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): October 16, 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 October 16, 2014, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended September 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 September 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 October 16, 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: | October 16, 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 October 16, 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 THIRD QUARTER 2014 RESULTS AND
UPDATES FULL YEAR GUIDANCE
• | Reports quarterly revenue of $2.1 billion, an increase of 8% over the prior year |
• | Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.35, up 8% from an adjusted prior year |
• | Generates bookings growth of 10% |
• | Narrows guidance for 2014 full year adjusted diluted earnings per share from continuing operations to $4.75 to $4.80, a $0.05 reduction to the high end of prior guidance, largely reflecting the impact of recent acquisitions |
Downers Grove, Illinois, October 16, 2014 — Dover (NYSE: DOV) announced today that for the third quarter ended September 30, 2014, revenue was $2.1 billion, an increase of 8% over the prior year. The revenue increase was driven by organic growth of 4% and an increase of 4% from acquisitions, with a negligible impact from foreign exchange. Earnings from continuing operations were $232.8 million, or $1.38 diluted earnings per share (“EPS”), compared to $226.2 million, or $1.31 EPS, in the prior year period, representing increases of 3% and 5%, respectively. EPS from continuing operations for the quarter ended September 30, 2014, included discrete tax benefits of $0.03, while the quarter ended September 30, 2013, included discrete tax benefits of $0.04 and other one-time gains of $0.02. Excluding these items, adjusted EPS from continuing operations for the third quarter of 2014 was $1.35, an increase of 8% over an adjusted EPS of $1.25 in the prior year period.
Revenue for the nine months ended September 30, 2014 was $6.0 billion, an increase of 7% over the prior year, reflecting organic growth of 4% and a 3% increase from acquisitions. Foreign exchange had a negligible impact. Earnings from continuing operations for the nine months ended September 30, 2014 were $626.6 million, or $3.69 EPS, compared to $651.5 million, or $3.75 EPS in the prior year period, representing decreases of 4% and 2%, respectively. EPS from continuing operations during this period includes discrete tax benefits of $0.04 EPS compared to $0.42 EPS in the prior year, as well as $0.02 of other one-time gains recognized in the prior year. Excluding these items, adjusted EPS from continuing operations for the nine months ended September 30, 2014 was $3.65, an increase of 10% over an adjusted EPS of $3.31 in the prior year.
Commenting on the third quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, “I was pleased with our strong finish to the third quarter, during which business activity significantly improved in September after softness in July and August. The result for the quarter was revenue and bookings growth at all segments. Most notably, Fluids delivered 17% growth, while Energy and Engineered Systems each grew 8%. In all, we generated revenue growth of 8%, grew bookings 10%, and saw our backlog increase 14%."
“Over the past three quarters, we have made great strides in enhancing our businesses. We have completed a number of productivity initiatives across the organization and have strengthened several of our businesses with acquisitions, including our recently completed Accelerated transaction. In total, we have invested roughly $800 million on acquisitions year to date. As a result, we have broadened our product offerings in Artificial Lift, expanded our global footprint in Fluid Transfer, and opened new markets for Printing and Identification. In addition, we have used our cash flow and balance sheet to grow our annual dividend for the 59th consecutive year, as well as fund nearly $400 million in share repurchases.”
"Looking at the full year, we expect total revenue growth of about 8%. Organic growth is anticipated to be around 4%. Completed acquisitions will now provide approximately 4% growth, representing a 1% increase from our prior forecast, principally driven by our recently completed acquisitions. While these deals will have a dilutive impact in 2014, they should be solidly accretive in 2015. In total, we now expect full year adjusted EPS to be in the range of $4.75 to $4.80, a $0.05 reduction to the high end of our prior guidance, largely reflecting the impact of recent acquisitions.”
Net earnings for the third quarter of 2014 were $231.8 million, or $1.38 EPS, which included a net loss from discontinued operations of $1.0 million, or $0.01 EPS compared to net earnings of $269.1 million, or $1.56 EPS, for the same period of 2013, which included earnings from discontinued operations of $42.9 million, or $0.25 EPS.
Net earnings for the nine months ended September 30, 2014 were $605.9 million, or $3.57 EPS, compared to net earnings of $809.2 million, or $4.65 EPS, for the same period of 2013. 2014 results reflected a net loss from discontinued operations of $20.7 million, or $0.12 EPS, which included $27.1 million in spin-off costs. 2013 results reflected earnings from discontinued operations of $157.7 million or $0.91 EPS, which included spin-off costs of $14.0 million.
Dover will host a webcast of its third quarter 2014 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, October 16, 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 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 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, industries in which Dover businesses operate, 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, U.S. 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 herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.
INVESTOR SUPPLEMENT - THIRD QUARTER 2014
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 2,092,467 | $ | 1,940,211 | $ | 6,024,852 | $ | 5,636,599 | |||||||
Cost of goods and services | 1,290,625 | 1,183,864 | 3,690,384 | 3,442,816 | |||||||||||
Gross profit | 801,842 | 756,347 | 2,334,468 | 2,193,783 | |||||||||||
Selling and administrative expenses | 442,709 | 408,264 | 1,351,106 | 1,260,321 | |||||||||||
Operating earnings | 359,133 | 348,083 | 983,362 | 933,462 | |||||||||||
Interest expense, net | 31,239 | 30,236 | 95,871 | 90,752 | |||||||||||
Other (income) expense, net | (803 | ) | 177 | (6,489 | ) | (1,065 | ) | ||||||||
Earnings before provision for income taxes and discontinued operations | 328,697 | 317,670 | 893,980 | 843,775 | |||||||||||
Provision for income taxes | 95,872 | 91,435 | 267,388 | 192,269 | |||||||||||
Earnings from continuing operations | 232,825 | 226,235 | 626,592 | 651,506 | |||||||||||
(Loss) earnings from discontinued operations, net | (981 | ) | 42,879 | (20,651 | ) | 157,660 | |||||||||
Net earnings | $ | 231,844 | $ | 269,114 | $ | 605,941 | $ | 809,166 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.40 | $ | 1.33 | $ | 3.74 | $ | 3.79 | |||||||
(Loss) earnings from discontinued operations, net | (0.01 | ) | 0.25 | (0.12 | ) | 0.92 | |||||||||
Net earnings | 1.40 | 1.58 | 3.62 | 4.71 | |||||||||||
Weighted average shares outstanding | 166,021 | 170,544 | 167,401 | 171,690 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.38 | $ | 1.31 | $ | 3.69 | $ | 3.75 | |||||||
(Loss) earnings from discontinued operations, net | (0.01 | ) | 0.25 | (0.12 | ) | 0.91 | |||||||||
Net earnings | 1.38 | 1.56 | 3.57 | 4.65 | |||||||||||
Weighted average shares outstanding | 168,343 | 172,734 | 169,761 | 173,870 | |||||||||||
Dividends paid per common share | $ | 0.40 | $ | 0.375 | $ | 1.15 | $ | 1.075 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2013 | ||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||
Energy | $ | 478,773 | $ | 481,016 | $ | 507,334 | $ | 1,467,123 | $ | 462,679 | $ | 465,906 | $ | 467,688 | $ | 1,396,273 | $ | 457,580 | $ | 1,853,853 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 263,533 | 287,284 | 290,635 | 841,452 | 237,869 | 250,616 | 256,565 | 745,050 | 276,672 | 1,021,722 | |||||||||||||||||||||
Industrials | 386,245 | 411,673 | 404,609 | 1,202,527 | 367,456 | 388,810 | 385,640 | 1,141,906 | 374,934 | 1,516,840 | |||||||||||||||||||||
649,778 | 698,957 | 695,244 | 2,043,979 | 605,325 | 639,426 | 642,205 | 1,886,956 | 651,606 | 2,538,562 | ||||||||||||||||||||||
Fluids | 345,009 | 346,275 | 361,797 | 1,053,081 | 273,638 | 310,137 | 309,241 | 893,016 | 343,822 | 1,236,838 | |||||||||||||||||||||
Refrigeration & Food Equipment | 411,493 | 522,357 | 528,807 | 1,462,657 | 422,468 | 517,574 | 521,322 | 1,461,364 | 426,476 | 1,887,840 | |||||||||||||||||||||
Intra-segment eliminations | (406 | ) | (867 | ) | (715 | ) | (1,988 | ) | (133 | ) | (632 | ) | (245 | ) | (1,010 | ) | (430 | ) | (1,440 | ) | |||||||||||
Total consolidated revenue | $ | 1,884,647 | $ | 2,047,738 | $ | 2,092,467 | $ | 6,024,852 | $ | 1,763,977 | $ | 1,932,411 | $ | 1,940,211 | $ | 5,636,599 | $ | 1,879,054 | $ | 7,515,653 | |||||||||||
NET EARNINGS | |||||||||||||||||||||||||||||||
Segment Earnings: | |||||||||||||||||||||||||||||||
Energy | $ | 118,968 | $ | 114,991 | $ | 122,738 | $ | 356,697 | $ | 118,708 | $ | 109,662 | $ | 119,086 | $ | 347,456 | $ | 112,193 | $ | 459,649 | |||||||||||
Engineered Systems | 92,320 | 112,422 | 119,316 | 324,058 | 83,283 | 102,804 | 111,850 | 297,937 | 101,511 | 399,448 | |||||||||||||||||||||
Fluids | 57,942 | 63,112 | 67,559 | 188,613 | 47,601 | 58,768 | 63,056 | 169,425 | 55,098 | 224,523 | |||||||||||||||||||||
Refrigeration & Food Equipment | 44,862 | 84,926 | 78,012 | 207,800 | 52,110 | 82,177 | 86,446 | 220,733 | 46,574 | 267,307 | |||||||||||||||||||||
Total Segments | 314,092 | 375,451 | 387,625 | 1,077,168 | 301,702 | 353,411 | 380,438 | 1,035,551 | 315,376 | 1,350,927 | |||||||||||||||||||||
Corporate expense / other | 30,521 | 29,107 | 27,689 | 87,317 | 33,632 | 34,860 | 32,532 | 101,024 | 28,752 | 129,776 | |||||||||||||||||||||
Net interest expense | 32,665 | 31,967 | 31,239 | 95,871 | 30,284 | 30,232 | 30,236 | 90,752 | 29,920 | 120,672 | |||||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 250,906 | 314,377 | 328,697 | 893,980 | 237,786 | 288,319 | 317,670 | 843,775 | 256,704 | 1,100,479 | |||||||||||||||||||||
Provision for income taxes | 74,582 | 96,934 | 95,872 | 267,388 | 70,573 | 30,261 | 91,435 | 192,269 | 74,138 | 266,407 | |||||||||||||||||||||
Earnings from continuing operations | 176,324 | 217,443 | 232,825 | 626,592 | 167,213 | 258,058 | 226,235 | 651,506 | 182,566 | 834,072 | |||||||||||||||||||||
(Loss) earnings from discontinued operations, net | (16,186 | ) | (3,484 | ) | (981 | ) | (20,651 | ) | 42,790 | 71,991 | 42,879 | 157,660 | 11,397 | 169,057 | |||||||||||||||||
Net earnings | $ | 160,138 | $ | 213,959 | $ | 231,844 | $ | 605,941 | $ | 210,003 | $ | 330,049 | $ | 269,114 | $ | 809,166 | $ | 193,963 | $ | 1,003,129 | |||||||||||
SEGMENT OPERATING MARGIN | |||||||||||||||||||||||||||||||
Energy | 24.8 | % | 23.9 | % | 24.2 | % | 24.3 | % | 25.7 | % | 23.5 | % | 25.5 | % | 24.9 | % | 24.5 | % | 24.8 | % | |||||||||||
Engineered Systems | 14.2 | % | 16.1 | % | 17.2 | % | 15.9 | % | 13.8 | % | 16.1 | % | 17.4 | % | 15.8 | % | 15.6 | % | 15.7 | % | |||||||||||
Fluids | 16.8 | % | 18.2 | % | 18.7 | % | 17.9 | % | 17.4 | % | 18.9 | % | 20.4 | % | 19.0 | % | 16.0 | % | 18.2 | % | |||||||||||
Refrigeration & Food Equipment | 10.9 | % | 16.3 | % | 14.8 | % | 14.2 | % | 12.3 | % | 15.9 | % | 16.6 | % | 15.1 | % | 10.9 | % | 14.2 | % | |||||||||||
Total Segment | 16.7 | % | 18.3 | % | 18.5 | % | 17.9 | % | 17.1 | % | 18.3 | % | 19.6 | % | 18.4 | % | 16.8 | % | 18.0 | % | |||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||||||||||||||
Energy | $ | 25,575 | $ | 25,807 | $ | 27,145 | $ | 78,527 | $ | 24,448 | $ | 24,714 | $ | 24,707 | $ | 73,869 | $ | 25,206 | $ | 99,075 | |||||||||||
Engineered Systems | 18,977 | 19,028 | 18,400 | 56,405 | 17,450 | 17,885 | 18,110 | 53,445 | 18,137 | 71,582 | |||||||||||||||||||||
Fluids | 16,366 | 15,308 | 14,019 | 45,693 | 11,361 | 11,570 | 11,790 | 34,721 | 14,091 | 48,812 | |||||||||||||||||||||
Refrigeration & Food Equipment | 17,212 | 17,451 | 17,073 | 51,736 | 16,585 | 16,611 | 16,962 | 50,158 | 17,070 | 67,228 | |||||||||||||||||||||
Corporate | 869 | 999 | 913 | 2,781 | 858 | 1,029 | 1,030 | 2,917 | 944 | 3,861 | |||||||||||||||||||||
$ | 78,999 | $ | 78,593 | $ | 77,550 | $ | 235,142 | $ | 70,702 | $ | 71,809 | $ | 72,599 | $ | 215,110 | $ | 75,448 | $ | 290,558 | ||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2013 | ||||||||||||||||||||||
BOOKINGS | |||||||||||||||||||||||||||||||
Energy | $ | 478,469 | $ | 477,162 | $ | 526,134 | $ | 1,481,765 | $ | 515,388 | $ | 416,892 | $ | 481,021 | $ | 1,413,301 | $ | 440,261 | $ | 1,853,562 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 282,867 | 282,326 | 281,115 | 846,308 | 237,291 | 259,380 | 256,210 | 752,881 | 270,392 | 1,023,273 | |||||||||||||||||||||
Industrials | 427,557 | 409,815 | 386,325 | 1,223,697 | 405,555 | 396,886 | 344,764 | 1,147,205 | 371,797 | 1,519,002 | |||||||||||||||||||||
Eliminations | (17 | ) | (17 | ) | (11 | ) | (45 | ) | (82 | ) | (129 | ) | (5 | ) | (216 | ) | 279 | 63 | |||||||||||||
710,407 | 692,124 | 667,429 | 2,069,960 | 642,764 | 656,137 | 600,969 | 1,899,870 | 642,468 | 2,542,338 | ||||||||||||||||||||||
Fluids | 362,943 | 375,009 | 350,853 | 1,088,805 | 303,609 | 298,817 | 307,729 | 910,155 | 351,767 | 1,261,922 | |||||||||||||||||||||
Refrigeration & Food Equipment | 493,731 | 542,810 | 459,099 | 1,495,640 | 482,742 | 515,320 | 433,426 | 1,431,488 | 450,850 | 1,882,338 | |||||||||||||||||||||
Intra-segment eliminations | (506 | ) | (1,090 | ) | (737 | ) | (2,333 | ) | (560 | ) | (708 | ) | (416 | ) | (1,684 | ) | 734 | (950 | ) | ||||||||||||
Total consolidated bookings | $ | 2,045,044 | $ | 2,086,015 | $ | 2,002,778 | $ | 6,133,837 | $ | 1,943,943 | $ | 1,886,458 | $ | 1,822,729 | $ | 5,653,130 | $ | 1,886,080 | $ | 7,539,210 | |||||||||||
BACKLOG | |||||||||||||||||||||||||||||||
Energy | $ | 210,846 | $ | 206,415 | $ | 232,739 | $ | 274,733 | $ | 218,764 | $ | 233,820 | $ | 206,790 | |||||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 136,309 | 135,872 | 120,780 | 95,353 | 103,864 | 105,699 | 100,032 | ||||||||||||||||||||||||
Industrials | 414,979 | 413,119 | 392,985 | 415,478 | 421,833 | 379,456 | 374,008 | ||||||||||||||||||||||||
551,288 | 548,991 | 513,765 | 510,831 | 525,697 | 485,155 | 474,040 | |||||||||||||||||||||||||
Fluids | 328,617 | 348,508 | 323,424 | 222,255 | 228,212 | 228,880 | 310,330 | ||||||||||||||||||||||||
Refrigeration & Food Equipment | 431,298 | 450,065 | 376,141 | 417,246 | 412,366 | 324,042 | 347,004 | ||||||||||||||||||||||||
Intra-segment eliminations | (374 | ) | (212 | ) | (302 | ) | (385 | ) | (526 | ) | (387 | ) | (592 | ) | |||||||||||||||||
Total consolidated backlog | $ | 1,521,675 | $ | 1,553,767 | $ | 1,445,767 | $ | 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 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2013 | ||||||||||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.04 | $ | 1.31 | $ | 1.40 | $ | 3.74 | $ | 0.96 | $ | 1.51 | $ | 1.33 | $ | 3.79 | $ | 1.07 | $ | 4.87 | |||||||||||
Discontinued operations | (0.10 | ) | (0.02 | ) | (0.01 | ) | (0.12 | ) | 0.25 | 0.42 | 0.25 | 0.92 | 0.07 | 0.99 | |||||||||||||||||
Net earnings | 0.94 | 1.29 | 1.40 | 3.62 | 1.21 | 1.93 | 1.58 | 4.71 | 1.14 | 5.86 | |||||||||||||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.02 | $ | 1.29 | $ | 1.38 | $ | 3.69 | $ | 0.95 | $ | 1.49 | $ | 1.31 | $ | 3.75 | $ | 1.06 | $ | 4.81 | |||||||||||
Discontinued operations | (0.09 | ) | (0.02 | ) | (0.01 | ) | (0.12 | ) | 0.24 | 0.42 | 0.25 | 0.91 | 0.07 | 0.97 | |||||||||||||||||
Net earnings | 0.93 | 1.27 | 1.38 | 3.57 | 1.20 | 1.91 | 1.56 | 4.65 | 1.13 | 5.78 | |||||||||||||||||||||
Adjusted diluted earnings per common share (calculated below): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.01 | $ | 1.29 | $ | 1.35 | $ | 3.65 | $ | 0.93 | $ | 1.13 | $ | 1.25 | $ | 3.31 | $ | 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 | $ | 232,825 | $ | 626,592 | $ | 167,213 | $ | 258,058 | $ | 226,235 | $ | 651,506 | $ | 182,566 | $ | 834,072 | |||||||||||
Discontinued operations | (16,186 | ) | (3,484 | ) | (981 | ) | (20,651 | ) | 42,790 | 71,991 | 42,879 | 157,660 | 11,397 | 169,057 | |||||||||||||||||
Net earnings | 160,138 | 213,959 | 231,844 | 605,941 | 210,003 | 330,049 | 269,114 | 809,166 | 193,963 | 1,003,129 | |||||||||||||||||||||
Average shares outstanding: | |||||||||||||||||||||||||||||||
Basic | 169,750 | 166,474 | 166,021 | 167,401 | 173,448 | 171,111 | 170,544 | 171,690 | 170,027 | 171,271 | |||||||||||||||||||||
Diluted | 172,013 | 168,857 | 168,343 | 169,761 | 175,567 | 173,097 | 172,734 | 173,870 | 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 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2013 | ||||||||||||||||||||||
Adjusted earnings from continuing operations: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 176,324 | $ | 217,443 | $ | 232,825 | $ | 626,592 | $ | 167,213 | $ | 258,058 | $ | 226,235 | $ | 651,506 | $ | 182,566 | $ | 834,072 | |||||||||||
Gains (losses) from discrete and other tax items | 2,541 | (636 | ) | 5,524 | 7,429 | 4,343 | 61,477 | 7,751 | 73,571 | 6,084 | 79,655 | ||||||||||||||||||||
Other one-time gains, net of tax | — | — | — | — | — | — | 2,866 | 2,866 | — | 2,866 | |||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 173,783 | $ | 218,079 | $ | 227,301 | $ | 619,163 | $ | 162,870 | $ | 196,581 | $ | 215,618 | $ | 575,069 | $ | 176,482 | $ | 751,551 | |||||||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 1.02 | $ | 1.29 | $ | 1.38 | $ | 3.69 | $ | 0.95 | $ | 1.49 | $ | 1.31 | $ | 3.75 | $ | 1.06 | $ | 4.81 | |||||||||||
Gains (losses) from discrete and other tax items | 0.01 | — | 0.03 | 0.04 | 0.02 | 0.36 | 0.04 | 0.42 | 0.04 | 0.46 | |||||||||||||||||||||
Other one-time gains, net of tax | — | — | — | — | — | — | 0.02 | 0.02 | — | 0.02 | |||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 1.01 | $ | 1.29 | $ | 1.35 | $ | 3.65 | $ | 0.93 | $ | 1.13 | $ | 1.25 | $ | 3.31 | $ | 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 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2013 | ||||||||||||||||||||||
Cash flow from operating activities | $ | 39,778 | $ | 197,696 | $ | 294,662 | $ | 532,136 | $ | 57,713 | $ | 249,388 | $ | 281,336 | $ | 588,437 | $ | 424,713 | $ | 1,013,150 | |||||||||||
Less: Additions to property, plant and equipment | (33,402 | ) | (43,924 | ) | (35,313 | ) | (112,639 | ) | (26,326 | ) | (32,017 | ) | (39,644 | ) | (97,987 | ) | (47,579 | ) | (145,566 | ) | |||||||||||
Free cash flow | $ | 6,376 | $ | 153,772 | $ | 259,349 | $ | 419,497 | $ | 31,387 | $ | 217,371 | $ | 241,692 | $ | 490,450 | $ | 377,134 | $ | 867,584 | |||||||||||
Free cash flow as a percentage of earnings from continuing operations | 3.6 | % | 70.7 | % | 111.4 | % | 66.9 | % | 18.8 | % | 84.2 | % | 106.8 | % | 75.3 | % | 206.6 | % | 104.0 | % | |||||||||||
Free cash flow as a percentage of revenue | 0.3 | % | 7.5 | % | 12.4 | % | 7.0 | % | 1.8 | % | 11.2 | % | 12.5 | % | 8.7 | % | 20.1 | % | 11.5 | % | |||||||||||
Earnings Conference Call Third Quarter 2014 October 16, 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 third 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 $0.50 $0.70 $0.90 $1.10 $1.30 $1.50 Q1* Q2* Q3* Q4* Q1* Q2 Q3* Q3 2014 Performance Adjusted Earnings Per Share* (continuing operations) Q3 Q3/Q3 * 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, $0.01 in Q1 2014, and $0.03 in Q3 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 solid; Canada and Brazil declined Segment margin of 18.5% was impacted 50 bps by the impact of recent acquisitions Bookings growth of 10% is broad-based across all segments Book-to-bill of 0.96 is seasonally normal Revenue $2.1B 8% $6.0B 7% Adj. EPS (cont.) $1.35 8% $3.65 10% Bookings $2.0B 10% $6.1B 9% Seg. Margins 18.5% -110 bps 17.9% -50 bps Organic Rev. 4% 4% Acq. Growth 4% 3% FCF (a) $259M 7% $419M -14% 9M 9M/9M
4 Revenue Q3 2014 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic 5% 4% 6% 1% 4% Acquisitions 3% 4% 11% - 4% Currency - - - - - Total 8% 8% 17% 1% 8% 9M 2014 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic 4% 5% 7% - 4% Acquisitions 2% 3% 10% - 3% Currency -1% - 1% - - Total 5% 8% 18% - 7%
5 Printing & ID Industrial $410 $386 $477 $526 $282 $281 $375 $351 $543 $459 $0 $200 $400 $600 $800 DE Q2 DE Q3 DES Q2 DES Q3 DF Q2 DF Q3 DRE Q2 DRE Q3 Sequential Results – Q2 2014 → Q3 2014 5 $412 $405 $481 $507 $287 $291 $346 $362 $522 $529 $0 $200 $400 $600 $800 DE Q2 DE Q3 DES Q2 DES Q3 DF Q2 DF Q3 DRE Q2 DRE Q3 Revenue +5% -15% +1% -6% +4% -4% ≈ 0% +10% Bookings
6 Energy Drilling & Production revenue growth was strong in core U.S. markets; partially offset by tough comps related to Australia and lower Canada activity Bearings & Compression results reflect improving compression end-markets Overall margin remains strong at 24.2% and includes 100 bps dilutive impact of recent acquisitions Bookings growth of 9% was broad-based Book-to-bill at 1.04 6 Q3 2014 Q3 2013 % Change Revenue $507 $468 8% Earnings $123 $119 3% Margin 24.2% 25.5% -130 bps Bookings $526 $481 9% Revenue by End-Market % of Q3 Revenue Y / Y Growth Drilling & Production 81% 9% Bearings & Compression 19% 5% $ in millions
7 Engineered Systems Revenue growth is broad- based – Printing & Identification had very strong results in the US and from MS Printing – Industrial growth is led by auto-related businesses Margin was solid at 17.2%; the benefits of productivity and volume leverage largely offset business mix (lower military activity) Broad-based bookings growth of 11% Book-to-bill of 0.96 7 Q3 2014 Q3 2013 % Change Revenue $695 $642 8% Earnings $119 $112 7% Margin 17.2% 17.4% -20 bps Bookings $667 $601 11% Revenue by End-Market % of Q3 Revenue Y / Y Growth Printing & Identification 42% 13% Industrial 58% 5% $ in millions
8 Fluids Revenue growth driven by strong demand in Fluid Transfer and acquisitions Fluid transfer benefitting from increased regulatory activity around the safe transport of fuels and flammable materials Pumps results driven by North America and new products Segment margin of 18.7% impacted by recent acquisitions Bookings activity remains strong, especially in Fluid Transfer Book-to-bill at 0.97 8 Q3 2014 Q3 2013 % Change Revenue $362 $309 17% Earnings $ 68 $ 63 7% Margin 18.7% 20.4% -170 bps Bookings $351 $308 14% Revenue by End-Market % of Q3 Revenue Y / Y Growth Pumps 44% 13% Fluid Transfer 56% 21% $ in millions
9 Refrigeration & Food Equipment Revenue growth driven by Refrigeration markets, partially offset by customer push-outs and the timing of Belvac shipments in Food Equipment Margin performance reflects the impact of unanticipated supply chain costs, inefficiencies connected with customer push-outs, and customer mix Bookings and backlog growth is seasonally strong Book-to-bill at a seasonally strong 0.87 9 Q3 2014 Q3 2013 % Change Revenue $529 $521 1% Earnings $ 78 $ 86 -10% Margin 14.8% 16.6% -180 bps Bookings $459 $433 6% Revenue by End-Market % of Q3 Revenue Y / Y Growth Refrigeration 80% 3% Food Equipment 20% -5% $ in millions
10 Q3 2014 Overview 10 Q3 2014 Net Interest Expense $31 million, up $1 million from last year and in- line with expectations Corporate Expense $28 million, down $5 million from last year, generally in-line with expectations Effective Tax Rate (ETR) Q3 rate was 30.8%, excluding $0.03 discrete tax benefit; in-line with expectations Capex $35 million, below prior expectations due to timing of projects Share Repurchases Repurchased 857K shares ($75M) in quarter
11 FY 2014 Guidance Revenue – Organic revenue: ≈ 4% – Completed acquisitions: ≈ 4% – Total revenue: ≈ 8% Corporate expense: ≈ $120 million Interest expense: ≈ $130 million Full-year tax rate: ≈ 31.0% Capital expenditures: ≈ 2.3% of revenue FY free cash flow: ≈ 11% of revenue 2014 Organic growth rate Energy 4% - 5% Engineered Systems 4% - 5% Fluids 5% - 6% Refrigeration & Food Equipment ≈ 1% Total organic ≈ 4% Acquisitions ≈ 4% (a) Total growth ≈ 8% (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-time gains(2): (0.02) 2013 Adjusted EPS $ 4.33 – Volume, mix, price (inc. FX): 0.26 - 0.29 – Net benefits of productivity: 0.16 - 0.18 – Acquisitions(3): (0.01) - 0.00 – Investment / Compensation: (0.16 - 0.18) – Corporate expenses: 0.04 – Interest / Shares / Tax rate (net): 0.13 - 0.14 2014 EPS – Adj. Continuing Ops(4) $4.75 - $4.80 (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 (3) Includes the dilutive impact of acquisitions closed in Q3 2014 and Q4 2014 (4) Excludes discrete and other tax benefits of $0.01 in Q1 2014 and $0.03 in Q3 2014
