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 20, 2017
________________________________
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On April 20, 2017, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended March 31, 2017; 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, 2017.
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 20, 2017.
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 20, 2017 | 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 20, 2017 | |
99.2 | Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com | |
Exhibit 99.1
Investor Contact: | Media Contact: | |
Paul Goldberg | Adrian Sakowicz | |
Vice President - Investor Relations | Vice President - Communications | |
(212) 922-1640 | (630) 743-5039 | |
peg@dovercorp.com | asakowicz@dovercorp.com | |
DOVER REPORTS FIRST QUARTER 2017 RESULTS AND RAISES FULL YEAR REVENUE AND EPS GUIDANCE
• | Reports quarterly revenue of $1.8 billion, an increase of 12% from the prior year |
• | Delivers quarterly diluted net earnings per share of $1.09, including a $0.39 gain on disposition |
• | Posts adjusted diluted net earnings per share of $0.70, excluding the gain on a disposition |
• | Increases full year revenue growth forecast; now expected to be 11% to 13% |
• | Raises 2017 full year diluted earnings per share guidance to now be in the range of $4.05 to $4.20, inclusive of the gain on a disposition |
Downers Grove, Illinois, April 20, 2017 — Dover (NYSE: DOV) announced today that for the first quarter ended March 31, 2017, revenue was $1.8 billion, an increase of 12% from the prior year. The increase in the quarter was driven by acquisition growth of 12% and organic growth of 4%, partially offset by a 3% impact from dispositions and an unfavorable impact from foreign exchange ("FX") of 1%. Net earnings were $172.2 million, an increase of 73% as compared to $99.4 million for the prior year period. Diluted net earnings per share ("EPS") for the first quarter ended March 31, 2017, were $1.09, compared to $0.64 EPS in the prior year period, representing an increase of 70%. EPS for the first quarter of 2017 included a gain on a disposition of $0.39. EPS for the prior year period included a gain on a disposition of $0.07. Excluding these items, adjusted EPS for the first quarter of 2017 was $0.70, an increase of 25% from an adjusted EPS of $0.56 in the prior year period. EPS for the first quarter ended March 31, 2017, and March 31, 2016, include restructuring costs of $0.03 EPS and $0.07 EPS, respectively.
Dover’s President and Chief Executive Officer, Robert A. Livingston, said, “I am very pleased with our first quarter business activity and results. The revenue growth of 12% was broad-based and bookings grew 21%, resulting in a strong book-to-bill of 1.12. Of particular note, organic revenue and bookings grew 4% and 12%, respectively.
“Among the highlights in the quarter was an acceleration in the recovery of our U.S. drilling and production market. At the same time, business activity was also very solid in our printing & identification, retail fueling, and retail refrigeration markets, as well as the majority of our other industrial markets. Strong growth and solid execution, along with an improved tax rate, resulted in adjusted EPS of $0.70.
“As a result of the solid first quarter performance, higher expectations in Energy, and overall strong bookings activity, we are raising our full year revenue and EPS guidance. We now expect full year diluted earnings per share to be in the range of $4.05 to $4.20, versus our prior guidance of $3.40 to $3.60. Our revised guidance includes the gain from our recent disposition. Further, this revised
guidance is based on full year revenue growth of 11% to 13% versus our prior forecast of 10% to 12%, and is comprised of organic growth of 4% to 6% and acquisition growth of approximately 10%, partially offset by a 2% impact from the dispositions and a 1% headwind from FX. Our revised revenue forecast is primarily driven by a one point increase in organic growth. The combined impact of acquisitions, dispositions, and FX is essentially unchanged from our prior forecast.”
Dover will host a webcast of its first quarter 2017 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, April 20, 2017. The webcast can be accessed on the Dover website at 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 be found on the Company’s website.
About Dover:
Dover is a diversified global manufacturer with annual revenue exceeding $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through four 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 over 60 years, our team of 29,000 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 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 concern future events and 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 address matters that are uncertain, including, by way of example only: operating and strategic plans, future sales, earnings, cash flows, margins, organic growth, growth from acquisitions, restructuring charges, cost structure, capital expenditures, capital allocation, capital structure, dividends, cash flows, exchange rates, tax rates, interest rates, interest expense, changes in operations and trends in industries in which our businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. 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, economic conditions generally and changes in economic conditions globally and in the markets and industries served by our businesses, including oil and gas activity and U.S. industrials activity; conditions and events affecting domestic and global financial and capital markets; oil and natural gas demand, production growth, and prices; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; risks related to our international operations and the ability of our businesses to expand into new geographic markets; the impact of interest rate and currency exchange rate fluctuations; increased competition and pricing pressures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of our businesses to adapt to technological developments; the ability of our 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; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; domestic and foreign governmental and public policy changes or
developments, including import/export laws and sanctions, tax policies, environmental regulations and conflict minerals disclosure requirements; increases in the cost of raw materials; our ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures, and to realize anticipated earnings and synergies from acquired businesses and joint ventures; our 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 legal compliance risks and litigation, including product recalls; indemnification obligations related to acquired or divested businesses; cybersecurity and privacy risks; protection and validity of patent and other intellectual property rights; goodwill or intangible asset impairment charges; a downgrade in our credit ratings which, among other matters, could make obtaining financing more difficult and costly; and work stoppages, union and works council campaigns and other labor disputes which could impact our productivity. 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 2017
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenue | $ | 1,813,372 | $ | 1,622,273 | |||
Cost of goods and services | 1,152,198 | 1,033,009 | |||||
Gross profit | 661,174 | 589,264 | |||||
Selling, general, and administrative expenses | 485,290 | 443,448 | |||||
Operating earnings | 175,884 | 145,816 | |||||
Interest expense | 36,409 | 33,318 | |||||
Interest income | (2,580 | ) | (1,604 | ) | |||
Gain on sale of businesses | (90,093 | ) | (11,228 | ) | |||
Other income, net | 176 | (2,294 | ) | ||||
Earnings before provision for income taxes | 231,972 | 127,624 | |||||
Provision for income taxes | 59,725 | 28,268 | |||||
Net earnings | $ | 172,247 | $ | 99,356 | |||
Net earnings per share: | |||||||
Basic | $ | 1.11 | $ | 0.64 | |||
Diluted | $ | 1.09 | $ | 0.64 | |||
Weighted average shares outstanding: | |||||||
Basic | 155,540 | 155,064 | |||||
Diluted | 157,399 | 156,161 | |||||
Dividends paid per common share | $ | 0.44 | $ | 0.42 | |||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2017 | 2016 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2016 | ||||||||||||||
REVENUE | |||||||||||||||||||
Energy | $ | 324,088 | $ | 283,230 | $ | 259,008 | $ | 273,248 | $ | 292,952 | $ | 1,108,438 | |||||||
Engineered Systems | |||||||||||||||||||
Printing & Identification | 249,238 | 239,681 | 263,648 | 253,091 | 266,082 | 1,022,502 | |||||||||||||
Industrials | 358,397 | 337,314 | 328,784 | 317,471 | 360,212 | 1,343,781 | |||||||||||||
607,635 | 576,995 | 592,432 | 570,562 | 626,294 | 2,366,283 | ||||||||||||||
Fluids | 525,195 | 399,062 | 405,838 | 412,822 | 482,852 | 1,700,574 | |||||||||||||
Refrigeration & Food Equipment | 356,834 | 363,252 | 429,386 | 451,328 | 376,373 | 1,620,339 | |||||||||||||
Intra-segment eliminations | (380 | ) | (266 | ) | (319 | ) | (197 | ) | (510 | ) | (1,292 | ) | |||||||
Total consolidated revenue | $ | 1,813,372 | $ | 1,622,273 | $ | 1,686,345 | $ | 1,707,763 | $ | 1,777,961 | $ | 6,794,342 | |||||||
NET EARNINGS | |||||||||||||||||||
Segment Earnings: | |||||||||||||||||||
Energy | $ | 41,691 | $ | 11,244 | $ | (75 | ) | $ | 13,279 | $ | 30,888 | $ | 55,336 | ||||||
Engineered Systems | 174,398 | 93,748 | 104,034 | 97,240 | 96,807 | 391,829 | |||||||||||||
Fluids | 52,639 | 46,047 | 54,033 | 66,178 | 34,663 | 200,921 | |||||||||||||
Refrigeration & Food Equipment | 33,562 | 38,161 | 63,230 | 64,111 | 118,126 | 283,628 | |||||||||||||
Total segments | 302,290 | 189,200 | 221,222 | 240,808 | 280,484 | 931,714 | |||||||||||||
Corporate expense / other | 36,489 | 29,862 | 24,566 | 26,638 | 31,674 | 112,740 | |||||||||||||
Interest expense | 36,409 | 33,318 | 33,779 | 33,789 | 35,515 | 136,401 | |||||||||||||
Interest income | (2,580 | ) | (1,604 | ) | (1,622 | ) | (795 | ) | (2,738 | ) | (6,759 | ) | |||||||
Earnings before provision for income taxes | 231,972 | 127,624 | 164,499 | 181,176 | 216,033 | 689,332 | |||||||||||||
Provision for income taxes | 59,725 | 28,268 | 46,209 | 51,092 | 54,871 | 180,440 | |||||||||||||
Net earnings | $ | 172,247 | $ | 99,356 | $ | 118,290 | $ | 130,084 | $ | 161,162 | $ | 508,892 | |||||||
SEGMENT MARGIN | |||||||||||||||||||
Energy | 12.9 | % | 4.0 | % | — | % | 4.9 | % | 10.5 | % | 5.0 | % | |||||||
Engineered Systems | 28.7 | % | 16.2 | % | 17.6 | % | 17.0 | % | 15.5 | % | 16.6 | % | |||||||
Fluids | 10.0 | % | 11.5 | % | 13.3 | % | 16.0 | % | 7.2 | % | 11.8 | % | |||||||
Refrigeration & Food Equipment | 9.4 | % | 10.5 | % | 14.7 | % | 14.2 | % | 31.4 | % | 17.5 | % | |||||||
Total segment operating margin | 16.7 | % | 11.7 | % | 13.1 | % | 14.1 | % | 15.8 | % | 13.7 | % | |||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||
Energy | $ | 31,365 | $ | 34,160 | $ | 33,289 | $ | 32,605 | $ | 31,366 | $ | 131,420 | |||||||
Engineered Systems | 19,575 | 16,036 | 16,075 | 16,238 | 25,597 | 73,946 | |||||||||||||
Fluids | 28,503 | 20,511 | 20,981 | 20,833 | 22,899 | 85,224 | |||||||||||||
Refrigeration & Food Equipment | 15,035 | 16,728 | 16,881 | 16,146 | 15,263 | 65,018 | |||||||||||||
Corporate | 1,120 | 1,169 | 868 | 901 | 2,193 | 5,131 | |||||||||||||
Total depreciation and amortization expense | $ | 95,598 | $ | 88,604 | $ | 88,094 | $ | 86,723 | $ | 97,318 | $ | 360,739 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2017 | 2016 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2016 | ||||||||||||||
BOOKINGS | |||||||||||||||||||
Energy | $ | 348,317 | $ | 273,445 | $ | 246,021 | $ | 270,685 | $ | 299,771 | $ | 1,089,922 | |||||||
Engineered Systems | |||||||||||||||||||
Printing & Identification | 256,665 | 242,569 | 266,490 | 248,443 | 268,951 | 1,026,453 | |||||||||||||
Industrials | 419,455 | 329,957 | 304,345 | 331,435 | 374,073 | 1,339,810 | |||||||||||||
676,120 | 572,526 | 570,835 | 579,878 | 643,024 | 2,366,263 | ||||||||||||||
Fluids | 565,987 | 418,345 | 413,767 | 413,535 | 457,283 | 1,702,930 | |||||||||||||
Refrigeration & Food Equipment | 438,576 | 411,367 | 468,661 | 429,134 | 336,645 | 1,645,807 | |||||||||||||
Intra-segment eliminations | (1,149 | ) | (90 | ) | (944 | ) | (245 | ) | (308 | ) | (1,587 | ) | |||||||
Total consolidated bookings | $ | 2,027,851 | $ | 1,675,593 | $ | 1,698,340 | $ | 1,692,987 | $ | 1,736,415 | $ | 6,803,335 | |||||||
BACKLOG | |||||||||||||||||||
Energy | $ | 156,255 | $ | 144,828 | $ | 129,873 | $ | 126,519 | $ | 134,181 | |||||||||
Engineered Systems | |||||||||||||||||||
Printing & Identification | 109,347 | 102,640 | 104,509 | 101,190 | 98,924 | ||||||||||||||
Industrials | 310,008 | 235,384 | 210,646 | 224,892 | 252,780 | ||||||||||||||
419,355 | 338,024 | 315,155 | 326,082 | 351,704 | |||||||||||||||
Fluids | 371,717 | 286,457 | 315,786 | 318,246 | 331,238 | ||||||||||||||
Refrigeration & Food Equipment | 341,530 | 303,479 | 332,312 | 309,462 | 258,329 | ||||||||||||||
Intra-segment eliminations | (729 | ) | (36 | ) | (265 | ) | (252 | ) | (102 | ) | |||||||||
Total consolidated backlog | $ | 1,288,128 | $ | 1,072,752 | $ | 1,092,861 | $ | 1,080,057 | $ | 1,075,350 | |||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
Earnings Per Share | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2016 | ||||||||||||||
Net earnings per share: | |||||||||||||||||||
Basic | $ | 1.11 | $ | 0.64 | $ | 0.76 | $ | 0.84 | $ | 1.04 | $ | 3.28 | |||||||
Diluted | $ | 1.09 | $ | 0.64 | $ | 0.76 | $ | 0.83 | $ | 1.03 | $ | 3.25 | |||||||
Net earnings and weighted average shares used in calculated earnings per share amounts are as follows: | |||||||||||||||||||
Net earnings | $ | 172,247 | $ | 99,356 | $ | 118,290 | $ | 130,084 | $ | 161,162 | $ | 508,892 | |||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 155,540 | 155,064 | 155,180 | 155,300 | 155,376 | 155,231 | |||||||||||||
Diluted | 157,399 | 156,161 | 156,595 | 156,798 | 156,816 | 156,636 | |||||||||||||
Adjusted Earnings Per Share (Non-GAAP) | |||||||||||||||||||
Net earnings are adjusted by gains on disposition of businesses and a product recall charge to derive adjusted net earnings and adjusted diluted earnings per common share as follows: | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2016 | ||||||||||||||
Adjusted net earnings: | |||||||||||||||||||
Net earnings | $ | 172,247 | $ | 99,356 | $ | 118,290 | $ | 130,084 | $ | 161,162 | $ | 508,892 | |||||||
Gain on dispositions, net of tax | (61,720 | ) | (11,228 | ) | — | — | (56,975 | ) | (68,203 | ) | |||||||||
Product recall charge, net of tax | — | — | — | — | 14,237 | 14,237 | |||||||||||||
Adjusted net earnings | $ | 110,527 | $ | 88,128 | $ | 118,290 | $ | 130,084 | $ | 118,424 | $ | 454,926 | |||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||
Net earnings | $ | 1.09 | $ | 0.64 | $ | 0.76 | $ | 0.83 | $ | 1.03 | $ | 3.25 | |||||||
Gain on dispositions, net of tax | (0.39 | ) | (0.07 | ) | — | — | (0.36 | ) | (0.44 | ) | |||||||||
Product recall charge, net of tax | — | — | — | — | 0.09 | 0.09 | |||||||||||||
Adjusted net earnings | $ | 0.70 | $ | 0.56 | $ | 0.76 | $ | 0.83 | $ | 0.76 | $ | 2.90 | |||||||
* Per share data may be impacted by rounding. | |||||||||||||||||||
DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)
Quarterly Cash Flow
2017 | 2016 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2016 | ||||||||||||||
Net Cash Flows Provided By (Used In): | |||||||||||||||||||
Operating activities | $ | 78,071 | $ | 133,413 | $ | 207,868 | $ | 231,665 | $ | 289,029 | $ | 861,975 | |||||||
Investing activities | 81,780 | (425,857 | ) | (69,415 | ) | (66,110 | ) | (942,461 | ) | (1,503,843 | ) | ||||||||
Financing activities | (93,293 | ) | 178,507 | (127,678 | ) | 98,491 | 484,288 | 633,608 | |||||||||||
Quarterly Free Cash Flow (Non-GAAP)
2017 | 2016 | ||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | FY 2016 | ||||||||||||||
Cash flow from operating activities | $ | 78,071 | $ | 133,413 | $ | 207,868 | $ | 231,665 | $ | 289,029 | $ | 861,975 | |||||||
Less: Capital expenditures | (42,259 | ) | (37,230 | ) | (35,422 | ) | (43,116 | ) | (49,437 | ) | (165,205 | ) | |||||||
Free cash flow | $ | 35,812 | $ | 96,183 | $ | 172,446 | $ | 188,549 | $ | 239,592 | $ | 696,770 | |||||||
Free cash flow as a percentage of revenue | 2.0 | % | 5.9 | % | 10.2 | % | 11.0 | % | 13.5 | % | 10.3 | % | |||||||
Free cash flow as a percentage of net earnings | 20.8 | % | 96.8 | % | 145.8 | % | 144.9 | % | 148.7 | % | 136.9 | % | |||||||
Revenue Growth Factors
Three Months Ended March 31, 2017 | ||||||||||||||
Energy | Engineered Systems | Fluids | Refrigeration & Food Equipment | Total | ||||||||||
Organic | 15 | % | 2 | % | (2 | )% | 5 | % | 4 | % | ||||
Acquisitions | — | % | 9 | % | 35 | % | — | % | 12 | % | ||||
Dispositions | — | % | (4 | )% | — | % | (7 | )% | (3 | )% | ||||
Currency translation | (1 | )% | (1 | )% | (1 | )% | — | % | (1 | )% | ||||
Total * | 14 | % | 5 | % | 32 | % | (2 | )% | 12 | % | ||||
* Totals may be impacted by rounding. | ||||||||||||||
Non-GAAP Disclosures
In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted net earnings, adjusted diluted earnings per common share, free cash flow and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for net earnings, diluted earnings per common share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. Adjusted net earnings represents net earnings adjusted for gains on disposition of businesses and a product recall charge. Adjusted diluted earnings per common share represents adjusted net earnings divided by average diluted shares. Management believes this information is useful to investors to better understand the company’s ongoing profitability and facilitates easier comparisons of the company’s profitability to prior and future periods and to its peers. Free cash flow represents net cash provided by operating activities minus capital expenditures. Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock. Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue performance and trends between periods.
Earnings Conference Call
First Quarter 2017
April 20, 2017 – 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
2016, 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, 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, which are available on our
website.
2
3
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
Q1 Q2 Q3 Q4 Q1
Earnings per share Adj. EPS*
Q1 2017 Performance
Earnings Per Share
Q1 Q1/Q1
* Excludes gains on dispositions of $0.07 in Q1 2016, $0.36 in Q4 2016, $0.39 in
Q1 2017, and a $0.09 voluntary product recall charge in Q4 2016
(d) See Press Release for free cash flow reconciliation
3
Quarterly Comments
2016
Revenue growth largely driven by acquisitions and strong
recovery in Drilling & Production
Printing & Identification, Refrigeration, Retail Fueling, Hygienic &
Pharma, and most other industrial end markets were solid,
offsetting declines in longer cycle oil & gas markets and the
impact of dispositions
Solid organic growth in U.S., Europe and China
Adjusted segment margin improvement largely driven by strong
conversion on volume in the Energy segment
Bookings growth reflects broad-based organic increases and
acquisitions
Book-to-bill at a seasonally strong 1.12 Note: EPS and Adj. EPS include restructuring costs of $0.07 in Q1 2016, $0.04
in Q2 2016, $0.04 in Q3 2016, $0.04 in Q4 2016, and $0.03 in Q1 2017
Revenue $1.8B 12%
EPS $1.09 70%
Adj. EPS (a) $0.70 25%
Bookings $2.0B 21%
Seg. Margin 16.7% 500 bps
Adj. Seg. Margin (a) 11.8% 80 bps
Organic Rev. (b) 4%
Net Acq. Growth (c) 9%
Cash flow from Ops $78M -41%
FCF (d) $36M -63%
(a) Adjusted for gains on dispositions of $11M in Q1 2016 and $88M in Q1 2017
(b) Change in revenue from businesses owned over 12 months, excluding FX impact
(c) Change in revenue from acquisitions, less revenue from dispositions
2017
4
Revenue
Q1 2017
Energy
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Dover
Organic 15% 2% -2% 5% 4%
Acquisitions - 9% 35% - 12%
Dispositions - -4% - -7% -3%
Currency -1% -1% -1% - -1%
Total 14% 5% 32% -2% 12%
Note: Totals may be impacted due to rounding
5
Energy
Revenue increase driven by
significant improvement in
early cycle oil & gas
fundamentals, particularly U.S.
rig count and well completions
– Q1 revenue up 11%
sequentially
– Bearings & Compression
growth driven by improved
OEM build rates
– Automation benefitting from
customer capex increases
Margin of 12.9% exceeds
expectation, reflecting higher
volume and strong
incrementals
Bookings growth is broad-
based
Book-to-bill at 1.07
5
$ in millions
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue $324 $283 14% 15%
Earnings $ 42 $ 11 271%
Margin 12.9% 4.0% 890 bps
Bookings $348 $273 27% 28%
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Drilling & Production 67% 14% 14%
Bearings & Compression 22% 13% 16%
Automation 11% 19% 19%
6
Engineered Systems
Organic revenue growth of 2%
– Organic growth in Printing &
Identification driven by strong
marking & coding and digital
textile markets
– Industrial’s organic decline
driven by chassis availability
challenges in Environmental
Solutions Group
Adjusted margin in-line with
expectations
Organic bookings growth is
broad-based
Book-to-bill of 1.11
6
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue(a) $608 $577 5% 2%
Earnings $174 $ 94 86%
Margin 28.7% 16.2% NM
Adj. Earnings* $ 86 $ 83 4%
Adj. Margin* 14.2% 14.3% -10 bps
Bookings(b) $676 $573 18% 12%
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Printing & Identification 41% 4% 5%
Industrial 59% 6% -1%
$ in millions
(a) Revenue increased 5% overall, reflecting organic growth of 2% and
acquisition growth of 8%, offset by a 4% impact from dispositions and a 1%
unfavorable impact from FX
(b) Bookings growth of 18% reflects organic growth of 12% and acquisition
growth of 9%, partially offset by a 2% impact from dispositions and a 1%
unfavorable impact from FX
* Earnings adjusted for gains on dispositions of $11M in Q1 2016 and $88M in
Q1 2017
7
Fluids
Revenue growth driven by
acquisitions
– Dover Fueling Solutions off
to very strong start
– Organic revenue impacted
by continued weakness in
longer cycle oil & gas
markets, especially
transport
Solid retail fueling and
strong Hygienic &
Pharma markets
Margin primarily impacted by
acquisitions and business mix
Bookings growth is broad-
based
Book-to-bill at 1.08
7
$ in millions
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Pumps 29% -4% -2%
Fueling & Transport 60% 69% -4%
Hygienic & Pharma 11% 2% 5%
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue $525 $399 32% -2%
Earnings $ 53 $ 46 14%
Margin 10.0% 11.5% -150 bps
Bookings $566 $418 35% 2%
8
Refrigeration & Food Equipment
Organic revenue growth
reflects strong activity in
retail refrigeration market
– Door and specialty case
product lines doing very
well
– Within Food Equipment,
can-shaping equipment
project timing offsets solid
commercial food
equipment activity
Margin performance reflects
impact of dispositions and
$2 million in restructuring
Organic bookings growth is
broad-based
Book-to-bill at seasonally
strong 1.23
8
$ in millions
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Refrigeration 84% 7% 7%
Food Equipment 16% -31% -3%
(a) Revenue decline of 2% reflects organic growth of 5%, offset by a 7% impact
from dispositions
(b) Bookings growth of 7% reflects organic growth of 13% and a 6% impact
from dispositions
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue(a) $357 $363 -2% 5%
Earnings $34 $ 38 -12%
Margin 9.4% 10.5% -110 bps
Bookings(b) $439 $411 7% 13%
9
Q1 2017 Overview
9
Q1 2017
Net Interest Expense $34 million, in-line with forecast
Corporate Expense $36 million, in-line with forecast
Effective Tax Rate Q1 rate was 25.7%, lower than forecast,
reflecting the impact of a disposition and other
discrete items. Excluding these items,
normalized rate was 27.8%
Capex $42 million, generally in-line with forecast
Share Repurchases No activity
10
FY 2017F Updated Guidance
Corporate expense: ≈ $130 million
Net interest expense: ≈ $133 million
Q2 – Q4 tax rate: ≈ 28%
Capital expenditures: ≈ 2.4% of revenue
FY free cash flow: ≈ 11% of revenue or 140% of net income*
2017F
Energy
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Organic rev. 20% - 23% 2% - 3% 1% - 2% 1% - 3% 4% - 6%
Acquisitions - ≈ 8% ≈ 31% - ≈ 10%
Dispositions - (3%) - (5%) (2%)
Currency - (1%) (1%) - (1%)
Total revenue 20% - 23% 6% - 7% 31% - 32% (4% - 2%) 11% - 13%
* Excludes the gain on sale of business
11
2017F EPS Guidance – Updated Bridge
2016 EPS – Continuing Ops (GAAP): $3.25
– Less 2016 gain on dispositions(1): (0.44)
– Less 2016 earnings from dispositions(2) : (0.05)
– Plus 2016 charges related to recall: 0.09
2016 Adjusted EPS $2.85
– Net restructuring(3): 0.08 - 0.10
– Performance including restructuring benefits: 1.12 – 1.21
– Compensation & investment: (0.17 - 0.15)
– Interest / Corp. / Tax rate / Shares / Other (net): (0.18 - 0.16)
– Net benefit of disposition(4) 0.35
2017F EPS – Continuing Ops $4.05 - $4.20
(2) Includes 2016 operating earnings from THI and Tipper Tie
(3) Includes restructuring costs of approximately $0.18 in FY 2016 and $0.08 - $0.10 in FY 2017F
(1) Includes $0.07 gain on the disposition of THI in Q1 2016 and $0.36 gain on the disposition of Tipper Tie in Q4 2016
(4) Includes $0.39 gain on the disposition of PMI, partially offset by ($0.04) of PMI operational earnings in the prior forecast
