Good morning. Welcome to Dover's 2020 Analyst and Investor Meeting webcast. In attendance from Dover Corporation today are Richard J. Tobin, President and Chief Executive Officer, Brad M. Cerepak, Senior Vice President and Chief Financial Officer, Andrey Galiuk, Vice President of Corporate Development and Investor Relations, Karl Bucher, President of Dover's Pump Solutions Group, and Janel Wittmayer , President of Colder Products Company. After the presentations, there will be a question and answer period. If you would like to ask a question during this time, press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key on your telephone keypad. Today's presentation will include two videos. All attendees who do not anticipate asking questions are encouraged to participate via the webcast link on Dover's website.
As a reminder, ladies and gentlemen, this webcast and conference call is being recorded and your participation implies consent to our recording. If you do not agree with these terms, please disconnect at this time. Thank you. I would now like to turn the call over to Mr. Galiuk. Please go ahead, sir.
Thank you, Gigi. Good morning, everyone, and thank you for joining our virtual meeting today. This webcast will be available for playback on our website through December 11th, 2020. Dover provides non-GAAP information and performance metrics. Relevant definitions and reconciliations between GAAP and adjusted measures are included in the presentation materials, which are available on our website. We want to remind everyone that our comments today may contain forward-looking statements that are subject to uncertainties and risks, including the impacts of COVID-19 on the global economy and on our customers, suppliers, employees, operations, business, liquidity, and cash flow. We caution everyone to be guided in their analysis of Dover by referring to our Form 10-K and Form 10-Q for the second quarter for a list of factors that could cause our results to differ from those anticipated in any forward-looking statement.
We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. With that, I will turn this call over to Rich.
Thanks, Andrey. Good morning, everyone, and welcome to our Investor and Analyst Meeting. The purpose of today's meeting will be to focus on our Pumps & Process Solutions segment, which, as you know, has been performing very well over the last several years. In particular, we will deep dive into our high-growth biopharma business, where we've made some interesting organic and inorganic investments recently, and we see a long runway for profitable growth. When we initially planned this event, our intention was to have it coincide with the grand opening of our brand new CPC facility near Minneapolis. Due to pandemic-related restrictions, a pre-recorded video will hopefully give you a glimpse of how our new best-in-class manufacturing and engineering facility, coupled with some recent product acquisitions, position us to sustain and accelerate our growth trajectory. Moving on to slide three.
Joining me today are two of our operating company Presidents, both veteran operators with experience in driving growth and strong operational performance. Karl Bucher is the President of our Pump Solutions Group, and Janel Wittmayer is the President of Colder Products Company. Today, I will provide a brief third quarter corporate performance update and then provide a high-level view of our Pumps & Process Solutions and biopharma businesses. After that, Karl and Janel will take us through more detail about their businesses. We'll do a brief Q&A at the end of the session. Okay, let's jump into the quick corporate update on slide four.
I assume most people in attendance are familiar with Dover, those of you that are new to the name, we are a $7 billion supplier of engineered and differentiated industrial equipment, components, services, and software to a diverse set of attractive niche businesses or business-to-business markets. Our strategy of participating in new attractive markets, coupled with strong operating track record, attractive cash flow, and active capital deployment, have historically resulted in superior shareholder value creation over long-term horizons. Despite the challenging business environment thus far in 2020, Dover has demonstrated relative top-line resilience and an ability to flex our cost structure to preserve profitability. This performance has been augmented by our multi-year effort to drive permanent cost efficiency programs across our portfolio.
With the confidence of continued ability of our portfolio's companies to execute well in the current environment, we were one of the few multi-industrials to reinstitute full-year guidance at the end of Q2. Let's go to slide five and I'll give you a short Q3 update on trading conditions. Demand conditions continue to improve sequentially across the majority of our markets. Bookings, while negative year-over-year, are higher than our forecasted expectations and improving sequentially, with book-to-bill turning above one in August. Also, our absolute backlog remains higher than this time last year, providing confidence of our revenue forecast for the full year. In terms of the individual business highlights, our above-ground retail fueling, heat exchanger, aerospace and defense, and biopharma businesses continue to deliver robust performance. Demand conditions are constructive in marking and coding, food retail, and vehicle aftermarket.
Our longer cycle businesses, such as plastics and polymers and can-making equipment, continue to track as expected with limited disruption or shipment deferment. Our expectation to deliver improved comparative margin performance in our refrigeration business remains on track. As a result of the Q3 top-line trends, positive product mix, some of which we will highlight today, and continued good execution on our cost control measures, we expect to exceed our internal modeled Q3 forecasts embedded in our full-year guidance, de-risking any potential of unexpected demand dislocations in the fourth quarter. This provides us a clear path to achieve the top end of our full-year guidance, which I would expect to further refine at the end of Q3. With that, let's move on to why we're here today. On slide six, we are providing an update on our capital allocation execution toward the priorities we outlined in prior years.
We prioritize high ROI and high certainty organic investments to fuel growth and improve productivity. We've made significant investments over the last two years, and these strategic projects remain on track despite moderate supplier obstacles associated with the COVID-19 pandemic. One of the largest organic investments by Dover was the new building for CPC to support growth. We are proud to announce the completion of this project, which provides CPC with significant growth capacity and an expanded set of capabilities. Janel will talk more about this today. Our investment to automate production of our refrigerated door cases is progressing as well. We are piloting production and we'll be gradually increasing volume through the next several quarters, driving improvement in our margin performance. Inorganic deployment of capital is in Dover's DNA and remains a high priority. We have a solid track record of driving value through bolt-on acquisitions.
An important vector of our M&A efforts is enhancing our offerings to customers and upgrading our business mix through digital and software offerings and investments in markets with secular growth trends. All six bolt-on deals we have closed this year meet this criteria. Four are focused on software and digital offerings, and two on product line extensions of high growth spaces. As we mentioned during the second quarter results, our M&A pipeline remains robust and we are well-positioned to continue enhancing our earnings growth through smart capital redeployment. We remain committed to providing shareholder returns by regularly returning a portion of our strong cash flow. To this end, Dover has maintained its 66-year track record of uninterrupted dividend increases, and we will continue growing our dividend. Turning to slide seven. This tees up why we want to shine some more light on our Pumps & Process Solutions business.
This segment has been an excellent performer, both within the Dover portfolio and when benchmarked versus our peers. As we showed you last year, after a decade-long upgrading, our portfolio has demonstrated robust GDP plus growth and margin accretion through cycle. Pumps & Process Solutions stands out against that solid backdrop. As you can see, this is one of the fastest-growing businesses with the highest margin profile and significant recurring-like revenue sources. We expect this segment to be the most resilient in 2020 as well, and they have a commendable margin performance year-to-date. Moving to slide eight. We have four operating companies in the segment, ranging in size from approximately $200 million to a half a billion. These are leaders in niche markets, mostly focused on high criticality flow control applications.
From a business mix perspective, the majority of the segment is comprised of components that represent relatively small cost compared to the value and use and total cost of the system. Many of our technologies are proprietary. For example, CPC's portfolio includes 85 patents, and Em-tec utilizes proprietary software in their flow controllers to optimize flow rates based on meter readings. Contributing to the stability and predictability of these businesses are significant replacement demand and a sizable stream of parts and services after initial install. As an example, nearly two-thirds of the demand of our pumps comes from maintenance repair and goes toward replacing equipment in the field. Within our PPS segment, we have several high-growth sub-platforms that have been under development for several years. One of them is biopharma, which we're going to talk about today.
There are also growing applications and offerings like renewable energy, thermal management, medical, and hygienic. I'm not going to spend a lot of time on slide nine, and we'll just point out that we have a number of product lines serving a variety of life science and hygienic applications that add up to roughly a $300 million business, serving addressable markets of over $2 billion. On slide 10, we show you how we think about the growth avenues for this platform. Our biopharma business is an excellent example of that. We developed it organically from an industrial connector offering, and Janel will talk about another great example of driving growth through thermal management applications. To support these aspirations, we invest almost $10 million a year in R&D across CPC and PSG, which drives our organic product development and our inorganic opportunity identification. Quattroflow is a great example.
It offers a new-to-the-world positive displacement pumping technology. We also have our sights set on more opportunities just like it. Lastly, we continually look for ways to enhance our offering to existing customers through complementary solutions that go hand-in-hand with our core products. Em-tec is a great example, and Karl will talk about it later in the presentation. We believe we can continue to drive substantial growth through this framework. Moving ahead, let's dive into our biopharma business. We are really proud of what our teams have accomplished here, starting from virtually zero. We made a few targeted inorganic investments that seeded the platform, and the majority of the growth has come through excellent application of customer-centric organic growth levers. This platform is growing at rates well into the double digits, and at this pace, doubles in size every few years.
This is why we're feeding this growth, a smart organic investment is a paramount priority. We have moved Quattroflow to a new facility a few years ago, now have built a greenfield site for CPC to support their growth into the future. On the next few slides, we'll give you a high-level overview of our thesis for biopharma market participation and let Karl and Janel take us through a more in-depth look. On slide 12, we lay out the growth drivers behind biopharma and single-use production technology in particular. These drivers are well supported and have been playing out for a long time, importantly, have runway to support future growth. First off, biologic drugs have been growing at a rate double that of traditional small-volume pharmaceuticals.
They deliver successful novel therapies for multiple common ailments, share of biologics in pharma pipelines has been increasing with a steady stream of innovation coming out of the industry, including recently, cell and gene therapies. Globally, the volume of biologics production is growing in double digits. Within biopharma, there are two main production methods, fixed stainless steel structures that require deep cleaning after each batch, single-use production systems utilizing recyclable plastic components where possible, such as bags, tubing, connectors, and more recently, pumps. Single-use technology offers clear operational benefits to producers has been a technology of choice for the vast majority of new production capacity put in place. The results in single-use offering growing above double-digit base growth of biologics production. Additionally, the single-use nature of our products, essentially consumables, tied to the production volume as opposed to capital expense.
On slide 13, we show that we partner with customers across the whole value chain of drug development and production. We start collaborating early in the R&D process and development stage, and that makes our product a natural choice for manufacturing scale-up phase. Slide 14 is the last one we'll cover before we get into the meat of the presentation, is just a visual showing of the logic behind the platform we are building. As you can see, the offering we've built over time is not a random collection of products. We aim to participate in high-criticality components that operate on the same fluid path and often can be sold on the same sale occasion and can be engineered to work together and make the overall system safer and more efficient. This visual shows our pumps, connectors, and flow meters on a continuous chromatography system.
Importantly, we operate an OEM-agnostic model that offers the most flexibility to our end customers. With that, I'd like to hand the presentation over to Karl Bucher to speak more about the biopharma business within our Pump Solutions Group. Karl?
Thanks, Rich. Let me start by briefly introducing Pump Solutions Group. PSG is a global pump and dispensing solution expert, enabling safe and efficient transfer of critical and valuable fluids with revenue of about a half a billion dollars. Our end markets include chemical processing, general industrial, liquid and dry bulk transport, downstream oil and gas, commercial cleaning, and the rapidly growing medical and biopharma space. I've been with PSG for the last nine years and president of the business for the last six. To begin, I'd like to show you a short video about our Quattroflow pump offering and our recent acquisition, Em-tec.
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We've been acquiring flow meters off the market to marry up with our Quattroflow pump. We found Em-tec to be a really interesting technology. It's non-invasive, it's highly accurate. We thought we could take that product, marry it to a Quattroflow pump and process controller, and with some sophisticated algorithms, provide a more technologically advanced pumping flow control system for biopharma. We've been doing that now, and our customers are very excited about it.
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Thanks to Em-tec's strong engineering background and its commitment to innovation and to research and development, we've been able to excel within the medical devices market for over three decades. This background strategically positioned us to fit naturally within the biopharma industry, where there's a growing expectation towards quality, reliability, and precision.
We acquired Quattroflow. It was a perfect fit for the application. In biopharma, in chromatography, its ability to maintain cell viability in the process was outstanding. Then things took off from there. We were started in the lab, over time, we found our customers applying this technology into larger applications. As single-use became more common, our customers wanted single-use models, we developed a range of single-use models that takes us basically from the lab to full-scale production manufacturing in single-use. Today, that business is 10 times what it was when we bought it in 2012.
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Let's move to slide 17 for additional detail about Quattroflow. I had recently joined PSG as the sales and marketing leader when we acquired Quattroflow in January 2012. I've been involved with the Quattroflow journey from the beginning. It has really been exciting to lead the organization that drove the growth of this nascent new technology and overcome the obstacles that often accompany scaling up a small business. The Quattroflow business has grown tenfold since we acquired it, and we continue to see strong growth and momentum going forward. On slide 18, we highlight some of the advantages of this innovative, patent-protected technology. These pumps produce low-pressure pulsation and consistent flow for the gentle handling of critical fluids under dynamic system pressure conditions. The ability to maintain cell viability at the customer's desired operating conditions improves yields and optimizes processing times.
Other pump technologies are not as effective at higher system pressures. As a result, Quattroflow has been able to stake out a share in highly sensitive bioprocessing applications. When we first acquired the business, only a couple of pump models were available. The flow range was severely limited. In addition, very few customers had tested and accepted the technology into their systems. Under Dover ownership, we've grown the business by focusing and investing in creating a scalable product line while working with our OEM channels and end user customers to drive industry specification. This has led to a great increase in the addressable market opportunity for the technology. We've also been rapidly expanding manufacturing, clean room capacity, and supply chain to meet the growing customer increasing demand. On slide 19, we show the current Quattroflow product range.
The first model developed was the QF1200, and over the past 8 years, we've expanded the offering of both multi-use and single-use models to increase the applications we can serve. The scalability of the product allows for the pump to be used in early R&D and process development stages, as well as into full-scale commercial manufacturing. This gives us an advantage as we partner with customers very early in a drug's development. During the R&D stage, we showcase the benefit of our technology and what it will provide throughout the life cycle of the drug. Moving to slide 20, here we highlight various bioprocessing applications where you might see Quattroflow. Bioprocessing is a complex, multi-stage process that has varying system requirements throughout the process. Quattroflow's core applicability in downstream bioprocessing and is well established in chromatography and filtration applications.
We are also finding success now in other applications where end users are requiring improved flow accuracy, more process control, and reduced processing times. Let's switch gears a bit and talk about Em-tec on slide 21. We acquired Em-tec earlier this year and have already seen positive results from the integration to our platform. Em-tec's roots are in flow metering in medical applications, in particular, heart and lung machines, life support machines, and dialysis. Prior to the acquisition by Dover, they had successfully entered the biopharma space with their non-invasive flow meters, and we started noticing the product being adopted by our customers. That's where we realized the opportunity to help Em-tec accelerate growth through our global sales channels, but also to integrate the pump, flow meter, and process controller to deliver even better flow control solutions to our customers.
You can see this business has a nice growth trajectory, doubling in the past four years, and we will help improve that trajectory. Slide 22 provides an overview of the Em-tec technology and product offering. The Em-tec flow meters use ultrasound to measure the rate of fluid flow non-invasively. The sensors clamp around the outside of the tube. This noninvasive flow measurement technology is a great fit for medical and bioprocessing applications where there is zero tolerance for contamination. The noninvasive design also allows for quick and easy installation and has a compatibility with a broad range of tube sizes and materials. This, in turn, gives the customer flexibility in R&D, during process development, and when designing full-scale production. Em-tec supplies clamp-on transducers, flow measurement solutions, and embedded in-house developed software for a broad range of application needs.
Em-tec can supply a single flow measurement device for a laboratory environment, or it can provide a complete flow station for multiple commercial scale processing units. For end use customers who desire more accuracy and/or an all-in-one clean room packaged tube set solution, we are now developing a truly single-use flow measurement device. On slide 23, we show both the key bioprocessing applications currently addressed by Em-tec meters and prospective applications we are targeting. Similar to Quattroflow, the technology can be used throughout the life cycle of a drug. Em-tec's standard offering is currently well-positioned to penetrate upstream process development applications and downstream chromatography, filtration, and filling applications. As biomanufacturing processes become more sophisticated, end users need to improve the control of their manufacturing processes, we believe we are well-positioned to help meet customer flow sensing needs.
Hopefully, you can tell that we're really excited about our future in the biopharma market, and we see a clear runway to continue innovating and expanding our addressable market. Moreover, we have our sights on other opportunities like Em-tec to grow inorganically in this space. Thank you for listening to our story. I'll now hand over things to Janel.
Thanks, Karl. We'll now transition to Colder Products Company. Let's begin on page 25 with a quick CPC profile. We are one of the smaller operating companies at Dover, but one of the fastest-growing for a reason. Fitting into that Dover profile that Rich talked about, we supply highly engineered connectors for biopharma, medical, industrial, and thermal management applications. We make sterile connectors for the biopharma market that are single-use and thousands of other low pressure couplings, many of which are used in medical applications that are also single-use. The beauty of our business model is for many of our customers, we are designed into their equipment from the beginning, so there is an annuity, a recurring nature there. Dover acquired CPC in 2005, and the business has grown fourfold since then, making it a really nice growth story that I will tell you about today.
To begin, let's talk about our recent facility expansion. We're really excited about our new building. CPC had been stationed across several buildings, and the setup was operationally not very efficient. With the growth we've experienced, we were bumping literally into physical capacity limits. Since reliability of supply is paramount in this industry, it was imperative for us to expand. We now have the capacity to double and triple production. Additionally, the facility includes a large clean room, larger and redundant to another nearby that we will continue to keep operating. This will accommodate spikes and growth in demand like the one we are seeing during the COVID vaccine development sprint. Let's take a look at the video featuring our new building.
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We are primed for growth. On slide 27, you can see the evolution of our product design in the markets we serve. From CPC's founding, we have earned a reputation as the innovative specialist supplier of high-performance couplings and connectors, and our current portfolio of over 85 U.S. patents is a testament to that. That reputation has led customers to turn to us when they have a new challenge in their equipment design. That's what got us into the biopharma business when in 2002, a customer asked us to figure out a way to connect a disposable bag to a stainless steel bioreactor. That's when we launched Steam-Thru. In 2009, building on some early traction, we launched AseptiQuik, which enables sterile connections in non-sterile environments.
With that success and intimate knowledge of the industry, we knew we could score with the genderless AseptiQuik that offers increasing operational efficiency and flexibility. From that introduction in 2013, it is now our fastest-growing product line and opening avenues for growth in our other aseptic products. What seems like a simple product from the outside is really decades of R&D and intellectual property that make customer-demanding applications perform flawlessly. As you can see, the story of CPC growth is really a story of continuous customer-centric innovation based on market knowledge and pushing the boundary of where our technology can be applied. A bit more about leveraging our industry knowledge on slide 28. Our biopharma business unit is at a great point in its growth story. We are well-positioned with leading drug manufacturers and OEMs who drive the specification to use CPC products in their production processes.
We are prepared to participate in the next waves of innovation in production of vaccines, cell and gene therapies, as well as feeding continuous growth in single-use applications. We also have a material presence in various medical applications that involve transfer of fluids, which can be gases or liquids, such as dialysis, ventilators, laser surgery systems, and disinfectant systems. These applications have secular growth tailwinds behind them as well. Our next growth frontier is thermal management, where leak-free sealed connectors are required in a variety of demanding applications, such as data centers and electrical vehicle charging. Traditional HVAC methods are insufficient, and liquid cooling is a technology of choice. Whenever you have liquid transfer in a constrained electronic environment, leaks are unacceptable and robust non-spill technology is enviable. We will touch on this industry in a few slides.
Turning now to slide 29, we'll discuss CPC's biopharma offerings and why we win. In short, connectors and couplings are all that we do, and our cumulative application expertise and investment are second to none. Quality of the product, ease of use, and reliability of supply matter greatly in this industry, especially with its significant growth. We meet those criteria and another key consideration in the industry. Most connector suppliers also compete on integrated systems with the very OEMs that are looking for connectors. Because we make connectors, we are not competing on other product lines to be included in a specification set. We call this being market neutral or OEM agnostic. Choosing CPC is then an easy proposition. There's the reputation for quality and reliability, and then the choice isn't complicated by price or supply bundling other components decisions.
To that, add the benefit of the fact that many of our AseptiQuik connectors are genderless, which reduces inventory costs and simplifies operator training. Our growth strategy is built around both push and pull marketing. We're a recognized leader in the space, so we are often pulled into new customer opportunities through our extensive distribution network. However, we also maintain close relationships with end users, and our partnerships allow us to stay on the cutting edge of innovation and push new applications to grow the market opportunity for our connectors. These close ties with both distribution partners and end users position us to win the spec or get in at the beginning of a customer's development cycle, creating a loyal customer and strong partnership for years to come. The mantra, "Win the spec," is embedded in our culture and is a significant driver of our growth.
Turning to slide 30, we will now talk about the opportunity in thermal applications, which shares a number of parallels with our biopharma business about a decade ago. We had developed technologies over the years to service this sector with the growth in computing. However, similar to our biopharma business, our business really took off when a customer approached us for a customized solution that used liquid coolant because air-conditioned cooling was no longer an effective option. In creating the product and developing industry know-how, we quickly learned there was a significant commercial opportunity, and we were able to broadly market our technology to other customers in the space, including data centers and cell towers.
With our close partnerships with end users, we not only have a seat at the table, but are at the forefront of driving innovation in the space, including a move towards thermal plastic connectors from the traditional brass and stainless steel. We are very excited about the potential for this business line. With that, I'll pass it back up to Rich for wrap-up.
Thanks, Janel. Thanks. I hope this short overview gives you a flavor of what we're building in the biopharma space. This business is less than 5% of total Dover revenue, but with the organic growth rates we've been achieving, with an additional investment, our aim is to triple this business in the future. I hope the examples we provided demonstrate how we organically expand our addressable markets and take our products into new applications. Also, we wanted to underscore the importance of long-term value creation potential from smaller inorganic bolt-ons, which may seem unimpressive at first but can drive substantial growth, leveraging the scale and synergy of being part of a larger enterprise. We'll continue investing behind this platform and other similar high-performing businesses at Dover, and we believe that it will create significant value to our shareholders in the future.
Thanks for your time today, despite not getting to visit the facility, that hopefully we can soon. We'll open it up to Q&A, Andrey.
JJ, let's move on to the Q&A.
If you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key on your telephone keypad. Our first question comes from the line of Steve Tusa from JP Morgan. Your line is now open.
Hey, guys. Thanks for making this interactive. It's great to be able to chat a bit about this stuff. Just curious as to, I got to go back and see how much you paid for Quattroflow. Can you just remind us of what kind of returns you're getting on this deal? When you look at kind of the one you just did, the Em-tec deal, with this type of growth, what kind of cash on cash returns that you're going to get? These seem like they're very high return types of things that they're growing this fast.
Sure, Steve. You know that we have a hurdle of 10% return on invested capital for inorganic investments. Quattroflow was done some time ago.
Yep.
With the growth, and we haven't calculated it recently, but with the growth rates and where it is from a margin profile, I can pretty much guarantee that it far exceeds that return threshold. Em-tec is new. Based on what we can tell, I don't want to put Karl on the spot to forecast over the next three years for Em-tec, our expectation, again, because of the margin accretion and because of the underlying growth that we can expect in the space, that one will also significantly exceed the 10% return on invested capital threshold in three years.
How much did you pay for that one again? Em-tec?
We didn't say. I think you're going to have to go look at our disclosure at the end of the year. It's not a lot, I'll put it to you that way.
Okay. I'll have to expend the effort then.
Well, look, again, I know. Go ahead.
You talked about some of the better markets early on in the presentation. Maybe if you could give us an update on some of the ones that had a bit less visibility. I know food retail was one that was uncertain. Maybe there's waste handling. Just maybe on some of the more questionable markets, where you stand on those?
Sure. I think that what we said at the end of Q2 that was embedded in our full year forecast was for food retail and textile digital printing, trading conditions are going to remain difficult through the end of the year. I don't think that we're going to change that stance between now and the end of the year. Those two in particular are down significantly. I think that we've done a very good job in the two particular segments that they participate in of offsetting that loss of profits through better margin performance. I think that in the printing and ID side, we've done really well in terms of the margin performance, largely as a result of some cost cutting and good mix that we're getting out of the consumable side. We've done well there.
Despite the fact that food retail, we are projecting to remain subdued. We expect the segment margins in DRFE to actually improve between now and the end of the year, driven by better margin performance out of the refrigeration unit and Belvac.
Okay. One last one, just on the details. You guys said that this biopharma and the hygienic business is like a $300 million business. You said it's about 21% of sales. That $300 spot on, that gets you to north of $1.4 billion in sales. That's up year-over-year. I don't think that's necessarily what you're trying to say. There's probably some rounding going on. Is this a business, though, the Pumps & Process Solutions segment that can kind of claw back to flat by the end of this year?
That was a really complicated question. I think that you misunderstood a portion of it. I think that we're saying that it's $300 million in total. I'll go back to the slide here so I don't misstate anything. If we go to slide Where is it?
Yeah, it's slide nine.
Yeah. It is a $300 million platform on slide nine.
Yep. Then slide eight says 21% of sales.
Well, it's $300 million in total. The biopharmacy and medical piece of that $300 million is a piece of that $300 million.
Okay.
20% of it.
Got it.
20% of the 300, and that's the part that's growing at double digit.
Okay. Got it. This segment in total will still be down this year, revenue-wise.
The segment in total I don't think that we've given forecasts on the segment itself, because this is a sub-segment or a sub-platform.
Total segment.
Yeah. This sub-platform will be up year-over-year. I think what we said in terms of the segment goal, or PPS, is we made no comment on revenue, but we are aiming to, despite having some headwinds on the precision component side, of delivering year-over-year full-year profit increase.
Got it. Okay, great. Thanks a lot.
Thanks, Steve.
Thank you. Our next question comes from the line of Scott Davis from Melius Research. Your line is now open.
Hey, good morning, guys, and thanks, Rich, for doing this.
Hey, Scott.
Rich, are your M&A deals more likely to be in kind of your higher margin segments? I mean, clearly probably a couple of businesses that you don't have an interest in, but are you filtering down deals based on what your current business mix looks like, or could you add a new platform?
I think that we would add some. I would consider this a sub-platform, right? Part of the reason that we wanted to do this presentation was to solve for two issues. One was we got a little bit of stick back in 2018 about going into a capital-intensive phase, and we said, "Well, look, you know what? There's nothing wrong with organic investment." One of the investments we called out was a greenfield capacity expansion in a high-growth area that really our view was not a lot of investors knew about. Today was to kind of give more color around, here's a sub-segment. Our Pumps & Process Solutions is not just all industrial pumps, and as you can imagine, the questions we answer all the time about oil and gas exposure and blah, blah.
This was something that we'd like to highlight because we want higher returns, and we're trying to invest smartly behind growth. I don't envision us creating a new segment in total. The five that we have are broad enough. We'd like to create sub-platforms within those segments.
Okay. Look, for actually, Karl, Janel.
Yeah. If this got big enough, clearly, five, six years from now, you could split it in half again. I don't see that right now. Go ahead with the question for Janel.
I know this is minutia, but Karl, Janel, can you give us geographic breakdown of your businesses and perhaps just clarify what's sold direct versus through distribution?
Yeah. Thanks for the question. This is Janel. Geographically, about 60% of our business is in North America, and the rest of our business is the rest of the world. Distribution as an overall CPC business is about 55% of our business is through distribution, and the rest of it is direct.
This is Karl. Roughly half the business is in Europe. The Americas is our next largest region, then Asia. We're split about 50-50 with direct and distribution.
Okay. Super helpful. Thank you. Good luck, guys. Janel, thank you.
Thanks, Scott.
Thank you.
Thank you. Our next question comes from the line of Andrew Kaplowitz from Citigroup. Your line is now open.
Good morning, guys. Thanks for the presentation.
Hi, Andy.
Rich, given your commentary to Scott, how do you think about Pumps & Process Solutions overall, the overall segment moving forward with the growth you are seeing from Karl and Janel's businesses? Do you see the overall Pumps & Process Solutions business having the capability to meet or beat that mid-single digit growth that you have been recording over the last few years, over the next few years? If we look at that 35% recurring that you highlighted, is that just a stop toward higher recurring related growth over time?
Well, one is kind of a shorter-term question, and one is more of a strategic question. I think our mid-single-digit growth rate is over long periods of time. You're going to get years of outperformance and then years of underperformance. Let's take COVID out of the mix, right, and call that a one-off. Our DPC business, because of its energy exposure, is retarding the growth rate that we have within the segment, but we've got faster pieces of the portfolio, like the CPC business that we're talking about today. On average, over 10-year horizons, we would like to see mid-single-digit growth, but you're going to get years of outperformance, clearly, and hopefully in 2021.
To the extent that DPC comes back next year, and we expect the trajectory in this particular sub-segment to remain as it is this year, then you could see some outperformance.
Got it. For Karl or Janel, how has the PSG under CPC competitive landscape evolved over time? I know the businesses are younger at Dover, I think Dover does tend to have number one or number two businesses across its portfolio. Maybe you could just frame the competition for us, how consolidated a market is, are these markets, and what's the opportunity here?
Yeah. The competition for CPC in the biopharm business is fairly fragmented. With our innovative leading connector, we are number one for sterile connectors.
For us in biopharma, we have several competitors, but they have different technologies. Typically, a tube pump or a peristaltic pump is what we're competing against. If you want a Quattroflow pump, you want it because it does a better job in performance because it's much more expensive than those technologies. That's how we compete in biopharma.
Thanks, guys. Appreciate it.
Thanks, Andy.
Thank you. Our next question comes from the line of John Inch from Gordon Haskett. Your line is now open.
Yeah. Thanks. Good morning, everyone. Morning, Rich. Can we just pick up on that competition theme a little bit and talk about the China dynamics, in terms of the importance of China today as a growth market? Obviously, it's big in terms of biologics and pharma, in terms of that country's aspirations. Also, I just want to know, kind of competitively, are there risks in terms of IP and the risk that your products can maybe be reverse engineered by the Chinese? How do you see pros and cons of that market?
For us, this is Janel with CPC, the majority of our products, well, all of our biopharma products are manufactured in the U.S. We sell highly through distribution into our APAC markets. With our very strong patent portfolio of over 85 patents, and obviously that's just our U.S. number, we have over 200 global patents. We are pretty well-positioned in terms of taking advantage of the growth that's happening with bio in Asia, specifically overall, but feel pretty well-protected as well.
Yeah, this is Karl. All of our larger customers are either doing business in China or planning to do business in China very soon. Yeah, there are folks trying to copy product, but the way we manufacture product and the quality that we have it in, our customers aren't likely to take a chance on something that's not from the direct OEM. We've not seen any risk of that yet. The other part is that we're innovating with Em-tec and Quattroflow together, coming up with different solutions for our customers that control the process better. I think we're staying ahead of any risk of competition that way as well.
Can we also just sort of follow that up with the sales process? How sort of short cycle versus long cycle is this? Like, how much visibility do you have? Maybe you could both just describe kind of how this is working and sort of how this fits into backlogs that have levels of predictability.
Yeah, I think it's a little mixed. We do have projects we're working with our OEMs that are a little bit longer cycle. The activity has been very robust in the market space, and so we're seeing a lot of money flow and investment into this area. We're seeing a lot more diverse customer range and needs coming much more rapidly than they used to. A little bit of both, I think.
I'll just follow up a little bit on that. We do, as mentioned, have both a push and a pull strategy. We are working directly with the end user, directly with the drug manufacturers. In those cases where we're on the specification, we've won the specification, we obviously have visibility. There is lots that's also sold through distribution. We don't necessarily always have the visibility in terms of some of the variation of the orders that come in.
I would say the end market drivers are not necessarily economic per se, right? I understand the kind of structural growth drivers, but if you were to think about growth drivers in these businesses, X say share gain, but just say call it market, what exactly are those? Is it just sort of investment spending by drug companies? For instance, on the biopharma stuff, is that how you gauge this? Maybe there's other ways to think about intermediate-term growth drivers.
Just so I understand, the question is, what is driving the growth in biopharma?
Well, intermediate term, and in particular, for the end markets that you guys are serving, it's not entirely clear to me, anyway.
I think there's two major growth drivers in biopharma, right? One is just the overall growth in biological drugs and biological manufacturing. It's very strong pipelines in a lot of these end users in terms of new drugs that are in development, new drugs that are being launched. Obviously, vaccines are included in that. The second growth driver is really the transition of manufacturing these drugs from stainless steel manufacturing to single-use plastic components in manufacturing. Again, biologics is growing quite rapidly overall, but then this transformation that's taking place in how they manufacture these drugs is driving growth above just the biologics growth.
Yeah, perfectly stated. Exactly.
Okay. Just one final one here. In terms of the equipment and components business, I was noticing, so you've got this diagram, this out, you've got your pumps, your flow meters, your connectors. Can you talk about maybe the frequency of the bundling of all three versus, and I'm not talking in terms of the part sales, right? The frequency of the bundling versus say, the one-off and sort of what are the penetration trends or drivers kind of as you look forward and also what's missing, in terms of these machines, are there some obvious other product markets that you could actually be adding? Those are the three sort of primary things that kind of cover you at least for the space that you want to compete in?
Yes, Karl, there's not a whole lot of bundling happening between PSG and CPC. We do leverage our sales channels to make introductions and get face time with customers when there used to be face time with customers. Within PSG, the whole point with Em-tec was to do more bundling of pumps and meters to provide better process control. We're really kind of just starting that, so there's not a whole lot of it going on right now, but we expect that to be very successful.
Okay, good. Thank you very much. Appreciate it.
Thanks, John.
Thank you. Our next question comes from the line of Julian Mitchell from Barclays. Your line is now open.
Thanks. Good morning. Maybe just trying to stick to two questions. The first one is just around any color you could give on PSG and CPC pricing power and profitability in the two businesses.
I'll take that for the two operating company presidents, Julian. I'm not going to give you any. These two businesses and the products compete on product engineering. In terms of pricing power per se, it's more fit for use, and it's competing against other products as opposed to pricing it appropriately versus its competitors. The margin is accretive to the segment, and that's part of the reason that we're highlighting the businesses in addition to the growth rate.
Thank you very much. Maybe one follow-up, and I suppose this could be for Karl or Janel or for you, Rich. Circling back to that slide eight, you have about just under 15% of sales in the overall DPPS segment coming from service plus consumables. How do we think about that share expanding over time? How critical is PSG and CPC to that? Are there sort of specific initiatives across the businesses or across the segment in aggregate to help push up that share if that's something viewed as desirable?
Well, I'll let the two of them answer on their unique businesses, but I think it becomes, because these are single-use platforms or single-use products, they can be considered consumables, and that's part of the reason that we like it, but I'll let the two operators answer of what they think.
Yeah. You can see from slide 25 for CPC that about 70% of our overall business is recurring or single-use applications. That consumables for CPC is really a big part of who we are and really the markets that we play in.
Yeah, same thing here. On slide 17, we talk about single-use chambers being 62% of the revenue. By far, once you're installed on an application with the base pump, the recurring revenue from those chambers is significant. I think Em-tec's a little bit different. It's really not a single-use device yet, so a significant part of their business is still the initial sale.
I see. Thank you.
Thanks, Julian.
Thank you. Our next question comes from the line of Andrew Obin from Bank of America.
Hi, guys. Good afternoon.
Hi, Andrew.
Just a question. If you look at the competition in the biopharma in the space, it seems that all the big guys, Thermo, Danaher, Sartorius, are sort of buyers rather than sellers, and whatever is available probably comes in very big chunks. Is there opportunity to buy from sort of bigger, more integrated players, in terms of businesses that they're not focusing on? Just trying to understand what's the opportunity for a more focused niche player like yourself, to grow through M&A, given that it's a very sort of strategically attractive space for a lot of competent companies.
That is a good question. We have not seen a lot of that because I think they have been very busy acquiring themselves and integrating, but one could envision that as part of the integration of some of these bigger deals, that there could be attractive pieces to come out. To answer your question, other than theory, right now, we don't see that. Mostly what we see is smaller companies that have developed unique devices that fit into the industry, and that really is the locus of this presentation to a certain extent, that Em-tec was a very small company when we bought it. We envision that we can grow it substantially once we put it in the wider portfolio. Same thing with CPC, quite frankly, when it was bought and how it's developed over time.
To answer your question, it's a possibility, but from what we see right now, it tends to be smaller product engineering firms that have attractive products that we're aware of just because we occupy the space.
Just a follow-up question. I think the whole thesis on Dover has been is that if you look under the hood, there are a lot of these great companies like you guys are talking about today. As you were guys thinking about this Analyst Day, how many other businesses are like this inside Dover that you could sort of highlight that, I think both sell side and buy side don't quite understand? I know that you have sort of highlighted, this has been one of the themes that you've highlighted to us before. Just are there other businesses with similar growth and return parameters inside Dover that you could highlight down the line to us?
There are. We are going to do another product focus one between now and the end of the year once we get all the information bundled up. Really, look, we did this because we were noodling around here how to deal with investor relations under a COVID no travel ban. I agree that it was just inappropriate to do kind of a Dover investment day or what we've done in the past, just based on, I've been here a couple of years now. We've gone through the portfolio review, the natural way to move this would've been to do it focused on smaller sub-platforms in the portfolio that we think deserve some recognition. We could probably do at least two or three more of these. We're definitely going to do another one between now and the end of the year.
Depending on the feedback we get from this one, it may be reoccurring. We'll do one or two a year. We'll see.
This is fantastic. No, it's really helpful. Thank you so much.
Thanks, Andrew.
Thank you. The last question comes from Joe Ritchie from Goldman Sachs. Your line is now open.
Thanks. Hi, everybody. Appreciate all the details.
Thanks, Joe.
Just, I guess my first question. You referenced some of the acquisitions that you did year to date. Obviously, there were a couple of software deals in there. When you peel back this business, it looks like you're already driving pretty good recurring kind of consumables piece for your business. If you could maybe just talk a little bit more about the deals that you did on the software side. What did they get you, in this space specifically that you didn't necessarily have?
Well, look, not to jump on some macro theme. In multi-industrial world where software has taken kind of paramount importance. Look, the software deal that we did in marking and coding was a near adjacency of track and trace. It was a logical extension of the great position that we have in consumer goods. We believe that track and trace technology, which has largely been in pharma, is going to begin to be adapted from a variety of different products for a variety of different reasons. We thought we had the entrée to expand it just because of the penetration that we have in high-value consumer goods. That was the logic other than, let's go around and start buying software companies because somehow that's popular now in industrial world. Same thing with Soft-Pak that we did on ESG.
That was part and parcel to an acquisition we did several years ago that was getting into camera technology. It's allowed what is probably considered to be an industrial bodybuilding business, and it's changed that business, I would argue, significantly in terms of how it's perceived by our customer base. It's kind of smart add-ons to get away from price sensitivity and discussing what steel plate prices are all the time and changing the business model. The small, well, Em-tec we talked about. Solaris was a product line extension because we needed some additional products in laser. Xantec is control systems, which is just built around the leading position that we have in polymers and processing. VHSS is scanning technology. We've done a lot of work in automotive aftermarket on sensing technology, and that was just a line extension from there.
We're not going around and saying, "We need to buy software. We need to buy consumables." Clearly, there's a logic because of the recurring revenue streams there that you would like to do it. For us, it's line extensions and building off where we think that we have strength in terms of the market structure.
Got it. That makes a lot of sense, Rich. Maybe just my one follow-on question, and this may be a little bit of an unfair question to have to answer. Have you guys tried to size what the vaccine opportunity is for this business or maybe even broader across your Dover portfolio?
Yeah, we were talking about that this morning, that question was likely going to come up. We can't, Joe. Look, we are what we are. We are very small compared to the customers that we supply who are in a much better position to answer those questions than us.
Fair enough. Figured it was worth a shot, but appreciate the call to action.
All right. Thanks.
Thank you. That concludes our question and answer period and Dover's 2019 Analyst and Investor Meeting. You may now disconnect your lines at this time, and have a wonderful day.