Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Refer to the section below entitled "Special Notes Regarding Forward-Looking Statements" for a discussion of factors that could cause our actual results to differ from the forward-looking statements contained below and throughout this quarterly report.

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we refer to measures used by management to evaluate performance as well as liquidity, including a number of financial measures that are not defined under accounting principles generally accepted in the United States of America ("GAAP"). We believe these measures provide investors with important information that is useful in understanding our business results and trends. Explanations within this MD&A provide more details on the use and derivation of these measures.

OVERVIEW

Dover is a diversified global manufacturer and solutions provider delivering innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food Equipment. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement and collaboration, which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Unless the context indicates otherwise, references herein to "Dover," "the Company," and words such as "we," "us," or "our" include Dover Corporation and its consolidated subsidiaries.

Dover's five operating segments are as follows:

• Our Engineered Products segment is a provider of a wide range of products, software and services that have broad customer applications across a number of markets, including aftermarket vehicle service, solid waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing.

• Our Fueling Solutions segment is focused on providing components, equipment and software and service solutions enabling safe transport of fuels and other hazardous fluids along the supply chain, as well as the safe and efficient operation of retail fueling and vehicle wash establishments.

• Our Imaging & Identification segment supplies precision marking and coding, product traceability and digital textile printing equipment, as well as related consumables, software and services.

• Our Pumps & Process Solutions segment manufactures specialty industrial pumps, fluid handling components, plastics and polymer processing equipment, single use pumps, flow meters and connectors for biopharma and other hygienic applications, and highly engineered components for rotating and reciprocating machines.

• Our Refrigeration & Food Equipment segment is a provider of innovative and energy-efficient equipment and systems that serve the commercial refrigeration, heating and cooling and food equipment markets.

In the third quarter of 2021, revenue was $2.0 billion, which increased $270.0 million, or 15.4%, as compared to the third quarter of 2020. This was driven by organic revenue growth of 13.2%, a favorable impact from foreign currency translation of 1.1%, and acquisition-related revenue growth of 1.1%.

The 13.2% organic revenue growth for the third quarter of 2021 was broad-based across our segments as market conditions and demand improved from the adverse impact of COVID-19 in the prior year. The Engineered Products segment had organic revenue growth of 14.2% primarily as a result of strength in our waste handling, vehicle services and industrial automation businesses, whereas our aerospace and defense business declined year-over-year due to in part to supplier component input constraints and labor availability. The Fueling Solutions segment had organic revenue growth of 3.0% driven by growth in retail fueling in North American and EMEA, as well as strength in vehicle wash solutions. The Imaging & Identification segment experienced organic revenue growth of 7.4% driven by increased demand in marking and coding and digital textile printing end markets. The Pumps & Process Solutions segment had organic revenue growth of 24.6% reflecting strong demand in biopharma pumps and connectors, and industrial pumps, and recovery in bearings and compression components. The Refrigeration & Food Equipment segment posted organic revenue growth of 16.0% across all end markets, principally driven

by robust activity in can-shaping, heat exchangers. Our food service equipment and retail refrigeration end markets, while delivering growth in the quarter, was impacted by supplier component input constraints and labor availability.

From a geographic perspective, in the third quarter, organic revenue for the U.S., our largest market, increased 15.7%. Organic revenue in Asia and Europe grew 4.6% and 15.5%, respectively. This organic growth was largely broad-based, with all our segments posting increased sales in North America, Europe, Asia and Latin America, as global demand continued to improve after the impact of operational and economic headwinds of COVID-19 experienced in the prior year.

Bookings were $2.3 billion for the three months ended September 30, 2021, an increase of $490.9 million, or 27.2% compared to the prior year comparable period. Included in this result was organic growth of 24.8%, a favorable impact from foreign currency translation of 1.3%, and acquisition-related bookings growth of 1.1%. Bookings grew organically in all five segments primarily as a result of strong demand and order intake in most end markets compared to the adverse global impact of COVID-19 in the prior year.

Backlog as of September 30, 2021 was $2.8 billion, an increase from $1.6 billion in the prior year and $200 million from the second quarter of 2021. See definition of bookings and backlog within "Segment Results of Operations".

During the three months ended September 30, 2021, we acquired two businesses in separate transactions for a total consideration of $90.0 million, net of cash acquired. We acquired 100% of the voting stock of CDS Visual, a leading provider of 3D visualization solutions tailored for industrial applications, for $29.3 million, net of cash acquired. The CDS Visual acquisition extends the Company's offering of customer-facing digital capabilities and its results will be reported as part the Engineered Products segment. We also acquired 100% of the voting stock of Espy, a manufacturer of advanced electronic radio frequency sensor systems, for $60.6 million, net of cash acquired. The Espy acquisition strengthens the Company's offering of complete signal intelligence systems with integrated software within the Engineered Products segment.

Rightsizing benefit of $3.2 million included restructuring costs of $4.8 million and other benefits of $8.0 million for the three months ended September 30, 2021. Restructuring costs related to actions initiated in 2020 and 2021 in response to demand conditions, asset charges related to a product line exit, and broad-based operational efficiency initiatives focusing on footprint consolidation and IT centralization. See Note 9 — Restructuring Activities for further details. Other rightsizing benefits are comprised primarily of a $9.1 million payment received for previously incurred restructuring costs related to a product line exit, partially offset by $1.0 million of restructuring related costs pertaining to broad-based operational efficiency initiatives focusing on footprint consolidation and IT centralization.

Subsequent to the third quarter of 2021, on October 11, 2021, we entered into a definitive agreement to sell its Unified Brands business, which is part of the Refrigeration & Food Equipment segment, to Electrolux Professional AB for approximately $244 million, on a cash free and debt free basis, subject to customary post-closing adjustments. On October 15, 2021, we completed the acquisition of LIQAL, a turn-key supplier of liquified natural gas and hydrogen refueling equipment and solutions and micro-liquefaction solutions, for approximately €20 million, plus potential contingent consideration. LIQAL will be included in the Fueling Solutions segment. See Note 21 — Subsequent Events for further details.

COVID-19 Update

The global COVID-19 outbreak and associated countermeasures implemented by governments around the world, as well as increased business uncertainty, had an adverse impact on our financial results during 2020 through global shutdowns and supply chain and operational disruptions. We took a variety of actions during 2020 to help mitigate the financial impact, including executing temporary cost savings measures, reducing our capital spending, initiating restructuring actions and proactively managing our working capital. Activity in most of the end markets we serve has improved throughout 2021 year-to-date, although demand in certain businesses such as foodservice equipment, textile printing and bearings and compression components is expected to take longer to recover to pre-pandemic levels with continued improvement expected in the fourth quarter. The recovery in demand has had business impacts, including increased material cost inflation (principally steel), labor availability issues and logistics costs increases. Our businesses have also been impacted from supplier component input availability issues. Currently our expectation is that the impact of material cost inflation, labor and logistics constraints and to some extent supplier component input availability will continue into the fourth quarter of 2021.

Our foremost focus has been on the health and safety of our employees throughout the pandemic and we will continue to maintain enhanced safety protocols and to encourage our employees to seek vaccination. Our core global manufacturing locations remained substantially operational throughout 2021 to date. As guidance from authorities such as the U.S. Centers for

Disease Control and Prevention or the World Health Organization evolves, we will update our practices accordingly, as we have done throughout the pandemic.

CONSOLIDATED RESULTS OF OPERATIONS

			Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands, except per share data)			2021						2020						% Change						2021						2020						% Change
Revenue			$	2,018,269					$	1,748,256					15.4		%				$	5,917,846					$	4,903,370					20.7		%
Cost of goods and services			1,263,690						1,089,527						16.0		%				3,669,547						3,080,800						19.1		%
Gross profit			754,579						658,729						14.6		%				2,248,299						1,822,570						23.4		%
Gross profit margin			37.4		%				37.7		%				(0.3)						38.0		%				37.2		%				0.8
Selling, general and administrative expenses			412,553						381,831						8.0		%				1,249,593						1,135,512						10.0		%
Selling, general and administrative expenses as a percent of revenue			20.4		%				21.8		%				(1.4)						21.1		%				23.2		%				(2.1)
Operating earnings			342,026						276,898												998,706						687,058
Interest expense			26,433						27,724						(4.7)		%				79,917						83,703						(4.5)		%
Interest income			(1,466)						(960)						52.7		%				(3,088)						(2,871)						7.6		%
Loss (gain) on sale of a business			—						557						nm*						—						(5,213)						nm*
Other income, net			(10,460)						(1,420)						nm*						(18,236)						(9,887)						nm*
Earnings before provision for income taxes			327,519						250,997						30.5		%				940,113						621,326						51.3		%
Provision for income taxes			63,763						50,697						25.8		%				179,080						119,981						49.3		%
Effective tax rate			19.5		%				20.2		%				(0.7)						19.0		%				19.3		%				(0.3)
Net earnings			263,756						200,300						31.7		%				761,033						501,345						51.8		%
Net earnings per common share - diluted			$	1.81					$	1.38					31.2		%				$	5.24					$	3.45					51.9		%

• nm - not meaningful

Revenue

Revenue for the three months ended September 30, 2021 increased $270.0 million, or 15.4%, from the prior year comparable quarter. Results included organic revenue growth of 13.2% across all of our segments as market conditions and demand improved from the adverse impact of COVID-19 in the prior year. Acquisition-related revenue growth was 1.1%, driven mainly by acquisitions in our Fueling Solutions and Imaging & Identification segments, along with a favorable impact from foreign currency translation of 1.1%. Customer pricing favorably impacted revenue by approximately 3.6% in the third quarter of 2021.

Revenue for the nine months ended September 30, 2021 increased $1.0 billion, or 20.7%, from the comparable period. The increase primarily reflects organic revenue growth of 16.8%, across all of our segments as market conditions and demand improved from the adverse impact of COVID-19 in the prior year. Acquisition-related growth was 1.2% led by our Fueling Solutions and Imaging & Identification segments, along with a favorable impact from foreign currency translation of 2.8%, slightly offset by a 0.1% impact from dispositions within the Refrigeration & Food Equipment segment. Customer pricing favorably impacted revenue by approximately 2.2% for the nine months ended September 30, 2021.

Gross Profit

Gross profit for the three months ended September 30, 2021 increased $95.9 million, or 14.6%, but gross profit margin decreased 30 basis points to 37.4%, from the prior year comparable quarter, due to increased material, labor and logistics costs offset partially by organic revenue growth, pricing, and benefits from productivity and cost reduction actions.

Gross profit for the nine months ended September 30, 2021 increased $425.7 million, or 23.4%, from the comparable period, primarily due to organic revenue growth of 16.8% and benefits from pricing and productivity initiatives and rightsizing actions,

partially offset by increased material, labor and logistics costs as a well as production inefficiencies caused by supplier input component availability issues. Gross profit margin increased by 80 basis points for the nine months ended September 30, 2021 from the comparable period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2021 increased $30.7 million, or 8.0%, from the prior year comparable quarter, primarily due to higher labor and acquisition related costs, and lower discretionary spend in the prior year. As a percentage of revenue, selling, general and administrative expenses improved 140 basis points to 20.4% due to an increase in the revenue base.

Selling, general and administrative expenses for the nine months ended September 30, 2021 increased $114.1 million, or 10.0%, from the comparable period primarily due to higher labor and acquisition related costs, and lower discretionary spend in the prior year. Selling, general and administrative expenses as a percentage of revenue improved 210 basis points as compared to the prior year comparable period due to an increase in the revenue base.

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $34.4 million and $36.4 million for the three months ended September 30, 2021 and 2020, respectively, and $116.8 million and $106.7 million, for the nine months ended September 30, 2021 and 2020, respectively. These costs as a percent of revenue were 1.7% and 2.1% for the three months ended September 30, 2021 and 2020, respectively, and 2.0% and 2.2% for the nine months ended September 30, 2021 and 2020, respectively.

Gain on sale of a business

On March 6, 2020, we sold the Chino, California branch of The AMS Group ("AMS Chino") within the Refrigeration & Food Equipment segment for total consideration of $15.4 million, which included a working capital adjustment. A gain of $5.2 million was recognized on this sale. The disposal did not represent a strategic shift in operations and, therefore, did not qualify for presentation as discontinued operations.

Other income, net

Other income, net for the three months ended September 30, 2021 increased $9.0 million from the prior year comparable period primarily due to investment income and lower foreign exchange losses from the remeasurement of foreign currency denominated balances.

Other income, net for the nine months ended September 30, 2021 increased $8.3 million from the prior year comparable period primarily due to investment income and lower foreign exchange losses from the remeasurement of foreign currency denominated balances.

Income Taxes

The effective tax rates for the three months ended September 30, 2021 and 2020 were 19.5% and 20.2%, respectively. The decrease in the effective tax rate for the three months ended September 30, 2021 relative to the prior year comparable quarter was primarily driven by favorable audit settlements.

The effective tax rates for the nine months ended September 30, 2021 and 2020 were 19.0% and 19.3%, respectively. The slight decrease in the effective tax rate for the nine months ended September 30, 2021 relative to the prior year comparable period was primarily driven by favorable audit settlements.See Note 12 — Income Taxes.

Net earnings

Net earnings for the three months ended September 30, 2021 increased 31.7% to $263.8 million, or $1.81 diluted earnings per share, from $200.3 million, or $1.38 diluted earnings per share, from the prior year comparable quarter. The increase in net earnings is mainly attributable to strong demand and robust recovery from prior year market conditions resulting in strong broad-based organic growth, favorable pricing initiatives, and benefits from productivity and restructuring actions. These benefits were partially offset by increased material, labor and logistics costs.

Net earnings for the nine months ended September 30, 2021 increased 51.8% to $761.0 million, or $5.24 diluted earnings per share, from $501.3 million, or $3.45 diluted earnings per share, from the comparable period. The increase in net earnings was principally attributable to volume growth, pricing initiatives, productivity actions and benefits from rightsizing actions. These benefits were partially offset by increased material, labor and logistics costs.

Rightsizing Activities, which includes Restructuring and Other Costs

During the three and nine months ended September 30, 2021, rightsizing activities included restructuring charges of $4.8 million and $20.7 million, respectively, and other benefits, net, of $8.0 million and $8.9 million, respectively. See Note 9 — Restructuring Activities for further details on restructuring expense for the three months ended September 30, 2021. Restructuring expense for the nine months ended September 30, 2021 was comprised primarily of $8.6 million in new actions initiated in 2020 and 2021 in response to demand conditions and broad-based operational efficiency initiatives focusing on footprint consolidation and IT centralization, and asset charges of $12.1 million, including $9.1 million related to a product line exit. Other benefits, net for the three months ended September 30, 2021 was comprised primarily of a $9.1 million payment received for previously incurred restructuring costs related to a product line exit ($7.3 million is classified within costs of goods and services and $1.8 million within selling, general and administrative expenses), partially offset by $1.0 million of restructuring related costs. Other benefits, net for the nine months ended September 30, 2021 was comprised primarily of a $9.1 million payment received for previously incurred restructuring costs related to a product line exit, $3.3 million of gains on sales of assets as a result of restructuring actions, partially offset by $3.4 million of restructuring related costs principally pertaining to footprint consolidation and IT centralization costs. These rightsizing charges were recorded in cost of goods and services and selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings. Additional programs beyond the scope of the announced programs may be implemented during 2021 with related restructuring charges.

We recorded the following rightsizing costs for the three and nine months ended September 30, 2021:

			Three Months Ended September 30, 2021
(dollars in thousands)			Engineered Products						Fueling Solutions						Imaging & Identification						Pumps & Process Solutions						Refrigeration & Food Equipment						Corporate						Total
Restructuring (GAAP)			$	870					$	1,620					$	168					$	639					$	1,293					$	200					$	4,790
Other (benefits) costs, net			(9,202)						(36)						1,123						(152)						227						49						(7,991)
Rightsizing (Non-GAAP)			$	(8,332)					$	1,584					$	1,291					$	487					$	1,520					$	249					$	(3,201)

			Nine Months Ended September 30, 2021
(dollars in thousands)			Engineered Products						Fueling Solutions						Imaging & Identification						Pumps & Process Solutions						Refrigeration & Food Equipment						Corporate						Total
Restructuring (GAAP)			$	9,200					$	3,084					$	1,032					$	1,526					$	4,637					$	1,182					$	20,661
Other (benefits) costs, net			(8,859)						215						1,119						(2,146)						(616)						1,366						(8,921)
Rightsizing (Non-GAAP)			$	341					$	3,299					$	2,151					$	(620)					$	4,021					$	2,548					$	11,740

During the three and nine months ended September 30, 2020, rightsizing activities included restructuring charges of $6.7 million and $26.4 million, respectively, and other benefits of $0.9 million and other costs of $4.2 million, respectively. Restructuring expense was comprised primarily of new actions taken in response to lower demand driven by COVID-19 and continuing broad-based selling, general and administrative expense reduction initiatives and broad-based operational efficiency initiatives focusing on footprint consolidation, operational optimization and IT centralization. Other costs and benefits was comprised primarily of other charges related to the restructuring actions and a $3.6 million write-off of assets offset by a $1.7 million gain on sale of assets in our Refrigeration & Food Equipment segment as a result of restructuring actions. These rightsizing charges were recorded in cost of goods and services and selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings.

We recorded the following rightsizing costs for the three and nine months ended September 30, 2020:

			Three Months Ended September 30, 2020
(dollars in thousands)			Engineered Products						Fueling Solutions						Imaging & Identification						Pumps & Process Solutions						Refrigeration & Food Equipment						Corporate						Total
Restructuring (GAAP)			$	2,342					$	1,572					$	99					$	1,719					$	534					$	474					$	6,740
Other costs (benefits), net			33						43						—						52						(1,505)						485						(892)
Rightsizing (Non-GAAP)			$	2,375					$	1,615					$	99					$	1,771					$	(971)					$	959					$	5,848

			Nine Months Ended September 30, 2020
(dollars in thousands)			Engineered Products						Fueling Solutions						Imaging & Identification						Pumps & Process Solutions						Refrigeration & Food Equipment						Corporate						Total
Restructuring (GAAP)			$	6,860					$	3,958					$	(167)					$	10,271					$	3,307					$	2,136					$	26,365
Other costs, net			45						18						3						37						2,442						1,637						4,182
Rightsizing (Non-GAAP)			$	6,905					$	3,976					$	(164)					$	10,308					$	5,749					$	3,773					$	30,547

SEGMENT RESULTS OF OPERATIONS

The summary that follows provides a discussion of the results of operations of each of our five reportable operating segments (Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food Equipment). Each of these segments is comprised of various product and service offerings that serve multiple markets. See Note 17 — Segment Information in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for a reconciliation of segment revenue and earnings to our consolidated revenue and net earnings. For further information, see "Non-GAAP Disclosures" at the end of this Item 2.

Additionally, we use the following operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments:

• Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends.

• Organic bookings represent total orders received from customers in the current reporting period excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of revenue order trends.

• Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet been satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future.

• Book-to-bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand.

Engineered Products

Our Engineered Products segment is a provider of a wide range of products, software and services that have broad customer applications across a number of markets, including aftermarket vehicle service, solid waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing.

						Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2021						2020						% Change						2021						2020						% Change
Revenue						$	447,798					$	386,562					15.8		%				$	1,318,016					$	1,137,102					15.9		%
Segment earnings (EBIT)						$	71,717					$	64,890					10.5		%				$	203,216					$	181,686					11.9		%
Depreciation and amortization						11,123						10,717						3.8		%				37,151						30,561						21.6		%
Segment EBITDA						$	82,840					$	75,607					9.6		%				$	240,367					$	212,247					13.2		%
Segment margin						16.0%						16.8%												15.4%						16.0%
Segment EBITDA margin						18.5%						19.6%												18.2%						18.7%
Other measures:
Bookings						$	502,767					$	381,139					31.9		%				$	1,528,277					$	1,074,484					42.2		%
Backlog																								$	662,834					$	373,458					77.5		%
Components of revenue growth:
Organic growth																		14.2		%																13.3		%
Acquisitions																		0.2		%																0.2		%
Foreign currency translation																		1.4		%																2.4		%
																		15.8		%																15.9		%

Third Quarter 2021 Compared to the Third Quarter 2020

Engineered Products segment revenue for the third quarter of 2021 increased $61.2 million, or 15.8%, as compared to the third quarter of 2020, comprised primarily of organic growth of 14.2% and a favorable impact from foreign currency translation of 1.4%. Customer pricing favorably impacted revenue by approximately 6.5% in the third quarter. Pricing was higher than in prior quarters reflecting actions to recover increasing costs, as discussed below.

The organic revenue growth was most notable in our waste handling, vehicle service, and industrial automation businesses. Our aerospace and defense business was down year-over-year as the business experienced push-outs of orders in Europe and continued labor and supplier component availability constraints that impacted shipments. Despite the strong organic growth and record high backlog levels, certain shipments in our waste handling and vehicle service groups were deferred to future quarters as a result of supply chain and labor availability constraints. We expect shipment performance in both businesses to improve in the coming quarters as these constraints begin to subside.

Engineered Products segment earnings increased $6.8 million, or 10.5%, compared to the third quarter of 2020. The increase was primarily driven by conversion on increased volumes, benefits from rightsizing actions and a payment received for costs related to a product line exit, partially offset by unfavorable business mix, higher material and logistics costs, most notably steel and ocean & air freight costs, as well as plant productivity shortfalls resulting from supply chain disruption and higher labor costs. As a result, segment operating margin decreased 80 basis points to 16.0% from 16.8% as compared to the prior year quarter.

Bookings increased 31.9% for the segment, comprised primarily of organic growth of 30.3% and a favorable impact from foreign currency translation of 1.4%. The organic bookings growth was broad-based, most notably in our vehicle service, waste handling, industrial automation, and industrial winch and hoist businesses. Segment book-to-bill was 1.12. Backlog increased 77.5% compared to the prior year comparable quarter.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Engineered Products revenue for the nine months ended September 30, 2021 increased $180.9 million, or 15.9%, compared to the prior year comparable period. This was comprised of organic revenue growth of 13.3%, a favorable impact from foreign currency translation of 2.4%, and acquisition-related growth of 0.2%. The organic revenue growth was most notable in our waste handling, vehicle service, industrial automation, and aerospace and defense businesses. Customer pricing favorably impacted revenue by approximately 3.2% for the nine months ended September 30, 2021.

Segment earnings for the nine months ended September 30, 2021 increased $21.5 million, or 11.9%, as compared to the 2020 comparable period. This increase was primarily driven by conversion on increased volumes and benefits from productivity and rightsizing actions, partially offset by higher material and logistics costs, comprised primarily of increased steel and freight costs, which were not fully recovered by pricing actions. Segment margin decreased from 16.0% to 15.4% as compared to the prior year comparable period.

Fueling Solutions

Our Fueling Solutions segment is focused on providing components, equipment and software and service solutions enabling safe transport of fuels and other hazardous fluids along the supply chain, as well as the safe and efficient operation of retail fueling and vehicle wash establishments.

						Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2021						2020						% Change						2021						2020						% Change
Revenue						$	410,561					$	380,511					7.9		%				$	1,237,281					$	1,066,988					16.0		%
Segment earnings						$	65,593					$	66,601					(1.5)		%				$	210,828					$	167,313					26.0		%
Depreciation and amortization						19,920						18,014						10.6		%				58,664						54,321						8.0		%
Segment EBITDA						$	85,513					$	84,615					1.1		%				$	269,492					$	221,634					21.6		%
Segment margin						16.0%						17.5%												17.0%						15.7%
Segment EBITDA margin						20.8%						22.2%												21.8%						20.8%
Other measures:
Bookings						$	467,821					$	383,902					21.9		%				$	1,343,635					$	1,068,470					25.8		%
Backlog																								$	312,176					$	204,574					52.6		%
Components of revenue growth:
Organic growth																		3.0		%																9.7		%
Acquisitions																		3.6		%																3.5		%
Foreign currency translation																		1.3		%																2.8		%
																		7.9		%																16.0		%

Third Quarter 2021 Compared to the Third Quarter 2020

Fueling Solutions segment revenue for the third quarter of 2021 increased $30.1 million, or 7.9%, as compared to the third quarter of 2020, comprised of organic growth of 3.0%, a favorable impact from foreign currency translation of 1.3%, and acquisition-related growth of 3.6%. Acquisition-related growth was driven by the acquisition of Innovative Control Systems, Inc. and AvaLAN Wireless Systems Incorporated. Customer pricing favorably impacted revenue by approximately 2.0% in the third quarter.

The organic revenue growth for the Fueling Solutions segment was driven by solid demand in our North American and EMEA retail fueling and vehicle wash solutions businesses, partially offset by continued softness in Asian retail fueling and transportation components. Supply chain challenges and labor availability headwinds during the third quarter adversely affected our ability to ship customer orders, inhibiting further contributions to organic revenue growth.

Fueling Solutions segment earnings decreased $1.0 million, or 1.5%, over the prior year comparable quarter. The decrease was primarily driven by material and labor cost inflation as well as negative product mix, partially offset by pricing initiatives, productivity actions benefits from restructuring actions, and a favorable impact from acquisitions. Segment margin decreased to 16.0% from 17.5% in the prior year quarter due to similar factors that drove segment earnings.

Overall bookings increased 21.9% as compared to the prior year comparable quarter, driven by organic growth of 15.8%, a favorable impact from foreign currency translation of 1.9%, and acquisition-related growth of 4.2%. Organic bookings growth was primarily driven by strong demand for retail fueling solutions in North America and Asia-Pacific, and continued order strength in vehicle wash solutions. Segment book to bill was 1.14. Backlog increased 52.6% as compared to the prior year comparable quarter.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Fueling Solutions segment revenue increased $170.3 million, or 16.0%, as compared to the nine months ended September 30, 2020, attributable to organic growth of 9.7%, a favorable impact from foreign currency translation of 2.8%, and acquisition-related growth of 3.5%. Organic revenue increases were driven by strong activity in our retail fueling and vehicle wash solutions businesses, given the broader market recovery due to reduced demand beginning in the first quarter and continuing through the third quarter of 2020 due to COVID-19. Customer pricing favorably impacted revenue by approximately 1.8% for the nine months ended September 30, 2021.

Fueling Solutions segment earnings increased $43.5 million, or 26.0%, for the nine months ended September 30, 2021. The increase was driven by conversion on organic revenue growth, pricing initiatives, productivity actions, and a favorable impact from acquisitions, partially offset by material and labor cost inflation. Segment margin increased 136 basis points to 17.0% from 15.7% in the prior year comparable period.

Imaging & Identification

Our Imaging & Identification segment supplies precision marking and coding, product traceability and digital textile printing equipment, as well as related consumables, software and services.

						Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2021						2020						% Change						2021						2020						% Change
Revenue						$	292,535					$	265,690					10.1		%				$	870,939					$	750,432					16.1		%
Segment earnings						$	63,419					$	51,928					22.1		%				$	181,158					$	141,456					28.1		%
Depreciation and amortization						9,821						9,809						0.1		%				28,708						27,802						3.3		%
Segment EBITDA						$	73,240					$	61,737					18.6		%				$	209,866					$	169,258					24.0		%
Segment margin						21.7%						19.5%												20.8%						18.8%
Segment EBITDA margin						25.0%						23.2%												24.1%						22.6%
Other measures:
Bookings						$	293,782					$	266,423					10.3		%				$	887,004					$	760,342					16.7		%
Backlog																								$	204,766					$	171,158					19.6		%
Components of revenue growth:
Organic growth																		7.4		%																10.0		%
Acquisitions																		1.2		%																1.6		%
Foreign currency translation																		1.5		%																4.5		%
																		10.1		%																16.1		%

Third Quarter 2021 Compared to the Third Quarter 2020

Imaging & Identification segment revenue for the third quarter of 2021 increased $26.8 million, or 10.1%, as compared to the third quarter of 2020, comprised of organic growth of 7.4%, a favorable impact from foreign currency translation of 1.5%, and acquisition-related growth of 1.2%. Acquisition-related growth was driven by the acquisitions of Solaris Laser S.A. in the third quarter of 2020 and of Blue Bite LLC in the second quarter of 2021. Customer pricing favorably impacted revenue by approximately 0.7% in the third quarter.

Organic revenue growth was driven by both our marking and coding business, and our digital textile printing business. Our marking and coding business delivered continued solid growth in new equipment and associated services and consumables, as well as serialization software sales. Our digital textile printing business experienced gradual demand recovery compared to the third quarter of 2020 when demand for printed textiles was significantly reduced due to the impact of COVID-19 restrictions on the global apparel industry. While current global apparel retail volumes have improved substantially from this time last year, volumes have not yet returned to pre-pandemic levels and continue to be impacted by local business and travel restrictions, as well as work-from-home policies. We continue to believe we remain favorably positioned to gain from a longer-term transition from analog to digital printing by our customers, and believe some business model shifts within the industry driven by the COVID-19 pandemic may accelerate our customers’ need to shift from analog to digital printing.

Imaging & Identification segment earnings increased $11.5 million, or 22.1%, over the prior year comparable quarter. This increase was primarily driven by conversion on increased revenue and the benefits from productivity initiatives and restructuring actions. Segment margin increased to 21.7% from 19.5% in the prior year comparable quarter.

Overall bookings increased 10.3% as compared to the prior year comparable quarter, reflecting organic growth of 7.5%, a favorable impact from foreign currency translation of 1.7%, and acquisition-related growth of 1.1%. Segment book to bill was 1.00. Backlog increased 19.6% as compared to the prior year quarter primarily driven by increased order intake in our marking and coding business.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Imaging & Identification segment revenue increased $120.5 million, or 16.1%, as compared to the nine months ended September 30, 2020, attributable to organic growth of 10.0%, a favorable impact from foreign currency translation of 4.5%, and

acquisition-related growth of 1.6%. The organic revenue growth was primarily driven by continued strong demand for marking and coding equipment and associated services and consumables, serialization software sales, as well as a continuing gradual recovery in demand for printed textiles. Customer pricing favorably impacted revenue by approximately 0.9% for the nine months ended September 30, 2021.

Imaging & Identification segment earnings increased $39.7 million, or 28.1%, for the nine months ended September 30, 2021 over the prior year comparable period. The increase was primarily driven by conversion on increased revenue and the benefits from productivity initiatives and restructuring actions. Segment margin increased to 20.8% from 18.8% in the prior year comparable quarter.

Pumps & Process Solutions

Our Pumps & Process Solutions segment manufactures specialty industrial pumps, fluid handling components, plastics and polymer processing equipment, single use pumps, flow meters and connectors for biopharma and other hygienic applications, and highly engineered components for rotating and reciprocating machines.

						Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2021						2020						% Change						2021						2020						% Change
Revenue						$	438,240					$	347,875					26.0		%				$	1,261,318					$	976,506					29.2		%
Segment earnings						$	142,414					$	89,786					58.6		%				$	404,691					$	223,567					81.0		%
Depreciation and amortization						17,843						17,206						3.7		%				51,635						53,114						(2.8)		%
Segment EBITDA						$	160,257					$	106,992					49.8		%				$	456,326					$	276,681					64.9		%
Segment margin						32.5%						25.8%												32.1%						22.9%
Segment EBITDA margin						36.6%						30.8%												36.2%						28.3%
Other measures:
Bookings						$	490,581					$	323,801					51.5		%				$	1,562,956					$	969,076					61.3		%
Backlog																								$	682,415					$	361,631					88.7		%
Components of revenue growth:
Organic growth																		24.6		%																25.4		%
Acquisitions																		0.2		%																0.7		%
Foreign currency translation																		1.2		%																3.1		%
																		26.0		%																29.2		%

Third Quarter 2021 Compared to the Third Quarter 2020

Pumps & Process Solutions segment revenue for the third quarter of 2021 increased $90.4 million, or 26.0%, as compared to the third quarter of 2020, comprised of organic growth of 24.6%, a favorable impact from foreign currency translation of 1.2%, and acquisition-related growth of 0.2%. Acquisition-related growth was primarily driven by the acquisition of Quantex Arc Limited and one other immaterial acquisition. Customer pricing favorably impacted revenue by approximately 2.3% in the third quarter.

The organic revenue growth was primarily driven by continued robust demand in the biopharma and hygienic markets, where we saw continued strong demand for single use pumps and connectors used in biopharmaceutical production processes. Our industrial pumps business also contributed to top-line growth on strong end market demand, despite experiencing supply chain constraints and customer delivery challenges throughout the quarter. Revenue in bearings and compression components saw solid growth amidst continued recovery in end market demand. Demand in our plastics and polymer processing solutions business remained strong, however revenues declined year over year on the timing of customer shipments and high revenue in the prior year comparable quarter. We expect the broad-based strength across all our pumps and process solutions businesses to carry into the next quarter and beyond.

Pumps & Process Solutions segment earnings increased $52.6 million, or 58.6%, over the prior year comparable quarter. The increase was primarily driven by strong conversion on revenue growth, product mix, pricing initiatives, and productivity actions, partially offset by material and labor cost inflation. Segment margin increased to 32.5% from 25.8% from the prior year comparable quarter.

Overall bookings increased 51.5% as compared to the prior year comparable quarter, reflecting organic growth of 50.1%, a favorable impact from foreign currency translation of 1.1%, and acquisition-related growth of 0.3%. Organic bookings growth was driven by significant growth in the biopharma and hygienic pumps and connectors markets, as well as strong order intake in industrial pumps and plastics & polymer processing solutions, and increased demand in bearings and compression components. Segment book to bill was 1.12. Backlog increased 88.7% compared to the prior year comparable quarter.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Pumps & Process Solutions segment revenue increased $284.8 million, or 29.2%, as compared to the nine months ended September 30, 2020, attributable to organic growth of 25.4%, a favorable impact from foreign currency translation of 3.1% and a 0.7% impact from acquisitions. The organic increase was principally driven by strong performance in the biopharma and hygienic pumps and connectors markets, along with solid growth in industrial pumps and plastics & polymer processing solutions. Customer pricing favorably impacted revenue by approximately 1.5% for the nine months ended September 30, 2021.

Pumps & Process Solutions segment earnings increased $181.1 million, or 81.0%, for the nine months ended September 30, 2021 over the prior year comparable period. The increase was predominantly driven by conversion on revenue growth, product mix, pricing initiatives, and productivity actions, partially offset by material and labor cost inflation. Segment margin increased to 32.1% from 22.9% from the prior year comparable period.

Refrigeration & Food Equipment

Our Refrigeration & Food Equipment segment is a provider of innovative and energy-efficient equipment and systems that serve the commercial refrigeration, heating and cooling and food equipment markets.

						Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2021						2020						% Change						2021						2020						% Change
Revenue						$	429,425					$	368,395					16.6		%				$	1,232,008					$	973,835					26.5		%
Segment earnings(1)						$	42,841					$	40,159					6.7		%				$	129,929					$	75,147					72.9		%
Depreciation and amortization						12,392						12,081						2.6		%				36,565						35,050						4.3		%
Segment EBITDA(1)						$	55,233					$	52,240					5.7		%				$	166,494					$	110,197					51.1		%
Segment margin(1)						10.0%						10.9%												10.5%						7.7%
Segment EBITDA margin(1)						12.9%						14.2%												13.5%						11.3%
Other measures:
Bookings						$	540,280					$	449,549					20.2		%				$	1,684,151					$	1,131,106					48.9		%
Backlog																								$	964,233					$	472,140					104.2		%
Components of revenue growth:
Organic growth																		16.0		%																25.1		%
Dispositions																		—		%																(0.5)		%
Foreign currency translation																		0.6		%																1.9		%
																		16.6		%																26.5		%

(1) Segment earnings (EBIT) and Segment EBITDA for the three and nine months ended September 30, 2020 include a $557 expense and a $5,213 net gain on the sale of AMS Chino, respectively. The nine months ended September 30, 2020 also include a $3,640 write-off of assets.

Third Quarter 2021 Compared to the Third Quarter 2020

Refrigeration & Food Equipment segment revenue increased $61.0 million, or 16.6%, as compared to the third quarter of 2020, reflecting organic revenue growth of 16.0% and a favorable impact from foreign currency translation of 0.6%. Customer pricing favorably impacted revenue by approximately 5.7% in the third quarter. Pricing was higher than in prior quarters reflecting actions to recover increasing costs, as discussed below.

The organic revenue growth was principally driven by robust demand across all our key end-markets. Can-shaping equipment revenues more than doubled from prior year, driven by continued favorable macro trends in the global beverage industry as producers shift from plastic and glass packaging to aluminum containers for environmental sustainability and merchandising benefits offered by modern aluminum containers. Our heat exchanger business experienced healthy growth across all regions, fueled by regulation-driven heat pump demand in Europe, robust demand in Asia and strengthening commercial HVAC and industrial markets globally. Commercial foodservice equipment revenues improved over the comparable prior year period, as many key restaurant chain customers resumed store investment programs once government mandated COVID-19 restrictions began to ease. Retail refrigeration experienced broad based growth as well, driven by robust remodel programs with key supermarket customers and strong growth for our natural refrigerant systems in both Europe and the U.S.

Refrigeration & Food Equipment segment earnings increased $2.7 million, or 6.7%, as compared to the third quarter of 2020. Segment margin decreased to 10.0% from 10.9% in the prior year comparable quarter. The earnings increase was driven by conversion on increased volumes and mix, improved operational efficiencies and benefits from prior restructuring programs, offset by increased material and logistics costs, most notably metals, and plant productivity shortfalls resulting from supply chain disruption and increased labor costs most significantly in our retail refrigeration business. We expect the impact of increased metals costs and productivity shortfalls in retail refrigeration to continue into the next quarter.

Bookings in the third quarter of 2021 increased 20.2% from the prior year comparable quarter, reflecting organic growth of 19.7% and a favorable impact from foreign currency translation of 0.5%. The organic bookings growth was principally driven by continued supermarket remodel programs in retail refrigeration and strong global demand for brazed plate heat exchangers.

Segment book to bill for the third quarter of 2021 was 1.26. Backlog increased 104.2% over the prior year comparable quarter, reflective of the improving outlook across all businesses within the segment.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Refrigeration & Food Equipment segment revenue increased $258.2 million, or 26.5%, compared to the nine months ended September 30, 2020, reflecting an organic revenue growth of 25.1% and a favorable foreign currency translation of 1.9%, partially offset by a 0.5% impact from the disposition of AMS Chino. The organic revenue growth for the nine months ended September 30, 2021 was driven by strong growth across our key end markets, most notably retail refrigeration, can-shaping equipment and heat exchangers. Commercial foodservice equipment revenues exceeded prior year, driven by a strong recovery with restaurant chain customers due to the easing of COVID-19 government mandated restrictions. Customer pricing favorably impacted revenue by approximately 3.0% for the nine months ended September 30, 2021.

Refrigeration & Food Equipment segment earnings increased $54.8 million, or 72.9%, for the nine months ended September 30, 2021, as compared to the prior year comparable period. The increase was primarily due to conversion on increased volumes and benefits from prior restructuring programs, partially offset by increased material and logistics costs, most notably metals, and a prior year gain on the sale of AMS Chino. Segment margin increased to 10.5% from 7.7% in the prior year comparable period.

FINANCIAL CONDITION

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, repurchases of outstanding shares, adequacy of available commercial paper and bank lines of credit, and the ability to attract long-term capital with satisfactory terms. We generate substantial cash from the operations of our businesses and remain in a strong financial position, with sufficient liquidity available for reinvestment in existing businesses and strategic acquisitions.

Cash Flow Summary

The following table is derived from our Condensed Consolidated Statements of Cash Flows:

			Nine Months Ended September 30,
Cash Flows (dollars in thousands)			2021						2020
Net Cash Flows Provided By (Used In):
Operating activities			$	788,586					$	686,919
Investing activities			(286,642)						(362,998)
Financing activities			(274,798)						(283,336)

Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2021 increased approximately $101.7 million compared to the comparable period in 2020. This increase was primarily driven by higher net earnings, excluding the impact of depreciation, amortization and gain on sale of a business as well as lower compensation payouts in 2021 compared to 2020. This increase was partially offset by higher investments in working capital to support business growth. Additionally, 2020 included the impact of permitted deferrals of approximately $20 million of payroll taxes in the second and third quarters of 2020 to the fourth quarters of 2021 and 2022. There were no such deferrals in 2021.

Adjusted Working Capital: We believe adjusted working capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) provides a meaningful measure of our operational results by showing changes caused solely by revenue. The following table provides a reconciliation of adjusted working capital to the most directly comparable GAAP measure:

Adjusted Working Capital (dollars in thousands)						September 30, 2021						December 31, 2020
Accounts receivable						$	1,351,144					$	1,137,223
Inventories						1,055,831						835,804
Less: Accounts payable						1,047,824						853,942
Adjusted working capital						$	1,359,151					$	1,119,085

Adjusted working capital increased from December 31, 2020 by $240.1 million, or 21.5%, to $1.4 billion at September 30, 2021, which reflected an increase of $213.9 million in accounts receivable and $220.0 million in inventory, partially offset by an increase in accounts payable of $193.9 million. These amounts include the effects of acquisitions, dispositions and foreign currency translation. Accounts receivable increased compared to the prior year as a result of higher revenue. Inventories increased to support business growth and higher backlog which also drove an increase in accounts payable.

We facilitate the opportunity for suppliers to participate in voluntary supply chain financing (“SCF”) programs with participating financial institutions. Participating suppliers have the ability to sell receivables due from us to SCF financial institutions at the discretion of both the suppliers and the SCF financial institutions, at no economic impact to the Company. The Company and our suppliers agree on commercial terms, including payment terms, for the goods and services we procure regardless of whether the supplier participates in SCF. For participating suppliers, our responsibility is limited to making all payments to the SCF financial institutions on the terms originally negotiated with the supplier, irrespective of whether the supplier elects to sell receivables to the SCF financial institution. The SCF financial institution pays the supplier on the invoice due date for any invoices that were not previously sold by the supplier to the SCF financial institution.  Thus, suppliers using SCF have additional potential flexibility in managing their liquidity by accelerating, at their option and cost, collection of receivables due from Dover.

Outstanding payments related to SCF programs are recorded within accounts payable in our consolidated balance sheets. As of September 30, 2021 and December 31, 2020, amounts due to financial institutions for suppliers using SCF were approximately $218 million and $139 million, respectively. SCF related payments are classified as a reduction to cash flows from operations. During the nine months ended September 30, 2021 and 2020 amounts paid to SCF financial institutions were  approximately $596 million and $448  million, respectively.

Investing Activities

Cash provided from investing activities is derived from cash outflows for capital expenditures and acquisitions, offset by proceeds from sales of businesses and property, plant and equipment. For the nine months ended September 30, 2021 and 2020, we used cash in investing activities of $286.6 million and $363.0 million, respectively, driven mainly by the following factors:

*•*Acquisitions: During the nine months ended September 30, 2021, we acquired Espy and CDS Visual within the Engineered Products segment, AvaLAN and Blue Bite within the Fueling Solutions and Imaging & Identification segments, respectively, and Quantex and one other immaterial acquisition within the Pumps & Process Solutions segment for $171.3 million, net of cash acquired. During the nine months ended September 30, 2020, we acquired Systech, Soft-Pak, Em-tec, Solaris, and an immaterial business within the Imaging & Identification, Engineered Products, and Pumps & Process Solutions segments, respectively, for $258.7 million, net of cash acquired.

• Capital spending: Our capital expenditures decreased $2.4 million during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. We continue to expect full year 2021 capital expenditures to be approximately $175-$200 million.

*•*Proceeds from sale of businesses: There were no proceeds from the sale of businesses during the nine months ended September 30, 2021. For the nine months ended September 30, 2020, we received proceeds of $15.4 million from the sale of AMS Chino within the Refrigeration & Food Equipment segment.

We anticipate that capital expenditures and any acquisitions we make through the remainder of 2021 will be funded from available cash and internally generated funds and through the issuance of commercial paper, use of lines of credit or public or private debt markets, as necessary.

Financing Activities

Our cash flow from financing activities generally relates to the use of cash for purchases of our common stock and payment of dividends, offset by net borrowing activity. For the nine months ended September 30, 2021 and 2020, we used cash totaling $274.8 million and $283.3 million, respectively, for financing activities, with the activity primarily attributable to the following:

• Repurchase of common stock: During the nine months ended September 30, 2021, we used $21.6 million to repurchase 182,951 shares. During the nine months ended September 30, 2020, we used $52.9 million to repurchase 548,659 shares.

*•*Long-term debt, commercial paper and notes payable: During the nine months ended September 30, 2021, we did not borrow or have proceeds from long-term debt, commercial paper or notes payable. During the nine months ended September 30, 2020, we borrowed $500 million under the $1.0 billion Credit Agreement which was repaid during the same period. During the nine months ended September 30, 2020, we also received net proceeds from commercial paper of $5.8 million.

• Dividend payments: Dividends paid to shareholders during the nine months ended September 30, 2021 totaled $214.8 million as compared to $213.0 million during the same period in 2020. Our dividends paid per common share increased 1.0% to $1.49 during the nine months ended September 30, 2021 compared to $1.475 during the same period in 2020.

*•*Payments to settle employee tax obligations: Payments to settle tax obligations from the exercise of share-based awards increased $13.4 million compared to the prior year period. The increase is primarily due to the increase in the number of shares exercised and an increase in the average stock price compared to the prior year period.

Liquidity and Capital Resources

Free Cash Flow

In addition to measuring our cash flow generation and usage based upon the operating, investing and financing classifications included in the Condensed Consolidated Statements of Cash Flows, we also measure free cash flow (a non-GAAP measure) which represents net cash provided by operating activities minus capital expenditures. We believe that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.

The following table reconciles our free cash flow to cash flow provided by operating activities:

			Nine Months Ended September 30,
Free Cash Flow (dollars in thousands)			2021						2020
Cash flow provided by operating activities			$	788,586					$	686,919
Less: Capital expenditures			(121,157)						(123,564)
Free cash flow			$	667,429					$	563,355
Free cash flow as a percentage of revenue			11.3		%				11.5		%
Free cash flow as a percentage of net earnings			87.7		%				112.4		%

For the nine months ended September 30, 2021, we generated free cash flow of $667.4 million, representing 11.3% of revenue and 87.7% of net earnings. Free cash flow for the nine months ended September 30, 2021 increased $104.1 million compared to the prior year period, due to higher operating cash flow primarily as a result of higher earnings and lower compensation payments, partially offset by higher investments in working capital to support growth, and deferrals of tax payments in 2020 that did not repeat in 2021, as previously noted.

Capitalization

We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of our common stock. As of September 30, 2021, we maintained a $1 billion Credit Agreement with a syndicate of banks with an expiration date of October 4, 2024. The Credit Agreement is used as liquidity back-up for our commercial paper program and for general corporate purposes.

Beginning in early-to-mid-March 2020, the commercial paper market began to experience very high levels of volatility as a result of COVID-19 related uncertainties. Volatility was most pronounced for "Tier-2" issuers, such as Dover, and impacted both market access and pricing. As a result, on March 16, 2020, the Company borrowed $500 million under the Credit Agreement. Proceeds from the borrowing were used to repay all of the Company's outstanding commercial paper and for general corporate purposes. We subsequently repaid the $500 million in the second quarter of 2020 using proceeds from commercial paper as volatility in the commercial paper market stabilized and we resumed borrowing commercial paper.

Under the Credit Agreement, we are required to pay a facility fee and to maintain an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of not less than 3.0 to 1.0. We were in compliance with this covenant and our other long-term debt covenants at September 30, 2021 and had a coverage ratio of 14.9 to 1. We are not aware of any potential impairment to our liquidity and expect to remain in compliance with all of our debt covenants. Additionally, our earliest long-term debt maturity is in 2025.

We also have a current shelf registration statement filed with the Securities and Exchange Commission that allows for the issuance of additional debt securities that may be utilized in one or more offerings on terms to be determined at the time of the offering. Net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, capital expenditures and acquisitions.

At September 30, 2021, our cash and cash equivalents totaled $739.1 million, of which $503.8 million was held outside the United States. At December 31, 2020, our cash and cash equivalents totaled $513.1 million, of which $345.9 million was held outside the United States. Cash and cash equivalents are invested in highly liquid investment-grade money market instruments and bank deposits with maturities of three months or less. We invest any cash in excess of near-term requirements in money

market instruments or short-term investments, which consist of investment grade time deposits with original maturity dates at the time of purchase of no greater than three months.

We utilize the net debt to net capitalization calculation (a non-GAAP measure) to assess our overall financial leverage and capacity and believe the calculation is useful to investors for the same reason. Net debt represents total debt minus cash and cash equivalents. Net capitalization represents net debt plus stockholders' equity. The following table provides a reconciliation of net debt to net capitalization to the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (dollars in thousands)						September 30, 2021						December 31, 2020
Long-term debt						$	3,060,184					$	3,108,829
Total debt						3,060,184						3,108,829
Less: Cash and cash equivalents						(739,144)						(513,075)
Net debt						2,321,040						2,595,754
Add: Stockholders' equity						3,891,818						3,385,773
Net capitalization						$	6,212,858					$	5,981,527
Net debt to net capitalization						37.4		%				43.4		%

Our net debt to net capitalization ratio decreased to 37.4% at September 30, 2021 compared to 43.4% at December 31, 2020. Net debt decreased $274.7 million during the period primarily due to an increase in cash and cash equivalents and a decrease in long-term debt as a result of foreign currency translation on Euro denominated notes. Stockholders' equity increased $506.0 million primarily as a result of earnings during the period, partially offset by dividends paid, exercises of share-based awards and share repurchases.

Operating cash flow, existing capacity of our Credit Agreement and access to capital markets are expected to satisfy our various cash flow requirements, including acquisitions, capital expenditures and share repurchases.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements and related public financial information are based on the application of GAAP which requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our public disclosures, including information regarding contingencies, risk and our financial condition. We believe our use of estimates and underlying accounting assumptions conform to GAAP and are consistently applied. We review valuations based on estimates for reasonableness on a consistent basis.

Recent Accounting Standards

See Part 1, Notes to Condensed Consolidated Financial Statements, Note 20 — Recent Accounting Pronouncements. The adoption of recent accounting standards as included in Note 20 — Recent Accounting Pronouncements in the Condensed Consolidated Financial Statements has not had, and is not expected to have, a significant impact on our revenue, earnings or liquidity.

Special Notes Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, especially MD&A, contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this document other than statements of historical fact are statements that are, or could be deemed, “forward-looking” statements. Some of these statements may be indicated by words such as “may”, “anticipate”, “expect”, believe”, “intend”, “guidance”, “estimates”, “suggest”, “will”, “plan”, “should”, “would”, “could”, “forecast”, "headwind", "tailwind" and other words and terms that use the future tense or have a similar meaning. Forward-looking statements are based on current expectations and are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control. Factors that could cause actual results to differ materially from current expectations include, among other things, the impacts of COVID-19 or other future pandemics on the global economy and on our customers, suppliers, employees, business and cash flows, supply chain constraints and labor shortages that could result in production stoppages, inflation in material input costs and freight logistics, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, changes in law, including the effect of U.S. tax laws and developments with respect to trade policy and tariffs, our ability to identify and complete acquisitions and integrate and realize synergies from newly acquired businesses, the impact of interest rate and currency exchange rate fluctuations, capital allocation plans and changes in those plans, including with

respect to dividends, share repurchases, investments in research and development, capital expenditures and acquisitions, our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions, changes in material costs or the supply of input materials, the impact of legal compliance risks and litigation, including with respect to product quality and safety, cybersecurity and privacy, our ability to capture and protect intellectual property rights, and various other factors that are described in our periodic reports filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2020. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

The Company may, from time to time, post financial or other information on its website, www.dovercorporation.com. The website is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.

Non-GAAP Disclosures

In an effort to provide investors with additional information regarding our results as determined by GAAP, we also disclose non-GAAP information which we believe provides useful information to investors. Segment EBITDA, segment EBITDA margin, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of net earnings, net debt, net capitalization, net debt to net capitalization ratio, adjusted working capital, organic revenue growth and rightsizing costs are not financial measures under GAAP and should not be considered as a substitute for earnings, cash flows from operating activities, debt or equity, working capital, revenue or restructuring costs as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.

We believe that segment EBITDA and segment EBITDA margin are useful to investors and other users of our financial information in evaluating ongoing operating profitability as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment earnings, which is the most directly comparable GAAP measure. We do not present segment net income because corporate expenses, interest and taxes are not allocated at a segment level. Segment EBITDA margin is calculated as segment EBITDA divided by segment revenue.

We believe the net debt to net capitalization ratio and free cash flow are important measures of liquidity. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ. Free cash flow and free cash flow ratios provide both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase our common stock. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of net earnings equals free cash flow divided by net earnings. We believe that reporting adjusted working capital, which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of our operational results by showing the changes caused solely by revenue. We believe that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and divestitures, provides a useful comparison of our revenue performance and trends between periods. We believe that reporting rightsizing costs, which include restructuring and other charges, is important as it enables management and investors to better understand the financial impact of our broad-based cost reduction and operational improvement initiatives.

Reconciliations of non-GAAP measures can be found above in this Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations.