Dover Reports Second Quarter 2013 Results; Provides Full-Year Outlook

DOWNERS GROVE, Ill., July 18, 2013 /PRNewswire/ --

  • Reports quarterly revenue of $2.2 billion, an increase of 9% over the prior year
  • Delivers quarterly diluted earnings per share from continuing operations of $1.70, an increase of 55% over last year
  • Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.36, excluding tax benefits of $0.36 and Knowles spin off costs of $0.02, up 24% from an adjusted prior year
  • Reaffirms outlook for full year revenue growth at 7% to 9%
  • Expects diluted earnings per share from continuing operations to be in the range of $5.56 to $5.71 after raising the low end of the range, and including tax benefits and incurred spin off costs

Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2013, revenue was $2.2 billion, an increase of 9% over the prior year period. The revenue increase was driven by organic growth of 5%, an increase of 4% from acquisitions, and a minor impact from foreign exchange. Earnings from continuing operations were $294.4 million, or $1.70 diluted earnings per share ("EPS"), compared to $205.2 million, or $1.10 EPS, in the prior year period, representing increases of 43% and 55%, respectively.  EPS from continuing operations includes discrete tax items of $0.36 EPS and Knowles spin off costs of $0.02 EPS recognized in the current quarter. Excluding these items, adjusted EPS from continuing operations for the second quarter of 2013 was $1.36, reflecting an increase of 24% over EPS of $1.10 in the prior year period.  

Revenue for the six months ended June 30, 2013 was $4.3 billion, an increase of 7% over the prior year, reflecting organic growth of 2%, a 5% increase from acquisitions, and a minor impact from foreign exchange. Earnings from continuing operations for the six months ended June 30, 2013 were $491.3 million, or $2.82 EPS, compared to $391.6 million, or $2.10 EPS in the prior year period, representing increases of 25% and 34%, respectively.  EPS from continuing operations during this period includes discrete tax items of $0.38 EPS and Knowles spin off costs of $0.02 EPS, compared to ($0.01) EPS of discrete tax items in the prior year. Excluding these items, adjusted EPS from continuing operations for the six months ended June 30, 2013, was $2.46, an increase of 17% over an adjusted EPS of $2.11 in the prior year.

Commenting on the second quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "I am very pleased with our results for the second quarter and the actions we've taken to strengthen our company. The quarter was driven by broad-based growth, particularly among our businesses serving the consumer electronics and refrigeration markets, with solid contribution from our energy and fluids businesses. In all, we posted strong revenue growth of 9%.  Segment margin also expanded, where improved performance at Printing & Identification and Engineered Systems helped drive segment margin to 17.3%, a 30 basis point improvement over last year."

"We also made progress on several important strategic actions in the quarter.  We continued to execute on our share repurchase program, completed four small synergistic acquisitions, and most importantly, announced our intention to spin off several businesses within our Communication Technologies segment to our shareholders, which is progressing as planned.  Taken together, these actions demonstrate Dover's ongoing commitment to create significant shareholder value."

"Looking ahead, 2013 remains largely consistent with the view we previously shared. We continue to expect full year organic revenue growth of 3% to 5%, complemented by acquisition growth of 4%, resulting in total revenue growth of 7% to 9%.  Based on our solid second quarter performance, we are taking up the low end of our earnings guidance range.  In addition, we are adjusting full year guidance to include discrete tax benefits and incurred spin off costs.  As a result, our revised guidance for full year EPS is now $5.56 to $5.71.  This range does not include any prospective Knowles spin off costs to be incurred in the next several quarters."

Net earnings for the second quarter of 2013 were $330.0 million or $1.91 EPS, including earnings from discontinued operations of $35.7 million, or $0.21 EPS, compared to net earnings of $214.1 million, or $1.15 EPS, for the same period of 2012, which included earnings from discontinued operations of $8.9 million, or $0.05 EPS.  Reflected within discontinued operations was a goodwill impairment charge of $18.7 million, net of tax, or $0.11 EPS, connected with the anticipated sale of our electronic test and assembly businesses, and discrete tax benefits of $42.7 million, or $0.25 EPS.

Net earnings for the six months ended June 30, 2013, were $540.1 million, or $3.10 EPS, including net earnings from discontinued operations of $48.7 million, or $0.28 EPS, compared to net earnings of $410.2 million, or $2.20 EPS, for the same period of 2012, which included net earnings from discontinued operations of $18.6 million or $0.10 EPS. Reflected within discontinued operations was a goodwill impairment charge of $18.7 million, net of tax, or $0.11 EPS, connected with the anticipated sale of our electronic test and assembly businesses, and discrete tax benefits of $52.4 million, or $0.30 EPS.

Dover will host a webcast of its second quarter 2013 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 18, 2013. The webcast can be accessed on the Dover website at www.dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover's second quarter results and its operating segments can also be found on the Company's website.

About Dover:

Dover is a diversified global manufacturer with annual revenues of over $8 billion.  For over 50 years, Dover has been delivering outstanding products and services that reflect its market leadership and commitment to operational and technical excellence. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Dover focuses on innovative equipment and components, specialty systems and support services through its four major operating segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Headquartered in Downers Grove, Illinois, Dover employs 35,000 people worldwide. Dover is traded on the New York Stock Exchange under "DOV." Additional information is available on our website at www.dovercorporation.com.

Forward-Looking Statement:

This press release contains "forward-looking" statements within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover businesses operate and the U.S. and global economies. Statements in this press release that are not historical are hereby identified as "forward-looking statements" and may be indicated by words or phrases such as "anticipates," "expects," "believes," "indicates," "suggests," "will," "plans," "supports," "projects," "should," "would," "could," "forecast" and "management is of the opinion," or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, the state of the worldwide economy and sovereign credit, especially in Europe; political events that could impact the worldwide economy; the impact of natural disasters and their effect on global supply chains and energy markets; current economic conditions and uncertainties in the credit and capital markets; instability in countries where Dover conducts business; the ability of Dover's businesses to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; increased competition and pricing pressures in the markets served by Dover's businesses; the impact of the proposed spin off and our ability to consummate it on the anticipated time line or terms; the terms and timing of the sale of any business in discontinued operations; the impact of loss of a single-source manufacturing facility; changes in customer demand or loss of a significant customer; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes including environmental regulations, conflict minerals disclosure requirements, and tax policies (including domestic and international export subsidy programs, R&E credits and other similar programs); protection and validity of patent and other intellectual property rights; the ability to identify and successfully consummate value-adding acquisition opportunities;  Dover's ability to achieve expected savings from integration, synergy and other cost-control initiatives; unforeseen developments in contingencies such as litigation; international economic conditions including interest rate and  currency exchange rate fluctuations; possible future terrorist threats and their effect on the worldwide economy; and a downgrade in Dover's credit ratings.  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 in this press release. Dover undertakes no obligation to update any forward-looking statement, except as required by law.

 

 

INVESTOR SUPPLEMENT - SECOND QUARTER 2013

 

 

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(unaudited)(in thousands, except per share data)

 

 


Three Months Ended June 30,


Six Months Ended June 30,


2013


2012


2013


2012

Revenue

$

2,228,763



$

2,038,289



$

4,268,336



$

3,992,903


Cost of goods and services

1,372,811



1,261,187



2,635,762



2,469,721


Gross profit

855,952



777,102



1,632,574



1,523,182


Selling and administrative expenses

505,628



466,089



990,049



920,078


Operating earnings

350,324



311,013



642,525



603,104


Interest expense, net

30,280



29,715



60,524



59,746


Other expense (income), net

2,543



364



(2,176)



2,149


Earnings before provision for income taxes

and discontinued operations

317,501



280,934



584,177



541,209


Provision for income taxes

23,149



75,778



92,836



149,644


Earnings from continuing operations

294,352



205,156



491,341



391,565


Earnings from discontinued operations, net

35,697



8,945



48,711



18,599


Net earnings

$

330,049



$

214,101



$

540,052



$

410,164










Comprehensive earnings

$

332,989



$

120,514



$

511,713



$

357,819










Basic earnings per common share:








Earnings from continuing operations

$

1.72



$

1.12



$

2.85



$

2.13


Earnings from discontinued operations, net

0.21



0.05



0.28



0.10


Net earnings

1.93



1.17



3.13



2.23










Weighted average shares outstanding

171,111



183,494



172,273



183,625










Diluted earnings per common share:








Earnings from continuing operations

$

1.70



$

1.10



$

2.82



$

2.10


Earnings from discontinued operations, net

0.21



0.05



0.28



0.10


Net earnings

1.91



1.15



3.10



2.20










Weighted average shares outstanding

173,097



185,780



174,325



186,171










Dividends paid per common share

$

0.35



$

0.315



$

0.70



$

0.63



























 


 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)

 


2013


2012


Q1

Q2

Q2 YTD


Q1

Q2

Q2 YTD

Q3

Q4

FY 2012

REVENUE











Communication Technologies

$

372,790


$

401,477


$

774,267



$

357,575


$

361,689


$

719,264


$

396,470


$

400,851


$

1,516,585













Energy

561,198


573,471


1,134,669



531,570


538,786


1,070,356


562,263


539,985


2,172,604













Engineered Systems











Fluid Solutions

203,991


226,882


430,873



180,364


211,974


392,338


218,324


206,500


817,162


Refrigeration & Industrial

664,294


777,396


1,441,690



642,213


674,501


1,316,714


674,116


613,012


2,603,842


Eliminations

(352)


(383)


(735)



(453)


(352)


(805)


(319)


(336)


(1,460)



867,933


1,003,895


1,871,828



822,124


886,123


1,708,247


892,121


819,176


3,419,544













Printing & Identification

237,877


250,646


488,523



243,570


251,875


495,445


246,945


254,141


996,531













Intra-segment eliminations

(225)


(726)


(951)



(225)


(184)


(409)


(194)


(322)


(925)













Total consolidated revenue

$

2,039,573


$

2,228,763


$

4,268,336



$

1,954,614


$

2,038,289


$

3,992,903


$

2,097,605


$

2,013,831


$

8,104,339













NET EARNINGS











Segment Earnings:











Communication Technologies

$

44,208


$

51,789


$

95,997



$

46,556


$

50,322


$

96,878


$

63,706


$

58,376


$

218,960


Energy

139,545


132,926


272,471



132,115


133,936


266,051


139,038


133,561


538,650


Engineered Systems

117,178


165,440


282,618



122,092


133,808


255,900


144,245


101,807


501,952


Printing & Identification

29,752


35,967


65,719



26,089


28,918


55,007


39,502


40,650


135,159


Total Segments

330,683


386,122


716,805



326,852


346,984


673,836


386,491


334,394


1,394,721


Corporate expense /

other (1)

33,763


38,341


72,104



36,546


36,335


72,881


32,001


31,127


136,009


Net interest expense

30,244


30,280


60,524



30,031


29,715


59,746


30,399


30,996


121,141


Earnings from continuing operations before provision for income taxes

266,676


317,501


584,177



260,275


280,934


541,209


324,091


272,271


1,137,571


Provision for income taxes

69,687


23,149


92,836



73,866


75,778


149,644


90,761


64,047


304,452


Earnings from continuing operations

196,989


294,352


491,341



186,409


205,156


391,565


233,330


208,224


833,119


Earnings (loss) from discontinued operations, net

13,014


35,697


48,711



9,654


8,945


18,599


7,716


(48,364)


(22,049)


Net earnings

$

210,003


$

330,049


$

540,052



$

196,063


$

214,101


$

410,164


$

241,046


159,860


$

811,070













SEGMENT OPERATING MARGIN









Communication Technologies

11.9

%

12.9

%

12.4

%


13.0

%

13.9

%

13.5

%

16.1

%

14.6

%

14.4

%

Energy

24.9

%

23.2

%

24.0

%


24.9

%

24.9

%

24.9

%

24.7

%

24.7

%

24.8

%

Engineered Systems

13.5

%

16.5

%

15.1

%


14.9

%

15.1

%

15.0

%

16.2

%

12.4

%

14.7

%

Printing & Identification

12.5

%

14.3

%

13.5

%


10.7

%

11.5

%

11.1

%

16.0

%

16.0

%

13.6

%

Total Segment

16.2

%

17.3

%

16.8

%


16.7

%

17.0

%

16.9

%

18.4

%

16.6

%

17.2

%












DEPRECIATION AND AMORTIZATION EXPENSE









Communication Technologies

$

35,501


$

37,719


$

73,220



$

31,513


$

32,828


$

64,341


$

32,997


$

35,281


$

132,619


Energy

26,298


26,599


52,897



21,184


23,533


44,717


24,639


25,721


95,077


Engineered Systems

31,551


32,282


63,833



19,582


23,913


43,495


23,060


27,066


93,621


Printing & Identification

7,630


7,606


15,236



8,331


8,496


16,827


8,777


7,998


33,602


Corporate

859


1,026


1,885



700


765


1,465


842


359


2,666



$

101,839


$

105,232


$

207,071



$

81,310


$

89,535


$

170,845


$

90,315


$

96,425


$

357,585


 

(1) Includes $3.3 million of incurred Knowles spin off costs in Q2 2013.

 

 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)

 


2013


2012


Q1

Q2

Q2 YTD


Q1

Q2

Q2 YTD

Q3

Q4

FY 2012

BOOKINGS












Communication Technologies

$

379,122


$

422,293


$

801,415



$

347,291


$

387,058


$

734,349


$

411,005


$

363,624


$

1,508,978














Energy

620,640


525,612


1,146,252



585,775


530,352


1,116,127


526,824


550,091


2,193,042














Engineered Systems












Fluid Solutions

223,764


213,359


437,123



184,711


204,139


388,850


197,767


209,872


796,489


Refrigeration & Industrial

755,026


784,904


1,539,930



711,911


666,223


1,378,134


600,065


606,931


2,585,130


Eliminations

(373)


(432)


(805)



(408)


(376)


(784)


(258)


(399)


(1,441)



978,417


997,831


1,976,248



896,214


869,986


1,766,200


797,574


816,404


3,380,178














Printing & Identification

237,217


259,282


496,499



249,773


251,733


501,506


244,611


252,937


999,054














Intra-segment eliminations

(720)


(137)


(857)



(609)


(221)


(830)


(759)


(1,020)


(2,609)














Total consolidated bookings

$

2,214,676


$

2,204,881


$

4,419,557



$

2,078,444


$

2,038,908


$

4,117,352


$

1,979,255


$

1,982,036


$

8,078,643














BACKLOG












Communication Technologies

$

458,765


$

480,426




$

451,110


$

476,745



$

491,041


$

453,172















Energy

311,793


255,544




296,360


282,364



248,233


256,093















Engineered Systems












Fluid Solutions

178,854


184,142




191,327


172,300



156,191


160,890



Refrigeration & Industrial

592,922


597,838




598,910


586,824



515,285


516,559



Eliminations

(178)


(227)




(132)


(155)



(94)


(157)




771,598


781,753




790,105


758,969



671,382


677,292















Printing & Identification

95,353


103,864




102,117


98,216



98,356


97,857















Intra-segment eliminations

(886)


(578)




(986)


(648)



(324)


(591)















Total consolidated backlog

$

1,636,623


$

1,621,009




$

1,638,706


$

1,615,646



$

1,508,688


$

1,483,823






































 

 

 


 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

(unaudited)(in thousands, except per share data*)

 


2013


2012


Q1

Q2

Q2 YTD


Q1

Q2

Q2 YTD

Q3

Q4

FY 2012

Basic earnings (loss) per common share:








Continuing operations

$

1.14


$

1.72


$

2.85



$

1.01


$

1.12


$

2.13


$

1.28


$

1.17


$

4.59


Discontinued operations

0.08


0.21


0.28



0.05


0.05


0.10


0.04


(0.27)


(0.12)


Net earnings

1.21


1.93


3.13



1.07


1.17


2.23


1.33


0.90


4.47













Diluted earnings (loss) per common share:








Continuing operations

$

1.12


$

1.70


$

2.82



$

1.00


$

1.10


$

2.10


$

1.27


$

1.16


$

4.53


Discontinued operations

0.07


0.21


0.28



0.05


0.05


0.10


0.04


(0.27)


(0.12)


Net earnings

1.20


1.91


3.10



1.05


1.15


2.20


1.31


0.89


4.41













Adjusted diluted earnings per common share (calculated below):

Continuing operations

$

1.10


$

1.36


$

2.46



$

1.01


$

1.10


$

2.11


$

1.25


$

1.09


$

4.44













Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:












Net earnings (loss):











Continuing operations

$

196,989


$

294,352


$

491,341



$

186,409


$

205,156


$

391,565


$

233,330


$

208,224


$

833,119


Discontinued operations

13,014


35,697


48,711



9,654


8,945


18,599


7,716


(48,364)


(22,049)


Net earnings

210,003


330,049


540,052



196,063


214,101


410,164


241,046


159,860


811,070













Average shares outstanding:








Basic

173,448


171,111


172,273



183,737


183,494


183,625


181,763


177,257


181,551


Diluted

175,567


173,097


174,325



186,706


185,780


186,171


183,932


179,365


183,993


 

Note:

Earnings from continuing operations are adjusted by discrete tax items and incurred Knowles spin off costs to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:













2013


2012


Q1

Q2

Q2 YTD


Q1

Q2

Q2 YTD

Q3

Q4

FY 2012

Adjusted earnings from continuing operations:








Earnings from continuing

operations

$

196,989


$

294,352


$

491,341



$

186,409


$

205,156


$

391,565


$

233,330


$

208,224


$

833,119


Gains (losses) from discrete and other tax items

4,525


61,477


66,002



(1,610)


(372)


(1,982)


4,513


13,606


16,137


Knowles spin off costs


(3,322)


(3,322)









Adjusted earnings from continuing operations

$

192,464


$

236,197


$

428,661



$

188,019


$

205,528


$

393,547


$

228,817


$

194,618


$

816,982













Adjusted diluted earnings per common share:








Earnings from continuing operations

$

1.12


$

1.70


$

2.82



$

1.00


$

1.10


$

2.10


$

1.27


$

1.16


$

4.53


Gains (losses) from discrete and other tax items

0.02


0.36


0.38



(0.01)



(0.01)


0.02


0.07


0.09


Knowles spin off costs


(0.02)


(0.02)









Adjusted earnings from continuing operations

$

1.10


$

1.36


$

2.46



$

1.01


$

1.10


$

2.11


$

1.25


$

1.09


$

4.44














* Per share data may not add due to rounding.

 


 

 

DOVER CORPORATION

QUARTERLY FREE CASH FLOW

(unaudited)(in thousands)

 


2013


2012


Q1

Q2

Q2 YTD


Q1

Q2

Q2 YTD

Q3

Q4

FY 2012

Cash flow from operating

activities

$

78,326


$

304,729


$

383,055



$

161,327


$

243,363


$

404,690


$

285,811


$

570,659


$

1,261,160


Less: Additions to property,

plant and equipment

(47,153)


(53,284)


(100,437)



(68,249)


(72,758)


(141,007)


(67,842)


(88,163)


(297,012)


Free cash flow

$

31,173


$

251,445


$

282,618



$

93,078


$

170,605


$

263,683


$

217,969


$

482,496


$

964,148













Free cash flow as a percentage of earnings from continuing operations

15.8

%

85.4

%

57.5

%


49.9

%

83.2

%

67.3

%

93.4

%

231.7

%

115.7

%












Free cash flow as a percentage of revenue

1.5

%

11.3

%

6.6

%


4.8

%

8.4

%

6.6

%

10.4

%

24.0

%

11.9

%

 

 

 

SOURCE Dover Corporation



RELATED LINKS
http://www.dovercorporation.com

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