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): January 30, 2020
_______________________________
(Exact name of registrant as specified in its charter)
______________________________________________
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(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 (see General Instruction A.2. below):
| 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)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company 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 January 30, 2020, Dover Corporation ("Dover") issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended December 31, 2019.
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, 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, as amended.
Item 7.01 Regulation FD Disclosure.
As previously announced, on January 30, 2020, Dover will hold an investor conference call and webcast at 9:00 a.m. Central time (10:00 a.m. Eastern time) to discuss its results of operations for the quarter ended December 31, 2019. A copy of the supplemental presentation materials that will be used during the conference call is furnished as Exhibit 99.2 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this report:
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).
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: | January 30, 2020 | DOVER CORPORATION | ||||||||||||
| (Registrant) | ||||||||||||||
| By: | /s/ Ivonne M. Cabrera | |||||||||||||
| Ivonne M. Cabrera | ||||||||||||||
| Senior Vice President, General Counsel & Secretary | ||||||||||||||
Exhibit 99.1
| Investor Contact: | Media Contact: | |||||||
| Andrey Galiuk | Adrian Sakowicz | |||||||
| Vice President - Corporate Development | Vice President - Communications | |||||||
| and Investor Relations | (630) 743-5039 | |||||||
| (630) 743-5131 | asakowicz@dovercorp.com | |||||||
| agaliuk@dovercorp.com | ||||||||
DOVER REPORTS FULL YEAR DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS OF $4.61 ($5.93 ON AN ADJUSTED BASIS); PROVIDES 2020 GUIDANCE
DOWNERS GROVE, Ill., January 30, 2020 — Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the fourth quarter and full year ended December 31, 2019.
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||||||||
| ($ in millions, except per share data) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||||||||||||||||||
| U.S. GAAP from continuing operations | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,776 | $ | 1,809 | (1.8) | % | $ | 7,136 | $ | 6,992 | 2.1 | % | ||||||||||||||||||||||||||
Earnings | 168 | 158 | 6.4 | % | 678 | 591 | 14.7 | % | ||||||||||||||||||||||||||||||
Diluted EPS | 1.15 | 1.07 | 7.5 | % | 4.61 | 3.89 | 18.5 | % | ||||||||||||||||||||||||||||||
| Non-GAAP from continuing operations | ||||||||||||||||||||||||||||||||||||||
| Organic revenue growth | (1.1) | % | 3.8 | % | ||||||||||||||||||||||||||||||||||
Adjusted earnings 1 | 226 | 211 | 7.0 | % | 872 | 756 | 15.4 | % | ||||||||||||||||||||||||||||||
| Adjusted diluted EPS | 1.54 | 1.43 | 7.7 | % | 5.93 | 4.97 | 19.3 | % | ||||||||||||||||||||||||||||||
1 For the three months ended December 31, 2019 and 2018, adjusted earnings excluded after tax acquisition-related amortization costs of $25.1 million and $26.3 million, respectively, and rightsizing and other costs of $14.2 million and $29.6 million, respectively. In addition, the three months ended December 31, 2019, also excluded a $18.4 million loss on extinguishment of debt, and the three months ended December 31, 2018 excluded a $2.8 million net benefit from the Tax Cuts & Jobs Act.
For the full years ended December 31, 2019 and December 31, 2018, adjusted earnings excluded after tax acquisition-related amortization costs of $103.6 million and $109.3 million, respectively, and rightsizing and other costs of $25.4 million and $58.3 million, respectively. In addition, full year 2019 excluded a $46.9 million non-cash after-tax loss on assets held for sale related to Finder, as well as a $18.4 million loss on extinguishment of debt. Full year 2018 excluded a $2.8 million net benefit from the Tax Cuts & Jobs Act.
For the quarter ended December 31, 2019, Dover generated revenue of $1.8 billion, a decline of 2% (-1% organic) compared to the fourth quarter of the prior year. GAAP earnings from continuing operations of $168 million increased 6%, and GAAP diluted EPS of $1.15 was up 7%. On an adjusted basis, earnings from continuing operations of $226 million grew 7%, and adjusted diluted EPS of $1.54 was up 8% versus the comparable quarter of the prior year.
For the full year ended December 31, 2019, Dover generated revenue of $7.1 billion, up 2% (+4% organic) compared to the prior year. GAAP earnings from continuing operations of $678 million increased by 15%, and GAAP diluted EPS of $4.61 was up 19%. On an adjusted basis, earnings from continuing
operations of $872 million grew 15%, and adjusted diluted EPS of $5.93 was up 19% versus the prior year.
A full reconciliation between GAAP and adjusted measures is included as an exhibit herein.
MANAGEMENT COMMENTARY:
Dover’s President and Chief Executive Officer, Richard J. Tobin, said, “Dover delivered solid results in the fourth quarter. As expected, revenue declined slightly as we faced a difficult comparable from the fourth quarter of 2018. Segment EBIT margin continued to expand year-over-year, consistent with prior quarters as our margin improvement and operational efficiency programs continue to deliver tangible results.
“During the fourth quarter, our Fueling Solutions segment grew despite a challenging comparable quarter in 2018, driven by strong global demand, most notably in North America on a pickup in EMV compliance activity. Solid growth in Engineered Products was driven by healthy activity in both the waste handling equipment and software business and aftermarket vehicle services.
“The Imaging & Identification segment declined slightly in the quarter, a result of continued slower marking & coding activity in Asia, as well as slower activity in the digital textile printing business. The Pumps & Process Solutions segment posted a revenue decline, primarily due to comparable calendarization in our plastics processing business as well as slower demand in our pumps and precision components businesses as a result of channel inventory drawdowns. The segment’s biopharma business continued its double-digit growth trajectory. Finally, Refrigeration & Food Equipment segment had a slower quarter due to continued softness in new food retail store builds negatively impacting our systems volumes, partially offset by continued strength in core food retail case products and return to growth in our beverage can making and heat exchangers businesses.
“Overall, Dover delivered strong results for the full year 2019 despite an uncertain economic backdrop. Revenue growth was healthy across a majority of the portfolio and our businesses converted it well into earnings. Our strong operational execution delivered a significant increase in comparable cash flow and was complemented by value-creating and disciplined capital allocation, including large capital projects focused on growth and productivity, several attractive bolt-on acquisitions, and opportunistic share repurchases.
“As we enter 2020, most markets remain constructive. Order backlog is up year-over-year in four out of five segments, we are progressing well on multiple in-flight cost and productivity initiatives, and our M&A pipeline remains active. We are well-positioned to deliver top-line growth, margin expansion and solid EPS accretion in 2020, as outlined in our September investor meeting. Our strategy remains unchanged for 2020: drive value-creation through sustained growth, continued profitability improvement, strong cash flow and smart organic and inorganic capital deployment.”
FULL YEAR 2020 GUIDANCE:
In 2020, Dover expects to generate GAAP EPS in the range of $5.48 to $5.68 (adjusted EPS of $6.20 to $6.40), based on full year revenue growth of 2% to 3%. A full reconciliation between forecasted GAAP and forecasted adjusted measures is included as an exhibit herein.
SUBSEQUENT EVENTS:
On January 24, 2020, Dover closed the previously-announced acquisition of Systech International, a leading provider of traceability and brand-protection software solutions to global pharmaceutical and FMCG manufacturers. The transaction is expected to deliver accretive first year adjusted EPS.
On January 24, 2020, Dover signed an agreement to acquire Soft-Pak, Incorporated, a provider of software solutions for waste handling fleets. The transaction is expected to close in Q1 2020.
CONFERENCE CALL INFORMATION:
Dover will host a webcast and conference call to discuss its fourth quarter and full year 2019 results and 2020 guidance at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, January 30, 2020. 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 fourth quarter and full year results and its operating segments can be found on the Company’s website.
ABOUT DOVER:
Dover is a diversified global manufacturer with annual revenue of over $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through five operating segments: Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, 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 24,000 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. All statements in this document other than statements of historical fact are statements that are, or could be deemed, “forward-looking” statements. Forward-looking statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control. Factors that could cause actual results to differ materially from current expectations include, among other things, general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions. For details on the risks and uncertainties that could cause our results to differ materially from the forward-looking statements contained herein, we refer you to the documents we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These documents are available from the Securities and Exchange Commission, and on our website, dovercorporation.com. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2019
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Revenue | $ | 1,775,589 | $ | 1,808,950 | $ | 7,136,397 | $ | 6,992,118 | |||||||||||||||
| Cost of goods and services | 1,124,274 | 1,163,979 | 4,515,459 | 4,432,562 | |||||||||||||||||||
| Gross profit | 651,315 | 644,971 | 2,620,938 | 2,559,556 | |||||||||||||||||||
| Selling, general, and administrative expenses | 403,223 | 426,198 | 1,599,098 | 1,716,444 | |||||||||||||||||||
| Loss on assets held for sale | — | — | 46,946 | — | |||||||||||||||||||
| Operating earnings | 248,092 | 218,773 | 974,894 | 843,112 | |||||||||||||||||||
| Interest expense | 30,846 | 32,015 | 125,818 | 130,972 | |||||||||||||||||||
| Interest income | (1,428) | (2,201) | (4,526) | (8,881) | |||||||||||||||||||
| Loss on extinguishment of debt | 23,543 | — | 23,543 | — | |||||||||||||||||||
| Other (income) loss, net | (1,891) | 2,284 | (12,950) | (4,357) | |||||||||||||||||||
| Earnings before provision for income taxes | 197,022 | 186,675 | 843,009 | 725,378 | |||||||||||||||||||
| Provision for income taxes | 28,900 | 28,700 | 165,091 | 134,233 | |||||||||||||||||||
| Earnings from continuing operations | 168,122 | 157,975 | 677,918 | 591,145 | |||||||||||||||||||
| Loss from discontinued operations, net | — | (16,406) | — | (20,878) | |||||||||||||||||||
| Net earnings | $ | 168,122 | $ | 141,569 | $ | 677,918 | $ | 570,267 | |||||||||||||||
| Basic earnings (loss) per share*: | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 1.16 | $ | 1.08 | $ | 4.67 | $ | 3.94 | |||||||||||||||
| Loss from discontinued operations, net | — | (0.11) | — | (0.14) | |||||||||||||||||||
| Net earnings | $ | 1.16 | $ | 0.97 | $ | 4.67 | $ | 3.80 | |||||||||||||||
| Weighted average shares outstanding | 144,966 | 146,007 | 145,198 | 149,874 | |||||||||||||||||||
| Diluted earnings (loss) per common share*: | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 1.15 | $ | 1.07 | $ | 4.61 | $ | 3.89 | |||||||||||||||
| Loss from discontinued operations, net | — | (0.11) | — | (0.14) | |||||||||||||||||||
Net earnings | $ | 1.15 | $ | 0.96 | $ | 4.61 | $ | 3.75 | |||||||||||||||
| Weighted average shares outstanding | 146,790 | 147,940 | 146,992 | 152,133 | |||||||||||||||||||
| Dividends paid per common share | $ | 0.49 | $ | 0.48 | $ | 1.94 | $ | 1.90 | |||||||||||||||
| * Per share data may be impacted by rounding. | |||||||||||||||||||||||
IS - 1
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||||||||||||||
| Engineered Products | $ | 418,851 | $ | 429,928 | $ | 426,689 | $ | 422,089 | $ | 1,697,557 | $ | 402,980 | $ | 416,552 | $ | 401,243 | $ | 412,372 | $ | 1,633,147 | |||||||||||||||
| Fueling Solutions | 373,050 | 390,586 | 411,769 | 444,772 | 1,620,177 | 319,304 | 363,355 | 367,617 | 415,314 | 1,465,590 | |||||||||||||||||||||||||
| Imaging & Identification | 268,354 | 266,588 | 275,109 | 274,420 | 1,084,471 | 268,654 | 286,458 | 270,299 | 284,432 | 1,109,843 | |||||||||||||||||||||||||
| Pumps & Process Solutions | 330,219 | 338,924 | 341,337 | 328,048 | 1,338,528 | 308,840 | 330,337 | 322,506 | 370,210 | 1,331,893 | |||||||||||||||||||||||||
| Refrigeration & Food Equipment | 334,643 | 385,474 | 370,335 | 306,165 | 1,396,617 | 338,235 | 401,766 | 386,214 | 326,878 | 1,453,093 | |||||||||||||||||||||||||
| Intra-segment eliminations | (360) | (794) | 106 | 95 | (953) | (342) | (374) | (476) | (256) | (1,448) | |||||||||||||||||||||||||
| Total consolidated revenue | $ | 1,724,757 | $ | 1,810,706 | $ | 1,825,345 | $ | 1,775,589 | $ | 7,136,397 | $ | 1,637,671 | $ | 1,798,094 | $ | 1,747,403 | $ | 1,808,950 | $ | 6,992,118 | |||||||||||||||
| NET EARNINGS | |||||||||||||||||||||||||||||||||||
| Segment Earnings: | |||||||||||||||||||||||||||||||||||
| Engineered Products | $ | 67,119 | $ | 77,129 | $ | 74,367 | $ | 73,233 | $ | 291,848 | $ | 59,363 | $ | 67,331 | $ | 64,570 | $ | 61,104 | $ | 252,368 | |||||||||||||||
| Fueling Solutions | 37,230 | 52,637 | 68,069 | 73,937 | 231,873 | 22,709 | 35,342 | 40,615 | 53,589 | 152,255 | |||||||||||||||||||||||||
| Imaging & Identification | 55,955 | 54,641 | 61,655 | 57,233 | 229,484 | 42,703 | 59,318 | 44,144 | 52,737 | 198,902 | |||||||||||||||||||||||||
Pumps & Process Solutions 1 | 14,991 | 76,278 | 77,433 | 71,379 | 240,081 | 44,639 | 57,686 | 60,592 | 74,632 | 237,549 | |||||||||||||||||||||||||
| Refrigeration & Food Equipment | 24,807 | 44,375 | 35,211 | 14,439 | 118,832 | 29,182 | 51,372 | 42,434 | 13,131 | 136,119 | |||||||||||||||||||||||||
| Total segment earnings (EBIT) | 200,102 | 305,060 | 316,735 | 290,221 | 1,112,118 | 198,596 | 271,049 | 252,355 | 255,193 | 977,193 | |||||||||||||||||||||||||
Corporate expense / other 2 | 30,866 | 24,512 | 28,658 | 63,781 | 147,817 | 30,763 | 30,050 | 30,207 | 38,704 | 129,724 | |||||||||||||||||||||||||
| Interest expense | 31,808 | 31,754 | 31,410 | 30,846 | 125,818 | 35,640 | 32,125 | 31,192 | 32,015 | 130,972 | |||||||||||||||||||||||||
| Interest income | (890) | (945) | (1,263) | (1,428) | (4,526) | (2,057) | (2,563) | (2,060) | (2,201) | (8,881) | |||||||||||||||||||||||||
| Earnings before provision for income taxes | 138,318 | 249,739 | 257,930 | 197,022 | 843,009 | 134,250 | 211,437 | 193,016 | 186,675 | 725,378 | |||||||||||||||||||||||||
| Provision for income taxes | 32,613 | 51,654 | 51,924 | 28,900 | 165,091 | 24,841 | 44,981 | 35,711 | 28,700 | 134,233 | |||||||||||||||||||||||||
| Earnings from continuing operations | 105,705 | 198,085 | 206,006 | 168,122 | 677,918 | 109,409 | 166,456 | 157,305 | 157,975 | 591,145 | |||||||||||||||||||||||||
| Earnings (loss) from discontinued operations, net | — | — | — | — | — | 22,025 | (26,497) | — | (16,406) | (20,878) | |||||||||||||||||||||||||
| Net earnings | $ | 105,705 | $ | 198,085 | $ | 206,006 | $ | 168,122 | $ | 677,918 | $ | 131,434 | $ | 139,959 | $ | 157,305 | $ | 141,569 | $ | 570,267 | |||||||||||||||
| SEGMENT MARGIN | |||||||||||||||||||||||||||||||||||
| Engineered Products | 16.0 | % | 17.9 | % | 17.4 | % | 17.4 | % | 17.2 | % | 14.7 | % | 16.2 | % | 16.1 | % | 14.8 | % | 15.5 | % | |||||||||||||||
| Fueling Solutions | 10.0 | % | 13.5 | % | 16.5 | % | 16.6 | % | 14.3 | % | 7.1 | % | 9.7 | % | 11.0 | % | 12.9 | % | 10.4 | % | |||||||||||||||
| Imaging & Identification | 20.9 | % | 20.5 | % | 22.4 | % | 20.9 | % | 21.2 | % | 15.9 | % | 20.7 | % | 16.3 | % | 18.5 | % | 17.9 | % | |||||||||||||||
Pumps & Process Solutions 1 | 4.5 | % | 22.5 | % | 22.7 | % | 21.8 | % | 17.9 | % | 14.5 | % | 17.5 | % | 18.8 | % | 20.2 | % | 17.8 | % | |||||||||||||||
| Refrigeration & Food Equipment | 7.4 | % | 11.5 | % | 9.5 | % | 4.7 | % | 8.5 | % | 8.6 | % | 12.8 | % | 11.0 | % | 4.0 | % | 9.4 | % | |||||||||||||||
| Total segment operating margin | 11.6 | % | 16.8 | % | 17.4 | % | 16.3 | % | 15.6 | % | 12.1 | % | 15.1 | % | 14.4 | % | 14.1 | % | 14.0 | % | |||||||||||||||
| DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||||||||||||||||||
| Engineered Products | $ | 10,359 | $ | 10,452 | $ | 10,095 | $ | 10,126 | $ | 41,032 | $ | 11,443 | $ | 11,286 | $ | 10,528 | $ | 11,739 | $ | 44,996 | |||||||||||||||
| Fueling Solutions | 17,879 | 18,945 | 18,744 | 19,477 | 75,045 | 17,017 | 17,241 | 16,877 | 17,328 | 68,463 | |||||||||||||||||||||||||
| Imaging & Identification | 7,435 | 7,413 | 7,360 | 8,322 | 30,530 | 7,797 | 7,916 | 7,675 | 7,494 | 30,882 | |||||||||||||||||||||||||
Pumps & Process Solutions 1 | 17,548 | 16,201 | 16,018 | 17,817 | 67,584 | 17,431 | 17,741 | 18,078 | 18,732 | 71,982 | |||||||||||||||||||||||||
| Refrigeration & Food Equipment | 13,011 | 12,777 | 13,047 | 12,525 | 51,360 | 13,579 | 13,524 | 13,533 | 19,841 | 60,477 | |||||||||||||||||||||||||
| Corporate | 1,506 | 1,981 | 1,523 | 1,726 | 6,736 | 1,358 | 1,595 | 1,399 | 1,428 | 5,780 | |||||||||||||||||||||||||
| Total depreciation and amortization expense | $ | 67,738 | $ | 67,769 | $ | 66,787 | $ | 69,993 | $ | 272,287 | $ | 68,625 | $ | 69,303 | $ | 68,090 | $ | 76,562 | $ | 282,580 | |||||||||||||||
1 Q1 and FY 2019 include a $46,946 loss on assets held for sale for Finder Pompe S.r.l. ("Finder"). | |||||||||||||||||||||||||||||||||||
2 Q4 and FY 2019 include a $23,543 loss on early extinguishment of debt. | |||||||||||||||||||||||||||||||||||
IS - 2
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
| Earnings Per Share | |||||||||||||||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.73 | $ | 1.36 | $ | 1.42 | $ | 1.16 | $ | 4.67 | $ | 0.71 | $ | 1.10 | $ | 1.07 | $ | 1.08 | $ | 3.94 | |||||||||||||||
| Discontinued operations | — | — | — | — | — | 0.14 | (0.17) | — | (0.11) | (0.14) | |||||||||||||||||||||||||
| Net earnings | $ | 0.73 | $ | 1.36 | $ | 1.42 | $ | 1.16 | $ | 4.67 | $ | 0.85 | $ | 0.92 | $ | 1.07 | $ | 0.97 | $ | 3.80 | |||||||||||||||
| Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.72 | $ | 1.35 | $ | 1.40 | $ | 1.15 | $ | 4.61 | $ | 0.70 | $ | 1.08 | $ | 1.05 | $ | 1.07 | $ | 3.89 | |||||||||||||||
| Discontinued operations | — | — | — | — | — | 0.14 | (0.17) | — | (0.11) | (0.14) | |||||||||||||||||||||||||
| Net earnings | $ | 0.72 | $ | 1.35 | $ | 1.40 | $ | 1.15 | $ | 4.61 | $ | 0.84 | $ | 0.91 | $ | 1.05 | $ | 0.96 | $ | 3.75 | |||||||||||||||
| Net earnings (loss) and weighted average shares used in calculated earnings per share amounts are as follows: | |||||||||||||||||||||||||||||||||||
| Net earnings (loss): | |||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 105,705 | $ | 198,085 | $ | 206,006 | $ | 168,122 | $ | 677,918 | $ | 109,409 | $ | 166,456 | $ | 157,305 | $ | 157,975 | $ | 591,145 | |||||||||||||||
| Discontinued operations | — | — | — | — | — | 22,025 | (26,497) | — | (16,406) | (20,878) | |||||||||||||||||||||||||
| Net earnings | $ | 105,705 | $ | 198,085 | $ | 206,006 | $ | 168,122 | $ | 677,918 | $ | 131,434 | $ | 139,959 | $ | 157,305 | $ | 141,569 | $ | 570,267 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||||||||
| Basic | 145,087 | 145,366 | 145,372 | 144,966 | 145,198 | 154,520 | 151,744 | 147,344 | 146,007 | 149,874 | |||||||||||||||||||||||||
| Diluted | 146,911 | 147,179 | 147,051 | 146,790 | 146,992 | 157,090 | 153,938 | 149,457 | 147,940 | 152,133 | |||||||||||||||||||||||||
| * Per share data may be impacted by rounding. | |||||||||||||||||||||||||||||||||||
IS - 3
DOVER CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)(in thousands)
| December 31, 2019 | December 31, 2018 | ||||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 397,253 | $ | 396,221 | |||||||
| Receivables, net of allowances | 1,217,190 | 1,231,859 | |||||||||
| Inventories, net | 806,141 | 748,796 | |||||||||
| Prepaid and other current assets | 127,846 | 126,878 | |||||||||
| Property, plant and equipment, net | 842,318 | 806,497 | |||||||||
| Goodwill | 3,783,347 | 3,677,328 | |||||||||
| Intangible assets, net | 1,055,014 | 1,134,256 | |||||||||
| Other assets and deferred charges | 440,368 | 243,936 | |||||||||
| Total assets | $ | 8,669,477 | $ | 8,365,771 | |||||||
| Liabilities and Stockholders' Equity: | |||||||||||
| Notes payable | $ | 84,700 | $ | 220,318 | |||||||
| Payables and accrued expenses | 1,665,191 | 1,607,103 | |||||||||
| Deferred taxes and other non-current liabilities | 901,210 | 826,024 | |||||||||
| Long-term debt | 2,985,716 | 2,943,660 | |||||||||
| Stockholders' equity | 3,032,660 | 2,768,666 | |||||||||
| Total liabilities and stockholders' equity | $ | 8,669,477 | $ | 8,365,771 | |||||||
IS - 4
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)(in thousands)
| Years Ended December 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Operating activities: | |||||||||||
| Net earnings | $ | 677,918 | $ | 570,267 | |||||||
| Loss from discontinued operations, net | — | 20,878 | |||||||||
| Loss on assets held for sale | 46,946 | — | |||||||||
| Loss on extinguishment of debt | 23,543 | — | |||||||||
| Depreciation and amortization | 272,287 | 282,580 | |||||||||
| Stock-based compensation | 29,702 | 23,698 | |||||||||
| Contributions to employee benefit plans | (21,436) | (25,933) | |||||||||
| Net change in assets and liabilities | (83,654) | (82,297) | |||||||||
| Net cash provided by operating activities | 945,306 | 789,193 | |||||||||
| Investing activities: | |||||||||||
| Additions to property, plant and equipment | (186,804) | (170,994) | |||||||||
| Acquisitions (net of cash and cash equivalents acquired) | (215,687) | (68,557) | |||||||||
| Proceeds from the sale of property, plant and equipment | 4,168 | 5,908 | |||||||||
| Proceeds from the sale of businesses | 24,218 | 3,937 | |||||||||
| Other | (10,150) | (15,774) | |||||||||
| Net cash used in investing activities | (384,255) | (245,480) | |||||||||
| Financing activities: | |||||||||||
| Cash received from Apergy, net of cash distributed | — | 689,643 | |||||||||
| Change in commercial paper and notes payable, net | (135,650) | (10,722) | |||||||||
| Net increase (decrease) in long-term debt | 42,357 | (350,000) | |||||||||
| Dividends to stockholders | (282,197) | (283,570) | |||||||||
| Purchase of common stock | (143,280) | (894,977) | |||||||||
| Payments to settle employee tax obligations on exercise | (37,370) | (46,254) | |||||||||
| Other | (1,902) | (1,958) | |||||||||
| Net cash used in financing activities | (558,042) | (897,838) | |||||||||
| Net cash used in discontinued operations | — | (14,263) | |||||||||
| Effect of exchange rate changes on cash | (1,977) | 10,645 | |||||||||
| Net (decrease) increase in cash and cash equivalents | 1,032 | (357,743) | |||||||||
| Cash and cash equivalents at beginning of period | 396,221 | 753,964 | |||||||||
| Cash and cash equivalents at end of period | $ | 397,253 | $ | 396,221 | |||||||
IS - 5
DOVER CORPORATION
QUARTERLY ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| Adjusted earnings: | |||||||||||||||||||||||||||||||||||
| Earnings from continuing operations | $ | 105,705 | $ | 198,085 | $ | 206,006 | $ | 168,122 | $ | 677,918 | $ | 109,409 | $ | 166,456 | $ | 157,305 | $ | 157,975 | $ | 591,145 | |||||||||||||||
Acquisition-related amortization, pre-tax 1 | 35,635 | 34,997 | 34,244 | 33,460 | 138,336 | 38,150 | 38,072 | 34,997 | 35,078 | 146,297 | |||||||||||||||||||||||||
Acquisition-related amortization, tax impact 2 | (8,964) | (8,777) | (8,624) | (8,403) | (34,768) | (9,716) | (9,683) | (8,785) | (8,817) | (37,001) | |||||||||||||||||||||||||
Rightsizing and other costs, pre-tax 3 | 3,963 | 6,457 | 3,807 | 17,926 | 32,153 | 4,371 | 6,808 | 24,201 | 37,448 | 72,828 | |||||||||||||||||||||||||
Rightsizing and other costs, tax impact 2 | (861) | (1,377) | (806) | (3,745) | (6,789) | (797) | (1,448) | (4,477) | (7,809) | (14,531) | |||||||||||||||||||||||||
Loss on extinguishment of debt, pre-tax 4 | — | — | — | 23,543 | 23,543 | — | — | — | — | — | |||||||||||||||||||||||||
Loss on extinguishment of debt, tax impact 2 | — | — | — | (5,163) | (5,163) | — | — | — | — | — | |||||||||||||||||||||||||
Loss on assets held for sale 5 | 46,946 | — | — | — | 46,946 | — | — | — | — | — | |||||||||||||||||||||||||
Tax Cuts and Jobs Act 6 | — | — | — | — | — | — | — | — | (2,832) | (2,832) | |||||||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 182,424 | $ | 229,385 | $ | 234,627 | $ | 225,740 | $ | 872,176 | $ | 141,417 | $ | 200,205 | $ | 203,241 | $ | 211,043 | $ | 755,906 | |||||||||||||||
| Adjusted diluted earnings per share: | |||||||||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.72 | $ | 1.35 | $ | 1.40 | $ | 1.15 | $ | 4.61 | $ | 0.70 | $ | 1.08 | $ | 1.05 | $ | 1.07 | $ | 3.89 | |||||||||||||||
Acquisition-related amortization, pre-tax 1 | 0.24 | 0.24 | 0.23 | 0.23 | 0.94 | 0.24 | 0.25 | 0.23 | 0.24 | 0.96 | |||||||||||||||||||||||||
Acquisition-related amortization, tax impact 2 | (0.06) | (0.06) | (0.06) | (0.06) | (0.24) | (0.06) | (0.06) | (0.06) | (0.06) | (0.24) | |||||||||||||||||||||||||
Rightsizing and other costs, pre-tax 3 | 0.03 | 0.04 | 0.03 | 0.12 | 0.22 | 0.03 | 0.04 | 0.16 | 0.25 | 0.48 | |||||||||||||||||||||||||
Rightsizing and other costs, tax impact 2 | (0.01) | (0.01) | (0.01) | (0.03) | (0.06) | (0.01) | (0.01) | (0.03) | (0.05) | (0.10) | |||||||||||||||||||||||||
Loss on extinguishment of debt, pre-tax 4 | — | — | — | 0.16 | 0.16 | — | — | — | — | — | |||||||||||||||||||||||||
Loss on extinguishment of debt, tax impact 2 | — | — | — | (0.04) | (0.04) | — | — | — | — | — | |||||||||||||||||||||||||
Loss on assets held for sale 5 | 0.32 | — | — | — | 0.32 | — | — | — | — | — | |||||||||||||||||||||||||
Tax Cuts and Jobs Act 6 | — | — | — | — | — | — | — | — | (0.02) | (0.02) | |||||||||||||||||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 1.24 | $ | 1.56 | $ | 1.60 | $ | 1.54 | $ | 5.93 | $ | 0.90 | $ | 1.30 | $ | 1.36 | $ | 1.43 | $ | 4.97 | |||||||||||||||
1 Includes amortization on acquisition-related intangible assets and inventory step-up. | |||||||||||||||||||||||||||||||||||
2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period. | |||||||||||||||||||||||||||||||||||
3 Rightsizing and other costs include actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges. | |||||||||||||||||||||||||||||||||||
4 Represents a loss on early extinguishment of €300,000 2.125% notes due 2020 and $450,000 4.30% notes due 2021. | |||||||||||||||||||||||||||||||||||
5 Represents a loss on assets held for sale of Finder. Under local law, no tax benefit is realized from the loss on the sale of a wholly-owned business. | |||||||||||||||||||||||||||||||||||
6 2018 tax benefits related to additional Tax Cuts and Jobs Act regulatory guidance covered by SAB 118. | |||||||||||||||||||||||||||||||||||
| * Per share data and totals may be impacted by rounding. | |||||||||||||||||||||||||||||||||||
IS - 6
DOVER CORPORATION
QUARTERLY SEGMENT ADJUSTED EBIT AND ADJUSTED EBITDA (NON-GAAP)
(unaudited)(in thousands)
Non-GAAP Reconciliations
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| ADJUSTED SEGMENT EBIT AND ADJUSTED EBITDA | |||||||||||||||||||||||||||||||||||
| Engineered Products: | |||||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 67,119 | $ | 77,129 | $ | 74,367 | $ | 73,233 | $ | 291,848 | $ | 59,363 | $ | 67,331 | $ | 64,570 | $ | 61,104 | $ | 252,368 | |||||||||||||||
| Rightsizing and other costs | 80 | 1,125 | 590 | 1,355 | 3,150 | 463 | 417 | 2,713 | 3,693 | 7,286 | |||||||||||||||||||||||||
| Adjusted EBIT - Segment | 67,199 | 78,254 | 74,957 | 74,588 | 294,998 | 59,826 | 67,748 | 67,283 | 64,797 | 259,654 | |||||||||||||||||||||||||
| Adjusted EBIT % | 16.0 | % | 18.2 | % | 17.6 | % | 17.7 | % | 17.4 | % | 14.8 | % | 16.3 | % | 16.8 | % | 15.7 | % | 15.9 | % | |||||||||||||||
Adjusted D&A 2 | 10,359 | 9,855 | 10,095 | 10,126 | 40,435 | 11,443 | 11,286 | 10,528 | 11,230 | 44,487 | |||||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 77,558 | $ | 88,109 | $ | 85,052 | $ | 84,714 | $ | 335,433 | $ | 71,269 | $ | 79,034 | $ | 77,811 | $ | 76,027 | $ | 304,141 | |||||||||||||||
| Adjusted EBITDA % | 18.5 | % | 20.5 | % | 19.9 | % | 20.1 | % | 19.8 | % | 17.7 | % | 19.0 | % | 19.4 | % | 18.4 | % | 18.6 | % | |||||||||||||||
| Fueling Solutions: | |||||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 37,230 | $ | 52,637 | $ | 68,069 | $ | 73,937 | $ | 231,873 | $ | 22,709 | $ | 35,342 | $ | 40,615 | $ | 53,589 | $ | 152,255 | |||||||||||||||
| Rightsizing and other costs | 752 | 1,768 | 811 | 1,554 | 4,885 | 1,112 | 1,623 | 5,922 | 6,675 | 15,332 | |||||||||||||||||||||||||
| Adjusted EBIT - Segment | 37,982 | 54,405 | 68,880 | 75,491 | 236,758 | 23,821 | 36,965 | 46,537 | 60,264 | 167,587 | |||||||||||||||||||||||||
| Adjusted EBIT % | 10.2 | % | 13.9 | % | 16.7 | % | 17.0 | % | 14.6 | % | 7.5 | % | 10.2 | % | 12.7 | % | 14.5 | % | 11.4 | % | |||||||||||||||
Adjusted D&A 2 | 17,879 | 18,945 | 18,744 | 19,477 | 75,045 | 17,017 | 17,241 | 16,877 | 17,328 | 68,463 | |||||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 55,861 | $ | 73,350 | $ | 87,624 | $ | 94,968 | $ | 311,803 | $ | 40,838 | $ | 54,206 | $ | 63,414 | $ | 77,592 | $ | 236,050 | |||||||||||||||
| Adjusted EBITDA % | 15.0 | % | 18.8 | % | 21.3 | % | 21.4 | % | 19.2 | % | 12.8 | % | 14.9 | % | 17.3 | % | 18.7 | % | 16.1 | % | |||||||||||||||
| Imaging & Identification: | |||||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 55,955 | $ | 54,641 | $ | 61,655 | $ | 57,233 | $ | 229,484 | $ | 42,703 | $ | 59,318 | $ | 44,144 | $ | 52,737 | $ | 198,902 | |||||||||||||||
| Rightsizing and other costs | 389 | 1,268 | 301 | 4,392 | 6,350 | 899 | 347 | 7,923 | 3,476 | 12,645 | |||||||||||||||||||||||||
| Adjusted EBIT - Segment | 56,344 | 55,909 | 61,956 | 61,625 | 235,834 | 43,602 | 59,665 | 52,067 | 56,213 | 211,547 | |||||||||||||||||||||||||
| Adjusted EBIT % | 21.0 | % | 21.0 | % | 22.5 | % | 22.5 | % | 21.7 | % | 16.2 | % | 20.8 | % | 19.3 | % | 19.8 | % | 19.1 | % | |||||||||||||||
Adjusted D&A 2 | 7,336 | 7,317 | 7,286 | 7,892 | 29,831 | 7,797 | 7,916 | 7,675 | 7,392 | 30,780 | |||||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 63,680 | $ | 63,226 | $ | 69,242 | $ | 69,517 | $ | 265,665 | $ | 51,399 | $ | 67,581 | $ | 59,742 | $ | 63,605 | $ | 242,327 | |||||||||||||||
| Adjusted EBITDA % | 23.7 | % | 23.7 | % | 25.2 | % | 25.3 | % | 24.5 | % | 19.1 | % | 23.6 | % | 22.1 | % | 22.4 | % | 21.8 | % | |||||||||||||||
| Pumps & Process Solutions: | |||||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 14,991 | $ | 76,278 | $ | 77,433 | $ | 71,379 | $ | 240,081 | $ | 44,639 | $ | 57,686 | $ | 60,592 | $ | 74,632 | $ | 237,549 | |||||||||||||||
| Rightsizing and other costs | 414 | 903 | 943 | 3,868 | 6,128 | 653 | 2,071 | 4,552 | 6,099 | 13,375 | |||||||||||||||||||||||||
Loss on assets held for sale 1 | 46,946 | — | — | — | 46,946 | — | — | — | — | — | |||||||||||||||||||||||||
| Adjusted EBIT - Segment | 62,351 | 77,181 | 78,376 | 75,247 | 293,155 | 45,292 | 59,757 | 65,144 | 80,731 | 250,924 | |||||||||||||||||||||||||
| Adjusted EBIT % | 18.9 | % | 22.8 | % | 23.0 | % | 22.9 | % | 21.9 | % | 14.7 | % | 18.1 | % | 20.2 | % | 21.8 | % | 18.8 | % | |||||||||||||||
Adjusted D&A 2 | 17,548 | 16,199 | 16,018 | 17,004 | 66,769 | 17,431 | 17,741 | 18,078 | 17,823 | 71,073 | |||||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 79,899 | $ | 93,380 | $ | 94,394 | $ | 92,251 | $ | 359,924 | $ | 62,723 | $ | 77,498 | $ | 83,222 | $ | 98,554 | $ | 321,997 | |||||||||||||||
| Adjusted EBITDA % | 24.2 | % | 27.6 | % | 27.7 | % | 28.1 | % | 26.9 | % | 20.3 | % | 23.5 | % | 25.8 | % | 26.6 | % | 24.2 | % | |||||||||||||||
| Refrigeration & Food Equipment: | |||||||||||||||||||||||||||||||||||
| Segment earnings (EBIT) | $ | 24,807 | $ | 44,375 | $ | 35,211 | $ | 14,439 | $ | 118,832 | $ | 29,182 | $ | 51,372 | $ | 42,434 | $ | 13,131 | $ | 136,119 | |||||||||||||||
| Rightsizing and other costs | 2,293 | 666 | 840 | 2,243 | 6,042 | — | — | 451 | 9,498 | 9,949 | |||||||||||||||||||||||||
| Adjusted EBIT - Segment | 27,100 | 45,041 | 36,051 | 16,682 | 124,874 | 29,182 | 51,372 | 42,885 | 22,629 | 146,068 | |||||||||||||||||||||||||
| Adjusted EBIT % | 8.1 | % | 11.7 | % | 9.7 | % | 5.4 | % | 8.9 | % | 8.6 | % | 12.8 | % | 11.1 | % | 6.9 | % | 10.1 | % | |||||||||||||||
Adjusted D&A 2 | 13,011 | 12,777 | 13,047 | 12,525 | 51,360 | 13,579 | 13,524 | 13,533 | 13,541 | 54,177 | |||||||||||||||||||||||||
| Adjusted EBITDA - segment | $ | 40,111 | $ | 57,818 | $ | 49,098 | $ | 29,207 | $ | 176,234 | $ | 42,761 | $ | 64,896 | $ | 56,418 | $ | 36,170 | $ | 200,245 | |||||||||||||||
| Adjusted EBITDA % | 12.0 | % | 15.0 | % | 13.3 | % | 9.5 | % | 12.6 | % | 12.6 | % | 16.2 | % | 14.6 | % | 11.1 | % | 13.8 | % | |||||||||||||||
| Total Segments: | |||||||||||||||||||||||||||||||||||
Segment earnings (EBIT) 3 | $ | 200,102 | $ | 305,060 | $ | 316,735 | $ | 290,221 | $ | 1,112,118 | $ | 198,596 | $ | 271,049 | $ | 252,355 | $ | 255,193 | $ | 977,193 | |||||||||||||||
| Rightsizing and other costs | 3,928 | 5,730 | 3,485 | 13,412 | 26,555 | 3,127 | 4,458 | 21,561 | 29,441 | 58,587 | |||||||||||||||||||||||||
Loss on assets held for sale 1 | 46,946 | — | — | — | 46,946 | — | — | — | — | — | |||||||||||||||||||||||||
Adjusted EBIT - Segment 4 | 250,976 | 310,790 | 320,220 | 303,633 | 1,185,619 | 201,723 | 275,507 | 273,916 | 284,634 | 1,035,780 | |||||||||||||||||||||||||
Adjusted EBIT % 4 | 14.5 | % | 17.2 | % | 17.5 | % | 17.1 | % | 16.6 | % | 12.3 | % | 15.3 | % | 15.7 | % | 15.7 | % | 14.8 | % | |||||||||||||||
Adjusted D&A 2 | 66,133 | 65,093 | 65,190 | 67,024 | 263,440 | 67,267 | 67,708 | 66,691 | 67,314 | 268,980 | |||||||||||||||||||||||||
Adjusted EBITDA - segment 4 | $ | 317,109 | $ | 375,883 | $ | 385,410 | $ | 370,657 | $ | 1,449,059 | $ | 268,990 | $ | 343,215 | $ | 340,607 | $ | 351,948 | $ | 1,304,760 | |||||||||||||||
Adjusted EBITDA % 4 | 18.4 | % | 20.7 | % | 21.1 | % | 20.9 | % | 20.3 | % | 16.4 | % | 19.1 | % | 19.5 | % | 19.5 | % | 18.7 | % | |||||||||||||||
1 Q1 and FY 2019 include a $46,946 loss on assets held for sale for Finder Pompe S.r.l. ("Finder"). | |||||||||||||||||||||||||||||||||||
2 Adjusted D&A is depreciation and amortization expense, excluding depreciation and amortization included within rightsizing and other costs. | |||||||||||||||||||||||||||||||||||
3 Refer to Quarterly Segment Information section for reconciliation of total segment earnings (EBIT) to net earnings. | |||||||||||||||||||||||||||||||||||
4 Refer to Additional Information section for definition. | |||||||||||||||||||||||||||||||||||
IS - 7
DOVER CORPORATION
REVENUE GROWTH FACTORS & ADJUSTED GUIDANCE (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Other Non-GAAP Reconciliations
Revenue Growth Factors
| 2019 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Full Year | |||||||||||||||||||||||||
| Organic | |||||||||||||||||||||||||||||
| Engineered Products | 6.1 | % | 4.9 | % | 7.4 | % | 3.1 | % | 5.4 | % | |||||||||||||||||||
| Fueling Solutions | 20.0 | % | 8.3 | % | 10.7 | % | 5.0 | % | 10.5 | % | |||||||||||||||||||
| Imaging & Identification | 5.5 | % | (3.1) | % | 4.6 | % | (1.8) | % | 1.2 | % | |||||||||||||||||||
| Pumps & Process Solutions | 10.0 | % | 6.7 | % | 8.7 | % | (8.0) | % | 3.9 | % | |||||||||||||||||||
| Refrigeration & Food Equipment | 0.7 | % | (2.8) | % | (3.2) | % | (5.6) | % | (2.7) | % | |||||||||||||||||||
| Total Organic | 8.3 | % | 2.9 | % | 5.6 | % | (1.1) | % | 3.8 | % | |||||||||||||||||||
| Acquisitions | 0.5 | % | 0.8 | % | 1.0 | % | 0.9 | % | 0.8 | % | |||||||||||||||||||
| Dispositions | (0.1) | % | (0.5) | % | (0.5) | % | (0.6) | % | (0.5) | % | |||||||||||||||||||
| Currency translation | (3.4) | % | (2.5) | % | (1.6) | % | (1.0) | % | (2.0) | % | |||||||||||||||||||
| Total* | 5.3 | % | 0.7 | % | 4.5 | % | (1.8) | % | 2.1 | % | |||||||||||||||||||
* Totals may be impacted by rounding.
| 2019 | |||||
| Full Year | |||||
| Organic | |||||
| United States | 3.6 | % | |||
| Other Americas | 1.2 | % | |||
| Europe | 6.5 | % | |||
| Asia | 2.4 | % | |||
| Other | 2.3 | % | |||
| Total Organic | 3.8 | % | |||
| Acquisitions | 0.8 | % | |||
| Dispositions | (0.5) | % | |||
| Currency translation | (2.0) | % | |||
| Total* | 2.1 | % | |||
* Totals may be impacted by rounding.
Adjusted Guidance Reconciliation
| 2019 Actual | 2020 Guidance | ||||||||||
| Adjusted net earnings per share*: | |||||||||||
| Net earnings (GAAP) | $ | 4.61 | $ 5.48 - 5.68 | ||||||||
| Acquisition-related amortization, net | 0.70 | 0.66 | |||||||||
| Rightsizing and other costs, net | 0.16 | 0.06 | |||||||||
| Loss on extinguishment of debt | 0.12 | — | |||||||||
| Loss on assets held for sale | 0.32 | — | |||||||||
| Adjusted net earnings (Non-GAAP) | $ | 5.93 | $ 6.20 - 6.40 | ||||||||
* Per share data and totals may be impacted by rounding.
IS - 8
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| BOOKINGS | |||||||||||||||||||||||||||||||||||
| Engineered Products | $ | 427,697 | $ | 397,420 | $ | 426,059 | $ | 457,145 | $ | 1,708,321 | $ | 480,513 | $ | 425,322 | $ | 403,098 | $ | 494,622 | $ | 1,803,555 | |||||||||||||||
| Fueling Solutions | 343,083 | 394,256 | 450,727 | 425,698 | 1,613,764 | 360,519 | 392,100 | 383,749 | 376,651 | 1,513,019 | |||||||||||||||||||||||||
| Imaging & Identification | 267,762 | 264,175 | 284,527 | 276,451 | 1,092,915 | 270,653 | 294,248 | 258,883 | 282,519 | 1,106,303 | |||||||||||||||||||||||||
| Pumps & Process Solutions | 369,801 | 375,905 | 329,642 | 318,482 | 1,393,830 | 342,991 | 345,278 | 340,287 | 358,319 | 1,386,875 | |||||||||||||||||||||||||
| Refrigeration & Food Equipment | 376,998 | 384,365 | 323,422 | 361,970 | 1,446,755 | 372,701 | 428,816 | 331,979 | 341,221 | 1,474,717 | |||||||||||||||||||||||||
| Intra-segment eliminations | (725) | (490) | (528) | 872 | (871) | (680) | (25) | (597) | (617) | (1,919) | |||||||||||||||||||||||||
| Total consolidated bookings | $ | 1,784,616 | $ | 1,815,631 | $ | 1,813,849 | $ | 1,840,618 | $ | 7,254,714 | $ | 1,826,697 | $ | 1,885,739 | $ | 1,717,399 | $ | 1,852,715 | $ | 7,282,550 | |||||||||||||||
| BACKLOG | |||||||||||||||||||||||||||||||||||
| Engineered Products | $ | 451,335 | $ | 418,154 | $ | 416,025 | $ | 452,142 | $ | 380,846 | $ | 375,975 | $ | 370,948 | $ | 442,519 | |||||||||||||||||||
| Fueling Solutions | 185,847 | 186,202 | 223,081 | 205,842 | 229,234 | 246,087 | 251,212 | 208,574 | |||||||||||||||||||||||||||
| Imaging & Identification | 118,177 | 116,810 | 121,877 | 125,775 | 131,544 | 133,570 | 123,624 | 118,057 | |||||||||||||||||||||||||||
| Pumps & Process Solutions | 353,066 | 378,427 | 361,478 | 353,073 | 315,020 | 318,891 | 337,420 | 315,230 | |||||||||||||||||||||||||||
| Refrigeration & Food Equipment | 311,632 | 310,454 | 262,870 | 320,577 | 283,250 | 309,440 | 255,783 | 268,991 | |||||||||||||||||||||||||||
| Intra-segment eliminations | (403) | (141) | (252) | (249) | (394) | (154) | (58) | (200) | |||||||||||||||||||||||||||
| Total consolidated backlog | $ | 1,419,654 | $ | 1,409,906 | $ | 1,385,079 | $ | 1,457,160 | $ | 1,339,500 | $ | 1,383,809 | $ | 1,338,929 | $ | 1,353,171 | |||||||||||||||||||
Bookings Growth Factors
| 2019 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Full Year | |||||||||||||||||||||||||
| Organic | |||||||||||||||||||||||||||||
| Engineered Products | (9.3) | % | (4.9) | % | 6.9 | % | (6.8) | % | (4.0) | % | |||||||||||||||||||
| Fueling Solutions | (2.3) | % | 1.9 | % | 16.5 | % | 11.0 | % | 6.9 | % | |||||||||||||||||||
| Imaging & Identification | 4.5 | % | (6.4) | % | 13.0 | % | (0.3) | % | 2.3 | % | |||||||||||||||||||
| Pumps & Process Solutions | 11.0 | % | 12.8 | % | (0.8) | % | (9.2) | % | 3.3 | % | |||||||||||||||||||
| Refrigeration & Food Equipment | 2.8 | % | (9.2) | % | (1.5) | % | 6.8 | % | (0.7) | % | |||||||||||||||||||
| Total Organic | 0.4 | % | (1.5) | % | 6.8 | % | (0.1) | % | 1.3 | % | |||||||||||||||||||
| Acquisitions | 0.6 | % | 0.6 | % | 0.9 | % | 0.9 | % | 0.8 | % | |||||||||||||||||||
| Dispositions | (0.1) | % | (0.5) | % | (0.4) | % | (0.3) | % | (0.3) | % | |||||||||||||||||||
| Currency translation | (3.2) | % | (2.3) | % | (1.7) | % | (1.2) | % | (2.1) | % | |||||||||||||||||||
| Total* | (2.3) | % | (3.7) | % | 5.6 | % | (0.7) | % | (0.4) | % | |||||||||||||||||||
* Totals may be impacted by rounding.
IS - 9
ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2019
(Amounts in thousands except share data and where otherwise indicated)
Change in Segments
Effective October 1, 2019, the Company transitioned from a three-segment to a five-segment structure as a result of a change to its internal organization. This new structure will increase management efficiency and better align the Company’s operations with its strategic initiatives and capital allocation priorities across its businesses. All periods are presented under the new structure.
Acquisitions
The Company did not complete any acquisitions during the fourth quarter of 2019. For the full year 2019, the Company acquired three businesses in separate transactions for total consideration of $216.4 million, net of cash acquired and including contingent consideration. The businesses were acquired to complement and expand upon existing operations within the Fueling Solutions and Pumps & Process Solutions segments.
Discontinued and Disposed Businesses
The Company did not dispose of any businesses during the fourth quarter of 2019. For the full year 2019, the Company completed the sale of Finder, which generated total cash proceeds of $24.2 million. The Finder business was included in the results of the Pumps & Process Solutions segment. The sale does not represent a strategic shift that will have a major effect on operations and financial results and, therefore, did not qualify for presentation as a discontinued operation.
Rightsizing and Other Costs
During the year ended December 31, 2019, the Company executed several programs in order to further optimize operations. Rightsizing programs in 2019 included 1) broad-based selling, general and administrative expense reduction and 2) initiation of footprint consolidation actions. During the fourth quarter of 2019, the Company recorded rightsizing and other related costs of $17.9 million which is comprised of $14.8 million of restructuring costs and $3.1 million of other charges. During the full year 2019, the Company recorded rightsizing and other related costs of $32.2 million which is comprised of $26.8 million of restructuring costs and $5.3 million of other charges. These costs primarily relate to actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges. During the fourth quarter and full year 2019, rightsizing and other charges were broad based across all segments as well as corporate, with costs incurred by segment as follows:
| ($ in millions) | 2019 | 2018 | |||||||||||||||||||||
| Q4 | FY | Q4 | FY | ||||||||||||||||||||
| Engineered Products | $ | 1.4 | $ | 3.2 | $ | 3.7 | $ | 7.3 | |||||||||||||||
| Fueling Solutions | 1.6 | 4.9 | 6.7 | 15.3 | |||||||||||||||||||
| Imaging & Identification | 4.4 | 6.4 | 3.5 | 12.6 | |||||||||||||||||||
| Pumps & Process Solutions | 3.9 | 6.1 | 6.1 | 13.4 | |||||||||||||||||||
| Refrigeration & Food Equipment | 2.2 | 6.0 | 9.5 | 10.0 | |||||||||||||||||||
| Corporate | 4.5 | 5.6 | 8.0 | 14.2 | |||||||||||||||||||
| Total* | $ | 17.9 | $ | 32.2 | $ | 37.4 | $ | 72.8 | |||||||||||||||
* Totals may be impacted by rounding.
Tax Rate
The effective tax rate was 14.7% and 15.4% for the fourth quarters of 2019 and 2018, respectively. On a full year basis, the effective tax rate for 2019 and 2018 was 19.6% and 18.5%, respectively. The 2019 tax rate was primarily driven by the tax deduction for share-based awards and other favorable discrete items, partially offset by the exclusion of capital losses on a disposition of a business under local tax law. The 2018 tax rate was impacted by the tax deduction for share-based awards, the impact of SAB 118 from US Tax Reform, and other favorable discrete items.
IS - 10
ADDITIONAL INFORMATION (CONTINUED)
FOURTH QUARTER AND FULL YEAR 2019
(Amounts in thousands except share data and where otherwise indicated)
Share Repurchases
During the year ended December 31, 2019, the Company purchased approximately 1.3 million shares of its common stock for a total cost of $143.3 million, or $106.64 per share. As of December 31, 2019, 8,360,044 shares remain authorized for repurchase under the February 2018 share repurchase authorization.
Borrowings
On November 4, 2019, the Company issued €500 million of 0.750% euro-denominated notes due 2027 and $300 million of 2.950% notes due 2029. The proceeds from the sale of euro-denominated notes of €494.7 million, net of discounts and issuance costs, were used in part to redeem the €300 million 2.125% notes due 2020. The proceeds from the sale of notes of $296.9 million, net of discounts and issuance costs, and the remaining funds from the sale of the euro-denominated notes, were used to fund the redemption of the $450 million 4.30% notes due 2021. The remainder of the proceeds will be used for general corporate purposes. The early extinguishment of debt resulted in a pre-tax loss of $23.5 million.
Capitalization
The following table provides a reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:
| Net Debt to Net Capitalization Ratio (Non-GAAP) | December 31, 2019 | December 31, 2018 | ||||||||||||
| Commercial paper | 84,700 | 220,318 | ||||||||||||
| Notes payable | 84,700 | 220,318 | ||||||||||||
| Long-term debt | 2,985,716 | 2,943,660 | ||||||||||||
| Total debt | 3,070,416 | 3,163,978 | ||||||||||||
| Less: Cash and cash equivalents | (397,253) | (396,221) | ||||||||||||
| Net debt | 2,673,163 | 2,767,757 | ||||||||||||
| Add: Stockholders' equity | 3,032,660 | 2,768,666 | ||||||||||||
| Net capitalization | $ | 5,705,823 | $ | 5,536,423 | ||||||||||
| Net debt to net capitalization | 46.8 | % | 50.0 | % | ||||||||||
Quarterly Cash Flow
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| Net Cash Flows Provided By (Used In): | |||||||||||||||||||||||||||||||||||
| Operating activities | $ | 24,524 | $ | 208,709 | $ | 350,865 | $ | 361,208 | $ | 945,306 | $ | 15,535 | $ | 159,205 | $ | 243,944 | $ | 370,509 | $ | 789,193 | |||||||||||||||
| Investing activities | (217,690) | (69,755) | (48,612) | (48,198) | (384,255) | (122,597) | (51,606) | (35,922) | (35,355) | (245,480) | |||||||||||||||||||||||||
| Financing activities | 36,067 | (60,596) | (277,901) | (255,612) | (558,042) | (289,103) | (227,734) | (232,476) | (148,525) | (897,838) | |||||||||||||||||||||||||
Quarterly Free Cash Flow (Non-GAAP)
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY 2019 | Q1 | Q2 | Q3 | Q4 | FY 2018 | ||||||||||||||||||||||||||
| Cash flow from operating activities | $ | 24,524 | $ | 208,709 | $ | 350,865 | $ | 361,208 | $ | 945,306 | $ | 15,535 | $ | 159,205 | $ | 243,944 | $ | 370,509 | $ | 789,193 | |||||||||||||||
| Less: Capital expenditures | (37,122) | (53,970) | (46,184) | (49,528) | (186,804) | (44,678) | (51,686) | (38,192) | (36,438) | (170,994) | |||||||||||||||||||||||||
| Free cash flow * | $ | (12,598) | $ | 154,739 | $ | 304,681 | $ | 311,680 | $ | 758,502 | $ | (29,143) | $ | 107,519 | $ | 205,752 | $ | 334,071 | $ | 618,199 | |||||||||||||||
| Free cash flow as a percentage of revenue | (0.7) | % | 8.5 | % | 16.7 | % | 17.6 | % | 10.6 | % | (1.8) | % | 6.0 | % | 11.8 | % | 18.5 | % | 8.8 | % | |||||||||||||||
| Free cash flow as a percentage of earnings from continuing operations | (11.9) | % | 78.1 | % | 147.9 | % | 185.4 | % | 111.9 | % | (26.6) | % | 64.6 | % | 130.8 | % | 211.5 | % | 104.6 | % | |||||||||||||||
* FY 2019 and 2018 free cash flow includes cash payments related to restructuring initiatives of $33.3 million and $52.0 million, respectively. Q4 2019 and 2018 free cash flow includes cash payments related to restructuring initiatives of $7.4 million and $13.4 million, respectively.
IS - 11
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 earnings from continuing operations, adjusted diluted earnings per share from continuing operations, total segment earnings (EBIT), adjusted EBIT by segment, adjusted EBIT margin by segment, adjusted EBITDA by segment, adjusted EBITDA margin by segment, net debt, net capitalization, net debt to net capitalization ratios, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of earnings, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for earnings from continuing operations, diluted earnings per share from continuing operations, debt or equity, 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 earnings from continuing operations represents earnings from continuing operations adjusted for the effect of acquisition-related amortization, rightsizing and other costs, loss on extinguishment of debt, loss on assets held for sale, and the Tax Cuts and Jobs Act. We exclude after-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. We exclude the other items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or Management believes they are not indicative of the Company's ongoing operating costs or gains in a given period.
Adjusted diluted earnings per share from continuing operations represents adjusted earnings from continuing operations divided by average diluted shares.
Total segment earnings (EBIT) is defined as earnings from continuing operations before income taxes, net interest expense and corporate expenses. Total segment earnings (EBIT) margin is defined as total segment earnings (EBIT) divided by revenue.
Adjusted EBIT by Segment is defined as earnings from continuing operations before income taxes, net interest expense, corporate expenses, rightsizing and other costs and a 2019 loss on assets held for sale. Adjusted EBIT Margin by Segment is defined as adjusted EBIT by segment divided by segment revenue.
Adjusted EBITDA by Segment is defined as adjusted EBIT by segment plus depreciation and amortization, excluding depreciation and amortization included within rightsizing and other costs. Adjusted EBITDA Margin by Segment is defined as adjusted EBITDA by segment divided by segment revenue.
Management believes these measures are useful to investors to better understand the Company’s ongoing profitability as it will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers.
Net debt represents total debt minus cash and cash equivalents. Net capitalization represents net debt plus stockholders' equity. Net debt to net capitalization ratio equals net debt divided by net capitalization. Management believes the net debt to net capitalization ratio is useful to assess our overall financial leverage and capacity.
Free cash flow represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of earnings from continuing operations equals free cash flow divided by earnings from continuing operations. Management believes that free cash flow and free cash flow ratios are important measures 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 and bookings performance and trends between periods.
IS - 12
January 30, 2020 – 9:00am CT Earnings Conference Call Fourth Quarter and Full Year 2019
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 2018, 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. In addition to financial measures based on U.S. GAAP, Dover provides supplemental non-GAAP financial information. Management uses non-GAAP measures in addition to GAAP measures to understand and compare operating results across periods, make resource allocation decisions, and for forecasting and other purposes. Management believes these non-GAAP measures reflect results in a manner that enables, in many instances, more meaningful analysis of trends and facilitates comparison of results across periods and to those of peer companies. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP and may not be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. The use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP. Reconciliations and definitions are included either in this presentation or in Dover’s earnings release and investor supplement for the fourth quarter, which are available on Dover’s website. 2
Summary Corporate Results and Highlights Q4 2019 FY 2019 Highlights and Comments . Q4 expectedly slower on challenging comparable All-in -2% +2% Revenue growth . Strong year despite macro uncertainty Organic(1) -1% +4% . FX impact: -1% in Q4; -2% for FY19 . Constructive activity across most end markets All-in -1% Flat Bookings growth . Book-to-bill: 1.04 Organic(1) Flat +1% . Backlog up 8% Y-o-Y; increase in four segments . Q4 margin up despite lower revenue Segment EBIT Reported(2) +220 bps +160 bps margin Y-o-Y . Continued focus on productivity and margin Adjusted(1) +140 bps +180 bps improvement enhancement yields tangible results Earnings Reported $168M $678M . Q4 Y-o-Y growth: Reported +6%; Adjusted +7% from continuing (1) operations Adjusted $226M $872M . FY Y-o-Y growth: Reported +15%; Adjusted +15% Diluted EPS Reported $1.15 $4.61 from continuing . Full year 2019 Reported and Adj. EPS both +19% (1) operations Adjusted $1.54 $5.93 . 2020 EPS guidance: ‒ Reported: $5.48 - 5.68 Guidance and other activities ‒ Adjusted(1): $6.20 - 6.40 . Soft-Pak (signed), Systech (closed) in January ’20 (1) Non-GAAP measures (definitions and reconciliations in appendix) 3 (2) Refer to definition of total segment earnings (EBIT) margin in appendix
Q4 and Full Year 2019 Adjusted Segment Results Q4 2019 (1) FY 2019 (1) Revenue Adj. Revenue Adj. ($M) / EBIT % / ($M) / EBIT % / Comments Segment Organic bps ∆ Organic bps ∆ Growth % Y-o-Y Growth% Y-o-Y . Strength in solid waste handling, vehicle services and aerospace $422 17.7% $1,698 17.4% & defense DEP +3% +200 bps +5% +150 bps . Q4 bookings -8% (-7% organically) on difficult comparable at ESG vs. Q4 ’18; Strong backlog into 2020 . Solid demand across all regions in 2019, incl. Q4 (particularly $445 17.0% $1,620 14.6% strong in North America) DFS +5% +250 bps +11% +320 bps . Q4 bookings +13% (+11% organically), driven by acceleration in EMV compliance . Slower coding activity in Asia and order pushouts in digital textile $274 22.5% $1,084 21.7% printing DII -2% +270 bps +1% +260 bps . Q4 bookings -2% (flat organically); impacted by order timing and deliveries at DDP . Slow demand in pumps and precision components, order timing in plastics processing; strong growth in biopharma $328 22.9% $1,339 21.9% DPPS -8% +110 bps +4% +310 bps . Q4 bookings -11% (-9% organically) on channel inventory drawdowns in pumps and slower precision components; Backlog +12% Y-o-Y . Soft new food retail store builds and foodservice equipment; $306 5.4% $1,397 8.9% return to growth in beverage can making and heat exchangers DRFE -6% -150 bps -3% -120 bps . Q4 bookings +6% (+7% organically) on significant increase in food retail case orders; Backlog +19% Y-o-Y (1) Non-GAAP reconciliations in appendix 4
Q4 and FY 2019 Revenue & Bookings Geographic Detail Revenue Change in Organic Revenue(1): -$19M, or -1.1% FY 2019 Organic Rev Growth(1) OTHER 4% 2% ASIA 12% 2% EUROPE 22% 6% 1,809 13 21 -5 -30 -18 -20 5 1,776 ($M) Q4 2018 DEP DFS DII DPPS DRFE FX ACQ./ Q4 2019 ORG. ORG. ORG. ORG. ORG. DISP. (2) OTHER AMER. 9% 1% Bookings Change in Organic Bookings: -$2M, or -0.1% US 53% 4% 1,853 -34 41 -1 -33 23 1 -21 10 1,841 ($M) Q4 2018 DEP DFS DII DPPS DRFE SEG FX ACQ./ Q4 2019 ORG. ORG. ORG. ORG. ORG. ELIMS DISP. (3) FY 2019 % of Revenue Note: $ in millions. Numbers may not add due to rounding (1) Non-GAAP measure (definition and reconciliation in appendix) (2) Acquisitions: $17M, dispositions: $12M 5 (3) Acquisitions: $16M, dispositions: $6M
Q4 2019 Profitability Drivers Change in Adjusted Segment EBIT (3) +$19M +7% 20.9% 19.5% 17.1% 15.7% 285 67 352 9 17 6 -6 -7 371 -67 304 ($M) ADJ. EBIT D&A (1) ADJ. EBITDA DEP DFS DII DPPS DRFE ADJ. EBITDA D&A (2) ADJ. EBIT Q4 2018 Q4 2019 Change in Adjusted Earnings from Continuing Operations (3) +$15M +7% 12.7% 11.7% 158 30 26 -3 211 19 -5 1 226 -25 -14 -18 168 ($M) GAAP RIGHT ACQ. TAX CUTS & ADJ. SEGMENT CORP. INT./TAX ADJ. ACQ. RIGHT LOSS ON GAAP EARNINGS SIZING AMORT. JOBS ACT EARNINGS EBIT EXPENSE EXPENSE EARNINGS AMORT. SIZING EXT. OF EARNINGS DEBT Q4 2018 Q4 2019 (1) Depreciation: $32M, Amortization: $35M Note: $ in millions. Numbers may not add due to rounding (2) Depreciation: $33M, Amortization: $34M 6 (3) Non-GAAP measures (definitions and reconciliations in appendix)
2019 Free Cash Flow Increased $140 Million $M FY 2019 FY 2018 ∆ Net earnings $678 $570 +$108 Adjustments for losses(1) 71 21 +50 D&A 272 283 -10 Chg. in working capital (41) (62) +22 Chg. in other(2) (35) (23) -12 Cash flow from operations $945 $789 +$156 Capex (187) (171) -16 Free cash flow(4) $758 $618 +$140 (3)(4) FCF as % of reported earnings 112% 105%12.3% +730 bps FCF as % of adjusted earnings(3)(4) 87% 82% +520 bps . Q4 cash restructuring costs: $7M, YTD: $33M . Q4 2019 FCF(4) 17.6% of revenue; 18.0% excluding cash restructuring costs . 2019 FCF(4) 10.6% of revenue; 11.1% excluding cash restructuring costs Note: Numbers may not add due to rounding (1) Includes loss from discontinued operations, loss on assets held for sale, and loss on extinguishment of debt (2) Includes stock-based compensation and changes in other current and non-current assets and liabilities 7 (3) From continuing operations. Excludes loss from discontinued operations of $0 million and $21 million in 2019 and 2018, respectively (4) Non-GAAP measures (definitions and reconciliations in appendix)
2019 Adjusted EPS Bridge Adjusted EPS(1) ($/share) $5.93 ($0.13) $0.20 $0.81 $4.97 $0.08 2018 Acquisitions / Organic FX Corporate, Interest, 2019 Adj. EPS Dispositions Revenue Growth Shares, and ETR Adj. EPS / Conversion 2019 Adjusted EPS up 19% Year-over-Year Note: Numbers may not add due to rounding (1) Non-GAAP measure (definitions and reconciliations in appendix) 8
FY 2020 Guidance Revenue Growth CorporateCorporate Items Items . 2% - 3% all-in . Net interest expense: – Minimal impact from FX – ≈ $102 million and M&A . Tax rate: – ≈ 20% - 22% . 2% - 3% organic(3) . Corporate expenses: – ≈ $135 million EPS Free Cash Flow . Reported: $5.48 - $5.68 . 85 - 90% conversion on adjusted net earnings . Adjusted(1): $6.20 - $6.40 . Capital expenditures: – ≈ $200 - $220 million Guidance implies ~8-11% Y-o-Y growth(2) in adjusted diluted EPS in 2020(1) Dollar/Euro assumption: 1.11 (1) Non-GAAP measure (definitions and reconciliations in appendix); assumes 146.1 million diluted weighted average shares outstanding (2) Excluding discrete taxes 9 (3) Non-GAAP measure (definition in appendix, reconciliation on next page)
FY 2020 Revenue Guidance Detail Pumps & Refrig Engineered Fueling Imaging Process & Food Total Products Solutions & ID Solutions Equip. Organic Guidance 3% - 5% 0% - 2% 2% - 3% 3% - 5% 0% - 2% 2% - 3% Acquisitions - 0% - 0% - 0% Dispositions - - - (1%) - 0% Currency 0% (1)% - 0% (1)% - 0% 0% 0% 0% Total Revenue 3% - 5% 0% - 2% 1% - 2% 2% - 4% 0% - 2% 2% - 3% Dollar/Euro assumption: 1.11 10
Progress in Delivering on Our Commitments Improve Deploy Capital Maintain Reinvest in Margins and Smartly and Organic Growth the Business Execution Productively ’19 Results . ~$136M SG&A take-out . 4% organic growth(1) in . ~$30M of SG&A savings . Four bolt-on deals FY19 reinvested signed/closed (including in . Above-ground fueling Initiated ~$60M growth January ’20) business exited 2019 . Four out of five segments . above target margin range delivered organic growth and productivity CapEx . $143M of share investments repurchases in 2019 . ’19 total adj. segment EBIT(1) up 180 bps ’20 Plan . $50M incremental cost . Sustained organic . Continued priority on . Robust acquisition pipeline take-out growth(2) of 2-3% organic reinvestment consistent with strategic Expect all segments to Several new growth portfolio intent and criteria . DFR productivity . . programs initiated grow in 2020 CapEx projects . Opportunistic repurchases . Continued investments . Ongoing operating model in digital and operations evolution with increased capabilities focus on operational excellence Strategic Playbook Unchanged for 2020 1. Non-GAAP measure (definition and reconciliation in appendix) 11 2. Non-GAAP measure (definition in appendix, reconciliation on prior slide)
Appendix 12
Q4 2018 to Q4 2019 Revenue and Bookings Bridges by Segment Revenue Bridge by Segment ($ in millions) DEP DFS DII DPPS DRFE Total Q4 2018 Revenue 412 415 284 370 327 1,809 Organic Growth 13 21 (5) (30) (18) (19) FX (3) (5) (5) (4) (3) (20) Acquisitions / Dispositions - 14 - (9) - 5 Q4 2019 Revenue 422 445 274 328 306 1,776 Bookings Bridge by Segment ($ in millions) DEP DFS DII DPPS DRFE Total Q4 2018 Bookings 495 377 283 358 341 1,853 Organic Growth (34) 41 (1) (33) 23 (2) FX (4) (5) (5) (4) (3) (21) Acquisitions / Dispositions - 13 - (3) - 10 Q4 2019 Bookings 457 426 276 318 362 1,841 Note: Numbers may not add due to rounding 13
FY 2019 Organic Revenue and Bookings Bridges FY 2019 Segment Growth Factors Revenue Growth Bookings Growth Organic Engineered Products 5.4% -4.0% Fueling Solutions 10.5% 6.9% Imaging & Identification 1.2% 2.3% Pumps & Process Solutions 3.9% 3.3% Refrigeration & Food Equipment -2.7% -0.7% Total Organic 3.8% 1.3% Acquisitions 0.8% 0.8% Dispositions -0.5% -0.3% Currency translation -2.0% -2.1% Total 2.1% -0.4% FY 2019 Geographic Revenue Growth Factors Revenue Growth Organic US 3.6% Other Americas 1.2% Europe 6.5% Asia 2.4% Other 2.3% Total Organic 3.8% Acquisitions 0.8% Dispositions -0.5% Currency translation -2.0% Total 2.1% Note: Numbers may not add due to rounding 14
Reconciliation of Q4 2019 Earnings from Continuing Operations to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment Q4 2019 ($ in millions) DEP DFS DII DPPS DRFE Total Revenue 422 445 274 328 306 1,776 Earnings from continuing operations - - - - - 168 Add back: Corporate expense - - - - - 40 Interest expense, net - - - - - 29 Income tax expense - - - - - 29 Loss on extinguishment of debt - - - - - 24 Segment earnings (EBIT) 73 74 57 71 14 290 EBIT % 17.4% 16.6% 20.9% 21.8% 4.7% 16.3% Adjustments: Rightsizing and other costs 1 2 4 4 2 13 Adjusted EBIT - Segment 75 75 62 75 17 304 Adjusted EBIT % 17.7% 17.0% 22.5% 22.9% 5.4% 17.1% Adjusted depreciation and amortization expense(1) 10 19 8 17 13 67 Adjusted EBITDA - Segment 85 95 70 92 29 371 Adjusted EBITDA % 20.1% 21.4% 25.3% 28.1% 9.5% 20.9% Note: Numbers may not add due to rounding (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs 15
Reconciliation of Q4 2018 Earnings from Continuing Operations to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment Q4 2018 ($ in millions) DEP DFS DII DPPS DRFE Total Revenue 412 415 284 370 327 1,809 Earnings from continuing operations - - - - - 158 Add back: Corporate expense - - - - - 39 Interest expense, net - - - - - 30 Income tax expense - - - - - 29 Segment earnings (EBIT) 61 54 53 75 13 255 EBIT % 14.8% 12.9% 18.5% 20.2% 4.0% 14.1% Adjustments: Rightsizing and other costs 4 7 3 6 9 29 Adjusted EBIT - Segment 65 60 56 81 23 285 Adjusted EBIT % 15.7% 14.5% 19.8% 21.8% 6.9% 15.7% Adjusted depreciation and amortization expense (1) 11 17 7 18 14 67 Adjusted EBITDA - Segment 76 78 64 99 36 352 Adjusted EBITDA % 18.4% 18.7% 22.4% 26.6% 11.1% 19.5% Note: Numbers may not add due to rounding (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs 16
Reconciliation of FY 2019 Earnings from Continuing Operations to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment FY 2019 ($ in millions) DEP DFS DII DPPS DRFE Total Revenue 1,698 1,620 1,084 1,339 1,397 7,136 Earnings from continuing operations - - - - - 678 Add back: Corporate expense - - - - - 124 Interest expense, net - - - - - 121 Income tax expense - - - - - 165 Loss on extinguishment of debt - - - - - 24 Segment earnings (EBIT) 292 232 229 240 119 1,112 EBIT % 17.2% 14.3% 21.2% 17.9% 8.5% 15.6% Adjustments: Rightsizing and other costs 3 5 6 6 6 27 Loss on sale of Finder - - - 47 - 47 Adjusted EBIT - Segment 295 237 236 293 125 1,186 Adjusted EBIT % 17.4% 14.6% 21.7% 21.9% 8.9% 16.6% Adjusted depreciation and amortization expense(1) 40 75 30 67 51 263 Adjusted EBITDA - Segment 335 312 266 360 176 1,449 Adjusted EBITDA % 19.8% 19.2% 24.5% 26.9% 12.6% 20.3% Note: Numbers may not add due to rounding (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs 17
Reconciliation of FY 2018 Earnings from Continuing Operations to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment FY 2018 ($ in millions) DEP DFS DII DPPS DRFE Total Revenue 1,633 1,466 1,110 1,332 1,453 6,992 Earnings from continuing operations - - - - - 591 Add back: Corporate expense - - - - - 130 Interest expense, net - - - - - 122 Income tax expense - - - - - 134 Segment earnings (EBIT) 252 152 199 238 136 977 EBIT % 15.5% 10.4% 17.9% 17.8% 9.4% 14.0% Adjustments: Rightsizing and other costs 7 15 13 13 10 59 Adjusted EBIT - Segment 260 168 212 251 146 1,036 Adjusted EBIT % 15.9% 11.4% 19.1% 18.8% 10.1% 14.8% Adjusted depreciation and amortization expense(1) 44 68 31 71 54 269 Adjusted EBITDA - Segment 304 236 242 322 200 1,305 Adjusted EBITDA % 18.6% 16.1% 21.8% 24.2% 13.8% 18.7% Note: Numbers may not add due to rounding (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs 18
Reconciliation of Adjusted Earnings from Continuing Operations to Earnings from Continuing Operations and Calculation of Adjusted Diluted EPS under U.S. GAAP ($ in millions, except per share data) Q4 2019 Q4 2018 FY 2019 FY 2018 Earnings from continuing operations ($) 168 158 678 591 Acquisition-related amortization, pre tax 33 35 138 146 Acquisition-related amortization, tax impact (8) (9) (35) (37) Rightsizing and other costs, pre tax 18 37 32 73 Rightsizing and other costs, tax impact (4) (8) (7) (15) Loss on debt extinguishment, pre tax 24 - 24 - Loss on debt extinguishment, tax impact (5) - (5) - Loss on assets held for sale - - 47 - Tax Cuts and Jobs Act - (3) - (3) Adjusted earnings from continuing operations ($) 226 211 872 756 Weighted average shares outstanding – diluted 147 148 147 152 Diluted EPS ($) 1.15 1.07 4.61 3.89 Acquisition-related amortization, pre tax 0.23 0.24 0.94 0.96 Acquisition-related amortization, tax impact (0.06) (0.06) (0.24) (0.24) Rightsizing and other costs, pre tax 0.12 0.25 0.22 0.48 Rightsizing and other costs, tax impact (0.03) (0.05) (0.06) (0.10) Loss on debt extinguishment, pre tax 0.16 - 0.16 - Loss on debt extinguishment, tax impact (0.04) - (0.04) - Loss on assets held for sale - - 0.32 - Tax Cuts and Jobs Act - (0.02) - (0.02) Adjusted diluted EPS ($) 1.54 1.43 5.93 4.97 Note: Numbers may not add due to rounding 19
Reconciliation of Free Cash Flow and EPS from Continuing Operations to Adjusted EPS from Continuing Operations Free Cash Flow Reconciliation ($ millions) Q4 2019 Q4 2018 FY 2019 FY 2018 Net Cash Provided by Operating Activities 361 371 945 789 Capital Expenditures (50) (36) (187) (171) Free Cash Flow 312 334 758 618 Cash Restructuring Costs 7 13 33 52 Free Cash Flow, Excluding Cash Restructuring Costs 319 347 792 670 Free Cash Flow as a % of Earnings from Continuing Operations 185.4% 211.5% 111.9% 104.6% Free Cash Flow as a % of Adjusted Earnings from Continuing Operations 138.1% 158.3%185.4% 87.0% 81.8% Free Cash Flow as a % of Revenue 17.6% 18.5%185.4% 10.6% 8.8% Free Cash Flow, Excluding Cash Restructuring Costs, as a % of Revenue 18.0% 19.2%185.4% 11.1% 9.6% Adjusted EPS from Continuing Operations Reconciliation Range 2020 Guidance for Earnings per Share from Continuing Operations (GAAP) $5.48 $5.68 Acquisition-related amortization, net 0.66 Rightsizing and other costs, net 0.06 2020 Guidance for Adjusted Earnings per Share from Continuing Operations $6.20 $6.40 Note: Numbers may not add due to rounding 20
Non-GAAP Definitions Definitions of Non-GAAP Measures: Adjusted Earnings from Continuing Operations: is defined as earnings from continuing operations adjusted for the effect of acquisition-related amortization, rightsizing and other costs, a 2019 loss on debt extinguishment, a 2019 loss on assets held for sale and 2018 tax benefits for the Tax Cuts and Jobs Act. Adjusted Diluted Earnings Per Share from Continuing Operations: is defined as adjusted earnings from continuing operations divided by average diluted shares. Total segment earnings (EBIT): is defined as earnings from continuing operations before income taxes, net interest expense and corporate expenses. Total segment earnings (EBIT) margin: is defined as total segment earnings (EBIT) divided by revenue. Adjusted EBIT by Segment: is defined as earnings from continuing operations before income taxes, net interest expense, corporate expenses, rightsizing and other costs and a 2019 loss on assets held for sale. Adjusted EBIT Margin by Segment: is defined as adjusted EBIT by segment divided by segment revenue. The bps change Y-o-Y is calculated as the difference between adjusted EBIT margin for the current period and the prior period. Adjusted EBITDA by Segment: is defined as adjusted EBIT by segment plus depreciation and amortization, excluding depreciation and amortization included within rightsizing and other costs. Adjusted EBITDA Margin by Segment: is defined as adjusted EBITDA by segment divided by segment revenue. Free Cash Flow: is defined as net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of earnings from continuing operations equals free cash flow divided by earnings from continuing operations. Free cash flow as a percentage of adjusted earnings from continuing operations equals free cash flow divided by adjusted earnings from continuing operations. Free cash flow, excluding cash restructuring costs, is defined as free cash flow minus cash restructuring costs. Free cash flow, excluding cash restructuring costs, as a % of revenue equals free cash flow, excluding cash restructuring costs, divided by revenue. Organic Revenue Growth: is defined as revenue growth excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. The tables included in this presentation provide reconciliations of the non-GAAP measures used in this presentation to the most directly comparable U.S. GAAP measures. Further information regarding management’s use of these non-GAAP measures is included in Dover’s earnings release and investor supplement for the fourth quarter. 21
