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Dover Reports First Quarter Records
NEW YORK, April 17 /PRNewswire/ -- Dover Corporation (NYSE: DOV) earned $.57 per diluted share from continuing operations in the first quarter ended March 31, 2000, an increase of 78% from the $.32 per diluted share earned in the comparable quarter last year. Net income from continuing operations for the first quarter was a first quarter record of $117.3 million, up 69% from $69.2 million in net income from continuing operations last year. Sales in the quarter were a record $1.25 billion, up 29% from $969.8 million last year. In the first quarter of 1999 Dover also reported a non-recurring gain of $2.40 per share from the sale of its elevator business.
Each of Dover's four business segments achieved earnings growth in excess of 20%, led by Technologies where income more than tripled from a weak performance in the first quarter of last year.
Dover completed four add-on and one stand-alone acquisitions during the quarter at a combined investment of $168 million. At Dover Resources, Sure Seal, a leading supplier of butterfly valves, actuators and other components used in piping systems, pneumatic conveying, transportation and industrial applications complements Civacon/Knappco, and Hydro Cam Engineering, a maker of stamping dies for the electric motor, generator, transformer and automotive markets, joins De-Sta-Co Manufacturing. At Dover Technologies, Prime Yield, a maker of semiconductor test sockets and distributor of probe cards, expands Everett Charles' semiconductor product offerings in this market. At Dover Diversified, Yakima Wire Works, a maker of bagging machinery for the packaging of soft perishable produce joins SWF. Dover Industries completed the only stand-alone acquisition - Triton Systems, Inc. (Mississippi). Triton is the leading provider of cash-dispensing ATMs for off-premise locations and is the second-largest manufacturer of ATMs (measured in units) and ATM management software in the U.S. The profit impact of these acquisitions in 2000 will be small due to acquisition write-offs, and imputed financing costs.
Segment Results
Dover Technologies sales in the first quarter increased 62% to $466.4 million, from $288.1 million last year, and segment profit increased 227% to $84.8 million, from $25.9 million last year. These strong results were a continuation of trends apparent in the second half of last year, and compare to a weak first quarter of 1999. Segment bookings set a quarterly record, and at $562 million were 21% greater than shipments.
Technologies' circuit board assembly and test equipment (CBAT) companies achieved their fourth consecutive quarterly improvement in orders, shipments, and earnings following an electronic industry cyclical slowdown that began in late 1997 and continued into the early part of 1999. Sales, earnings, and orders in the first quarter of 2000 surpassed the best levels reached in the previous industry up-cycle, and margins improved to 20%. The CBAT market demand is being driven by the broad-based electronics industry recovery, innovations in semiconductor packaging, and rising capacity needs -- especially for "new generation" products. CBAT bookings were up 92% from last year, and the book-to-bill ratio in the quarter was 1.13.
Technologies' specialty electronic components (SEC) companies experienced an outstanding quarter, as profits more than doubled on a 42% sales gain, the result of strong demand from the communication market for increased bandwidth and additional capacity for voice and data transmission in both fixed and wireless systems, combined with improved operational performance. SEC bookings were up 103%, and the quarter's book-to-bill ratio was 1.53.
Technologies' industrial marking business, Imaje, reported sales and profits substantially ahead of last year's weak first quarter. The decline of the French Franc in relation to the U.S. dollar has improved Imaje's competitiveness in some markets, while lowering percentage gains expressed in U.S. dollars. Imaje's sales, measured in French Francs, were up 34% from the first quarter of 1999.
Technologies' quarter-end backlog creates the potential for favorable comparisons to last year's second quarter. Favorable comparisons in the second half of 2000 will be harder to achieve, particularly for CBAT, whose 1999 second half profits were much higher than the first half.
Dover Industries sales in the first quarter increased 16% to $299.0 million from $258.7 million last year, and segment earnings increased 35% from $37.3 million to $50.4 million. Acquisitions made in the last year, including Triton, contributed 12 percentage points of the sales increase and 13 percentage points of the segment earnings gain. Segment bookings in the quarter were up 6% and the book-to-bill ratio was .98.
Heil Environmental set quarterly sales and profit records before counting a $3 million gain from settlement of a long-standing dispute. Shipments rose 12% from the average quarterly level in 1999, exceeding bookings for the first time since the third quarter of 1998. Backlog remains high, up 38% from prior year.
The automotive service equipment market continues to be strong, which helped Rotary Lift, Chief Automotive, and PDQ improve their sales by about 30% and profits more than 60%. Rotary Lift improved partly as a result of two acquisitions made in 1999, but also due to gains in its "core" U.S. lift operations. All invested heavily in new products and in manufacturing improvements during 1999.
In the food service equipment area, both Groen and Randell improved sales and earnings. DovaTech's welding/laser equipment business grew internally and by acquisition to become Industries' third largest profit producer. A portion of these profit improvements was offset by a $1.1 million (19%) decline at Heil Trailer and modest declines at three other companies totaling $1.2 million. Heil Trailer began reducing its shipments in 1999's third quarter reflecting soft order rates earlier in that year. After an order spike late last year, the downward trend has continued with first quarter orders falling 13% from the prior year to a level 17% below shipments.
Overall, Industries should see further profit growth in the second quarter, which historically has been seasonally strong, and continues to expect a strong gain for the full year including, now, a growing contribution from Triton.
Dover Diversified sales in the first quarter increased 17% to $269.5 million from $230.6 million, last year, and segment income increased 23% to $33.5 million from $27.3 million. The primary drivers of the profit gain were acquisitions made in 1999 (especially Crenlo and JE Piston), good internal growth at Tranter, Waukesha (U.S.) and Wiseco, and the successful turnaround at Belvac. This company achieved earnings more than five times greater than last year on only a 3% sales gain, improved margins close to historical levels, and booked slightly more than it shipped. Employment levels at Belvac are down almost 40% from last year and 69% from the high point during the 1994-1996 can-necker boom.
These gains were partially offset by declines at several other companies (including Hill Phoenix, A-C Compressor, and Sargent) that totaled $4.5 million, somewhat less than the amount added by companies acquired during 1999. Acquisitions, net of divestments, added about $38 million to Diversified's first quarter sales.
Many of Diversified's companies tend to have variable quarterly results due to seasonal factors and the irregular pattern of large machinery shipments. In the current quarter Bookings exceeded billings by 15% for Diversified as a whole and backlog ended 18% higher than last year.
Diversified's profits are expected to exceed the first quarter level in the next two quarters of this year and to be ahead for the year as a whole.
Dover Resources sales in the first quarter increased to $218.2 million from $193.8 million last year, or 13%, and segment income increased 25%, from $26.9 million to $33.5 million. Segment bookings in the quarter were up 24% and the book-to-bill ratio was 1.05.
Ten of the fourteen companies achieved earnings gains compared to last year, with only one suffering a significant (and expected) decline. The Petroleum Equipment Group, which suffered severely from low oil prices during the first half of last year, more than doubled sales compared to last year's first quarter, expanded margins, and achieved its best quarterly profits in over ten years. Other companies that are strongly influenced by the petro- chemical and energy production/transmission industries -- Wilden, Blackmer, Cook, and OPW Fluid Transfer Group -- achieved strong profit gains that totaled over 20%.
This improvement was partially offset by a 42% profit decline at OPW Fueling Components on a sales drop of 15%. Spillover sales traceable to an EPA compliance deadline for underground gasoline tanks inflated 1999's first quarter results, turning this usually seasonally slow quarter into 1999's best quarter by far. Actual earnings in this year's first quarter were only 10% below the average level of the last three quarters of 1999.
For the first quarter total bookings and backlog at Resources' were both up about 25% from last year with a book-to-bill ratio of 1.05. Resources' goal in 2000 is to exceed their previous record earnings year ($125 million in 1998), hopefully by a significant amount. This will require continued strengthening from first quarter levels.
Dover Corporation reports its pretax earnings in two ways -- on the GAAP/SEC required segment reporting described above, and on an EBITACQ basis (Earnings Before Interest, Taxes, and non-cash charges arising from purchase accounting for acquisitions). First quarter EBITACQ of $218 million was 65% higher than prior year. Of this, about 12 percentage points reflect acquisitions and 53 percentage points reflect the growth of existing companies (notably electronics). The reduction in shares outstanding during the last 9 months of 1999 resulted in stronger growth for EBITACQ per outstanding share, as this measure increased 73% to $1.07 per share.
Thomas L. Reece, Dover's Chairman and CEO, noted, "The first quarter was a strong start to what we expect will be another record year. Order rates, backlogs and seasonality suggest that EPS could rise in the second quarter, possibly setting a new quarterly record, and again be well ahead of prior year ($.44 per share). Beyond this, modest increases are possible, in our industrial businesses and in the SEC portion of our electronics business. We are unable to predict business levels for our CBAT companies much more than one quarter ahead. As I noted in our recently published Annual Report, "guesses and hopes must face the test of achievement, which is not assured".
Additional information on Dover and its operating companies can be found on the Company's Website. (http://www.dovercorporation.com)
"Dover Corporation makes information available to the public, orally and in writing, which may use words like 'expects' and 'believes', which are 'forward-looking' statements' under the Private Securities Litigation Reform Act of 1995. These 'forward-looking' statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially from historical results or those anticipated. People receiving such information are advised to evaluate this information in light of the various risk factors identified in the Company's most recent Annual Report on Form 10-K, see page 2 - Special Notes Regarding Forward Looking Statements".
DOVER CORPORATION CONSOLIDATED
MARKET SEGMENT RESULTS
(unaudited)
First quarter ended March 31
Percent
SALES 2000 1999 Change
Dover Technologies $466,366,000 $288,120,000 62%
Dover Industries 299,041,000 258,706,000 16%
Dover Diversified 269,538,000 230,580,000 17%
Dover Resources 218,156,000 193,757,000 13%
Total (after
intramarket
eliminations) $ 1,251,283,000 $969,755,000 29%
EARNINGS
Dover Technologies $84,795,000 $25,914,000 227%
Dover Industries 50,415,000 37,284,000 35%
Dover Diversified 33,465,000 27,281,000 23%
Dover Resources 33,541,000 26,933,000 25%
Subtotal (after
intramarket
eliminations) 202,216,000 117,412,000 72%
Gain (loss)
on disposition (1,400,000) (3,675,000)
Corporate expense (6,241,000) (4,502,000) 39%
Net interest expense (15,582,000) (4,471,000) 249%
Earnings before
taxes on income 178,993,000 104,764,000 71%
Taxes on income 61,674,000 35,544,000 74%
Net earnings -
Continuing Operations 117,319,000 69,220,000 69%
Gain on sale of
discontinued
operations* - 523,938,000
Net earnings $117,319,000 $593,158,000 -80%
Net earnings per share:
Basic - Continuing $0.58 $0.32 81%
Gain on sale - 2.41
Net earnings $0.58 $2.73
Diluted - Continuing $0.57 $0.32 78%
Gain on sale - 2.40
Net earnings $0.57 $2.72
Average number of shares outstanding
- Basic 202,797,000 216,928,000
Average number of shares outstanding
- Diluted 204,440,000 218,326,000
On January 5, 1999, Dover completed the sale of its elevator business to
Thyssen Industrie AG for $1.16 billion.
DOVER CORPORATION
OPERATIONAL PROFITS (1)
(in millions)
2000 - 1999 - 1999 -
THREE MONTHS THREE MONTHS FULL YEAR
SALES EARNINGS % SALES EARNINGS % SALES EARNINGS %
Dover Technologies 466 93 20 288 35 12 1,458 261 18
Dover Industries 299 56 19 259 42 16 1,145 203 18
Dover Diversified 270 41 15 231 33 14 1,072 177 17
Dover Resources 218 42 19 194 32 16 778 128 16
Operational
Profits
(after
elim.)(1) $1,251 232 19 $970 142 15 $4,446 769 17
Corporates
and
other (14) (10) (44)
EBITACQ(2) 218 132 725
Gain (loss)
on
dispo-
sitions (1) (4) 10
Interest (16) (4) (35)
Acquisition
Write-offs (22) (19) (85)
Dover Pre-tax
income 179 $105 $615
(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.
DOVER CORPORATION CONSOLIDATED
(unaudited)
March 31 December 31
2000 1999
BALANCE SHEET ('OOO)
Assets:
Cash & equivalents $ 120,875 $138,038
Receivables, net of allowances
for doubtful accounts 841,743 750,917
Inventories 705,122 639,379
Prepaid expenses 92,676 83,228
Net property, plant & equipment 651,514 646,475
Intangible and other assets 1,991,436 1,873,903
$4,403,366 $4,131,940
Liabilities & stockholders' equity:
Short term debt $ 755,208 $297,900
Payables and accrued expenses 715,909 1,036,965
Deferred credits 156,772 150,294
Long-term debt 634,295 608,025
Stockholders' equity 2,141,182 2,038,756
$4,403,366 $4,131,940
Three Months
2000 1999
CASH FLOWS ('000)
Operating activities
Net earnings $ 117,319 $ 593,158
Gain on sale of discontinued
business,net - (523,938)
Loss on sale of business 1,400 3,675
Depreciation 31,963 29,146
Amortization 16,048 14,036
Working capital changes (155,123) (67,869)
Other, net 4,540 (11,518)
Net cash from operating activities 16,147 36,690
Investing activities:
Capital expenditures (35,231) (26,305)
Acquisitions, net of cash
and cash equivalents (154,080) (164,048)
Proceeds from sale of businesses 14,923 -
Purchase of treasury stock (3,307) (249,294)
Net cash from (used in)
investing activities (177,695) (439,647)
Financing activities:
Increase (decrease) in notes payable 456,975 (324,350)
Increase (decrease) in long-term debt 12,728 (989)
Cash dividends (23,339) (22,685)
Proceeds from exercise of stock options 5,449 4,550
Net cash from (used in)
financing activities 451,813 (343,474)
Discontinued operations -
proceeds, taxes, cash (307,428) 1,169,599
Net increase (decrease)
in cash & equivalents (17,163) 423,168
Cash & cash equivalents at
beginning of period 138,038 96,774
Cash & cash equivalents at
end of period $ 120,875 $ 519,942
SOURCE Dover Corporation
CONTACT: David S. Smith Vice President of Dover, 212-922-1640/