Dover Reports First Quarter 2018 Results and Provides 2018 Guidance

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Dover Reports First Quarter 2018 Results and Provides 2018 Guidance

- Reports quarterly revenue of $1.9 billion, an increase of 6% from the prior year
- Posts diluted net earnings per share of $0.84 on a GAAP basis
- Generates quarterly adjusted diluted net earnings per share of $1.16, an increase of 26% from the prior year, which excludes acquisition-related amortization costs and costs associated with rightsizing initiatives and the Apergy separation
- Provides pro forma 2018 guidance for full year diluted earnings per share from continuing operations, which excludes Apergy

DOWNERS GROVE, Ill., April 27, 2018 /PRNewswire/ -- Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Financial Results (including Apergy):

For the first quarter ended March 31, 2018, Dover's revenue was $1.9 billion, an increase of 6% from the prior year. The increase in the quarter was driven by organic growth of 4%, acquisition growth of 1% and a favorable impact from foreign exchange ("FX") of 4%, partially offset by a 3% impact from dispositions. Net earnings were $131.4 million, a decrease of 24% as compared to $172.2 million for the prior year period. Diluted net earnings per share ("EPS") for the first quarter ended March 31, 2018, were $0.84, compared to $1.09 EPS in the prior year period, representing a decrease of 23%.

For the first quarter ended March 31, 2018, EPS included Apergy separation related costs of $0.06 and rightsizing and other costs of $0.02. First quarter EPS also included acquisition-related amortization costs of $0.24. Excluding these costs, adjusted EPS for the first quarter ended March 31, 2018, was $1.16, an increase of 26% over an adjusted EPS of $0.92 in the prior year period, which excludes a gain on disposition of $0.39 and acquisition-related amortization costs of $0.22.

A reconciliation between GAAP and adjusted measures is included as an exhibit herein.

Full Year 2018 Guidance (excluding Apergy):

Beginning with this earnings release, Dover is providing full year EPS and revenue guidance on a pro forma continuing operations basis, which excludes the 2018 operating results of Apergy. On this basis, in 2018, Dover expects to generate adjusted diluted earnings per share in the range of $4.70 to $4.85, representing an increase of approximately 15% over the prior year, on a comparable pro forma basis. This guidance is based on full year revenue growth of 4% to 5%, which is comprised of organic growth of 3% to 4%, acquisition growth of 1%, and a favorable impact from FX of 3%, partially offset by a 3% impact from dispositions. In addition, the effect of estimated incremental share repurchases is reflected in the updated guidance.

Dover's updated pro forma 2018 guidance for adjusted EPS from continuing operations excludes acquisition-related amortization costs of $0.71, Apergy-related separation costs of $0.06 incurred in the first quarter, and estimated full year rightsizing and other costs of $0.05. Dover expects to incur further separation costs in the second quarter of 2018 in the range of $33 to $35 million, which is not included in this guidance.

A reconciliation between Dover's prior EPS guidance and its updated pro forma EPS guidance, which excludes Apergy, is provided in the appendix of its first quarter 2018 earnings presentation, which is available on the Company's website, dovercorporation.com.

Apergy Separation Update:

As previously announced on April 18, 2018, Dover's Board of Directors formally approved the separation of Apergy through a distribution of all of the common stock of Apergy held by Dover to Dover shareholders. In connection with the approval, the Board has also set the distribution ratio, record date and distribution date for the spin-off.

The distribution is expected to be made at 12:01 a.m. ET on May 9, 2018, to Dover shareholders of record as of 5:00 p.m. ET on April 30, 2018, the record date for the distribution. On the distribution date, Dover shareholders will receive one share of Apergy common stock for every two shares of Dover common stock held as of the record date. Following the distribution, Apergy will be an independent, publicly traded company, and Dover will retain no ownership interest in Apergy.

Management Commentary:

Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our first quarter revenue and earnings performance was solid and in-line with our expectations. We experienced continued strength in many of our businesses, including those serving the waste handling, printing & identification, heat exchanger and upstream energy markets. A number of other businesses also turned in solid performances, including pumps, vehicle service equipment, and industrial winches. This performance was partially offset by softer than expected retail refrigeration markets in the first quarter.

"Separately, pro forma bookings on a continuing operations basis were strong in Engineered Systems and Fluids, resulting in a solid total company book-to-bill of 1.12, which positions us well as we continue through the second quarter.

"We recently made two important announcements. First, we announced the appointment of Rich Tobin as Dover's new President & CEO, effective May 1st. Rich is inheriting a strong company with outstanding talent and attractive businesses that are well-positioned in their markets. The Board and I are confident he is the right person to lead Dover to even greater success. We also announced the Board's approval of the Apergy spin-off. The spin-off positions Dover to become a more focused company with more consistent performance."

Conference Call Information:

Dover will host a webcast and conference call to discuss its first quarter 2018 results and 2018 guidance at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Friday, April 27, 2018. The webcast can be accessed on the Dover website at dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover's first quarter results and its operating segments can be found on the Company's website.

About Dover:

Dover is a diversified global manufacturer with annual revenue of approximately $8 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through four operating segments: Engineered Systems, Fluids, Refrigeration & Food Equipment and Energy. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 60 years, our team of 29,000 employees takes an ownership mindset, collaborating with customers to redefine what's possible. Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under "DOV." Additional information is available at dovercorporation.com.

Forward-Looking Statements:

This press release 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" 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, 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, our ability to identify and complete acquisitions and integrate and realize synergies from newly acquired businesses, our execution of the Apergy spinoff, capital allocation plans and changes in those plans, including with respect to dividends, share repurchases, investments in research and development, capital expenditures and acquisitions, changes in law, including the effect of U.S. tax reform and developments with respect to trade policy and tariffs, our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions, changes in sourcing input 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 the Company's periodic reports filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K/A for the year ended December 31, 2017. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

 

INVESTOR SUPPLEMENT - FIRST QUARTER 2018


DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited)(in thousands, except per share data)




Three Months Ended March 31,


2018


2017

Revenue

$

1,921,579


$

1,813,372

Cost of goods and services

1,212,638


1,152,198

Gross profit

708,941


661,174

Selling, general, and administrative expenses

514,149


486,260

Operating earnings

194,792


174,914

Interest expense

35,807


36,409

Interest income

(2,058)


(2,580)

Gain on sale of businesses


(90,093)

Other expense (income), net

286


(794)

Earnings before provision for income taxes

160,757


231,972

Provision for income taxes

29,322


59,725

Net earnings

$

131,435


$

172,247





Net earnings per share:




Basic

$

0.85


$

1.11

Diluted

$

0.84


$

1.09





Weighted average shares outstanding:




Basic

154,520


155,540

Diluted

157,090


157,399





Dividends paid per common share

$

0.47


$

0.44





 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)







2018


2017


Q1


Q1

Q2

Q3

Q4

FY 2017

REVENUE








Engineered Systems








Printing & Identification

$

282,521



$

249,238


$

278,220


$

272,941


$

293,615


$

1,094,014


Industrials

364,263



358,397


377,210


372,891


373,776


1,482,274



646,784



607,635


655,430


645,832


667,391


2,576,288










Fluids

553,295



525,195


553,259


562,818


609,558


2,250,830










Refrigeration & Food Equipment

338,235



356,834


426,304


438,788


377,179


1,599,105










Energy

383,654



324,088


359,168


359,298


363,647


1,406,201










Intra-segment eliminations

(389)



(380)


(810)


(461)


(337)


(1,988)


Total consolidated revenue

$

1,921,579



$

1,813,372


$

1,993,351


$

2,006,275


$

2,017,438


$

7,830,436










NET EARNINGS








Segment Earnings:








Engineered Systems

$

97,864



$

174,398


$

106,820


$

98,348


$

210,864


$

590,430


Fluids

54,511



52,639


73,558


87,164


91,747


305,108


Refrigeration & Food Equipment

29,182



33,562


65,829


65,413


29,018


193,822


Energy

54,554



41,691


53,368


51,936


41,432


188,427


Total segments

236,111



302,290


299,575


302,861


373,061


1,277,787


Corporate expense / other

41,605



36,489


34,190


31,741


64,818


167,238


Interest expense

35,807



36,409


36,932


35,453


36,414


145,208


Interest income

(2,058)



(2,580)


(2,338)


(1,761)


(1,823)


(8,502)


Earnings before provision (benefit) for
income taxes

160,757



231,972


230,791


237,428


273,652


973,843


Provision (benefit) for income taxes

29,322



59,725


66,733


58,516


(22,796)


162,178


Net earnings

$

131,435



$

172,247


$

164,058


$

178,912


$

296,448


$

811,665










SEGMENT MARGIN







Engineered Systems

15.1

%


28.7

%

16.3

%

15.2

%

31.6

%

22.9

%

Fluids

9.9

%


10.0

%

13.3

%

15.5

%

15.1

%

13.6

%

Refrigeration & Food Equipment

8.6

%


9.4

%

15.4

%

14.9

%

7.7

%

12.1

%

Energy

14.2

%


12.9

%

14.9

%

14.5

%

11.4

%

13.4

%

Total segment operating margin

12.3

%


16.7

%

15.0

%

15.1

%

18.5

%

16.3

%









DEPRECIATION AND AMORTIZATION EXPENSE







Engineered Systems

$

18,278



$

19,575


$

20,259


$

22,104


$

19,481


$

81,419


Fluids

30,912



28,503


29,473


30,252


31,892


120,120


Refrigeration & Food Equipment

13,579



15,035


14,522


14,093


13,557


57,207


Energy

34,005



31,365


32,000


33,421


34,210


130,996


Corporate

1,249



1,120


1,164


994


1,220


4,498


Total depreciation and amortization expense

$

98,023



$

95,598


$

97,418


$

100,864


$

100,360


$

394,240










 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)



2018


2017


Q1


Q1

Q2

Q3

Q4

FY 2017

BOOKINGS








Engineered Systems








Printing & Identification

$

284,437



$

256,665


$

282,157


$

268,700


$

306,818


$

1,114,340



Industrials

435,137



419,455


367,352


366,430


374,280


1,527,517



719,574



676,120


649,509


635,130


681,098


2,641,857










Fluids

625,469



565,987


554,656


576,538


613,804


2,310,985










Refrigeration & Food Equipment

372,701



438,576


466,276


357,855


319,899


1,582,606










Energy

395,787



348,317


352,617


368,377


354,833


1,424,144










Intra-segment eliminations

(609)



(1,149)


(529)


(468)


(542)


(2,688)










Total consolidated bookings

$

2,112,922



$

2,027,851


$

2,022,529


$

1,937,432


$

1,969,092


$

7,956,904











BACKLOG








Engineered Systems








Printing & Identification

$

135,915



$

109,347


$

115,763


$

116,359


$

129,752




Industrials

350,808



310,008


301,474


297,860


310,463




486,723



419,355


417,237


414,219


440,215











Fluids

480,967



371,717


378,774


398,827


399,742











Refrigeration & Food Equipment

283,250



341,530


382,598


302,574


244,972











Energy

161,942



156,255


147,568


158,645


149,579











Intra-segment eliminations

(534)



(729)


(378)


(383)


(571)











Total consolidated backlog

$

1,412,348



$

1,288,128


$

1,325,799


$

1,273,882


$

1,233,937




 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

(unaudited)(in thousands, except per share data*)


Earnings Per Share









2018


2017


Q1


Q1

Q2

Q3

Q4

FY 2017

Net earnings per share:








Basic

$

0.85



$

1.11


$

1.05


$

1.15


$

1.90


$

5.21

Diluted

$

0.84



$

1.09


$

1.04


$

1.14


$

1.88


$

5.15










Net earnings and weighted average shares used in calculated earnings per share amounts are as follows:


Net earnings

$

131,435



$

172,247


$

164,058


$

178,912


$

296,448


$

811,665










Weighted average shares outstanding:








Basic

154,520



155,540


155,703


155,757


155,734


155,685

Diluted

157,090



157,399


157,513


157,555


158,013


157,744










* Per share data may be impacted by rounding.




























 

Non-GAAP Reconciliations


Adjusted Earnings Per Share (Non-GAAP)







Net earnings are adjusted by the effect of acquisition-related amortization, the Tax Cuts and Jobs Act, gains on disposition of businesses, disposition costs, Apergy separation costs, rightsizing and other costs and a product recall reserve charge and reversal to derive adjusted net earnings and adjusted diluted earnings per common share as follows:


2018


2017


Q1


Q1

Q2

Q3

Q4

FY 2017

Adjusted net earnings:







Net earnings

$

131,435



$

172,247


$

164,058


$

178,912


$

296,448


$

811,665


Acquisition-related amortization, pre-tax 1

50,624



52,203


50,833


50,524


50,630


204,190


Acquisition-related amortization, tax impact 2

(12,642)



(17,554)


(16,807)


(16,885)


(16,797)


(68,043)


Tax Cuts and Jobs Act 3






(50,859)


(50,859)


Gain on dispositions, pre-tax 4



(88,402)




(116,932)


(205,334)


Gain on dispositions, tax impact 2



26,682




6,071


32,753


Disposition costs, pre-tax 5





3,314


1,931


5,245


Disposition costs, tax impact 2





(964)


(1,051)


(2,015)


Apergy separation costs, pre-tax

11,746





1,718


13,552


15,270


Apergy separation costs, tax impact 2

(2,142)





(500)


(5,025)


(5,525)


Rightsizing and other costs, pre-tax 6

4,371






56,278


56,278


Rightsizing and other costs, tax impact 2

(797)






(17,149)


(17,149)


Product recall reversal, pre-tax






(7,200)


(7,200)


Product recall reversal, tax impact 2






2,614


2,614


Adjusted net earnings

$

182,595



$

145,176


$

198,084


$

216,119


$

212,511


$

771,890










Adjusted diluted earnings per common share*:







Diluted earnings per share

$

0.84



$

1.09


$

1.04


$

1.14


$

1.88


$

5.15


Acquisition-related amortization, pre-tax 1

0.32



0.33


0.32


0.32


0.32


1.29


Acquisition-related amortization, tax impact 2

(0.08)



(0.11)


(0.11)


(0.11)


(0.11)


(0.43)


Tax Cuts and Jobs Act 3






(0.32)


(0.32)


Gain on dispositions, pre-tax 4



(0.56)




(0.74)


(1.30)


Gain on dispositions, tax impact 2



0.17




0.04


0.21


Disposition costs, pre-tax 5





0.02


0.01


0.03


Disposition costs, tax impact 2





(0.01)


(0.01)


(0.02)


Apergy separation costs, pre-tax

0.07





0.01


0.09


0.10


Apergy separation costs, tax impact 2

(0.01)






(0.03)


(0.03)


Rightsizing and other costs, pre-tax 6

0.03






0.36


0.36


Rightsizing and other costs, tax impact 2

(0.01)






(0.11)


(0.11)


Product recall reversal, pre-tax






(0.05)


(0.05)


Product recall reversal, tax impact 2






0.02


0.02


Adjusted diluted earnings per share

$

1.16



$

0.92


$

1.26


$

1.37


$

1.34


$

4.89










1 Includes amortization on acquisition-related intangible assets and inventory step-up.

2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period.

3 Tax impact primarily related to the enactment of the Tax Cuts and Jobs Act. This benefit also includes decreases in statutory tax rates of foreign jurisdictions.

4 Includes gains from the sales of Performance Motorsports International and Warn Industries, Inc. in the first and fourth quarters of 2017, respectively.

5 Disposition costs include costs related to the fourth quarter sale of Warn Industries, Inc.

6 Rightsizing and other costs include actions taken on employee reductions, facility consolidations and site closures and product line divestitures and exits.

* Per share data and totals may be impacted by rounding.

 

DOVER CORPORATION

ADDITIONAL INFORMATION

(unaudited)(in thousands)

Quarterly Cash Flow*



2018


2017


Q1


Q1

Q2

Q3

Q4

FY 2017

Net Cash Flows Provided By (Used In):








Operating activities

$

35,195



$

78,926


$

159,289


$

273,370


$

324,497


$

836,082


Investing activities

(136,022)



80,925


(54,549)


(60,781)


196,255


161,850


Financing activities

(289,103)



(93,293)


(216,273)


(197,634)


(87,539)


(594,739)


 

Quarterly Adjusted Free Cash Flow (Non-GAAP)*



2018


2017


Q1


Q1

Q2

Q3

Q4

FY 2017

Cash flow from operating activities

$

35,195



$

78,926


$

159,289


$

273,370


$

324,497


$

836,082


Less: Capital expenditures

(58,361)



(43,114)


(51,747)


(64,908)


(51,489)


(211,258)


Plus: Cash taxes paid for gains on
dispositions1




42,955


5,651


20,434


69,040


Plus: Cash paid for Apergy separation costs

7,377





369


9,139


9,508


Plus: Cash paid for rightsizing actions

13,233








Adjusted free cash flow

$

(2,556)



$

35,812


$

150,497


$

214,482


$

302,581


$

703,372










Adjusted free cash flow as a percentage of
revenue

(0.1)

%


2.0

%

7.5

%

10.7

%

15.0

%

9.0

%









Adjusted free cash flow as a percentage of
adjusted net earnings

(1.4)

%


24.7

%

76.0

%

99.2

%

142.4

%

91.1

%









1 Federal and state tax payments related to the gains on the dispositions of Warn Industries Inc. and Performance Motorsports International in 2017 and Tipper Tie in 2016.

* On January 1, 2018, the Company adopted ASU 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The Company retrospectively revised cash flows from operating activities and investing activities for all periods presented. There is no impact to adjusted free cash flow as a result of this guidance.

 

Revenue Growth Factors



Three Months Ended March 31, 2018


Engineered
Systems


Fluids


Refrigeration
& Food
Equipment


Energy


Total

Organic

8%


—%


(7)%


17%


4%

Acquisitions

—%


1%


1%


—%


1%

Dispositions

(8)%


—%


(1)%


—%


(3)%

Currency translation

6%


4%


2%


1%


4%

Total **

6%


5%


(5)%


18%


6%











** Totals may be impacted by rounding.










 

Non-GAAP Disclosures

In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted net earnings, adjusted diluted earnings per common share, adjusted free cash flow, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for net earnings, diluted earnings per common share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.

Adjusted net earnings represents net earnings adjusted for the effect of the acquisition-related amortization, Tax Cuts and Jobs Act, gains on disposition of businesses, disposition costs, Apergy separation costs, rightsizing and other costs, and a product recall reserve reversal. We exclude these items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or Management believes they are not indicative of the Company's ongoing operating costs or gains in a given period. Management believes this information is useful to investors to better understand the company's ongoing profitability and facilitates easier comparisons of the company's profitability to prior and future periods and to its peers. Adjusted diluted earnings per common share represents adjusted net earnings divided by average diluted shares. Beginning in 2018, adjusted net earnings further exclude after-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions we consummate. Management believes excluding after-tax acquisition-related amortization will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability with peer companies.

Adjusted free cash flow represents net cash provided by operating activities minus capital expenditures, plus the add back of cash taxes paid for gains on dispositions and cash paid for the Apergy separation costs and rightsizing actions. Management believes that adjusted free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.

Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue performance and trends between periods.

 

Cision View original content:http://www.prnewswire.com/news-releases/dover-reports-first-quarter-2018-results-and-provides-2018-guidance-300637925.html

SOURCE Dover

Investor Contact: Paul Goldberg, Vice President - Investor Relations, (630) 743-5180, peg@dovercorp.com; Media Contact: Adrian Sakowicz, Vice President - Communications, (630) 743-5039, asakowicz@dovercorp.com