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 20, 2015
________________________________
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 20, 2015, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended September 30, 2015; 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, 2015.
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 20, 2015.
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 20, 2015 | 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 20, 2015 | |
99.2 | Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com | |
Exhibit 99.1
Investor Contact: | Media Contact: | |
Paul Goldberg | Adrian Sakowicz | |
Vice President - Investor Relations | Vice President - Communications | |
(212) 922-1640 | (630) 743-5039 | |
peg@dovercorp.com | asakowicz@dovercorp.com | |
DOVER REPORTS THIRD QUARTER 2015 RESULTS, UPDATES 2015 GUIDANCE, AND ANNOUNCES TWO ACQUISITIONS
• | Reports quarterly revenue of $1.8 billion, a decrease of 11% from the prior year |
• | Delivers quarterly diluted earnings per share from continuing operations of $1.19, including $0.05 of discrete tax benefits |
• | Updates full year 2015 diluted earnings per share from continuing operations to now be in the range of $3.73 to $3.80, including discrete tax benefits |
• | Signs definitive agreements to acquire two businesses with combined 2016 revenue of approximately $165 million |
Downers Grove, Illinois, October 20, 2015 — Dover (NYSE: DOV) announced today that for the third quarter ended September 30, 2015, revenue was $1.8 billion, a decrease of 11% from the prior year. The decrease in revenue was driven by an organic revenue decline of 10% and an unfavorable impact from foreign exchange of 4%, partially offset by 3% growth from acquisitions. Earnings from continuing operations were $186.5 million, a decrease of 17% as compared to $225.7 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the third quarter ended September 30, 2015 were $1.19, compared to $1.34 EPS in the prior year period, representing a decrease of 11%. EPS from continuing operations for the third quarter of 2015 included discrete tax benefits of $0.05, compared to $0.03 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations for the third quarter of 2015 was $1.14, a decrease of 13% over an adjusted EPS of $1.31 in the prior year period. EPS for the third quarter ended September 30, 2015 and 2014 includes restructuring costs of $0.05 EPS and $0.01 EPS, respectively.
Revenue for the nine months ended September 30, 2015 was $5.3 billion, a decrease of 9% over the prior year, reflecting an organic revenue decline of 9% and an unfavorable impact from foreign exchange of 4%, offset by 4% growth from acquisitions. Earnings from continuing operations for the nine months ended September 30, 2015 were $459.3 million, a decrease of 24% as compared to $606.3 million for the prior year period. Diluted EPS for the nine months ended September 30, 2015 was $2.87, compared to $3.57 EPS in the prior year period, representing a decrease of 20%. EPS from continuing operations for the nine months ended September 30, 2015 included discrete tax benefits of $0.05, compared to $0.04 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations decreased 20% to $2.82 from an adjusted EPS of $3.53 in the prior year period. EPS for the nine months ended September 30, 2015 and 2014 includes restructuring costs of $0.17 EPS and $0.03 EPS, respectively.
Commenting on the third quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Overall, our third quarter performance was in line with our expectations. Our
team aggressively pursued cost actions and productivity initiatives, which helped to mitigate weak global macro conditions.
“We continued to pursue acquisitions that offer industry-leading products and significantly complement and expand our market positions. In this regard, I am pleased to announce we have signed definitive agreements to acquire two businesses, both of which are expected to close later in the fourth quarter. These acquisitions are in addition to our previously announced Tokheim deal.
“Specifically, we have agreed to acquire Italy-based JK Group SPA (“JK”), a leading manufacturer of innovative inks and consumables serving the fast-growing digital textile printing markets. JK’s digital inks will complement our MS Solutions equipment business, and will join the Engineered Systems segment under its Printing & Identification platform. We have also agreed to acquire Gala Industries, Inc. (“Gala”), a leading manufacturer of underwater pelletizing systems and solutions serving the plastics compounding industry, headquartered in Eagle Rock, Virginia. Gala will become part of our Maag business within the Fluids segment, and collectively, will provide our customers unequaled process and engineering expertise.”
The combined purchase price of JK and Gala will be approximately $520 million. JK and Gala are expected to have combined 2016 revenue of about $165 million and be about $0.11 accretive to continuing earnings per share in 2016. On an operating basis, which excludes purchase accounting amortization, JK and Gala are expected to be approximately $0.23 accretive in 2016. Combining JK and Gala with the previously announced Tokheim deal, Dover expects 2016 acquisition revenue to be approximately $500 million and 2016 continuing earnings per share accretion to be about $0.18. On an operating basis, which excludes normal transaction-related costs and purchase accounting amortization, these acquisitions are expected to be approximately $0.38 accretive in 2016. Dover expects to fund the nearly $1 billion in total acquisition spend with cash on hand and debt. Interest charges associated with the incremental debt financing are not included in the above earnings per share estimates.
"Looking to the remainder of 2015,” Mr. Livingston continued, “we have lowered our guidance to reflect the impact of generally weaker global market conditions. We expect full-year revenue to decline 10% to 11%, a two point reduction from our previous forecast. Within this revenue forecast, organic growth is anticipated to decline 9% to 10%, completed acquisitions will provide approximately 3% growth, and FX is expected to be a 4% headwind. In total, full year EPS is expected to be in the range of $3.73 to $3.80, as compared to our prior forecast of $3.75 to $3.90. This range includes approximately $0.20 of restructuring charges, representing a $0.02 increase from our last forecast, and now also includes $0.05 of discrete tax benefits.”
Net earnings for the third quarter ended September 30, 2015, were $186.1 million, or $1.19 EPS, which included a loss from discontinued operations of $0.4 million, compared to net earnings of $231.8 million, or $1.38 EPS, for the same period of 2014, which included earnings from discontinued operations of $6.2 million, or $0.04 EPS.
Net earnings for the nine months ended September 30, 2015, were $728.0 million, or $4.55 EPS, which included earnings from discontinued operations of $268.7 million, or $1.68 EPS, compared to net earnings of $605.9 million, or $3.57 EPS, for the same period of 2014, which included a loss from discontinued operations of $0.4 million. 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 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, October 20, 2015. 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 approximately $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 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, and tax policies; 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 2015
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 1,787,582 | $ | 2,009,575 | $ | 5,261,711 | $ | 5,774,781 | |||||||
Cost of goods and services | 1,114,974 | 1,235,153 | 3,307,376 | 3,524,400 | |||||||||||
Gross profit | 672,608 | 774,422 | 1,954,335 | 2,250,381 | |||||||||||
Selling and administrative expenses | 395,688 | 426,160 | 1,233,017 | 1,298,388 | |||||||||||
Operating earnings | 276,920 | 348,262 | 721,318 | 951,993 | |||||||||||
Interest expense, net | 31,983 | 31,231 | 96,008 | 95,847 | |||||||||||
Other income, net | (367 | ) | (1,032 | ) | (5,810 | ) | (7,074 | ) | |||||||
Earnings before provision for income taxes and discontinued operations | 245,304 | 318,063 | 631,120 | 863,220 | |||||||||||
Provision for income taxes | 58,821 | 92,380 | 171,813 | 256,915 | |||||||||||
Earnings from continuing operations | 186,483 | 225,683 | 459,307 | 606,305 | |||||||||||
(Loss) earnings from discontinued operations, net | (385 | ) | 6,161 | 268,697 | (364 | ) | |||||||||
Net earnings | $ | 186,098 | $ | 231,844 | $ | 728,004 | $ | 605,941 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.20 | $ | 1.36 | $ | 2.90 | $ | 3.62 | |||||||
Earnings (loss) from discontinued operations, net | — | 0.04 | 1.70 | — | |||||||||||
Net earnings | 1.20 | 1.40 | 4.59 | 3.62 | |||||||||||
Weighted average shares outstanding | 155,300 | 166,021 | 158,507 | 167,401 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.19 | $ | 1.34 | $ | 2.87 | $ | 3.57 | |||||||
Earnings (loss) from discontinued operations, net | — | 0.04 | 1.68 | — | |||||||||||
Net earnings | 1.19 | 1.38 | 4.55 | 3.57 | |||||||||||
Weighted average shares outstanding | 156,560 | 168,343 | 160,112 | 169,761 | |||||||||||
Dividends paid per common share | $ | 0.42 | $ | 0.40 | $ | 1.22 | $ | 1.15 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2014 | ||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||
Energy | $ | 430,423 | $ | 366,044 | $ | 363,872 | $ | 1,160,339 | $ | 478,773 | $ | 481,016 | $ | 507,334 | $ | 1,467,123 | $ | 550,116 | $ | 2,017,239 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 230,181 | 229,934 | 227,992 | 688,107 | 231,679 | 252,354 | 257,282 | 741,315 | 247,569 | 988,884 | |||||||||||||||||||||
Industrials | 343,015 | 363,157 | 351,404 | 1,057,576 | 335,995 | 361,467 | 355,019 | 1,052,481 | 344,600 | 1,397,081 | |||||||||||||||||||||
573,196 | 593,091 | 579,396 | 1,745,683 | 567,674 | 613,821 | 612,301 | 1,793,796 | 592,169 | 2,385,965 | ||||||||||||||||||||||
Fluids | 340,236 | 351,511 | 352,018 | 1,043,765 | 345,009 | 346,275 | 361,797 | 1,053,081 | 377,485 | 1,430,566 | |||||||||||||||||||||
Refrigeration & Food Equipment | 372,097 | 448,115 | 492,460 | 1,312,672 | 411,493 | 522,357 | 528,807 | 1,462,657 | 458,532 | 1,921,189 | |||||||||||||||||||||
Intra-segment eliminations | (451 | ) | (133 | ) | (164 | ) | (748 | ) | (379 | ) | (833 | ) | (664 | ) | (1,876 | ) | (355 | ) | (2,231 | ) | |||||||||||
Total consolidated revenue | $ | 1,715,501 | $ | 1,758,628 | $ | 1,787,582 | $ | 5,261,711 | $ | 1,802,570 | $ | 1,962,636 | $ | 2,009,575 | $ | 5,774,781 | $ | 1,977,947 | $ | 7,752,728 | |||||||||||
NET EARNINGS | |||||||||||||||||||||||||||||||
Segment Earnings: | |||||||||||||||||||||||||||||||
Energy | $ | 52,305 | $ | 40,909 | $ | 48,726 | $ | 141,940 | $ | 118,968 | $ | 114,991 | $ | 122,738 | $ | 356,697 | $ | 105,118 | $ | 461,815 | |||||||||||
Engineered Systems | 88,149 | 96,702 | 102,866 | 287,717 | 83,227 | 101,766 | 108,800 | 293,793 | 93,205 | 386,998 | |||||||||||||||||||||
Fluids | 54,634 | 70,168 | 74,911 | 199,713 | 57,942 | 63,112 | 67,559 | 188,613 | 63,026 | 251,639 | |||||||||||||||||||||
Refrigeration & Food Equipment | 36,150 | 65,732 | 76,665 | 178,547 | 44,862 | 84,926 | 78,012 | 207,800 | 30,934 | 238,734 | |||||||||||||||||||||
Total Segments | 231,238 | 273,511 | 303,168 | 807,917 | 304,999 | 364,795 | 377,109 | 1,046,903 | 292,283 | 1,339,186 | |||||||||||||||||||||
Corporate expense / other | 34,526 | 20,382 | 25,881 | 80,789 | 30,734 | 29,287 | 27,815 | 87,836 | 29,964 | 117,800 | |||||||||||||||||||||
Net interest expense | 32,037 | 31,988 | 31,983 | 96,008 | 32,655 | 31,961 | 31,231 | 95,847 | 31,332 | 127,179 | |||||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 164,675 | 221,141 | 245,304 | 631,120 | 241,610 | 303,547 | 318,063 | 863,220 | 230,987 | 1,094,207 | |||||||||||||||||||||
Provision for income taxes | 47,485 | 65,507 | 58,821 | 171,813 | 71,569 | 92,966 | 92,380 | 256,915 | 59,152 | 316,067 | |||||||||||||||||||||
Earnings from continuing operations | 117,190 | 155,634 | 186,483 | 459,307 | 170,041 | 210,581 | 225,683 | 606,305 | 171,835 | 778,140 | |||||||||||||||||||||
Earnings (loss) from discontinued operations, net | 92,320 | 176,762 | (385 | ) | 268,697 | (9,903 | ) | 3,378 | 6,161 | (364 | ) | (2,541 | ) | (2,905 | ) | ||||||||||||||||
Net earnings | $ | 209,510 | $ | 332,396 | $ | 186,098 | $ | 728,004 | $ | 160,138 | $ | 213,959 | $ | 231,844 | $ | 605,941 | $ | 169,294 | $ | 775,235 | |||||||||||
SEGMENT OPERATING MARGIN | |||||||||||||||||||||||||||||||
Energy | 12.2 | % | 11.2 | % | 13.4 | % | 12.2 | % | 24.8 | % | 23.9 | % | 24.2 | % | 24.3 | % | 19.1 | % | 22.9 | % | |||||||||||
Engineered Systems | 15.4 | % | 16.3 | % | 17.8 | % | 16.5 | % | 14.7 | % | 16.6 | % | 17.8 | % | 16.4 | % | 15.7 | % | 16.2 | % | |||||||||||
Fluids | 16.1 | % | 20.0 | % | 21.3 | % | 19.1 | % | 16.8 | % | 18.2 | % | 18.7 | % | 17.9 | % | 16.7 | % | 17.6 | % | |||||||||||
Refrigeration & Food Equipment | 9.7 | % | 14.7 | % | 15.6 | % | 13.6 | % | 10.9 | % | 16.3 | % | 14.8 | % | 14.2 | % | 6.7 | % | 12.4 | % | |||||||||||
Total Segment | 13.5 | % | 15.6 | % | 17.0 | % | 15.4 | % | 16.9 | % | 18.6 | % | 18.8 | % | 18.1 | % | 14.8 | % | 17.3 | % | |||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||||||||||||||
Energy | $ | 34,427 | $ | 32,740 | $ | 31,858 | $ | 99,025 | $ | 25,575 | $ | 25,807 | $ | 27,145 | $ | 78,527 | $ | 33,429 | $ | 111,956 | |||||||||||
Engineered Systems | 14,526 | 14,392 | 14,503 | 43,421 | 15,850 | 15,982 | 15,334 | 47,166 | 14,780 | 61,946 | |||||||||||||||||||||
Fluids | 13,848 | 13,648 | 13,367 | 40,863 | 16,366 | 15,308 | 14,019 | 45,693 | 15,210 | 60,903 | |||||||||||||||||||||
Refrigeration & Food Equipment | 16,458 | 16,406 | 16,609 | 49,473 | 17,212 | 17,451 | 17,073 | 51,736 | 16,965 | 68,701 | |||||||||||||||||||||
Corporate | 923 | 841 | 837 | 2,601 | 870 | 1,000 | 910 | 2,780 | 902 | 3,682 | |||||||||||||||||||||
$ | 80,182 | $ | 78,027 | $ | 77,174 | $ | 235,383 | $ | 75,873 | $ | 75,548 | $ | 74,481 | $ | 225,902 | $ | 81,286 | $ | 307,188 | ||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2014 | ||||||||||||||||||||||
BOOKINGS | |||||||||||||||||||||||||||||||
Energy | $ | 416,628 | $ | 345,079 | $ | 351,557 | $ | 1,113,264 | $ | 478,469 | $ | 477,162 | $ | 526,134 | $ | 1,481,765 | $ | 534,646 | $ | 2,016,411 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 235,617 | 224,203 | 226,756 | 686,576 | 250,416 | 245,429 | 249,288 | 745,133 | 248,071 | 993,204 | |||||||||||||||||||||
Industrials | 337,070 | 336,173 | 338,744 | 1,011,987 | 370,949 | 363,773 | 342,687 | 1,077,409 | 374,438 | 1,451,847 | |||||||||||||||||||||
572,687 | 560,376 | 565,500 | 1,698,563 | 621,365 | 609,202 | 591,975 | 1,822,542 | 622,509 | 2,445,051 | ||||||||||||||||||||||
Fluids | 339,310 | 333,695 | 357,032 | 1,030,037 | 362,943 | 375,009 | 350,853 | 1,088,805 | 345,553 | 1,434,358 | |||||||||||||||||||||
Refrigeration & Food Equipment | 419,659 | 486,793 | 430,681 | 1,337,133 | 493,731 | 542,810 | 459,099 | 1,495,640 | 367,567 | 1,863,207 | |||||||||||||||||||||
Intra-segment eliminations | (628 | ) | (417 | ) | (385 | ) | (1,430 | ) | (506 | ) | (1,089 | ) | (737 | ) | (2,332 | ) | (644 | ) | (2,976 | ) | |||||||||||
Total consolidated bookings | $ | 1,747,656 | $ | 1,725,526 | $ | 1,704,385 | $ | 5,177,567 | $ | 1,956,002 | $ | 2,003,094 | $ | 1,927,324 | $ | 5,886,420 | $ | 1,869,631 | $ | 7,756,051 | |||||||||||
BACKLOG | |||||||||||||||||||||||||||||||
Energy | $ | 212,060 | $ | 194,819 | $ | 156,631 | $ | 210,846 | $ | 206,415 | $ | 232,739 | $ | 233,347 | |||||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 108,151 | 103,403 | 100,476 | 131,298 | 128,912 | 115,352 | 110,359 | ||||||||||||||||||||||||
Industrials | 276,598 | 248,592 | 236,298 | 266,517 | 268,680 | 254,612 | 282,598 | ||||||||||||||||||||||||
384,749 | 351,995 | 336,774 | 397,815 | 397,592 | 369,964 | 392,957 | |||||||||||||||||||||||||
Fluids | 259,504 | 240,389 | 236,608 | 328,617 | 348,508 | 323,424 | 277,834 | ||||||||||||||||||||||||
Refrigeration & Food Equipment | 337,084 | 373,193 | 307,351 | 431,298 | 450,065 | 376,141 | 282,507 | ||||||||||||||||||||||||
Intra-segment eliminations | (595 | ) | (354 | ) | (598 | ) | (374 | ) | (211 | ) | (302 | ) | (431 | ) | |||||||||||||||||
Total consolidated backlog | $ | 1,192,802 | $ | 1,160,042 | $ | 1,036,766 | $ | 1,368,202 | $ | 1,402,369 | $ | 1,301,966 | $ | 1,186,214 | |||||||||||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2014 | ||||||||||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.98 | $ | 1.20 | $ | 2.90 | $ | 1.00 | $ | 1.26 | $ | 1.36 | $ | 3.62 | $ | 1.04 | $ | 4.67 | |||||||||||
Discontinued operations | 0.57 | 1.11 | — | 1.70 | $ | (0.06 | ) | $ | 0.02 | $ | 0.04 | $ | — | $ | (0.02 | ) | $ | (0.02 | ) | ||||||||||||
Net earnings | 1.30 | 2.10 | 1.20 | 4.59 | $ | 0.94 | $ | 1.29 | $ | 1.40 | $ | 3.62 | $ | 1.03 | $ | 4.65 | |||||||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.19 | $ | 2.87 | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 3.57 | $ | 1.03 | $ | 4.61 | |||||||||||
Discontinued operations | 0.57 | 1.10 | — | 1.68 | $ | (0.06 | ) | $ | 0.02 | $ | 0.04 | $ | — | $ | (0.02 | ) | $ | (0.02 | ) | ||||||||||||
Net earnings | 1.28 | 2.07 | 1.19 | 4.55 | $ | 0.93 | $ | 1.27 | $ | 1.38 | $ | 3.57 | $ | 1.02 | $ | 4.59 | |||||||||||||||
Adjusted diluted earnings per common share (calculated below): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.14 | $ | 2.82 | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 3.53 | $ | 1.01 | $ | 4.54 | |||||||||||
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows: | |||||||||||||||||||||||||||||||
Net earnings (loss): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 117,190 | $ | 155,634 | $ | 186,483 | $ | 459,307 | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 606,305 | $ | 171,835 | $ | 778,140 | |||||||||||
Discontinued operations | 92,320 | 176,762 | (385 | ) | 268,697 | (9,903 | ) | 3,378 | 6,161 | (364 | ) | (2,541 | ) | (2,905 | ) | ||||||||||||||||
Net earnings | 209,510 | 332,396 | 186,098 | 728,004 | 160,138 | 213,959 | 231,844 | 605,941 | 169,294 | 775,235 | |||||||||||||||||||||
Average shares outstanding: | |||||||||||||||||||||||||||||||
Basic | 161,650 | 158,640 | 155,300 | 158,507 | 169,750 | 166,474 | 166,021 | 167,401 | 164,589 | 166,692 | |||||||||||||||||||||
Diluted | 163,323 | 160,398 | 156,560 | 160,112 | 172,013 | 168,857 | 168,343 | 169,761 | 166,467 | 168,842 | |||||||||||||||||||||
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: | |||||||||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2014 | ||||||||||||||||||||||
Adjusted earnings from continuing operations: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 117,190 | $ | 155,634 | $ | 186,483 | $ | 459,307 | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 606,305 | $ | 171,835 | $ | 778,140 | |||||||||||
Gains (losses) from discrete and other tax items | — | — | 8,131 | 8,131 | 2,541 | (635 | ) | 5,524 | 7,430 | 3,860 | 11,290 | ||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 117,190 | $ | 155,634 | $ | 178,352 | $ | 451,176 | $ | 167,500 | $ | 211,216 | $ | 220,159 | $ | 598,875 | $ | 167,975 | $ | 766,850 | |||||||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.19 | $ | 2.87 | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 3.57 | $ | 1.03 | $ | 4.61 | |||||||||||
Gains (losses) from discrete and other tax items | — | — | 0.05 | 0.05 | 0.01 | — | 0.03 | 0.04 | 0.02 | 0.07 | |||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.14 | $ | 2.82 | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 3.53 | $ | 1.01 | $ | 4.54 | |||||||||||
* Per share data may not add due to rounding. | |||||||||||||||||||||||||||||||
DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2014 | ||||||||||||||||||||||
Cash flow from operating activities | $ | 131,332 | $ | 218,911 | $ | 282,213 | $ | 632,456 | $ | 28,361 | $ | 185,013 | $ | 292,012 | $ | 505,386 | $ | 444,778 | $ | 950,164 | |||||||||||
Less: Additions to property, plant and equipment | (27,956 | ) | (43,807 | ) | (39,516 | ) | (111,279 | ) | (32,695 | ) | (42,550 | ) | (33,532 | ) | (108,777 | ) | (57,256 | ) | (166,033 | ) | |||||||||||
Free cash flow | $ | 103,376 | $ | 175,104 | $ | 242,697 | $ | 521,177 | $ | (4,334 | ) | $ | 142,463 | $ | 258,480 | $ | 396,609 | $ | 387,522 | $ | 784,131 | ||||||||||
Free cash flow as a percentage of earnings from continuing operations | 88.2 | % | 112.5 | % | 130.1 | % | 113.5 | % | (2.5 | )% | 67.7 | % | 114.5 | % | 65.4 | % | 225.5 | % | 100.8 | % | |||||||||||
Free cash flow as a percentage of revenue | 6.0 | % | 10.0 | % | 13.6 | % | 9.9 | % | (0.2 | )% | 7.3 | % | 12.9 | % | 6.9 | % | 19.6 | % | 10.1 | % | |||||||||||
Earnings Conference Call Third Quarter 2015 October 20, 2015 – 9:00am CT
2 Forward looking statements and non-GAAP measures 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 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. This document contains non-GAAP financial information. Reconciliations of non-GAAP measures are included either in this presentation or Dover’s earnings release and investor supplement for the third quarter 2015. 2
3 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Q1* Q2 Q3* Q4* Q1 Q2 Q3* Q3 2015 Performance Adjusted Earnings Per Share* (continuing operations) Q3 Q3/Q3 * Excludes discrete & other tax benefits of $0.01 in Q1 2014, $0.03 in Q3 2014, $0.02 in Q4 2014, and $0.05 in Q3 2015 (b) See Press Release for free cash flow reconciliation 3 Quarterly Comments 2014 2015 Revenue impacted by weak global macro conditions, the impact of FX, and continued tough oil & gas markets, partially offset by acquisition growth US activity declined, largely driven by oil & gas markets and tough comps in retail refrigeration. Asian and European activity softened on reduced capex spending Segment margin benefitted from broad-based cost and productivity initiatives, partially offsetting the impact of lower volume and business mix Bookings decline largely driven by oil & gas markets and FX Book-to-bill of 0.95 Note: Q4 2014 includes restructuring and other costs of $0.17; includes restructuring costs of $0.10 in Q1 2015, $0.01 in Q2 2015, and $0.05 in Q3 2015 Revenue $1.8B -11% $5.3B -9% Adj. EPS (cont.) $1.14 -13% $2.82 -20% Bookings $1.7B -12% $5.2B -12% Seg. Margin 17.0% -180 bps 15.4% -270 bps Adj. Seg. Margin (a) 17.6% -120 bps 16.1% -200 bps Organic Rev. -10% -9% Acq. Growth 3% 4% FCF (b) $243M -6% $521M 31% 9M 9M/9M (a) Adjusted for $11.5 million of restructuring in Q3 2015 and $ 38.7 million for 9m 2015
4 Revenue Q3 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -37% 1% 1% -6% -10% Acquisitions 11% - 1% 1% 3% Currency -2% -6% -5% -2% -4% Total -28% -5% -3% -7% -11% 9M 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -32% 3% 3% -8% -9% Acquisitions 13% - 2% 1% 4% Currency -2% -6% -6% -3% -4% Total -21% -3% -1% -10% -9%
5 Printing & ID Industrial $336 $339 $345 $352 $224 $227 $334 $357 $487 $431 $0 $200 $400 $600 $800 DE Q2 DE Q3 DES Q2 DES Q3 DF Q2 DF Q3 DRE Q2 DRE Q3 Sequential Results – Q2 2015 → Q3 2015 5 $363 $352 $366 $364 $230 $228 $352 $352 $448 $492 $0 $200 $400 $600 $800 DE Q2 DE Q3 DES Q2 DES Q3 DF Q2 DF Q3 DRE Q2 DRE Q3 Revenue -1% -12% +10% +7% Flat +1% -2% +2% Bookings
6 Energy Revenue decline driven by persistent low demand and inventory adjustments in NA oil & gas markets – Middle East markets holding up well – Bearings & Compression’s energy-related markets weakened on slower OEM build rates Adjusted margin of 15.1% reflects negative product mix and price pressure, partially offset by the benefits of restructuring Bookings decline of 33% driven by macro oil & gas trends Book-to-bill at 0.97 6 Q3 2015 Q3 2014 % Change Revenue $364 $507 -28% Earnings $ 49 $123 -60% Margin 13.4% 24.2% -1080 bps Adj. Earnings* $ 55 $123 -55% Adj. Margin* 15.1% 24.2% -910 bps Bookings $352 $526 -33% Revenue by End-Market % of Q3 Revenue Y / Y Drilling & Production 67% -31% Bearings & Compression 22% -12% Automation 11% -35% $ in millions * Q3 2015 earnings adjusted for $6M in restructuring costs
7 Engineered Systems Modest organic revenue growth offset by impact of FX – Printing & Identification was flat organically, where solid North American results were offset by a softer Asia and order timing in Europe – Industrial’s organic growth of 1% was led by waste handling and microwave components Adjusted margin of 18.5% reflects positive business mix and completed restructuring Bookings decline primarily reflects impact of FX, up 2% organically Book-to-bill of 0.98 7 Q3 2015 Q3 2014 % Change Revenue $579 $612 -5% Earnings $103 $109 -5% Margin 17.8% 17.8% Flat Adj. Earnings* $107 $109 -2% Adj. Margin* 18.5% 17.8% 70 bps Bookings $565 $592 -4% Revenue by End-Market % of Q3 Revenue Y / Y Growth Printing & Identification 39% -11% Industrial 61% -1% $ in millions * Q3 2015 earnings adjusted for $4M in restructuring costs
8 Fluids Revenue decline driven by FX; organic growth of 1% reflects: – Solid Fluid Transfer businesses – Strong shipments of plastics-related projects in Pumps, offset by oil & gas market weakness Strong segment margin reflects positive product mix, leverage on volume and productivity Bookings growth primarily related to project related orders Book-to-bill at 1.01 8 Q3 2015 Q3 2014 % Change Revenue $352 $362 -3% Earnings $ 75 $ 68 11% Margin 21.3% 18.7% 260 bps Bookings $357 $351 2% Revenue by End-Market % of Q3 Revenue Y / Y Growth Pumps 42% -7% Fluid Transfer 58% 1% $ in millions
9 Refrigeration & Food Equipment Revenue decline primarily reflects anticipated reduced volume from a key retail refrigeration customer – Within Food Equipment, can- shaping equipment results were improved, but were impacted by a delayed large shipment Margin improvement reflects reduced manufacturing and supply chain costs versus last year, and the benefits of restructuring Bookings reflect normal seasonality off a lower base Book-to-bill at 0.87 9 Q3 2015 Q3 2014 % Change Revenue $492 $529 -7% Earnings $ 77 $ 78 -2% Margin 15.6% 14.8% 80 bps Bookings $431 $459 -6% Revenue by End-Market % of Q3 Revenue Y / Y Growth Refrigeration 79% -8% Food Equipment 21% -4% $ in millions
10 Q3 2015 Overview 10 Q3 2015 Net Interest Expense $32 million, inline with forecast Corporate Expense $26 million, down $2 million from last year; reflecting continuing cost management initiatives Effective Tax Rate (ETR) Q3 rate was 27.3%, excluding discrete tax benefits of $0.05 cents. Rate reflects the benefits from restructuring international operations Capex $40 million, generally inline with expectations Share Repurchases Repurchased 1.5M shares ($100M) in quarter
11 FY 2015 Guidance Revenue – Organic revenue: (10% - 9%) – Completed acquisitions: ≈ 3% – FX impact: (4%) – Total revenue: (11% - 10%) Corporate expense: ≈ $107 million Interest expense: ≈ $127 million Full-year tax rate: ≈ 28.5% Capital expenditures: ≈ 2.3% of revenue FY free cash flow: ≈ 12% of revenue 2015 Organic growth rate Energy (34% - 33%) Engineered Systems ≈ 3% Fluids 2% - 3% Refrigeration & Food Equipment (8% - 7%) Total organic (10% - 9%) Acquisitions ≈ 3% (a) FX Impact (4%) Total revenue (11% - 10%) (a) Reflects completed acquisitions. Does not include Tokheim, JK or Gala
12 2015 EPS Guidance – Continuing Ops 2014 EPS – Continuing Ops (GAAP) $ 4.61 – Less 2014 tax items(1): (0.07) 2014 Adjusted EPS $ 4.54 – Net restructuring and one-time items(2): (0.04 - 0.02) – Performance including restructuring benefits & deal costs (3): (1.15 - 1.11) – Acquisitions(4): ≈ 0.04 – Shares(5): ≈ 0.21 – Interest / Corp. / Tax rate / Other (net): 0.08 - 0.09 2015 Adjusted EPS – Continuing Ops $3.68 - $3.75 – Plus 2015 tax items(6): $0.05 2015 EPS – Continuing Ops (GAAP) $3.73 - $3.80 (1) $0.01 in Q1 2014 , $0.03 in Q3 2014 and $0.02 in Q4 2014 (4) Deals completed, principally Accelerated (does not include Tokheim, JK, or Gala) (5) Based on 2015 repurchases of $600M (2) Includes restructuring charges of $0.16 in Q4 2014 and approximately $0.20 in FY 2015, and pension settlement costs of $0.01 in Q4 2014 (3) Includes restructuring benefits of $0.40 - $0.41, and deal costs of $0.02 in Q3 2015 (6) $0.05 in Q3 2015
