Good morning and welcome to the Fourth Quarter 2014 Dover 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. After the speakers’ opening remarks, there will be a question-and-answer period. [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, Maria. Good morning and welcome to Dover’s fourth quarter earnings call. Today’s call will begin with some comments from Bob and Brad on Dover’s fourth quarter and full-year operating and financial performance, and will follow with an update of our 2015 outlook. We will then open the call up for questions. As a courtesy, 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, www.dovercorporation.com. This call will be available for playback through January 30 and the audio portion of this call will be archived on our website for 3 months. The replay telephone number is 800-585-8367. When accessing the playback, you’ll need to supply the following access code, 60883381. 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 uncertainties. We caution everyone to be guided in their analysis of Dover 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 statements. Also, we 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 the call over to Bob.

Thanks Paul. Good morning everyone and thank you for joining us for this morning’s conference call. We finish the year with a very strong fourth quarter, achieving solid revenue growth and earnings growth that exceeded expectations. We saw robust topline growth at each segment, led by Energy and Fluids, results again overall growth of 11%, including organic growth of 6%. We also achieved solid volume leverage as three of our four segments improved margin excluding restructuring cost. From a geographic perspective, we saw solid growth in the U.S., Europe and Asia, whereas Latin America continued to be weak. Now let me share some specific comments on the quarter. In Energy, revenue growth was strong as U.S. drilling and production customer activity was as expected. Our recent acquisition accelerated, exceeded our expectations, and the automation and bearings and compression markets were solid. In Engineered Systems, we achieved solid growth across both platforms. Within Printing & Identification, our recent MS acquisition continued to perform well and more than offset European softness in our core printing and coating markets. The Industrial platform achieved strong broad-based growth led by outstanding results in our auto related and waste handling businesses. Our Fluid segment once again performed well. We are continuing robust market conditions for Fluid Transfer products and improved pump markets resulted in organic growth of 9%. Refrigeration and Food Equipment generated very strong revenue growth of 8%, were strong refrigeration performance was supported by shipments of quarter three push-outs. Since the end of the third quarter, we have taken actions to strengthen and position our company for 2015 with a focus on our portfolio and cost reduction. We made a decision to divest Datamax O'Neil and Sargent, which now have been reported as discontinued operations. While both are strong companies, these actions increased our…

Thanks Bob. Good morning everyone. Let’s start on Slide 3 of our presentation deck. Today, we reported fourth quarter revenue of $2 billion, an increase of 11%. Organic revenue grew 6% and growth from acquisitions was 7% offset by 2% of FX. Adjusted EPS was $1.01, excluding this free tax benefits. This result includes $0.17 of restructuring and other costs. Segment margin for the quarter was 14.8%, 210 basis points below last year. Adjusting for restructuring and normal acquisition purchase accounting cost, our overall margin was 17.3%. Bookings increased 4% over the prior year to $1.9 billion, led by Energy and Engineered Systems. Overall book-to-bill finished at 0.95. Our backlog was essentially flat at $1.2 billion. Free cash flow was $390 million for the quarter. For the full year, we generated free cash flow of $787 million, 10% of revenue or a 100% conversion of net income. Now turning to Slide 4. All segments grew organically in the quarter. Fluids grew 9% benefiting from solid fluid transfer and pump markets. Refrigeration and Food Equipment driven in part by shipments of Q3 push-outs grew 8%. Engineered Systems grew 5%, with strong growth in the industrial platform. Energy was up 1%. Acquisition growth in the quarter was 7% comprised of 20% in Energy, whereas Engineered Systems grew 4% and Fluids increased 3%. Turning to Slide 5 in our sequential results. Revenue decreased 2% from the third quarter primarily reflecting normal seasonality. Overall Energy grew 8%, while Fluids increased 4%. Engineered Systems was down 3%, while Refrigeration and Food Equipment declined 13%. Sequential bookings decreased 3%, principally reflecting anticipated lower orders in refrigeration and the timing of orders in food equipment. In all, Engineered Systems grew 5% and Energy increased 2% on the strength of acquisitions. Fluids declined 2% and Refrigeration and Food…

Thanks Brad. Overall, I am pleased with our fourth quarter and full year performance. We grew revenue 8% and delivered 10% EPS growth. We focused on lean and productivity initiatives across the organization and in the fourth quarter, restructured many of our businesses to be better positioned for continued growth and margin expansion. In 2015, we will continue to execute a strategy that has served us well. This includes investing in geographic expansion, product innovation and providing solutions that increase our customer’s cash flow and reduce their cost through productivity. Across all four segments our business leaders are focused on executing these initiatives and I’m confident we’ll deliver a solid 2015. We remain focused on growth. With that, I’d like to thank our entire Dover team for their continued focused on serving our customers and driving results. Now Paul, let’s take some questions.

Thanks Bob. At this point, I would like to remind all the callers that we have a lot of people in queue. So if you can limit yourself to one question with a follow-up, we’ll be able take a lot more questions. And with that Maria if we can have the first question.

Our first question comes from the line of Scott Davis of Barclays.

Hi, good morning guys.

Good morning.

Good morning Scott.

Can you give us a sense of how much you’ve stress tested this new forecast in drilling and production negative 17 and negative 19 core growth? And just give us a sense of how you came to that number, was that based on bookings or bottoms up from your customers? Just a little bit more granularity there will be helpful.

Okay, gosh Scott I can’t tell you how many different models we’ve run with respect to the drilling and production activity for 2015. So how was this number - how do we provide this number, what are the underlying assumptions and the work we’ve done? Yes it does reflect a lot of conversations with our customers over the last few weeks. I would tell you that one of the data points that everyone does look at and continue to track is rig count deployment. And this range we provide for 2015 assumes a rig count decrease year-over-year average of 25% to 30%.

Okay. That seems fair.

I will also tell you that we will - we do expect to see a little bit of the anticipated decline show up in their first quarter, but Scott this is going to be a modest impact in their quarter. We do expect the second and third quarters to bear the brunt of this downturn. We do expect the rig count declined to be rather steep and reflective of what we’re seeing here in the last few weeks.

Yes makes sense. And you gave a number of $300 million revenue hit, I mean, I know this is hard to do, but given all the restructuring and the cost out, do you plan to do - I mean, what kind of a drop through to profits, do you see that?

Well okay let’s say - what are - repeat that question.

So if you take that $300 million…

So if you take $300 million…

What’s the decremental margin?

Yes.

Well, I mean if I just look at, okay so the way we’re thinking about that and the way we forecasted is that 300 net of. The benefits we see in 2015 of restructuring offset by some costs, as we talked about, would drop to at about 30%.

Okay.

So that’s basically what we’re assuming, Scott.

Okay, fair enough. And just last and I’ll past it on. Can you just update us on close-the-case, it didn’t seem all that encouraging the comments you made on Refrigeration and Food Equipment with the book-to-bill that. Is close-the-case something that still is a legitimate or is it getting pushed out?

No, close-the-case is continuing to perform quite well. You’re referring to the bookings number in the fourth quarter.

Yes, down 8%.

Yeah. First of, I would tell you that I think Brad commented on this in his prepared remarks, part of that loop is the timing of orders in our Food Equipment platform. We’ve got one business and the food equipment group that does have very choppy order rates. It’s very much of a project business that’s Belvac. And I think that almost half of that 20% or 18% year-over-year decline is just associated to the timing of orders at Belvac. And there is nothing wrong with the Belvac business. It will continue to perform quite well with just timing of orders. With respect to Hill Phoenix; Scott, I would tell you that we had another record year in revenue at Hill Phoenix. I think they had a 2% or 3% organic growth in 2014. We had a year where book-to-bill again was 1.0% for Hill Phoenix like it was in 2013, but you see between the two years, a very, very different waterfall of quarterly order rates at Hill Phoenix. And part of what you see in the fourth quarter is an anticipated product mix change. I call it a slight product mix change as we go into 2015. And we will expect in 2015 a little bit higher waiting in our business mix towards doors, doors with - our cases with doors and a little bit of a reduced waiting on systems. And part of that is showing up in the fourth quarter order rates. System orders tend to show up anywhere from one to three months before orders per cases do and where the fourth quarter order rates reflect that and it was anticipated.

Okay. That’s for that granularity guys. Good presentation. Thank you and good luck.

Thanks.

Our next question comes from the line of Deane Dray of RBC Capital Markets.

Thank you. Good morning everyone.

Hi, Deane.

Good morning.

I don’t want to sound like Monday morning quarter backing, but I recall in the December…

Excuse me.

I know [Multiple Speakers]. But if we go back to the December outlook meeting when you announced the restructuring, I think most people, my self included, were surprised that you weren’t doing more restructuring on the Energy piece, which everyone knew was in the middle of this downturn and actually early stages, most of the restructuring was in Refrigeration. So now, we’re seeing restructuring actions. Are you behind the curve in this? And the decrementals of 30% kind of means would suggest that you’re right on pace with where you should be. So maybe you just reconcile expectations on the pace of restructuring for starters.

Okay, I would - everything being equal, maybe we could have done a little bit more in the fourth quarter. And yes, I would even label that as a little bit of Monday morning quarter backing with respect to my comment. Don’t lose side effect that as went through the fourth quarter, Scott, we were - Deane, we were still in a growth mode within this Energy segment. And a lot of the costs we’re taking out are variable cost related to being able to serve the customer with respect to shipments. It was a bit difficult to take more cost, especially variable cost out in the fourth quarter when we were still expanding our U.S. production rates here to satisfy customers. We are responding, I think, fairly aggressively here in the early part of the first quarter. I think between the actions that we took in the fourth quarter and the actions that we’re pulling the trigger on here in the first quarter, those actions will generate annualized benefits for our Energy segment in the range of $55 million to $60 million, is that the right number, Brad?

That’s right.

And I think we’ll end up picking up about $45 million to $50 million of that in 2015 or might a bit high on that.

That’s what the forecast shows.

And Deane all I can tell you is that we have - we continue to model and look at different scenarios as we have opportunities or as we think the market activity would dictate. We’re going to take cost out, especially related to U.S. production and drilling activity. But I would also point out, these guys have - are also dealing with an initiative from need [ph] on growth. We are continuing to expand our activity outside of the U.S. We’re continuing to spend a fair amount of money on product development and product innovation. And you’ll see us continue to work the growth initiatives within automation and within Bearings & Compression. And I think those initiatives may even provide a little bit of upside to this segment in 2015.

So just as my follow-up let’s just stay right there, but if we could, may be just expand on your expectations for the growth in the international oil and gas and in the compression business, this degree of confidence, earnings visibility, length of contracts and so forth?

Well it’s probably the one that’s most fun to talk about, perhaps the easiest to talk about Deane, is the activity that we have been pushing, pursuing and growing over the last three years around our geographic expansion, especially around our artificial lift activity. We’ve been fairly successful with that over the last three years or four years, we continue to see an increasing number of tenders that we can participate in with each quarter as we go through this activity outside of the U.S. Upside activity or upside opportunities in 2015, you know will tell you that we have nothing in our revenue plan for 2015 on non-U.S. tender activity other than what’s in our backlog. And we do know that we’ve got opportunities in front of us on tender orders that will be awarded here in the first quarter and the second quarter and in the Middle East, notably Oman. And some activity and I call it broader Asia and there we’re looking at some interesting activity in India. But those tenders if we are successful and whatever impact they have on 2015 will be an upside for the segment.

Great, thank you.

Thank you.

Our next question comes from the line of Charlie Brady of BMO Capital Markets.

Hi thanks good morning guys.

Hi, Charlie.

Good morning.

Its just on the Refrigeration business, are you guys seeing - you’ve seen targets kind of pulling out of Canada, obviously the Walmart kind of roll out issues still going on, any change kind of in the target Walmart, Dollar Store kind of segmented as far as what they are doing on cap spending and how that’s impacting that segment?

You’re asking me to look back or look forward?

Look forward.

Look forward, fine. Well first of, I would tell you that, if we use 2015 as a - or 2014 as a reference point, our revenue activity with target my goodness in the second half of the year, Charlie, was probably less than $10 million. So even with the continued activity that’s going on at Target to - for them to sort of reposition their business that’s - even if it went to zero that’s not going to have much of an impact on our business and in 2015. Year-over-year and 2014 Wal-Mart and Target together, we probably saw a decline of approaching $30 million year-over-year 2014 over 2013. We do include in our forecast for 2015 another year-over-year decline on the combination of Wal-Mart and Target. I actually don’t remember the exact number, but I think it maybe even a little bit higher than the $30 million we had in 2014, but it’s not three times that size, but I think we do expect a decline. Where we are seeing the growth in this business is all of the other customers outside of these two. I think we ended up with 5% or 6% or 7% growth and all of the other customers within this refrigeration business in 2014 and we’re expecting something like that number again in 2015.

Okay. So simply sounds like when the larger sized retailers, almost a non-event and being well more than offset by companies outside that - those guys.

Correct.

Okay. Just one more follow-up just on the Energy business, the outlook, the revised outlook from acquisition growth which I guess this is all accelerated. It looks as though you’re forecasted that has accelerated down about 35% relative to what I guess their 2014 revenue is estimated to be on your bottom, is that about right?

Okay, I'm not sure I can do the quick math on the percent. I think maybe when we provided our initial outlook at Dover Day in early December; Brad, you’re going to have to help me here, but I think the revenue outlook for Accelerated may have been in the 240 to 250 range in my close.

Yes, that’s correct.

Okay. And for 2015 revised outlook, we’ve got it slightly below 200. Correct me if I'm wrong.

It’s a little bit lower than that, but that’s directionally right.

Okay.

And Charlie, I would tell you, I would love to sit here a year from now and tell you I was really conservative with that outlook. I will tell you that the Accelerated team outperformed in the fourth quarter. Goodness I think their revenue in the fourth quarter was about 15% higher than what we had modeled. I know, they are holding a quite well here in January, I was actually down to see the guys, I guess about a week ago or two weeks ago. And it just absolutely amazes me how many different opportunities they are finding to satisfy customers, to help customers with productivity and cash flow projects that we just don’t account for when in forecast when we put together our acquisition model. It is possible but this is one of our business units in 2015 that even if we’re right on nailing the rig count declined of 25% to 30% even with that, here is one business within our official book that get actually outperform our expectations.

That’s great, that’s very helpful. Thanks to the color on that.

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

Thank you, good morning everyone.

Hi, Joe.

Good morning.

Hi, so my first question, just going back to Energy for a minute. Clearly things have changed since early December when we met. But I’m just wondering, did you guys see significant deceleration in your order trends in December and then to start January, because right now, it looks like we’ve got orders are up 21%, but it was really based on the accelerated acquisition. So I’m just trying to really get a sense for the trends in your organic orders for the Energy business.

Hi, Brad may have details on some of the order trends, but are you asking - was the question sequentially from third quarter to fourth quarter?

And then into January, yes.

Organically and the fourth quarter - I don’t have the detail, I can’t even remember what the difference was in order rates between October and December. So I’m seeing here a little bit on comfortable trying to take a guess a direction. But there weren’t any surprises Joe and the order rates in the fourth quarter. As we move from the fourth quarter, as we move from December into January, one of the things that sort of seems to incur every single year though it’s always difficult to predict when we’ll deal with it, is a little bit of restocking with some customers especially around our drilling customers, drill bit customers and sometimes with our sucker rod customers. It is not unusual for us to see that little bit of, I call it, two to three week of inventory management period occur in the fourth quarter. It didn’t occur this year. What we did see was it occurring in the first two weeks of January. There was some choppiness in the order rates, both with our drill-bit customers in the first couple of weeks of January as well as with our sucker rod customers. We get beyond those first two weeks, what we call the restocking management activity and order rates have returned to the levels that we have expected here for the first quarter.

So it sounds like that changed your organic growth guidance for the drilling and production business is really driven by customer conversations on what you expect to come as opposed to what you’re actually seeing in your business today, is that a fair comment?

That’s a fair comment that I would like to strongly support. It’s the guide down from Dover Day on our Energy business is what we anticipate to see here in the second, third and fourth quarters that guide down is not reflective of the activity we’re seeing here in the early part of the first quarter.

Okay, it’s fair. And I guess the follow-on to that is really relating to the restructuring spend on the energy side of the business. It seems like you took that up by about $0.05 in the first quarter versus your initial expectations in the early part of December. I guess the question is how confident do you feel that you ring fence the issue or if you do start to see the order trends decline significantly as you anticipate as we progressed through the year. Can we presume that there is going to be more restructuring in Energy? I'm just trying to get my head around that.

Okay, so, I actually think that business teams and business leaders have been quite responsive. I would even say contrary or even though I may say here Monday morning quarter back as in earlier call or used the phrase, the guys have actually been quite proactive in taking cost out ahead of cost from a reduction in their activity. Is there more we can do if customer activity slips even deeper or even further from what we’ve planned? The answer is yes. And even we’ve got a fairly aggressive cost plan take out for their first quarter, if by the time we get into the March and April timeframe, if we believe then that the customer activity either being driven by even lower rig count deployment in 2015 beyond the 25% to 30% decline or for whatever reason we are fully prepared to take additional cost out and the trigger points have been identified.

Yes, I guess so, we’d only add to that reiterate what you said earlier Bob is that, while we’re taking a lot of cost out and we’re proactively I believe ahead of the curve of the downturn from rig counts and the commodity impact. One thing we’re - here’s what we’re not doing, we’re not backing off our investment or growth initiatives within Energy and I think Bob said that earlier, we continue to invest in innovation, in new product development, geo reach…

Across the board.

Across the board. And so that that’s what our forecast reflects.

Okay, thanks guys. I get back in queue.

[Operator Instructions] Our next question comes from the line of Shannon O’Callaghan of UBS. ShannonO’Callaghan: Good morning, guys.

Well, Shannon, welcome back. ShannonO’Callaghan: Thanks, Bob.

Good morning. ShannonO’Callaghan: I appreciate it. I missed all the fun. So in terms of the drilling and production decline of 17% and 19%, can you give us a split of the drilling versus the production piece and also within production what pieces that you expect to kind of hold that better than others.

Well, I left that book in my office, I wasn’t prepared to deal with that kind of detail. ShannonO’Callaghan: Take your shot.

Okay, so I would tell you that you’ll see a little bit of a steeper decline in revenue at our drilling business. And that shouldn’t be a surprise to anyone it was not a surprise us, we sort of solved that in the last downturn in 0.08 and 0.09. And they solved the sharpest decline, but also the quickest recovery, once we hit the turf. To a lesser degree, we say it in U.S., we used a phrase production, but I’m going to be more specific here in U.S. artificial lift applications, it will start later with artificial lift, then we’ll see with drilling activity. And it will not be uniform across our artificial lift product portfolio. I think you will see - I think we anticipate more of a decline in our rod business than we do our pump business. Simple, because a much, much higher percentage of our pump activity is after market and repair and service as apposed to new well completion. But I this session will give you actual percentages Shannon, I’d be guessing and then Paul would spend the rest of the day correcting my guesses. ShannonO’Callaghan: No, no, the - I just the dynamics.

Yeah. ShannonO’Callaghan: That’s helpful in terms of the different product lines. And then as you think about restructuring and sort of trying to defend margins in this downturn, you did it very successfully in the last downturn, is there anything different about the nature of the business now or nature of the downturn, or is it pretty much the same playbook, you feel like you have to execute?

Well, I would say we start with the same playbook. The business is little bit larger today, than it was in 2008 and 2009. And we’re a bit more geographic, we’re bit more geographic, than we were in 2008 and 2009. That said, I would say that the playbook in our drilling business is essentially the same today, as it was in 2009. Where you’ll see some differences will be in our artificial lift business and product portfolio, simply because, in 2008 the bulk of it was sucker rods and today it is probably 60% pumps and service activity and 40% sucker rods and I’m probably still being heavy on the rod business. But the playbook is very much the same, the guys know how to execute this, we know how to take care of our customer as we go through this downturn, we know how to time to take out a variable cost and we know how to time to take out of overhead and when it’s appropriate and we are trying to hold margins, that is one of the objectives. But don’t get hung up on that, thinking that that’s our primary objective, the primary objective it’s actually to take care of the customers. And to continue with our product development and innovation activity, the result of all of this is we do believe we’ll end up with margins within the Energy segment of about 20%. ShannonO’Callaghan: Okay, very helpful. Thanks Bob.

Our next question comes from the line of Julian Mitchell of Credit Suisse.

Hi, thanks.

Good morning, Julian.

Good morning, hi. Just firstly on the Energy, just talk a little bit about what price degradation you assume in the business this year. And also on automation you made very, very small adjustments organic growth a very large adjustment to the assumption for drilling and production. So why do you feel confident in the automation can hold up at around flat?

Okay, there is part of the automation product portfolio that actually deals with drilling and with some down-hole monitoring. We do anticipate a decline in that part of the automation portfolio, when you move beyond that specific product area in our automation portfolio, we actually don’t anticipate much of a decline in automation. In fact there is a lot of work going on internally right now within this segment and within that business to figure out how we actually grow automation beyond what we have in our guidance in 2015. And we think we’ve get some opportunities to do so, but to be quite transparent, there is part of that automation portfolio, I’m repeating myself, that is, that does have some down-hole applications. And our Bearings & Compression activity that we’ve got fairly aggressive growth plans as well as cost containment activity within both of those business as we grow it in 2015. And we don’t see those businesses being directly impacted by the drop in rig count in 2015. Price, we do have some modest price declines in our plan for 2015. When I say modest - but some of these discussions are still underway, so I would give the nod to the customer let us finish these discussions before I get too specific and responding to an open question like that. But I would tell you for planning purposes, we have low to mid single-digit price declines planned for some of the products and for some of the products nothing, no price declines. And I would say that the activity we’ve encountered here over the last few weeks with our customers gives us some confident that we’ve pegged that number correctly.

Thanks. And then just quickly on the Fluids, it’s hard from the outside to get a sense of the different end-markets in that. Any thing you’re seeing that sort of changed or is interesting versus what you said at Dover Day?

No, in fact I think I commented, made that comment as I had my prepared remarks within Fluids, within Engineered Systems and within Refrigeration. We’ve made no changes and need to make no changes to our growth plans for 2015 beyond what we shared with you at Dover Day. Fluids it’s an amazing year they had in 2015 with 8% organic growth for the entire segment. And it wasn’t an unbalanced year for that segment, both fluid transfer, as well as our pump businesses did quite well in 2014. And we’re expecting both of them to continue with growth initiatives and growth results in 2015.

Great, thank you.

Our next question comes from the line of Steven Winoker of Bernstein.

Thanks, good morning all.

Good morning.

Good morning.

Just a question on the flip side here so you are taking headcount down 14% in Energy it sounded like, what happens if and when oil prices go backed up and if that were to happen in the six months or nine months how long does it take you to cycle through this between you’ve got your – the impact which you haven’t even said you mentioned that you’re just starting to see barely now, you are anticipating that. And this could be a little shorter lived than people think. So how are you dealing that with your scenario planning how it is compared to what you did last time? Your ability to - on the positive side of this is probably a nice thing to think about what would happen in the other end, your ability to make your commitments?

So I take it by the tone of your question that you are long on oil and you are very short.

Yeah, no, it’s not. Let’s not look at presumption in scenario planning here.

Look it…

So it’s a bottom for everything right?

Well I know it. It’s interesting that you asked the question that way because and how honest that we talk about that quite a bit when we go through our planning scenarios. I would just remind you that someone, one of their earlier questions was, are we using the same playbook from the 2008, 2009 time frame and in many instances we are, that’s where we are sort of where we start. And we had a pretty quick bounce in 2009 both on the oil price after it hit its bottom and then a pretty rapid increase in rig count deployment as we went through 2009 and 2010. And I would tell you that we were able to bring employees back, quick enough we were able to bring on new employees, quick enough and to get them trained that our customer service activity, which is always the thing we want to pay attention to, our customer service activity levels were quite high and we did not disappoint customers. And that the other day that’s sort of what guides our decision.

And Bob you guys take advantage of M&A in these kind of environments, usually this is your prime time just sort of have a longer view of the cycle I guess in that same way. You still, its hard to get comfortable right now, right? But how are you starting to think about that trade off and buybacks versus M&A, you probably just lifted your buyback may be give us some color.

Okay, so we - let me deal first with the M&A question and then you tied into share repurchases. M&A in Energy, gosh! I would tell you that I’m not speaking for anyone other than Brad and I. M&A activity in the Energy sector in the next three or four months, I’m going to use your phrase, could be a bit uncomfortable. Simply because of the uncertainty as the timing, the uncertainty as the debt and then even after the price of oil does recover and start to find a new normal that’s higher than where it is today, is what’s going to happen with investment activity in the U.S. shale fields and I think that’s to me, that’s the more larger question. But I think as we get through perhaps not the first quarter, the first quarter is probably not going to give us enough information. I think as we get through the second quarter or into and through the second quarter, I guess that not only us, but others in this sector may have a comfort level that’s being developed, that would allow us to make a decision or two on M&A. And if the opportunity is right for us, I’m going to tell you, we’re going to look at it. But the comfort level is pretty high for the next three months to four months. On share repurchase activity, don’t think that our share repurchase activity in 2015 is a diminishment of our ability to execute on M&A. And Brad can give you a lot more detail on this than I will or I could. But in real simplistic way to look at this our share repurchase activity in 2015 is going to be funded by divestures. Said and done. We’re not increasing any debt on our balance sheet to fund share repurchase activity, we’re not using operating cash flow to fund share repurchase activity. I closed my prepared comments with our plan is to grow, well that’s part of our growth agenda. And as opportunities come forward we will execute.

Okay, thanks guys.

Our final question comes from the line of Steve Tusa of JPMorgan.

Hi, good morning.

Hi Steve.

Good morning.

Just a question on the – what degree of pricing you said low-to-mid in some of your business flat in other part in energy. What’s kind of the total is it, does that all mix in the kind of 50 bips of the price pressure they you’re assuming?

Well again I’m going to repeat myself on two points. One, we’re still in discussions with customers so I’m going to treat some of this as confidential discussions with customers right now until we complete some of these dialogues. I’m saying that in our plan where we do anticipate price reduction discussions with customers that the low-to-mid, I’m talking to 2% to 5%.

Part of the portfolio.

One of the portfolio is included in our guidance.

Okay, what’s the…

And I would also tell you Steve, there is just as much activity going on by us to offset that with input cost.

Sure, in the gross margin of Energy…

I have a suggestion for everyone that’s listening, I don’t think this is going to be a big item in 2015.

What’s going to be the pricing?

The pricing is not going to be a significant item for Dover in 2015.

What does that does 2016?

You should not give any guidance of 2016.

I’m not giving guidance of 2016.

Okay. Is the gross margin at Energy I would assume it’s above the company average.

Yes. Yes, that’s true.

Yes.

And is it meaningfully above the company average.

300 basis points, 250 basis points.

Okay. So basically, we should think about it as you are going to convert there kind of less than gross margin given the cost take out with kind of pricing TBD around that? What do you think is going to be kind of flat, I guess this year?

Well, I don’t know its TBD, but I would say your first assumption is correct that we will convert and I said earlier I think 30% decrementals is the way we think about it. So therefore, we are converting on the downside at less than the gross margin because the cost takeout, that’s the thing.

Right, okay, that makes some sense.

That’s all in there Steve.

But what are the - so you guys - one more question just on the cash flow stuff.

Yes.

You announced on Datamax O’Neil I think it’s a $180 - $190 million cash inflow, is there any tax impact on that, so what’s the after tax? And then what are the - are there any other divestitures that you’re planning on bringing cash in for, just on the entire, I guess $600 million in buyback.

No. No, no, no others. I would just say generally on both of those that it’s not a lot of tax leakage let’s just say that.

Okay. So in total those are going to bring in $600 million?

Pretty close to that, yes Steve. That’s what our expectation at this point.

Okay, great. Thanks a lot.

Thank you. That does conclude our question-and-answer period. I would now like to turn the call back over to Mr. Goldberg for closings remarks. Paul E. Goldberg. Thanks Maria. This concludes our conference call. With that, we thank you for your continued interest in Dover. And we look forward to speaking to you again next quarter. Have a good day. Thanks. Bye.