Dover Earnings Set Record
NEW YORK, Jan. 20 /PRNewswire/ -- In the fourth quarter ending December 31, 1999, Dover Corporation (NYSE: DOV) earned a record $.60 per share from continuing operations, before special items. This brought full year profits by this measure to $1.90 per share, also a record. Earnings per share from continuing operations in 1998 were $.36 in the fourth quarter and $1.45 for the full year. Sales in 1999 rose 12% to almost $4.5 billion with fourth quarter sales advancing 23% to $1.25 billion.
In the quarter just ended Dover recorded a $7 million pre-tax charge in connection with the sale of a business, reducing its gain for the year from such special items to $10.3 million. Both figures round to $.02 per share and are not included in the EPS numbers above.
In January, 1999 Dover completed the sale of its elevator business for $1.16 billion, reporting an after-tax gain of $524 million, which is now equal to $2.49 per average diluted share. This brought total earnings per share for 1999 to $4.41. Total earnings per share in 1998 were $1.69.
The largest single factor underlying the fourth quarter and full year growth in operating income was the electronics industry's recovery, especially as it impacted Dover's circuit board assembly and test operations (CBAT). Pre-tax profits for the CBAT companies rose $64 million for the year (70%) with fourth quarter profits more than triple the prior year.
Dover also set records for new investment by acquisition ($599 million in 18 transactions) and for share repurchases ($672 million for 18.5 million shares at an average price of $36). These actions fully redeployed the $1.16 billion received from the elevator sale. The resulting reduction in Dover's average shares outstanding and in financing costs added approximately $.23 per share to 1999 earnings from continuing operations. This was closer to the $.24 per share earned by Elevator in 1998 than originally expected when this business was sold. Further growth of Dover's operating income in 2000, and the "automatic" further reduction in average shares outstanding, will make the sale and asset redeployment additive to earnings per share in 2000.
The 18 acquisitions completed in 1999 added $239 million to sales in 1999 and $44 million to operating income for the varying lengths of their partial-year inclusion in Dover's results. Both numbers are expected to approximately double in 2000. After interest costs to fund the program and non-cash charges required by "purchase accounting rules" their contribution to earnings per share in 1999 was $.03. Total non-cash charges to earnings required by purchase accounting for these and for prior years' acquisitions rose to $.29 per share in 1999 from $ .23 in 1998.
Three of Dover's Business Segments achieved full year earnings gains. Technologies (+55%), Industries (+16%) and Diversified (+6%). Resources experienced a 14% decline.
As noted, the Dover Technologies Business Segment benefited from the CBAT market recovery, which began in May-June and has continued through the fourth quarter. The order downturn reported for September in Dover's earnings report for the third quarter now appears to have been an aberration, rather than the beginning of a trend. Universal Instruments, the largest Technologies company serving the CBAT market, achieved its highest quarterly shipments, earnings and bookings (1.07 book-to-bill) in the fourth quarter. Its orders in the fourth quarter, including a strong performance from newly acquired Alphasem, were almost double the year-earlier period. Specialty electronic components also achieved a record year with earnings up 53% on a 16% sales gain, reflecting a strong communications market and the success of internal profit improvement programs. Imaje (marking) also achieved record sales and earnings, up 6% and 3% respectively. Imaje is a "technology heavy" business but serves worldwide industrial markets where growth was slow in 1999. Technologies achieved record sales for the year of almost $1.5 billion (up 20%) and record sales in the fourth quarter of $435 million. Book-to-bill was 1.06 for the year and 1.03 for the quarter for Technologies as a whole (1.06 and 1.02, respectively, in the CBAT area).
The 16% earnings gain in the Industries Business Segment reflected broad-based internal growth by its companies as well as the full year effect of 1998 acquisitions (all of which improved earnings in 1999) and the partial year effect of 1999 acquisitions. The largest internal gains came from Heil Environmental, which is benefiting from pent-up demand in the domestic refuse vehicle market. Its sales and earnings set records by substantial amounts with a book-to-bill of 1.20 for the year and 1.41 for the fourth quarter. A strong recovery in the final quarter at Heil Trailer allowed it to match its 1998 records for sales and earnings. Its book-to-bill of 1.09 in the fourth quarter was the first quarter above 1.0 in two years. The two Heil companies accounted for about one-third of Industries' sales and a somewhat smaller percentage of earnings. Other strong internal growth performers were Rotary Lift, Texas Hydraulics, PDQ, and Somero. Industries operational profits (before corporate expense and acquisition write-offs) increased by $30 million (17%) in 1999. Approximately half of this came from internal growth of the businesses owned at the start of 1999. Book-to-bill was 1.02 for the year and 1.07 for the quarter, with year-end backlog up 16%. Most companies in Industries ship what they book within a quarter (the Heil companies are the major exceptions), making backlog and book-to-bill measures less indicative of near term activity than in Technologies.
A very strong fourth quarter allowed the Dover Diversified Business Segment to increase earnings 6% for the year on a 12% sales gain. All of the earnings gain, and half of the sales gain, came in the fourth quarter when earnings exceeded prior year by 35% and sales were ahead by 20%. The $50 million earned in the final quarter represented one-third of the year's profits due to unusual profit patterns at several companies. Belvac was profitable in the quarter, after losses for the prior nine months. A-C Compressor's customer schedules required heavy shipments toward the end of the year, resulting in half of its 1999 profits falling into the final quarter. Diversified does not expect to match the 1999 fourth quarter profit rate in 2000, although full year profits should continue to grow. Individual company results were quite mixed in 1999. Companies making factory or process equipment -- Tranter, A-C Compressor, Belvac, Van Dam -- faced poor markets and suffered earnings declines totaling about $30 million. Companies making more commercially oriented equipment -- Hill Phoenix (supermarket display cases and refrigeration systems), Mark Andy (presses used for label printing), SWF (packaging equipment), and Waukesha (bearings for power generation equipment) -- all had good earnings gains. Sargent Controls also had strong gains, particularly in its defense applications. Additionally, 1999 acquisitions were strongly additive to segment reporting. Diversified's book-to-bill ratio was .99 for the year and .91 for the fourth quarter (due to heavy billings). Year-end backlog is up 20% with good gains at A-C Compressor and Belvac.
The Dover Resources Business Segment's profit decline of 14% for the full year moderated to only a 1% decline in the fourth quarter. Earnings in the final quarter exceeded $30 million for the first time in 1999. The relative strength in the final quarter primarily reflected above average results at the Wilden and Blackmer pump companies where business had been adversely affected by slow sales for chemical and industrial process applications during most of the year. Additionally, earnings from petroleum drilling and production equipment continued to improve, with fourth quarter profits more than four times those of last year. Cook, both De-Sta-Co companies, Hydro-Systems, and Tulsa Winch also showed gains in the final quarter. For the year as a whole, however, only three of Resources' fourteen companies achieved meaningful earnings gains over 1998. Three others were essentially even for the year, and the others down by 13% or more. OPW-Fueling Components and OPW-Fluid Transfer had superb results in 1998 and struggled during 1999 with oversold distribution, declining markets, and a disruptive strike. Markets for Ronningen-Petter (filters primarily used in papermaking and petroleum refining) and for Duncan (parking meters) declined very sharply, reducing their combined income by about $13 million. Operating profits for these four businesses declined by almost one-half, more than accounting for the full year drop at Resources. Overall book-to-bill for Resources was .99 for the quarter and year. Backlog at year-end was down 2%, primarily at OPW which had enjoyed a year-end surge in orders in 1998 for equipment to meet EPA requirements. Even more than at Dover Industries, these measurements at Dover Resources are poor indicators of near term business activity.
Thomas L. Reece, Dover's Chairman and CEO, offered these comments. "This was a great way to end the 20th century. We have good momentum going into 2000 and expect very favorable earnings comparisons at least during the first part of the year. At this point, a reasonable guess is that earnings per share in 2000 will be about 20% higher than this year's $1.90. Doing substantially better will require that the electronics industry stay strong throughout 2000 and that we have no surprises in the rest of our businesses. We will grow more slowly if markets turn against us."
DOVER CORPORATION CONSOLIDATED MARKET SEGMENT RESULTS (unaudited) EARNINGS SALES Fourth quarter ended December 31, 1999 1998* 1999 1998* Dover Industries $48,420,000 $44,925,000 $300,147,000 $264,105,000 Dover Technologies 78,901,000 31,291,000 434,464,000 294,214,000 Dover Diversified 49,970,000 37,091,000 311,949,000 259,217,000 Dover Resources 30,786,000 31,105,000 203,007,000 202,717,000 Subtotal (after intramarket eliminations) 208,077,000 144,412,000 $1,248,284,000$1,018,866,000 Gain\(loss) on disposition (7,000,000) -- Corporate expense (8,769,000) (7,565,000) Net interest expense (12,972,000) (16,347,000) Earnings before taxes on income 179,336,000 120,500,000 Taxes on income 58,347,000 38,435,000 Net earnings - Continuing Operations 120,989,000 82,065,000 Earnings from discontinued operations* -- 12,759,000 Net earnings $120,989,000 $94,824,000 Net earnings per share: Basic - Continuing $0.60 $0.37 Discontinued -- 0.06 Net earnings $0.60 $0.43 Diluted - Continuing $0.58 $0.36 Discontinued -- 0.06 Net earnings $0.58 $0.42 EARNINGS SALES Twelve months ended December 31, 1999 1998* 1999 1998* Dover Industries $179,554,000 $154,500,000 $1,144,599,000$1,012,440,000 Dover Technologies 226,761,000 146,612,000 1,457,792,000 1,211,416,000 Dover Diversified 152,139,000 143,157,000 1,071,574,000 957,579,000 Dover Resources 107,264,000 125,225,000 777,691,000 800,914,000 Subtotal (after intramarket eliminations) 665,718,000 569,494,000 $4,446,420,000$3,977,666,000 Gain\(loss) on disposition 10,256,000 -- Corporate expense (25,790,000) (24,241,000) Net interest expense (35,180,000) (56,607,000) Earnings before taxes on income 615,004,000 488,646,000 Taxes on Income 209,950,000 162,249,000 Net earnings - Continuing Operations 405,054,000 326,397,000 Earnings from discontinued operations* -- 52,448,000 Gain on sale of discontinued operations* 523,938,000 -- Net earnings $928,992,000 $378,845,000 Net earnings per share: Basic - Continuing $1.94 $1.47 Discontinued -- 0.23 Gain on sale 2.50 -- Net earnings $4.44 $1.70 Diluted - Continuing $1.92 $1.45 Discontinued -- 0.24 Gain on sale 2.49 -- Net earnings $4.41 $1.69 Average number of shares outstanding - Basic 209,063,000 222,793,000 Average number of shares outstanding - Diluted 210,679,000 224,386,000 * On January 5, 1999, Dover completed the sale of its elevator business to Thyssen Industrie AG for $1.16 billion. Results for 1998 have been restated to classify the elevator business as discontinued. DOVER CORPORATION CONSOLIDATED FINANCIAL RESULTS (unaudited) PERCENT Fourth quarter CHANGE ended December 31, 1999 1998* Net sales $1,248,284,000 $1,018,866,000 22.5% Earnings before taxes $179,336,000 $120,500,000 48.8% Net earnings from continuing operations $120,989,000 $82,065,000 47.4% Net earnings* $120,989,000 $94,824,000 27.6% Net earnings per share: Basic - Continuing $0.60 $0.37 62.2% Discontinued -- 0.06 Net earnings $0.60 $0.43 39.5% Diluted - Continuing $0.58 $0.36 61.1% Discontinued -- 0.06 Net earnings $0.58 $0.42 38.1% Depreciation/ amortization $42,081,000 $45,488,000 -7.5% Capital expenditures $43,201,000 $39,541,000 9.3% PERCENT Twelve months CHANGE ended December 31, 1999 1998* Net sales $4,446,420,000 $3,977,666,000 11.8% Earnings before taxes $615,004,000 $488,646,000 25.9% Net earnings from continuing operations $405,054,000 $326,397,000 24.1% Net earnings* $928,992,000 $378,845,000 145.2% Net earnings per share: Basic - Continuing $1.94 $1.47 32.0% Discontinued -- 0.23 Gain on sale 2.50 -- Net earnings $4.44 $1.70 161.2% Diluted - Continuing $1.92 $1.45 32.4% Discontinued -- 0.24 Gain on sale 2.49 -- Net earnings $4.41 $1.69 160.9% Depreciation/ amortization $183,244,000 $167,687,000 9.3% Capital expenditures $130,112,000 $125,730,000 3.5% Cash and cash equivalents $138,038,000 $96,774,000 42.6% Short-term debt & current maturities of long-term $297,900,000 $433,589,000 -31.3% Long-term debt $608,025,000 $610,090,000 -.3% Equity $2,038,765,000 $1,910,884,000 6.7% * On January 5, 1999, Dover completed the sale of its elevator business to Thyssen Industrie AG for $1.16 billion. Results for 1998 have been restated to classify the elevator business as discontinued. DOVER CORPORATION AND SUBSIDIARIES OPERATIONAL PROFITS (in millions) (unaudited) 1999 - FOURTH QUARTER 1999 1998 SALES EARNINGS % SALES EARNINGS % SALES EARNINGS % Dover Industries $300 $54 18 $1,145 $203 18 $1,012 $173 17 Dover Technologies 435 88 20 1,458 261 18 1,211 178 15 Dover Diversified 312 58 19 1,072 177 17 958 164 17 Dover Resources 203 37 18 778 128 16 801 144 18 Operational Profits (after elim.)(1) $1,248 237 19 $4,446 769 17 $3,978 659 17 Corporates and other (15) (44) (40) EBITACQ (2) 222 725 619 Gain\(loss) on dispositions (7) 10 -- Interest (13) (35) (57) Acquisition Write-offs (23) (85) (73) Dover Pre-tax income $179 $615 $489 (1) Differs from segment operating profits in that all non-cash write-offs relating to acquisitions are excluded, along with the expenses of each segment's corporate group. (2) Earnings before taxes, interest, acquisition write-offs and non-recurring gains. SOURCE Dover Corporation CONTACT: John F. McNiff, Vice President of Dover, 212-922-1640/ /Web site: http://www.dovercorporation.com/ (DOV)