UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 8-K
________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 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 July 21, 2015, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended June 30, 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 June 30, 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 July 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: | July 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 July 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 SECOND QUARTER 2015 RESULTS
• | Reports quarterly revenue of $1.8 billion, a decrease of 10% from the prior year |
• | Achieves quarterly diluted earnings per share from continuing operations of $0.97 |
• | Expects full year diluted earnings per share from continuing operations to be in the range of $3.75 to $3.90 |
Downers Grove, Illinois, July 21, 2015 — Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2015, revenue was $1.8 billion, a decrease of 10% from the prior year. The decrease in revenue was driven by an organic revenue decline of 10% and a 4% unfavorable impact from foreign exchange, partially offset by 4% growth from acquisitions. Earnings from continuing operations were $155.6 million, a decrease of 26% as compared to $210.6 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the second quarter ended June 30, 2015 were $0.97, compared to $1.25 EPS in the prior year period, representing a decrease of 22%. EPS for the second quarter ended June 30, 2015 includes restructuring costs of $0.01.
Revenue for the six months ended June 30, 2015 was $3.5 billion, a decrease of 8% over the prior year, reflecting an organic revenue decline of 8% and a 4% unfavorable impact from foreign exchange, partially offset by 4% growth from acquisitions. Earnings from continuing operations for the six months ended June 30, 2015 were $272.8 million, a decrease of 28% as compared to $380.6 million for the prior year period. Diluted EPS for the six months ended June 30, 2015 was $1.69, compared to $2.23 EPS in the prior year period, representing a decrease of 24%. Excluding discrete tax benefits recognized in the prior year period, EPS from continuing operations for the six months ended June 30, 2015 decreased 24% from an adjusted EPS of $2.22 in the prior year period. EPS for the six months ended June 30, 2015 includes restructuring costs of $0.12.
Commenting on the second quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "In the quarter, we continued to be impacted by diminished demand and customer inventory reductions in our North American Energy markets. We were also affected by reduced customer capital spending in retail refrigeration, oil & gas related pump markets and our industrial businesses within Engineered Systems. These factors offset the benefits of our broad-based cost containment initiatives and restructuring actions, causing our overall results to be below our prior expectations.
“We will continue to manage through these headwinds, especially energy-related, as well as the ongoing impact of a stronger U.S. dollar, with an eye towards future growth and enhanced profitability. I remain confident that the strength of our market positions, combined with the actions we are taking, will enable Dover to deliver an improved second half of 2015.
"Looking forward, our forecast remains unchanged from our recently updated 2015 guidance. We expect full-year revenue to decline 8% to 9%. Within this revenue forecast, organic growth is anticipated to decline 7% to 8%, completed acquisitions will provide approximately 3% growth, and FX is expected to be a 4% headwind. In total, full year adjusted EPS is expected to be in the range of $3.75 to $3.90, inclusive of $0.16 to $0.19 of restructuring charges.”
Net earnings for the second quarter ended June 30, 2015, were $332.4 million, or $2.07 EPS, which included earnings from discontinued operations of $176.8 million, or $1.10 EPS, compared to net earnings of $214.0 million, or $1.27 EPS, for the same period of 2014, which included earnings from discontinued operations of $3.4 million, or $0.02 EPS. Second quarter 2015 earnings from discontinued operations included a gain of $177.8 million, or $1.11 EPS, resulting from the disposition of a business held for sale.
Net earnings for the six months ended June 30, 2015, were $541.9 million, or $3.35 EPS, which included earnings from discontinued operations of $269.1 million, or $1.66 EPS, compared to net earnings of $374.1 million, or $2.19 EPS, for the same period of 2014, which included a loss from discontinued operations of $6.5 million, or $0.04 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.64 EPS, resulting from the disposition of two businesses held for sale.
Dover will host a webcast of its second quarter 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, July 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 second 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 in excess of $7 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; changes in customer demand and capital spending; 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; 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 - SECOND QUARTER 2015
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 1,758,628 | $ | 1,962,636 | $ | 3,474,129 | $ | 3,765,206 | |||||||
Cost of goods and services | 1,104,060 | 1,194,537 | 2,192,402 | 2,289,247 | |||||||||||
Gross profit | 654,568 | 768,099 | 1,281,727 | 1,475,959 | |||||||||||
Selling and administrative expenses | 402,695 | 438,824 | 837,329 | 872,228 | |||||||||||
Operating earnings | 251,873 | 329,275 | 444,398 | 603,731 | |||||||||||
Interest expense, net | 31,988 | 31,961 | 64,025 | 64,616 | |||||||||||
Other income, net | (1,256 | ) | (6,233 | ) | (5,443 | ) | (6,042 | ) | |||||||
Earnings before provision for income taxes and discontinued operations | 221,141 | 303,547 | 385,816 | 545,157 | |||||||||||
Provision for income taxes | 65,507 | 92,966 | 112,992 | 164,535 | |||||||||||
Earnings from continuing operations | 155,634 | 210,581 | 272,824 | 380,622 | |||||||||||
Earnings (loss) from discontinued operations, net | 176,762 | 3,378 | 269,082 | (6,525 | ) | ||||||||||
Net earnings | $ | 332,396 | $ | 213,959 | $ | 541,906 | $ | 374,097 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 0.98 | $ | 1.26 | $ | 1.70 | $ | 2.26 | |||||||
Earnings (loss) from discontinued operations, net | 1.11 | 0.02 | 1.68 | (0.04 | ) | ||||||||||
Net earnings | 2.10 | 1.29 | 3.38 | 2.23 | |||||||||||
Weighted average shares outstanding | 158,640 | 166,474 | 160,137 | 168,103 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 0.97 | $ | 1.25 | $ | 1.69 | $ | 2.23 | |||||||
Earnings (loss) from discontinued operations, net | 1.10 | 0.02 | 1.66 | (0.04 | ) | ||||||||||
Net earnings | 2.07 | 1.27 | 3.35 | 2.19 | |||||||||||
Weighted average shares outstanding | 160,398 | 168,857 | 161,876 | 170,450 | |||||||||||
Dividends paid per common share | $ | 0.40 | $ | 0.375 | $ | 0.80 | $ | 0.75 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2015 | 2014 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2014 | ||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||
Energy | $ | 430,423 | $ | 366,044 | $ | 796,467 | $ | 478,773 | $ | 481,016 | $ | 959,789 | $ | 507,334 | $ | 550,116 | $ | 2,017,239 | ||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | 230,181 | 229,934 | 460,115 | 231,679 | 252,354 | 484,033 | 257,282 | 247,569 | 988,884 | |||||||||||||||||||
Industrials | 343,015 | 363,157 | 706,172 | 335,995 | 361,467 | 697,462 | 355,019 | 344,600 | 1,397,081 | |||||||||||||||||||
573,196 | 593,091 | 1,166,287 | 567,674 | 613,821 | 1,181,495 | 612,301 | 592,169 | 2,385,965 | ||||||||||||||||||||
Fluids | 340,236 | 351,511 | 691,747 | 345,009 | 346,275 | 691,284 | 361,797 | 377,485 | 1,430,566 | |||||||||||||||||||
Refrigeration & Food Equipment | 372,097 | 448,115 | 820,212 | 411,493 | 522,357 | 933,850 | 528,807 | 458,532 | 1,921,189 | |||||||||||||||||||
Intra-segment eliminations | (451 | ) | (133 | ) | (584 | ) | (379 | ) | (833 | ) | (1,212 | ) | (664 | ) | (355 | ) | (2,231 | ) | ||||||||||
Total consolidated revenue | $ | 1,715,501 | $ | 1,758,628 | $ | 3,474,129 | $ | 1,802,570 | $ | 1,962,636 | $ | 3,765,206 | $ | 2,009,575 | $ | 1,977,947 | $ | 7,752,728 | ||||||||||
NET EARNINGS | ||||||||||||||||||||||||||||
Segment Earnings: | ||||||||||||||||||||||||||||
Energy | $ | 52,305 | $ | 40,909 | $ | 93,214 | $ | 118,968 | $ | 114,991 | $ | 233,959 | $ | 122,738 | $ | 105,118 | $ | 461,815 | ||||||||||
Engineered Systems | 88,149 | 96,702 | 184,851 | 83,227 | 101,766 | 184,993 | 108,800 | 93,205 | 386,998 | |||||||||||||||||||
Fluids | 54,634 | 70,168 | 124,802 | 57,942 | 63,112 | 121,054 | 67,559 | 63,026 | 251,639 | |||||||||||||||||||
Refrigeration & Food Equipment | 36,150 | 65,732 | 101,882 | 44,862 | 84,926 | 129,788 | 78,012 | 30,934 | 238,734 | |||||||||||||||||||
Total Segments | 231,238 | 273,511 | 504,749 | 304,999 | 364,795 | 669,794 | 377,109 | 292,283 | 1,339,186 | |||||||||||||||||||
Corporate expense / other | 34,526 | 20,382 | 54,908 | 30,734 | 29,287 | 60,021 | 27,815 | 29,964 | 117,800 | |||||||||||||||||||
Net interest expense | 32,037 | 31,988 | 64,025 | 32,655 | 31,961 | 64,616 | 31,231 | 31,332 | 127,179 | |||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 164,675 | 221,141 | 385,816 | 241,610 | 303,547 | 545,157 | 318,063 | 230,987 | 1,094,207 | |||||||||||||||||||
Provision for income taxes | 47,485 | 65,507 | 112,992 | 71,569 | 92,966 | 164,535 | 92,380 | 59,152 | 316,067 | |||||||||||||||||||
Earnings from continuing operations | 117,190 | 155,634 | 272,824 | 170,041 | 210,581 | 380,622 | 225,683 | 171,835 | 778,140 | |||||||||||||||||||
Earnings (loss) from discontinued operations, net | 92,320 | 176,762 | 269,082 | (9,903 | ) | 3,378 | (6,525 | ) | 6,161 | (2,541 | ) | (2,905 | ) | |||||||||||||||
Net earnings | $ | 209,510 | $ | 332,396 | $ | 541,906 | $ | 160,138 | $ | 213,959 | $ | 374,097 | $ | 231,844 | $ | 169,294 | $ | 775,235 | ||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||||||
Energy | 12.2 | % | 11.2 | % | 11.7 | % | 24.8 | % | 23.9 | % | 24.4 | % | 24.2 | % | 19.1 | % | 22.9 | % | ||||||||||
Engineered Systems | 15.4 | % | 16.3 | % | 15.8 | % | 14.7 | % | 16.6 | % | 15.7 | % | 17.8 | % | 15.7 | % | 16.2 | % | ||||||||||
Fluids | 16.1 | % | 20.0 | % | 18.0 | % | 16.8 | % | 18.2 | % | 17.5 | % | 18.7 | % | 16.7 | % | 17.6 | % | ||||||||||
Refrigeration & Food Equipment | 9.7 | % | 14.7 | % | 12.4 | % | 10.9 | % | 16.3 | % | 13.9 | % | 14.8 | % | 6.7 | % | 12.4 | % | ||||||||||
Total Segment | 13.5 | % | 15.6 | % | 14.5 | % | 16.9 | % | 18.6 | % | 17.8 | % | 18.8 | % | 14.8 | % | 17.3 | % | ||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | ||||||||||||||||||||||||||||
Energy | $ | 34,427 | $ | 32,740 | $ | 67,167 | $ | 25,575 | $ | 25,807 | $ | 51,382 | $ | 27,145 | $ | 33,429 | $ | 111,956 | ||||||||||
Engineered Systems | 14,526 | 14,392 | 28,918 | 15,850 | 15,982 | 31,832 | 15,334 | 14,780 | 61,946 | |||||||||||||||||||
Fluids | 13,848 | 13,648 | 27,496 | 16,366 | 15,308 | 31,674 | 14,019 | 15,210 | 60,903 | |||||||||||||||||||
Refrigeration & Food Equipment | 16,458 | 16,406 | 32,864 | 17,212 | 17,451 | 34,663 | 17,073 | 16,965 | 68,701 | |||||||||||||||||||
Corporate | 923 | 841 | 1,764 | 870 | 1,000 | 1,870 | 910 | 902 | 3,682 | |||||||||||||||||||
$ | 80,182 | $ | 78,027 | $ | 158,209 | $ | 75,873 | $ | 75,548 | $ | 151,421 | $ | 74,481 | $ | 81,286 | $ | 307,188 | |||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2015 | 2014 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2014 | ||||||||||||||||||||
BOOKINGS | ||||||||||||||||||||||||||||
Energy | $ | 416,628 | $ | 345,079 | $ | 761,707 | $ | 478,469 | $ | 477,162 | $ | 955,631 | $ | 526,134 | $ | 534,646 | $ | 2,016,411 | ||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | 235,636 | 224,209 | 459,845 | 250,434 | 245,445 | 495,879 | 249,299 | 248,082 | 993,260 | |||||||||||||||||||
Industrials | 337,070 | 336,173 | 673,243 | 370,949 | 363,773 | 734,722 | 342,687 | 374,438 | 1,451,847 | |||||||||||||||||||
Eliminations | (19 | ) | (6 | ) | (25 | ) | (18 | ) | (16 | ) | (34 | ) | (11 | ) | (11 | ) | (56 | ) | ||||||||||
572,687 | 560,376 | 1,133,063 | 621,365 | 609,202 | 1,230,567 | 591,975 | 622,509 | 2,445,051 | ||||||||||||||||||||
Fluids | 339,310 | 333,695 | 673,005 | 362,943 | 375,009 | 737,952 | 350,853 | 345,553 | 1,434,358 | |||||||||||||||||||
Refrigeration & Food Equipment | 419,659 | 486,793 | 906,452 | 493,731 | 542,810 | 1,036,541 | 459,099 | 367,567 | 1,863,207 | |||||||||||||||||||
Intra-segment eliminations | (628 | ) | (417 | ) | (1,045 | ) | (506 | ) | (1,089 | ) | (1,595 | ) | (737 | ) | (644 | ) | (2,976 | ) | ||||||||||
Total consolidated bookings | $ | 1,747,656 | $ | 1,725,526 | $ | 3,473,182 | $ | 1,956,002 | $ | 2,003,094 | $ | 3,959,096 | $ | 1,927,324 | $ | 1,869,631 | $ | 7,756,051 | ||||||||||
BACKLOG | ||||||||||||||||||||||||||||
Energy | $ | 212,060 | $ | 194,819 | $ | 210,846 | $ | 206,415 | $ | 232,739 | $ | 233,347 | ||||||||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | 108,151 | 103,403 | 131,298 | 128,912 | 115,352 | 110,359 | ||||||||||||||||||||||
Industrials | 276,598 | 248,592 | 266,517 | 268,680 | 254,612 | 282,598 | ||||||||||||||||||||||
384,749 | 351,995 | 397,815 | 397,592 | 369,964 | 392,957 | |||||||||||||||||||||||
Fluids | 259,504 | 240,389 | 328,617 | 348,508 | 323,424 | 277,834 | ||||||||||||||||||||||
Refrigeration & Food Equipment | 337,084 | 373,193 | 431,298 | 450,065 | 376,141 | 282,507 | ||||||||||||||||||||||
Intra-segment eliminations | (595 | ) | (354 | ) | (374 | ) | (211 | ) | (302 | ) | (431 | ) | ||||||||||||||||
Total consolidated backlog | $ | 1,192,802 | $ | 1,160,042 | $ | 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 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2014 | ||||||||||||||||||||
Basic earnings (loss) per common share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.98 | $ | 1.70 | $ | 1.00 | $ | 1.26 | $ | 2.26 | $ | 1.36 | $ | 1.04 | $ | 4.67 | ||||||||||
Discontinued operations | 0.57 | 1.11 | 1.68 | (0.06 | ) | 0.02 | (0.04 | ) | 0.04 | (0.02 | ) | (0.02 | ) | |||||||||||||||
Net earnings | 1.30 | 2.10 | 3.38 | 0.94 | 1.29 | 2.23 | 1.40 | 1.03 | 4.65 | |||||||||||||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.69 | $ | 0.99 | $ | 1.25 | $ | 2.23 | $ | 1.34 | $ | 1.03 | $ | 4.61 | ||||||||||
Discontinued operations | 0.57 | 1.10 | 1.66 | (0.06 | ) | 0.02 | (0.04 | ) | 0.04 | (0.02 | ) | (0.02 | ) | |||||||||||||||
Net earnings | 1.28 | 2.07 | 3.35 | 0.93 | 1.27 | 2.19 | 1.38 | 1.02 | 4.59 | |||||||||||||||||||
Adjusted diluted earnings per common share (calculated below): | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.69 | $ | 0.97 | $ | 1.25 | $ | 2.22 | $ | 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 | $ | 155,634 | $ | 272,824 | $ | 170,041 | $ | 210,581 | $ | 380,622 | $ | 225,683 | $ | 171,835 | $ | 778,140 | ||||||||||
Discontinued operations | 92,320 | 176,762 | 269,082 | (9,903 | ) | 3,378 | (6,525 | ) | 6,161 | (2,541 | ) | (2,905 | ) | |||||||||||||||
Net earnings | 209,510 | 332,396 | 541,906 | 160,138 | 213,959 | 374,097 | 231,844 | 169,294 | 775,235 | |||||||||||||||||||
Average shares outstanding: | ||||||||||||||||||||||||||||
Basic | 161,650 | 158,640 | 160,137 | 169,750 | 166,474 | 168,103 | 166,021 | 164,589 | 166,692 | |||||||||||||||||||
Diluted | 163,323 | 160,398 | 161,876 | 172,013 | 168,857 | 170,450 | 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 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2014 | ||||||||||||||||||||
Adjusted earnings from continuing operations: | ||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 117,190 | $ | 155,634 | $ | 272,824 | $ | 170,041 | $ | 210,581 | $ | 380,622 | $ | 225,683 | $ | 171,835 | $ | 778,140 | ||||||||||
Gains (losses) from discrete and other tax items | — | — | — | 2,541 | (635 | ) | 1,906 | 5,524 | 3,860 | 11,290 | ||||||||||||||||||
Adjusted earnings from continuing operations | $ | 117,190 | $ | 155,634 | $ | 272,824 | $ | 167,500 | $ | 211,216 | $ | 378,716 | $ | 220,159 | $ | 167,975 | $ | 766,850 | ||||||||||
Adjusted diluted earnings per common share: | ||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.69 | $ | 0.99 | $ | 1.25 | $ | 2.23 | $ | 1.34 | $ | 1.03 | $ | 4.61 | ||||||||||
Gains (losses) from discrete and other tax items | — | — | — | 0.01 | — | 0.01 | 0.03 | 0.02 | 0.07 | |||||||||||||||||||
Adjusted earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.69 | $ | 0.97 | $ | 1.25 | $ | 2.22 | $ | 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 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2014 | ||||||||||||||||||||
Cash flow from operating activities | $ | 131,332 | $ | 218,911 | $ | 350,243 | $ | 28,361 | $ | 185,013 | $ | 213,374 | $ | 292,012 | $ | 444,778 | $ | 950,164 | ||||||||||
Less: Additions to property, plant and equipment | (27,956 | ) | (43,807 | ) | (71,763 | ) | (32,695 | ) | (42,550 | ) | (75,245 | ) | (33,532 | ) | (57,256 | ) | (166,033 | ) | ||||||||||
Free cash flow | $ | 103,376 | $ | 175,104 | $ | 278,480 | $ | (4,334 | ) | $ | 142,463 | $ | 138,129 | $ | 258,480 | $ | 387,522 | $ | 784,131 | |||||||||
Free cash flow as a percentage of earnings from continuing operations | 88.2 | % | 112.5 | % | 102.1 | % | (2.5 | )% | 67.7 | % | 36.3 | % | 114.5 | % | 225.5 | % | 100.8 | % | ||||||||||
Free cash flow as a percentage of revenue | 6.0 | % | 10.0 | % | 8.0 | % | (0.2 | )% | 7.3 | % | 3.7 | % | 12.9 | % | 19.6 | % | 10.1 | % | ||||||||||
Earnings Conference Call Second Quarter 2015 July 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 second quarter 2015. 2
3 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Q1* Q2 Q3* Q4* Q1 Q2 Q2 2015 Performance Adjusted Earnings Per Share* (continuing operations) Q2 Q2/Q2 * 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 tough NA energy markets, FX headwinds and reduced spending by retail refrigeration customers; partially offset by solid performance in Fluids and Engineered Systems US and Asian markets declined driven by NA energy, retail refrigeration and moderating China capex spend; Europe remained solid Segment margin was impacted by lower volume and business mix Bookings decline driven by NA energy markets, and reduced customer capital spending in retail refrigeration, oil & gas related pump markets and select industrial markets Book-to-bill of 0.98 Note: Q4 2014 includes restructuring and other costs of $0.17; includes restructuring costs of $0.10 in Q1 2015 and $0.01 in Q2 2015 Revenue $1.8B -10% $3.5B -8% Adj. EPS (cont.) $0.97 -22% $1.69 -24% Bookings $1.7B -14% $3.5B -12% Seg. Margins 15.6% -300 bps 14.5% -330 bps Organic Rev. -10% -8% Acq. Growth 4% 4% FCF (a) $175M 23% $278M 102% 1H 1H/1H
4 Revenue Q2 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -34% 3% 6% -12% -10% Acquisitions 12% - 2% 1% 4% Currency -2% -6% -6% -3% -4% Total -24% -3% 2% -14% -10% 1H 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -29% 4% 4% -10% -8% Acquisitions 14% 1% 2% 1% 4% Currency -2% -6% -6% -3% -4% Total -17% -1% - -12% -8%
5 Printing & ID Industrial $337 $336 $417 $345 $236 $224 $339 $334 $420 $487 $0 $200 $400 $600 $800 DE Q1 DE Q2 DES Q1 DES Q2 DF Q1 DF Q2 DRE Q1 DRE Q2 Sequential Results – Q1 2015 → Q2 2015 5 $343 $363 $430 $366 $230 $230 $340 $352 $372 $448 $0 $200 $400 $600 $800 DE Q1 DE Q2 DES Q1 DES Q2 DF Q1 DF Q2 DRE Q1 DRE Q2 Revenue -15% +16% +20% -2% +3% -2% +3% -17% Bookings
6 Energy Revenue decline driven by steep deterioration in NA oil & gas markets resulting in destocking and diminished demand – International markets holding up well Adjusted margin of 12.0% reflects negative product mix and modest price pressure – Will reduce cost base nearly $90 million this year Bookings decline of 28% largely driven by macro oil & gas trends Book-to-bill at 0.94 6 Q2 2015 Q2 2014 % Change Revenue $366 $481 -24% Earnings $ 41 $115 -64% Margin 11.2% 23.9% -1270 bps Adj. Earnings* $ 44 $115 -62% Adj. Margin* 12.0% 23.9% -1190 bps Bookings $345 $477 -28% Revenue by End-Market % of Q2 Revenue Y / Y Drilling & Production 68% -30% Bearings & Compression 22% -5% Automation 10% -14% $ in millions * Q2 2015 earnings adjusted for $3M in restructuring costs
7 Engineered Systems Organic revenue growth is solid in both platforms – Printing & Identification grew 4% organically, driven by solid global markets for core printing and coding products – Industrial’s organic growth of 3% was led by waste handling and auto-related businesses Margin of 16.3% impacted by business mix Bookings decline primarily reflects impact of FX and softness in capital spending in Asian and European industrial markets Book-to-bill of 0.94 7 Q2 2015 Q2 2014 % Change Revenue $593 $614 -3% Earnings $ 97 $102 -5% Margin 16.3% 16.6% -30 bps Bookings $560 $609 -8% Revenue by End-Market % of Q2 Revenue Y / Y Growth Printing & Identification 39% -9% Industrial 61% Flat $ in millions
8 Fluids Organic revenue grew 6%, driven by solid activity in Fluid Transfer and strong project- related shipments in pumps, partially offset by FX headwinds Segment margin of 20% reflects positive product mix and leverage on volume Bookings decline primarily related to oil & gas end- market exposure in Pumps, the impact of FX, and the timing of project related orders Book-to-bill at 0.95 8 Q2 2015 Q2 2014 % Change Revenue $352 $346 2% Earnings $ 70 $ 63 11% Margin 20.0% 18.2% 180 bps Bookings $334 $375 -11% Revenue by End-Market % of Q2 Revenue Y / Y Growth Pumps 44% Flat Fluid Transfer 56% 3% $ in millions
9 Refrigeration & Food Equipment Revenue results driven by weak customer spending in retail refrigeration and timing of shipments in can shaping equipment – Replacement activity for lost refrigeration volume has been slow to develop Segment margin performance reflects lower volume and product mix Bookings reflect slower than anticipated order activity in retail refrigeration, partially offset by solid food equipment orders Book-to-bill seasonally strong at 1.09 9 Q2 2015 Q2 2014 % Change Revenue $448 $522 -14% Earnings $ 66 $ 85 -23% Margin 14.7% 16.3% -160 bps Bookings $487 $543 -10% Revenue by End-Market % of Q2 Revenue Y / Y Growth Refrigeration 78% -13% Food Equipment 22% -19% $ in millions
10 Q2 2015 Overview 10 Q2 2015 Net Interest Expense $32 million, flat with last year Corporate Expense $20 million, down $9 million from last year; reflecting cost management initiatives Effective Tax Rate (ETR) Q2 rate was 29.3%, essentially inline with forecast Capex $44 million, inline with expectations Share Repurchases Repurchased 4M shares ($300M) in quarter
11 FY 2015 Guidance Revenue – Organic revenue: (8% - 7%) – Completed acquisitions: ≈ 3% – FX impact: (4%) – Total revenue: (9% - 8%) Corporate expense: ≈ $116 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 (32% - 31%) Engineered Systems 3% - 4% Fluids 5% - 6% Refrigeration & Food Equipment (8% - 6%) Total organic (8% - 7%) Acquisitions ≈ 3% (a) FX Impact (4%) Total revenue (9% - 8%) (a) Reflects completed acquisitions
12 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): (0.02) - 0.00 – Performance including restructuring benefits(3): (1.00 - 0.92) – Acquisitions(4): 0.02 - 0.04 – Shares(5): 0.20 - 0.21 – Interest / Corp. / Tax rate / Other (net): 0.01 - 0.03 2015 EPS – Continuing Ops $3.75 - $3.90 (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 $0.17 - $0.19 in FY 2015, and pension settlement costs of $0.01 in Q4 2014 (3) Includes restructuring benefits of $0.36 - $0.38
