e8vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 16, 2009
DOVER CORPORATION
(Exact Name of Registrant as Specified in Charter)
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| Delaware
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1-4018
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53-0257888 |
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(Commission File Number)
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(I.R.S. Employer |
| of Incorporation)
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Identification No.) |
280 Park Avenue
New York, NY 10017
(Address of Principal Executive Offices)
(212) 922-1640
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former address, if Changed Since Last Report)
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure.
Dover Corporation (the “Company”) is holding Dover Day, its 2009 Investor Meeting, on Monday,
November 16, 2009 in New York, New York. The meeting begins at 1:00 pm Eastern Time and is
available to all interested parties via webcast at
http://www.dovercorporation.com. The
presentation materials are attached hereto as exhibit 99.1and are available on the Investor Information section of the Company’s website at
www.dovercorporation.com.
Item 9.01 Financial Statements and Exhibits
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Financial statements of business acquired. |
Not applicable.
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Pro forma financial information. |
Not applicable.
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Shell company transactions. |
Not applicable.
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Exhibits |
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The following exhibit is filed as part of this report: |
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99.1 |
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Dover Investor Day Presentation Materials, dated November 16, 2009. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Date: November 16, 2009 |
DOVER CORPORATION
(Registrant)
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By: |
/s/ Joseph W. Schmidt
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Name: |
Joseph W. Schmidt |
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Title: |
Vice President, General Counsel & Secretary |
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EXHIBIT INDEX
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Exhibit |
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99.1
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Dover Investor Day Presentation Materials, dated November 16, 2009. |
exv99w1
| Creating Value The “Dover Way” |
| Dover Investor Day Presentation |
| Forward Looking Statements |
| We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties. We
caution everyone to be guided in their analysis of Dover Corporation by referring to our Form 10-K 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 internet site, www.dovercorporation.com, where considerably more information can be found. |
| 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way 1:35 — 1:45 Steve Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative 1:55 — 2:55 Segment Presidents Segment Overviews |
| Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics 3:10 — 3:15 Bob Livingston Summary and Conclusion 3:15 — 3:45 Bob
Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception |
| Dover Investor Day Agenda |
| 1:00 — 1:05 Paul Goldberg Welcome and Introduction |
| 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way |
| 1:35 — 1:45 Steve Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative 1:55 — 2:55 Segment Presidents Segment Overviews |
| Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics 3:10 — 3:15 Bob Livingston Summary and Conclusion 3:15 — 3:45 Bob
Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception 2 |
| President and Chief Executive Officer Dover Corporation 3 |
| Building on our Strengths to Drive Sustained, Superior Returns |
| Attractive portfolio of highly-profitable industrial businesses |
| OpCo leadership empowered to win with customers
Application-specific innovation, driving customer value |
| Mix of organic & acquisitive growth |
| Many Changes at Dover Over Past Year |
| Brad Cerepak Joe Schmidt
VP Finance and CFO VP General Counsel and Secretary |
| Tom Giacomini Steve Sellhausen
President, Industrial Products VP Corporate Development |
| Ray Hoglund Bill Spurgeon
President, Engineered Systems President, Fluid Management |
| Jay Kloosterboer Dave Van Loan
VP Human Resources President, Electronic Technologies |
| Bob Livingston Michael Zhang
President & CEO Managing Director, China |
| Jim Moyle
VP Global Sourcing & Supply Chain |
| Many Changes at Dover Over Past Year |
| Brad Cerepak Joe Schmidt
VP Finance and CFO VP General Counsel and Secretary |
| Tom Giacomini Steve Sellhausen
President, Industrial Products VP Corporate Development |
| Ray Hoglund Bill Spurgeon
President, Engineered Systems President, Fluid Management |
| Jay Kloosterboer Dave Van Loan
VP Human Resources President, Electronic Technologies |
| Bob Livingston Michael Zhang
President & CEO Managing Director, China |
| Jim Moyle
VP Global Sourcing & Supply Chain New to role 6 |
| Many Changes at Dover Over Past Year |
| Brad Cerepak Joe Schmidt
VP Finance and CFO VP General Counsel and Secretary |
| Tom Giacomini Steve Sellhausen
President, Industrial Products VP Corporate Development |
| Ray Hoglund Bill Spurgeon
President, Engineered Systems President, Fluid Management |
| Jay Kloosterboer Dave Van Loan
VP Human Resources President, Electronic Technologies |
| Bob Livingston Michael Zhang
President & CEO Managing Director, China |
| Jim Moyle New to role
VP Global Sourcing & Supply Chain
New to Dover 7 |
| Slow response to ‘00-’01 economic downturn |
| Better alignment and integration needed with acquisitions |
| Maintained market-leading position |
| Maintained focus on generating strong cash flow |
| Actively shaping our portfolio |
| Improved and standardized M&A and PMI processes |
| Decisively and aggressively dealing with economic downturn 8 |
| Our Advantaged Business Model |
| Attractive portfolio of highly-profitable, industrial businesses with strong market positions Entrepreneurial operating company
leadership empowered to win with customers Winning through application-specific innovation driving customer value Delivering
organic and acquisitive growth in attractive spaces |
| A continued focus on customers, market leadership, cash generation 9 |
| Customer Focused, Entrepreneurial Operating Company Leadership Empowered to Win |
| Close to customers, channels, and competitors Compete on customer value rather than price Ability to act fast, respond to market
changes quickly Earn high-gross margins Application-specific product Win with winners
innovation, providing
Attract and retain best leaders
tangible value to customers in the industry Precision pricing Grow faster than our markets Operational resources aligned with
market strategy |
| Dover Well Positioned to Create Shareholder Value |
| Capturing Benefits of Common Ownership |
| Positioning More Disciplined for Growth Capital Allocation |
| Dover Well Positioned to Create Shareholder Value |
| Capturing Benefits of Common Ownership |
| Procurement
Regional infrastructure
Shared technology and facilities |
| Positioning More Disciplined for Growth Capital Allocation |
| Operating Company Performance Enhanced by Dover Scale |
| Procurement
Leverage combined buying Operating company leadership power of Dover able to focus on customers, products and technology
Regional infrastructure
Utilize capacity and resources Improved cash “drop through” across company boundaries from every dollar of growth Advantaged
cost structures Shared technology and facilities Provide attractive career paths
Cross business product and develop talent base to its development full potential
Shared manufacturing centers |
| Building Scale in China for Growth |
| Opened regional headquarters in Shanghai September 2009 |
| Increasing regional business development resources |
| Managing shared manufacturing facilities |
| Building best cost country supply base |
| Operating shared service center |
| Dover Well Positioned to Create Shareholder Value |
| Capturing Benefits of Common Ownership |
| Positioning for Growth
More Disciplined
Healthy portfolio positioned for growth
Exposure to global macro growth Capital Allocation drivers Investing through the downturn |
| Healthy Portfolio Positioned for Growth |
| Electronic Leading market positions, strong industrial brands
Technologies (18%)
Value-added in engineering, design and marketing
Fluid
Management Intense customer intimacy
(22%) |
| Application-specific innovation, creating value Industrial for customers
Products (28%)
Sustainable growth, exposure to tailwinds and growth drivers |
| Longer product life cycles with evolutionary
Systems
technology shifts |
| 2009e Revenue
100% = $5.6-5.8B 17 |
| Significant Exposure to a Number of Favorable Global Macro Growth Trends — ‘Tailwinds’ |
| Increased demand, depleting resources Renewable energy technologies Emerging market growth |
| Energy efficiency
Environmentally friendly products Recycling Clean energy |
| Product identification
Traceability
Food safety |
| Mobile devices
Defense spending/ geopolitics Infrastructure |
| Increased living standards Infrastructure build-out Manufacturing/LCC capabilities 18 |
| Dover Well Positioned to Create Shareholder Value |
| Capturing Benefits of Common Ownership |
| More Disciplined Capital Allocation Positioning
for Growth Strategic and synergistic Process discipline
Integration focus and accountability 19 |
| Focusing Our Investments in Attractive Sectors |
| Energy Fluid Solutions Product Identification |
| Acoustic and Communication Food Service and
Retail Equipment Components |
| Overarching Goal:
Drive Sustained Shareholder Returns |
| Objective: Sustained top-quartile TSR |
| 4-5% through-cycle Drive margin organic growth improvement Disciplined capital allocation Balance of growth Expand return
on from disciplined invested capital Maintain ongoing acquisitions in return of cash to attractive sectors Leverage shareholders
Dover scale |
| Supporting • Compensation linked to TSR
• Well defined and actively governed M&A/PMI processes infrastructure • Talent development programs 21 |
| Dover Investor Day Agenda |
| 1:00 — 1:05 Paul Goldberg Welcome and Introduction 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way |
| 1:35 — 1:45 Steve Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative 1:55 — 2:55 Segment Presidents Segment Overviews |
| Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics 3:10 — 3:15 Bob Livingston Summary and Conclusion 3:15 — 3:45 Bob
Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception 22 |
| The New Dover Disciplined M&A Strategy —What’s Different? |
| Opportunistic Proactive + opportunistic More stand alone focused More strategic add-ons Buy and improve Integrate and capture
synergies 23 |
| M&A Core to Dover Strategy |
| Acquisition spend or divestiture as % of revenue (%) 25 |
| Stand alone
20 acquisitions |
| 15 Strategic add-on acquisitions
10 Avg = 8% |
| 5 Corning Freq.
0
Rasco
Avg = 2% -5 Hydratight Tranter
AC Compressor Divestitures -10 Mark Andy Dovatech Universal |
| -15
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 YTD |
| Robust Acquisition/Divestiture Processes Established |
| Proactively pursue businesses with attractive Dover business model
Focus on “expandable” growth spaces — link to capital allocation
Acquisitions where current Dover Platforms enable value creation
Address low-fit businesses — operational/divestiture |
| Explicit deal board and due diligence processes
“Value stack” transaction assessment linked to post-close actions
Discipline
Valuation discipline: acquisitions compete with share buybacks |
| Repeatable, scalable, resourced process for acquisition integrations
Integration
Standardized tools, scorecards, metrics and reporting/tracking
Discipline
Focused and accountable management (sponsor, integration manager) |
| Proactively Shaping Dover M&A Pipeline |
| Proactively pursue businesses with attractive Dover business model Linked to
strategy & portfolio review Fits common Dover business model Formal search & screen criteria |
| Primary focus on strategic add-on deals Maximizes value creation potential |
| Focus on continued international expansion |
| Traditional focus on private deals, though open to public deals |
| Focus on $50M — $500M sweet spot |
| Example: Disciplined M&A Process Acme Acquisition Integration Performance |
| Category of acquisition Sponsor Integration Manager Acquisition date Current date Add-on J. Smith M. Jones 1/1/09 8/1/09
Original planned results Realized results Financial performance ($M) 2009
2010
Cumulative Cumulative
Cumulative On (for specified period) 1Q 2Q 3Q 4Q Tot 1Q 2Q 3Q 4Q Tot plan to date actual to date estimate track?
Sales (overall) 50 50 55 60 215 60 65 65 70 260 118 130 500 EBIT (overall) 3 3 4 7 17 7 8 9 11 35 7 9 55 EBIT margin % (overall) 6 6
7 12 8 12 12 14 16 14 6 7 11 FCF (overall) 1 2 2 4 9 4 5 6 7 22 3 4 35
Planned integration impact Realized results
Integration impact ($M) 2009 2010 Cumulative Cumulative On (achieved by quarter) 1Q 2Q 3Q 4Q Tot 1Q 2Q 3Q 4Q Tot Plan to date
Realized to date track?
EBIT impact
SG&A reduction 0.1 0.3 0.3 0.3 1.0 0.3 0.3 0.3 0.3 1.2 0.7 0.7 Cross-selling — - 1.0 1.0 2.0 1.0 1.0 1.0 1.0 4.0 1.0 0.7 Sourcing
savings — - — 2.0 2.0 2.0 2.0 2.0 2.0 8.0 — -Plant consolidation — - — - — - 2.5 2.5 2.5 7.5 — -Total EBIT impact 0.1 0.3 1.3 3.3 5.0
3.3 5.8 5.8 5.8 20.7 1.7 1.4 |
| FCF impact
Inventory reduction — - — 2.0 2.0 — - — - — - -One time capital impacts (cash) — - — - — - — - — - — -One time non-capital
impacts (cash) — - — - — (1.0) — - — (1.0) — - |
| Integration economics Projected Latest estimate Integration assessment
Total one time impacts (cash) $201M $201M
Underlying business growing faster than expected due to new
3-year incremental iTSR 5% 5% product launch that has increased share. SG&A reduction
3-year standalone iTSR 17% 18% completed on time and realized target. Cross-selling slightly After-tax IRR 14% 16% below target due
to delays in salesperson training.
Cash payback Year 8 Year 7
On track (above commitment) At risk (<20% below commitment) Off track (>20% below commitment) |
| Continuing to Pursue and Execute Attractive Deals: Hill PHOENIX Acquisition of Tyler Refrigeration |
| Exceeding planned customer retention rates |
| Tyler technology incorporated in Hill PHOENIX products within 4 weeks of close |
| All Tyler volume absorbed into Hill PHOENIX facility — no delayed or missed orders |
| Value capture ahead of plan |
| Key step in Hill PHOENIX strategy |
| Dover Investor Day Agenda |
| 1:00 — 1:05 Paul Goldberg Welcome and Introduction 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way 1:35 — 1:45 Steve
Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative
1:55 — 2:55 Segment Presidents Segment Overviews |
| Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics 3:10 — 3:15 Bob Livingston Summary and Conclusion 3:15 — 3:45 Bob
Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception |
| Capturing the Benefits of Common Ownership Through Procurement |
| New Strategic Direction for Procurement |
| Historically, procurement highly decentralized Move from tactical buying
— >30 businesses, >200 plants to strategic procurement
— Procurement fragmented across many locations
Shifting to a more global supply base
Identified significant overlap in purchasing Capture value from across Dover combined buying power of Dover Building
central/matrixed procurement capability to leverage Dover scale |
| Focused on Six Areas of Improvement |
| Identify and qualify the most capable suppliers |
| Forge alliances with major suppliers |
| Standardize supply chain sourcing processes |
| Provide data analysis tools |
| Increase BCC/LCC Sourcing |
| Train and develop procurement professionals |
| New Capabilities and a New Way of Working Together |
| Building supporting infrastructure at corporate and segments |
| — Central procurement group |
| — Segment sourcing leadership |
| — China sourcing organization |
| Formed commodity teams with central leadership and representatives from businesses that will benefit the most Umbrella agreements
negotiated centrally are used by local buyers Confident this will drive significant, lasting impact but it will take time |
| Multi-Year Procurement Program Prioritizes Efforts Based on ROI |
| Year of Example Addressable completion categories spend ($M) |
| 2009 Telecom 30 Office supplies
Annual 2010 Transportation ~1,000 recurring Plastics savings of Metals & Castings
$75 — 100M
Motors in 2011 2011 MRO & Travel ~500 Hydraulics Machined Parts |
| 2012+ Bearings ~1,000 Chemicals Electronics |
| Rationalizing supply base, becoming more
relevant to those we keep Transportation a significant opportunity for Dover Transportation Vendors (#) Dover with >$250M of annual
spend
1200
~1,100 |
| Wrapping up intensive analysis phase routes 800
— Analyzed database of >14k global |
| Negotiations with ~50 vendors underway 400
200 |
| ~50
Expect to achieve >10% savings on total
0
spend
2008 2009 RFQ 2010 plan
Avg. spend per supplier $0.2 M $5.0 M
($M) |
| Similar Opportunities in Many Other Categories |
| Approximate number of Direct spend category Dover
suppliers |
| Machined parts and fabrications 1,300 Transportation 1,100 Castings 425 Refrigeration 400 Metals 375 Electronics 350 Resins and
plastics 275 ... and many more |
| Dover is Strategically Changing its Focus to a Single Voice |
| In Short...
Dover is strategically sourcing as one! |
| Dover Investor Day Agenda |
| 1:00 — 1:05 Paul Goldberg Welcome and Introduction 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way 1:35 — 1:45 Steve
Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative
1:55 — 2:55 Segment Presidents Segment Overviews
Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics 3:10 — 3:15 Bob Livingston Summary and Conclusion 3:15 — 3:45 Bob
Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception |
| Electronic Engineered Products Technologies Leading suppliers of: (18%) Commercial food service/ display equipment Fluid
Refrigeration and cooling
Management systems
(22%) Food packaging equipment |
| Industrial
Products Product Identification
(28%) Worldwide suppliers of industrial marking and coding systems serving: Food and beverage
Cosmetic
Pharma
Electronic & industrial |
| 2009e Revenue
100% = $5.6-5.8B |
| Engineered Systems has a Multi-National Customer Base in Food and Consumer Staples |
| Engineered Systems Demonstrated Relative Stability in 2009 |
| Year over year revenue down 11% YTD and 1% in Q3 Improving revenue trends, steady margin
— Sequential revenue up 11% in Q3 vs. Q2, driven by SWEP, Product ID, and Tyler
— Margins have remained strong relative to 2008 |
| Bookings are continuing to improve YoY Expect to follow normal seasonal market trends
2009 Update |
| Increasing emphasis on environmental sustainability Modest recovery in markets supported by GDP
2010 Planning
Favorable trends in Supermarket remodels assumptions
Proactive acquisition activity continues |
| Our Strategy: Help Our Customers Sell More Product, More Profitably and More Responsibly |
| Drivers and scope of DES strategy |
| — Businesses driven by food and consumer staples trends |
| — Engineered equipment companies with opportunity for growth and advantage |
| — Globalization based on risk/reward |
| Expanding attractive sub-sectors |
| — Hill PHOENIX, Unified Brands food equipment |
| Maximizing value of all portfolio companies |
| Strong Secular Trends Driving Growth |
| 2003-08 GDP Rural development 2003-08 Population Growth Per Capita
Growth
4.4% per year Energy U.S + U.S
0.9% per year
Europe Sustainability
Europe 3.6% per year China 0.6% per year
Safety, traceability
China 21% India
1.5% Income redistribution
India 14% per year |
| More People Rising Living Standards Government Lift |
| Global population CAGR: ~1.2% Global GDP per capita Growth Multiple: + (70 million people/yr.) CAGR: ~7.5% |
| User Trends and Government Influence Create Opportunity for Faster Equipment Growth |
| Trends Government Influence |
| Energy
Regs Rising Energy Cost (e.g., EPACT)
Needed Customer Solutions
More Sustainable Sustainability
(Greenhouse Cap & Trade?) |
| Traceability User Needs Opportunity for “Help Me Compete” Rural region dev.
Equipment Growth >
Look Income re-distribution Taste Consumption Growth Speed Tax credits/fines
Operating cost Initial cost
Inv./Logistics
Government drivers for growth and technology change |
| SWEP is Growing Through Technology Leadership in Attractive Global Markets |
| Regulatory and societal pressures for more sustainable products |
| Increasing value of energy efficiency |
| Global customers with localized needs |
| Product ID Group Achieving Global Scale While Maintaining Local Market Intimacy |
| Identified ways to better serve global customer base
Geographic presence
Global technology customized to local needs |
| Operating philosophy — provide scale and customer intimacy
Common back-end: supply chain, R&D,
Global Coverage shared services
Broad, Complementary Offering Local front-end: customer interface, local product customization |
| Dover and customers now realizing the benefits
More products, better service to customers
Larger scale for Dover |
| Electronic Energy
Technologies Leading component and service (18%) supplier serving: Oil & gas production Fluid Gas compressors Management
Turbine power generation
(22%) |
| Norris Production Solutions
Industrial Products
(28%) Fluid Solutions
Specialty fluid handling products
Pumps and compressors Engineered Vehicle fueling components Hazardous fluid handling Systems components
(32%)
Quick disconnect couplings and fluid dispensers |
| 2009e Revenue
100% = $5.6-5.8B |
| Fluid Management Maintained Margins Through Downturn |
| 2008 backlog fueled strong 1Q 3Q improvement over 2Q low point Strong EBIT margin performance
2009 YTD
— Price management and cost reductions
Continued investment for future |
| Industrial Production/GDP improving — positive trends Energy markets slight improvement
— Canadian rigs count up
2009 Update
— Gas prices recently improved — cold winter? |
| Global macro economic conditions improving Uncertainties in Energy market
2010 Planning — NA average rig count expected to be up in 2010 assumptions — Oil prices average $70-75; Gas prices uncertain
Fluid Solutions well positioned for global growth |
| Our Strategy: Provide Leading Technology to Extract and Handle Critical Fluids |
| Global expansion Synergies Operational excellence New product development Value creating acquisitions Leadership
development |
| Three Macro Trends Driving Demand for Fluid Management Technology |
| Growing energy Maturing fields, declining production rates demand
Extractions in harsher environments Increasing challenges
Work force demographics, need for remote monitoring to extract oil & gas |
| Sustainability “Zero harm” standards
Leak prevention and containment Increasing regulation Increased efficiency and
customer needs More active monitoring |
| Infrastructure BRIC development curves, rising standard of living Urbanization, increased infrastructure needs Globalization
of e.g. retail fueling infrastructure spend e.g. waste water management systems |
| US Synthetic PDC Drill Bit Inserts Reduce Overall Drilling Costs |
| Gulf of Mexico 10,000 ft well
Total rig cost US Synthetics sales / rig —Worldwide rig count (bar) indexed (line)
Rock Bit PDC 5,000 3 |
| Rate of penetration 40 ft / hr 70 ft / hr
4,000 +11% CAGR Bit life 1,500 ft 3,000 ft |
| Drilling 10,000 ft days . well for 13.0 7.5 2
Daily rig rate $100,000 $100,000 3,000 |
| Total rig cost $1.30MM $0.75MM
2,000
1
+6% CAGR |
| 75% faster drilling rate 1,000 2x longer bit life Ability to drill in harsher
0 0 environment ‘98 ‘00 ‘02 ‘04 ‘06 ‘08 |
| From production to consumption, our solutions protect the environment while delivering quantifiable customer benefits |
| Wellhead Production Transmission Loading/Unloading Transport Retail Fueling |
| Remote monitoring Remote monitoring & Dry disconnect Safety valves, fittings Automated tank and artificial lift diagnostics
solutions and vapor recovery gauging, spill automation Compliance testing & systems containment, vapor reporting recovery systems |
| Protect people & environment Remote monitoring/automation Productivity improvement Dry disconnect solutions Compliance &
reporting Vapor recovery systems Application specific software |
| Pump Solutions Group is Well Positioned for Global Growth While Reaping Benefits of Integration |
| Broad portfolio of pump technologies with market leading brands |
| Attractive and diverse end-markets |
| 7 Global Locations Global reach & scale
— e.g. serving growing global infrastructure projects |
| Well-developed business integration process
— Integration generated run-rate savings of ~$15M |
| Electronic
Technologies Material Handling
(18%) Winches and gearboxes Fluid Construction attachments Management and components Industrial automation
(22%) systems |
| Industrial Products
(28%) Mobile Equipment
Specialty transport Aerospace
and military components Engineered Waste management Systems equipment
(32%)
Vehicle services |
| 2009e Revenue
100% = $5.6-5.8B |
| Many Significant Actions Have Been Taken to Reduce Costs |
| Closed 23 facilities, 2 additional underway |
| Fixed Cost
Reduced headcount by ~3,200 (30%+ of prior years total)
Restructuring |
| Lowered breakeven by >20% |
| Leading Dover’s global procurement efforts in key
Procurement categories
— Metals
— Transportation |
| Reduced inventory levels by ~$75M |
| Working Capital
Maintained DSO level |
| Industrial Products Saw Significant Decline in End Markets |
| Demand declines across all served end markets
Sequential revenue and margin improvements in Q3 vs. Q2
— Revenue up 3%
2009 YTD
— EBIT margin up 2%
Restructuring initiatives have helped to protect margins —YTD drop through $22M |
| Margins continue to improve over first half of year Continued focus on cash generation
2009 Update Order levels stabilizing, but not expecting quick recovery |
| Full year of restructuring benefits realized Mild recovery in auto end-markets
2010 Planning Mixed view on transportation — some strength in aerospace assumptions and government Continued challenges in N.A.
construction |
| Our Strategy: Two Major Focuses to Drive Long Term Value Creation |
| Position for organic Drive new product development growth Exploit exposures to favorable tailwinds |
| Reshape the Invest primarily in three focus sectors portfolio Increase effectiveness and positioning for growth through combinations |
| Different Strategic Priorities Across Our Industrial Products Businesses |
| Tulsa Winch Industrial winches, hoists and gearboxes
Grow Warn
Industrial automation components DeStaCo
proactively
Heil Environmental Solid waste/recycling Marathon |
| Sargent Aerospace/defense
Manage for Vehicle Service Group cash / Vehicle services equipment PDQ
opportunistic Heil Trailer
Bulk transport/tanker bodies
growth PMI
Motorsport components/ accessories Warn |
| Improve Construction equipment Paladin Crenlo
Texas Hydraulic |
| Well Positioned to Grow in Industrial Winches, Hoists and Gearboxes |
| Large market (~$2.5B), fragmented players |
| Attractive end markets with tailwinds
— Onshore/Offshore oil & gas
— Alternative energy
— Government |
| Proprietary products within a comprehensive portfolio |
| Product certification and industry standards are critical |
| Opportunities identified for international expansion |
| Leveraging a Global Footprint in Industrial Automation Components |
| Diverse, global market ($3B+) |
| Favorable tailwinds from increased consumer consumption, food/medical safety, and workplace safety |
| Strong DeStaCo brand with a global footprint |
| Recurring revenue streams |
| Interested in components that “touch the production part” |
| Building on a Strong Position to Grow in Attractive Solid Waste and Recycling Sector |
| Increased waste levels from secular global consumption trends
— Growth rates higher in specific geographies (e.g. CEE) |
| Favorable recycling equipment tailwinds (10%+ CAGR)
— Increased automation |
| Worldwide Municipal Solid Waste
Emerging technology opportunities
(M tonnes/yr) Waste-
— to-Energy
2,000 — Green Technology / Telemetrics
1,600 4+%
High engineering value-add in select sub 1,200 segments |
| 800
2008 2013 2018 Leading position for Dover
Source: OECD, United Nations, IMF |
| Electronic Communication Components Technologies High-end sound and high-(18%) frequency signal initiation, transmission,
reception and Fluid conversion components
Management
Microphones and receivers (22%)
Filters, oscillators, switches |
| Industrial Products
(28%) Electronic Assembly and Test
Assembly, repair, and test equipment
for semiconductors and electronic circuit boards Engineered Testers and fixtures
Systems
(32%) Material deposition Precision soldering |
| 2009e Revenue
100% = $5.6-5.8B |
| Electronic Technologies Performance Update |
| Improving revenue and margin trends |
| — Sequential revenue up 12% in Q3 vs. Q2, driven by 2009 YTD Knowles, and the Tech
Group
— Sequential margins have improved by 580 bps |
| Bookings are forecasted to improve YoY Positive indicators of a Tech market recovery
2009 Update |
| Customers overreacted to the downturn and didn’t keep up with capacity or technology purchases Handset sales expected to return to
historical growth rates —
2010 Planning pent up demand assumptions
Windows 7 spike in PC sales Shrinking defense spending |
| Electronic Technologies Working to Broaden End-Market Diversification |
| End market sales as a percent of Electronic Technologies Revenue |
| 100
Other PCs/Servers
80 Military/Space Medical 60 Industrial |
| Our Strategy: Attractive Through-Cycle Growth and More Consistent Earnings |
| Reshaping the portfolio
— Streamlined portfolio to technology and share leaders
— Integrating companies to create advantaged global positions |
| Improving ‘Flexibility’ and reducing cost base
— Moved manufacturing to Asia
— Lowered breakeven in many businesses by up to 50%
— Maintained ability to rapidly scale up in market up cycles |
| Growing our recurring revenues
— 23% of DET revenue from capital equipment |
| Expanding the core
— Apply existing technology to adjacent markets
— Diversify end markets — reduce links to semiconductor cycle
— Position in front of growth tailwinds (e.g. renewable energy, sensors) |
| Integrated DET Businesses and Established Global Operating Model |
| 11 companies we have owned since 2000 are now integrated into 5 businesses
— Created global footprint and scale
— Leveraging benefits of common ownership |
| Established centers of excellence
— Manufacturing
— Back office
— Sourcing |
| Maintained local customer intimacy & brands Shenzhen Facility —consolidates 7 sites into 1 Established financially efficient
structure |
| Leveraging Technology Leadership for Growth Across DET |
| Current New applications applications |
| Leveraging current
Material deposition leading technology equipment positions
Electronics Solar panels |
| Attractive applications in adjacent markets |
| Testing handling
equipment for Driving end market MEMs diversification and
Semiconductors MEMs
growth |
| Surface acoustic wave (SAW) sensors Oscillators Viscosity sensors |
| Growing Knowles Beyond Acoustic Components to Human Interface Components |
| Stable, predictable growth position in hearing aids |
| Strong core cell phone market |
| Expanding the core, broadening applications and end-markets |
| Leveraging MEMS capabilities |
| Dover Investor Day Agenda |
| 1:00 — 1:05 Paul Goldberg Welcome and Introduction 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way 1:35 — 1:45 Steve
Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative 1:55 — 2:55 Segment Presidents Segment Overviews |
| Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics |
| 3:10 — 3:15 Bob Livingston Summary and Conclusion 3:15 — 3:45 Bob Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception |
| 2009 .... A Challenging Year |
| Significant end market demand declines in core markets
Select businesses have shown more resilience (e.g.
Knowles, Hill PHOENIX) Continuing Earnings Per Share
($)
Took decisive actions to protect and strengthen our 1.20 business 1.01
0.98
Restructured our businesses 0.91
0.90
— Took out $125M of annual cost 0.77
— Closed 27 facilities; reduced headcount 20%
Focused on operational efficiency and cash generation 0.58
0.60 0.54
— Scaled up global procurement efforts
— Maintained working capital 20% of sales 0.33
0.30
Demonstrated relative strength through the year
Maintained double-digit margins 0.00
Increased dividend while maintaining strong balance sheet Q1 Q2 Q3 Q4 Q1 Q2 Q3 |
| Well positioned for growth as economy recovers 2008 2009
Reduced restructuring charges (down $70M from 2009) $35M — $40M of carryover year-over-year savings Continued to invest in organic
growth |
| Key messages from last earnings call
Stability across portfolio
Normal seasonal revenue decline (e.g. refrigeration)
4th quarter revenue decrease $80-90M sequentially
Anticipate full-year EPS around mid-point of $1.75-$2.00 range |
| What’s changed
Electronic assembly and energy businesses stronger than originally anticipated |
| We are confident full-year EPS will be slightly above the mid-point of previously provided guidance of $1.75 to $2.00 |
| 2010 ... A Framework For Earnings Growth |
| Long Term Goal 2010 Initial Thoughts |
| Sales growth 7% — 10% TBD Organic (%) 4% — 5% 3% — 5% Acquisition (%) 3% — 5% TBD |
| Segment EBIT margin (%) >15% Up 200 — 225 bps from 2009 Earnings growth (%) 10% — 13% > Long-term goal Free cash flow / Sales (%)
>10% 10% Interest expense — Up slightly from 2009 Corporate expense — Up ~$10M from 2009 CapEx — Up slightly from 2009 Tax rate -
29% — 30% |
| Dover Focused on Growing Sales, Earnings and Free Cash Generation |
| Operating company value drivers Winning in the market
Sales growth (organic)
7-10%
Margin management Acquisitions Earnings
Operating discipline
Working capital 10-13% EPS Inventory turns CapEx Asset productivity
generation |
| Total Shareholder Return Captures Contribution From Both Growth in Value and Free Cash Flow |
| We have set a corporate objective of sustained top-quartile TSR vs. our peers |
| We have adjusted internal processes and Dividends controls to align all levels of management Capital gains paid (dividend
The TSR contribution of individual business (stock price Ä)
yield)
units is explicitly measured
Strategic plans are shared and discussed in context of drivers of TSR
Portfolio shaping criteria include impact on TSR |
| We have tied significant long-term
TSR
incentives to TSR and its drivers |
| Balanced Capital Allocation With Focus on Value Creation |
| Estimated cumulative cash flow
(3-years ending December 2009, $B) |
| Cash flow from operations after interest, taxes $2.6 Capital expenditures (0.5) Discretionary
cash 2.1 Change in net debt 0.1 Total $2.2 |
| Committed to maintaining investment grade credit rating (debt/cap ~35%) |
| Fully funded internal operations and organic growth initiatives |
| Continue long and consistent dividend policy
— 25-30% of through cycle earnings |
| Acquisitions compete with share repurchases
— Current environment weighted towards acquisitions |
| Dover Investor Day Agenda |
| 1:00 — 1:05 Paul Goldberg Welcome and Introduction 1:05 — 1:35 Bob Livingston Dover Strategy — The Dover Way 1:35 — 1:45 Steve
Sellhausen Disciplined M&A |
| 1:45 — 1:55 Jim Moyle Global Procurement Initiative 1:55 — 2:55 Segment Presidents Segment Overviews |
| Ray Hoglund (DES) Bill Spurgeon (DFM) Tom Giacomini (DIP) Dave Van Loan (DET) |
| 2:55 — 3:10 Brad Cerepak Dover Financial Goals and Metrics |
| 3:10 — 3:15 Bob Livingston Summary and Conclusion
3:15 — 3:45 Bob Livingston Q&A
3:45 — 4:00 Refreshment Break 4:00 — 5:00 Segment Presidents Segment Q&A Breakouts 5:00 Dover Reception |
| Dover Well Positioned to Create Shareholder Value |
| Capturing Benefits of Common Ownership |
| Positioning More Disciplined for Growth Capital Allocation |
| Committed to Sustained, Superior Total Shareholder Return |
