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 18, 2019
________________________________
(Exact name of registrant as specified in its charter)
________________________________
| 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) | ||||||||
(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 (see General Instruction A.2. below):
| ¨ | 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)) | ||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock | DOV | New York Stock Exchange | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On July 18, 2019, Dover Corporation ("Dover") (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended June 30, 2019; 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, 2019.
The information in this Current Report on Form 8-K, including the 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, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this report:
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 18, 2019 | DOVER CORPORATION | ||||||||||||
| (Registrant) | ||||||||||||||
| By: | /s/ Ivonne M. Cabrera | |||||||||||||
| Ivonne M. Cabrera | ||||||||||||||
| Senior Vice President, General Counsel & Secretary | ||||||||||||||
Exhibit 99.1
| Investor Contact: | Media Contact: | |||||||
| Andrey Galiuk | Adrian Sakowicz | |||||||
| Vice President - Corporate Development | Vice President - Communications | |||||||
| and Investor Relations | (630) 743-5039 | |||||||
| (630) 743-5131 | asakowicz@dovercorp.com | |||||||
| agaliuk@dovercorp.com | ||||||||
DOVER REPORTS SECOND QUARTER 2019 RESULTS; TIGHTENS FULL YEAR 2019 ADJUSTED EPS GUIDANCE TO $5.75 TO $5.85
Reports adjusted diluted EPS growth of 20%, organic revenue growth of 3%, and significant operating margin accretion
DOWNERS GROVE, Ill., July 18, 2019 — Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the second quarter ended June 30, 2019.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| ($ in millions, except per share data) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||||||||||||||||||
| U.S. GAAP from continuing operations | ||||||||||||||||||||||||||||||||||||||
| Revenue | $1,811 | $1,798 | 1% | $3,535 | $3,436 | 3% | ||||||||||||||||||||||||||||||||
Earnings 1 | 198 | 166 | 19% | 304 | 276 | 10% | ||||||||||||||||||||||||||||||||
Diluted EPS 1 | 1.35 | 1.08 | 25% | 2.07 | 1.77 | 17% | ||||||||||||||||||||||||||||||||
| Non-GAAP from continuing operations | ||||||||||||||||||||||||||||||||||||||
| Adjusted earnings | 229 | 200 | 15% | 412 | 342 | 21% | ||||||||||||||||||||||||||||||||
| Adjusted diluted EPS | 1.56 | 1.30 | 20% | 2.80 | 2.20 | 27% | ||||||||||||||||||||||||||||||||
1 Q1 2019 included a $46.9 million ($0.32 of EPS) non-cash after-tax loss on assets held for sale related to Finder Pompe S.r.l.
A full reconciliation between GAAP and adjusted measures is included as an exhibit herein.
Second Quarter 2019 Financial Results:
For the second quarter ended June 30, 2019, revenue was $1.8 billion, an increase of 0.7% over the prior year. The increase in the quarter was driven by organic growth of 2.9% and acquisition growth of 0.8%, partially offset by a 2.5% unfavorable impact from foreign exchange ("FX") and 0.5% due to dispositions.
Earnings from continuing operations of $198.1 million included acquisition-related amortization costs of $26.2 million and rightsizing and other costs of $5.1 million, representing $0.18 and $0.03 of diluted earnings per share from continuing operations ("EPS"), respectively. Excluding these items, adjusted earnings from continuing operations for the quarter were $229.4 million (+15% over the comparable period in 2018), and adjusted EPS was $1.56 (+20% over the comparable period in 2018).
Year to Date 2019 Financial Results:
For the six month period ended June 30, 2019, revenue was $3.5 billion, an increase of 2.9% over the comparable period in the prior year. The increase was driven by organic growth of 5.5% and acquisition growth of 0.7% partially offset by a 3.0% unfavorable impact from FX and 0.3% due to dispositions.
Earnings from continuing operations of $303.8 million included acquisition-related amortization costs of $52.9 million and rightsizing and other costs of $8.2 million, representing $0.36 and $0.06 of EPS, respectively. In addition, the period included a $46.9 million, or $0.32 of EPS, non-cash after-tax loss on assets held for sale related to Finder Pompe S.r.l. (a supplier of pumps to the upstream oil & gas industry), which was sold on April 2, 2019. Excluding these items, adjusted earnings from continuing operations for the period were $411.8 million (+21% over the comparable period in 2018), and adjusted EPS was $2.80 (+27% over the comparable period in 2018).
Full Year 2019 Guidance Update:
Adjusted EPS guidance for full year 2019 was tightened toward the upper end of the previous range, to $5.75 to $5.85. Guidance for full year revenue growth remains unchanged.
Management Commentary:
Dover’s President and Chief Executive Officer, Richard J. Tobin, said, “Our results for the second quarter reflect a continued constructive demand environment across a significant portion of our portfolio that, when coupled with our ongoing productivity improvement actions, drove a 190 bps increase in operating margins on a comparable basis.
“Our Fluids segment posted a solid quarter with organic growth of 7%, with our fueling & transport, pumps, and process solutions businesses each delivering significant improvements in operating margin. Engineered Systems' organic growth of 2% was primarily driven by the industrial platform, offsetting the expected lower activity in digital printing, which we expect to reaccelerate into the second half. Organic revenue in Refrigeration & Food Equipment was slower in the quarter principally as a result of reduced shipments of heat exchangers in Asia; we still expect the segment to end the year with positive organic growth and margin improvement over the prior year.
“Overall, on the back of a strong first half of the year, solid backlogs and continued execution towards margin expansion targets, we are tightening the range of our previous full year adjusted EPS guidance to $5.75 to $5.85."
Conference Call Information:
Dover will host a webcast and conference call to discuss its second quarter 2019 results at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 18, 2019. The webcast can be accessed on the Dover website at dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover’s second quarter and year to date results and its operating segments can be found on the Company’s website.
About Dover:
Dover is a diversified global manufacturer with annual revenue of approximately $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through three operating segments: Engineered Systems, Fluids and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 60 years, our team of 24,000 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 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. All statements in this document other than statements of historical fact are statements that are, or could be deemed, “forward-looking” statements. Forward-looking statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control. Factors that could cause actual results to differ materially from current expectations include, among other things, general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions. For details on the risks and uncertainties that could cause our results to differ materially from the forward-looking statements contained herein, we refer you to the documents we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These documents are available from the Securities and Exchange Commission, and on our website, dovercorporation.com. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
INVESTOR SUPPLEMENT - SECOND QUARTER 2019
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Revenue | $ | 1,810,706 | $ | 1,798,094 | $ | 3,535,463 | $ | 3,435,765 | |||||||||||||||
| Cost of goods and services | 1,138,113 | 1,132,858 | 2,239,328 | 2,167,700 | |||||||||||||||||||
| Gross profit | 672,593 | 665,236 | 1,296,135 | 1,268,065 | |||||||||||||||||||
| Selling, general, and administrative expenses | 396,634 | 428,775 | 805,100 | 863,801 | |||||||||||||||||||
| Loss on assets held for sale | — | — | 46,946 | — | |||||||||||||||||||
| Operating earnings | 275,959 | 236,461 | 444,089 | 404,264 | |||||||||||||||||||
| Interest expense | 31,754 | 32,125 | 63,562 | 67,765 | |||||||||||||||||||
| Interest income | (945) | (2,563) | (1,835) | (4,620) | |||||||||||||||||||
| Other income, net | (4,589) | (4,538) | (5,695) | (4,568) | |||||||||||||||||||
| Earnings before provision for income taxes | 249,739 | 211,437 | 388,057 | 345,687 | |||||||||||||||||||
| Provision for income taxes | 51,654 | 44,981 | 84,267 | 69,822 | |||||||||||||||||||
| Earnings from continuing operations | 198,085 | 166,456 | 303,790 | 275,865 | |||||||||||||||||||
| Loss from discontinued operations, net | — | (26,497) | — | (4,472) | |||||||||||||||||||
| Net earnings | $ | 198,085 | $ | 139,959 | $ | 303,790 | $ | 271,393 | |||||||||||||||
| Basic earnings (loss) per share*: | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 1.36 | $ | 1.10 | $ | 2.09 | $ | 1.80 | |||||||||||||||
| Loss from discontinued operations, net | — | (0.17) | — | (0.03) | |||||||||||||||||||
| Net earnings | $ | 1.36 | $ | 0.92 | $ | 2.09 | $ | 1.77 | |||||||||||||||
| Weighted average shares outstanding | 145,366 | 151,744 | 145,227 | 153,124 | |||||||||||||||||||
| Diluted earnings (loss) per common share*: | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 1.35 | $ | 1.08 | $ | 2.07 | $ | 1.77 | |||||||||||||||
| Loss from discontinued operations, net | — | (0.17) | — | (0.03) | |||||||||||||||||||
Net earnings | $ | 1.35 | $ | 0.91 | $ | 2.07 | $ | 1.74 | |||||||||||||||
| Weighted average shares outstanding | 147,179 | 153,938 | 147,041 | 155,573 | |||||||||||||||||||
| Dividends paid per common share | $ | 0.48 | $ | 0.47 | $ | 0.96 | $ | 0.94 | |||||||||||||||
* Per share data may be impacted by rounding. | |||||||||||||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
| 2019 | 2018 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||
| REVENUE | ||||||||||||||||||||||||||||||||
| Engineered Systems | ||||||||||||||||||||||||||||||||
| Printing & Identification | $ | 282,086 | $ | 278,813 | $ | 560,899 | $ | 282,522 | $ | 299,834 | $ | 582,356 | $ | 283,232 | $ | 296,843 | $ | 1,162,431 | ||||||||||||||
| Industrials | 405,105 | 417,688 | 822,793 | 389,104 | 403,155 | 792,259 | 388,302 | 399,956 | 1,580,517 | |||||||||||||||||||||||
| 687,191 | 696,501 | 1,383,692 | 671,626 | 702,989 | 1,374,615 | 671,534 | 696,799 | 2,742,948 | ||||||||||||||||||||||||
| Fluids | 703,224 | 729,433 | 1,432,657 | 628,098 | 693,666 | 1,321,764 | 690,065 | 785,509 | 2,797,338 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 334,643 | 385,474 | 720,117 | 338,235 | 401,766 | 740,001 | 386,214 | 326,878 | 1,453,093 | |||||||||||||||||||||||
| Intra-segment eliminations | (301) | (702) | (1,003) | (288) | (327) | (615) | (410) | (236) | (1,261) | |||||||||||||||||||||||
| Total consolidated revenue | $ | 1,724,757 | $ | 1,810,706 | $ | 3,535,463 | $ | 1,637,671 | $ | 1,798,094 | $ | 3,435,765 | $ | 1,747,403 | $ | 1,808,950 | $ | 6,992,118 | ||||||||||||||
| NET EARNINGS | ||||||||||||||||||||||||||||||||
| Segment Earnings: | ||||||||||||||||||||||||||||||||
| Engineered Systems | $ | 123,074 | $ | 131,770 | $ | 254,844 | $ | 102,066 | $ | 126,649 | $ | 228,715 | $ | 108,714 | $ | 113,841 | $ | 451,270 | ||||||||||||||
Fluids 1 | 52,221 | 128,915 | 181,136 | 67,348 | 93,028 | 160,376 | 101,207 | 128,221 | 389,804 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 24,807 | 44,375 | 69,182 | 29,182 | 51,372 | 80,554 | 42,434 | 13,131 | 136,119 | |||||||||||||||||||||||
| Total segments | 200,102 | 305,060 | 505,162 | 198,596 | 271,049 | 469,645 | 252,355 | 255,193 | 977,193 | |||||||||||||||||||||||
| Corporate expense / other | 30,866 | 24,512 | 55,378 | 30,763 | 30,050 | 60,813 | 30,207 | 38,704 | 129,724 | |||||||||||||||||||||||
| Interest expense | 31,808 | 31,754 | 63,562 | 35,640 | 32,125 | 67,765 | 31,192 | 32,015 | 130,972 | |||||||||||||||||||||||
| Interest income | (890) | (945) | (1,835) | (2,057) | (2,563) | (4,620) | (2,060) | (2,201) | (8,881) | |||||||||||||||||||||||
| Earnings before provision for income taxes | 138,318 | 249,739 | 388,057 | 134,250 | 211,437 | 345,687 | 193,016 | 186,675 | 725,378 | |||||||||||||||||||||||
| Provision for income taxes | 32,613 | 51,654 | 84,267 | 24,841 | 44,981 | 69,822 | 35,711 | 28,700 | 134,233 | |||||||||||||||||||||||
| Earnings from continuing operations | 105,705 | 198,085 | 303,790 | 109,409 | 166,456 | 275,865 | 157,305 | 157,975 | 591,145 | |||||||||||||||||||||||
| Earnings (loss) from discontinued operations, net | — | — | — | 22,025 | (26,497) | (4,472) | — | (16,406) | (20,878) | |||||||||||||||||||||||
| Net earnings | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 131,434 | $ | 139,959 | $ | 271,393 | $ | 157,305 | $ | 141,569 | $ | 570,267 | ||||||||||||||
| SEGMENT MARGIN | ||||||||||||||||||||||||||||||||
| Engineered Systems | 17.9 | % | 18.9 | % | 18.4 | % | 15.2 | % | 18.0 | % | 16.6 | % | 16.2 | % | 16.3 | % | 16.5 | % | ||||||||||||||
Fluids 1 | 7.4 | % | 17.7 | % | 12.6 | % | 10.7 | % | 13.4 | % | 12.1 | % | 14.7 | % | 16.3 | % | 13.9 | % | ||||||||||||||
| Refrigeration & Food Equipment | 7.4 | % | 11.5 | % | 9.6 | % | 8.6 | % | 12.8 | % | 10.9 | % | 11.0 | % | 4.0 | % | 9.4 | % | ||||||||||||||
| Total segment operating margin | 11.6 | % | 16.8 | % | 14.3 | % | 12.1 | % | 15.1 | % | 13.7 | % | 14.4 | % | 14.1 | % | 14.0 | % | ||||||||||||||
| DEPRECIATION AND AMORTIZATION EXPENSE | ||||||||||||||||||||||||||||||||
| Engineered Systems | $ | 17,795 | $ | 17,865 | $ | 35,660 | $ | 19,239 | $ | 19,203 | $ | 38,442 | $ | 18,204 | $ | 19,233 | $ | 75,879 | ||||||||||||||
| Fluids | 35,426 | 35,146 | 70,572 | 34,449 | 34,981 | 69,430 | 34,954 | 36,060 | 140,444 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 13,011 | 12,777 | 25,788 | 13,579 | 13,524 | 27,103 | 13,533 | 19,841 | 60,477 | |||||||||||||||||||||||
| Corporate | 1,506 | 1,981 | 3,487 | 1,358 | 1,595 | 2,953 | 1,399 | 1,428 | 5,780 | |||||||||||||||||||||||
| Total depreciation and amortization expense | $ | 67,738 | $ | 67,769 | $ | 135,507 | $ | 68,625 | $ | 69,303 | $ | 137,928 | $ | 68,090 | $ | 76,562 | $ | 282,580 | ||||||||||||||
1 Q1 and Q2 YTD 2019 includes a $46,946 loss on assets held for sale for Finder Pompe S.r.l. ("Finder"). Excluding this loss, Fluids segment earnings was $99,167 and $228,082, respectively, and segment margin was 14.1% and 15.9%, respectively. | ||||||||||||||||||||||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
| 2019 | 2018 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||
| BOOKINGS | ||||||||||||||||||||||||||||||||
| Engineered Systems | ||||||||||||||||||||||||||||||||
| Printing & Identification | $ | 280,658 | $ | 276,402 | $ | 557,060 | $ | 284,437 | $ | 306,770 | $ | 591,207 | $ | 271,367 | $ | 295,963 | $ | 1,158,537 | ||||||||||||||
| Industrials | 414,786 | 385,181 | 799,967 | 466,722 | 412,780 | 879,502 | 390,606 | 481,172 | 1,751,280 | |||||||||||||||||||||||
| 695,444 | 661,583 | 1,357,027 | 751,159 | 719,550 | 1,470,709 | 661,973 | 777,135 | 2,909,817 | ||||||||||||||||||||||||
| Fluids | 712,856 | 770,091 | 1,482,947 | 703,461 | 737,340 | 1,440,801 | 723,996 | 734,943 | 2,899,740 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 376,998 | 384,365 | 761,363 | 372,701 | 428,816 | 801,517 | 331,979 | 341,221 | 1,474,717 | |||||||||||||||||||||||
| Intra-segment eliminations | (682) | (408) | (1,090) | (624) | 33 | (591) | (549) | (584) | (1,724) | |||||||||||||||||||||||
| Total consolidated bookings | $ | 1,784,616 | $ | 1,815,631 | $ | 3,600,247 | $ | 1,826,697 | $ | 1,885,739 | $ | 3,712,436 | $ | 1,717,399 | $ | 1,852,715 | $ | 7,282,550 | ||||||||||||||
| BACKLOG | ||||||||||||||||||||||||||||||||
| Engineered Systems | ||||||||||||||||||||||||||||||||
| Printing & Identification | $ | 121,374 | $ | 119,967 | $ | 135,915 | $ | 137,019 | $ | 126,609 | $ | 122,028 | ||||||||||||||||||||
| Industrials | 448,137 | 414,996 | 376,474 | 372,525 | 367,963 | 438,546 | ||||||||||||||||||||||||||
| 569,511 | 534,963 | 512,389 | 509,544 | 494,572 | 560,574 | |||||||||||||||||||||||||||
| Fluids | 538,888 | 564,603 | 544,250 | 564,959 | 588,632 | 523,791 | ||||||||||||||||||||||||||
| Refrigeration & Food Equipment | 311,632 | 310,454 | 283,250 | 309,440 | 255,783 | 268,991 | ||||||||||||||||||||||||||
| Intra-segment eliminations | (377) | (114) | (389) | (134) | (58) | (185) | ||||||||||||||||||||||||||
| Total consolidated backlog | $ | 1,419,654 | $ | 1,409,906 | $ | 1,339,500 | $ | 1,383,809 | $ | 1,338,929 | $ | 1,353,171 | ||||||||||||||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
| Earnings Per Share | ||||||||||||||||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||
| Basic earnings (loss) per common share: | ||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.73 | $ | 1.36 | $ | 2.09 | $ | 0.71 | $ | 1.10 | $ | 1.80 | $ | 1.07 | $ | 1.08 | $ | 3.94 | ||||||||||||||
| Discontinued operations | — | — | — | 0.14 | (0.17) | (0.03) | — | (0.11) | (0.14) | |||||||||||||||||||||||
| Net earnings | $ | 0.73 | $ | 1.36 | 2.09 | $ | 0.85 | $ | 0.92 | $ | 1.77 | $ | 1.07 | $ | 0.97 | $ | 3.80 | |||||||||||||||
| Diluted earnings (loss) per common share: | ||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.72 | $ | 1.35 | $ | 2.07 | $ | 0.70 | $ | 1.08 | $ | 1.77 | $ | 1.05 | $ | 1.07 | $ | 3.89 | ||||||||||||||
| Discontinued operations | — | — | — | 0.14 | (0.17) | (0.03) | — | (0.11) | (0.14) | |||||||||||||||||||||||
| Net earnings | $ | 0.72 | $ | 1.35 | $ | 2.07 | $ | 0.84 | $ | 0.91 | $ | 1.74 | $ | 1.05 | $ | 0.96 | $ | 3.75 | ||||||||||||||
| Net earnings (loss) and weighted average shares used in calculated earnings per share amounts are as follows: | ||||||||||||||||||||||||||||||||
| Net earnings (loss): | ||||||||||||||||||||||||||||||||
| Continuing operations | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 109,409 | $ | 166,456 | $ | 275,865 | $ | 157,305 | $ | 157,975 | $ | 591,145 | ||||||||||||||
| Discontinued operations | — | — | — | 22,025 | (26,497) | (4,472) | — | (16,406) | (20,878) | |||||||||||||||||||||||
| Net earnings | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 131,434 | $ | 139,959 | $ | 271,393 | $ | 157,305 | $ | 141,569 | $ | 570,267 | ||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||
| Basic | 145,087 | 145,366 | 145,227 | 154,520 | 151,744 | 153,124 | 147,344 | 146,007 | 149,874 | |||||||||||||||||||||||
| Diluted | 146,911 | 147,179 | 147,041 | 157,090 | 153,938 | 155,573 | 149,457 | 147,940 | 152,133 | |||||||||||||||||||||||
| * Per share data may be impacted by rounding. | ||||||||||||||||||||||||||||||||
Non-GAAP Reconciliations
| Adjusted Earnings Per Share (Non-GAAP) | ||||||||||||||||||||||||||||||||
| Earnings from continuing operations are adjusted by the effect of acquisition-related amortization, rightsizing and other costs, loss on assets held for sale, and the Tax Cuts and Jobs Act to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows: | ||||||||||||||||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||
| Adjusted earnings: | ||||||||||||||||||||||||||||||||
| Earnings from continuing operations | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 109,409 | $ | 166,456 | $ | 275,865 | $ | 157,305 | $ | 157,975 | $ | 591,145 | ||||||||||||||
Acquisition-related amortization, pre-tax 1 | 35,635 | 34,997 | 70,632 | 38,150 | 38,072 | 76,222 | 34,997 | 35,078 | 146,297 | |||||||||||||||||||||||
Acquisition-related amortization, tax impact 2 | (8,964) | (8,777) | (17,741) | (9,716) | (9,683) | (19,399) | (8,785) | (8,817) | (37,001) | |||||||||||||||||||||||
Rightsizing and other costs, pre-tax 3 | 3,963 | 6,457 | 10,420 | 4,371 | 6,808 | 11,179 | 24,201 | 37,448 | 72,828 | |||||||||||||||||||||||
Rightsizing and other costs, tax impact 2 | (861) | (1,377) | (2,238) | (797) | (1,448) | (2,245) | (4,477) | (7,809) | (14,531) | |||||||||||||||||||||||
Loss on assets held for sale 4 | 46,946 | — | 46,946 | — | — | — | — | — | — | |||||||||||||||||||||||
Tax Cuts and Jobs Act 5 | — | — | — | — | — | — | — | (2,832) | (2,832) | |||||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 182,424 | $ | 229,385 | $ | 411,809 | $ | 141,417 | $ | 200,205 | $ | 341,622 | $ | 203,241 | $ | 211,043 | $ | 755,906 | ||||||||||||||
| Adjusted diluted earnings per common share*: | ||||||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.72 | $ | 1.35 | $ | 2.07 | $ | 0.70 | $ | 1.08 | $ | 1.77 | $ | 1.05 | $ | 1.07 | $ | 3.89 | ||||||||||||||
Acquisition-related amortization, pre-tax 1 | 0.24 | 0.24 | 0.48 | 0.24 | 0.25 | 0.49 | 0.23 | 0.24 | 0.96 | |||||||||||||||||||||||
Acquisition-related amortization, tax impact 2 | (0.06) | (0.06) | (0.12) | (0.06) | (0.06) | (0.12) | (0.06) | (0.06) | (0.24) | |||||||||||||||||||||||
Rightsizing and other costs, pre-tax 3 | 0.03 | 0.04 | 0.07 | 0.03 | 0.04 | 0.07 | 0.16 | 0.25 | 0.48 | |||||||||||||||||||||||
Rightsizing and other costs, tax impact 2 | (0.01) | (0.01) | (0.02) | (0.01) | (0.01) | (0.01) | (0.03) | (0.05) | (0.10) | |||||||||||||||||||||||
Loss on assets held for sale 4 | 0.32 | — | 0.32 | — | — | — | — | — | — | |||||||||||||||||||||||
Tax Cuts and Jobs Act 5 | — | — | — | — | — | — | — | (0.02) | (0.02) | |||||||||||||||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 1.24 | $ | 1.56 | $ | 2.80 | $ | 0.90 | $ | 1.30 | $ | 2.20 | $ | 1.36 | $ | 1.43 | $ | 4.97 | ||||||||||||||
1 Includes amortization on acquisition-related intangible assets and inventory step-up. | ||||||||||||||||||||||||||||||||
2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period. | ||||||||||||||||||||||||||||||||
3 Rightsizing and other costs include actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges. | ||||||||||||||||||||||||||||||||
4 Represents a loss on assets held for sale of Finder. Under local law, no tax benefit is realized from the loss on the sale of a wholly-owned business. | ||||||||||||||||||||||||||||||||
5 2018 tax benefits related to additional Tax Cuts and Jobs Act regulatory guidance covered by SAB 118. | ||||||||||||||||||||||||||||||||
| * Per share data and totals may be impacted by rounding. | ||||||||||||||||||||||||||||||||
| Adjusted EPS from Continuing Operations Guidance Reconciliation | |||||||||||
| Range | |||||||||||
| 2019 Guidance for Earnings per Share from Continuing Operations (GAAP) | $ | 4.63 | $ | 4.73 | |||||||
| Acquisition-related amortization, net | 0.71 | ||||||||||
| Rightsizing and other costs, net | 0.09 | ||||||||||
| Loss on assets held for sale | 0.32 | ||||||||||
| 2019 Guidance for Adjusted Earnings per Share from Continuing Operations (Non-GAAP) | $ | 5.75 | $ | 5.85 | |||||||
DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)
Quarterly Cash Flow
| 2019 | 2018 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||
| Net Cash Flows Provided By (Used In): | ||||||||||||||||||||||||||||||||
| Operating activities | $ | 24,524 | $ | 208,709 | $ | 233,233 | $ | 15,535 | $ | 159,205 | $ | 174,740 | $ | 243,944 | $ | 370,509 | $ | 789,193 | ||||||||||||||
| Investing activities | (217,690) | (69,755) | (287,445) | (122,597) | (51,606) | (174,203) | (35,922) | (35,355) | (245,480) | |||||||||||||||||||||||
| Financing activities | 36,067 | (60,596) | (24,529) | (289,103) | (227,734) | (516,837) | (232,476) | (148,525) | (897,838) | |||||||||||||||||||||||
Quarterly Free Cash Flow (Non-GAAP)
| 2019 | 2018 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||
| Cash flow from operating activities | $ | 24,524 | $ | 208,709 | $ | 233,233 | $ | 15,535 | $ | 159,205 | $ | 174,740 | $ | 243,944 | $ | 370,509 | $ | 789,193 | ||||||||||||||
| Less: Capital expenditures | (37,122) | (53,970) | (91,092) | (44,678) | (51,686) | (96,364) | (38,192) | (36,438) | (170,994) | |||||||||||||||||||||||
| Free cash flow | $ | (12,598) | $ | 154,739 | $ | 142,141 | $ | (29,143) | $ | 107,519 | $ | 78,376 | $ | 205,752 | $ | 334,071 | $ | 618,199 | ||||||||||||||
| Free cash flow as a percentage of revenue | (0.7) | % | 8.5 | % | 4.0 | % | (1.8) | % | 6.0 | % | 2.3 | % | 11.8 | % | 18.5 | % | 8.8 | % | ||||||||||||||
Revenue Growth Factors
| Three Months Ended June 30, 2019 | |||||||||||||||||||||||
| Engineered Systems | Fluids | Refrigeration & Food Equipment | Total | ||||||||||||||||||||
| Organic | 1.7 | % | 7.5 | % | (2.8) | % | 2.9 | % | |||||||||||||||
| Acquisitions | — | % | 2.1 | % | — | % | 0.8 | % | |||||||||||||||
| Dispositions | — | % | (1.4) | % | — | % | (0.5) | % | |||||||||||||||
| Currency translation | (2.6) | % | (3.0) | % | (1.3) | % | (2.5) | % | |||||||||||||||
| Total * | (0.9) | % | 5.2 | % | (4.1) | % | 0.7 | % | |||||||||||||||
| Six Months Ended June 30, 2019 | |||||||||||||||||||||||
| Engineered Systems | Fluids | Refrigeration & Food Equipment | Total | ||||||||||||||||||||
| Organic | 3.7 | % | 11.1 | % | (1.2) | % | 5.5 | % | |||||||||||||||
| Acquisitions | — | % | 1.7 | % | — | % | 0.7 | % | |||||||||||||||
| Dispositions | — | % | (0.8) | % | — | % | (0.3) | % | |||||||||||||||
| Currency translation | (3.0) | % | (3.6) | % | (1.5) | % | (3.0) | % | |||||||||||||||
| Total * | 0.7 | % | 8.4 | % | (2.7) | % | 2.9 | % | |||||||||||||||
| * Totals may be impacted by rounding. | |||||||||||||||||||||||
Non-GAAP Disclosures
In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted earnings from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for earnings from continuing operations, diluted earnings per share from continuing operations, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.
Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for the effect of acquisition-related amortization, rightsizing and other costs, loss on assets held for sale, and the Tax Cuts and Jobs Act. We exclude after-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. We exclude the other items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or Management believes they are not indicative of the Company's ongoing operating costs or gains in a given period. Management believes this information is useful to investors to better understand the Company’s ongoing profitability as it will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers. Adjusted diluted earnings per share from continuing operations represents adjusted earnings from continuing operations divided by average diluted shares.
Free cash flow represents net cash provided by operating activities minus capital expenditures. Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.
Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue performance and trends between periods.
Exhibit 99.2 July 18, 2019 – 9:00am CT Earnings Conference Call Second Quarter 2019
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 2018, 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, dovercorporation.com, where considerably more information can be found. In addition to financial measures based on U.S. GAAP, Dover provides supplemental non-GAAP financial information. Management uses non-GAAP measures in addition to GAAP measures to understand and compare operating results across periods, make resource allocation decisions, and for forecasting and other purposes. Management believes these non-GAAP measures reflect results in a manner that enables, in many instances, more meaningful analysis of trends and facilitates comparison of results across periods and to those of peer companies. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP and may not be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. The use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP. Reconciliations and definitions are included either in this presentation or in Dover’s earnings release and investor supplement for the second quarter, which are available on Dover’s website. 2
Q2 2019 - Highlights Organic revenue growth of 3% Organic bookings decline 2% 3% unfavorable FX impact 2% unfavorable FX impact Solid growth in DF and DES Industrial DES bookings lower as expected Wins in DRFE support growth outlook for the year Adjusted earnings from continuing Adjusted diluted EPS from continuing operations(1) increase 15% to $229M operations(2) at $1.56, up 20% Earnings from continuing operations on a GAAP $0.02 benefit related to discrete tax items(3) basis up 19% to $198M Diluted EPS from continuing operations on a GAAP basis at $1.35, up 25% Segment performance Guidance & Other Activities Adjusted EBIT(1) increases 13% to $311M, with 2019 Adj. EPS(2) guidance narrowed to $5.75 to $5.85 margin at 17.2% Acquisition of All-Flo Pump Co. closed on May 7 Adjusted EBIT margin(1) up 190 bps year over year (1) Non-GAAP measures (definitions and reconciliations in appendix) 3 (2) Adjusted diluted EPS excludes acquisition-related amortization, rightsizing and other costs (reconciliation in appendix) (3) Includes $3.6M of discrete tax benefits in the quarter
Q2 2019 – Financial Summary US GAAP from continuing operations Q2 2019 Q2 2018 ∆ Revenue ($M) 1,811 1,798 1% Earnings ($M) 198 166 19% Diluted EPS ($) 1.35 1.08 25% Non-GAAP(1) from continuing operations Adjusted EBIT – Segment ($M) 311 276 13% margin percent 17.2% 15.3% 190 bps Adjusted EBITDA – Segment ($M) 376 343 10% margin percent 20.8% 19.1% 170 bps Adjusted Earnings ($M) 229 200 15% Adjusted diluted EPS(2) ($) 1.56 1.30 20% Note: Numbers may not add due to rounding (1) Non-GAAP measures (definition and reconciliation in appendix) 4 (2) Adjusted diluted EPS excludes acquisition-related amortization, rightsizing and other costs (reconciliation in appendix)
Q2 2019 - Revenue & Bookings Revenue Split Revenue Change in Organic Revenue: +$52M, or 2.9% 4% 11% By 22% Region 53% 10% ($M) US 1,798 12 52 -11 -45 5 1,811 OTHER AMER. Q2 2018 DES DF DRFE FX ACQ./ Q2 2019 ORG. ORG. ORG. DISP. (1) EUROPE ASIA OTHER Bookings Change in Organic Bookings: -$31M, or -1.7% 21% -3% By 39% Segment DES 40% DF 1,886 -39 52 -43 -42 3 1,816 ($M) DRFE Q2 2018 DES DF DRFE FX ACQ./ Q2 2019 ORG. ORG. ORG. DISP. (2) Note: Numbers may not add due to rounding (1) Acquisitions: $15M, dispositions: $10M 5 (2) Acquisitions: $12M, dispositions: $10M
Q2 2019 – Adj. Segment EBIT & EBITDA Walk, and Earnings & Adj. Earnings Walk – (Continuing Operations basis) Change in Adjusted Segment EBIT (3) +$35M +13% 20.8% 19.1% 17.2% 15.3% 276 68 343 5 35 -7 376 -65 311 ($M) ADJ. EBIT D&A (1) ADJ. EBITDA DES DF DRFE ADJ. EBITDA D&A (2) ADJ. EBIT Q2 2018 Q2 2019 Change in Adjusted Earnings from Continuing Operations (3) +$29M +15% 166 5 28 200 35 4 -10 229 -26 -5 198 ($M) GAAP RIGHTSIZING ACQ. ADJ. SEGMENT CORP. INT./TAX ADJ. ACQ. RIGHTSIZING GAAP EARNINGS AMORT. EARNINGS EBIT EXPENSE EXPENSE EARNINGS AMORT. EARNINGS Q2 2018 Q2 2019 (1) Depreciation: $31M, Amortization: $36M Note: Numbers may not add due to rounding (2) Depreciation: $30M, Amortization: $35M 6 (3) Non-GAAP measures (definition and reconciliation in appendix)
H1 2019 – Free Cash Flow $M H1 2019 H1 2018 ∆ Net earnings $304 $271 $33 Loss from disc. ops. 0 4 (4) Loss on assets held for sale 47 0 47 D&A 136 138 (2) Chg. in working capital (164) (129) (35) Chg. in other(1) (90) (109) 19 Cash flow from operations $233 $175 $58 Capex (91) (96) 5 Free cash flow $142 $7912.3% $63 FCF as a % of revenue 4.0% 2.3% • Q2 2019 FCF 8.5% of revenue (compared to 6.0% in Q2 2018) Note: Numbers may not add due to rounding (1) Includes stock-based compensation and changes in other current and non-current assets and liabilities 7
Segment Information 8
Engineered Systems – Financial Results Revenue Bookings Printing & Identification ($M) . Organic growth: 1.7% . Organic change: -5.5% . Strength in ESG and expected . Driven by DDP and ESG slower quarter in DDP . Pipeline for solid Q3 703 12 -18 0 697 720 -39 -19 0 662 ($M) Q2 2018 ORG. FX ACQ./ Q2 2019 Q2 2018 ORG. FX ACQ./ Q2 2019 DISP. DISP. (1) Adjusted EBIT, EBITDA & Margin Industrial 21.7% 20.9% 19.3% . Volume leverage in Industrial and productivity 18.1% gains across portfolio . >100% organic conversion . Adjusted EBIT up 5% (+120 bps) 127 19 147 13 0 0 -5 -3 151 -17 134 ($M) ADJ. EBIT D&A (2) ADJ. ORGANIC ACQ./ R&D & FX OTHER ADJ. D&A (3) ADJ. EBIT EBITDA VOLUME DISP. INVEST. EBITDA Q2 2018 Q2 2019 Note: Numbers may not add due to rounding (1) Non-GAAP measures (definition and reconciliation in appendix) 9 (2) Depreciation: $9M, Amortization: $10M (3) Depreciation: $9M, Amortization: $8M
Fluids – Financial Results Revenue Bookings Fueling & Transport ($M) . Organic growth: 7.5% . Continued strength across . Organic growth: 7.0% portfolio 694 52 -22 5 729 737 52 -22 3 770 ($M) Q2 2018 ORG. FX ACQ./ Q2 2019 Q2 2018 ORG. FX ACQ./ Q2 2019 Pumps DISP. (2) DISP. (3) Adjusted EBIT, EBITDA & Margin (1) 19.0% 22.9% . Strong growth and conversion, esp. in Fueling 18.0% 13.9% . 50% organic conversion Process Solutions . Adjusted EBIT up 36% (+410 bps) 97 35 132 29 4 -3 -2 7 167 -35 132 ($M) ADJ. EBIT D&A (4) ADJ. ORGANIC ACQ./ R&D & FX OTHER ADJ. D&A (6) ADJ. EBIT EBITDA VOLUME DISP. (5) INVEST. EBITDA Q2 2018 Q2 2019 Note: Numbers may not add due to rounding (1) Non-GAAP measures (definition and reconciliation in appendix) (4) Depreciation: $16M, Amortization: $19M (2) Acquisitions: $15M, Dispositions: $10M (5) Acquisitions: $4M, Dispositions: $0M 10 (3) Acquisitions: $12M, Dispositions: $10M (6) Depreciation: $16M, Amortization: $19M
Refrigeration & Food Equipment – Financial Results Revenue Bookings Refrigeration ($M) . Organic change: -2.8% . Organic change: -10.1% . Weak heat exchanger, esp. in Asia . Recent customer wins support growth outlook for 2H 402 -11 -5 0 385 429 -43 -1 0 384 ($M) Q2 2018 ORG. FX ACQ./ Q2 2019 Q2 2018 ORG. FX ACQ./ Q2 2019 Food Equipment DISP. DISP. Adjusted EBIT, EBITDA & Margin (1) 16.2% . Materials inflation and lower volumes 15.0% 12.8% . Negative conversion as a result of SWEP mix and costs in DFR 11.7% . Adjusted EBIT down 12% (-110 bps) 51 14 65 -6 0 0 -1 0 58 -13 45 ($M) ADJ. EBIT D&A (2) ADJ. ORGANIC ACQ./ R&D & FX OTHER ADJ. D&A (3) ADJ. EBIT EBITDA VOLUME DISP. INVEST. EBITDA Q2 2018 Q2 2019 Note: Numbers may not add due to rounding (1) Non-GAAP measures (definition and reconciliation in appendix) (2) Depreciation: $6M, Amortization: $7M 11 (3) Depreciation: $6M, Amortization: $7M
Q2 Adjusted EPS grew by 20% Adjusted EPS(1) ($/share) $1.56 Q2 ’19 impact $0.03 $0.02 from discrete $0.06 tax items $0.02 21% EBIT conversion $0.15 Q2 ‘18 $1.30 impact from $0.02 discrete tax items Q2 ’18 SG&A Rightsizing Acquisitions / Revenue Growth Shares, ’Q2 19 Adj. EPS Benefit Dispositions / Conversion ETR, and FX Adj. EPS 73% organic margin conversion including SG&A rightsizing benefit Note: Numbers may not add due to rounding 12 (1) Adjusted diluted EPS excludes acquisition-related amortization, rightsizing and other costs (reconciliation in appendix)
2019 FY Guidance 13
Updated FY 2019F Guidance Engineered Refrigeration 2019 Systems Fluids & Food Equip Total Organic revenue 4% - 5% 4% - 5% 1% - 2% 3% - 5% Acquisitions - 2% - 1% Dispositions - (1%) - (0%) Currency (1%) - (2%) (1%) - (2%) (1%) (1%) - (2%) Total revenue 3% - 4% 4% - 5% 0% - 1% 3% - 4% Adjusted EPS: $5.75 - $5.85(1) Dollar/Euro assumption: 1.13 (1) Adjusted EPS excludes acquisition-related amortization costs, rightsizing and other costs, and a 2019 loss on assets held for sale; assumes 147.2 million weighted average shares 14 Note: Numbers may not add due torounding
Appendix 15
Reconciliation of Q2 2019 Earnings from Continuing Operations to Adj. EBIT and Adj. EBITDA and calculation of Adj. EBIT margin and Adj. EBITDA margin by Segment (U.S. GAAP) Q2 2019 ($ in millions) DES DF DRFE Total Revenue 697 729 385 1,811 Earnings from continuing operations - - - 198 Add back: Corporate expense - - - 25 Interest expense, net - - - 31 Income tax expense - - - 52 EBIT 132 129 44 305 EBIT % 18.9% 17.7% 11.5% 16.8% Adjustments: Rightsizing and other costs 2 3 1 6 Adjusted EBIT - Segment 134 132 45 311 Adjusted EBIT % 19.3% 18.0% 11.7% 17.2% Adjusted depreciation and amortization expense(1) 17 35 13 65 Adjusted EBITDA - Segment 151 167 58 376 Adjusted EBITDA % 21.7% 22.9% 15.0% 20.8% Note: Numbers may not add due to rounding (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs 16
Reconciliation of Q2 2018 Earnings from Continuing Operations to Adj. EBIT and Adj. EBITDA and calculation of Adj. EBIT margin and Adj. EBITDA margin by Segment (U.S. GAAP) Q2 2018 ($ in millions) DES DF DRFE Total Revenue 703 694 402 1,798 Earnings from continuing operations - - - 166 Add back: Corporate expense - - - 30 Interest expense, net - - - 30 Income tax expense - - - 45 EBIT 127 93 51 271 EBIT % 18.0% 13.4% 12.8% 15.1% Adjustments: Rightsizing and other costs 1 4 - 4 Adjusted EBIT - Segment 127 97 51 276 Adjusted EBIT % 18.1% 13.9% 12.8% 15.3% Depreciation and amortization expense 19 35 14 68 Adjusted EBITDA - Segment 147 132 65 343 Adjusted EBITDA % 20.9% 19.0% 16.2% 19.1% Note: Numbers may not add due to rounding 17
Reconciliation of Adjusted Earnings from Continuing Operations to Earnings from Continuing Operations and calculation of Adjusted diluted EPS under U.S. GAAP ($ in millions, except per share data) Q2 2019 Q2 2018 Earnings from continuing operations ($) 198 166 Acquisition-related amortization, pre tax 35 38 Acquisition-related amortization, tax impact (9) (10) Rightsizing and other costs, pre tax 6 7 Rightsizing and other costs, tax impact (1) (1) Adjusted earnings from continuing operations ($) 229 200 Weighted average shares outstanding – diluted (thousand) 147 154 Diluted EPS ($) 1.35 1.08 Acquisition-related amortization, pre tax 0.24 0.25 Acquisition-related amortization, tax impact (0.06) (0.06) Rightsizing and other costs, pre tax 0.04 0.04 Rightsizing and other costs, tax impact (0.01) (0.01) Adjusted diluted EPS ($) 1.56 1.30 Note: Numbers may not add due to rounding 18
Reconciliation of Free Cash Flow; and EPS from Continuing Operations to Adjusted EPS from Continuing Operations Reconciliation Free Cash Flow Reconciliation Jun 30, Jun 30, ($ millions) 2019 2018 Net Cash Provided by Operating Activities 233 175 Capital Expenditures (91) (96) Free Cash Flow 142 79 Adjusted EPS from Continuing Operations Reconciliation Range 2019 Guidance for Earnings per Share from Continuing Operations (GAAP) $4.63 $4.73 Acquisition-related amortization, net 0.71 Rightsizing and other costs, net 0.09 Loss on assets held for sale 0.32 2019 Guidance for Adjusted Earnings per Share from Continuing Operations $5.75 $5.85 Note: Numbers may not add due to rounding 19
Non-GAAP Definitions Definitions of Non-GAAP Measures: Adjusted Earnings from Continuing Operations: is defined as earnings from continuing operations adjusted for the effect of acquisition-related amortization, rightsizing and other costs and a 2019 loss on assets held for sale. Adjusted Diluted Earnings Per Share from Continuing Operations: is defined as adjusted earnings from continuing operations divided by average diluted shares. Adjusted EBIT by Segment: is defined as earnings from continuing operations before income taxes, net interest expense, corporate expenses, rightsizing and other costs and a 2019 loss on assets held for sale. Adjusted EBIT Margin by Segment: is defined as adjusted EBIT by segment divided by segment revenue. Adjusted EBITDA by Segment: is defined as adjusted EBIT by segment plus depreciation and amortization, excluding depreciation and amortization included within rightsizing and other costs. Adjusted EBITDA Margin by Segment: is defined as adjusted EBITDA by segment divided by segment revenue. Free Cash Flow: is defined as net cash provided by operating activities minus capital expenditures. Organic Revenue Growth: is defined as revenue growth excluding the impact of foreign currency exchange rates and the impact of acquisition and dispositions. The tables included in this presentation provide reconciliations of the non-GAAP measures used in this presentation to the most directly comparable U.S. GAAP measures. Further information regarding management’s use of these non-GAAP measures is included in Dover’s earnings release and investor supplement for the second quarter. 20
