Press Release
<< Back
Dover Reports Record Quarterly Earnings
NEW YORK, Oct. 15 /PRNewswire/ -- Dover Corporation (NYSE: DOV) announced record earnings from continuing operations for its Third Quarter ended September 30. Earnings per share of $.58, which includes $.05 from non-recurring items described below, were 53% ahead of the $.38 earned in the Third Quarter of 1998. Excluding the non-recurring items, earnings per share rose 39%. Dover's Elevator Business, which was sold at the beginning of 1999 and which is therefore shown as a discontinued operation, added a further $.04 to last year's reported earnings per share, brining last year's total to $.42.
Three of Dover's four Segments achieved profit gains, led by Technologies, which was up 82% primarily as a result of strong bookings, shipments, and earnings for its Circuit Board Assembly and Test Business (CBAT). Earnings of the four companies serving this market more than doubled from prior year as shipments improved 44%. An 18% gain in the Industries segment and a 3% gain in Diversified more than offset Resources' 22% decline.
The $.05 non-recurring net gain was composed of a $20.9 million gain on the sale of the Pathway Bellows company (net of a charge to close a plant in the OPW Fluid Transfer company) and a $3.1 million provision to settle legal claims (shown as corporate expense). Non cash write-offs required by purchase accounting rules amounted to $21 million (pre-tax) in the Quarter, equal to $.07 per share.
Dover invested $192 million to repurchase 4.9 million shares of its common stock in the Quarter at an average price of $39. Since announcing the sale of its Elevator Business in November, 1998 the Company has now repurchased 19.6 million of its shares, at an average cost of $36 per share, which has reduced actual shares outstanding by 9%.
Dover companies also made five "add-on" acquisitions during the quarter at a cost of $65 million, bringing 9-month acquisition spending to $371 million. Dover management now believes that total acquisition investment in 1999 could top the previous record of $556 million in 1998.
The 82% profit increase in the Technologies segment on a 32% gain in sales reflects the strong operating leverage inherent in its CBAT and Specialty Electronics Components (SEC) businesses, which provided almost all of the $98 million sales gain. The marking business (Imaje) primarily serves consumer products manufacturers, rather than the electronics industry, and growth here was very modest, as recovery in Asia was offset by slower sales in Europe. Technologies' overall book-to-bill ratio in the Quarter was 1.04, with CBAT and SEC at similar ratios.
All of the CBAT companies achieved significant earnings gains, driven by sharply higher capital spending by both OEM and CEM customers who have begun adding capacity for assembly of printed circuit boards. Dover does not believe that increased market share has contributed significantly to the higher sales levels in the Third Quarter. The general strengthening in the market that began in June continued during July and August, providing record "rolling three month" bookings. However, orders fell sharply in September raising a concern that there may be a temporary pause coming in the market. The longer-term outlook remains positive, however, based on more powerful processors being rolled out by semiconductor makers and strong interest in downstream products for Internet data transfer and access -- both hard wired and wireless.
Technologies' four SEC companies continued to benefit from these trends with record shipments and profits for the quarter and record bookings in September. Third quarter profits here rose 75% on a 20% sales gain with almost all of the increases coming from communications related products. Quadrant has again expanded production capacity for its oscillator products, the timing "clocks" of voice and data transmissions. Orders for wireless base station equipment rose sharply at K&L, which has created focused - factory work cells to increase capacity.
Technologies management believes that its fourth quarter may not be as strong as the third because of the September fall-off in CBAT orders. However, CBAT's strong backlog and good order rates for marking and SEC products should enable this segment to set an earnings record for the year, exceeding the $195 million earned in 1997.
Dover Industries' 18% profit gain on a 9% sales increase was driven by (a) continued strength at Heil Environmental and Marathon, which serve the solid waste disposal industry. Combined profits here were up 23% with new orders almost equal to shipments and 21% higher than prior year; and (b) profit gains in excess of 15% at Rotary Lift, Texas Hydraulics, DovaTech, and PDQ. New products (internally developed and through acquisitions), new marketing strategies and more aggressive pricing made possible by unit cost reductions were important factors in these companies' gains.
Five of the Industries companies owned last year had earnings declines, but by small amounts that totaled only $1.4 million. The addition of Somero (acquired in Q2 of 1999) and of three add-on acquisitions during the quarter added $1 million to Third Quarter profits (after purchase accounting write-offs).
The book-to-bill ratio for Industries as a whole was .99 in the Quarter. Backlog is an important "leading indicator" at only a few Industries' companies, notably at Heil Trailer and Heil Environmental, which generally account for more than half of total backlog. Combined, these two companies have 6% lower backlog than at the end of third quarter 1998, as large gains at Environmental have almost offset weakness in Trailer's markets. Dover Industries expects a solid fourth quarter with record full year earnings in the $170 - $180 million range.
Profits at Dover Diversified continued to improve sequentially from the start of 1999, reaching a record level of $40 million. Both A-C Compressor and Belvac Production Machinery had sharply lower earnings than last year ($6 million in total) due to poor bookings last year at A-C and this year at Belvac. Bookings at A-C thus far in 1999 have been 30% ahead of 1998, bringing backlog up 25% since the start of the year. Belvac's market, however, shows few signs of improvement. Hill Phoenix offset much of these profit declines with a gain of more than 40% from the third quarter of last year. Both sales and profits set records as this company became
Diversified's largest profit maker in the Quarter (and Dover's fourth largest). Diversified's other operations were close to, or ahead, of prior year profits, with acquisitions made this year adding almost $4 million to quarterly earnings (after acquisition write-offs). Book-to-bill at Diversified was .88 in the quarter, with the largest imbalance at Hill Phoenix where record shipments combined with seasonally soft orders. Diversified's total backlog is 1% below last year.
Dover Resources' profits continued under pressure due to poor market conditions for some of its companies and due to a strike at its OPW-Cincinnati operations in mid-September. Contract discussions with the union are continuing, but shipments (and profits) at OPW-Fueling Components and OPW-Fluid Transfer will be adversely affected, at least through October. Market conditions for both of these companies have been much softer than in 1998 and this, rather than the strike, is the cause of their Third Quarter drop of $13 million in sales and over $5 million in profits. Earlier in the quarter OPW-Fluid Transfer announced the permanent closing of one of its Cincinnati plants to address the basic overcapacity problem.
An improvement in crude oil prices and significant internal cost reductions allowed Resource's Petroleum Equipment companies to achieve a strong sales gain and very strong earnings improvement compared to last year's depressed results. However, poor market conditions for Duncan (parking meters) and Ronninger-Petter (filters for papermaking and oil refinery) depressed profits for these companies, which are now comparing against last year's best results. Within Dover, and especially within Dover Resources, the answer to the question "Is the industrial economy strong or weak" continues to be, "It depends on which Company President you ask ... and which month."
Resources' book-to-bill of 1.04 for the Quarter and 1.09 for September (best bookings this year) give some hope for profit improvement in the Fourth Quarter but probably not to the $31 million level of last year.
Dover also announced that John F. McNiff, who has been Chief Financial Officer of Dover since 1983, plans to retire in the course of the year 2000 after a successor has been named. Thomas L. Reece, Dover's Chief Executive Officer, noted, "John has done a terrific job for Dover, and I will miss his analytic mind and encyclopedic memory of Dover's corporate history. We will conduct a thorough evaluation, both internally and externally, for the best possible successor. I understand and support John's decision that after 30 years as a 'corporate officer' he would like to take a break and then look at something different. John has given me an open-ended commitment to an orderly transition.
"Our excellent Third Quarter financial results make me confident of fulfilling the goal for 1999 expressed in last year's Annual Report," Mr. Reece added. "I will indeed be 'very disappointed if earnings per share from continuing operation (excluding special items) does not grow at least 15% in 1999.' More important, I think we have established a good base for continued strong growth for next year and beyond."
DOVER CORPORATION CONSOLIDATED
MARKET SEGMENT RESULTS
(unaudited)
EARNINGS SALES
Third quarter ended
September 30, 1999 1998* 1999 1998*
Dover Industries $45,141,000 $38,207,000 $291,920,000 $266,776,000
Dover Technologies 74,042,000 40,697,000 400,325,000 302,512,000
Dover Diversified 40,080,000 38,771,000 268,330,000 239,255,000
Dover Resources 24,650,000 31,730,000 191,373,000 211,021,000
Subtotal (after
intramarket
eliminations) 183,913,000 149,405,000$1,150,531,000 $1,018,532,000
Gain on disposition 20,931,000 --
Corporate expense (7,361,000) (4,274,000)
Net interest expense(9,404,000) (16,413,000)
Earnings before
taxes on income 188,079,000 128,718,000
Taxes on income 66,544,000 42,937,000
Net earnings -
Continuing
Operations 121,535,000 85,781,000
Earnings from
discontinued
operations* -- 8,191,000
Net earnings $121,535,000 $93,972,000
Net earnings per share:
Basic - Continuing $0.58 $0.39
Discontinued -- 0.03
Gain on sale -- --
Net earnings $0.58 $0.42
Diluted - Continuing $0.58 $0.38
Discontinued -- 0.04
Gain on sale -- --
Net earnings $0.58 $0.42
EARNINGS SALES
Nine months ended
September 30, 1999 1998* 1999 1998*
Dover Industries $131,134,000 $109,575,000 $844,452,000 $748,335,000
Dover Technologies 147,860,000 115,321,000 1,023,328,000 917,202,000
Dover Diversified 102,169,000 106,066,000 759,625,000 698,362,000
Dover Resources 76,478,000 94,120,000 574,684,000 598,197,000
Subtotal (after
intramarket
eliminations) 457,641,000 425,082,000$3,198,136,000 $2,958,800,000
Gain on disposition 17,256,000 --
Corporate expense
& interest net (17,021,000) (16,676,000)
Net interest expense(22,208,000)(40,260,000)
Earnings before
taxes on income 435,668,000 368,146,000
Taxes on Income 151,603,000 123,814,000
Net earnings -
Continuing
Operations 284,065,000 244,332,000
Earnings from
discontinued
operations* -- 39,689,000
Gain on sale
of discontinued
operations* 523,938,000 --
Net earnings $808,003,000 $284,021,000
Net earnings per share:
Basic - Continuing $1.34 $1.10
Discontinued -- 0.17
Gain on sale 2.49 --
Net earnings $3.83 $1.27
Diluted - Continuing $1.34 $1.09
Discontinued -- 0.18
Gain on sale 2.46 --
Net earnings $3.80 $1.27
Average number of
shares outstanding -
Basic 211,238,000 223,028,000
Average number of
shares outstanding -
Diluted 212,776,000 224,440,000
* On January 5, 1999, Dover completed the sale of its elevator business to
Thyssen Industrie AG for $1.17 billion. Results for 1998 have been
restated to classify the elevator business as discontinued.
DOVER CORPORATION CONSOLIDATED
FINANCIAL RESULTS
(unaudited)
Third quarter ended
September 30, 1999 1998* PERCENT
CHANGE
Net sales $1,150,531,000 $1,018,532,000 13.0%
Earnings before taxes $188,079,000 $128,718,000 46.1%
Net earnings from
continuing operations* $121,535,000 $85,781,000 41.7%
Net earnings* $121,535,000 $93,972,000 29.3%
Net earnings per share:
Basic - Continuing $0.58 $0.39 48.7%
Discontinued -- 0.03
Gain on sale -- --
Net earnings $0.58 $0.42 38.1%
Diluted - Continuing $0.58 $0.38 52.6%
Discontinued -- 0.04
Gain on sale -- --
Net earnings $0.58 $0.42 38.1%
Depreciation/amortization $51,249,000 $43,452,000 17.9%
Capital expenditures $33,086,000 $28,555,000 15.9%
Nine months ended
September 30, 1999 1998* PERCENT
CHANGE
Net sales $3,198,136,000 $2,958,800,000 8.1%
Earnings before taxes $435,668,000 $368,146,000 18.3%
Net earnings from
continuing operations* $284,065,000 $244,332,000 16.3%
Net earnings* $808,003,000 $284,021,000 184.5%
Net earnings per share:
Basic - Continuing $1.34 $1.10 21.8%
Discontinued -- 0.17
Gain on sale 2.49 --
Net earnings $3.83 $1.27 201.6%
Diluted - Continuing $1.34 $1.09 22.9%
Discontinued -- 0.18
Gain on sale 2.46 --
Net earnings $3.80 $1.27 199.2%
Depreciation/amortization $141,163,000 $122,199,000 15.5%
Capital expenditures $86,911,000 $86,189,000 .8%
Cash and
marketable securities $174,628,000 $63,839,000 173.5%
Short-term debt &
current maturities of
long-term debt $185,211,000 $438,849,000 -57.8%
Long-term debt $609,401,000 $611,310,000 -.3%
Equity $1,998,058,000 $1,917,216,000 4.2%
* On January 5, 1999, Dover completed the sale of its elevator business to
Thyssen Industrie AG for $1.17 billion. Results for 1998 have been
restated to classify the elevator business as discontinued.
DOVER CORPORATION
OPERATIONAL PROFITS (A)
(in millions)
1999 1999 1998
THIRD QUARTER NINE MONTHS FULL YEAR
SALES EARNINGS % SALES EARNINGS % SALES EARNINGS %
Dover Industries
$292 $52 18 $844 $149 18 $1,012 $173 17
Dover Technologies
400 82 21 1,024 173 17 1,211 178 15
Dover Diversified
268 45 17 760 119 16 958 164 17
Dover Resources
191 30 15 575 91 16 801 144 18
Operational Profits (after elim.)
$1,151 209 18 $3,198 532 17 $3,978 659
17
Corporates and other (12) (29) (40)
EBITACQ (B) 197 503 619
Gain on dispositions 21 17 --
Interest (9) (22) (57)
Acquisition
Write-offs (21) (62) (73)
Dover Pre-tax
income $188 $436 $489
(A) Differs from segment operating profits in that all non-cash write-offs
relating to acquisitions are excluded, along with the expenses of each
segment's corporate group.
(B) Earnings before taxes, interest, acquisition write-offs and
non-recurring gains.
SOURCE Dover Corporation