Dover Reports Fourth Quarter And Full Year 2015 Results And Reaffirms 2016 EPS Guidance

- Reports quarterly revenue of $1.7 billion, a decrease of 14% from the prior year

- Delivers quarterly diluted earnings per share from continuing operations of $0.87, including $0.06 of discrete tax benefits

- Generates $274 million in free cash flow in the fourth quarter of 2015, and $795 million for the full year

- Adjusts full year 2016 revenue forecast to reflect weaker oil & gas markets; now expects full year organic revenue to decline 1% to 4%, one point lower than the previous forecast

- Reaffirms 2016 full year diluted earnings per share from continuing operations to be in the range of $3.85 to $4.05

Jan 26, 2016, 06:55 ET from Dover

DOWNERS GROVE, Ill., Jan. 26, 2016 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2015, revenue was $1.7 billion, a decrease of 14% from the prior year. The decrease in revenue was driven by an organic revenue decline of 12% and an unfavorable impact from foreign exchange of 4%, partially offset by 2% growth from acquisitions. Earnings from continuing operations were $136.6 million, a decrease of 21% as compared to $171.8 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the fourth quarter ended December 31, 2015 were $0.87, compared to $1.03 EPS in the prior year period, representing a decrease of 16%. EPS from continuing operations for the fourth quarter of 2015 included discrete tax benefits of $0.06, compared to $0.02 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations for the fourth quarter of 2015 was $0.81, a decrease of 20% over an adjusted EPS of $1.01 in the prior year period. EPS for the fourth quarter ended December 31, 2015 and December 31, 2014 includes restructuring costs of $0.08 EPS and $0.16 EPS, respectively.

Revenue for the year ended December 31, 2015 was $7.0 billion, a decrease of 10% over the prior year, reflecting an organic revenue decline of 10% and an unfavorable impact from foreign exchange of 4%, offset by 4% growth from acquisitions. Earnings from continuing operations for the year ended December 31, 2015 were $595.9 million, a decrease of 23% as compared to $778.1 million for the prior year period. Diluted EPS for the year ended December 31, 2015 was $3.74, compared to $4.61 EPS in the prior year period, representing a decrease of 19%. EPS from continuing operations for the year ended December 31, 2015 included discrete tax benefits of $0.11, compared to $0.07 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations decreased 20% to $3.63 from an adjusted EPS of $4.54 in the prior year period. EPS for the year ended December 31, 2015 and 2014 includes restructuring costs of $0.25 EPS and $0.19 EPS, respectively. 

Robert A. Livingston, Dover's President and Chief Executive Officer, said, "Fourth quarter and full year results continued to be impacted by tough business conditions, particularly in oil & gas markets. In this environment, we delivered fourth quarter adjusted EPS of $0.81, driven by solid execution, as our teams continued to pursue customer wins, cost actions and productivity initiatives.

"During 2015, we increased our efforts around operating efficiencies through our Dover Excellence program. One key element of this program focuses on free cash flow generation, which increased to $795 million for the year. This program also supports our ongoing investment in product innovation and customer expansion activities. Additionally, during the year we took multiple steps to right-size our businesses to reflect difficult market conditions, especially in our Energy segment. These initiatives will remain a focus as we move into 2016.

"Regarding 2016, we are reaffirming EPS to be in the range of $3.85 to $4.05. This guidance reflects a lower revenue forecast driven by weaker oil & gas markets, essentially offset by an improved tax rate. In total, our full-year revenue growth, on an adjusted basis, is now anticipated to be in the range of 1% to 4%, comprising an organic revenue decline of (4%) to (1%), one point below our prior forecast. Acquisition growth of 7% and a 2% impact from FX remain unchanged from our prior forecast."

Net earnings for the fourth quarter ended December 31, 2015, were $141.8 million, or $0.91 EPS, which included earnings from discontinued operations of $5.3 million, compared to net earnings of $169.3 million, or $1.02 EPS, for the same period of 2014, which included a loss from discontinued operations of $2.5 million, or $0.02 EPS.

Net earnings for the year ended December 31, 2015, were $869.8 million, or $5.46 EPS, which included earnings from discontinued operations of $273.9 million, or $1.72 EPS, compared to net earnings of $775.2 million, or $4.59 EPS, for the same period of 2014, which included a loss from discontinued operations of $2.9 million, or $0.02 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.67 EPS, resulting from the disposition of two businesses held for sale.

Dover will host a webcast of its fourth quarter 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, January 26, 2016. 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 fourth 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 approximately $7 billion. We deliver innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve.  Recognized for our entrepreneurial approach for 60 years, our team of 26,000 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 www.dovercorporation.com.

Forward-Looking Statements:

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, foreign exchange, changes in operations, acquisitions, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as "anticipates," "expects," "believes," "suggests," "will," "plans," "should," "would," "could," and "forecast", or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover's customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, tax policies, and export/import laws; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.

 

INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2015

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

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

Three Months Ended December 31,

Years Ended December 31,

2015

2014

2015

2014

Revenue

$

1,694,600

$

1,977,947

$

6,956,311

$

7,752,728

Cost of goods and services

1,080,791

1,254,079

4,388,167

4,778,479

Gross profit

613,809

723,868

2,568,144

2,974,249

Selling and administrative expenses

414,365

460,377

1,647,382

1,758,765

Operating earnings

199,444

263,491

920,762

1,215,484

Interest expense, net

31,249

31,332

127,257

127,179

Other (income) expense, net

(1,295)

1,172

(7,105)

(5,902)

Earnings before provision for income taxes and discontinued operations

169,490

230,987

800,610

1,094,207

Provision for income taxes

32,916

59,152

204,729

316,067

Earnings from continuing operations

136,574

171,835

595,881

778,140

Earnings (loss) from discontinued operations, net

5,251

(2,541)

273,948

(2,905)

Net earnings

$

141,825

$

169,294

$

869,829

$

775,235

Basic earnings per common share:

Earnings from continuing operations

$

0.88

$

1.04

$

3.78

$

4.67

Earnings (loss) from discontinued operations, net

0.03

(0.02)

1.74

(0.02)

Net earnings

0.92

1.03

5.52

4.65

Weighted average shares outstanding

154,986

164,589

157,619

166,692

Diluted earnings per common share:

Earnings from continuing operations

$

0.87

$

1.03

$

3.74

$

4.61

Earnings (loss) from discontinued operations, net

0.03

(0.02)

1.72

(0.02)

Net earnings

0.91

1.02

5.46

4.59

Weighted average shares outstanding

156,254

166,467

159,172

168,842

Dividends paid per common share

$

0.42

$

0.40

$

1.64

$

1.55

 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)

2015

2014

Q1

Q2

Q3

Q4

FY 2015

Q1

Q2

Q3

Q4

FY 2014

REVENUE

Energy

$

430,423

$

366,044

$

363,872

$

323,341

$

1,483,680

$

478,773

$

481,016

$

507,334

$

550,116

$

2,017,239

Engineered Systems

Printing & Identification

230,181

229,934

227,992

255,563

943,670

231,679

252,354

257,282

247,569

988,884

Industrials

343,015

363,157

351,404

341,667

1,399,243

335,995

361,467

355,019

344,600

1,397,081

573,196

593,091

579,396

597,230

2,342,913

567,674

613,821

612,301

592,169

2,385,965

Fluids

340,236

351,511

352,018

355,508

1,399,273

345,009

346,275

361,797

377,485

1,430,566

Refrigeration & Food Equipment

372,097

448,115

492,460

418,758

1,731,430

411,493

522,357

528,807

458,532

1,921,189

Intra-segment eliminations

(451)

(133)

(164)

(237)

(985)

(379)

(833)

(664)

(355)

(2,231)

Total consolidated revenue

$

1,715,501

$

1,758,628

$

1,787,582

$

1,694,600

$

6,956,311

$

1,802,570

$

1,962,636

$

2,009,575

$

1,977,947

$

7,752,728

NET EARNINGS

Segment Earnings:

Energy

$

52,305

$

40,909

$

48,726

$

31,250

$

173,190

$

118,968

$

114,991

$

122,738

$

105,118

$

461,815

Engineered Systems

88,149

96,702

102,866

89,244

376,961

83,227

101,766

108,800

93,205

386,998

Fluids

54,634

70,168

74,911

62,404

262,117

57,942

63,112

67,559

63,026

251,639

Refrigeration & Food Equipment

36,150

65,732

76,665

42,752

221,299

44,862

84,926

78,012

30,934

238,734

Total Segments

231,238

273,511

303,168

225,650

1,033,567

304,999

364,795

377,109

292,283

1,339,186

Corporate expense / other

34,526

20,382

25,881

24,911

105,700

30,734

29,287

27,815

29,964

117,800

Net interest expense

32,037

31,988

31,983

31,249

127,257

32,655

31,961

31,231

31,332

127,179

Earnings from continuing operations before provision for income taxes

164,675

221,141

245,304

169,490

800,610

241,610

303,547

318,063

230,987

1,094,207

Provision for income taxes

47,485

65,507

58,821

32,916

204,729

71,569

92,966

92,380

59,152

316,067

Earnings from continuing operations

117,190

155,634

186,483

136,574

595,881

170,041

210,581

225,683

171,835

778,140

Earnings (loss) from discontinued operations, net

92,320

176,762

(385)

5,251

273,948

(9,903)

3,378

6,161

(2,541)

(2,905)

Net earnings

$

209,510

$

332,396

$

186,098

$

141,825

$

869,829

$

160,138

$

213,959

$

231,844

$

169,294

$

775,235

SEGMENT OPERATING MARGIN

Energy

12.2

%

11.2

%

13.4

%

9.7

%

11.7

%

24.8

%

23.9

%

24.2

%

19.1

%

22.9

%

Engineered Systems

15.4

%

16.3

%

17.8

%

14.9

%

16.1

%

14.7

%

16.6

%

17.8

%

15.7

%

16.2

%

Fluids

16.1

%

20.0

%

21.3

%

17.6

%

18.7

%

16.8

%

18.2

%

18.7

%

16.7

%

17.6

%

Refrigeration & Food Equipment

9.7

%

14.7

%

15.6

%

10.2

%

12.8

%

10.9

%

16.3

%

14.8

%

6.7

%

12.4

%

Total Segment

13.5

%

15.6

%

17.0

%

13.3

%

14.9

%

16.9

%

18.6

%

18.8

%

14.8

%

17.3

%

DEPRECIATION AND AMORTIZATION EXPENSE

Energy

$

34,427

$

32,740

$

31,858

$

42,754

$

141,779

$

25,575

$

25,807

$

27,145

$

33,429

$

111,956

Engineered Systems

14,526

14,392

14,503

16,493

59,914

15,850

15,982

15,334

14,780

61,946

Fluids

13,848

13,648

13,367

15,215

56,078

16,366

15,308

14,019

15,210

60,903

Refrigeration & Food Equipment

16,458

16,406

16,609

16,601

66,074

17,212

17,451

17,073

16,965

68,701

Corporate

923

841

837

643

3,244

870

1,000

910

902

3,682

$

80,182

$

78,027

$

77,174

$

91,706

$

327,089

$

75,873

$

75,548

$

74,481

$

81,286

$

307,188

 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

 (continued)

(unaudited)(in thousands)

2015

2014

Q1

Q2

Q3

Q4

FY 2015

Q1

Q2

Q3

Q4

FY 2014

BOOKINGS

Energy

$

416,628

$

345,079

$

351,557

$

315,996

$

1,429,260

$

478,469

$

477,162

$

526,134

$

534,646

$

2,016,411

Engineered Systems

Printing & Identification

235,617

224,203

226,756

250,639

937,215

250,416

245,429

249,288

248,071

993,204

Industrials

337,070

336,173

338,744

357,451

1,369,438

370,949

363,773

342,687

374,438

1,451,847

572,687

560,376

565,500

608,090

2,306,653

621,365

609,202

591,975

622,509

2,445,051

Fluids

339,310

333,695

357,032

321,154

1,351,191

362,943

375,009

350,853

345,553

1,434,358

Refrigeration & Food Equipment

419,659

486,793

430,681

379,967

1,717,100

493,731

542,810

459,099

367,567

1,863,207

Intra-segment eliminations

(628)

(417)

(385)

(486)

(1,916)

(506)

(1,089)

(737)

(644)

(2,976)

Total consolidated bookings

$

1,747,656

$

1,725,526

$

1,704,385

$

1,624,721

$

6,802,288

$

1,956,002

$

2,003,094

$

1,927,324

$

1,869,631

$

7,756,051

BACKLOG

Energy

$

212,060

$

194,819

$

156,631

$

155,586

$

210,846

$

206,415

$

232,739

$

233,347

Engineered Systems

Printing & Identification

108,151

103,403

100,476

98,288

131,298

128,912

115,352

110,359

Industrials

276,598

248,592

236,298

250,725

266,517

268,680

254,612

282,598

384,749

351,995

336,774

349,013

397,815

397,592

369,964

392,957

Fluids

259,504

240,389

236,608

243,459

328,617

348,508

323,424

277,834

Refrigeration & Food Equipment

337,084

373,193

307,351

247,352

431,298

450,065

376,141

282,507

Intra-segment eliminations

(595)

(354)

(598)

(808)

(374)

(211)

(302)

(431)

Total consolidated backlog

$

1,192,802

$

1,160,042

$

1,036,766

$

994,602

$

1,368,202

$

1,402,369

$

1,301,966

$

1,186,214

 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

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

2015

2014

Q1

Q2

Q3

Q4

FY 2015

Q1

Q2

Q3

Q4

FY 2014

Basic earnings (loss) per common share:

Continuing operations

$

0.72

$

0.98

$

1.20

$

0.88

$

3.78

$

1.00

$

1.26

$

1.36

$

1.04

$

4.67

Discontinued operations

0.57

1.11

0.03

1.74

$

(0.06)

$

0.02

$

0.04

$

(0.02)

$

(0.02)

Net earnings

1.30

2.10

1.20

0.92

5.52

$

0.94

$

1.29

$

1.40

$

1.03

$

4.65

Diluted earnings (loss) per common share:

Continuing operations

$

0.72

$

0.97

$

1.19

$

0.87

$

3.74

$

0.99

$

1.25

$

1.34

$

1.03

$

4.61

Discontinued operations

0.57

1.10

0.03

1.72

$

(0.06)

$

0.02

$

0.04

$

(0.02)

$

(0.02)

Net earnings

1.28

2.07

1.19

0.91

5.46

$

0.93

$

1.27

$

1.38

$

1.02

$

4.59

Adjusted diluted earnings per common share (calculated below):

Continuing operations

$

0.72

$

0.97

$

1.14

$

0.81

$

3.63

$

0.97

$

1.25

$

1.31

$

1.01

$

4.54

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

Net earnings (loss):

Continuing operations

$

117,190

$

155,634

$

186,483

$

136,574

$

595,881

$

170,041

$

210,581

$

225,683

$

171,835

$

778,140

Discontinued operations

92,320

176,762

(385)

5,251

273,948

(9,903)

3,378

6,161

(2,541)

(2,905)

Net earnings

209,510

332,396

186,098

141,825

869,829

160,138

213,959

231,844

169,294

775,235

Average shares outstanding:

Basic

161,650

158,640

155,300

154,986

157,619

169,750

166,474

166,021

164,589

166,692

Diluted

163,323

160,398

156,560

156,254

159,172

172,013

168,857

168,343

166,467

168,842

Note:

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

2015

2014

Q1

Q2

Q3

Q4

FY 2015

Q1

Q2

Q3

Q4

FY 2014

Adjusted earnings from continuing operations:

Earnings from continuing operations

$

117,190

$

155,634

$

186,483

$

136,574

$

595,881

$

170,041

$

210,581

$

225,683

$

171,835

$

778,140

Gains (losses) from discrete and other tax items

8,131

9,382

17,513

2,541

(635)

5,524

3,860

11,290

Adjusted earnings from continuing operations

$

117,190

$

155,634

$

178,352

$

127,192

$

578,368

$

167,500

$

211,216

$

220,159

$

167,975

$

766,850

Adjusted diluted earnings per common share:

Earnings from continuing operations

$

0.72

$

0.97

$

1.19

$

0.87

$

3.74

$

0.99

$

1.25

$

1.34

$

1.03

$

4.61

Gains (losses) from discrete and other tax items

0.05

0.06

0.11

0.01

0.03

0.02

0.07

Adjusted earnings from continuing operations

$

0.72

$

0.97

$

1.14

$

0.81

$

3.63

$

0.97

$

1.25

$

1.31

$

1.01

$

4.54

* Per share data may not add due to rounding.

 

DOVER CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

December 31, 2015

December 31, 2014

Assets:

Cash and cash equivalents

$

362,185

$

681,581

Receivables, net of allowances

1,120,490

1,186,746

Inventories, net

802,895

863,737

Other current assets

135,209

101,905

Property, plant and equipment, net

854,269

837,069

Goodwill

3,737,389

3,491,557

Intangible assets, net

1,413,223

1,369,520

Deferred taxes and other assets

194,103

171,005

Assets of discontinued operations

327,171

Total assets

$

8,619,763

$

9,030,291

Liabilities and Stockholders' Equity:

Notes payable and current maturities of long-term debt

$

151,122

$

777,956

Payables and accrued expenses

1,216,060

1,260,893

Deferred taxes and other non-current liabilities

990,664

986,958

Long-term debt

2,617,342

2,253,041

Liabilities of discontinued operations

50,718

Stockholders' equity

3,644,575

3,700,725

Total liabilities and stockholders' equity

$

8,619,763

$

9,030,291

 

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)(in thousands)

Years Ended December 31,

2015

2014

Operating activities:

Net earnings

$

869,829

$

775,235

(Earnings) loss from discontinued operations, net

(273,948)

2,905

Depreciation and amortization

327,089

307,188

Stock-based compensation

30,697

31,628

Contributions to employee benefit plans

(21,942)

(24,232)

Net change in assets and liabilities

17,334

(142,560)

Net cash provided by operating activities of continuing operations

949,059

950,164

Investing activities:

Additions to property, plant and equipment

(154,251)

(166,033)

Acquisitions (net of cash and cash equivalents acquired)

(567,843)

(802,254)

Proceeds from the sale of property, plant and equipment

14,604

14,373

Proceeds from the sale of businesses

689,314

191,348

Settlement of net investment hedge

(17,752)

Other

1,350

(19,991)

Net cash used in investing activities of continuing operations

(34,578)

(782,557)

Financing activities:

Cash received from Knowles Corporation, net of cash distributed

359,955

Change in notes payable, net

(327,000)

251,500

Net increase in debt

94,252

(6,566)

Dividends to stockholders

(257,969)

(258,487)

Purchase of common stock

(600,164)

(601,077)

Net proceeds from exercise of share-based awards

(1,005)

(814)

Net cash used in financing activities of continuing operations

(1,091,886)

(255,489)

Net cash (used in) provided by discontinued operations

(115,930)

6,007

Effect of exchange rate changes on cash

(26,061)

(40,426)

Net decrease in cash and cash equivalents

(319,396)

(122,301)

Cash and cash equivalents at beginning of period

681,581

803,882

Cash and cash equivalents at end of period

$

362,185

$

681,581

 

DOVER CORPORATION

QUARTERLY FREE CASH FLOW

(unaudited)(in thousands)

2015

2014

Q1

Q2

Q3

Q4

FY 2015

Q1

Q2

Q3

Q4

FY 2014

Cash flow from operating activities

$

131,332

$

218,911

$

282,213

$

316,603

$

949,059

$

28,361

$

185,013

$

292,012

$

444,778

$

950,164

Less: Additions to property, plant and equipment

(27,956)

(43,807)

(39,516)

(42,972)

(154,251)

(32,695)

(42,550)

(33,532)

(57,256)

(166,033)

Free cash flow

$

103,376

$

175,104

$

242,697

$

273,631

$

794,808

$

(4,334)

$

142,463

$

258,480

$

387,522

$

784,131

Free cash flow as a percentage of earnings from continuing operations

88.2

%

112.5

%

130.1

%

200.4

%

133.4

%

(2.5)%

67.7

%

114.5

%

225.5

%

100.8

%

Free cash flow as a percentage of revenue

6.0

%

10.0

%

13.6

%

16.1

%

11.4

%

(0.2)%

7.3

%

12.9

%

19.6

%

10.1

%

 

ADDITIONAL INFORMATION FOURTH QUARTER AND FULL YEAR 2015

Acquisitions

During the fourth quarter of 2015, the Company completed three acquisitions across the Fluids segment and the Printing & Identification platform of the Engineered Systems segment. For the full year 2015, Dover made a total of four acquisitions for consideration totaling $567.8 million.

Discontinued Operations

For the fourth quarter of 2015, the Company recognized a gain from discontinued operations of $5.3 million, or $0.03 EPS. On a full-year basis, the Company generated net earnings of $273.9 million, or $1.72 EPS. Included in this amount is a $87.8 million gain on sale of Datamax O'Neil, which was sold in the first quarter of 2015 and a $177.8 million gain on sale of Sargent Aerospace, which was sold in the second quarter of 2015. Also included in the results of discontinued operations is $6.3 million of earnings, or $0.04 EPS, attributable to the operations of Datamax O'Neil and Sargent Aerospace.

Restructuring and Other Costs

During the quarter, the Company took actions to adjust our costs and streamline our businesses, resulting in $16.5 million, or $0.08 EPS, of restructuring charges. These charges were incurred primarily at each of our business segments, including $4.2 million in Energy, $4.5 million in Engineered Systems, $1.3 million in Fluids, and $6.3 million in Refrigeration & Food Equipment. For full year, restructuring costs totaled $55.2 million, or $0.25 EPS, of which primarily $30.8 million was incurred in Energy, $13.3 million in Engineered Systems, $4.9 million in Fluids, and $5.8 million in Refrigeration and Food Equipment.

Tax Rate

The effective tax rate on continuing operations was 19.4% and 25.6% for the fourth quarters of 2015 and 2014, respectively. On a full year basis, the effective tax rates on continuing operations for 2015 and 2014 were 25.6% and 28.9%, respectively.  The 2015 and 2014 rates were favorably impacted by discrete and other items, as shown in the reconciliation for quarterly earnings per share included herein.  After adjusting for discrete and other items, the fourth quarter effective tax rates were 25.0% and 27.3% for 2015 and 2014, respectively, and the full year rates were 27.8% and 29.9% for 2015 and 2014, respectively. The reduction in the effective tax rate year over year is principally due to a change in the geographic mix of earnings as well as restructuring of foreign operations.

Free Cash Flow

The following table is a reconciliation of free cash flow (a non-GAAP measure) from cash flow provided by operating activities:

Three Months Ended December 31,

Years Ended December 31,

2015

2014

2015

2014

Free Cash Flow (dollars in thousands)

Cash flow provided by operating activities

$

316,603

444,778

$

949,059

$

950,164

Less: Capital expenditures

(42,972)

(57,256)

(154,251)

(166,033)

Free cash flow

$

273,631

$

387,522

$

794,808

$

784,131

Free cash flow as a percentage of revenue

16.1

%

19.6

%

11.4

%

10.1

%

Free cash flow as a percentage of earnings from continuing operations

133.4

%

100.8

%

The fourth quarter 2015 decrease in free cash flow reflects lower earnings relative to the prior year driven by lower volume and product mix.

Revenue Growth Factors

2015

Q1

Q2

Q3

Q4

Full Year

Organic

(6)%

(10)%

(10)%

(12)%

(10)%

Acquisitions

5%

4%

3%

2%

4%

Currency translation

(4)%

(4)%

(4)%

(4)%

(4)%

(5)%

(10)%

(11)%

(14)%

(1)

(10)%

(1)

(1) Includes a decline in revenue in Q4 within the Refrigeration & Food Equipment segment due to the divestiture of a product line.

Share Repurchases

In January 2015, the Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 15 million shares of its common stock over the following three years. This plan replaced the Company's $1.0 billion share repurchase program, which it completed in 2014. During the year ended December 31, 2015, the Company purchased a total of approximately 8.2 million shares of its common stock in the open market at a total cost of $600.2 million, or $72.94 per share.  As of December 31, 2015, the approximate number of shares still available for repurchase under the January 2015 share repurchase authorization was 6.8 million.

Capitalization

The following table provides a summary reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (in thousands)

December 31, 2015

December 31, 2014

Current maturities of long-term debt

$

122

$

299,956

Commercial paper

151,000

478,000

Long-term debt

2,617,342

2,253,041

Total debt

2,768,464

3,030,997

Less: Cash and cash equivalents

(362,185)

(681,581)

Net debt

2,406,279

2,349,416

Add: Stockholders' equity

3,644,575

3,700,725

Net capitalization

$

6,050,854

$

6,050,141

Net debt to net capitalization

39.8

%

38.8

%

Non-GAAP Information:

These Investor Supplement tables contain non-GAAP measures of adjusted earnings from continuing operations used in calculating adjusted diluted earnings per common share, as management believes this information is useful to investors to better understand the company's ongoing profitability and facilitates easier comparisons of the company's profitability to prior and future periods and to its peers. The company has also disclosed herein a number of non-GAAP measures related to free cash flow and the ratio of net debt to net capitalization. Management believes these metrics are important measures of the company's operating performance and liquidity. Free cash flow information provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase common stock, while the net debt to net capitalization ratio is helpful in evaluating the company's capital structure and the amount of leverage employed.

SOURCE Dover



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