Dover Reports Third Quarter 2016 Results

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Dover Reports Third Quarter 2016 Results

- Reports quarterly revenue of $1.7 billion, a decrease of 4% from the prior year
- Delivers quarterly diluted earnings per share from continuing operations of $0.83, including third quarter restructuring costs of $0.04
- Reaffirms recently reduced guidance for diluted earnings per share from continuing operations to be in the range of $3.00 to $3.05 for full year 2016

DOWNERS GROVE, Ill., Oct. 19, 2016 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the third quarter ended September 30, 2016, revenue was $1.7 billion, a decrease of 4% from the prior year. Organic revenue declined 7% and acquisition revenue, net of dispositions, provided 3% growth in the quarter.  Earnings from continuing operations were $130.1 million, a decrease of 30% as compared to $186.5 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the third quarter ended September 30, 2016, were $0.83, compared to $1.19 EPS in the prior year period, representing a decrease of 30%. Third quarter  2016 EPS of $0.83 decreased 27% as compared to third quarter 2015 adjusted EPS of $1.14, which excludes $0.05 of discrete tax benefits. There were no discrete tax benefits in the third quarter of 2016. EPS for the quarters ended September 30, 2016, and September 30, 2015, includes restructuring costs of $0.04 EPS and $0.05 EPS, respectively.

Revenue for the nine months ended September 30, 2016, was $5.0 billion, a decrease of 5% from the prior year, reflecting an organic revenue decline of 7% and an unfavorable impact from foreign exchange of 1%, offset by 3% growth from acquisition revenue, net of dispositions. Earnings from continuing operations for the nine months ended September 30, 2016, were $347.7 million, a decrease of 24% as compared to $459.3 million for the prior year period. Diluted EPS for the nine months ended September 30, 2016, was $2.22, compared to $2.87 EPS in the prior year period, representing a decrease of 23%. EPS from continuing operations for the nine months ended September 30, 2016, includes discrete tax benefits of $0.04 and a gain on disposition of $0.07. Excluding discrete tax benefits and the gain on disposition, adjusted EPS from continuing operations decreased 25% to $2.11 from a comparable EPS of $2.82 in the prior year period. EPS for the nine months ended September 30, 2016, and September 30, 2015, also includes restructuring costs of $0.14 EPS and $0.17 EPS, respectively.           

Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our third quarter results were disappointing.  The continuing weak macro environment, further declines in longer cycle oil & gas exposed markets, and production inefficiencies in our retail refrigeration business impacted both volume and earnings.  These results were well below our expectations, and more than offset solid improvements in our upstream drilling and production businesses, as well as continued strong performance in our Printing & Identification platform.

"As we announced on October 10, given these factors, we expect 2016 full year EPS to be in the range of $3.00 to $3.05.  Within this guidance, organic revenue is forecasted to decline 7% to 8%.

"Regarding the fourth quarter, we expect further improvements in our early cycle upstream oil & gas markets, strong performance in Printing & Identification, and continued sequential growth in Fluids. We also expect a seasonal decline in Refrigeration & Food Equipment.  These factors will result in our fourth quarter EPS to be largely in-line with the third quarter."

Net earnings for the third quarter ended September 30, 2016, were $130.1 million, or $0.83 EPS, compared to net earnings of $186.1 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $0.4 million.

Net earnings for the nine months ended September 30, 2016, were $347.7 million, or $0.83 EPS, compared to net earnings of $728.0 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $268.7 million, or $1.68 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.66 EPS, resulting from the disposition of two businesses held for sale.

Dover will host a webcast of its third quarter 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, October 19, 2016. The webcast can be accessed on the Dover website at www.dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover's third quarter results and its operating segments can also be found on the Company's website.

About Dover:

Dover is a diversified global manufacturer with annual revenue approaching $7 billion. We deliver innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. 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 26,000 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 www.dovercorporation.com.

Forward-Looking Statements:       

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, foreign exchange, changes in operations, acquisitions, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as "anticipates," "expects," "believes," "suggests," "will," "plans," "should," "would," "could," and "forecast", or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover's customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, tax policies, trade sanctions, and export/import laws; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.

 


INVESTOR SUPPLEMENT - THIRD QUARTER 2016

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

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



Three Months Ended September 30,

Nine Months Ended September 30,

2016

2015

2016

2015

Revenue

$

1,707,763

$

1,787,582

$

5,016,381

$

5,261,711

Cost of goods and services

1,075,975

1,114,974

3,164,116

3,307,376

Gross profit

631,788

672,608

1,852,265

1,954,335

Selling and administrative expenses

421,042

395,688

1,301,901

1,233,017

Operating earnings

210,746

276,920

550,364

721,318

Interest expense, net

32,994

31,983

96,865

96,008

Other income, net

(3,424)

(367)

(19,800)

(5,810)

Earnings before provision for income taxes and
discontinued operations

181,176

245,304

473,299

631,120

Provision for income taxes

51,092

58,821

125,569

171,813

Earnings from continuing operations

130,084

186,483

347,730

459,307

Earnings (loss) from discontinued operations, net

—

(385)

—

268,697

Net earnings

$

130,084

$

186,098

$

347,730

$

728,004








Basic earnings per common share:






Earnings from continuing operations

$

0.84

$

1.20

$

2.24

$

2.90

Earnings from discontinued operations, net

—

—

—

1.70

Net earnings

0.84

1.20

2.24

4.59








Weighted average shares outstanding

155,300

155,300

155,182

158,507








Diluted earnings per common share:






Earnings from continuing operations

$

0.83

$

1.19

$

2.22

$

2.87

Earnings from discontinued operations, net

—

—

—

1.68

Net earnings

0.83

1.19

2.22

4.55








Weighted average shares outstanding

156,798

156,560

156,562

160,112








Dividends paid per common share

$

0.44

$

0.42

$

1.28

$

1.22








 


DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)


2016

2015

Q1

Q2

Q3

Q3 YTD

Q1

Q2

Q3

Q3 YTD

Q4

FY 2015

REVENUE










Energy

$

283,230

$

259,008

$

273,248

$

815,486

$

430,423

$

366,044

$

363,872

$

1,160,339

$

323,341

$

1,483,680












Engineered Systems










Printing & Identification

239,681

263,648

253,091

756,420

230,181

229,934

227,992

688,107

255,563

943,670

Industrials

337,314

328,784

317,471

983,569

343,015

363,157

351,404

1,057,576

341,667

1,399,243

576,995

592,432

570,562

1,739,989

573,196

593,091

579,396

1,745,683

597,230

2,342,913












Fluids

399,062

405,838

412,822

1,217,722

340,236

351,511

352,018

1,043,765

355,508

1,399,273












Refrigeration & Food
Equipment

363,252

429,386

451,328

1,243,966

372,097

448,115

492,460

1,312,672

418,758

1,731,430












Intra-segment eliminations

(266)

(319)

(197)

(782)

(451)

(133)

(164)

(748)

(237)

(985)

Total consolidated revenue

$

1,622,273

$

1,686,345

$

1,707,763

$

5,016,381

$

1,715,501

$

1,758,628

$

1,787,582

$

5,261,711

$

1,694,600

$

6,956,311












NET EARNINGS










Segment Earnings:










Energy

$

11,244

$

(75)

$

13,279

$

24,448

$

52,305

$

40,909

$

48,726

$

141,940

$

31,250

$

173,190

Engineered Systems

93,748

104,034

97,240

295,022

88,149

96,702

102,866

287,717

89,244

376,961

Fluids

46,047

54,033

66,178

166,258

54,634

70,168

74,911

199,713

62,404

262,117

Refrigeration & Food
Equipment

38,161

63,230

64,111

165,502

36,150

65,732

76,665

178,547

42,752

221,299

Total segments

189,200

221,222

240,808

651,230

231,238

273,511

303,168

807,917

225,650

1,033,567

Corporate expense / other

29,862

24,566

26,638

81,066

34,526

20,382

25,881

80,789

24,911

105,700

Interest expense, net

31,714

32,157

32,994

96,865

32,037

31,988

31,983

96,008

31,249

127,257

Earnings from continuing
operations before provision
for income taxes

127,624

164,499

181,176

473,299

164,675

221,141

245,304

631,120

169,490

800,610

Provision for income taxes

28,268

46,209

51,092

125,569

47,485

65,507

58,821

171,813

32,916

204,729

Earnings from continuing
operations

99,356

118,290

130,084

347,730

117,190

155,634

186,483

459,307

136,574

595,881

Earnings (loss) from
discontinued operations, net

—

—

—

—

92,320

176,762

(385)

268,697

5,251

273,948

Net earnings

$

99,356

$

118,290

$

130,084

$

347,730

$

209,510

$

332,396

$

186,098

$

728,004

$

141,825

$

869,829












SEGMENT OPERATING MARGIN








Energy

4.0

%

—

%

4.9

%

3.0

%

12.2

%

11.2

%

13.4

%

12.2

%

9.7

%

11.7

%

Engineered Systems

16.2

%

17.6

%

17.0

%

17.0

%

15.4

%

16.3

%

17.8

%

16.5

%

14.9

%

16.1

%

Fluids

11.5

%

13.3

%

16.0

%

13.7

%

16.1

%

20.0

%

21.3

%

19.1

%

17.6

%

18.7

%

Refrigeration & Food
Equipment

10.5

%

14.7

%

14.2

%

13.3

%

9.7

%

14.7

%

15.6

%

13.6

%

10.2

%

12.8

%

Total segment operating
margin

11.7

%

13.1

%

14.1

%

13.0

%

13.5

%

15.6

%

17.0

%

15.4

%

13.3

%

14.9

%












DEPRECIATION AND AMORTIZATION EXPENSE








Energy

$

34,160

$

33,289

$

32,605

$

100,054

$

34,427

$

32,740

$

31,858

$

99,025

$

42,754

$

141,779

Engineered Systems

16,036

16,075

16,238

48,349

14,526

14,392

14,503

43,421

16,493

59,914

Fluids

20,511

20,981

20,833

62,325

13,848

13,648

13,367

40,863

15,215

56,078

Refrigeration & Food
Equipment

16,728

16,881

16,146

49,755

16,458

16,406

16,609

49,473

16,601

66,074

Corporate

1,169

868

901

2,938

923

841

837

2,601

643

3,244

Total depreciation and
amortization expense

$

88,604

$

88,094

$

86,723

$

263,421

$

80,182

$

78,027

$

77,174

$

235,383

$

91,706

$

327,089












 


DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)


2016

2015

Q1

Q2

Q3

Q3 YTD

Q1

Q2

Q3

Q3 YTD

Q4

FY 2015

BOOKINGS










Energy

$

273,445

$

246,021

$

270,685

$

790,151

$

416,628

$

345,079

$

351,557

$

1,113,264

$

315,996

$

1,429,260












Engineered Systems










Printing & Identification

242,569

266,490

248,443

757,502

235,617

224,203

226,756

686,576

250,639

937,215

Industrials

329,957

304,345

331,435

965,737

337,070

336,173

338,744

1,011,987

357,451

1,369,438

572,526

570,835

579,878

1,723,239

572,687

560,376

565,500

1,698,563

608,090

2,306,653












Fluids

418,345

413,767

413,535

1,245,647

339,310

333,695

357,032

1,030,037

321,154

1,351,191












Refrigeration & Food
Equipment

411,367

468,661

429,134

1,309,162

419,659

486,793

430,681

1,337,133

379,967

1,717,100












Intra-segment eliminations

(90)

(944)

(245)

(1,279)

(628)

(417)

(385)

(1,430)

(486)

(1,916)












Total consolidated bookings

$

1,675,593

$

1,698,340

$

1,692,987

$

5,066,920

$

1,747,656

$

1,725,526

$

1,704,385

$

5,177,567

$

1,624,721

$

6,802,288












BACKLOG










Energy

$

144,828

$

129,873

$

126,519


$

212,060

$

194,819

$

156,631

$

155,586













Engineered Systems










Printing & Identification

102,640

104,509

101,190


108,151

103,403

100,476

98,288

Industrials

235,384

210,646

224,892


276,598

248,592

236,298

250,725


338,024

315,155

326,082


384,749

351,995

336,774

349,013













Fluids

286,457

315,786

318,246


259,504

240,389

236,608

243,459













Refrigeration & Food
Equipment

303,479

332,312

309,462


337,084

373,193

307,351

247,352













Intra-segment eliminations

(36)

(265)

(252)


(595)

(354)

(598)

(808)













Total consolidated backlog

$

1,072,752

$

1,092,861

$

1,080,057


$

1,192,802

$

1,160,042

$

1,036,766

$

994,602

 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

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

Earnings Per Share











2016

2015

Q1

Q2

Q3

Q3 YTD

Q1

Q2

Q3

Q3 YTD

Q4

FY 2015

Basic earnings (loss) per common share:








Continuing operations

$

0.64

$

0.76

$

0.84

$

2.24

$

0.72

$

0.98

$

1.20

$

2.90

$

0.88

$

3.78

Discontinued operations

—

—

—

—

0.57

1.11

—

1.70

0.03

1.74

Net earnings

$

0.64

$

0.76

$

0.84

$

2.24

$

1.30

$

2.10

$

1.20

$

4.59

$

0.92

$

5.52












Diluted earnings (loss) per common share:








Continuing operations

$

0.64

$

0.76

$

0.83

$

2.22

$

0.72

$

0.97

$

1.19

$

2.87

$

0.87

$

3.74

Discontinued operations

—

—

—

—

0.57

1.10

—

1.68

0.03

1.72

Net earnings

$

0.64

$

0.76

$

0.83

$

2.22

$

1.28

$

2.07

$

1.19

$

4.55

$

0.91

$

5.46












Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:












Net earnings (loss):










Continuing operations

$

99,356

$

118,290

$

130,084

$

347,730

$

117,190

$

155,634

$

186,483

$

459,307

$

136,574

$

595,881

Discontinued operations

—

—

—

—

92,320

176,762

(385)

268,697

5,251

273,948

Net earnings

$

99,356

$

118,290

$

130,084

$

347,730

$

209,510

$

332,396

$

186,098

$

728,004

$

141,825

$

869,829












Average shares outstanding:








Basic

155,064

155,180

155,300

155,182

161,650

158,640

155,300

158,507

154,986

157,619

Diluted

156,161

156,595

156,798

156,562

163,323

160,398

156,560

160,112

156,254

159,172

 


Adjusted Earnings Per Share (Non-GAAP)









Earnings from continuing operations are adjusted by gains (losses) from discrete and other tax items and gain on disposition of business to derive
adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:













2016

2015

Q1

Q2

Q3

Q3 YTD

Q1

Q2

Q3

Q3 YTD

Q4

FY 2015

Adjusted earnings from continuing operations:







Earnings from continuing operations

$

99,356

$

118,290

$

130,084

$

347,730

$

117,190

$

155,634

$

186,483

$

459,307

$

136,574

$

595,881

Gains (losses) from discrete and
other tax items

7,348

(1,221)

(304)

5,823

—

—

8,131

8,131

9,382

17,513

Gain on disposition of business

11,228

—

—

11,228

—

—

—

—

—

—

Adjusted earnings from continuing
operations

$

80,780

$

119,511

$

130,388

$

330,679

$

117,190

$

155,634

$

178,352

$

451,176

$

127,192

$

578,368












Adjusted diluted earnings per common share:








Earnings from continuing operations

$

0.64

$

0.76

$

0.83

$

2.22

$

0.72

$

0.97

$

1.19

$

2.87

$

0.87

$

3.74

Gains (losses) from discrete and
other tax items

0.05

(0.01)

—

0.04

—

—

0.05

0.05

0.06

0.11

Gain on disposition of business

0.07

—

—

0.07

—

—

—

—

—

—

Adjusted earnings from continuing
operations

$

0.52

$

0.76

$

0.83

$

2.11

$

0.72

$

0.97

$

1.14

$

2.82

$

0.81

$

3.63












* Per share data may not add due to rounding.






 

DOVER CORPORATION

ADDITIONAL INFORMATION

(unaudited)(in thousands)

Quarterly Cash Flow


2016

2015

Q1

Q2

Q3

Q3 YTD

Q1

Q2

Q3

Q3 YTD

Q4

FY 2015

Net Cash Flows Provided By
(Used In):










Operating activities

$

133,413

$

207,868

$

231,665

$

572,946

$

131,332

$

218,911

$

282,213

$

632,456

$

316,603

$

949,059

Investing activities

(425,857)

(69,415)

(66,110)

(561,382)

156,585

457,875

(33,454)

581,006

(615,584)

(34,578)

Financing activities

178,507

(127,678)

98,491

149,320

(416,603)

(608,329)

(86,033)

(1,110,965)

19,079

(1,091,886)

 


Quarterly Free Cash Flow (Non-GAAP)


2016

2015

Q1

Q2

Q3

Q3 YTD

Q1

Q2

Q3

Q3 YTD

Q4

FY 2015

Cash flow from operating
activities

$

133,413

$

207,868

$

231,665

$

572,946

$

131,332

$

218,911

$

282,213

$

632,456

$

316,603

$

949,059

Less: Capital expenditures

(37,230)

(35,422)

(43,116)

(115,768)

(27,956)

(43,807)

(39,516)

(111,279)

(42,972)

(154,251)

Free cash flow

$

96,183

$

172,446

$

188,549

$

457,178

$

103,376

$

175,104

$

242,697

$

521,177

$

273,631

$

794,808












Free cash flow as a
percentage of earnings from
continuing operations

96.8

%

145.8

%

144.9

%

131.5

%

88.2

%

112.5

%

130.1

%

113.5

%

200.4

%

133.4

%












Free cash flow as a
percentage of revenue

5.9

%

10.2

%

11.0

%

9.1

%

6.0

%

10.0

%

13.6

%

9.9

%

16.1

%

11.4

%

 

Revenue Growth Factors


Three Months Ended September 30, 2016

Energy

Engineered
Systems

Fluids

Refrigeration
& Food
Equipment

Total

Organic (decline) growth

(24)

%

1

%

(9)

%

(2)

%

(7)

%

Acquisitions

—

%

3

%

27

%

—

%

6

%

Dispositions

—

%

(5)

%

—

%

(7)

%

(3)

%

Currency translation

(1)

%

(1)

%

(1)

%

—

%

(1)

%

(25)

%

(2)

%

17

%

(9)

%

(5)

%

 

Nine Months Ended September 30, 2016

Energy

Engineered
Systems

Fluids

Refrigeration
& Food
Equipment

Total

Organic (decline) growth

(29)

%

2

%

(7)

 

%

1

%

(7)

%

Acquisitions

—

%

3

%

25

%

—

%

6

%

Dispositions

—

%

(4)

%

—

%

(6)

%

(3)

%

Currency translation

(1)

 

%

(1)

 

%

(1)

 

%

—

%

(1)

 

%

(30)

 

%

—

%

17

%

(5)

%

(5)

%

 

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 earnings from continuing operations, adjusted diluted earnings per common share, free cash flow and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for earnings from continuing operations, 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 earnings from continuing operations represents earnings from continuing operations adjusted for gains or losses from discrete and other tax items and for gain on disposition of business.  Adjusted diluted earnings per common share represents adjusted earnings from continuing operations divided by average diluted shares.  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.  Free cash flow represents net cash provided by operating activities minus capital expenditures.  Management believes that 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, provides a useful comparison of our revenue performance and trends between periods.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/dover-reports-third-quarter-2016-results-300347357.html

SOURCE Dover

Investor Contact: Paul Goldberg, Vice President - Investor Relations, (212) 922-1640, peg@dovercorp.com, or Media Contact: Adrian Sakowicz, Vice President - Communications, (630) 743-5039, asakowicz@dovercorp.com