us some jumpstart into that discussion of margin expansion into 2016.
And on top of that, we are anticipating and planning and identifying significant benefits from productivity in 2016.
Yes, it was a Dover number.
<UNK>, I'm going to have to ---+ I would be guessing because I don't have good recall on what the down cycle was in China by each segment.
It was evident at each segment.
That I can tell you, but I don't have the numbers and a good recall for each segment.
Fluids and printing and ID.
And it's actually not insignificant for refrigeration, either.
I would characterize it more like a one-off for this year, and probably reverting back to the slightly below 30% rate, that 29% rate for 2016.
Good morning.
I don't like the word weapon because ---+ (laughter).
We'll use it as a strategic opportunity to better service our customers.
(laughter) Absolutely.
I will underscore how important that question is on this JK acquisition.
Oh, my goodness.
So, let's see.
How do I want to tackle that one, <UNK>.
Help me with a response here between manufacturing, manufacturing cost, and SG&A.
So for manufacturing cost, our restructuring activity, I think we are at a run rate now, an annualized run rate of $90 million or $94 million, am I right with that number.
$92 million across all segments.
And a significant chunk of that was not recognized for the entire year.
We have about $45 million of that that is a carryover into 2016.
And then below the line, below the gross margin line, we have taken out, goodness, is it close to $50 million in SG&A.
$35 million in SG&A of which we would label about 18% to 20% of that as permanent.
It's that permanent part of SG&A that I add to the carryover from the manufacturing cost of about $40 million that gets me to the round number of about $50 million of benefits that we'll see in 2016 as we see these projects complete the annual cycle.
Thanks, Lori.
This concludes our conference call.
We were very happy to speak to you this morning and personally thank you for the one question and one follow-up.
We got a lot more questions than we normally would.
With that, we would like to thank you for your continued interest in Dover, and we look forward to speaking to you at our next earnings call.
Have a good day.
Thank you.
