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): April 21, 2015
________________________________
DOVER CORPORATION
(Exact name of registrant as specified in its charter)
________________________________
State of Delaware | 1-4018 | 53-0257888 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
3005 Highland Parkway | ||
Downers Grove, Illinois | 60515 | |
(Address of principal executive offices) | (Zip Code) | |
(630) 541-1540
(Registrant’s telephone number, including area code)
______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | 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)) |
Item 2.02 Results of Operations and Financial Condition.
On April 21, 2015, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended March 31, 2015; and (ii) posted on its website at
http://www.dovercorporation.com the presentation slides attached hereto as Exhibit 99.2 for the quarter ended March 31, 2015.
The information in this Current Report on Form 8-K, including exhibits, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be incorporated by reference into any of Dover’s filings with the SEC under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this report:
99.1 Dover Corporation Press Release dated April 21, 2015.
99.2 Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com.
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: | April 21, 2015 | DOVER CORPORATION | ||
(Registrant) | ||||
By: | /s/ Ivonne M. Cabrera | |||
Ivonne M. Cabrera | ||||
Senior Vice President, General Counsel & Secretary | ||||
EXHIBIT INDEX
Number | Exhibit | |
99.1 | Press Release of Dover Corporation dated April 21, 2015 | |
99.2 | Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com | |
Exhibit 99.1
CONTACT: | ||
Paul Goldberg | ||
Vice President - Investor Relations | ||
(212) 922-1640 | ||
DOVER REPORTS FIRST QUARTER 2015 RESULTS
• | Reports quarterly revenue of $1.7 billion, a decrease of 5% from the prior year |
• | Achieves quarterly diluted earnings per share from continuing operations of $0.72, including restructuring charges of $0.10 |
• | Expects full year diluted earnings per share from continuing operations to be in the range of $4.20 to $4.40 |
Downers Grove, Illinois, April 21, 2015 — Dover (NYSE: DOV) announced today that for the first quarter ended March 31, 2015, revenue was $1.7 billion, a decrease of 5% from the prior year. The decrease in revenue was driven by an organic revenue decline of 6% and a 4% unfavorable impact from foreign exchange, offset in part by 5% growth from acquisitions. Earnings from continuing operations were $117.2 million, a decrease of 31% as compared to $170.0 million for the prior year period. Diluted earnings per share ("EPS") for the first quarter ended March 31, 2015 was $0.72, compared to $0.99 EPS in the prior year period, representing a decrease of 27%. Excluding discrete tax benefits recognized in the prior year period, EPS from continuing operations for the first quarter of 2015 decreased 26% from an adjusted EPS of $0.97 in the prior year period.
Commenting on the first quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our businesses continued to perform well against the backdrop of significant headwinds in our energy-related markets, as well as the ongoing FX impact of the strengthening US dollar and slower than expected activity in our core refrigeration case and systems markets. To better align our costs with anticipated demand, we incurred $24 million in restructuring charges in the quarter, primarily in Energy. These restructuring actions were in addition to $37 million in charges incurred in the fourth quarter of 2014. We expect to pursue additional cost reduction actions as we move through the year."
“As we deal with these headwinds we will remain focused on growth investments, as well as investment in productivity initiatives, including supply chain optimization and shared infrastructure. I am confident the combination of these actions positions us well to continue our long-term track record of strong performance.”
"Looking forward, we are re-affirming our recently updated 2015 guidance. We expect full-year revenue to decline 4% to 6%. Within our revenue forecast, organic growth is anticipated to decline 2% to 4%, completed acquisitions will provide approximately 2% growth, and FX is expected to be a 4% headwind. In total, full year adjusted EPS is expected to be in the range of $4.20 to $4.40, inclusive of $0.15 to $0.18 of restructuring charges.”
Net earnings for the quarter ended March 31, 2015, were $209.5 million, or $1.28 EPS, which included earnings from discontinued operations of $92.3 million, or $0.57 EPS, compared to net earnings of $160.1 million, or $0.93 EPS, for the same period of 2014, which included a loss from
discontinued operations of $9.9 million, or $0.06 EPS. First quarter 2015 earnings from discontinued operations included a gain of $87.4 million, or $0.53 EPS, resulting from the disposition of a business held for sale.
Dover will host a webcast of its first quarter 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, April 21, 2015. The webcast can be accessed on the Dover website at www.dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover’s first quarter results and its operating segments can also be found on the Company’s website.
About Dover:
Dover is a diversified global manufacturer with annual revenues approaching $7.5 billion. We deliver innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for 60 years, our team of 26,000 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 www.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. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, changes in operations, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as “anticipates,” “expects,” “believes,” “suggests,” “will,” “plans,” “should,” “would,” “could,” and “forecast”, or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover’s customers and changes in the level of oil and natural gas exploration and development; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; changes in customer demand or the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, and tax policies; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these
and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.
INVESTOR SUPPLEMENT - FIRST QUARTER 2015
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Revenue | $ | 1,715,501 | $ | 1,802,570 | |||
Cost of goods and services | 1,088,342 | 1,094,710 | |||||
Gross profit | 627,159 | 707,860 | |||||
Selling and administrative expenses | 434,634 | 433,404 | |||||
Operating earnings | 192,525 | 274,456 | |||||
Interest expense, net | 32,037 | 32,655 | |||||
Other (income) expense, net | (4,187 | ) | 191 | ||||
Earnings before provision for income taxes and discontinued operations | 164,675 | 241,610 | |||||
Provision for income taxes | 47,485 | 71,569 | |||||
Earnings from continuing operations | 117,190 | 170,041 | |||||
Earnings (loss) from discontinued operations, net | 92,320 | (9,903 | ) | ||||
Net earnings | $ | 209,510 | $ | 160,138 | |||
Basic earnings per common share: | |||||||
Earnings from continuing operations | $ | 0.72 | $ | 1.00 | |||
Earnings (loss) from discontinued operations, net | 0.57 | (0.06 | ) | ||||
Net earnings | 1.30 | 0.94 | |||||
Weighted average shares outstanding | 161,650 | 169,750 | |||||
Diluted earnings per common share: | |||||||
Earnings from continuing operations | $ | 0.72 | $ | 0.99 | |||
Earnings (loss) from discontinued operations, net | 0.57 | (0.06 | ) | ||||
Net earnings | 1.28 | 0.93 | |||||
Weighted average shares outstanding | 163,323 | 172,013 | |||||
Dividends paid per common share | $ | 0.40 | $ | 0.375 | |||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||
REVENUE | |||||||||||||||||||
Energy | $ | 430,423 | $ | 478,773 | $ | 481,016 | $ | 507,334 | $ | 550,116 | $ | 2,017,239 | |||||||
Engineered Systems | |||||||||||||||||||
Printing & Identification | 230,181 | 231,679 | 252,354 | 257,282 | 247,569 | 988,884 | |||||||||||||
Industrials | 343,015 | 335,995 | 361,467 | 355,019 | 344,600 | 1,397,081 | |||||||||||||
573,196 | 567,674 | 613,821 | 612,301 | 592,169 | 2,385,965 | ||||||||||||||
Fluids | 340,236 | 345,009 | 346,275 | 361,797 | 377,485 | 1,430,566 | |||||||||||||
Refrigeration & Food Equipment | 372,097 | 411,493 | 522,357 | 528,807 | 458,532 | 1,921,189 | |||||||||||||
Intra-segment eliminations | (451 | ) | (379 | ) | (833 | ) | (664 | ) | (355 | ) | (2,231 | ) | |||||||
Total consolidated revenue | $ | 1,715,501 | $ | 1,802,570 | $ | 1,962,636 | $ | 2,009,575 | $ | 1,977,947 | $ | 7,752,728 | |||||||
NET EARNINGS | |||||||||||||||||||
Segment Earnings: | |||||||||||||||||||
Energy | $ | 52,305 | $ | 118,968 | $ | 114,991 | $ | 122,738 | $ | 105,118 | $ | 461,815 | |||||||
Engineered Systems | 88,149 | 83,227 | 101,766 | 108,800 | 93,205 | 386,998 | |||||||||||||
Fluids | 54,634 | 57,942 | 63,112 | 67,559 | 63,026 | 251,639 | |||||||||||||
Refrigeration & Food Equipment | 36,150 | 44,862 | 84,926 | 78,012 | 30,934 | 238,734 | |||||||||||||
Total Segments | 231,238 | 304,999 | 364,795 | 377,109 | 292,283 | 1,339,186 | |||||||||||||
Corporate expense / other | 34,526 | 30,734 | 29,287 | 27,815 | 29,964 | 117,800 | |||||||||||||
Net interest expense | 32,037 | 32,655 | 31,961 | 31,231 | 31,332 | 127,179 | |||||||||||||
Earnings from continuing operations before provision for income taxes | 164,675 | 241,610 | 303,547 | 318,063 | 230,987 | 1,094,207 | |||||||||||||
Provision for income taxes | 47,485 | 71,569 | 92,966 | 92,380 | 59,152 | 316,067 | |||||||||||||
Earnings from continuing operations | 117,190 | 170,041 | 210,581 | 225,683 | 171,835 | 778,140 | |||||||||||||
Earnings (loss) from discontinued operations, net | 92,320 | (9,903 | ) | 3,378 | 6,161 | (2,541 | ) | (2,905 | ) | ||||||||||
Net earnings | $ | 209,510 | $ | 160,138 | $ | 213,959 | $ | 231,844 | $ | 169,294 | $ | 775,235 | |||||||
SEGMENT OPERATING MARGIN | |||||||||||||||||||
Energy | 12.2 | % | 24.8 | % | 23.9 | % | 24.2 | % | 19.1 | % | 22.9 | % | |||||||
Engineered Systems | 15.4 | % | 14.7 | % | 16.6 | % | 17.8 | % | 15.7 | % | 16.2 | % | |||||||
Fluids | 16.1 | % | 16.8 | % | 18.2 | % | 18.7 | % | 16.7 | % | 17.6 | % | |||||||
Refrigeration & Food Equipment | 9.7 | % | 10.9 | % | 16.3 | % | 14.8 | % | 6.7 | % | 12.4 | % | |||||||
Total Segment | 13.5 | % | 16.9 | % | 18.6 | % | 18.8 | % | 14.8 | % | 17.3 | % | |||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||
Energy | $ | 34,427 | $ | 25,575 | $ | 25,807 | $ | 27,145 | $ | 33,429 | $ | 111,956 | |||||||
Engineered Systems | 14,526 | 15,850 | 15,982 | 15,334 | 14,780 | 61,946 | |||||||||||||
Fluids | 13,848 | 16,366 | 15,308 | 14,019 | 15,210 | 60,903 | |||||||||||||
Refrigeration & Food Equipment | 16,458 | 17,212 | 17,451 | 17,073 | 16,965 | 68,701 | |||||||||||||
Corporate | 923 | 870 | 1,000 | 910 | 902 | 3,682 | |||||||||||||
$ | 80,182 | $ | 75,873 | $ | 75,548 | $ | 74,481 | $ | 81,286 | $ | 307,188 | ||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||
BOOKINGS | |||||||||||||||||||
Energy | $ | 416,628 | $ | 478,469 | $ | 477,162 | $ | 526,134 | $ | 534,646 | $ | 2,016,411 | |||||||
Engineered Systems | |||||||||||||||||||
Printing & Identification | 235,636 | 250,434 | 245,445 | 249,299 | 248,082 | 993,260 | |||||||||||||
Industrials | 337,070 | 370,949 | 363,773 | 342,687 | 374,438 | 1,451,847 | |||||||||||||
Eliminations | (19 | ) | (18 | ) | (16 | ) | (11 | ) | (11 | ) | (56 | ) | |||||||
572,687 | 621,365 | 609,202 | 591,975 | 622,509 | 2,445,051 | ||||||||||||||
Fluids | 339,310 | 362,943 | 375,009 | 350,853 | 345,553 | 1,434,358 | |||||||||||||
Refrigeration & Food Equipment | 419,659 | 493,731 | 542,810 | 459,099 | 367,567 | 1,863,207 | |||||||||||||
Intra-segment eliminations | (628 | ) | (506 | ) | (1,089 | ) | (737 | ) | (644 | ) | (2,976 | ) | |||||||
Total consolidated bookings | $ | 1,747,656 | $ | 1,956,002 | $ | 2,003,094 | $ | 1,927,324 | $ | 1,869,631 | $ | 7,756,051 | |||||||
BACKLOG | |||||||||||||||||||
Energy | $ | 212,060 | $ | 210,846 | $ | 206,415 | $ | 232,739 | $ | 233,347 | |||||||||
Engineered Systems | |||||||||||||||||||
Printing & Identification | 108,151 | 131,298 | 128,912 | 115,352 | 110,359 | ||||||||||||||
Industrials | 276,598 | 266,517 | 268,680 | 254,612 | 282,598 | ||||||||||||||
384,749 | 397,815 | 397,592 | 369,964 | 392,957 | |||||||||||||||
Fluids | 259,504 | 328,617 | 348,508 | 323,424 | 277,834 | ||||||||||||||
Refrigeration & Food Equipment | 337,084 | 431,298 | 450,065 | 376,141 | 282,507 | ||||||||||||||
Intra-segment eliminations | (595 | ) | (374 | ) | (211 | ) | (302 | ) | (431 | ) | |||||||||
Total consolidated backlog | $ | 1,192,802 | $ | 1,368,202 | $ | 1,402,369 | $ | 1,301,966 | $ | 1,186,214 | |||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
2015 | 2014 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 1.00 | $ | 1.26 | $ | 1.36 | $ | 1.04 | $ | 4.67 | |||||||
Discontinued operations | 0.57 | (0.06 | ) | 0.02 | 0.04 | (0.02 | ) | (0.02 | ) | ||||||||||
Net earnings | 1.30 | 0.94 | 1.29 | 1.40 | 1.03 | 4.65 | |||||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | |||||||
Discontinued operations | 0.57 | (0.06 | ) | 0.02 | 0.04 | (0.02 | ) | (0.02 | ) | ||||||||||
Net earnings | 1.28 | 0.93 | 1.27 | 1.38 | 1.02 | 4.59 | |||||||||||||
Adjusted diluted earnings per common share (calculated below): | |||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 1.01 | $ | 4.54 | |||||||
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows: | |||||||||||||||||||
Net earnings (loss): | |||||||||||||||||||
Continuing operations | $ | 117,190 | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | |||||||
Discontinued operations | 92,320 | (9,903 | ) | 3,378 | 6,161 | (2,541 | ) | (2,905 | ) | ||||||||||
Net earnings | 209,510 | 160,138 | 213,959 | 231,844 | 169,294 | 775,235 | |||||||||||||
Average shares outstanding: | |||||||||||||||||||
Basic | 161,650 | 169,750 | 166,474 | 166,021 | 164,589 | 166,692 | |||||||||||||
Diluted | 163,323 | 172,013 | 168,857 | 168,343 | 166,467 | 168,842 | |||||||||||||
Note: | |||||||||||||||||||
Earnings from continuing operations are adjusted by discrete tax items and other one-time gains to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows: | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||
Adjusted earnings from continuing operations: | |||||||||||||||||||
Earnings from continuing operations | $ | 117,190 | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | |||||||
Gains (losses) from discrete and other tax items | — | 2,541 | (635 | ) | 5,524 | 3,860 | 11,290 | ||||||||||||
Adjusted earnings from continuing operations | $ | 117,190 | $ | 167,500 | $ | 211,216 | $ | 220,159 | $ | 167,975 | $ | 766,850 | |||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||
Earnings from continuing operations | $ | 0.72 | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | |||||||
Gains (losses) from discrete and other tax items | — | 0.01 | — | 0.03 | 0.02 | 0.07 | |||||||||||||
Adjusted earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 1.01 | $ | 4.54 | |||||||
* Per share data may not add due to rounding. | |||||||||||||||||||
DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||
Cash flow from operating activities | $ | 131,332 | $ | 28,361 | $ | 185,013 | $ | 292,012 | $ | 444,778 | $ | 950,164 | |||||||
Less: Additions to property, plant and equipment | (27,956 | ) | (32,695 | ) | (42,550 | ) | (33,532 | ) | (57,256 | ) | (166,033 | ) | |||||||
Free cash flow | $ | 103,376 | $ | (4,334 | ) | $ | 142,463 | $ | 258,480 | $ | 387,522 | $ | 784,131 | ||||||
Free cash flow as a percentage of earnings from continuing operations | 88.2 | % | (2.5 | )% | 67.7 | % | 114.5 | % | 225.5 | % | 100.8 | % | |||||||
Free cash flow as a percentage of revenue | 6.0 | % | (0.2 | )% | 7.3 | % | 12.9 | % | 19.6 | % | 10.1 | % | |||||||
Earnings Conference Call First Quarter 2015 April 21, 2015 – 9:00am 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. 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 2014, 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, www.dovercorporation.com, where considerably more information can be found. This document contains non-GAAP financial information. Reconciliations of non-GAAP measures are included either in this presentation or Dover’s earnings release and investor supplement for the first quarter 2015. 2
3 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Q1* Q2 Q3* Q4* Q1 Q1 2015 Performance Adjusted Earnings Per Share* (continuing operations) Q1 Q1/Q1 * Excludes discrete & other tax benefits of $0.01 in Q1 2014, $0.03 in Q3 2014 and $0.02 in Q4 2014 (a) See Press Release for free cash flow reconciliation 3 Quarterly Comments 2014 2015 Revenue impacted by North American Energy markets, FX headwinds and tough comps in Refrigeration and Food Equipment; partially offset by solid performance in Engineered Systems and Fluids US non-energy related markets moderated; Europe and Asia markets were solid Segment margin was impacted by lower volume, business mix, as well as restructuring and normal purchase price accounting costs Bookings decline was primarily driven by oil & gas markets within Energy and case and systems markets within Refrigeration & Food Equipment Book-to-bill of 1.02 Revenue $1.7B -5% Adj. EPS (cont.) $0.72 -26% Bookings $1.7B -11% Seg. Margins 13.5% -340 bps Organic Rev. -6% Acq. Growth 5% FCF (a) $103M ↑ Note: Q4 2014 includes restructuring and other costs of $0.17 and Q1 2015 includes $0.10 of restructuring costs
4 Revenue Q1 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -24% 6% 2% -7% -6% Acquisitions 15% 1% 2% - 5% Currency -1% -6% -5% -3% -4% Total -10% 1% -1% -10% -5%
5 Printing & ID Industrial $374 $337 $535 $417 $248 $236 $346 $339 $368 $420 $0 $200 $400 $600 $800 DE Q4 DE Q1 DES Q4 DES Q1 DF Q4 DF Q1 DRE Q4 DRE Q1 Sequential Results – Q4 2014 → Q1 2015 5 $345 $343 $550 $430 $247 $230 $377 $340 $459 $372 $0 $200 $400 $600 $800 DE Q4 DE Q1 DES Q4 DES Q1 DF Q4 DF Q1 DRE Q4 DRE Q1 Revenue -22% +14% -19% -2% -10% -8% -3% -22% Bookings
6 Energy Revenue decline driven by steeper and broader deterioration in NA oil & gas markets resulting in destocking and reduced capex spending – Drilling and production most impacted – Bearings & Compression less impacted due to broader end-markets served – Automation benefitting from recent acquisitions Adjusted margin of 18.8% reflects negative product mix and modest price pressure Bookings decline of 13% largely driven by macro oil & gas trends Book-to-bill at 0.97 6 Q1 2015 Q1 2014 % Change Revenue $430 $479 -10% Earnings $ 52 $119 -56% Margin 12.2% 24.8% -1260 bps Adj. Earnings* $ 81 $119 -32% Adj. Margin* 18.8% 24.8% -600 bps Bookings $417 $478 -13% Revenue by End-Market % of Q1 Revenue Y / Y Drilling & Production 70% -15% Bearings & Compression 18% -7% Automation 12% 24% $ in millions * Q1 2015 earnings adjusted for $18M in restructuring costs and $11M impact of purchase price accounting for Accelerated acquisition
7 Engineered Systems Revenue growth is broad- based – Printing & Identification grew 8% organically, driven by strong digital printing activity and solid global markets for core printing and coding products – Industrial’s organic growth of 4% was broad-based, led by waste handling and auto-related businesses Margin of 15.4% driven by the benefits of productivity and volume Bookings decline primarily reflects order timing in waste handling and softer hydraulic cylinder markets Book-to-bill of 1.00 7 Q1 2015 Q1 2014 % Change Revenue $573 $568 1% Earnings* $ 88 $ 83 6% Margin 15.4% 14.7% 70 bps Bookings $573 $621 -8% Revenue by End-Market % of Q1 Revenue Y / Y Growth Printing & Identification 40% -1% Industrial 60% 2% $ in millions * Q1 2015 earnings include $4M in restructuring costs and an insurance recovery of $4M
8 Fluids Organic revenue grew 2%, driven by continued strong activity in Fluid Transfer; Revenue impacted by 5% FX headwind – Fluid Transfer continues to benefit from increased safety and environmental regulations – Pumps impacted by timing of shipments to customers in plastics & polymers markets Segment margin of 16.1% reflects product mix Bookings decline primarily related to the timing of project-related orders in Pumps Book-to-bill at 1.00 8 Q1 2015 Q1 2014 % Change Revenue $340 $345 -1% Earnings* $ 55 $ 58 -6% Margin 16.1% 16.8% -70 bps Bookings $339 $363 -7% Revenue by End-Market % of Q1 Revenue Y / Y Growth Pumps 43% -12% Fluid Transfer 57% 9% $ in millions * Q1 2015 earnings include $2M in restructuring costs
9 Refrigeration & Food Equipment Revenue decline driven by softer spending on refrigeration cases and systems, and timing of shipments in food packaging equipment – Glass door, heat exchanger and commercial kitchen equipment markets continue to perform well Segment margin performance reflects lower volume and product mix Bookings impacted by the greater than anticipated decline in refrigeration orders and the timing of food equipment orders Book-to-bill at 1.13 9 Q1 2015 Q1 2014 % Change Revenue $372 $411 -10% Earnings $ 36 $ 45 -19% Margin 9.7% 10.9% -120 bps Bookings $420 $494 -15% Revenue by End-Market % of Q1 Revenue Y / Y Growth Refrigeration 78% -8% Food Equipment 22% -14% $ in millions
10 Q1 2015 Overview 10 Q1 2015 Net Interest Expense $32 million, down $1 million from last year and inline with expectations Corporate Expense $35 million, up $4 million from last year; largely consistent with expectations Effective Tax Rate (ETR) Q1 rate was 28.8%, essentially inline with revised forecast Capex $28 million Share Repurchases Repurchased 2.8M shares ($200M) in quarter
11 Energy Update Market Organic Growth Acq. Growth FX Impact Total Growth Organic Growth Acq. Growth FX Impact Total Growth Drilling and Prod. (19% - 17%) ≈ 7% (≈ 1%) (14% - 11%) (30% - 32%) ≈ 10% (1%-2%) (24% - 20%) Bearings and Comp. 2% - 4% - (≈ 1%) 1% - 3% (2% - 4%) - (≈ 2%) (6% - 4%) Automation (2%) - 3% 10% - 11% - 9% - 13% (18% - 20%) ≈ 13% - (7% - 4%) Total (14% - 11%) ≈ 6% (≈ 1%) (9% - 6%) (24% - 26%) ≈ 9% (1%-2%) (16% - 18%) Prior 2015 Forecast (1/27/15) Current 2015 Forecast
12 FY 2015 Guidance Revenue – Organic revenue: (2% - 4%) – Completed acquisitions: ≈ 2% – FX impact: (4%) – Total revenue: (4% - 6%) Corporate expense: ≈ $125 million Interest expense: ≈ $127 million Full-year tax rate: ≈ 29.0% Capital expenditures: ≈ 2.3% of revenue FY free cash flow: ≈ 11% of revenue 2015 Organic growth rate Energy (24% - 26%) Engineered Systems 3% - 5% Fluids 5% - 7% Refrigeration & Food Equipment (1% - 3%) Total organic (2% - 4%) Acquisitions ≈ 2% (a) FX Impact (4%) Total revenue (4% - 6%) (a) Reflects completed acquisitions
13 2015 EPS Guidance – Continuing Ops 2014 EPS – Continuing Ops (GAAP) $ 4.61 – Less 2014 tax items(1): (0.07) 2014 Adjusted EPS $ 4.54 – Net restructuring and one-time items(2): (0.01) - 0.02 – Performance including restructuring benefits(3): (0.58 - 0.47) – Acquisitions(4): 0.04 - 0.06 – Shares(5): 0.23 - 0.24 – Interest / Corp. / Tax rate / Other (net): (0.02) - 0.01 2015 EPS – Continuing Ops $4.20 - $4.40 (1) $0.01 in Q1 2014 , $0.03 in Q3 2014 and $0.02 in Q4 2014 (4) Deals completed, principally Accelerated (5) Based on 2015 estimated repurchases of $600M (2) Includes restructuring charges of $0.16 in Q4 2014 and $0.15 - $0.18 in FY 2015, and pension settlement costs of $0.01 in Q4 2014 (3) Includes restructuring benefits of $0.31 - $0.33
