Dover Earnings Call INSIGHTS: Strong Book to Bill, Outlook Change for Comm Tech
Strong Book to Bill
Scott Davis – Barclays Capital: Guys, I know this is kind of a tough question to answer I’m guessing, but when you look at Comm Tech and your book to bill 1.06, how do you see that kind of – and I’m guessing that’s a little bit better than you thought it would be for the quarter; but when you think about 3Q, does this seem like something that ramps up and continues to improve from here and to what magnitude do you think?
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Robert A. Livingston – President and CEO: The driver in the second half is going to be very similar to what we saw driving the strong book to bill in the second quarter and is going to be around our handset business both Knowles and Sound Solutions. Maybe Brad has the number. I can’t recall what the book to bill is in the second half for our handset business, Scott, but I know it’s very positive.
Scott Davis – Barclays Capital: When you think about Sound Solutions, I mean have we bottomed here? I mean at what point, do you call out it fixed I guess or how close are we to that?
Robert A. Livingston – President and CEO: Well, I’m not going to label it fixed until we’re performing like we expected this business to perform at the time of the acquisition. I think the – you’re going to see some trends here in the second half of the year with a much stronger fourth quarter than third quarter. It is going to accelerate during the second half. Brad can probably correctly me here on my answer, but I think sequentially as we look at Sound Solutions coming out of the second quarter, the revenue expectations in the third quarter are up about 20% to 25% and another sequential improvement in revenue in the fourth quarter of additional 20% to 25%, and Scott I think by the time we get to the end of the third quarter and the fourth quarter, we’re going to start to see the operating margins of this business set the base for what we’ll expect in 2013, which I think will be very reflective of the business performance on this business that we expected when we made the acquisition. So, you asked a very important question, have we seen the trough? I think we have.
Outlook Change for Comm Tech
Robert McCarthy – Robert W. Baird: So I’m just a little bit confused about the components of the change in outlook at Communication Technologies, the 11 to 13, it goes down to 7 to 8. How much of that is a function of more adverse currency translation and how much of that is the change in the actual organic outlook?
Robert A. Livingston – President and CEO: So I would say the – and you’re talking about Comm Tech in particular, very negligible, a very small impact on currency in that particular segment. Our segments on currency that get impacted the most are DES and DPI on foreign currency. The whole move down on DCT is really related to Sound Solutions.
Robert McCarthy – Robert W. Baird: Okay. As opposed to in terms of its organic contribution second half of the year.
Robert A. Livingston – President and CEO: Yeah exactly because as you know when we turn the first year of ownership, we put it into organic, so we’re seeing now off our last forecasted decline in Sound Solutions of approximately let’s say $80 million in the second half, sales loss. And the way to think about that we’ve been chasing Nokia and RIM down the whole year. A big share of that, over 50% of that revised forecast is due to continue what we call these OEM share shifts where we’re seeing losses of volume – continued losses of volume in Nokia and RIM and some other smaller handset providers, and then again the other piece of that is really timing related to how we see the launch coming now as we are in launch phase and how we see that launch progressing from the third quarter into the fourth.
Robert McCarthy – Robert W. Baird: Then in terms of the actual blocking and tackling, my recollection is that you expected to bring two of the new lines up in the quarter and it would leave you one more to do in the third. Do I have that right and are we still on that track and is there any change in progress just in terms of executing the transition of manufacturing?
Robert A. Livingston – President and CEO: I would label the second quarter as being successful at Sound Solutions with respect to our automation projects. By the time – it actually may be signed off today, Rob. By the time we close the month of July, we will have five of our new lines not just turned over to manufacturing but signed off on by our customers. And very positive with the progress we made in the second quarter on that activity.
Robert McCarthy – Robert W. Baird: Then I guess I can follow-up, just quickly in terms of Printing & ID, I think I got the message that your outlook in fast moving consumer goods is essentially unchanged. A quarter ago you were talking about expectations for high single digit growth there, excepting any impact from currency. Has that changed in any material way?
Robert A. Livingston – President and CEO: My answer is no. Brad may have something more definitive, but the impact you’re seeing is primarily FX.
Brad M. Cerepak – SVP and CFO: And the shortfall is concentrated in the electronics sector. I understood that. I just want to make sure that your outlook for basic fast moving consumer good was essentially unchanged.
Robert A. Livingston – President and CEO: Essentially unchanged.