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 22, 2020
_______________________________
(Exact name of registrant as specified in its charter)
______________________________________________
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(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 | ||||||
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 22, 2020, Dover Corporation ("Dover") issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended June 30, 2020.
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, 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 7.01 Regulation FD Disclosure.
As previously announced, on July 22, 2020, Dover will hold an investor conference call and webcast at 8:00 a.m. Central time (9:00 a.m. Eastern time) to discuss its results of operations for the quarter ended June 30, 2020. A copy of the supplemental presentation materials that will be used during the conference call is furnished as Exhibit 99.2 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this report:
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).
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 22, 2020 | 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 2020 RESULTS; RE-INITIATES FULL YEAR GUIDANCE
DOWNERS GROVE, Ill., July 22, 2020 — Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the second quarter ended June 30, 2020.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| ($ in millions, except per share data) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||||||||||||||||||
| U.S. GAAP | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,499 | $ | 1,811 | (17) | % | $ | 3,155 | $ | 3,535 | (11) | % | ||||||||||||||||||||||||||
Net earnings 1 | 125 | 198 | (37) | % | 301 | 304 | (1) | % | ||||||||||||||||||||||||||||||
Diluted EPS | 0.86 | 1.35 | (36) | % | 2.07 | 2.07 | — | % | ||||||||||||||||||||||||||||||
| Non-GAAP | ||||||||||||||||||||||||||||||||||||||
| Organic revenue change | (16) | % | (10) | % | ||||||||||||||||||||||||||||||||||
Adjusted net earnings 2 | 164 | 229 | (28) | % | 368 | 412 | (11) | % | ||||||||||||||||||||||||||||||
| Adjusted diluted EPS | 1.13 | 1.56 | (28) | % | 2.53 | 2.80 | (10) | % | ||||||||||||||||||||||||||||||
1 Q2 2020 and 2019 net earnings include rightsizing and other costs of $13.4 million and $5.1 million, respectively. Q2 2020 also includes a $0.6 million expense related to the sale of AMS Chino. Q2 year-to-date 2020 and 2019 net earnings include rightsizing and other costs of $19.6 million and $8.2 million, respectively. Q2 year-to-date 2020 also includes a $4.4 million non-cash gain on the sale of AMS Chino, and year-to-date 2019 includes a $46.9 million non-cash loss on assets held for sale related to Finder.
2 Q2 2020 and 2019 adjusted net earnings exclude after tax acquisition-related amortization costs of $25.7 million and $26.2 million, respectively, and rightsizing and other costs of $13.4 million and $5.1 million, respectively. Q2 2020 also excludes a $0.6 million expense related to the sale of AMS Chino. Q2 year-to-date 2020 and 2019 adjusted net earnings exclude acquisition-related amortization costs of $51.3 million and $52.9 million, respectively, and rightsizing and other costs of $19.6 million and $8.2 million, respectively. Q2 year-to-date 2020 also excludes a $4.4 million non-cash gain on the sale of AMS Chino, and year-to-date 2019 excludes a $46.9 million non-cash loss on assets held for sale related to Finder.
For the quarter ended June 30, 2020, Dover generated revenue of $1.5 billion, a decline of 17% (-16% organic) compared to the second quarter of the prior year. GAAP net earnings of $125 million decreased 37%, and GAAP diluted EPS of $0.86 was down 36%. On an adjusted basis, net earnings of $164 million declined 28%, and adjusted diluted EPS of $1.13 was down 28% versus the comparable quarter of the prior year.
For the six months ended June 30, 2020, Dover generated revenue of $3.2 billion, a decline of 11% (-10% organic) compared to the first six months of the prior year. GAAP net earnings of $301 million decreased 1%, and GAAP diluted EPS of $2.07 was flat year-over-year. On an adjusted basis, net earnings of $368 million declined 11%, and adjusted diluted EPS of $2.53 was down 10% versus the comparable quarter of the prior year.
A full reconciliation between GAAP and adjusted measures and definitions of non-GAAP and other performance measures are included as an exhibit herein.
MANAGEMENT COMMENTARY:
Dover’s President and Chief Executive Officer, Richard J. Tobin, said, “We are proud of our work and results in the second quarter. Economic uncertainty and operational disruption caused by the COVID-19 pandemic slowed activity across many markets and made the operating environment undeniably challenging. Our businesses have navigated the quarter well, as we focused on what was and remains within our control: diligently managing our costs and cash flow, providing a safe working environment for our associates and supporting our customers with the critical products they needed to keep their essential operations running.
“As we expected, activity declined across a majority of the markets we serve, albeit the impact varied widely across our diverse portfolio with many businesses proving their profitability and cash flow resilience in challenging conditions. Demand conditions in
textile printing, foodservice, below-ground fueling, food retail and automotive aftermarket were particularly challenged, partially offset by relative resilience in biopharma, aerospace & defense, heat exchangers and marking & coding. We remain positioned well for the second half with a higher backlog compared to this time last year, driven by our longer cycle businesses and sequential intra-quarter improvement in many shorter cycle businesses.
“Global lockdowns, travel restrictions, proactive production curtailments and reduced volumes created a challenging operating environment in the second quarter, but our cost controls and continued execution of our multi-year productivity program resulted in a satisfactory decremental margin performance, positioning us well to reach or exceed our annual conversion margin target.
“Looking forward, the demand outlook for the remainder of the year remains uncertain, with activity across most markets improving but not back to business-as-usual. As a result of our improved demand visibility into the third quarter, and our solid margin performance year-to-date, we are making the decision to reinstate our annual guidance, though with a wider range than usual for the mid-year reflecting the fluidity of market conditions. We retain additional flexibility to adjust our cost base if macroeconomic conditions in the second half of the year necessitate a response.”
FULL YEAR 2020 GUIDANCE REINSTATED:
In 2020, Dover expects to generate GAAP EPS in the range of $4.16 to $4.41 ($5.00 to $5.25 on an adjusted basis). A full reconciliation between forecasted GAAP and forecasted adjusted EPS is included as an exhibit herein.
CONFERENCE CALL INFORMATION:
Dover will host a webcast and conference call to discuss its second quarter and year-to-date 2020 results as well as updated 2020 guidance at 9:00 A.M. Eastern Time (8:00 A.M. Central Time) on Wednesday, July 22, 2020. 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 results and its operating segments can be found on the Company’s website.
ABOUT DOVER:
Dover is a diversified global manufacturer and solutions provider with annual revenue of approximately $7 billion. We deliver innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions 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 over 23,000 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, the impacts of COVID-19, or other future pandemics, on the global economy and on our customers, suppliers, employees, business and cash flows, other 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, 2019, 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 2020
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Revenue | $ | 1,499,175 | $ | 1,810,706 | $ | 3,155,114 | $ | 3,535,463 | |||||||||||||||
| Cost of goods and services | 947,577 | 1,138,113 | 1,991,273 | 2,239,328 | |||||||||||||||||||
| Gross profit | 551,598 | 672,593 | 1,163,841 | 1,296,135 | |||||||||||||||||||
| Selling, general, and administrative expenses | 366,740 | 396,634 | 753,681 | 805,100 | |||||||||||||||||||
| Loss on assets held for sale | — | — | — | 46,946 | |||||||||||||||||||
| Operating earnings | 184,858 | 275,959 | 410,160 | 444,089 | |||||||||||||||||||
| Interest expense | 28,711 | 31,754 | 55,979 | 63,562 | |||||||||||||||||||
| Interest income | (728) | (945) | (1,911) | (1,835) | |||||||||||||||||||
| Loss (gain) on sale of a business | 781 | — | (5,770) | — | |||||||||||||||||||
| Other income, net | (735) | (4,589) | (8,467) | (5,695) | |||||||||||||||||||
| Earnings before provision for income taxes | 156,829 | 249,739 | 370,329 | 388,057 | |||||||||||||||||||
| Provision for income taxes | 32,063 | 51,654 | 69,284 | 84,267 | |||||||||||||||||||
| Net earnings | $ | 124,766 | $ | 198,085 | $ | 301,045 | $ | 303,790 | |||||||||||||||
| Net earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.87 | $ | 1.36 | $ | 2.09 | $ | 2.09 | |||||||||||||||
| Diluted | $ | 0.86 | $ | 1.35 | $ | 2.07 | $ | 2.07 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 143,955 | 145,366 | 144,107 | 145,227 | |||||||||||||||||||
| Diluted | 144,995 | 147,179 | 145,359 | 147,041 | |||||||||||||||||||
| Dividends paid per common share | $ | 0.49 | $ | 0.48 | $ | 0.98 | $ | 0.96 | |||||||||||||||
| * Per share data may be impacted by rounding. | |||||||||||||||||||||||
IS - 1
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| REVENUE | ||||||||||||||||||||||||||||||||
| Engineered Products | $ | 408,160 | $ | 342,380 | $ | 750,540 | $ | 418,851 | $ | 429,928 | $ | 848,779 | $ | 426,689 | $ | 422,089 | $ | 1,697,557 | ||||||||||||||
| Fueling Solutions | 359,982 | 326,495 | 686,477 | 373,050 | 390,586 | 763,636 | 411,769 | 444,772 | 1,620,177 | |||||||||||||||||||||||
| Imaging & Identification | 256,765 | 227,977 | 484,742 | 268,354 | 266,588 | 534,942 | 275,109 | 274,420 | 1,084,471 | |||||||||||||||||||||||
| Pumps & Process Solutions | 319,536 | 309,095 | 628,631 | 330,219 | 338,924 | 669,143 | 341,337 | 328,048 | 1,338,528 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 311,913 | 293,527 | 605,440 | 334,643 | 385,474 | 720,117 | 370,335 | 306,165 | 1,396,617 | |||||||||||||||||||||||
| Intra-segment eliminations | (417) | (299) | (716) | (360) | (794) | (1,154) | 106 | 95 | (953) | |||||||||||||||||||||||
| Total consolidated revenue | $ | 1,655,939 | $ | 1,499,175 | $ | 3,155,114 | $ | 1,724,757 | $ | 1,810,706 | $ | 3,535,463 | $ | 1,825,345 | $ | 1,775,589 | $ | 7,136,397 | ||||||||||||||
| NET EARNINGS | ||||||||||||||||||||||||||||||||
| Segment Earnings: | ||||||||||||||||||||||||||||||||
| Engineered Products | $ | 69,094 | $ | 47,702 | $ | 116,796 | $ | 67,119 | $ | 77,129 | $ | 144,248 | $ | 74,367 | $ | 73,233 | $ | 291,848 | ||||||||||||||
| Fueling Solutions | 53,498 | 47,214 | 100,712 | 37,230 | 52,637 | 89,867 | 68,069 | 73,937 | 231,873 | |||||||||||||||||||||||
| Imaging & Identification | 51,482 | 38,046 | 89,528 | 55,955 | 54,641 | 110,596 | 61,655 | 57,233 | 229,484 | |||||||||||||||||||||||
Pumps & Process Solutions 1 | 66,079 | 67,702 | 133,781 | 14,991 | 76,278 | 91,269 | 77,433 | 71,379 | 240,081 | |||||||||||||||||||||||
Refrigeration & Food Equipment 2 | 23,529 | 11,459 | 34,988 | 24,807 | 44,375 | 69,182 | 35,211 | 14,439 | 118,832 | |||||||||||||||||||||||
| Total segment earnings (EBIT) | 263,682 | 212,123 | 475,805 | 200,102 | 305,060 | 505,162 | 316,735 | 290,221 | 1,112,118 | |||||||||||||||||||||||
Corporate expense / other 3 | 24,097 | 27,311 | 51,408 | 30,866 | 24,512 | 55,378 | 28,658 | 63,781 | 147,817 | |||||||||||||||||||||||
| Interest expense | 27,268 | 28,711 | 55,979 | 31,808 | 31,754 | 63,562 | 31,410 | 30,846 | 125,818 | |||||||||||||||||||||||
| Interest income | (1,183) | (728) | (1,911) | (890) | (945) | (1,835) | (1,263) | (1,428) | (4,526) | |||||||||||||||||||||||
| Earnings before provision for income taxes | 213,500 | 156,829 | 370,329 | 138,318 | 249,739 | 388,057 | 257,930 | 197,022 | 843,009 | |||||||||||||||||||||||
| Provision for income taxes | 37,221 | 32,063 | 69,284 | 32,613 | 51,654 | 84,267 | 51,924 | 28,900 | 165,091 | |||||||||||||||||||||||
| Net earnings | $ | 176,279 | $ | 124,766 | $ | 301,045 | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 206,006 | $ | 168,122 | $ | 677,918 | ||||||||||||||
| SEGMENT MARGIN | ||||||||||||||||||||||||||||||||
| Engineered Products | 16.9 % | 13.9 | % | 15.6 | % | 16.0 % | 17.9 % | 17.0 % | 17.4 % | 17.4 % | 17.2 % | |||||||||||||||||||||
| Fueling Solutions | 14.9 % | 14.5 | % | 14.7 | % | 10.0 % | 13.5 % | 11.8 % | 16.5 % | 16.6 % | 14.3 % | |||||||||||||||||||||
| Imaging & Identification | 20.1 % | 16.7 | % | 18.5 | % | 20.9 % | 20.5 % | 20.7 % | 22.4 % | 20.9 % | 21.2 % | |||||||||||||||||||||
Pumps & Process Solutions 1 | 20.7 % | 21.9 | % | 21.3 | % | 4.5 % | 22.5 % | 13.6 % | 22.7 % | 21.8 % | 17.9 % | |||||||||||||||||||||
Refrigeration & Food Equipment 2 | 7.5 % | 3.9 | % | 5.8 | % | 7.4 % | 11.5 % | 9.6 % | 9.5 % | 4.7 % | 8.5 % | |||||||||||||||||||||
| Total segment operating margin | 15.9 % | 14.1 | % | 15.1 | % | 11.6 % | 16.8 % | 14.3 % | 17.4 % | 16.3 % | 15.6 % | |||||||||||||||||||||
| DEPRECIATION AND AMORTIZATION EXPENSE | ||||||||||||||||||||||||||||||||
| Engineered Products | $ | 10,122 | $ | 9,722 | $ | 19,844 | $ | 10,359 | $ | 10,452 | $ | 20,811 | $ | 10,095 | $ | 10,126 | $ | 41,032 | ||||||||||||||
| Fueling Solutions | 18,339 | 17,968 | 36,307 | 17,879 | 18,945 | 36,824 | 18,744 | 19,477 | 75,045 | |||||||||||||||||||||||
| Imaging & Identification | 8,769 | 9,224 | 17,993 | 7,435 | 7,413 | 14,848 | 7,360 | 8,322 | 30,530 | |||||||||||||||||||||||
| Pumps & Process Solutions | 18,336 | 17,572 | 35,908 | 17,548 | 16,201 | 33,749 | 16,018 | 17,817 | 67,584 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 11,548 | 11,421 | 22,969 | 13,011 | 12,777 | 25,788 | 13,047 | 12,525 | 51,360 | |||||||||||||||||||||||
| Corporate | 1,638 | 1,696 | 3,334 | 1,506 | 1,981 | 3,487 | 1,523 | 1,726 | 6,736 | |||||||||||||||||||||||
| Total depreciation and amortization expense | $ | 68,752 | $ | 67,603 | $ | 136,355 | $ | 67,738 | $ | 67,769 | $ | 135,507 | $ | 66,787 | $ | 69,993 | $ | 272,287 | ||||||||||||||
1 Q1 and FY 2019 include a $46,946 loss on assets held for sale for Finder Pompe S.r.l. | ||||||||||||||||||||||||||||||||
2 Q1, Q2, and Q2 YTD includes a $6,551 gain, a $781 expense and a $5,770 net gain on the sale of the Chino, California branch of The AMS Group ("AMS Chino"), respectively. Q2 and Q2 YTD also include a $3,640 write-off of assets. | ||||||||||||||||||||||||||||||||
3 Q4 and FY 2019 include a $23,543 loss on early extinguishment of debt. | ||||||||||||||||||||||||||||||||
IS - 2
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
| Earnings Per Share | ||||||||||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| Net earnings per share: | ||||||||||||||||||||||||||||||||
| Basic | $ | 1.22 | $ | 0.87 | $ | 2.09 | $ | 0.73 | $ | 1.36 | $ | 2.09 | $ | 1.42 | $ | 1.16 | $ | 4.67 | ||||||||||||||
| Diluted | $ | 1.21 | $ | 0.86 | $ | 2.07 | $ | 0.72 | $ | 1.35 | $ | 2.07 | $ | 1.40 | $ | 1.15 | $ | 4.61 | ||||||||||||||
| Net earnings and weighted average shares used in calculated earnings per share amounts are as follows: | ||||||||||||||||||||||||||||||||
| Net earnings | $ | 176,279 | $ | 124,766 | $ | 301,045 | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 206,006 | $ | 168,122 | $ | 677,918 | ||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||
| Basic | 144,259 | 143,955 | 144,107 | 145,087 | 145,366 | 145,227 | 145,372 | 144,966 | 145,198 | |||||||||||||||||||||||
| Diluted | 145,782 | 144,995 | 145,359 | 146,911 | 147,179 | 147,041 | 147,051 | 146,790 | 146,992 | |||||||||||||||||||||||
| * Per share data may be impacted by rounding. | ||||||||||||||||||||||||||||||||
IS - 3
DOVER CORPORATION
QUARTERLY ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| Adjusted net earnings: | ||||||||||||||||||||||||||||||||
| Net earnings | $ | 176,279 | $ | 124,766 | $ | 301,045 | $ | 105,705 | $ | 198,085 | $ | 303,790 | $ | 206,006 | $ | 168,122 | $ | 677,918 | ||||||||||||||
Acquisition-related amortization, pre-tax 1 | 34,062 | 34,101 | 68,163 | 35,635 | 34,997 | 70,632 | 34,244 | 33,460 | 138,336 | |||||||||||||||||||||||
Acquisition-related amortization, tax impact 2 | (8,411) | (8,451) | (16,862) | (8,964) | (8,777) | (17,741) | (8,624) | (8,403) | (34,768) | |||||||||||||||||||||||
Rightsizing and other costs, pre-tax 3 | 7,859 | 16,840 | 24,699 | 3,963 | 6,457 | 10,420 | 3,807 | 17,926 | 32,153 | |||||||||||||||||||||||
Rightsizing and other costs, tax impact 2 | (1,605) | (3,452) | (5,057) | (861) | (1,377) | (2,238) | (806) | (3,745) | (6,789) | |||||||||||||||||||||||
Loss on extinguishment of debt, pre-tax 4 | — | — | — | — | — | — | — | 23,543 | 23,543 | |||||||||||||||||||||||
Loss on extinguishment of debt, tax impact 2 | — | — | — | — | — | — | — | (5,163) | (5,163) | |||||||||||||||||||||||
Loss on assets held for sale 5 | — | — | — | 46,946 | — | 46,946 | — | — | 46,946 | |||||||||||||||||||||||
(Gain) loss on disposition, pre-tax 6 | (6,551) | 781 | (5,770) | — | — | — | — | — | — | |||||||||||||||||||||||
(Gain) loss on disposition, tax-impact 2 | 1,592 | (190) | 1,402 | — | — | — | — | — | — | |||||||||||||||||||||||
Adjusted net earnings | $ | 203,225 | $ | 164,395 | $ | 367,620 | $ | 182,424 | $ | 229,385 | $ | 411,809 | $ | 234,627 | $ | 225,740 | $ | 872,176 | ||||||||||||||
| Adjusted diluted net earnings per share: | ||||||||||||||||||||||||||||||||
| Diluted net earnings per share | $ | 1.21 | $ | 0.86 | $ | 2.07 | $ | 0.72 | $ | 1.35 | $ | 2.07 | $ | 1.40 | $ | 1.15 | $ | 4.61 | ||||||||||||||
Acquisition-related amortization, pre-tax 1 | 0.23 | 0.24 | 0.47 | 0.24 | 0.24 | 0.48 | 0.23 | 0.23 | 0.94 | |||||||||||||||||||||||
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 | 0.05 | 0.12 | 0.17 | 0.03 | 0.04 | 0.07 | 0.03 | 0.12 | 0.22 | |||||||||||||||||||||||
Rightsizing and other costs, tax impact 2 | (0.01) | (0.02) | (0.03) | (0.01) | (0.01) | (0.02) | (0.01) | (0.03) | (0.06) | |||||||||||||||||||||||
Loss on extinguishment of debt, pre-tax 4 | — | — | — | — | — | — | — | 0.16 | 0.16 | |||||||||||||||||||||||
Loss on extinguishment of debt, tax impact 2 | — | — | — | — | — | — | — | (0.04) | (0.04) | |||||||||||||||||||||||
Loss on assets held for sale 5 | — | — | — | 0.32 | — | 0.32 | — | — | 0.32 | |||||||||||||||||||||||
(Gain) loss on disposition, pre-tax 6 | (0.04) | — | (0.04) | — | — | — | — | — | — | |||||||||||||||||||||||
(Gain) loss on disposition, tax-impact 2 | 0.01 | — | 0.01 | — | — | — | — | — | — | |||||||||||||||||||||||
Adjusted diluted net earnings per share | $ | 1.39 | $ | 1.13 | $ | 2.53 | $ | 1.24 | $ | 1.56 | $ | 2.80 | $ | 1.60 | $ | 1.54 | $ | 5.93 | ||||||||||||||
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 asset charges. | ||||||||||||||||||||||||||||||||
4 Represents a loss on early extinguishment of €300,000 2.125% notes due 2020 and $450,000 4.30% notes due 2021. | ||||||||||||||||||||||||||||||||
5 Represents a loss on assets held for sale of Finder Pompe S.r.l. ("Finder"). Under local law, no tax benefit is realized from the loss on the sale of a wholly-owned business. | ||||||||||||||||||||||||||||||||
6 Represents a (gain) loss on the disposition of AMS Chino within the Refrigeration & Food Equipment segment. | ||||||||||||||||||||||||||||||||
| * Per share data and totals may be impacted by rounding. | ||||||||||||||||||||||||||||||||
IS - 4
DOVER CORPORATION
QUARTERLY SEGMENT ADJUSTED EBIT AND ADJUSTED EBITDA (NON-GAAP)
(unaudited)(in thousands)
Non-GAAP Reconciliations
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| ADJUSTED SEGMENT EBIT AND ADJUSTED EBITDA | ||||||||||||||||||||||||||||||||
| Engineered Products: | ||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 69,094 | $ | 47,702 | $ | 116,796 | $ | 67,119 | $ | 77,129 | $ | 144,248 | $ | 74,367 | $ | 73,233 | $ | 291,848 | ||||||||||||||
| Rightsizing and other costs | 361 | 4,169 | 4,530 | 80 | 1,125 | 1,205 | 590 | 1,355 | 3,150 | |||||||||||||||||||||||
| Adjusted EBIT - Segment | 69,455 | 51,871 | 121,326 | 67,199 | 78,254 | 145,453 | 74,957 | 74,588 | 294,998 | |||||||||||||||||||||||
| Adjusted EBIT % | 17.0 | % | 15.2 | % | 16.2 | % | 16.0 | % | 18.2 | % | 17.1 | % | 17.6 | % | 17.7 | % | 17.4 | % | ||||||||||||||
Adjusted D&A 2 | 10,122 | 9,722 | 19,844 | 10,359 | 9,855 | 20,214 | 10,095 | 10,126 | 40,435 | |||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 79,577 | $ | 61,593 | $ | 141,170 | $ | 77,558 | $ | 88,109 | $ | 165,667 | $ | 85,052 | $ | 84,714 | $ | 335,433 | ||||||||||||||
| Adjusted EBITDA % | 19.5 | % | 18.0 | % | 18.8 | % | 18.5 | % | 20.5 | % | 19.5 | % | 19.9 | % | 20.1 | % | 19.8 | % | ||||||||||||||
| Fueling Solutions: | ||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 53,498 | $ | 47,214 | $ | 100,712 | $ | 37,230 | $ | 52,637 | $ | 89,867 | $ | 68,069 | $ | 73,937 | $ | 231,873 | ||||||||||||||
| Rightsizing and other costs | 1,493 | 868 | 2,361 | 752 | 1,768 | 2,520 | 811 | 1,554 | 4,885 | |||||||||||||||||||||||
| Adjusted EBIT - Segment | 54,991 | 48,082 | 103,073 | 37,982 | 54,405 | 92,387 | 68,880 | 75,491 | 236,758 | |||||||||||||||||||||||
| Adjusted EBIT % | 15.3 | % | 14.7 | % | 15.0 | % | 10.2 | % | 13.9 | % | 12.1 | % | 16.7 | % | 17.0 | % | 14.6 | % | ||||||||||||||
Adjusted D&A 2 | 18,339 | 17,783 | 36,122 | 17,879 | 18,945 | 36,824 | 18,744 | 19,477 | 75,045 | |||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 73,330 | $ | 65,865 | $ | 139,195 | $ | 55,861 | $ | 73,350 | $ | 129,211 | $ | 87,624 | $ | 94,968 | $ | 311,803 | ||||||||||||||
| Adjusted EBITDA % | 20.4 | % | 20.2 | % | 20.3 | % | 15.0 | % | 18.8 | % | 16.9 | % | 21.3 | % | 21.4 | % | 19.2 | % | ||||||||||||||
| Imaging & Identification: | ||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 51,482 | $ | 38,046 | $ | 89,528 | $ | 55,955 | $ | 54,641 | $ | 110,596 | $ | 61,655 | $ | 57,233 | $ | 229,484 | ||||||||||||||
| Rightsizing and other costs | 264 | (527) | (263) | 389 | 1,268 | 1,657 | 301 | 4,392 | 6,350 | |||||||||||||||||||||||
| Adjusted EBIT - Segment | 51,746 | 37,519 | 89,265 | 56,344 | 55,909 | 112,253 | 61,956 | 61,625 | 235,834 | |||||||||||||||||||||||
| Adjusted EBIT % | 20.2 | % | 16.5 | % | 18.4 | % | 21.0 | % | 21.0 | % | 21.0 | % | 22.5 | % | 22.5 | % | 21.7 | % | ||||||||||||||
Adjusted D&A 2 | 8,769 | 9,224 | 17,993 | 7,336 | 7,317 | 14,653 | 7,286 | 7,892 | 29,831 | |||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 60,515 | $ | 46,743 | $ | 107,258 | $ | 63,680 | $ | 63,226 | $ | 126,906 | $ | 69,242 | $ | 69,517 | $ | 265,665 | ||||||||||||||
| Adjusted EBITDA % | 23.6 | % | 20.5 | % | 22.1 | % | 23.7 | % | 23.7 | % | 23.7 | % | 25.2 | % | 25.3 | % | 24.5 | % | ||||||||||||||
| Pumps & Process Solutions: | ||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 66,079 | $ | 67,702 | $ | 133,781 | $ | 14,991 | $ | 76,278 | $ | 91,269 | $ | 77,433 | $ | 71,379 | $ | 240,081 | ||||||||||||||
| Rightsizing and other costs | 3,846 | 4,691 | 8,537 | 414 | 903 | 1,317 | 943 | 3,868 | 6,128 | |||||||||||||||||||||||
Loss on assets held for sale 1 | — | — | — | 46,946 | — | 46,946 | — | — | 46,946 | |||||||||||||||||||||||
| Adjusted EBIT - Segment | 69,925 | 72,393 | 142,318 | 62,351 | 77,181 | 139,532 | 78,376 | 75,247 | 293,155 | |||||||||||||||||||||||
| Adjusted EBIT % | 21.9 | % | 23.4 | % | 22.6 | % | 18.9 | % | 22.8 | % | 20.9 | % | 23.0 | % | 22.9 | % | 21.9 | % | ||||||||||||||
Adjusted D&A 2 | 16,230 | 16,816 | 33,046 | 17,548 | 16,199 | 33,747 | 16,018 | 17,004 | 66,769 | |||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 86,155 | $ | 89,209 | $ | 175,364 | $ | 79,899 | $ | 93,380 | $ | 173,279 | $ | 94,394 | $ | 92,251 | $ | 359,924 | ||||||||||||||
| Adjusted EBITDA % | 27.0 | % | 28.9 | % | 27.9 | % | 24.2 | % | 27.6 | % | 25.9 | % | 27.7 | % | 28.1 | % | 26.9 | % | ||||||||||||||
| Refrigeration & Food Equipment: | ||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 23,529 | $ | 11,459 | $ | 34,988 | $ | 24,807 | $ | 44,375 | $ | 69,182 | $ | 35,211 | $ | 14,439 | $ | 118,832 | ||||||||||||||
| Rightsizing and other costs | 704 | 6,016 | 6,720 | 2,293 | 666 | 2,959 | 840 | 2,243 | 6,042 | |||||||||||||||||||||||
(Gain) loss on disposition 3 | (6,551) | 781 | (5,770) | — | — | — | — | — | — | |||||||||||||||||||||||
| Adjusted EBIT - Segment | 17,682 | 18,256 | 35,938 | 27,100 | 45,041 | 72,141 | 36,051 | 16,682 | 124,874 | |||||||||||||||||||||||
| Adjusted EBIT % | 5.7 | % | 6.2 | % | 5.9 | % | 8.1 | % | 11.7 | % | 10.0 | % | 9.7 | % | 5.4 | % | 8.9 | % | ||||||||||||||
Adjusted D&A 2 | 11,548 | 11,421 | 22,969 | 13,011 | 12,777 | 25,788 | 13,047 | 12,525 | 51,360 | |||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 29,230 | $ | 29,677 | $ | 58,907 | $ | 40,111 | $ | 57,818 | $ | 97,929 | $ | 49,098 | $ | 29,207 | $ | 176,234 | ||||||||||||||
| Adjusted EBITDA % | 9.4 | % | 10.1 | % | 9.7 | % | 12.0 | % | 15.0 | % | 13.6 | % | 13.3 | % | 9.5 | % | 12.6 | % | ||||||||||||||
| Total Segments: | ||||||||||||||||||||||||||||||||
Segment earnings (EBIT) 4 | $ | 263,682 | $ | 212,123 | $ | 475,805 | $ | 200,102 | $ | 305,060 | $ | 505,162 | $ | 316,735 | $ | 290,221 | $ | 1,112,118 | ||||||||||||||
| Rightsizing and other costs | 6,668 | 15,217 | 21,885 | 3,928 | 5,730 | 9,658 | 3,485 | 13,412 | 26,555 | |||||||||||||||||||||||
Loss on assets held for sale 1 | — | — | — | 46,946 | — | 46,946 | — | — | 46,946 | |||||||||||||||||||||||
(Gain) loss on disposition 3 | (6,551) | 781 | (5,770) | — | — | — | — | — | — | |||||||||||||||||||||||
Adjusted EBIT - Segment 5 | 263,799 | 228,121 | 491,920 | 250,976 | 310,790 | 561,766 | 320,220 | 303,633 | 1,185,619 | |||||||||||||||||||||||
Adjusted EBIT % 4 | 15.9 | % | 15.2 | % | 15.6 | % | 14.5 | % | 17.2 | % | 15.9 | % | 17.5 | % | 17.1 | % | 16.6 | % | ||||||||||||||
Adjusted D&A 2 | 65,008 | 64,966 | 129,974 | 66,133 | 65,093 | 131,226 | 65,190 | 67,024 | 263,440 | |||||||||||||||||||||||
Adjusted EBITDA - segment 5 | $ | 328,807 | $ | 293,087 | $ | 621,894 | $ | 317,109 | $ | 375,883 | $ | 692,992 | $ | 385,410 | $ | 370,657 | $ | 1,449,059 | ||||||||||||||
Adjusted EBITDA % 5 | 19.9 | % | 19.5 | % | 19.7 | % | 18.4 | % | 20.7 | % | 19.6 | % | 21.1 | % | 20.9 | % | 20.3 | % | ||||||||||||||
1 Q1 and FY 2019 include a $46,946 loss on assets held for sale for Finder. | ||||||||||||||||||||||||||||||||
2 Adjusted D&A is depreciation and amortization expense, excluding depreciation and amortization included within rightsizing and other costs. | ||||||||||||||||||||||||||||||||
3 Q1, Q2, and Q2 YTD includes a $6,551 gain, a $781 expense and a $5,770 net gain on the sale of a business for AMS Chino, respectively. | ||||||||||||||||||||||||||||||||
4 Refer to Quarterly Segment Information section for reconciliation of total segment earnings (EBIT) to net earnings. | ||||||||||||||||||||||||||||||||
5 Refer to Non-GAAP Disclosures section for definition. | ||||||||||||||||||||||||||||||||
IS - 5
DOVER CORPORATION
REVENUE GROWTH FACTORS (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
Revenue Growth Factors
| 2020 | |||||||||||
| Q2 | Q2 YTD | ||||||||||
| Organic | |||||||||||
| Engineered Products | (20.1) | % | (11.1) | % | |||||||
| Fueling Solutions | (14.8) | % | (8.9) | % | |||||||
| Imaging & Identification | (14.0) | % | (9.2) | % | |||||||
| Pumps & Process Solutions | (8.8) | % | (5.0) | % | |||||||
| Refrigeration & Food Equipment | (20.2) | % | (12.8) | % | |||||||
| Total Organic | (16.0) | % | (9.5) | % | |||||||
| Acquisitions | 0.7 | % | 0.8 | % | |||||||
| Dispositions | (0.7) | % | (0.7) | % | |||||||
| Currency translation | (1.2) | % | (1.4) | % | |||||||
| Total* | (17.2) | % | (10.8) | % | |||||||
* Totals may be impacted by rounding.
| 2020 | |||||
| Q2 | |||||
| Organic | |||||
| United States | (10.3) | % | |||
| Other Americas | (33.5) | % | |||
| Europe | (19.5) | % | |||
| Asia | (14.3) | % | |||
| Other | (33.1) | % | |||
| Total Organic | (16.0) | % | |||
| Acquisitions | 0.7 | % | |||
| Dispositions | (0.7) | % | |||
| Currency translation | (1.2) | % | |||
| Total* | (17.2) | % | |||
* Totals may be impacted by rounding.
| Adjusted EPS Guidance Reconciliation | |||||||||||
| Range | |||||||||||
| 2020 Guidance for Earnings per Share (GAAP) | $ | 4.16 | $ | 4.41 | |||||||
| Acquisition-related amortization, net | 0.71 | ||||||||||
| Rightsizing and other costs, net | 0.16 | ||||||||||
| Gain on disposition, net | (0.03) | ||||||||||
| 2020 Guidance for Adjusted Earnings per Share (Non-GAAP) | $ | 5.00 | $ | 5.25 | |||||||
IS - 6
DOVER CORPORATION
QUARTERLY CASH FLOW AND FREE CASH FLOW (NON-GAAP)
(unaudited)(in thousands)
Quarterly Cash Flow
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| Net Cash Flows Provided By (Used In): | ||||||||||||||||||||||||||||||||
| Operating activities | $ | 75,863 | $ | 271,809 | $ | 347,672 | $ | 24,524 | $ | 208,709 | $ | 233,233 | $ | 350,865 | $ | 361,208 | $ | 945,306 | ||||||||||||||
| Investing activities | (230,511) | (67,763) | (298,274) | (217,690) | (69,755) | (287,445) | (48,612) | (48,198) | (384,255) | |||||||||||||||||||||||
| Financing activities | 280,954 | (67,458) | 213,496 | 36,067 | (60,596) | (24,529) | (277,901) | (255,612) | (558,042) | |||||||||||||||||||||||
Quarterly Free Cash Flow (Non-GAAP)
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| Cash flow from operating activities | $ | 75,863 | $ | 271,809 | $ | 347,672 | $ | 24,524 | $ | 208,709 | $ | 233,233 | $ | 350,865 | $ | 361,208 | $ | 945,306 | ||||||||||||||
| Less: Capital expenditures | (40,172) | (38,999) | (79,171) | (37,122) | (53,970) | (91,092) | (46,184) | (49,528) | (186,804) | |||||||||||||||||||||||
| Free cash flow | $ | 35,691 | $ | 232,810 | $ | 268,501 | $ | (12,598) | $ | 154,739 | $ | 142,141 | $ | 304,681 | $ | 311,680 | $ | 758,502 | ||||||||||||||
| Free cash flow as a percentage of revenue | 2.2 | % | 15.5 | % | 8.5 | % | (0.7) | % | 8.5 | % | 4.0 | % | 16.7 | % | 17.6 | % | 10.6 | % | ||||||||||||||
| Free cash flow as a percentage of net earnings | 20.2 | % | 186.6 | % | 89.2 | % | (11.9) | % | 78.1 | % | 46.8 | % | 147.9 | % | 185.4 | % | 111.9 | % | ||||||||||||||
IS - 7
DOVER CORPORATION
PERFORMANCE MEASURES
(unaudited)(in thousands)
| 2020 | 2019 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2019 | ||||||||||||||||||||||||
| BOOKINGS | ||||||||||||||||||||||||||||||||
| Engineered Products | $ | 414,972 | $ | 278,373 | $ | 693,345 | $ | 427,697 | $ | 397,420 | $ | 825,117 | $ | 426,059 | $ | 457,145 | $ | 1,708,321 | ||||||||||||||
| Fueling Solutions | 373,070 | 311,498 | 684,568 | 343,083 | 394,256 | 737,339 | 450,727 | 425,698 | 1,613,764 | |||||||||||||||||||||||
| Imaging & Identification | 272,604 | 221,315 | 493,919 | 267,762 | 264,175 | 531,937 | 284,527 | 276,451 | 1,092,915 | |||||||||||||||||||||||
| Pumps & Process Solutions | 369,403 | 275,872 | 645,275 | 369,801 | 375,905 | 745,706 | 329,642 | 318,482 | 1,393,830 | |||||||||||||||||||||||
| Refrigeration & Food Equipment | 355,157 | 326,400 | 681,557 | 376,998 | 384,365 | 761,363 | 323,422 | 361,970 | 1,446,755 | |||||||||||||||||||||||
| Intra-segment eliminations | (375) | (460) | (835) | (725) | (490) | (1,215) | (528) | 872 | (871) | |||||||||||||||||||||||
| Total consolidated bookings | $ | 1,784,831 | $ | 1,412,998 | $ | 3,197,829 | $ | 1,784,616 | $ | 1,815,631 | $ | 3,600,247 | $ | 1,813,849 | $ | 1,840,618 | $ | 7,254,714 | ||||||||||||||
| BACKLOG | ||||||||||||||||||||||||||||||||
| Engineered Products | $ | 453,867 | $ | 378,874 | $ | 451,335 | $ | 418,154 | $ | 416,025 | $ | 452,142 | ||||||||||||||||||||
| Fueling Solutions | 211,518 | 199,305 | 185,847 | 186,202 | 223,081 | 205,842 | ||||||||||||||||||||||||||
| Imaging & Identification | 170,119 | 168,904 | 118,177 | 116,810 | 121,877 | 125,775 | ||||||||||||||||||||||||||
| Pumps & Process Solutions | 397,969 | 379,090 | 353,066 | 378,427 | 361,478 | 353,073 | ||||||||||||||||||||||||||
| Refrigeration & Food Equipment | 356,133 | 390,368 | 311,632 | 310,454 | 262,870 | 320,577 | ||||||||||||||||||||||||||
| Intra-segment eliminations | (159) | (367) | (403) | (141) | (252) | (249) | ||||||||||||||||||||||||||
| Total consolidated backlog | $ | 1,589,447 | $ | 1,516,174 | $ | 1,419,654 | $ | 1,409,906 | $ | 1,385,079 | $ | 1,457,160 | ||||||||||||||||||||
Bookings Growth Factors
| 2020 | |||||||||||
| Q2 | Q2 YTD | ||||||||||
| Organic | |||||||||||
| Engineered Products | (29.8) | % | (15.6) | % | |||||||
| Fueling Solutions | (18.2) | % | (5.3) | % | |||||||
| Imaging & Identification | (16.5) | % | (8.0) | % | |||||||
| Pumps & Process Solutions | (25.7) | % | (11.9) | % | |||||||
| Refrigeration & Food Equipment | (11.6) | % | (7.9) | % | |||||||
| Total Organic | (20.6) | % | (10.0) | % | |||||||
| Acquisitions | 0.7 | % | 0.9 | % | |||||||
| Dispositions | (0.6) | % | (0.7) | % | |||||||
| Currency translation | (1.7) | % | (1.4) | % | |||||||
| Total* | (22.2) | % | (11.2) | % | |||||||
* Totals may be impacted by rounding.
IS - 8
Non-GAAP Measures Definitions
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 net earnings, adjusted diluted net earnings per share, total segment earnings (EBIT), adjusted EBIT by segment, adjusted EBIT margin by segment, adjusted EBITDA by segment, adjusted EBITDA margin by segment, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of net earnings, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for net earnings, diluted net earnings per share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.
Adjusted net earnings represents net earnings adjusted for the effect of acquisition-related amortization, rightsizing and other costs, loss on extinguishment of debt, loss on assets held for sale, and a gain/loss on disposition. 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.
Adjusted diluted net earnings per share represents adjusted net earnings divided by average diluted shares.
Total segment earnings (EBIT) is defined as net earnings before income taxes, net interest expense and corporate expenses. Total segment earnings (EBIT) margin is defined as total segment earnings (EBIT) divided by revenue.
Adjusted EBIT by Segment is defined as net earnings before income taxes, net interest expense, corporate expenses, rightsizing and other costs, a 2019 loss on assets held for sale and a 2020 gain/loss on disposition. 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.
Management believes these measures are 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.
Free cash flow represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of net earnings equals free cash flow divided by net earnings. Management believes that free cash flow and free cash flow ratios are important measures 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 and bookings performance and trends between periods.
Performance Measures Definitions
Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends.
Organic bookings represent total orders received from customers in the current reporting period excluding the impact of foreign currency exchange rates and the impact of acquisition and dispositions. This metric is an important measure of performance and an indicator of revenue order trends.
Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet have satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future.
We use the above operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments.
IS - 9
Earnings Conference Call Second Quarter 2020 July 22, 2020 – 8:00am 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, including the impacts of the novel coronavirus (COVID-19) on the global economy and on our customers, suppliers, employees, operations, business, liquidity and cash flow. 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 2019 and Form 10-Q for the second quarter of 2020, 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.
3 Summary Corporate Q2 Results and Highlights Q2 2020 Highlights and Comments Revenue change (Y-o-Y) All-in Organic(1) -17% -16% Expectedly slower demand across segments Material sequential improvement in June FX impact: -1%; acquisitions offset dispositions Bookings change (Y-o-Y) All-in Organic(3) -22% -21% Book-to-bill(3): 0.94 Backlog(3) remains strong (+8% Y-o-Y); increase in 4 of 5 segments Segment EBIT margin improvement (Y-o-Y) Reported(2) Adjusted(1) -270 bps -190 bps Cost containment and in-flight actions yield 27% adj. decremental margin(1) DFS and DPPS adj. margin increase Y-o-Y despite lower volume Earnings Reported Adjusted(1) $125M $164M Reported Y-o-Y change: -37% Adjusted Y-o-Y change: -28% Diluted EPS Reported Adjusted(1) $0.86 $1.13 Reported Y-o-Y change: -36% Adjusted Y-o-Y change: -28% Cash Flow change (Y-o-Y) OpCF(4) FCF(1) +$63M +$78M Q2 FCF(1) up Y-o-Y on lower Capex, NWC management, tax deferrals YTD FCF(1) up $126M Y-o-Y; liquidity position remains robust Guidance and other activities 2020 EPS guidance reinstated: ̶ Reported EPS: $4.16 - $4.41 ̶ Adjusted EPS(1): $5.00 - $5.25 (1) Non-GAAP measures (definitions and reconciliations in appendix) (2) Refer to definition of total segment earnings (EBIT) margin in appendix (3) See performance measures definitions in appendix (4) Cash flow from operations
4 Segment Revenue ($M) / Organic Change % Adj. EBIT % / bps ∆ Y-o-Y Comments DEP $342 -20% 15.2% -300 bps Relative resilience in waste handling and aerospace & defense off strong backlogs, weakness in other Capex-levered industrial businesses Margin decline due to lower volumes and difficult year-over-year comp (Q2’19 saw peak margin). Expect margin gap to narrow in H2 as volumes recover DFS $326 -15% 14.7% +80 bps Sustained strong activity in above ground retail fueling in North America (incl. EMV), lower demand in EMEA and in Asia largely due to expected lower activity Margin up on productivity gains and geo/product mix offsetting low volumes. Expect full year margin accretion for the segment DII $228 -14% 16.5% -450 bps Marking & Coding resilient with strength in consumables and fast moving consumer goods. Textiles significantly impacted by disruption in apparel demand and retail activity High segment gross margin and decline in digital print drove decremental margin. Strong margin performance in Marking & Coding (~flat Y-o-Y) expected to continue DPPS $309 -9% 23.4% +60 bps Record growth in biopharma and thermal connector business. Lower sales in industrial pumps and precision components. Plastics expectedly lower due to H2-geared backlog Margin improvement on productivity gains and mix. Expect to hold absolute profits approximately flat for full year DRFE $294 -20% 6.2% -550 bps Resilience in heat exchangers. Expectedly weak demand in foodservice and slow backlog conversion in food retail due to COVID disruption Proactive production curtailments resulted in negative fixed cost absorption and Q2 margin decline. Cost and productivity actions improved margins intra-quarter. Expect H2 Y-o-Y growth in absolute earnings and in margin Q2 2020 Segment Results Q2 2020(1) (1) Non-GAAP reconciliations in appendix
5 Q2 2019 Q2 2020 Revenue & Bookings Revenue Change in Organic Revenue(1): -$289M, or -16.0% DIIDFS DPPS DRFE FX ACQ./ DISP. (2) Q2 2020 Geographic Detail Q2 2019 DEP DFS DII DPPS DRFE FX ACQ./ DISP. (3) Q2 2020 Note: $ in millions. Numbers may not add due to rounding Bookings(4) Change in Organic Bookings(4): -$375M, or -20.6% (1) Non-GAAP measure (definition and reconciliation in appendix) (2) Acquisitions: $13M, dispositions: $12M DEP ($M)1,811 -58 -24 1,499-78-86 -30-37 ($M) 1 -72 -29 1,413-44-119 -97-43 11,816 Q2 2020 % of Revenue 3% 21% 11%ASIA 8% 57% OTHER EUROPE OTHER AMER. US (33)% (14)% (19)% (34)% (10)% Organic Rev Growth(1) Organic Organic (3) Acquisitions: $13M, dispositions: $12M (4) See performance measure definitions in appendix June vs. May ‘20 Bookings(4) Change Q2 Y-o-Y Backlog(4) Change ($ / %) 12% 30% 22% 11% 21% 19% -39 / -9% 13 / 7% 52 / 45% 1 / -% 80 / 26% 106 / 8% Full DOV
6 Q2 2020 Adjusted Segment EBIT and Adjusted Net Earnings GAAP EARNINGS RIGHT SIZING INT./TAX EXPENSE ACQ. AMORT. CORP. EXPENSE SEGMENT EBIT ADJ. EARNINGS ADJ. EARNINGS ACQ. AMORT. RIGHT SIZING ADJ. ON SALE OF CHINO GAAP EARNINGS Change in Adjusted Net Earnings (3) -$65M 198 5 26 229 -83 -2 20 164 -26 -13 Q2 2019 Q2 2020 ($M) Note: $ in millions. Numbers may not add due to rounding 125-1 DPPSDIIADJ. EBIT DFSD&A (1) DEPADJ. EBITDA DRFE ADJ. EBITDA D&A (2) ADJ. EBIT 20.7% 15.2% Change in Adjusted Segment EBIT (3) -$83M Q2 2020 311 376 -16-27 228 ($M)-4 17.2% Q2 2019 -65-7 -28 19.5% 29365 (1) Depreciation: $30M, Amortization: $35M (2) Depreciation: $31M, Amortization: $34M (3) Non-GAAP measures (definitions and reconciliations in appendix) 12.7% 11.0%
7 Year-to-Date Free Cash Flow 12.3% (1) Includes gain on disposition and loss on assets held for sale (2) Includes stock-based compensation and changes in other current and non-current assets and liabilities (3) Non-GAAP measures (reconciliation on this slide, definitions in appendix) $M YTD ’20 YTD ’19 ∆ Net earnings 301 304 -3 Adjustments for (gains) losses(1) (6) 47 -53 D&A 136 136 +1 Change in working capital (80) (164) +84 Change in other(2) (4) (89) +85 Cash flow from operations 348 233 +114 Capex (79) (91) 12 Free cash flow(3) 269 142 +126 FCF % of revenue(3) 8.5% 4.0% +450 bps FCF % of adj. earnings(3) 73.0% 34.5% +3,850 bps Note: Numbers may not add due to rounding NWC management led to improved FCF conversion Q2 benefited by ~$40M of deferred US tax payments (to be paid in Q3) Capex on “in-flight” committed projects largely completed in H1 ’20
8 Principled Capital Allocation Q2 2020: Balance Sheet Update Note: Numbers may not add due to rounding Prudent Leverage(1) ($ in billions) Flexible and conservative capital structure in line with long term objective Investment grade credit with “margin of safety” 2.9 1.3 Net Debt LTM ADJ. EBITDA 2.2x Improved Liquidity(2) 0.3 0.6 0.6 0.5 0.5 Legacy Revolver Capacity Q2 ’19 1.6 Q2 ’20 1.0 $450M New Revolver Capacity Cash Established new $450M revolver facility in Q2, $1B legacy revolver facility remains in place Re-entered stabilized commercial paper market No long term debt maturities until 2025 (1) Net debt and LTM adjusted EBITDA are non-GAAP measures (definitions and reconciliations in appendix) (2) Q2 ’19 and Q2 ’20 had $358M and $505M of commercial paper balance, respectively, which nets against legacy revolver capacity (3) Represents $239M of cash paid for acquisitions less $17M of cash proceeds from the sale of AMS Chino 65 years ~$225 million Consecutive years of increasing dividend Net year-to-date highly- synergistic bolt-on acquisitions(3) Continue to pay dividend Continue to pursue attractive bolt-on M&A opportunities Lifting suspension of share repurchases
9 Demand Outlook for H2 2020 Segment H2 Outlook vs. Q2(1) Demand Outlook Comments DEP Strong backlog and visibility in aerospace & defense (microwave products); improvement in short- cycle businesses (automotive aftermarket, industrial automation) Orders slowed in waste handling driven by pull-back in industry capex and municipal spend reductions, backlog remains strong DFS NA above-ground remains resilient and supported by EMV Global activity lower on challenging comparable from 2019, expiration of China double-wall, global decline in miles driven and decline in capital budgets for integrated oil (esp. China and Europe) Transportation components and vehicle wash impacted but recovering DII Marking & coding remains steady on robust demand in FMCG and consumables as well as pent- up demand (maintenance postponed due to travel restrictions) in printers and services Textile digital printing operating at a reduced capacity; apparel/fashion markets remain challenged, but signs of order upticks at end of Q2 DPPS Continued robust growth in biopharma and thermal connectors, improvement in industrial pumps on improving short cycle trends Strong backlog and visibility support stronger H2 in plastics processing; continued slowing in precision components, mainly in O&G and power gen DRFE Resilience in heat exchangers (esp. non-HVAC markets) and expected H2 deliveries from the large backlog in aluminum can making Expect food retail to begin shipping against a healthy backlog; possible upside from pent-up demand due to elevated wear & tear of field equipment in H1 and delayed maintenance/remodels Foodservice equipment (~10% of segment) to remain challenged through year-end (1) Denotes directional assessment of expected year-over-year revenue change in H2 2020 compared to Q2 2020 - H2 YoY growth or decline at a rate less than 50% of that seen in Q2 - H2 YoY decline at a slower rate vs. Q2 - H2 Trajectory approximately in line with Q2
10 FY2020 Guidance Negative FY organic revenue(1) change Sequential improvement from Q2 through Q3 and Q4 Revenue (1) Non-GAAP measure (definition in appendix) EBIT Conversion(1) EPS Corporate Items Cash Flow 20-25% full year decremental margin(1) range Revising favorably (vs. 25-30% on Q1 call) on back of strong first half performance Reported: $4.16 - $4.41 Adjusted(1): $5.00 - $5.25 Corp Expense: $110M - $115M Interest Expense: $105M - $108M Tax Rate: 20 – 22% Free Cash Flow(1) Conversion: – 100+% of Adjusted Net Earnings – 10-12% of Revenue Capex: $140M - $160M
11 Appendix
12 Q2 2019 to Q2 2020 Revenue and Bookings Bridges by Segment Note: Numbers may not add due to rounding DEP DFS DII DPPS DRFE Total 430 391 267 339 385 1,811 (86) (58) (37) (30) (78) (289) (2) (6) (9) (4) (2) (24) 1 - 8 4 (12) 1 342 326 228 309 294 1,499 DEP DFS DII DPPS DRFE Total 397 394 264 376 384 1,816 (119) (72) (43) (97) (44) (375) (2) (11) (9) (5) (2) (29) 1 - 10 2 (12) 1 278 311 221 276 326 1,413 FX Q2 2020 Bookings Q2 2019 Bookings Organic Growth Acquisitions / Dispositions ($ in millions) Q2 2019 Revenue Bookings Bridge by Segment ($ in millions) Acquisitions / Dispositions Q2 2020 Revenue Organic Growth FX Revenue Bridge by Segment
13 Q2 2020 Organic Revenue and Bookings Bridges Note: Numbers may not add due to rounding Q2 2020 Segment Growth Factors Revenue Growth Bookings Growth -20.1% -29.8% -14.8% -18.2% -14.0% -16.5% -8.8% -25.7% -20.2% -11.6% -16.0% -20.6% 0.7% 0.7% -0.7% -0.6% -1.2% -1.7% Total -17.2% -22.2% Q2 2020 Geographic Revenue Growth Factors Revenue Growth -10.3% -33.5% -19.5% -14.3% -33.1% -16.0% 0.7% -0.7% -1.2% Total -17.2% Acquisitions Dispositions Currency translation Organic US Other Americas Europe Asia Other Total Organic Acquisitions Dispositions Currency translation Organic Refrigeration & Food Equipment Total Organic Engineered Products Pumps & Process Solutions Fueling Solutions Imaging & Identification
14 Reconciliation of Q2 2020 Net Earnings to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment Note: Numbers may not add due to rounding (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs DEP DFS DII DPPS DRFE Total 342 326 228 309 294 1,499 - - - - - 125 - - - - - 27 - - - - - 28 - - - - - 32 48 47 38 68 11 212 13.9% 14.5% 16.7% 21.9% 3.9% 14.1% 4 1 (1) 5 6 15 - - - - 1 1 52 48 38 72 18 228 15.2% 14.7% 16.5% 23.4% 6.2% 15.2% 10 18 9 17 11 65 62 66 47 89 30 293 18.0% 20.2% 20.5% 28.9% 10.1% 19.5% Q2 2020 ($ in millions) Revenue Net earnings Add back: Adjusted EBITDA - Segment Adjusted EBITDA % Income tax expense Segment earnings (EBIT) EBIT % Adjustments: Rightsizing and other costs Corporate expense Adjusted EBIT - Segment Adjusted EBIT % Adjusted depreciation and amortization expense (1) Interest expense, net Loss on disposition
15 Reconciliation of Q2 2019 Net Earnings to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment Note: Numbers may not add due to rounding DEP DFS DII DPPS DRFE Total 430 391 267 339 385 1,811 - - - - - 198 - - - - - 25 - - - - - 31 - - - - - 52 77 53 55 76 44 305 17.9% 13.5% 20.5% 22.5% 11.5% 16.8% 1 2 1 1 1 6 78 54 56 77 45 311 18.2% 13.9% 21.0% 22.8% 11.7% 17.2% 10 19 7 16 13 65 88 73 63 93 58 376 20.5% 18.8% 23.7% 27.6% 15.0% 20.7% Q2 2019 ($ in millions) Revenue Net earnings Add back: Adjusted EBITDA - Segment Adjusted EBITDA % Income tax expense Segment earnings (EBIT) EBIT % Adjustments: Rightsizing and other costs Corporate expense Adjusted EBIT - Segment Adjusted EBIT % Adjusted depreciation and amortization expense (1) Interest expense, net (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs
16 Reconciliation of Free Cash Flow and Net Debt Note: Numbers may not add due to rounding ($ millions) Q2 2020 Q2 2019 Q2 YTD 2020 Q2 YTD 2019 Net Cash Provided by Operating Activities 272 209 348 233 Capital Expenditures (39) (54) (79) (91) Free Cash Flow 233 155 269 142 Free Cash Flow as a % of Earnings 186.6% 78.1% 89.2% 46.8% Free Cash Flow as a % of Adjusted Earnings 141.6% 67.5%18 .4% 73.0% 34.5% Free Cash Flow as a % of Revenue 15.5% 8.5%18 .4% 8.5% 4.0% Net Debt Q2 '20 - 505 505 3,001 3,506 (649) 2,857 Notes payables Long-term debt Total debt Less: Cash and cash equivalents Net debt Free Cash Flow ($ in millions) Short term borrowings Commercial paper
17 Reconciliation of Adjusted Net Earnings to Net Earnings and Calculation of Adjusted Diluted EPS under U.S. GAAP Note: Numbers may not add due to rounding ($ in millions, except per share data) Q2 2020 Q2 2019 Q2 YTD 2020 Q2 YTD 2019 Net earnings ($) 125 198 301 304 Acquisition-related amortization, pre tax 34 35 68 71 Acquisition-related amortization, tax impact (8) (9) (17) (18) Rightsizing and other costs, pre tax 17 6 25 10 Rightsizing and other costs, tax impact (3) (1) (5) (2) Loss (gain) on disposition, pre tax 1 - (6) - Loss (gain) on disposition, tax impact (0) - 1 - Loss on assets held for sale - - - 47 Adjusted net earnings ($) 164 229 368 412 Weighted average shares outstanding – diluted 145 147 145 147 Diluted EPS ($) 0.86 1.35 2.07 2.07 Acquisition-related amortization, pre tax 0.24 0.24 0.47 0.48 Acquisition-related amortization, tax impact (0.06) (0.06) (0.12) (0.12) Rightsizing and other costs, pre tax 0.12 0.04 0.17 0.07 Rightsizing and other costs, tax impact (0.02) (0.01) (0.03) (0.02) Loss (gain) on disposition, pre tax 0.00 - (0.04) - Loss (gain) on disposition, tax impact (0.00) - 0.01 - Loss on assets held for sale - - - 0.32 Adjusted diluted EPS ($) 1.13 1.56 2.53 2.80
18 Reconciliation of Corporate Last Twelve Months (“LTM”) Adjusted EBITDA and Decremental Margin Note: Numbers may not add due to rounding Q3 '19 Q4 '19 Q1 '20 Q2 '20 LTM 206 168 176 125 675 29 40 24 27 120 30 29 26 28 113 52 29 37 32 150 - 24 - - 24 317 290 264 212 1,083 3 13 7 15 38 - - (7) 1 (6) 320 304 264 228 1,116 65 67 65 65 262 385 371 329 293 1,378 (29) (64) (24) (27) (144) - 28 1 2 31 2 2 2 2 7 359 337 308 269 1,272 Adjustments: Rightsizing and other costs Adjusted EBIT - Segment Adjusted depreciation and amortization (2) (Gain) loss on disposition Plus: Corporate depreciation & amortization Adjusted Corporate EBITDA Adjusted Segment EBITDA Less: Corporate expenses (1) LTM Adjusted EBITDA ($ in millions) Plus: Corporate rightsizing & other costs (1) Net earnings Add back: Corporate expense Interest expense, net Income tax expense Loss on extinguishment of debt Segment earnings (EBIT) (1) Q4 ‘19 corporate expenses and rightsizing & other costs include a $24M loss on extinguishment of debt (2) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs Decremental Margin Q2 '20 Q2 '19 ∆ 1,499 1,811 (312) 228 311 (83) 27%Decremental Margin ($ in millions) Revenue Adjusted EBIT - Segment
19 Reconciliation of EPS to Adjusted EPS Range 2020 Guidance for Earnings per Share (GAAP) $4.16 $4.41 Acquisition-related amortization, net 0.71- Rightsizing and other costs, net 0.16- Gain on disposition, net (0.03) 2020 Guidance for Adjusted Earnings per Share (Non-GAAP) $5.00 $5.25 Note: Numbers may not add due to rounding
20 Non-GAAP Definitions Definitions of Non-GAAP Measures: Adjusted Net Earnings: is defined as net earnings adjusted for the effect of acquisition-related amortization, rightsizing and other costs, a 2019 loss on assets held for sale and a 2020 gain on disposition. Adjusted Diluted Net Earnings Per Share: is defined as adjusted net earnings divided by average diluted shares. Total segment earnings (EBIT): is defined as net earnings before income taxes, net interest expense and corporate expenses. Total segment earnings (EBIT) margin: is defined as total segment earnings (EBIT) divided by revenue. Adjusted EBIT by Segment: is defined as net earnings before income taxes, net interest expense, corporate expenses, rightsizing and other costs, a 2019 loss on assets held for sale and a 2020 gain/loss on disposition. Adjusted EBIT Margin by Segment: is defined as adjusted EBIT by segment divided by segment revenue. The bps change Y-o-Y is calculated as the difference between adjusted EBIT margin for the current period and the prior period. 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. EBIT Conversion / Decremental Margin: is defined as the change in total adjusted segment earnings (EBIT) divided by the change in revenue. Free Cash Flow: is defined as net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of net earnings equals free cash flow divided by net earnings. Free cash flow as a percentage of adjusted net earnings equals free cash flow divided by adjusted net earnings. Organic Revenue Growth: is defined as revenue growth excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. Net debt: is defined as total debt minus cash and cash equivalents. LTM Adjusted EBITDA: is defined as adjusted segment EBITDA, less corporate expenses, plus corporate rightsizing and other costs and corporate depreciation and amortization. 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.
21 Performance Measure Definitions Definitions of Performance Measures: Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends. Organic Bookings represent total orders received from customers in the current reporting period excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of revenue order trends. Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet been satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future. Book-to-bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand. We use the above operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments.
