2014

Dover Reports Third Quarter 2013 Results; Updates Full-Year Outlook

DOWNERS GROVE, Ill., Oct. 17, 2013 /PRNewswire/ --

  • Reports quarterly revenue of $2.3 billion, an increase of 7% over the prior year
  • Delivers quarterly diluted earnings per share from continuing operations of $1.53, an increase of 20% over last year
  • Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.54, excluding Knowles spin-off costs of $0.06, tax benefits of $0.03, and other one-time gains of $0.02, up 23% from an adjusted prior year
  • Revises outlook for full year revenue growth to approximately 7%
  • Narrows the range for diluted earnings per share from continuing operations to $5.57 to $5.64, including one-time items

Dover (NYSE: DOV) announced today that for the third quarter ended September 30, 2013, revenue was $2.3 billion, an increase of 7% over the prior year period. The revenue increase was driven by organic growth of 3% and an increase of 4% from acquisitions. Earnings from continuing operations were $263.7 million, or $1.53 diluted earnings per share ("EPS"), compared to $233.3 million, or $1.27 EPS, in the prior year period, representing increases of 13% and 20%, respectively.  EPS from continuing operations includes Knowles spin-off costs of $0.06 EPS, discrete tax benefits of $0.03 EPS, and other one-time gains of $0.02 recognized in the current quarter. Excluding these items, adjusted EPS from continuing operations for the third quarter of 2013 was $1.54, reflecting an increase of 23% over an adjusted EPS of $1.25 in the prior year period.

Revenue for the nine months ended September 30, 2013 was $6.5 billion, an increase of 7% over the prior year, reflecting organic growth of 2% and a 5% increase from acquisitions. Earnings from continuing operations for the nine months ended September 30, 2013 were $755.0 million, or $4.34 EPS, compared to $624.9 million, or $3.37 EPS in the prior year period, representing increases of 21% and 29%, respectively.  EPS from continuing operations during this period includes Knowles spin-off costs of $0.08 EPS, discrete tax benefits of $0.41 EPS, and other one-time gains of $0.02 compared to $0.01 EPS of discrete tax benefits in the prior year. Excluding these items, adjusted EPS from continuing operations for the nine months ended September 30, 2013 was $4.00, an increase of 19% over an adjusted EPS of $3.36 in the prior year.

Commenting on the third quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "I am pleased with our strong third quarter results, which were driven by broad-based organic growth across all segments.  These results reflect the impact of our global growth initiatives and our recent acquisitions.  Particularly strong were our drilling and downstream markets within Energy, our refrigeration & food equipment markets, and Printing & Identification.  Our revenue growth was leveraged by solid execution and cost reduction activities, resulting in a segment margin of 19.4%, representing a 100 basis point improvement over last year."

"Also encouraging, we continued to execute on our global growth strategies and productivity initiatives during the quarter.  We have announced several strategic acquisitions since our last quarterly report and expect more activity in the near-term.  These deals are highly synergistic and help to broaden our product mix and geographic breadth within our growth spaces.  In addition, we continued to execute on several projects that allow us to consolidate our manufacturing footprint and share infrastructure. These actions, taken together with the upcoming spin-off of Knowles, position Dover very well for sustained growth and outstanding performance."

"While our overall third quarter performance was strong, market conditions proved to be softer than anticipated.  As a result, we are revising our organic growth expectations to the low-end of our prior range, and now expect full year growth of about 3%.  Our acquisition growth remains unchanged at 4%, resulting in total full-year revenue growth of approximately 7%.  Based on this revised revenue guidance, we are narrowing our full year EPS guidance to the range of $5.57 to $5.64.  This range includes incurred spin-off costs, discrete tax benefits, and one-time gains.  This range does not include any prospective Knowles spin off costs in the fourth quarter."

Net earnings for the third quarter of 2013 were $269.1 million or $1.56 EPS, including earnings from discontinued operations of $5.5 million, or $0.03 EPS, compared to net earnings of $241.0 million, or $1.31 EPS, for the same period of 2012, which included earnings from discontinued operations of $7.7 million, or $0.04 EPS.

Net earnings for the nine months ended September 30, 2013 were $809.2 million, or $4.65 EPS, including net earnings from discontinued operations of $54.2 million, or $0.31 EPS, compared to net earnings of $651.2 million, or $3.51 EPS, for the same period of 2012, which included net earnings from discontinued operations of $26.3 million or $0.14 EPS. Reflected within discontinued operations was a goodwill impairment charge of $18.7 million, net of tax, or $0.11 EPS, in connection with the anticipated sale of our electronic test and assembly businesses, and discrete tax benefits of $54.4 million, or $0.31 EPS.

Dover will host a webcast of its third quarter 2013 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, October 17, 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 third 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 that 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 - THIRD QUARTER 2013


DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

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



Three Months Ended
September 30,


Nine Months Ended
September 30,


2013


2012


2013


2012

Revenue

$

2,252,349



$

2,097,605



$

6,520,685



$

6,090,508


Cost of goods and services

1,375,699



1,287,466



4,011,461



3,757,187


Gross profit

876,650



810,139



2,509,224



2,333,321


Selling and administrative expenses

482,284



451,943



1,472,333



1,372,021


Operating earnings

394,366



358,196



1,036,891



961,300


Interest expense, net

30,237



30,399



90,761



90,145


Other expense (income), net

970



3,706



(1,206)



5,855


Earnings before provision for income taxes and discontinued operations

363,159



324,091



947,336



865,300


Provision for income taxes

99,507



90,761



192,343



240,405


Earnings from continuing operations

263,652



233,330



754,993



624,895


Earnings from discontinued operations, net

5,462



7,716



54,173



26,315


Net earnings

$

269,114



$

241,046



$

809,166



$

651,210










Basic earnings per common share:








Earnings from continuing operations

$

1.55



$

1.28



$

4.40



$

3.41


Earnings from discontinued operations, net

0.03



0.04



0.32



0.14


Net earnings

1.58



1.33



4.71



3.56










Weighted average shares outstanding

170,544



181,763



171,690



183,000










Diluted earnings per common share:








Earnings from continuing operations

$

1.53



$

1.27



$

4.34



$

3.37


Earnings from discontinued operations, net

0.03



0.04



0.31



0.14


Net earnings

1.56



1.31



4.65



3.51










Weighted average shares outstanding

172,734



183,932



173,870



185,489










Dividends paid per common share

$

0.375



$

0.35



$

1.075



$

0.98










 

 


DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited) (in thousands)



2013




Q1

Q2

Q3

Q3 YTD


Q1

Q2

Q3

Q3 YTD

Q4

FY 2012

REVENUE












Communication
Technologies

$

372,790


$

401,477


$

413,608


$

1,187,875



$

357,575


$

361,689


$

396,470


$

1,115,734


$

400,851


$

1,516,585














Energy

561,198


573,471


577,350


1,712,019



531,570


538,786


562,263


1,632,619


539,985


2,172,604














Engineered Systems












Fluid Solutions

203,991


226,882


227,104


657,977



180,364


211,974


218,324


610,662


206,500


817,162


Refrigeration & 
       Industrial

664,294


777,396


778,336


2,220,026



642,213


674,501


674,116


1,990,830


613,012


2,603,842


Eliminations

(352)


(383)


(485)


(1,220)



(453)


(352)


(319)


(1,124)


(336)


(1,460)



867,933


1,003,895


1,004,955


2,876,783



822,124


886,123


892,121


2,600,368


819,176


3,419,544














Printing &
Identification

237,877


250,646


256,571


745,094



243,570


251,875


246,945


742,390


254,141


996,531














Intra-segment
eliminations

(225)


(726)


(135)


(1,086)



(225)


(184)


(194)


(603)


(322)


(925)


Total consolidated
revenue

$

2,039,573


$

2,228,763


$

2,252,349


$

6,520,685



$

1,954,614


$

2,038,289


$

2,097,605


$

6,090,508


$

2,013,831


$

8,104,339














NET EARNINGS












Segment Earnings:












Communication 
       Technologies

$

44,208


$

51,789


$

76,076


$

172,073



$

46,556


$

50,322


$

63,706


$

160,584


$

58,376


$

218,960


Energy

139,545


132,926


145,494


417,965



132,115


133,936


139,038


405,089


133,561


538,650


Engineered 
       Systems

117,178


165,440


172,223


454,841



122,092


133,808


144,245


400,145


101,807


501,952


Printing & 
       Identification

29,752


35,967


42,881


108,600



26,089


28,918


39,502


94,509


40,650


135,159


Total Segments

330,683


386,122


436,674


1,153,479



326,852


346,984


386,491


1,060,327


334,394


1,394,721


Corporate expense /
other

33,763


38,341


43,278


115,382



36,546


36,335


32,001


104,882


31,127


136,009


Net interest expense

30,244


30,280


30,237


90,761



30,031


29,715


30,399


90,145


30,996


121,141


Earnings from
continuing operations
before provision for income
taxes

266,676


317,501


363,159


947,336



260,275


280,934


324,091


865,300


272,271


1,137,571


Provision for income
taxes

69,687


23,149


99,507


192,343



73,866


75,778


90,761


240,405


64,047


304,452


Earnings from continuing operations

196,989


294,352


263,652


754,993



186,409


205,156


233,330


624,895


208,224


833,119


Earnings (loss) from discontinued operations, net

13,014


35,697


5,462


54,173



9,654


8,945


7,716


26,315


(48,364)


(22,049)


Net earnings

$

210,003


$

330,049


$

269,114


$

809,166



$

196,063


$

214,101


$

241,046


$

651,210


$

159,860


$

811,070














SEGMENT OPERATING MARGIN










Communication 
        Technologies

11.9

%

12.9

%

18.4

%

14.5

%


13.0

%

13.9

%

16.1

%

14.4

%

14.6

%

14.4

%

Energy

24.9

%

23.2

%

25.2

%

24.4

%


24.9

%

24.9

%

24.7

%

24.8

%

24.7

%

24.8

%

Engineered 
       Systems

13.5

%

16.5

%

17.1

%

15.8

%


14.9

%

15.1

%

16.2

%

15.4

%

12.4

%

14.7

%

Printing &
       Identification

12.5

%

14.3

%

16.7

%

14.6

%


10.7

%

11.5

%

16.0

%

12.7

%

16.0

%

13.6

%

Total Segment

16.2

%

17.3

%

19.4

%

17.7

%


16.7

%

17.0

%

18.4

%

17.4

%

16.6

%

17.2

%













DEPRECIATION AND AMORTIZATION EXPENSE










Communication Technologies

$

35,501


$

37,719


$

38,251


$

111,471



$

31,513


$

32,828


$

32,997


$

97,338


$

35,281


$

132,619


Energy

26,298


26,599


26,549


79,446



21,184


23,533


24,639


69,356


25,721


95,077


Engineered Systems

31,551


32,282


32,961


96,794



19,582


23,913


23,060


66,555


27,066


93,621


Printing & Identification

7,630


7,606


7,701


22,937



8,331


8,496


8,777


25,604


7,998


33,602


Corporate

859


1,026


1,032


2,917



700


765


842


2,307


359


2,666



$

101,839


$

105,232


$

106,494


$

313,565



$

81,310


$

89,535


$

90,315


$

261,160


$

96,425


$

357,585














 

 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited) (in thousands)





2013




Q1

Q2

Q3

Q3 YTD


Q1

Q2

Q3

Q3 YTD

Q4

FY 2012

BOOKINGS












Communication Technologies

$

379,122


$

422,293


$

423,662


$

1,225,077



$

347,291


$

387,058


$

411,005


$

1,145,354


$

363,624


$

1,508,978














Energy

620,640


525,612


595,421


1,741,673



585,775


530,352


526,824


1,642,951


550,091


2,193,042














Engineered Systems












Fluid Solutions

223,764


213,359


222,402


659,525



184,711


204,139


197,767


586,617


209,872


796,489


Refrigeration & 
       Industrial

755,026


784,904


662,464


2,202,394



711,911


666,223


600,065


1,978,199


606,931


2,585,130


Eliminations

(373)


(432)


(372)


(1,177)



(408)


(376)


(258)


(1,042)


(399)


(1,441)



978,417


997,831


884,494


2,860,742



896,214


869,986


797,574


2,563,774


816,404


3,380,178














Printing & Identification

237,217


259,282


256,211


752,710



249,773


251,733


244,611


746,117


252,937


999,054














Intra-segment eliminations

(720)


(137)


(109)


(966)



(609)


(221)


(759)


(1,589)


(1,020)


(2,609)














Total consolidated bookings

$

2,214,676


$

2,204,881


$

2,159,679


$

6,579,236



$

2,078,444


$

2,038,908


$

1,979,255


$

6,096,607


$

1,982,036


$

8,078,643














BACKLOG












Communication Technologies

$

458,765


$

480,426


$

492,583




$

451,110


$

476,745


$

491,041



$

453,172















Energy

311,793


255,544


274,243




296,360


282,364


248,233



256,093















Engineered Systems












Fluid Solutions

178,854


184,142


182,557




191,327


172,300


156,191



160,890



Refrigeration &
       Industrial

592,922


597,838


482,069




598,910


586,824


515,285



516,559



Eliminations

(178)


(227)


(113)




(132)


(155)


(94)



(157)




771,598


781,753


664,513




790,105


758,969


671,382



677,292















Printing & Identification

95,353


103,864


105,699




102,117


98,216


98,356



97,857















Intra-segment eliminations

(886)


(578)


(423)




(986)


(648)


(324)



(591)















Total consolidated backlog

$

1,636,623


$

1,621,009


$

1,536,615




$

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




Q1

Q2

Q3

Q3 YTD


Q1

Q2

Q3

Q3 YTD

Q4

FY 2012

Basic earnings (loss) per common share:










Continuing operations

$

1.14


$

1.72


$

1.55


$

4.40



$

1.01


$

1.12


$

1.28


$

3.41


$

1.17


$

4.59


Discontinued operations

0.08


0.21


0.03


0.32



0.05


0.05


0.04


0.14


(0.27)


(0.12)


Net earnings

1.21


1.93


1.58


4.71



1.07


1.17


1.33


3.56


0.90


4.47














Diluted earnings (loss) per common share:










Continuing operations

$

1.12


$

1.70


$

1.53


$

4.34



$

1.00


$

1.10


$

1.27


$

3.37


$

1.16


$

4.53


Discontinued operations

0.07


0.21


0.03


0.31



0.05


0.05


0.04


0.14


(0.27)


(0.12)


Net earnings

1.20


1.91


1.56


4.65



1.05


1.15


1.31


3.51


0.89


4.41














Adjusted diluted earnings per common share (calculated below):

Continuing operations

$

1.10


$

1.36


$

1.54


$

4.00



$

1.01


$

1.10


$

1.25


$

3.36


$

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


$

263,652


$

754,993



$

186,409


$

205,156


$

233,330


$

624,895


$

208,224


$

833,119


Discontinued operations

13,014


35,697


5,462


54,173



9,654


8,945


7,716


26,315


(48,364)


(22,049)


Net earnings

210,003


330,049


269,114


809,166



196,063


214,101


241,046


651,210


159,860


811,070














Average shares outstanding:










Basic

173,448


171,111


170,544


171,690



183,737


183,494


181,763


183,000


177,257


181,551


Diluted

175,567


173,097


172,734


173,870



186,706


185,780


183,932


185,489


179,365


183,993














Note:












Earnings from continuing operations are adjusted by discrete tax items, incurred spin-off costs, and other one-time gains to derive adjusted
earnings from continuing operations and adjusted diluted earnings per common share as follows:














2013




Q1

Q2

Q3

Q3 YTD


Q1

Q2

Q3

Q3 YTD

Q4

FY 2012

Adjusted earnings from continuing operations:










Earnings from continuing
operations

$

196,989


$

294,352


$

263,652


$

754,993



$

186,409


$

205,156


$

233,330


$

624,895


$

208,224


$

833,119


Gains (losses) from discrete
and other tax items

4,525


61,477


4,878


70,880



(1,610)


(372)


4,513


2,531


13,606


16,137


Knowles spin-off costs


(3,322)


(10,637)


(13,959)









Other one-time gains, net of tax



2,866


2,866









Adjusted earnings from continuing operations

$

192,464


$

236,197


$

266,545


$

695,206



$

188,019


$

205,528


$

228,817


$

622,364


$

194,618


$

816,982














Adjusted diluted earnings per common share:










Earnings from continuing operations

$

1.12


$

1.70


$

1.53


$

4.34



$

1.00


$

1.10


$

1.27


$

3.37


$

1.16


$

4.53


Gains (losses) from discrete and other tax items

0.02


0.36


0.03


0.41



(0.01)



0.02


0.01


0.07


0.09


Knowles spin-off costs


(0.02)


(0.06)


(0.08)









Other one-time gains, net of tax



0.02


0.02









Adjusted earnings from continuing operations

$

1.10


$

1.36


$

1.54


$

4.00



$

1.01


$

1.10


$

1.25


$

3.36


$

1.09


$

4.44














* Per share data may not add due to rounding.








 

 

DOVER CORPORATION

QUARTERLY FREE CASH FLOW

(unaudited) (in thousands)



2013




Q1

Q2

Q3

Q3 YTD


Q1

Q2

Q3

Q3 YTD

Q4

FY 2012

Cash flow from operating activities

$

78,326


$

304,729


$

340,005


$

723,060



$

161,327


$

243,363


$

285,811


$

690,501


$

570,659


$

1,261,160


Less: Additions to property, plant and equipment

(47,153)


(53,284)


(57,038)


(157,475)



(68,249)


(72,758)


(67,842)


(208,849)


(88,163)


(297,012)


Free cash flow

$

31,173


$

251,445


$

282,967


$

565,585



$

93,078


$

170,605


$

217,969


$

481,652


$

482,496


$

964,148














Free cash flow as a percentage of
earnings from continuing operations

15.8

%

85.4

%

107.3

%

74.9

%


49.9

%

83.2

%

93.4

%

77.1

%

231.7

%

115.7

%













Free cash flow as a percentage of revenue

1.5

%

11.3

%

12.6

%

8.7

%


4.8

%

8.4

%

10.4

%

7.9

%

24.0

%

11.9

%

 

 


SOURCE Dover Corporation



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