Press Release
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Reports First Quarter Earnings
NEW YORK--(BUSINESS WIRE)--April 15, 1999--Dover Corporation (NYSE-DOV) earned $2.72 per diluted share in its first quarter ending March 31, compared to $.40 per share in the first quarter of 1998.
This year's figure includes $2.40 per share ($524 million) realized from the sale of its elevator business, concluded in early January, while the 1998 figure includes $.07 earned by the elevator business.
Continuing operations earned $.32 per share in the first quarter, compared to $.33 per share in the prior year. The decision to exit from two small operations in this year's first quarter resulted in a pretax charge of $3.7 million, equivalent to slightly more than one cent per share.
Dover repurchased 7,482,000 shares of its common stock in the first quarter, paying an average price of $33 per share. This investment of $249 million, plus the $166 million of acquisitions described below, redeploys about one-half of the after-tax proceeds from the sale of the elevator business. The balance, plus Dover's normal free cash flow, will continue to be invested in solid, fairly-priced acquisition transactions and in opportunistic share repurchases.
Dover completed five add-on and one stand-alone acquisitions during the quarter at a combined cost of $166 million. The largest of these was Alphasem (Switzerland) a maker of semiconductor manufacturing equipment - which joins Dover's Universal Instruments. Alphasem is well known for its die bonders and sorters used in back-end semiconductor assembly. Its technology in this area will help Universal's Advanced Manufacturing Assembly business in the area of "array" package placement.
Van Dam (Netherlands) a maker of equipment for printing on plastic material joins Belvac; Hydra-Tight (U.K.) a leader in bolt tensioning and other mechanical jointing products joins Waukesha Bearings; TTI Testron (test fixtures) will be integrated into Everett Charles; and EMA (Brazil) gives De-Sta-Co Industries a position in that market for manual and power clamps.
Dover Diversified completed the only stand-alone acquisition - Graphic Microsystems (California), which manufactures pressroom automation equipment for precise color measurement and ink control. Its expertise in opto-electronics and machine control has created systems that increase a printer's ability to handle complex, shorter-run printing jobs while improving quality and reducing ink consumption and scrap.
These acquisitions, as a group, have an annualized sales volume of about $150 million. Their profit impact in 1999 will be small due to acquisition write-offs, imputed financing costs, and the soft current electronics market for Alphasem and TTI Testron.
Dover Industries was the only market segment to achieve a gain in first quarter earnings which exceeded prior year by 10% on a 13% sales gain. Acquisitions made during 1998 (principally PDQ - car washing equipment) represented $1.3 million of the $3.3 million gain in segment profits. Most Industries companies achieved sales and earnings gains, which were strongest at Heil Environmental and Rotary Lift. The U.S. market for refuse trucks, and Heil's position within it, are strong, as reflected in a 24% increase in shipments and book-to-bill ratio of 1.22. Rotary achieved higher sales and margins as its more competitive posture in the market place raised unit volume substantially and permitted unit cost reduction. Total bookings at Industries were 1.06x shipments for the quarter. In March they were 34% above prior year (20% adjusted for acquisitions).
Technologies' segment profits declined $9 million (27%), primarily due to continued softness in its four companies that serve the circuit board assembly and test market (CBAT). Sales in this market were down 8% (13% adjusted for acquisitions) with a $7 million decline in operating profits. Imaje realized lower, but still excellent, margins on increased sales. Strong gains in several of Quadrant's product lines (notably high frequency oscillators and filters used in wired communications) offset declines in other areas especially components used in wireless communication infrastructure) provision was also made for a $1.3 million non-recurring loss anticipated from the sale of product line. Book-to-bill ratios were above 1.0 at most companies, and averaged 1.07 for CBAT and 1.06 for Technologies as a whole.
Profits in the Diversified segment fell $3.7 million (13%) despite a 10% sales gain. The profit decline includes a $2.4 million loss from the shut down of a facility acquired by Tranter early last year. Operating profits for Belvac's can making machines dropped by more than $4 million reflecting low year-end backlog and continued low spending on new equipment by can makers. The majority of Diversified's other businesses also earned less than last year with only Sargent, SWF, and Waukesha achieving gains. Acquisitions made subsequent to the close of last year's first quarter added $29 million to Segment sales and about $5 million to earnings (after acquisition premium write-offs). Diversified's book-to-bill in the quarter was 1.05, mostly due to strength at A-C Compressor which has long lead times between orders and shipments.
Profits in the Resources segment dropped $5.1 million (16%) from prior year, primarily due to a decline of $5.5 million in the Petroleum Equipment Group and Quartzdyne whose sales fell over 50%. New investment in oil/gas drilling and related production equipment has been severely impacted by low energy prices since the second quarter of last year. A record performance by OPW-Fueling Components, smaller gains at two other companies, and the addition of $2.5 million from acquisitions (primarily Wilden) offset declines at several other companies. The Resources' companies involved in energy and chemical transfer products (Wilden, Blackmer, Cook and OPW-Fluid Transfer Group) have experienced modest sales slow-downs with larger profit decreases (due to the high marginal profitability of their products). Combined margins in these four businesses dropped 4 points to 19%. Resources had a .95 book-to-bill ratio for the quarter and expects only a modest sequential improvement in profits in the second quarter.
Non-operational factors at Dover largely offset the $14.6 million (11%) decline in segment profits described above. Interest costs dropped $6.7 million and average diluted shares outstanding dropped 3%, reducing the earnings per share decline to 3%.
In mid-March Dover told a group of security analysts (press release 3/16) that it expected first quarter EPS to exceed $.30 per share but be below Wall Streets' expectations, which had been in the mid to high $.30's. Dover expects earnings levels to improve during the balance of the year, but with strong growth delayed until recovery begins in the Technology segment.
DOVER CORPORATION CONSOLIDATED
MARKET SEGMENT RESULTS
(unaudited)
EARNINGS
First quarter ended March 31, : 1999 1998(a)
------------------------------- ---------------------------------
Dover Industries $ 37,284,000 $ 34,014,000
Dover Technologies 24,614,000 33,699,000
Dover Diversified 24,906,000 28,637,000
Dover Resources 26,933,000 32,046,000
---------------------------------
---------------------------------
Subtotal (after
intramarket eliminations) 113,737,000 128,396,000
Corporate expense & interest net (8,973,000) (17,168,000)
---------------------------------
Earnings before taxes on income 104,764,000 111,228,000
Taxes on income 35,544,000 37,385,000
---------------------------------
Net earnings - Continuing
Operations 69,220,000 73,843,000
Earnings from discontinued
operations (a) 16,152,000
Gain on sale of discontinued
operations (a) 523,938,000
====================================
Net earnings $ 593,158,000 $ 89,995,000
====================================
Net earnings per share:
Basic - Continuing $ 0.32 $ 0.33
Discontinued 0.07
Gain on sale 2.41
====================================
Net earnings $ 2.73 $ 0.40
====================================
Diluted - Continuing $ 0.32 $ 0.33
Discontinued 0.07
Gain on sale 2.40
====================================
Net earnings $ 2.72 $ 0.40
====================================
Average number of shares
outstanding:
Basic 216,928,000 222,775,000
Diluted 218,326,000 224,822,000
SALES
First quarter ended March 31, : 1999 1998 (a)
----------------------------------------------------------------------
Dover Industries $ 258,706,000 $ 229,494,000
Dover Technologies 288,120,000 297,657,000
Dover Diversified 230,580,000 210,275,000
Dover Resources 193,757,000 194,301,000
======================================
Subtotal (after intramarket
eliminations) $ 969,755,000 $ 930,496,000
======================================
(a) 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)
PERCENT
First quarter ended March 31, : 1999 1998 (a) CHANGE
---------------------------------------------------------------------
Net sales $ 969,755,000 $ 930,496,000 4.2%
Earnings before taxes $ 104,764,000 $ 111,228,000 -5.8%
Net earnings from continuing
operations (a) $ 69,220,000 $ 73,843,000 -6.3%
Net earnings (a) $ 593,158,000 $ 89,995,000 559.1%
Net earnings per share:
Basic - Continuing $ 0.32 $ 0.33 -3.0%
Discontinued - 0.07
Gain on sale 2.41 -
===============================
Net earnings $ 2.73 $ 0.40 582.5%
===============================
Diluted - Continuing $ 0.32 $ 0.33 -3.0%
Discontinued - 0.07
Gain on sale 2.40 -
===============================
Net earnings $ 2.72 $ 0.40 580.0%
===============================
Depreciation/amortization $ 43,183,000 $ 37,508,000 15.1%
Capital expenditures $ 26,305,000 $ 24,926,000 5.5%
Cash and marketable securities $ 519,942,000 $ 102,196,000 408.8%
Short-term debt & current
maturities of Long-term debt $ 111,168,000 $ 507,068,000 -78.1%
Long-term debt $ 609,182,000 $ 261,647,000 132.8%
Equity $2,216,709,000 $1,774,448,000 24.9%
(a) 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.
CONTACT: Dover Corporation, New York
John F. McNiff, Vice President, 212/922-1640