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Dover Reports Third Quarter Results
NEW YORK, Oct. 16 /PRNewswire/ -- Dover Corporation (NYSE: DOV) earned $.67 per diluted share in the third quarter ended September 30, 2000, excluding two non-recurring items. This was an increase of 26% from the $.53 per diluted share earned in the comparable quarter last year, excluding non- recurring items.
After taking into account a $.04 gain on the sale of 43% of an equity investment and a non-recurring charge to discontinued operations of $ .07 per diluted share, Dover earned $.64 per diluted share outstanding. The $.07 per diluted share charge ($13.6 million after tax) is a result of finalizing the purchase price adjustment on the sale of the Dover Elevator International segment in January 1999 (which generated a $524 million after-tax or $2.49 per diluted share gain in that quarter).
Operating income for the third quarter was $265.3 million, up 27% from $208.9 million last year. Net income from continuing operations for the third quarter was $135.5 million, up 23% from $110.4 million in net income from continuing operations last year, excluding the $ 8.9 million after tax gain on the equity investment sale this year, and the $11.1 million after-tax (or $.05 per share) non-recurring gain last year. Sales in the quarter were a record $1.39 billion, up 21% from $1.15 billion last year.
This strong performance was led by Dover Technologies, where income increased 57% from the third quarter last year. Dover Resources and Dover Industries earnings were also up, by 18% and 8%, respectively, while Dover Diversified experienced a 2% earnings decline.
Dover completed six add-on acquisitions during the quarter at a combined investment of $91 million, bringing the total for the year to 18 acquisitions for a total investment of $333 million. The profit impact of these acquisitions in 2000 will be small due to acquisition write-offs, and imputed financing costs. Acquisitions completed in the last twelve months added $101 million in sales and $15 million in operating profit in the third quarter.
Segment Results
Dover Technologies sales in the third quarter increased 41% to $565.0 million, from $400.3 million last year, and segment profit increased 57% to $116.0 million, from $74.0 million last year. Segment bookings at $591.9 million were 5% greater than shipments.
Technologies' Specialty Electronic Components (SEC) business has increased production dramatically in response to continued very strong demand from the data transmission, telecommunications, and networking markets it serves. This business, which supplies high-value components, precision devices, and multifunction integrated assemblies to OEM customers in these markets, is expanding capacity to address expected continued growth opportunities. SEC's sales in the quarter were $147.5 million, up 75% from the prior period, profits more than doubled to $29.6 million, and bookings were up 122% to $204 million, another new record. The quarter's book-to-bill ratio was 1.39 and the year-to-date book-to-bill is 1.5.
Technologies' Circuit Board Assembly and Test (CBAT) sales were up 38% to $366 million from last year, bookings were up 23% to $338 million, and earnings were up 57% to $80.5 million. These results represent the sixth quarter in a row that CBAT has shown improvement from the prior year's comparable quarter, and the seventh in a string of quarter-to-quarter improvements. Sales have increased 110% and earnings 400% since the cyclical trough in this market in the first quarter of 1999. Operating margins in the quarter increased to 22%. The book-to-bill ratio in the quarter slipped to .92, and was slightly lower at the largest CBAT company, Universal Instruments. Underlying demand for electronics (especially in the telecommunications industry), and thus demand for CBAT's production equipment for high volume electronics manufacturing, is expected to continue to grow. However, it appears that some customers are experiencing difficulty in managing the rate of their recent capacity expansions, and some have reported components shortages which have also dampened their enthusiasm for adding production capacity at the recent pace.
Dover believes that while both of these Technologies businesses are affected by the electronics manufacturing market, the SEC business will experience less variability in sales and earnings than the CBAT business, which is more dependent on its customers' capital absorption capacity.
Technologies' industrial marking business, Imaje, also continued its steady growth, with earnings up over 18% on a 15% sales increase, as measured in French Francs.
Dover Industries sales in the third quarter increased 8% to $314.0 million from $291.9 million last year, and segment earnings also increased 8% from $45.1 million to $48.8 million. Acquisitions made in the last year contributed all of the sales and earnings increase. Segment bookings in the quarter were up 7% to $309 million and the book-to-bill ratio was 0.99.
Sales at Heil Environmental, Industries' largest company, were up, with excellent operating leverage, partly due to shipments on a large contract with New York City. However, sales and earnings declines at Heil Trailer, the liquid and dry bulk tank trailer company, more than offset these results, with continued comparative weakness in its markets, particularly in dry bulk.
Industries' automotive service equipment businesses, Rotary Lift and Chief, again turned in very favorable comparisons to the prior year. PDQ, the manufacturer of touch-less car wash systems, whose comparisons had suffered in the second quarter from the adverse impact of new product introductions on existing product sales, strongly contributed to the prior year comparisons this quarter.
TipperTie/Technopack, while solidly profitable and generating high returns, hurt the quarterly comparisons and is focused on cost reductions, as well as product line and marketing organization rationalization.
The food service equipment businesses, Groen and Randell, both showed double-digit earnings increases on essentially flat sales in a very competitive market.
Dover Diversified sales in the third quarter increased 7% to $286.8 million from $268.3 million last year, and segment income declined 2% to $39.3 million from $40.1 million. Segment bookings in the quarter were up 22% to $289 million and the book-to-bill was 1.01. Acquisitions in the last year, particularly Crenlo, were meaningful contributors to both sales and earnings.
Hill Phoenix, the refrigeration systems and display case company, and Diversified's largest sales and second largest profit business, has experienced double-digit sales declines and margin erosion as capital spending in the supermarket and retail grocery industry has slowed due to industry consolidation, and as some key accounts have slowed store expansions.
AC Compressor, serving the process industries, is a long lead-time business. While results were comparable to last year-to-date and though prospects of a stronger market are evident, experienced a weaker quarter due to weak bookings earlier in the year. Sargent's results, in its Aerospace components business, have felt the effect of lower OEM airframe and aftermarket overhaul demand.
Partially offsetting these negatives, Tranter, Diversified's most profitable company, had improved margins on modest sales growth for both the quarter and year-to-date. And as in prior quarters this year, the turnaround at Belvac from marginal profitability last year to high margins this year, has been a major contributor to Diversified's comparisons.
Dover Resources sales in the third quarter increased to $226.3 million from $191.4 million last year, or 18%, and segment income also increased 18%, from $24.7 million to $29.0 million. Segment bookings in the quarter were up 9% to $217 million and the book-to-bill ratio was 0.96.
The oil production equipment company, Petroleum Equipment Group, is operating at record levels. C. Lee Cook, influenced by the gas gathering and transmission markets, is also sharply up from last year. Quartzdyne is now benefiting from increased drilling activity in the "measurement while drilling" market.
OPW Fueling Components' sales improvement over the prior year's third quarter and the second quarter of this year reached low double digits, with substantial earnings leverage. OPW Fluid Transfer Group is well ahead of last year's restructuring and strike-impacted performance. Tulsa Winch reported strong results due to both internal growth and acquisitions. Companies serving the process industries (Wilden, Blackmer, Ronninger - Petter) have faced an unsettled market this year, and were up 16% in sales but down 6% in earnings compared to the prior period.
Dover Corporation also reports its pretax earnings on an EBITACQ basis (Earnings Before Interest, Taxes, and non-cash charges arising from purchase accounting for acquisitions). Third quarter EBITACQ of $252 million was 28% higher than prior year. Of this, about 8 percentage points reflect acquisitions and 20 percentage points reflect the growth of existing companies (notably electronics).
On October 5th, Dover filed a shelf registration with the Securities and Exchange Commission for the possible issuance of up to $1 billion in senior debt securities. This will provide the flexibility to issue public debt rapidly depending on market conditions and financing needs. As of September 30, 2000 Dover had $836 million in short-term debt outstanding, $400 million of which matures in February 2001.
In 1997, Dover Technologies made a small investment in Bookham Technology PLC for strategic business reasons. Bookham (Nasdaq: BKHM) went public in April of this year. During the second quarter, Dover participated in a secondary offering, and the resultant sale of 313,043 Bookham shares resulted in a gain of $13.7 million, or $8.9 million after tax. To reflect its remaining investment of 406,957 shares, Dover will report as part of its Third Quarter Report on Form 10Q Statement of Comprehensive Income a year-to-date Unrealized Gain of $ 10.5 million after tax.
Commenting on prospects for the balance of the year Thomas L. Reece, Dover's Chairman, President and CEO, said, "At the end of the second quarter we said we were on a track that could lead to a full year earnings per share gain of as much as 35%. Although the CBAT businesses' series of sequential quarter improvements may well be broken in the fourth quarter, with the strength in the SEC businesses, and strong prospects for improvement from the third quarter at several of the Companies in the other Subsidiaries, we still believe that is possible."
Additional information on Dover and its operating companies can be found on the Company's website (http://www.dovercorporation.com). The Dover website will host a webcast of the third quarter conference call at 10:00 AM Eastern time on Tuesday, October 17. The conference call will also be made available for replay on the website.
Dover Corporation is a diversified manufacturer of industrial products.
"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)
Third quarter ended September 30,
Percent
SALES 2000 1999 Change
Dover Technologies $564,988,000 $400,325,000 41%
Dover Industries 314,037,000 291,920,000 8%
Dover Diversified 286,772,000 268,330,000 7%
Dover Resources 226,311,000 191,373,000 18%
Total (after intramarket
eliminations) $1,390,486,000 $1,150,531,000 21%
EARNINGS
Dover Technologies $116,038,000 $ 74,042,000 57%
Dover Industries 48,762,000 45,141,000 8%
Dover Diversified 39,313,000 40,080,000 -2%
Dover Resources 28,985,000 24,650,000 18%
Subtotal (after intramarket
eliminations) 233,098,000 183,913,000
Gain (loss) on disposition
and sale of equity
investments 13,741,000 20,931,000 -34%
Corporate expense (7,337,000) (7,361,000)
Net interest expense (25,528,000) (9,404,000) 171%
Earnings before taxes
on income 213,974,000 188,079,000 14%
Taxes on income 69,512,000 66,544,000 4%
Net earnings -- Continuing
Operations 144,462,000 121,535,000 19%
Loss on sale of
discontinued operations * (13,595,000) --
Net earnings $130,867,000 $121,535,000 8%
Net earnings per share:
Basic -- Continuing $0.71 $0.58 22%
Gain on sale (0.06) --
Net earnings $0.65 $0.58
Diluted -- Continuing $0.71 $0.58 22%
Gain on sale (0.07) --
Net earnings $0.64 $0.58
-
On January 5, 1999, Dover completed the sale of its elevator business tO Thyssen Industrie AG for $1.16 billion resulting in a net gain of $523.9 million in 1999. The loss of $13.6 million in 2000 reflects subsequent adjustments to both the purchase price and expenses related to the sale.
DOVER CORPORATION CONSOLIDATED
MARKET SEGMENT RESULTS
(unaudited)
Nine months ended September 30,
SALES 2000 1999
Dover Technologies $1,558,706,000 $1,023,328,000 52%
Dover Industries 939,367,000 844,452,000 11%
Dover Diversified 866,722,000 759,625,000 14%
Dover Resources 661,973,000 574,684,000 15%
Total (after intramarket
eliminations) $4,021,029,000 $3,198,136,000 26%
EARNINGS
Dover Technologies $311,177,000 $147,860,000 110%
Dover Industries 150,679,000 131,134,000 15%
Dover Diversified 116,992,000 102,169,000 15%
Dover Resources 94,538,000 76,478,000 24%
Subtotal (after intramarket
eliminations) 673,386,000 457,641,000
Gain (loss) on disposition
and sale of equity
investments 12,341,000 17,256,000 -28%
Corporate expense (20,454,000) (17,021,000) 20%
Net interest expense (62,894,000) (22,208,000) 183%
Earnings before
taxes on income 602,379,000 435,668,000 38%
Taxes on Income 203,865,000 151,603,000 34%
Net earnings --
Continuing Operations 398,514,000 284,065,000 40%
Gain / (loss) on sale
of discontinued
operations* (13,595,000) 523,938,000
Net earnings $384,919,000 $808,003,000 -52%
Net earnings per share:
Basic -- Continuing $1.96 $1.34 46%
Gain on sale (0.06) 2.49
Net earnings $1.90 $3.83
Diluted -- Continuing $1.95 $1.34 46%
Gain on sale (0.07) 2.46
Net earnings $1.88 $3.80
Average number of shares
outstanding -- Basic 202,937,000 211,238,000
Average number of shares
outstanding -- Diluted 204,736,000 212,776,000
-
On January 5, 1999, Dover completed the sale of its elevator business to Thyssen Industrie AG for $1.16 billion resulting in a net gain of $523.9 million in 1999. The loss of $13.6 million in 2000 reflects subsequent adjustments to both the purchase price and expenses related to the disposition.
DOVER CORPORATION
OPERATIONAL PROFITS (1)
(in millions)
2000 -- NINE MONTHS 1999 -- NINE MONTHS
SALES EARNINGS % SALES EARNINGS
%
Circuit board
assembly / test $1,037 $216 21 $647 $96 15
Electronic
components 372 71 19 235 35 15
Marking 151 48 32 142 42 30
Dover Technologies 1,560 335 21 1,024 173 17
Dover Industries 939 169 18 844 149 18
Dover Diversified 867 138 16 760 119 16
Dover Resources 662 117 18 575 91 16
Operational Profits
(after elim.) (1) $4,021 759 19 $3,198 532 17
Corporates and other (37) (29)
EBITACQ (2) 722 503
Gain (loss) on dispositions &
Sale of equity securities 12 17
Interest (63) (22)
Acquisition Write-offs (69) (62)
Dover Pre-tax income $602 $436
1999 -- FULL YEAR
SALES EARNINGS %
Circuit board assembly / test $934 $154 16
Electronic components 328 48 15
Marking 196 59 30
Dover Technologies 1,458 261 18
Dover Industries 1,145 203 18
Dover Diversified 1,072 177 17
Dover Resources 778 128 16
Operational Profits
(after elim.) (1) $4,446 769 17
Corporates and other (44)
EBITACQ(2) 725
Gain (loss) on dispositions &
Sale of equity securities 10
Interest (35)
Acquisition Write-offs (85)
Dover Pre-tax income $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)
September 30, December 31,
BALANCE SHEET ('000) 2000 1999
Assets:
Cash & equivalents $210,860 $138,038
Receivables, net of allowances
for doubtful accounts 936,130 750,917
Inventories 768,887 639,379
Prepaid expenses 96,430 83,228
Net property, plant & equipment 706,684 646,475
Intangible and other assets 2,072,334 1,873,903
$4,791,325 $4,131,940
Liabilities & stockholders' equity:
Short term debt $838,548 $297,900
Payables and accrued expenses 830,175 1,036,965
Deferred credits 178,101 150,294
Long-term debt 629,294 608,025
Stockholders' equity 2,315,207 2,038,756
$4,791,325 $4,131,940
Nine Months
CASH FLOWS ('000) 2000 1999
Operating activities:
Net earnings $ 384,919 $ 808,003
(Gain) loss on sale of
discontinued business, net 13,595 (523,938)
Gain on sale of business
and equity investments (12,341) (17,256)
Depreciation 101,358 97,093
Amortization 49,902 44,069
Working capital changes (209,444) (140,821)
Other, net 10,528 (6,558)
Net cash from operating activities 338,517 260,592
Investing activities:
Capital expenditures (134,537) (86,911)
Acquisitions, net of cash
and cash equivalents (314,084) (368,616)
Proceeds from sale of businesses
and equity investments 15,956 1,209,695
Purchase of treasury stock (3,928) (629,772)
Net cash from (used in)
investing activities (436,593) 124,396
Financing activities:
Increase (decrease) in notes payable 527,978 (245,072)
Increase (decrease) in long-term debt 14,465 (769)
Cash dividends (72,076) (68,508)
Proceeds from exercise of stock options 7,046 7,215
Net cash from (used in) financing activities 477,413 (307,134)
Discontinued operations -- tax payments (306,515) --
Net increase (decrease) in cash & equivalents 72,822 77,854
Cash & cash equivalents at beginning of period 138,038 96,774
Cash & cash equivalents at end of period $ 210,860 $ 174,628
DOVER CORPORATION
ACQUISITIONS -- THIRD QUARTER 2000
DATE TYPE ACQUIRED COMPANIES LOCATION (Near) NT -- Operating Co.
18-Jul Stock Syfer Technology Ltd. Norwich, U.K. DTI Novacap
Manufacturer of specialty ceramic electronic components. 24-Jul Asset Chesterton System One Pump Division Stoneham, MA DRI
Blackmer
Manufacturer of a high-end robust centrifugal pump line. 08-Aug Stock Kesseltronics Systems Corporation Hudson, Quebec DII PDQ
Developer of unique electronic products primarily for the Vehicle Wash Equipment Industry. 01-Sep Asset Vertex Piston S.P.A. Reggio Emila, Italy DDI Performance Motorsports
Manufacturer of cast aluminum pistons. 15-Sep Asset National Cooler Corporation San Dimas, CA DDI Hill Phoenix
Manufacturers of walk-in coolers, freezers and cold storage doors. 26-Sep Stock Pullmaster Winch Surrey, Vancouver DRI Tulsa Winch
Manufacturer of hydraulic planetary winches ranging from 1,000 to 50,000 pounds linepull. SOURCE Dover Corporation
CONTACT: David S. Smith, Vice President of Dover Corporation, 212-922-1640/