UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 8-K
________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 17, 2014
________________________________
DOVER CORPORATION
(Exact name of registrant as specified in its charter)
________________________________
State of Delaware | 1-4018 | 53-0257888 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
3005 Highland Parkway | ||
Downers Grove, Illinois | 60515 | |
(Address of principal executive offices) | (Zip Code) | |
(630) 541-1540
(Registrant’s telephone number, including area code)
______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On July 17, 2014, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended June 30, 2014; and (ii) posted on its website at
http://www.dovercorporation.com the presentation slides attached hereto as Exhibit 99.2 for the quarter ended June 30, 2014.
The information in this Current Report on Form 8-K, including exhibits, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be incorporated by reference into any of Dover’s filings with the SEC under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this report:
99.1 Dover Corporation Press Release dated July 17, 2014.
99.2 Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
Date: | July 17, 2014 | DOVER CORPORATION | ||
(Registrant) | ||||
By: | /s/ Ivonne M. Cabrera | |||
Ivonne M. Cabrera | ||||
Senior Vice President, General Counsel & Secretary | ||||
EXHIBIT INDEX
Number | Exhibit | |
99.1 | Press Release of Dover Corporation dated July 17, 2014 | |
99.2 | Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com | |
Exhibit 99.1
CONTACT: | ||
Paul Goldberg | ||
Vice President - Investor Relations | ||
(212) 922-1640 | ||
DOVER REPORTS SECOND QUARTER 2014 RESULTS AND
RAISES FULL YEAR GUIDANCE
• | Reports quarterly revenue of $2.0 billion, an increase of 6% over the prior year |
• | Achieves quarterly diluted earnings per share from continuing operations of $1.29, up 14% from an adjusted prior year |
• | Generates bookings growth of 11% |
• | Raises guidance for 2014 full year diluted earnings per share from continuing operations to $4.75 to $4.85 |
Downers Grove, Illinois, July 17, 2014 — Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2014, revenue was $2.0 billion, an increase of 6% over the prior year. The revenue increase was driven by organic growth of 3% and an increase of 3% from acquisitions. Earnings from continuing operations were $217.4 million, or $1.29 diluted earnings per share (“EPS”), compared to $258.1 million, or $1.49 EPS, in the prior year period, representing decreases of 16% and 13%, respectively. Excluding discrete tax benefits of $0.36 recognized in the prior year, EPS from continuing operations for the second quarter of 2014 increased 14% over an adjusted EPS of $1.13 in the prior year period.
Revenue for the six months ended June 30, 2014 was $3.9 billion, an increase of 6% over the prior year, reflecting organic growth of 3% and a 3% increase from acquisitions. Earnings from continuing operations for the six months ended June 30, 2014 were $393.8 million, or $2.31 EPS, compared to $425.3 million, or $2.44 EPS in the prior year period, representing decreases of 7% and 5%, respectively. EPS from continuing operations during this period includes discrete tax benefits of $0.01 EPS compared to $0.38 EPS in the prior year. Excluding these items, adjusted EPS from continuing operations for the six months ended June 30, 2014 was $2.30, an increase of 12% over an adjusted EPS of $2.06 in the prior year.
Commenting on the second quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, “Our second quarter results reflect the positive momentum we continue to experience across the majority of our businesses. Second quarter results were driven by solid revenue and earnings growth in our Fluids, Engineered Systems and Energy segments. We also generated strong broad-based order activity across all segments, resulting in total bookings growth of 11%. Overall, we are pleased with our performance in the first half of 2014, and our growing bookings and backlog reflect more positive market conditions. Combined, these factors give us confidence to raise our full year outlook."
“We made significant progress on a number of initiatives during the quarter. In particular, we completed the move to our consolidated manufacturing centers in Houston and Atlanta which will provide increased productivity and enhanced customer service capabilities for our Energy and Refrigeration & Food Equipment segments. Our companies continued to execute on core
competencies including actively developing and delivering products and solutions that enable our customers to compete more effectively and profitably. Also, our acquisition pipeline developed quite nicely in the quarter, including several opportunities that are highly complementary to our existing businesses. We expect to close on some of these acquisitions in the coming quarters.”
“Looking at the full year, we now expect organic growth to be about 4%, near the high end of our previously communicated range of 3% to 4%, principally driven by a more favorable mix. Completed acquisitions will provide 3% growth, resulting in total revenue growth at the high end of our 6% to 7% range. Our full year segment margin forecast of around 18% remains unchanged. As a result of these factors, we now expect our full year EPS to be in the range of $4.75 to $4.85.”
Net earnings for the second quarter of 2014 were $214.0 million, or $1.27 EPS, which included a net loss from discontinued operations of $3.5 million, or $0.02 EPS compared to net earnings of $330.0 million, or $1.91 EPS, for the same period of 2013, which included earnings from discontinued operations of $72.0 million, or $0.42 EPS.
Net earnings for the six months ended June 30, 2014 were $374.1 million, or $2.19 EPS, compared to net earnings of $540.1 million, or $3.10 EPS, for the same period of 2013. 2014 results reflected a net loss from discontinued operations of $19.7 million, or $0.12 EPS, which included $26.7 million in spin off costs. 2013 results reflected earnings from discontinued operations of $114.8 million or $0.66 EPS, which included spin off costs of $3.3 million.
Dover will host a webcast of its second quarter 2014 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 17, 2014. 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 second 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 revenues of $8 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 nearly 60 years, our team of 28,000 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, changes in operations and operating improvements. Forward-looking statements may be indicated by words or phrases such as “anticipates,” “expects,” “believes,” “indicates,” “suggests,” “will,” “plans,” “supports,” “projects,” “should,” “would,” “could,” “forecast” and “management is of the opinion,” 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, the ability of Dover's businesses to expand into new geographic markets, particularly outside of North America and Europe; Dover's ability to identify and successfully consummate value-adding acquisition opportunities; Dover's ability to achieve expected savings from integration and synergies from existing businesses and future acquisitions, and other cost-
control initiatives, such as lean and productivity programs; changes in customer demand or 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; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity, US industrials activity and the status of economic recovery in Europe; the impact of natural disasters and their effect on global supply chains and energy markets; instability in countries where Dover conducts business; increased competition and pricing pressures in the markets served by Dover's businesses; the impact of loss of a single-source manufacturing facility on our businesses that use the 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, and tax policies (including domestic and international export subsidy programs, R&E credits and other similar programs); protection and validity of patent and other intellectual property rights; the impact of regulation and regulatory and legal matters and legal compliance risks; the impact of interest rate and currency exchange rate fluctuations; conditions and events affecting domestic and global financial and capital markets; possible future terrorist threats and their effect on the worldwide economy; 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 in this press release. Dover undertakes no obligation to update any forward-looking statement, except as required by law.
INVESTOR SUPPLEMENT - SECOND QUARTER 2014
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 2,047,738 | $ | 1,932,411 | $ | 3,932,385 | $ | 3,696,388 | |||||||
Cost of goods and services | 1,251,321 | 1,176,593 | 2,399,759 | 2,258,952 | |||||||||||
Gross profit | 796,417 | 755,818 | 1,532,626 | 1,437,436 | |||||||||||
Selling and administrative expenses | 456,115 | 435,620 | 908,397 | 852,057 | |||||||||||
Operating earnings | 340,302 | 320,198 | 624,229 | 585,379 | |||||||||||
Interest expense, net | 31,967 | 30,232 | 64,632 | 60,516 | |||||||||||
Other (income) expense, net | (6,042 | ) | 1,647 | (5,686 | ) | (1,242 | ) | ||||||||
Earnings before provision for income taxes and discontinued operations | 314,377 | 288,319 | 565,283 | 526,105 | |||||||||||
Provision for income taxes | 96,934 | 30,261 | 171,516 | 100,834 | |||||||||||
Earnings from continuing operations | 217,443 | 258,058 | 393,767 | 425,271 | |||||||||||
(Loss) earnings from discontinued operations, net | (3,484 | ) | 71,991 | (19,670 | ) | 114,781 | |||||||||
Net earnings | $ | 213,959 | $ | 330,049 | $ | 374,097 | $ | 540,052 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.31 | $ | 1.51 | $ | 2.34 | $ | 2.47 | |||||||
Earnings (loss) from discontinued operations, net | (0.02 | ) | 0.42 | (0.12 | ) | 0.67 | |||||||||
Net earnings | 1.29 | 1.93 | 2.23 | 3.13 | |||||||||||
Weighted average shares outstanding | 166,474 | 171,111 | 168,103 | 172,273 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.29 | $ | 1.49 | $ | 2.31 | $ | 2.44 | |||||||
Earnings (loss) from discontinued operations, net | (0.02 | ) | 0.42 | (0.12 | ) | 0.66 | |||||||||
Net earnings | 1.27 | 1.91 | 2.19 | 3.10 | |||||||||||
Weighted average shares outstanding | 168,857 | 173,097 | 170,450 | 174,325 | |||||||||||
Dividends paid per common share | $ | 0.375 | $ | 0.35 | $ | 0.75 | $ | 0.70 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2014 | 2013 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2013 | ||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||
Energy | $ | 478,773 | $ | 481,016 | $ | 959,789 | $ | 462,679 | $ | 465,906 | $ | 928,585 | $ | 467,688 | $ | 457,580 | $ | 1,853,853 | ||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | 263,533 | 287,300 | 550,833 | 237,869 | 250,616 | 488,485 | 256,565 | 276,672 | 1,021,722 | |||||||||||||||||||
Industrials | 386,245 | 411,673 | 797,918 | 367,456 | 388,810 | 756,266 | 385,640 | 374,934 | 1,516,840 | |||||||||||||||||||
649,778 | 698,957 | 1,348,735 | 605,325 | 639,426 | 1,244,751 | 642,205 | 651,606 | 2,538,562 | ||||||||||||||||||||
Fluids | 345,009 | 346,275 | 691,284 | 273,638 | 310,137 | 583,775 | 309,241 | 343,822 | 1,236,838 | |||||||||||||||||||
Refrigeration & Food Equipment | 411,493 | 522,357 | 933,850 | 422,468 | 517,574 | 940,042 | 521,322 | 426,476 | 1,887,840 | |||||||||||||||||||
Intra-segment eliminations | (406 | ) | (867 | ) | (1,273 | ) | (133 | ) | (632 | ) | (765 | ) | (245 | ) | (430 | ) | (1,440 | ) | ||||||||||
Total consolidated revenue | $ | 1,884,647 | $ | 2,047,738 | $ | 3,932,385 | $ | 1,763,977 | $ | 1,932,411 | $ | 3,696,388 | $ | 1,940,211 | $ | 1,879,054 | $ | 7,515,653 | ||||||||||
NET EARNINGS | ||||||||||||||||||||||||||||
Segment Earnings: | ||||||||||||||||||||||||||||
Energy | $ | 118,968 | $ | 114,991 | $ | 233,959 | $ | 118,708 | $ | 109,662 | $ | 228,370 | $ | 119,086 | $ | 112,193 | $ | 459,649 | ||||||||||
Engineered Systems | 92,320 | 112,422 | 204,742 | 83,283 | 102,804 | 186,087 | 111,850 | 101,511 | 399,448 | |||||||||||||||||||
Fluids | 57,942 | 63,112 | 121,054 | 47,601 | 58,768 | 106,369 | 63,056 | 55,098 | 224,523 | |||||||||||||||||||
Refrigeration & Food Equipment | 44,862 | 84,926 | 129,788 | 52,110 | 82,177 | 134,287 | 86,446 | 46,574 | 267,307 | |||||||||||||||||||
Total Segments | 314,092 | 375,451 | 689,543 | 301,702 | 353,411 | 655,113 | 380,438 | 315,376 | 1,350,927 | |||||||||||||||||||
Corporate expense / other | 30,521 | 29,107 | 59,628 | 33,632 | 34,860 | 68,492 | 32,532 | 28,752 | 129,776 | |||||||||||||||||||
Net interest expense | 32,665 | 31,967 | 64,632 | 30,284 | 30,232 | 60,516 | 30,236 | 29,920 | 120,672 | |||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 250,906 | 314,377 | 565,283 | 237,786 | 288,319 | 526,105 | 317,670 | 256,704 | 1,100,479 | |||||||||||||||||||
Provision for income taxes | 74,582 | 96,934 | 171,516 | 70,573 | 30,261 | 100,834 | 91,435 | 74,138 | 266,407 | |||||||||||||||||||
Earnings from continuing operations | 176,324 | 217,443 | 393,767 | 167,213 | 258,058 | 425,271 | 226,235 | 182,566 | 834,072 | |||||||||||||||||||
(Loss) earnings from discontinued operations, net | (16,186 | ) | (3,484 | ) | (19,670 | ) | 42,790 | 71,991 | 114,781 | 42,879 | 11,397 | 169,057 | ||||||||||||||||
Net earnings | $ | 160,138 | $ | 213,959 | $ | 374,097 | $ | 210,003 | $ | 330,049 | $ | 540,052 | $ | 269,114 | $ | 193,963 | $ | 1,003,129 | ||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||||||
Energy | 24.8 | % | 23.9 | % | 24.4 | % | 25.7 | % | 23.5 | % | 24.6 | % | 25.5 | % | 24.5 | % | 24.8 | % | ||||||||||
Engineered Systems | 14.2 | % | 16.1 | % | 15.2 | % | 13.8 | % | 16.1 | % | 14.9 | % | 17.4 | % | 15.6 | % | 15.7 | % | ||||||||||
Fluids | 16.8 | % | 18.2 | % | 17.5 | % | 17.4 | % | 18.9 | % | 18.2 | % | 20.4 | % | 16.0 | % | 18.2 | % | ||||||||||
Refrigeration & Food Equipment | 10.9 | % | 16.3 | % | 13.9 | % | 12.3 | % | 15.9 | % | 14.3 | % | 16.6 | % | 10.9 | % | 14.2 | % | ||||||||||
Total Segment | 16.7 | % | 18.3 | % | 17.5 | % | 17.1 | % | 18.3 | % | 17.7 | % | 19.6 | % | 16.8 | % | 18.0 | % | ||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | ||||||||||||||||||||||||||||
Energy | $ | 25,575 | $ | 25,807 | $ | 51,382 | $ | 24,448 | $ | 24,714 | $ | 49,162 | $ | 24,707 | $ | 25,206 | $ | 99,075 | ||||||||||
Engineered Systems | 18,977 | 19,028 | 38,005 | 17,450 | 17,885 | 35,335 | 18,110 | 18,137 | 71,582 | |||||||||||||||||||
Fluids | 16,366 | 15,308 | 31,674 | 11,361 | 11,570 | 22,931 | 11,790 | 14,091 | 48,812 | |||||||||||||||||||
Refrigeration & Food Equipment | 17,212 | 17,451 | 34,663 | 16,585 | 16,611 | 33,196 | 16,962 | 17,070 | 67,228 | |||||||||||||||||||
Corporate | 869 | 999 | 1,868 | 858 | 1,029 | 1,887 | 1,030 | 944 | 3,861 | |||||||||||||||||||
$ | 78,999 | $ | 78,593 | $ | 157,592 | $ | 70,702 | $ | 71,809 | $ | 142,511 | $ | 72,599 | $ | 75,448 | $ | 290,558 | |||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2014 | 2013 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2013 | ||||||||||||||||||||
BOOKINGS | ||||||||||||||||||||||||||||
Energy | $ | 478,469 | $ | 477,162 | $ | 955,631 | $ | 515,388 | $ | 416,892 | $ | 932,280 | $ | 481,021 | $ | 440,261 | $ | 1,853,562 | ||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | 282,867 | 282,326 | 565,193 | 237,291 | 259,380 | 496,671 | 256,210 | 270,392 | 1,023,273 | |||||||||||||||||||
Industrials | 427,557 | 409,815 | 837,372 | 405,555 | 396,886 | 802,441 | 344,764 | 371,797 | 1,519,002 | |||||||||||||||||||
Eliminations | (17 | ) | (17 | ) | (34 | ) | (82 | ) | (129 | ) | (211 | ) | (5 | ) | 279 | 63 | ||||||||||||
710,407 | 692,124 | 1,402,531 | 642,764 | 656,137 | 1,298,901 | 600,969 | 642,468 | 2,542,338 | ||||||||||||||||||||
Fluids | 362,943 | 375,009 | 737,952 | 303,609 | 298,817 | 602,426 | 307,729 | 351,767 | 1,261,922 | |||||||||||||||||||
Refrigeration & Food Equipment | 493,731 | 542,810 | 1,036,541 | 482,742 | 515,320 | 998,062 | 433,426 | 450,850 | 1,882,338 | |||||||||||||||||||
Intra-segment eliminations | (506 | ) | (1,090 | ) | (1,596 | ) | (560 | ) | (708 | ) | (1,268 | ) | (416 | ) | 734 | (950 | ) | |||||||||||
Total consolidated bookings | $ | 2,045,044 | $ | 2,086,015 | $ | 4,131,059 | $ | 1,943,943 | $ | 1,886,458 | $ | 3,830,401 | $ | 1,822,729 | $ | 1,886,080 | $ | 7,539,210 | ||||||||||
BACKLOG | ||||||||||||||||||||||||||||
Energy | $ | 210,846 | $ | 206,415 | $ | 274,733 | $ | 218,764 | $ | 233,820 | $ | 206,790 | ||||||||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | 136,309 | 135,872 | 95,353 | 103,864 | 105,699 | 100,032 | ||||||||||||||||||||||
Industrials | 414,979 | 413,119 | 415,478 | 421,834 | 379,457 | 374,008 | ||||||||||||||||||||||
551,288 | 548,991 | 510,831 | 525,697 | 485,155 | 474,040 | |||||||||||||||||||||||
Fluids | 328,617 | 348,508 | 222,255 | 228,212 | 228,880 | 310,330 | ||||||||||||||||||||||
Refrigeration & Food Equipment | 431,298 | 450,065 | 417,246 | 412,366 | 324,042 | 347,004 | ||||||||||||||||||||||
Intra-segment eliminations | (374 | ) | (212 | ) | (385 | ) | (526 | ) | (387 | ) | (592 | ) | ||||||||||||||||
Total consolidated backlog | $ | 1,521,675 | $ | 1,553,767 | $ | 1,424,680 | $ | 1,384,513 | $ | 1,271,510 | $ | 1,337,572 | ||||||||||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
2014 | 2013 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2013 | ||||||||||||||||||||
Basic earnings (loss) per common share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 1.04 | $ | 1.31 | $ | 2.34 | $ | 0.96 | $ | 1.51 | $ | 2.47 | $ | 1.33 | $ | 1.07 | $ | 4.87 | ||||||||||
Discontinued operations | (0.10 | ) | (0.02 | ) | (0.12 | ) | 0.25 | 0.42 | 0.67 | 0.25 | 0.07 | 0.99 | ||||||||||||||||
Net earnings | 0.94 | 1.29 | 2.23 | 1.21 | 1.93 | 3.13 | 1.58 | 1.14 | 5.86 | |||||||||||||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 1.02 | $ | 1.29 | $ | 2.31 | $ | 0.95 | $ | 1.49 | $ | 2.44 | $ | 1.31 | $ | 1.06 | $ | 4.81 | ||||||||||
Discontinued operations | (0.09 | ) | (0.02 | ) | (0.12 | ) | 0.24 | 0.42 | 0.66 | 0.25 | 0.07 | 0.97 | ||||||||||||||||
Net earnings | 0.93 | 1.27 | 2.19 | 1.20 | 1.91 | 3.10 | 1.56 | 1.13 | 5.78 | |||||||||||||||||||
Adjusted diluted earnings per common share (calculated below): | ||||||||||||||||||||||||||||
Continuing operations | $ | 1.01 | $ | 1.29 | $ | 2.30 | $ | 0.93 | $ | 1.13 | $ | 2.06 | $ | 1.25 | $ | 1.02 | $ | 4.33 | ||||||||||
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows: | ||||||||||||||||||||||||||||
Net earnings (loss): | ||||||||||||||||||||||||||||
Continuing operations | $ | 176,324 | $ | 217,443 | $ | 393,767 | $ | 167,213 | $ | 258,058 | $ | 425,271 | $ | 226,235 | $ | 182,566 | $ | 834,072 | ||||||||||
Discontinued operations | (16,186 | ) | (3,484 | ) | (19,670 | ) | 42,790 | 71,991 | 114,781 | 42,879 | 11,397 | 169,057 | ||||||||||||||||
Net earnings | 160,138 | 213,959 | 374,097 | 210,003 | 330,049 | 540,052 | 269,114 | 193,963 | 1,003,129 | |||||||||||||||||||
Average shares outstanding: | ||||||||||||||||||||||||||||
Basic | 169,750 | 166,474 | 168,103 | 173,448 | 171,111 | 172,273 | 170,544 | 170,027 | 171,271 | |||||||||||||||||||
Diluted | 172,013 | 168,857 | 170,450 | 175,567 | 173,097 | 174,325 | 172,734 | 172,265 | 173,547 | |||||||||||||||||||
Note: | ||||||||||||||||||||||||||||
Earnings from continuing operations are adjusted by discrete tax items and other one-time gains to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows: | ||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2013 | ||||||||||||||||||||
Adjusted earnings from continuing operations: | ||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 176,324 | $ | 217,443 | $ | 393,767 | $ | 167,213 | $ | 258,058 | $ | 425,271 | $ | 226,235 | $ | 182,566 | $ | 834,072 | ||||||||||
Gains (losses) from discrete and other tax items | 2,541 | (636 | ) | 1,905 | 4,343 | 61,477 | 65,820 | 7,751 | 6,084 | 79,655 | ||||||||||||||||||
Other one-time gains, net of tax | — | — | — | — | — | 2,866 | — | 2,866 | ||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 173,783 | $ | 218,079 | $ | 391,862 | $ | 162,870 | $ | 196,581 | $ | 359,451 | $ | 215,618 | $ | 176,482 | $ | 751,551 | ||||||||||
Adjusted diluted earnings per common share: | ||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 1.02 | $ | 1.29 | $ | 2.31 | $ | 0.95 | $ | 1.49 | $ | 2.44 | $ | 1.31 | $ | 1.06 | $ | 4.81 | ||||||||||
Gains from discrete and other tax items | 0.01 | — | 0.01 | 0.02 | 0.36 | 0.38 | 0.04 | 0.04 | 0.46 | |||||||||||||||||||
Other one-time gains, net of tax | — | — | — | — | — | — | 0.02 | — | 0.02 | |||||||||||||||||||
Adjusted earnings from continuing operations | $ | 1.01 | $ | 1.29 | $ | 2.30 | $ | 0.93 | $ | 1.13 | $ | 2.06 | $ | 1.25 | $ | 1.02 | $ | 4.33 | ||||||||||
* Per share data may not add due to rounding. | ||||||||||||||||||||||||||||
DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)
2014 | 2013 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2013 | ||||||||||||||||||||
Cash flow from operating activities | $ | 39,778 | $ | 197,696 | $ | 237,474 | $ | 57,713 | $ | 249,388 | $ | 307,101 | $ | 281,336 | $ | 424,713 | $ | 1,013,150 | ||||||||||
Less: Additions to property, plant and equipment | (33,402 | ) | (43,924 | ) | (77,326 | ) | (26,326 | ) | (32,017 | ) | (58,343 | ) | (39,644 | ) | (47,579 | ) | (145,566 | ) | ||||||||||
Free cash flow | $ | 6,376 | $ | 153,772 | $ | 160,148 | $ | 31,387 | $ | 217,371 | $ | 248,758 | $ | 241,692 | $ | 377,134 | $ | 867,584 | ||||||||||
Free cash flow as a percentage of earnings from continuing operations | 3.6 | % | 70.7 | % | 40.7 | % | 18.8 | % | 84.2 | % | 58.5 | % | 106.8 | % | 206.6 | % | 104.0 | % | ||||||||||
Free cash flow as a percentage of revenue | 0.3 | % | 7.5 | % | 4.1 | % | 1.8 | % | 11.2 | % | 6.7 | % | 12.5 | % | 20.1 | % | 11.5 | % | ||||||||||
Earnings Conference Call Second Quarter 2014 July 17, 2014 – 9:00am CT
2 Forward looking statements We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties and risks. We caution everyone to be guided in their analysis of Dover Corporation by referring to the documents we file from time to time with the SEC, including our Form 10-K for 2013 and our Form 10-Q for the second quarter of 2014, for a list of factors that could cause our results to differ from those anticipated in any such forward- looking statements. We would also direct your attention to our website, www.dovercorporation.com, where considerably more information can be found. 2
3 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Q1* Q2* Q3* Q4* Q1* Q2 Q2 2014 Performance Adjusted Earnings Per Share* (continuing operations) Q2 Q2/Q2 * Excludes discrete & other tax benefits of $0.02 in Q1 2013, $0.36 in Q2 2013, $0.04 in Q3 2013, $0.04 in Q4 2013, and $0.01 in Q1 2014; excludes other one-time gains of $0.02 in Q3 2013 (a) See Press Release for free cash flow reconciliation 3 Quarterly Comments 2013 2014 Solid revenue growth is led by Fluids, Engineered Systems and Energy United States, Europe and Asia markets were strong; Latin America and Brazil were soft Segment margin of 18.3% as expected, impacted 40 bps by the impact of recent acquisitions Bookings growth of 11% is broad-based across all segments Book-to-bill of 1.02 is seasonally strong Revenue $2.0B 6% $3.9B 6% Adj. EPS (cont.) $1.29 14% $2.30 12% Bookings $2.1B 11% $4.1B 8% Seg. Margins 18.3% Flat 17.5% -20 bps Organic Rev. 3% 3% Acq. Growth 3% 3% FCF (a) $154M -29% $160M -36% 1H 1H/1H
4 Revenue Q2 2014 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic 3% 5% 2% 1% 3% Acquisitions 1% 4% 9% - 3% Currency -1% - 1% - - Total 3% 9% 12% 1% 6% 1H 2014 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic 3% 5% 7% -1% 3% Acquisitions 1% 3% 10% - 3% Currency -1% - 1% - - Total 3% 8% 18% -1% 6%
5 Printing & ID Industrial $428 $410 $478 $477 $283 $282 $363 $375 $494 $543 $0 $200 $400 $600 $800 DE Q1 DE Q2 DES Q1 DES Q2 DF Q1 DF Q2 DRE Q1 DRE Q2 Sequential Results – Q1 2014 → Q2 2014 5 $386 $412 $479 $481 $264 $287 $345 $346 $411 $522 $0 $200 $400 $600 $800 DE Q1 DE Q2 DES Q1 DES Q2 DF Q1 DF Q2 DRE Q1 DRE Q2 Revenue Flat ↑ 10% ↑ 27% ↑ 3% Flat ↓ 3% ↑8% Flat Bookings
6 Energy Drilling & Production revenue growth was strong in core U.S. markets; partially offset by tough comps related to Australian activity Bearings & Compression results impacted by softness in bearings relating to OEM build rates Overall margin remains strong and in-line with expectations at 23.9% Bookings growth of 15% was broad-based Book-to-bill at 0.99 6 Q2 2014 Q2 2013 % Change Revenue $481 $466 3% Earnings $115 $110 5% Margin 23.9% 23.5% 40 bps Bookings $477 $417 15% Revenue by End-Market % of Q2 Revenue Y / Y Growth Drilling & Production 82% 5% Bearings & Compression 18% -3% $ in millions
7 Engineered Systems Revenue growth is broad- based in Printing & Identification with very strong results in the US and Europe Revenue growth in Industrial is led by environmental solutions and vehicle services businesses Margin was steady at 16.1%; the benefits of productivity and volume leverage offset product mix and acquisition headwind Broad-based bookings growth Book-to-bill of 0.99 7 Q2 2014 Q2 2013 % Change Revenue $699 $639 9% Earnings $112 $103 9% Margin 16.1% 16.1% Flat Bookings $692 $656 5% Revenue by End-Market % of Q2 Revenue Y / Y Growth Printing & Identification 41% 15% Industrial 59% 6% $ in millions
8 Fluids Revenue growth driven by solid demand across most end-markets and acquisitions; partially offset by tough comps related to project shipments in Q2 2013 Pumps benefitting from strong demand in specialty chemical verticals; Fluid transfer benefitting from increased regulatory activity Excluding the impact of recent acquisitions, segment margin was about 20% on volume leverage and productivity Bookings activity remains strong across the segment Book-to-bill at 1.08 8 Q2 2014 Q2 2013 % Change Revenue $346 $310 12% Earnings $ 63 $ 59 7% Margin 18.2% 18.9% -70 bps Bookings $375 $299 26% Revenue by End-Market % of Q2 Revenue Y / Y Growth Pumps 45% 7% Fluid Transfer 55% 15% $ in millions
9 Refrigeration & Food Equipment Revenue growth driven by strong performance in Food Equipment markets; partially offset by the timing of shipments as we completed the transition to our new Atlanta manufacturing center, and soft Latin American markets Margin improvement driven by productivity gains and favorable product mix Bookings and backlog growth is seasonally strong Book-to-bill at a strong 1.04 9 Q2 2014 Q2 2013 % Change Revenue $522 $518 1% Earnings $ 85 $ 82 3% Margin 16.3% 15.9% 40 bps Bookings $543 $515 5% Revenue by End-Market % of Q2 Revenue Y / Y Growth Refrigeration 77% -1% Food Equipment 23% 8% $ in millions
10 Q2 2014 Overview 10 Q2 2014 Net Interest Expense $32 million, up $2 million from last year and in- line with expectations Corporate Expense $29 million, down $6 million from last year, roughly in-line with expectations Effective Tax Rate (ETR) Q2 rate was 30.8%, in-line with expectations Capex $44 million, in-line with expectations Share Repurchases Repurchased 290K shares ($25M) in quarter
11 FY 2014 Guidance Revenue – Organic revenue: 3% - 4% – Completed acquisitions: ≈ 3% – Total revenue: 6% - 7% Corporate expense: ≈ $125 million Interest expense: ≈ $133 million Full-year tax rate: ≈ 31.0% Capital expenditures: ≈ 2.5% of revenue FY free cash flow: ≈ 11% of revenue 2014 Organic growth rate Energy ≈ 5% Engineered Systems 4% - 5% Fluids 4% - 5% Refrigeration & Food Equipment 1% - 2% Total organic 3% - 4% Acquisitions ≈ 3% (a) Total growth 6% - 7% (a) Reflects completed acquisitions
12 2014 EPS Guidance Bridge – Continuing Ops 2013 EPS – Continuing Ops $ 4.81 – Less 2013 tax benefits(1): (0.46) – Other one-times gains(2): (0.02) 2013 Adjusted EPS $ 4.33 – Volume, mix, price (inc. FX): 0.26 - 0.33 – Net benefits of productivity: 0.17 - 0.21 – Acquisitions: 0.05 - 0.06 – Investment / Compensation: (0.18 - 0.22) – Corporate expenses: 0.03 - 0.04 – Interest / Shares / Tax rate (net): 0.09 - 0.10 2014 EPS – Continuing Ops $4.75 - $4.85 (1) $0.02 in Q1 2013 , $0.36 in Q2 2013, $0.04 in Q3 2013, $0.04 in Q4 2013 (2) $0.02 in Q3 2013
