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, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies. 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 provides a wide range of equipment, components, software, solutions and services for vehicle aftermarket, waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing end-markets.

• Our Clean Energy & Fueling segment provides components, equipment, and software and service solutions enabling safe transport of traditional and clean fuels and other hazardous substances along the supply chain, as well as the safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments.

• Our Imaging & Identification segment supplies precision marking and coding, packaging intelligence, product traceability, brand protection and digital textile printing equipment, as well as related consumables, software and services to the global packaged and consumer goods, pharmaceutical, industrial manufacturing, fashion and apparel and other end-markets.

• Our Pumps & Process Solutions segment manufactures specialty pumps and flow meters, fluid connecting solutions, plastics and polymer processing equipment, and highly-engineered precision components for rotating and reciprocating machines serving single-use biopharmaceutical production, diversified industrial manufacturing, polymer processing, midstream and downstream oil and gas and other end-markets.

• Our Climate & Sustainability Technologies segment is a provider of innovative and energy-efficient equipment and systems that serve the commercial refrigeration, heating and cooling and beverage can-making equipment markets.

In the second quarter of 2022, revenue was $2.2 billion, which increased $127.0 million, or 6.3%, as compared to the second quarter of 2021. This was driven by organic revenue growth of 7.5% and acquisition-related revenue growth of 4.1%, partially offset by an unfavorable impact from foreign currency translation of 3.6% and disposition-related decline of 1.7%. Pricing initiatives continued in the quarter to offset the impact of higher commodity costs, principally steel, component parts inflation, and higher freight and logistics costs.

The 7.5% organic revenue growth for the second quarter of 2022 was broad-based across most of our businesses based on solid underlying demand and our ability to produce and ship despite supply chain constraints, input cost inflation, and unforecasted production interruptions. The Engineered Products segment had organic revenue growth of 18.6% primarily as a result of pricing initiatives as well as strength in our waste handling, vehicle services, industrial automation, and industrial winch and hoist businesses, whereas our aerospace and defense business declined organically year-over-year driven by supply chain constraints and program timing. The Clean Energy & Fueling segment had organic revenue decline of 1.1% principally due to

reduced year-over-year demand in North America for Europay, Mastercard, and Visa ("EMV") compliant equipment following the compliance deadline in the second quarter of 2021, mostly offset by solid demand in our North America below ground retail fueling, fluid transfer solutions and vehicle wash solutions businesses, along with pricing initiatives. The Imaging & Identification segment experienced organic revenue decline of 0.9% driven by sourced logistics headwinds and continued component shortages due to COVID-19 related lockdowns in China in our marking and coding business, partially offset by growth in our serialization and brand management software. The Pumps & Process Solutions segment had organic revenue growth of 6.8%, driven by pricing initiatives, along with continued strength in our core non-COVID-19 biopharma platform, industrial pumps, plastics and polymer processing solutions, and bearings and compression components businesses, partially offset by lower shipments for single-use pumps and connectors used in biopharmaceutical production processes for the COVID-19 vaccine. The Climate & Sustainability Technologies segment posted organic revenue growth of 11.4%, reflective of pricing initiatives combined with strong demand in retail refrigeration, can-making, and heat exchangers.

From a geographic perspective, organic revenue for the U.S., our largest market, increased 12.5% in the second quarter of 2022. Organic revenue in Europe and Asia grew 11.8% and 0.4%, respectively. Revenue growth in Asia was negatively impacted by COVID-19 driven lockdowns in China in the quarter, which have since eased. Other Americas declined by 17.7% organically in the quarter.

Bookings were $2.1 billion for the three months ended June 30, 2022, a decrease of $270.3 million, or 11.4% compared to the prior year comparable period. Included in this result was organic decline of 9.9%, an unfavorable impact from foreign currency translation of 2.9%, disposition-related decline of 1.8%, and acquisition-related growth of 3.2%. The organic bookings decline was driven primarily by a $74.0 million order reversal due to customer financing limitations in our beverage can-making business, a decrease in orders for biopharmaceutical components used in COVID-19 vaccine production, and declines in our vehicle service and waste handling businesses principally related to higher year-over-year comparables and timing of orders in waste handling. This was partially offset by solid demand in our marking and coding business.

Backlog as of June 30, 2022 was $3.3 billion, an increase from $2.6 billion in the prior year. See definition of bookings and backlog within "Segment Results of Operations".

Restructuring and other costs of $7.9 million included restructuring charges of $4.3 million and other costs of $3.6 million for the three months ended June 30, 2022. Restructuring and other costs were primarily due to headcount reductions and facility consolidations resulting from restructuring programs initiated in 2021 and 2022, and asset write-downs. See Note 8 — Restructuring Activities in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for further details.

Subsequent to the second quarter of 2022, on July 1, 2022, the Company completed the acquisition of Malema Engineering Corporation ("Malema"), a designer and manufacturer of flow measurement and control instruments serving customers in the biopharmaceutical, semiconductor and industrial sectors, for approximately $224.0 million, subject to customary post-closing adjustments, and contingent consideration of up to $50.0 million. The Malema acquisition expands the Company's biopharma single-use production offering within the Pumps & Process Solutions segment. See Note 20 — Subsequent Events in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for further details.

COVID-19 Update

The COVID-19 outbreak and associated counteracting measures implemented by governments and businesses around the world, as well as subsequent accelerated recovery in global business activity, have increased uncertainty in the global business environment and led to supply chain disruptions and shortages in global markets for commodities, logistics and labor, as well as input cost inflation. Currently our expectation is that the impact of cost inflation, including labor, freight and logistics costs, as well as supplier component input availability will continue throughout 2022.

The public health situation, continued global response measures and corresponding impacts on various markets remain fluid and uncertain and may lead to sudden changes in trajectory and outlook. We will continue to proactively respond to the situation and may take further actions that alter our business activity as may be required by governmental authorities, or that we determine are in the best interests of our employees and operations.

CONSOLIDATED RESULTS OF OPERATIONS

			Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands, except per share data)			2022						2021						% Change						2022						2021						% Change
Revenue			$	2,158,715					$	2,031,676					6.3		%				$	4,210,616					$	3,899,577					8.0		%
Cost of goods and services			1,377,432						1,259,504						9.4		%				2,686,139						2,405,857						11.6		%
Gross profit			781,283						772,172						1.2		%				1,524,477						1,493,720						2.1		%
Gross profit margin			36.2		%				38.0		%				(1.8)						36.2		%				38.3		%				(2.1)
Selling, general and administrative expenses			424,433						428,042						(0.8)		%				868,276						837,040						3.7		%
Selling, general and administrative expenses as a percent of revenue			19.7		%				21.1		%				(1.4)						20.6		%				21.5		%				(0.9)
Operating earnings			356,850						344,130						3.7		%				656,201						656,680						(0.1)		%
Interest expense			26,989						26,661						1.2		%				53,541						53,484						0.1		%
Interest income			(949)						(942)						0.7		%				(1,724)						(1,622)						6.3		%
Other income, net			(4,546)						(4,933)						nm*						(6,675)						(7,776)						nm*
Earnings before provision for income taxes			335,356						323,344						3.7		%				611,059						612,594						(0.3)		%
Provision for income taxes			45,738						58,836						(22.3)		%				95,288						115,317						(17.4)		%
Effective tax rate			13.6		%				18.2		%				(4.6)						15.6		%				18.8		%				(3.2)
Net earnings			289,618						264,508						9.5		%				515,771						497,277						3.7		%
Net earnings per common share - diluted			$	2.00					$	1.82					9.9		%				$	3.56					$	3.43					3.8		%

• nm - not meaningful

Revenue

Revenue for the three months ended June 30, 2022 increased $127.0 million, or 6.3%, from the prior year comparable quarter. Results included organic revenue growth of 7.5%, primarily led by our Engineered Products and Climate & Sustainability Technologies segments, and acquisition-related revenue growth of 4.1%, driven by our Clean Energy & Fueling segment. This growth was partially offset by an unfavorable impact from foreign currency translation of 3.6% and disposition-related decline of 1.7%. Customer pricing favorably impacted revenue by approximately 6.6% in the second quarter of 2022 compared to 2.1% in the prior year comparable quarter.

Revenue for the six months ended June 30, 2022 increased $311.0 million, or 8.0%, from the comparable period. The increase primarily reflects organic revenue growth of 8.4%, primarily led by our Engineered Products and Climate & Sustainability Technologies segments. Acquisition-related growth was 4.3%, led by our Clean Energy & Fueling segment. This growth was partially offset by an unfavorable impact from foreign currency translation of 3.0% and a 1.7% impact from dispositions within the Climate & Sustainability Technologies segment. Customer pricing favorably impacted revenue by approximately 6.3% for the six months ended June 30, 2022 compared to 1.4% in the prior year comparable period.

Gross Profit

Gross profit for the three months ended June 30, 2022 increased $9.1 million, or 1.2%, while gross profit margin decreased 180 basis points to 36.2%, from the prior year comparable quarter. Our pricing initiatives which started in 2021 and into 2022 offset increased material and logistics costs.

Gross profit for the six months ended June 30, 2022 increased $30.8 million, or 2.1%, while gross profit margin decreased by 210 basis points to 36.2%, from the comparable period. Our pricing initiatives which started in 2021 and into 2022 offset increased material and logistics costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2022 decreased $3.6 million, or 0.8%, from the prior year comparable quarter, primarily due to lower variable compensation expense. As a percentage of revenue, selling, general and administrative expenses decreased 140 basis points as compared to the prior year comparable period to 19.7% due to an increase in the revenue base.

Selling, general and administrative expenses for the six months ended June 30, 2022 increased $31.2 million, or 3.7%, from the comparable period, primarily due to increased labor costs, travel and marketing expenses, and amortization expense from acquisitions. Selling, general and administrative expenses as a percentage of revenue decreased 90 basis points as compared to the prior year comparable period to 20.6% due to an increase in the revenue base.

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $38.6 million and $41.2 million for the three months ended June 30, 2022 and 2021, respectively, and $79.3 million and $82.4 million, for the six months ended June 30, 2022 and 2021, respectively. These costs as a percent of revenue were 1.8% and 2.0% for the three months ended June 30, 2022 and 2021, respectively, and 1.9% and 2.1% for the six months ended June 30, 2022 and 2021, respectively.

Other income, net

Other income, net for the three months ended June 30, 2022 decreased $0.4 million from the prior year comparable period due to various immaterial items.

Other income, net for the six months ended June 30, 2022 decreased $1.1 million due to various immaterial items.

Income Taxes

The effective tax rates for the three months ended June 30, 2022 and 2021 were 13.6% and 18.2%, respectively. The decrease in the effective tax rate for the three months ended June 30, 2022 relative to the prior year comparable quarter was primarily driven by favorable audit resolutions, including $22.6 million related to the Tax Cuts and Jobs Act.

The effective tax rates for the six months ended June 30, 2022 and 2021 were 15.6% and 18.8%, respectively. The decrease in the effective tax rate for the six months ended June 30, 2022 relative to the prior year comparable quarter was primarily driven by favorable audit resolutions, including $22.6 million related to the Tax Cuts and Jobs Act.

Net earnings

Net earnings for the three months ended June 30, 2022 increased 9.5% to $289.6 million, or $2.00 diluted earnings per share, from $264.5 million, or $1.82 diluted earnings per share, in the prior year comparable quarter. The increase in net earnings is mainly attributable to increased volumes, favorable business mix, and customer pricing actions, partially offset by increased material and logistic costs, increased labor costs, and unfavorable impact from foreign currency translation. Additionally, the three months ended June 30, 2022 was impacted by a $22.6 million reduction to income taxes previously recorded related to the Tax Cuts and Jobs Act.

Net earnings for the six months ended June 30, 2022 increased 3.7% to $515.8 million, or $3.56 diluted earnings per share, from $497.3 million, or $3.43 diluted earnings per share, in the prior year comparable quarter. The increase in net earnings is mainly attributable to increased volumes, favorable business mix, pricing initiatives, productivity actions, and restructuring benefits offset by higher material and logistic costs, increased labor costs and an unfavorable impact form foreign currency translation. Additionally, the six months ended June 30, 2022 was impacted by a $22.6 million reduction to income taxes previously recorded related to the Tax Cuts and Jobs Act.

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, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies). Each of these segments is comprised of various product and service offerings that serve multiple markets. We evaluate our operating segment performance based on segment earnings as defined in Note 16 — Segment Information in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q. 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 provides a wide range of equipment, components, software, solutions and services for vehicle aftermarket, waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing end-markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2022						2021						% Change						2022						2021						% Change
Revenue						$	514,436					$	442,091					16.4		%				$	1,002,083					$	870,218					15.2		%
Segment earnings						$	81,671					$	71,255					14.6		%				$	152,801					$	147,939					3.3		%
Segment margin						15.9%						16.1%												15.2%						17.0%
Operational metrics:
Bookings						$	452,668					$	497,200					(9.0)		%				$	993,703					$	1,025,510					(3.1)		%
Backlog																								$	759,589					$	613,517					23.8		%
Components of revenue growth:
Organic growth																		18.6		%																16.6		%
Acquisitions																		1.1		%																1.2		%
Foreign currency translation																		(3.3)		%																(2.6)		%
																		16.4		%																15.2		%

Second Quarter 2022 Compared to the Second Quarter 2021

Engineered Products segment revenue for the second quarter of 2022 increased $72.3 million, or 16.4%, as compared to the second quarter of 2021, comprised primarily of organic growth of 18.6%, acquisition-related growth of 1.1%, and an unfavorable impact from foreign currency translation of 3.3%. Customer pricing favorably impacted revenue in the second quarter of 2022 by approximately 10.3% compared to 2.7% in the prior year comparable quarter, reflecting actions to recover increasing costs.

The organic revenue growth was most notable in our waste handling, vehicle service, industrial automation, and industrial winch and hoist businesses. Our aerospace and defense business was down year-over-year driven by supply chain constraints, program timing, and a difficult comparable against record shipment levels in the prior year. Despite the strong organic growth and near record-high backlog levels for the segment, shipments continue to be challenged by supply chain and labor availability constraints. We anticipate organic revenue growth to continue into the second half of the year as demand remains strong in several of our key end-markets, most notably waste handling and vehicle services.

Engineered Products segment earnings increased $10.4 million, or 14.6%, compared to the second quarter of 2021. The increase was primarily driven by increased volumes, favorable business mix, and customer pricing actions, partially offset by higher material and logistic costs, increased labor costs, as well as an unfavorable impact from foreign currency translation. As a result, segment margin decreased to 15.9% from 16.1% as compared to the prior year quarter.

Bookings decreased 9.0% for the segment, comprised primarily of organic decline of 8.3%, an unfavorable impact from foreign currency translation of 2.2%, partially offset by acquisition-related growth of 1.5%. The organic bookings decline was driven by declines in our vehicle service and waste handling businesses principally related to higher year-over-year comparables and timing of orders in waste handling. Segment book-to-bill was 0.88. Backlog increased 23.8% compared to the prior year comparable period.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Engineered Products revenue for the six months ended June 30, 2022 increased $131.9 million, or 15.2%, compared to the prior year comparable period. This was comprised of organic revenue growth of 16.6% and acquisition-related growth of 1.2%, partially offset by an unfavorable impact from foreign currency translation of 2.6%. The organic revenue growth was most notable in our waste handling, vehicle service, industrial automation, and industrial winch and hoist businesses. Our aerospace and defense business was down year-over-year driven by program timing along with constrained labor availability and supply chain disruptions. Customer pricing favorably impacted revenue in the six months ended June 30, 2022 by approximately 10.5% compared to 1.6% in the prior comparable period.

Segment earnings for the six months ended June 30, 2022 increased $4.9 million, or 3.3%, as compared to the 2021 comparable period. The growth was primarily driven by increased volumes, favorable business mix, and customer pricing actions, partially offset by higher material and logistic costs, increased labor costs, as well as an unfavorable impact from foreign currency translation. Segment margin decreased to 15.2% from 17.0% as compared to the prior year comparable period.

Clean Energy & Fueling

Our Clean Energy & Fueling segment provides components, equipment, and software and service solutions enabling safe transport of traditional and clean fuels and other hazardous substances along the supply chain, as well as the safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2022						2021						% Change						2022						2021						% Change
Revenue						$	494,075					$	437,042					13.0		%				$	952,470					$	826,720					15.2		%
Segment earnings						$	99,034					$	93,430					6.0		%				$	171,996					$	173,002					(0.6)		%
Segment margin						20.0%						21.4%												18.1%						20.9%
Operational metrics:
Bookings						$	487,861					$	453,146					7.7		%				$	989,352					$	875,814					13.0		%
Backlog																								$	411,350					$	256,497					60.4		%
Components of revenue growth:
Organic decline																		(1.1)		%																(0.5)		%
Acquisitions																		17.3		%																18.3		%
Foreign currency translation																		(3.2)		%																(2.6)		%
																		13.0		%																15.2		%

Second Quarter 2022 Compared to the Second Quarter 2021

Clean Energy & Fueling segment revenue for the second quarter of 2022 increased $57.0 million, or 13.0%, as compared to the second quarter of 2021, comprised of acquisition-related growth of 17.3%, an unfavorable impact from foreign currency translation of 3.2%, and an organic decline of 1.1%. Acquisition-related growth was driven by the acquisitions of AvaLAN Wireless Systems Incorporated, Liqal BV, Acme Cryogenics, and RegO. Customer pricing favorably impacted revenue in the second quarter of 2022 by approximately 5.4% compared to 2.5% in the prior year comparable quarter.

The modest organic revenue decline was primarily driven by reduced year-over-year demand in North America for EMV compliant equipment following the compliance deadline in the second quarter of 2021. This was mostly offset by solid demand in our North America retail fueling, fluid transfer solutions and vehicle wash solutions business, along with pricing actions aimed at mitigating material and logistics cost inflation. We anticipate organic revenue to increase in the second half of the year as demand remains constructive in our key end-markets, most notably the retail fueling, fluid transfer and vehicle wash businesses, and we anticipate improvements related to supply chain and logistics constraints.

Clean Energy & Fueling segment earnings increased $5.6 million, or 6.0%, over the prior year comparable quarter. The increase was primarily driven by pricing, productivity initiatives and cost actions, and the favorable impact from acquisitions, which more than offset the unfavorable impact to earnings from lower EMV related revenues and increased material, logistics and labor costs. Segment margin decreased to 20.0% from 21.4% in the prior year quarter.

Overall bookings increased 7.7% as compared to the prior year comparable quarter, driven by acquisition-related growth of 14.5% and partially offset by an organic decline of 4.6% and an unfavorable impact from foreign currency translation of 2.2%. The organic bookings decline was primarily driven by the decrease in demand for EMV compliant equipment, partially offset by strong order intake in our vehicle wash and North America retail fueling businesses. Segment book-to-bill was 0.99. Backlog increased 60.4% as compared to the prior year comparable period, driven in large part by the acquisitions completed in 2021.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Clean Energy & Fueling segment revenue increased $125.8 million, or 15.2%, as compared to the six months ended June 30, 2021, attributable to acquisition-related growth of 18.3%, partially offset by an unfavorable impact from foreign currency translation of 2.6%, and an organic decline of 0.5%. Organic revenue remained relatively flat for the first half of the year with strong demand in our retail fueling, fluid transfer, and vehicle wash solutions markets being offset by the normalization of EMV related demand in North America. Customer pricing favorably impacted revenue in the six months ended June 30, 2022 by approximately 4.2% compared to 1.8% in the prior comparable period.

Clean Energy & Fueling segment earnings decreased $1.0 million, or 0.6%, for the six months ended June 30, 2022. The decrease was driven by lower organic revenues, increased material, logistics and labor costs, and an unfavorable impact from foreign currency translation. This was partially offset by benefits from higher pricing, productivity initiatives and cost actions, and acquisitions. Segment margin decreased to 18.1% from 20.9% in the prior year comparable period.

Imaging & Identification

Our Imaging & Identification segment supplies precision marking and coding, packaging intelligence, product traceability, brand protection and digital textile printing equipment, as well as related consumables, software and services to the global packaged and consumer goods, pharmaceutical, industrial manufacturing, fashion and apparel and other end-markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2022						2021						% Change						2022						2021						% Change
Revenue						$	275,951					$	294,076					(6.2)		%				$	548,206					$	578,404					(5.2)		%
Segment earnings						$	61,392					$	66,565					(7.8)		%				$	119,990					$	130,183					(7.8)		%
Segment margin						22.2%						22.6%												21.9%						22.5%
Operational metrics:
Bookings						$	292,136					$	299,608					(2.5)		%				$	599,240					$	593,222					1.0		%
Backlog																								$	255,255					$	206,125					23.8		%
Components of revenue decline:
Organic decline																		(0.9)		%																(1.0)		%
Acquisitions																		0.5		%																0.4		%
Foreign currency translation																		(5.8)		%																(4.6)		%
																		(6.2)		%																(5.2)		%

Second Quarter 2022 Compared to the Second Quarter 2021

Imaging & Identification segment revenue for the second quarter of 2022 decreased $18.1 million, or 6.2%, as compared to the second quarter of 2021, comprised of an unfavorable impact from foreign currency translation of 5.8% and an organic decline of 0.9%, partially offset by acquisition-related growth of 0.5%. Acquisition-related growth was driven by the acquisition of Blue Bite LLC. Customer pricing favorably impacted revenue in the second quarter of 2022 by approximately 3.2% compared to 1.1% in the prior year comparable quarter.

The organic revenue decline was primarily driven by continued sourced component shortages and logistics headwinds in our marking and coding business, which was most notably impacted by component shortages that arose due to the COVID-19 related lockdowns in China. These lockdowns also impacted underlying demand in Asia. This was partially offset by increased revenue in our serialization and brand management software business. We expect deliveries in our marking and coding business to improve in the second half, as component availability improves, China restrictions ease, and underlying demand for our printers and consumables remains positive.

Imaging & Identification segment earnings decreased $5.2 million, or 7.8%, over the prior year comparable quarter. This decrease was primarily driven by revenue reductions stemming from supply chain and logistics constraints, input cost inflation, and unfavorable foreign exchange, partially offset by pricing initiatives, productivity actions, restructuring benefits, and cost containment. Segment margin decreased to 22.2% from 22.6% in the prior year comparable quarter.

Overall bookings decreased 2.5% as compared to the prior year comparable quarter, reflecting an unfavorable impact from foreign currency translation of 5.5% offset by organic growth of 2.6% and acquisition-related growth of 0.4%. Organic bookings growth was primarily driven by solid demand for new equipment and associated services and consumables in our marking and coding business. Segment book-to-bill was 1.06. Backlog increased 23.8% as compared to the prior year period.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Imaging & Identification segment revenue decreased $30.2 million, or 5.2%, as compared to the six months ended June 30, 2021, attributable to an unfavorable impact from foreign currency translation of 4.6% and an organic decline of 1.0%, partially offset by acquisition-related growth of 0.4%. The organic revenue decline was primarily driven by supply chain and logistics headwinds in our marking and coding business, most notably due to the COVID-19 related lockdowns in China which also

impacted underlying demand in Asia. Customer pricing favorably impacted revenue in the six months ended June 30, 2022 by approximately 2.6% compared to 1.0% in the prior comparable period.

Imaging & Identification segment earnings decreased $10.2 million, or 7.8%, for the six months ended June 30, 2022 over the prior year comparable period. The decrease was primarily driven by the earnings impact from lower revenues, higher input costs, and unfavorable foreign exchange impacts, partially offset by cost reduction initiatives, price increases, restructuring benefits, and cost containment. Segment margin decreased to 21.9% from 22.5% in the prior year comparable quarter.

Pumps & Process Solutions

Our Pumps & Process Solutions segment manufactures specialty pumps and flow meters, fluid connecting solutions, plastics and polymer processing equipment, and highly-engineered precision components for rotating and reciprocating machines serving single-use biopharmaceutical production, diversified industrial manufacturing, polymer processing, midstream and downstream oil and gas and other end-markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2022						2021						% Change						2022						2021						% Change
Revenue						$	441,127					$	428,701					2.9		%				$	876,322					$	823,078					6.5		%
Segment earnings						$	138,048					$	146,759					(5.9)		%				$	284,665					$	275,654					3.3		%
Segment margin						31.3%						34.2%												32.5%						33.5%
Operational metrics:
Bookings						$	471,693					$	521,010					(9.5)		%				$	931,483					$	1,072,375					(13.1)		%
Backlog																								$	715,646					$	634,477					12.8		%
Components of revenue growth:
Organic growth																		6.8		%																9.6		%
Acquisitions																		0.4		%																0.3		%
Foreign currency translation																		(4.3)		%																(3.4)		%
																		2.9		%																6.5		%

Second Quarter 2022 Compared to the Second Quarter 2021

Pumps & Process Solutions segment revenue for the second quarter of 2022 increased $12.4 million, or 2.9%, as compared to the second quarter of 2021, comprised of organic growth of 6.8%, acquisition-related growth of 0.4%, and an unfavorable impact from foreign currency translation of 4.3%. Acquisition-related growth was primarily driven by the acquisition of AMN Dpi, Quantex Arc Limited, and one other immaterial acquisition. Customer pricing favorably impacted revenue in the second quarter of 2022 by approximately 3.4% compared to 1.3% in the prior year comparable quarter.

The organic revenue growth was driven by pricing initiatives, along with continued strength in our core non-COVID-19 biopharma platform, industrial pumps, plastics and polymer processing solutions, and bearings and compression components businesses which all saw revenue growth driven by robust end market demand and strong backlogs. Revenue from shipments of single-use pumps and connectors used in biopharmaceutical production processes declined compared to the second quarter of 2021, as biopharmaceutical manufacturers reduced orders for components used in COVID-19 vaccine production. Additionally, COVID-19 related lockdowns affected our supply chain in China and negatively impacted revenues in the second quarter. While underlying demand remains positive in our core biopharmaceutical platform, we expect sales of products used in the production of COVID-19 vaccines to continue to decline in the second half of 2022.

Pumps & Process Solutions segment earnings decreased $8.7 million, or 5.9%, over the prior year comparable quarter. The decrease was primarily driven by the impact of reduced revenues relating to single use components used in COVID-19 vaccine production, along with material and labor cost inflation. This was partially offset by pricing initiatives, conversion on increased revenues in industrial pumps, plastics and polymer processing solutions, and bearings and compression components, productivity actions, and restructuring benefits. Segment margin decreased to 31.3% from 34.2% from the prior year comparable period mainly due to revenue mix within the segment.

Overall bookings decreased 9.5% as compared to the prior year comparable quarter, reflecting an organic decline of 6.5%, an unfavorable impact from foreign currency translation of 3.4%, and acquisition-related growth of 0.4%. The organic bookings decline was driven by a decrease in orders for biopharmaceutical components used in COVID-19 vaccine production, but partially offset by record order intake levels in our plastics and polymer processing business. Segment book-to-bill was 1.07. Backlog increased 12.8% compared to the prior year comparable quarter, driven by strong order rates in our plastics and polymer processing solutions and bearings and compression components businesses.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Pumps & Process Solutions segment revenue increased $53.2 million, or 6.5%, as compared to the six months ended June 30, 2021, attributable to organic growth of 9.6% and acquisition-related growth of 0.3%, partially offset by an unfavorable impact from foreign currency translation of 3.4%. The organic growth was primarily driven by continued demand strength and strong backlogs entering the year in our core non-COVID-19 biopharma platform, industrial pumps, plastics and polymer processing solutions, and bearings and compression components businesses. The increase was partially offset by reduced demand for biopharmaceutical components used in COVID-19 vaccine production. Customer pricing favorably impacted revenue in the six months ended June 30, 2022 by approximately 3.5% compared to 1.1% in the prior comparable period.

Pumps & Process Solutions segment earnings increased $9.0 million, or 3.3%, for the six months ended June 30, 2022 over the prior year comparable period, predominantly driven by conversion on higher revenues, pricing initiatives, productivity actions, and restructuring benefits, but partially offset by an unfavorable impact from material and labor cost inflation, and an unfavorable impact from foreign exchange. Segment margin decreased to 32.5% from 33.5% from the prior year comparable period.

Climate & Sustainability Technologies

Our Climate & Sustainability Technologies segment is a provider of innovative and energy-efficient equipment and systems that serve the commercial refrigeration, heating and cooling and beverage can-making equipment markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2022						2021						% Change						2022						2021						% Change
Revenue						$	434,164					$	430,506					0.8		%				$	833,242					$	802,583					3.8		%
Segment earnings						$	64,181					$	56,905					12.8		%				$	117,790					$	100,380					17.3		%
Segment margin						14.8%						13.2%												14.1%						12.5%
Operational metrics:
Bookings						$	403,574					$	606,545					(33.5)		%				$	848,426					$	1,143,871					(25.8)		%
Backlog																								$	1,186,180					$	854,188					38.9		%
Components of revenue growth:
Organic growth																		11.4		%																14.2		%
Dispositions																		(8.0)		%																(8.1)		%
Foreign currency translation																		(2.6)		%																(2.3)		%
																		0.8		%																3.8		%

Second Quarter 2022 Compared to the Second Quarter 2021

Climate & Sustainability Technologies segment revenue increased $3.7 million, or 0.8%, as compared to the second quarter of 2021, reflecting organic revenue growth of 11.4%, offset by 8.0% from our disposition of Unified Brands in fourth quarter of 2021, and an unfavorable impact from foreign currency translation of 2.6%. Customer pricing favorably impacted revenue in the second quarter of 2022 by approximately 9.5% compared to 2.6% in the prior year comparable quarter, reflecting actions to recover higher costs.

The organic revenue growth was driven by customer price actions implemented to recover increased material and logistics costs combined with strong demand across most of our key end-markets. Retail refrigeration revenues increased from the prior year, driven by customer pricing actions on flat unit volumes despite robust end market demand, as industry-wide supply chain constraints resulted in deferred shipments that are anticipated to be recovered in the second half of the year as supply chain availability improves. Beverage can-making business revenues experienced strong growth, driven by continued favorable macro trends in the global beverage industry as producers shift from plastic and glass packaging to aluminum cans for environmental sustainability and merchandising benefits offered by modern aluminum cans. During the quarter, this business terminated a contract due to customer financing limitations, resulting in non-refundable deposits recognized in revenue and segment earnings. 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.

Climate & Sustainability Technologies segment earnings increased $7.3 million, or 12.8%, as compared to the second quarter of 2021. Segment margin increased to 14.8% from 13.2% in the prior year comparable quarter. The earnings increase was driven by increased volumes, favorable business mix, and customer pricing actions, partially offset by increased material and logistics costs, most notably metals and freight, plant productivity shortfalls resulting from supply chain disruption and increased labor costs, and the disposition of Unified Brands in the fourth quarter of 2021.

Bookings in the second quarter of 2022 decreased 33.5% from the prior year comparable quarter, reflecting organic decline of 24.1%, a disposition-related decline of 7.2%, and an unfavorable impact from foreign currency translation of 2.2%. The organic bookings decline includes a $74.0 million reversal of an order slated for 2023 completion in our beverage can-making business due to customer financing limitations, along with a challenging comparable quarter in the prior year, especially in retail refrigeration. Segment book-to-bill for the second quarter of 2022 was 0.93. Backlog increased 38.9% over the prior year comparable period, reflective of the improving outlook across all businesses within the segment, which more than offset the order reversal in our beverage can-making business.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Climate & Sustainability Technologies segment revenue increased $30.7 million, or 3.8%, compared to the six months ended June 30, 2021, reflecting an organic revenue growth of 14.2%, an 8.1% decline from the dispositions of AMS Chino and Unified Brands and an unfavorable foreign currency translation of 2.3%. The organic revenue growth for the six months ended June 30, 2022 was driven by robust demand across all our key end-markets. Retail refrigeration revenues increased from the prior year, driven by robust remodel programs with key supermarket customers and continued growing demand for our environmentally friendly natural refrigerant systems in Europe. Our beverage equipment business experienced strong revenue growth, driven by continued favorable macro trends in the global beverage industry as producers shift from plastic and glass packaging to aluminum cans for environmental sustainability and merchandising benefits offered by modern aluminum cans. The beverage can-making business terminated a contract due to customer financing limitations, resulting in non-refundable deposits recognized in revenue and segment earnings. 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. Customer pricing favorably impacted revenue in the six months ended June 30, 2022 by approximately 9.4% compared to 1.4% in the prior comparable period.

Climate & Sustainability Technologies segment earnings increased $17.4 million, or 17.3%, for the six months ended June 30, 2022, as compared to the prior year comparable period. Segment margin increased to 14.1% from 12.5% in the prior year. The earnings increase was driven by increased volumes, favorable business mix, and customer pricing actions, partially offset by increased material and logistics costs, most notably metals and freight, plant productivity shortfalls resulting from supply chain disruption and increased labor costs, and the disposition of Unified Brands in Q4, 2021.

Reconciliation of Segment Earnings to Net Earnings

												Three Months Ended June 30,												Six Months Ended June 30,
																		2022						2021						2022						2021
Net earnings:
Segment earnings:
Engineered Products																		$	81,671					$	71,255					$	152,801					$	147,939
Clean Energy & Fueling																		99,034						93,430						171,996						173,002
Imaging & Identification																		61,392						66,565						119,990						130,183
Pumps & Process Solutions																		138,048						146,759						284,665						275,654
Climate & Sustainability Technologies																		64,181						56,905						117,790						100,380
Total segment earnings																		444,326						434,914						847,242						827,158
Purchase accounting expenses (1)																		47,019						35,162						100,305						70,678
Restructuring and other costs (2)																		7,944						10,779						18,496						14,941
Loss on dispositions (3)																		—						—						194						—
Corporate expense / other (4)																		27,967						39,910						65,371						77,083
Interest expense																		26,989						26,661						53,541						53,484
Interest income																		(949)						(942)						(1,724)						(1,622)
Earnings before provision for income taxes																		335,356						323,344						611,059						612,594
Provision for income taxes																		45,738						58,836						95,288						115,317
Net earnings																		$	289,618					$	264,508					$	515,771					$	497,277

(1) Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period.

(2) Restructuring and other costs relate to actions taken for employee reductions, facility consolidations and site closures, product line exits, and other asset charges.

(3) Loss on disposition includes working capital adjustments related to dispositions.

(4) Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, shared business services overhead costs, deal-related expenses and various administrative expenses relating to the corporate headquarters.

Restructuring and Other Costs (Benefits)

Restructuring and other costs (benefits) are not presented in our segment earnings because these costs are excluded from the segment operating performance measure reviewed by management. Restructuring and other costs of $7.9 million for the three months ended June 30, 2022 were primarily due to headcount reductions and facility consolidations resulting from restructuring programs initiated in 2021 and 2022, and asset write-downs. For the six months ended June 30, 2022, substantial liquidation and exit from certain Latin America countries in our Climate & Sustainability Technologies segment contributed to restructuring expenses of $12.5 million and other costs (benefits), net of $6.0 million, comprised primarily of foreign currency translation losses and asset write-downs. These restructuring and other 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 2022 with related restructuring charges.

We recorded the following restructuring and other costs for the three and six months ended June 30, 2022:

			Three Months Ended June 30, 2022
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	524					$	1,423					$	344					$	1,476					$	159					$	383					$	4,309
Other costs, net			2,377						5						963						1						107						182						3,635
Restructuring and other costs			$	2,901					$	1,428					$	1,307					$	1,477					$	266					$	565					$	7,944

			Six Months Ended June 30, 2022
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	981					$	1,619					$	1,535					$	2,161					$	5,875					$	295					$	12,466
Other costs (benefits), net			2,429						(1)						1,149						2						2,224						227						6,030
Restructuring and other costs			$	3,410					$	1,618					$	2,684					$	2,163					$	8,099					$	522					$	18,496

During the three and six months ended June 30, 2021, restructuring and other activities included restructuring charges of $9.4 million and $15.9 million, respectively, and other costs (benefits) of $1.3 million and $(0.9) million, respectively. Restructuring expense and other costs were comprised primarily of new 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. Other costs (benefits), net for the six months ended June 30, 2021 was comprised primarily of a gain on sale of assets of $2.0 million and $1.3 million in our Pumps & Process Solutions and Climate & Sustainability Technologies segments, respectively, as a result of restructuring actions, partially offset by $2.4 million of restructuring related costs. These restructuring and other 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 restructuring and other costs for the three and six months ended June 30, 2021:

			Three Months Ended June 30, 2021
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	4,339					$	1,415					$	174					$	904					$	2,283					$	321					$	9,436
Other costs (benefits), net			315						242						4						(5)						256						531						1,343
Restructuring and other costs			$	4,654					$	1,657					$	178					$	899					$	2,539					$	852					$	10,779

			Six Months Ended June 30, 2021
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	8,330					$	1,464					$	864					$	887					$	3,344					$	982					$	15,871
Other costs (benefits), net			343						251						(4)						(1,994)						(843)						1,317						(930)
Restructuring and other costs (benefits)			$	8,673					$	1,715					$	860					$	(1,107)					$	2,501					$	2,299					$	14,941

Purchase Accounting Expenses

Purchase accounting expenses primarily relate to amortization of acquired assets and charges related to fair value step-ups for acquired inventory sold during the period. These expenses are not presented in our segment earnings because they are excluded from the segment operating performance measure reviewed by management. These expenses reconcile to segment earnings as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Purchase accounting expenses
Engineered Products			$	5,593					$	3,881					$	10,408					$	7,767
Clean Energy & Fueling 1			26,895						13,018						58,225						26,052
Imaging & Identification			5,609						5,640						11,301						11,584
Pumps & Process Solutions			4,097						7,228						10,688						14,484
Climate & Sustainability Technologies			4,825						5,395						9,683						10,791
Total			$	47,019					$	35,162					$	100,305					$	70,678
1 The increase of $13,877 and $32,173 in purchase accounting expenses for the three and six months ended June 30, 2022, respectively, from the prior year comparable period in our Clean Energy & Fueling segment is due to the acquisition of RegO and Acme Cryogenics in Q4 2021, inclusive of $6,898 and $18,995, respectively, in charges related to fair value step-ups for inventory.

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:

			Six Months Ended June 30,
Cash Flows (dollars in thousands)			2022						2021
Net Cash Flows Provided By (Used In):
Operating activities			$	202,456					$	437,257
Investing activities			(115,853)						(151,203)
Financing activities			45,265						(200,188)

Operating Activities

Cash provided by operating activities for the six months ended June 30, 2022 decreased approximately $234.8 million compared to the comparable period in 2021. This decrease was primarily driven by higher investments in inventory to support business and backlog growth, and also to mitigate potential inventory shortages given the continuing supply chain disruptions and constraints, as well as higher compensation payouts. Additionally, estimated tax payments increased from 2021 to 2022, which includes a $43.5 million income tax payment in 2022 related to the gain on sale of Unified Brands in Q4 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 liquidity by showing changes caused by operational results. The following table provides a calculation of adjusted working capital:

Adjusted Working Capital (dollars in thousands)						June 30, 2022						December 31, 2021
Accounts receivable						$	1,514,455					$	1,347,514
Inventories						1,381,607						1,191,095
Less: Accounts payable						1,200,612						1,073,568
Adjusted working capital						$	1,695,450					$	1,465,041

Adjusted working capital increased from December 31, 2021 by $230.4 million, or 15.7%, to $1.7 billion at June 30, 2022, which reflected an increase of $166.9 million in accounts receivable and $190.5 million in inventory, partially offset by an increase in accounts payable of $127.0 million. These amounts include the effects of acquisitions and foreign currency translation. Accounts receivable increased compared to the prior year as a result of higher revenue. Inventories increased to support business and backlog growth, and to also mitigate potential inventory shortages due to supply chain disruptions and constraints. These factors also led to 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 June 30, 2022 and December 31, 2021, amounts due to financial institutions for suppliers using SCF were approximately $162 million and $211 million, respectively. SCF-related payments are classified as a reduction to cash flows from operations. During the six months ended June 30, 2022 and 2021, amounts paid to SCF financial institutions were approximately $460 million and $378 million, respectively.

Investing Activities

Cash used in investing activities is derived from cash outflows for capital expenditures and acquisitions, offset by proceeds from sales of property, plant and equipment. For the six months ended June 30, 2022 and 2021, we used cash in investing activities of $115.9 million and $151.2 million, respectively, primarily driven by the the following factors:

• Acquisitions: During the six months ended June 30, 2022, we deployed approximately $8.5 million, net, to acquire AMN within the Pumps & Process Solutions segment. In comparison, during the six months ended June 30, 2021, we acquired AvaLAN and Blue Bite within the Clean Energy & Fueling and Imaging & Identification segments, respectively, and Quantex and one other immaterial acquisition within the Pumps & Process Solutions segment for an aggregate of $81.2 million, net.

• Capital spending: Our capital expenditures increased $27.3 million during the six months ended June 30, 2022 compared to the six months ended June 30, 2021. We expect full year 2022 capital expenditures to be approximately $200-$220 million.

We anticipate that capital expenditures and any acquisitions we make through the remainder of 2022 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 six months ended June 30, 2022 and 2021, we generated cash totaling $45.3 million and used cash totaling $200.2 million, respectively, for financing activities, with the activity primarily attributable to the following:

• Repurchase of common stock: During the six months ended June 30, 2022, we used $85.0 million to repurchase 641,428 shares. During the six months ended June 30, 2021, we used $21.6 million to repurchase 182,951 shares.

*•*Commercial paper and notes payable: During the six months ended June 30, 2022 we received net proceeds of $288.0 million from commercial paper borrowings. During the six months ended June 30, 2021 we did not borrow or have proceeds from commercial paper or notes payable.

• Dividend payments: Dividends paid to shareholders during the six months ended June 30, 2022 totaled $144.1 million as compared to $142.7 million during the same period in 2021. Our dividends paid per common share increased 1.0% to $1.00 during the six months ended June 30, 2022 compared to $0.99 during the same period in 2021.

*•*Payments to settle employee tax obligations: Payments to settle tax obligations from the exercise of share-based awards declined $21.0 million compared to the prior year period, primarily due to the decrease in the number of shares exercised.

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 liquidity 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:

			Six Months Ended June 30,
Free Cash Flow (dollars in thousands)			2022						2021
Cash flow provided by operating activities			$	202,456					$	437,257
Less: Capital expenditures			(100,577)						(73,231)
Free cash flow			$	101,879					$	364,026
Cash flow from operating activities as a percentage of revenue			4.8		%				11.2		%
Cash flow from operating activities as a percentage of net earnings			39.3		%				87.9		%
Free cash flow as a percentage of revenue			2.4		%				9.3		%
Free cash flow as a percentage of net earnings			19.8		%				73.2		%

For the six months ended June 30, 2022, we generated cash flow from operating activities of $202.5 million, representing 4.8% of revenue and 39.3% of net earnings, and we generated free cash flow of $101.9 million, representing 2.4% of revenue and 19.8% of net earnings. Free cash flow for the six months ended June 30, 2022 decreased $262.1 million compared to the prior year period, due to lower operating cash flow primarily as a result of increases in inventory, compensation payouts, estimated tax payments, and investments in capital expenditures compared to the prior year. The six months ended June 30, 2022 includes a $43.5 million income tax payment related to the gain on sale of Unified Brands in Q4 2021.

Capitalization

We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of our common stock. As of June 30, 2022, we maintained a $1.0 billion five-year unsecured revolving credit facility (the "Credit Agreement") with a syndicate of banks which expires on October 4, 2024. The Credit Agreement is used as liquidity back-up for our commercial paper program and for general corporate purposes.

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 June 30, 2022 and had an interest coverage ratio of 17.8 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 June 30, 2022, our cash and cash equivalents totaled $515.4 million, of which $252.9 million was held outside the United States. At December 31, 2021, our cash and cash equivalents totaled $385.5 million, of which $257.5 million was held outside the United States. Cash and cash equivalents in excess of near-term requirements are invested in highly liquid investment-grade money market instruments, short-term investments, or bank deposits, which consist of investment-grade time deposits with original maturity dates at the time of purchase of no greater than three months. Subsequent to the second quarter of 2022, the Company completed the acquisition of Malema and paid approximately $224.0 million. See Note 20 — Subsequent Events in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for further details.

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)						June 30, 2022						December 31, 2021
Short-term borrowings						$	654					$	702
Commercial paper						393,000						105,000
Notes payable						$	393,654					$	105,702
Long-term debt						$	2,936,124					$	3,018,714
Total debt						3,329,778						3,124,416
Less: Cash and cash equivalents						(515,371)						(385,504)
Net debt						2,814,407						2,738,912
Add: Stockholders' equity						4,388,523						4,189,528
Net capitalization						$	7,202,930					$	6,928,440
Net debt to net capitalization						39.1		%				39.5		%

Our net debt to net capitalization ratio decreased to 39.1% at June 30, 2022 compared to 39.5% at December 31, 2021. Net debt increased $75.5 million during the period primarily due to an increase in commercial paper borrowings, partially offset by the increase in cash and cash equivalents. Stockholders' equity increased $199.0 million primarily as a result of earnings during the period, partially offset by dividends paid and exercises of share-based awards.

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, purchase obligations, lease obligations, 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 Note 19 — Recent Accounting Pronouncements in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q. The adoption of recent accounting standards as included in Note 19 — 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 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, 2021. 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. 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, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for cash flows from operating activities, debt or equity, working capital or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.

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 provides a meaningful measure of liquidity by showing changes caused by operational results. 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.

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.