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 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 July 20, 2017, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended June 30, 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 June 30, 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 July 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: | July 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 July 20, 2017 | |
99.2 | Presentation Slides | |
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 SECOND QUARTER 2017 RESULTS AND RAISES FULL YEAR REVENUE AND EPS GUIDANCE
• | Reports quarterly revenue of $2.0 billion, an increase of 18% from the prior year |
• | Delivers quarterly diluted net earnings per share of $1.04, up 37% |
• | Increases full year revenue growth forecast; now expected to be 12% to 14% |
• | Raises 2017 full year diluted earnings per share guidance to now be in the range of $4.23 to $4.33, an increase of $0.15 at the mid-point of guidance |
DOWNERS GROVE, Ill., July 20, 2017 — Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2017, revenue was $2.0 billion, an increase of 18% from the prior year. The increase in the quarter was driven by organic growth of 10% and acquisition growth of 12%, partially offset by a 3% impact from dispositions and an unfavorable impact from foreign exchange ("FX") of 1%. Net earnings were $164.1 million, an increase of 39% as compared to $118.3 million for the prior year period. Diluted net earnings per share ("EPS") for the second quarter ended June 30, 2017, were $1.04, compared to $0.76 EPS in the prior year period, representing an increase of 37%. EPS for the second quarter ended June 30, 2017, and June 30, 2016, include restructuring costs of $0.01 EPS and $0.04 EPS, respectively.
Dover’s President and Chief Executive Officer, Robert A. Livingston, said, “The second quarter reflected the continuation of a trend that began to develop late last year, namely improving global markets and strong results reflecting solid execution by our teams. In all, we achieved revenue growth and margin expansion that exceeded our forecasts.
“All of our segments posted sequential increases in revenue and margin, which was most notable in Refrigeration & Food Equipment and Fluids. In addition, we benefited from strong broad-based activity in Engineered Systems, and also from higher than expected U.S. rig count and increased well completions, which resulted in significant growth in Energy.
“As a result of our strong second quarter performance and increased confidence in the back half of the year, we are raising our full year guidance for revenue and EPS. Our revised guidance is based on full year revenue growth of 12% to 14% versus our prior forecast of 11% to 13%, and includes organic growth of 5% to 7%, which has been increased one percentage point. Our revenue forecast also includes acquisition growth of 10%, a 2% impact from dispositions, and a 1% headwind from FX, all of which remain unchanged from our prior forecast. Lastly, we now expect full year diluted earnings per share to be in the range of $4.23 to $4.33, versus our prior guidance of $4.05 to $4.20.”
Dover will host a webcast of its second quarter 2017 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 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 second 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: Engineered Systems, Fluids, Refrigeration & Food Equipment, and Energy. 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 - SECOND QUARTER 2017
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | $ | 1,993,351 | $ | 1,686,345 | $ | 3,806,723 | $ | 3,308,618 | |||||||
Cost of goods and services | 1,243,905 | 1,055,132 | 2,396,103 | 2,088,141 | |||||||||||
Gross profit | 749,446 | 631,213 | 1,410,620 | 1,220,477 | |||||||||||
Selling, general, and administrative expenses | 484,046 | 437,411 | 969,336 | 880,859 | |||||||||||
Operating earnings | 265,400 | 193,802 | 441,284 | 339,618 | |||||||||||
Interest expense | 36,932 | 33,779 | 73,341 | 67,097 | |||||||||||
Interest income | (2,338 | ) | (1,622 | ) | (4,918 | ) | (3,226 | ) | |||||||
Gain on sale of businesses | — | (801 | ) | (90,093 | ) | (12,029 | ) | ||||||||
Other expense (income), net | 15 | (2,053 | ) | 191 | (4,347 | ) | |||||||||
Earnings before provision for income taxes | 230,791 | 164,499 | 462,763 | 292,123 | |||||||||||
Provision for income taxes | 66,733 | 46,209 | 126,458 | 74,477 | |||||||||||
Net earnings | $ | 164,058 | $ | 118,290 | $ | 336,305 | $ | 217,646 | |||||||
Net earnings per share: | |||||||||||||||
Basic | $ | 1.05 | $ | 0.76 | $ | 2.16 | $ | 1.40 | |||||||
Diluted | $ | 1.04 | $ | 0.76 | $ | 2.14 | $ | 1.39 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 155,703 | 155,180 | 155,622 | 155,122 | |||||||||||
Diluted | 157,513 | 156,595 | 157,457 | 156,414 | |||||||||||
Dividends paid per common share | $ | 0.44 | $ | 0.42 | $ | 0.88 | $ | 0.84 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2017 | 2016 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2016 | ||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | $ | 249,238 | $ | 278,220 | $ | 527,458 | $ | 239,681 | $ | 263,648 | $ | 503,329 | $ | 253,091 | $ | 266,082 | $ | 1,022,502 | ||||||||||
Industrials | 358,397 | 377,210 | 735,607 | 337,314 | 328,784 | 666,098 | 317,471 | 360,212 | 1,343,781 | |||||||||||||||||||
607,635 | 655,430 | 1,263,065 | 576,995 | 592,432 | 1,169,427 | 570,562 | 626,294 | 2,366,283 | ||||||||||||||||||||
Fluids | 525,195 | 553,259 | 1,078,454 | 399,062 | 405,838 | 804,900 | 412,822 | 482,852 | 1,700,574 | |||||||||||||||||||
Refrigeration & Food Equipment | 356,834 | 426,304 | 783,138 | 363,252 | 429,386 | 792,638 | 451,328 | 376,373 | 1,620,339 | |||||||||||||||||||
Energy | 324,088 | 359,168 | 683,256 | 283,230 | 259,008 | 542,238 | 273,248 | 292,952 | 1,108,438 | |||||||||||||||||||
Intra-segment eliminations | (380 | ) | (810 | ) | (1,190 | ) | (266 | ) | (319 | ) | (585 | ) | (197 | ) | (510 | ) | (1,292 | ) | ||||||||||
Total consolidated revenue | $ | 1,813,372 | $ | 1,993,351 | $ | 3,806,723 | $ | 1,622,273 | $ | 1,686,345 | $ | 3,308,618 | $ | 1,707,763 | $ | 1,777,961 | $ | 6,794,342 | ||||||||||
NET EARNINGS | ||||||||||||||||||||||||||||
Segment Earnings: | ||||||||||||||||||||||||||||
Engineered Systems | $ | 174,398 | $ | 106,820 | $ | 281,218 | $ | 93,748 | $ | 104,034 | $ | 197,782 | $ | 97,240 | $ | 96,807 | $ | 391,829 | ||||||||||
Fluids | 52,639 | 73,558 | 126,197 | 46,047 | 54,033 | 100,080 | 66,178 | 34,663 | 200,921 | |||||||||||||||||||
Refrigeration & Food Equipment | 33,562 | 65,829 | 99,391 | 38,161 | 63,230 | 101,391 | 64,111 | 118,126 | 283,628 | |||||||||||||||||||
Energy | 41,691 | 53,368 | 95,059 | 11,244 | (75 | ) | 11,169 | 13,279 | 30,888 | 55,336 | ||||||||||||||||||
Total segments | 302,290 | 299,575 | 601,865 | 189,200 | 221,222 | 410,422 | 240,808 | 280,484 | 931,714 | |||||||||||||||||||
Corporate expense / other | 36,489 | 34,190 | 70,679 | 29,862 | 24,566 | 54,428 | 26,638 | 31,674 | 112,740 | |||||||||||||||||||
Interest expense | 36,409 | 36,932 | 73,341 | 33,318 | 33,779 | 67,097 | 33,789 | 35,515 | 136,401 | |||||||||||||||||||
Interest income | (2,580 | ) | (2,338 | ) | (4,918 | ) | (1,604 | ) | (1,622 | ) | (3,226 | ) | (795 | ) | (2,738 | ) | (6,759 | ) | ||||||||||
Earnings before provision for income taxes | 231,972 | 230,791 | 462,763 | 127,624 | 164,499 | 292,123 | 181,176 | 216,033 | 689,332 | |||||||||||||||||||
Provision for income taxes | 59,725 | 66,733 | 126,458 | 28,268 | 46,209 | 74,477 | 51,092 | 54,871 | 180,440 | |||||||||||||||||||
Net earnings | $ | 172,247 | $ | 164,058 | $ | 336,305 | $ | 99,356 | $ | 118,290 | $ | 217,646 | $ | 130,084 | $ | 161,162 | $ | 508,892 | ||||||||||
SEGMENT MARGIN | ||||||||||||||||||||||||||||
Engineered Systems | 28.7 | % | 16.3 | % | 22.3 | % | 16.2 | % | 17.6 | % | 16.9 | % | 17.0 | % | 15.5 | % | 16.6 | % | ||||||||||
Fluids | 10.0 | % | 13.3 | % | 11.7 | % | 11.5 | % | 13.3 | % | 12.4 | % | 16.0 | % | 7.2 | % | 11.8 | % | ||||||||||
Refrigeration & Food Equipment | 9.4 | % | 15.4 | % | 12.7 | % | 10.5 | % | 14.7 | % | 12.8 | % | 14.2 | % | 31.4 | % | 17.5 | % | ||||||||||
Energy | 12.9 | % | 14.9 | % | 13.9 | % | 4.0 | % | — | % | 2.1 | % | 4.9 | % | 10.5 | % | 5.0 | % | ||||||||||
Total segment operating margin | 16.7 | % | 15.0 | % | 15.8 | % | 11.7 | % | 13.1 | % | 12.4 | % | 14.1 | % | 15.8 | % | 13.7 | % | ||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | ||||||||||||||||||||||||||||
Engineered Systems | $ | 19,575 | $ | 20,259 | $ | 39,834 | $ | 16,036 | $ | 16,075 | $ | 32,111 | $ | 16,238 | $ | 25,597 | $ | 73,946 | ||||||||||
Fluids | 28,503 | 29,473 | 57,976 | 20,511 | 20,981 | 41,492 | 20,833 | 22,899 | 85,224 | |||||||||||||||||||
Refrigeration & Food Equipment | 15,035 | 14,522 | 29,557 | 16,728 | 16,881 | 33,609 | 16,146 | 15,263 | 65,018 | |||||||||||||||||||
Energy | 31,365 | 32,000 | 63,365 | 34,160 | 33,289 | 67,449 | 32,605 | 31,366 | 131,420 | |||||||||||||||||||
Corporate | 1,120 | 1,164 | 2,284 | 1,169 | 868 | 2,037 | 901 | 2,193 | 5,131 | |||||||||||||||||||
Total depreciation and amortization expense | $ | 95,598 | $ | 97,418 | $ | 193,016 | $ | 88,604 | $ | 88,094 | $ | 176,698 | $ | 86,723 | $ | 97,318 | $ | 360,739 | ||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2017 | 2016 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2016 | ||||||||||||||||||||
BOOKINGS | ||||||||||||||||||||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | $ | 256,665 | $ | 282,157 | $ | 538,822 | $ | 242,569 | $ | 266,490 | $ | 509,059 | $ | 248,443 | $ | 268,951 | $ | 1,026,453 | ||||||||||
Industrials | 419,455 | 367,352 | 786,807 | 329,957 | 304,345 | 634,302 | 331,435 | 374,073 | 1,339,810 | |||||||||||||||||||
676,120 | 649,509 | 1,325,629 | 572,526 | 570,835 | 1,143,361 | 579,878 | 643,024 | 2,366,263 | ||||||||||||||||||||
Fluids | 565,987 | 554,656 | 1,120,643 | 418,345 | 413,767 | 832,112 | 413,535 | 457,283 | 1,702,930 | |||||||||||||||||||
Refrigeration & Food Equipment | 438,576 | 466,276 | 904,852 | 411,367 | 468,661 | 880,028 | 429,134 | 336,645 | 1,645,807 | |||||||||||||||||||
Energy | 348,317 | 352,617 | 700,934 | 273,445 | 246,021 | 519,466 | 270,685 | 299,771 | 1,089,922 | |||||||||||||||||||
Intra-segment eliminations | (1,149 | ) | (529 | ) | (1,678 | ) | (90 | ) | (944 | ) | (1,034 | ) | (245 | ) | (308 | ) | (1,587 | ) | ||||||||||
Total consolidated bookings | $ | 2,027,851 | $ | 2,022,529 | $ | 4,050,380 | $ | 1,675,593 | $ | 1,698,340 | $ | 3,373,933 | $ | 1,692,987 | $ | 1,736,415 | $ | 6,803,335 | ||||||||||
BACKLOG | ||||||||||||||||||||||||||||
Engineered Systems | ||||||||||||||||||||||||||||
Printing & Identification | $ | 109,347 | $ | 115,763 | $ | 102,640 | $ | 104,509 | $ | 101,190 | $ | 98,924 | ||||||||||||||||
Industrials | 310,008 | 301,474 | 235,384 | 210,646 | 224,892 | 252,780 | ||||||||||||||||||||||
419,355 | 417,237 | 338,024 | 315,155 | 326,082 | 351,704 | |||||||||||||||||||||||
Fluids | 371,717 | 378,774 | 286,457 | 315,786 | 318,246 | 331,238 | ||||||||||||||||||||||
Refrigeration & Food Equipment | 341,530 | 382,598 | 303,479 | 332,312 | 309,462 | 258,329 | ||||||||||||||||||||||
Energy | 156,255 | 147,568 | 144,828 | 129,873 | $ | 126,519 | $ | 134,181 | ||||||||||||||||||||
Intra-segment eliminations | (729 | ) | (378 | ) | (36 | ) | (265 | ) | (252 | ) | (102 | ) | ||||||||||||||||
Total consolidated backlog | $ | 1,288,128 | $ | 1,325,799 | $ | 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 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2016 | ||||||||||||||||||||
Net earnings per share: | ||||||||||||||||||||||||||||
Basic | $ | 1.11 | $ | 1.05 | $ | 2.16 | $ | 0.64 | $ | 0.76 | $ | 1.40 | $ | 0.84 | $ | 1.04 | $ | 3.28 | ||||||||||
Diluted | $ | 1.09 | $ | 1.04 | $ | 2.14 | $ | 0.64 | $ | 0.76 | $ | 1.39 | $ | 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 | $ | 164,058 | $ | 336,305 | $ | 99,356 | $ | 118,290 | $ | 217,646 | $ | 130,084 | $ | 161,162 | $ | 508,892 | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||||
Basic | 155,540 | 155,703 | 155,622 | 155,064 | 155,180 | 155,122 | 155,300 | 155,376 | 155,231 | |||||||||||||||||||
Diluted | 157,399 | 157,513 | 157,457 | 156,161 | 156,595 | 156,414 | 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 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2016 | ||||||||||||||||||||
Adjusted net earnings: | ||||||||||||||||||||||||||||
Net earnings | $ | 172,247 | $ | 164,058 | $ | 336,305 | $ | 99,356 | $ | 118,290 | $ | 217,646 | $ | 130,084 | $ | 161,162 | $ | 508,892 | ||||||||||
Gain on dispositions, pre-tax | (88,402 | ) | — | (88,402 | ) | (11,853 | ) | — | (11,853 | ) | — | (85,035 | ) | (96,888 | ) | |||||||||||||
Gain on dispositions, tax impact 1 | 26,682 | — | 26,682 | 625 | — | 625 | — | 28,060 | 28,685 | |||||||||||||||||||
Product recall charge, pre-tax | — | — | — | — | — | — | — | 23,150 | 23,150 | |||||||||||||||||||
Product recall charge, tax impact 1 | — | — | — | — | — | — | — | (8,913 | ) | (8,913 | ) | |||||||||||||||||
Adjusted net earnings | $ | 110,527 | $ | 164,058 | $ | 274,585 | $ | 88,128 | $ | 118,290 | $ | 206,418 | $ | 130,084 | $ | 118,424 | $ | 454,926 | ||||||||||
Adjusted diluted earnings per common share: | ||||||||||||||||||||||||||||
Net earnings | $ | 1.09 | $ | 1.04 | $ | 2.14 | $ | 0.64 | $ | 0.76 | $ | 1.39 | $ | 0.83 | $ | 1.03 | $ | 3.25 | ||||||||||
Gain on dispositions, pre-tax | (0.56 | ) | — | (0.56 | ) | (0.08 | ) | — | (0.08 | ) | — | (0.54 | ) | (0.62 | ) | |||||||||||||
Gain on dispositions, tax impact | 0.17 | — | 0.17 | — | — | — | — | 0.18 | 0.18 | |||||||||||||||||||
Product recall charge, pre-tax | — | — | — | — | — | — | — | 0.15 | 0.15 | |||||||||||||||||||
Product recall charge, tax impact | — | — | — | — | — | — | — | (0.06 | ) | (0.06 | ) | |||||||||||||||||
Adjusted net earnings | $ | 0.70 | $ | 1.04 | $ | 1.75 | $ | 0.56 | $ | 0.76 | $ | 1.31 | $ | 0.83 | $ | 0.76 | $ | 2.90 | ||||||||||
1 Gain on dispositions and the product recall charge were tax effected using the statutory tax rates in the specific jurisdiction for each period. | ||||||||||||||||||||||||||||
* Per share data may be impacted by rounding. | ||||||||||||||||||||||||||||
DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)
Quarterly Cash Flow
2017 | 2016 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2016 | ||||||||||||||||||||
Net Cash Flows Provided By (Used In): | ||||||||||||||||||||||||||||
Operating activities | $ | 78,071 | $ | 155,877 | $ | 233,948 | $ | 133,413 | $ | 207,868 | $ | 341,281 | $ | 231,665 | $ | 289,029 | $ | 861,975 | ||||||||||
Investing activities | 81,780 | (51,137 | ) | 30,643 | (425,857 | ) | (69,415 | ) | (495,272 | ) | (66,110 | ) | (942,461 | ) | (1,503,843 | ) | ||||||||||||
Financing activities | (93,293 | ) | (216,273 | ) | (309,566 | ) | 178,507 | (127,678 | ) | 50,829 | 98,491 | 484,288 | 633,608 | |||||||||||||||
Quarterly Free Cash Flow (Non-GAAP)
2017 | 2016 | |||||||||||||||||||||||||||
Q1 | Q2 | Q2 YTD | Q1 | Q2 | Q2 YTD | Q3 | Q4 | FY 2016 | ||||||||||||||||||||
Cash flow from operating activities | $ | 78,071 | $ | 155,877 | $ | 233,948 | $ | 133,413 | $ | 207,868 | $ | 341,281 | $ | 231,665 | $ | 289,029 | $ | 861,975 | ||||||||||
Less: Capital expenditures | (42,259 | ) | (48,335 | ) | (90,594 | ) | (37,230 | ) | (35,422 | ) | (72,652 | ) | (43,116 | ) | (49,437 | ) | (165,205 | ) | ||||||||||
Plus: Cash taxes paid for gains on dispositions1 | — | 42,955 | 42,955 | — | 435 | 435 | 217 | 217 | 869 | |||||||||||||||||||
Free cash flow | $ | 35,812 | $ | 150,497 | $ | 186,309 | $ | 96,183 | $ | 172,881 | $ | 269,064 | $ | 188,766 | $ | 239,809 | $ | 697,639 | ||||||||||
Free cash flow as a percentage of revenue | 2.0 | % | 7.5 | % | 4.9 | % | 5.9 | % | 10.3 | % | 8.1 | % | 11.1 | % | 13.5 | % | 10.3 | % | ||||||||||
Free cash flow as a percentage of net earnings | 20.8 | % | 91.7 | % | 55.4 | % | 96.8 | % | 146.2 | % | 123.6 | % | 145.1 | % | 148.8 | % | 137.1 | % | ||||||||||
1 Federal and state tax payments related to the gains on the dispositions of Performance Motorsports in 2017 and Tipper Tie and Texas Hydraulics in 2016. | ||||||||||||||||||||||||||||
Revenue Growth Factors
Three Months Ended June 30, 2017 | ||||||||||||||
Engineered Systems | Fluids | Refrigeration & Food Equipment | Energy | Total | ||||||||||
Organic | 5 | % | 4 | % | 5 | % | 39 | % | 10 | % | ||||
Acquisitions | 10 | % | 34 | % | — | % | — | % | 12 | % | ||||
Dispositions | (4 | )% | — | % | (6 | )% | — | % | (3 | )% | ||||
Currency translation | (1 | )% | (2 | )% | — | % | (1 | )% | (1 | )% | ||||
Total * | 11 | % | 36 | % | (1 | )% | 39 | % | 18 | % | ||||
* Totals may be impacted by rounding. | ||||||||||||||
Six Months Ended June 30, 2017 | ||||||||||||||
Engineered Systems | Fluids | Refrigeration & Food Equipment | Energy | Total | ||||||||||
Organic | 4 | % | 1 | % | 5 | % | 39 | % | 7 | % | ||||
Acquisitions | 9 | % | 35 | % | — | % | — | % | 12 | % | ||||
Dispositions | (4 | )% | — | % | (6 | )% | — | % | (3 | )% | ||||
Currency translation | (1 | )% | (2 | )% | — | % | (1 | )% | (1 | )% | ||||
Total * | 8 | % | 34 | % | (1 | )% | 26 | % | 15 | % | ||||
* 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, plus the add back of cash taxes paid for gains on dispositions (which reflect tax payments on disposition-related investing activities). 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
Second Quarter 2017
July 20, 2017 – 9:00am CT
Exhibit 99.2
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 second 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 Q2
Earnings per share Adj. EPS*
Q2 2017 Performance
Earnings Per Share
Q2 Q2/Q2
* 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
(c) See Press Release for free cash flow reconciliation
3
Quarterly Comments
2016
Revenue growth driven by broad-based organic growth and
acquisitions
Solid organic growth in U.S., Europe and China
Strong sequential margin improvement in Fluids and
Refrigeration & Food Equipment
Segment margin improvement largely driven by strong
conversion on volume and the benefits of integration and
productivity
Bookings growth reflects broad-based organic increases and
acquisitions
Book-to-bill at 1.01
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, $0.03 in Q1 2017, and $0.01 in
Q2 2017
Revenue $2.0B 18%
EPS $1.04 37%
Bookings $2.0B 19%
Segment margin 15.0% (d) 190 bps
Organic Rev. (a) 10%
Net Acq. Growth (b) 9%
Cash flow from Ops $165M -21%
FCF (c) $150M -13%
(a) Change in revenue from businesses owned over 12 months, excluding FX impact
(b) Change in revenue from acquisitions, less revenue from dispositions
2017
(d) Up 320 basis points sequentially vs. Q1 2017 adjusted margin of 11.8%, which
excludes gain on disposition of $88M
4
Revenue
Q2 2017
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Dover
Organic 5% 4% 5% 39% 10%
Acquisitions 10% 34% - - 12%
Dispositions -4% - -6% - -3%
Currency -1% -2% - -1% -1%
Total 11% 36% -1% 39% 18%
Note: Totals may be impacted due to rounding
5
Engineered Systems
Organic revenue growth of 5%
– Printing & Identification driven
by strong marking & coding
markets
– Industrial’s growth was broad-
based with particular strength
in waste handling
Recent acquisitions performing
well, driving 10% acquisition
growth
Margin in-line with expectations
Organic bookings growth is
broad-based
Book-to-bill of 0.99
5
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue(a) $655 $592 11% 5%
Earnings $107 $104 3%
Margin 16.3% 17.6% -130 bps
Bookings(b) $650 $571 14% 9%
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Printing & Identification 42% 6% 5%
Industrial 58% 15% 5%
$ in millions
(a) Revenue increased 11% overall, reflecting organic growth of 5% and
acquisition growth of 10%, offset by a 4% impact from dispositions and a 1%
unfavorable impact from FX
(b) Bookings growth of 14% reflects organic growth of 9% and acquisition
growth of 9%, partially offset by a 4% impact from dispositions
6
Fluids
Revenue growth driven by
acquisitions and 4% organic
growth
Return to organic revenue
growth driven by:
– Solid retail fueling markets
and industrial pump
markets
– Continued strong Hygienic
& Pharma markets
Margin primarily impacted by
acquisitions and business mix
– Sequentially up 330 basis
points, benefiting from retail
fueling integration
Bookings growth reflecting
acquisitions and solid Pumps
and Hygienic & Pharma
markets
Book-to-bill at 1.00
6
$ in millions
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Pumps 29% 7% 7%
Fueling & Transport 60% 69% 1%
Hygienic & Pharma 11% 4% 5%
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue $553 $406 36% 4%
Earnings $ 74 $ 54 36%
Margin 13.3% 13.3% Flat
Bookings $555 $414 34% 4%
7
Refrigeration & Food Equipment
Organic revenue growth
reflects strong activity in
retail refrigeration market
– Door and specialty case
product lines continue to
perform well
– Within Food Equipment,
can-shaping equipment
growth offsets softness in
commercial food equip.
Margin performance reflects
improved productivity and
volume leverage in retail
refrigeration, offset, in part,
by material cost inflation
– Margin up 600 points
sequentially
Organic bookings growth
driven by Food Equipment
Book-to-bill at 1.09
7
$ in millions
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Refrigeration 83% 6% 6%
Food Equipment 17% -24% 1%
(a) Revenue decline of 1% reflects organic growth of 5%, offset by a 6% impact
from dispositions
(b) Bookings decline of 1% reflects organic growth of 6%, offset by a 6%
impact from dispositions and 1% impact from FX
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue(a) $426 $429 -1% 5%
Earnings $ 66 $ 63 4%
Margin 15.4% 14.7% 70 bps
Bookings(b) $466 $469 -1% 6%
8
Energy
Revenue increase driven by
continued improvement in U.S.
rig count and increased well
completions
– Bearings & Compression
growth driven by improved
OEM build rates
– Automation benefitting from
customer capex increases
Margin of 14.9% reflects
significantly higher volume and
strong incrementals
Bookings growth is broad-
based
Book-to-bill at 0.98
8
$ in millions
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue $359 $259 39% 39%
Earnings $ 53 $ 0 NM
Margin 14.9% 0% NM
Bookings $353 $246 43% 44%
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Drilling & Production 67% 47% 47%
Bearings & Compression 22% 17% 19%
Automation 11% 45% 45%
9
Q2 2017 Overview
9
Q2 2017
Net Interest Expense $35 million
Corporate Expense $34 million
Effective Tax Rate Q2 rate was 28.9%, including the impact of
discrete costs. Excluding these costs,
normalized rate was 27.8%
Capex $48 million
Share Repurchases No activity
10
FY 2017F Updated Guidance
Corporate expense: ≈ $135 million
Net interest expense: ≈ $134 million
Q3 – Q4 tax rate: ≈ 28%
Capital expenditures: ≈ 2.4% of revenue
FY free cash flow: ≈ 11% of revenue or 140% of net income*
2017F
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Organic rev. 3% - 4% 2% - 3% 1% - 3% 24% - 27% 5% - 7%
Acquisitions ≈ 8% ≈ 31% - - ≈ 10%
Dispositions (3%) - (5%) - (2%)
Currency (1%) (1%) - - (1%)
Total revenue 7% - 8% 32% - 33% (4% - 2%) 24% - 27% 12% - 14%
* Excludes the gain on sale of business
12
Appendix
13
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: 1.36 – 1.40
– Compensation & investment: (0.19 - 0.17)
– Interest / Corp. / Tax rate / Shares / Other (net): (0.22 - 0.20)
– Net benefit of disposition(4) 0.35
2017F EPS – Continuing Ops $4.23 - $4.33
(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 in Q1 2017, partially offset by ($0.04) of PMI operational earnings in the prior forecast