DOVER CORPORATION DOWNERS GROVE, Ill., Oct. 19, 2016 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the third quarter ended September 30, 2016, revenue was $1.7 billion, a decrease of 4% from the prior year. Organic revenue declined 7% and acquisition revenue, net of dispositions, provided 3% growth in the quarter. Earnings from continuing operations were $130.1 million, a decrease of 30% as compared to $186.5 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the third quarter ended September 30, 2016, were $0.83, compared to $1.19 EPS in the prior year period, representing a decrease of 30%. Third quarter 2016 EPS of $0.83 decreased 27% as compared to third quarter 2015 adjusted EPS of $1.14, which excludes $0.05 of discrete tax benefits. There were no discrete tax benefits in the third quarter of 2016. EPS for the quarters ended September 30, 2016, and September 30, 2015, includes restructuring costs of $0.04 EPS and $0.05 EPS, respectively.
Revenue for the nine months ended September 30, 2016, was $5.0 billion, a decrease of 5% from the prior year, reflecting an organic revenue decline of 7% and an unfavorable impact from foreign exchange of 1%, offset by 3% growth from acquisition revenue, net of dispositions. Earnings from continuing operations for the nine months ended September 30, 2016, were $347.7 million, a decrease of 24% as compared to $459.3 million for the prior year period. Diluted EPS for the nine months ended September 30, 2016, was $2.22, compared to $2.87 EPS in the prior year period, representing a decrease of 23%. EPS from continuing operations for the nine months ended September 30, 2016, includes discrete tax benefits of $0.04 and a gain on disposition of $0.07. Excluding discrete tax benefits and the gain on disposition, adjusted EPS from continuing operations decreased 25% to $2.11 from a comparable EPS of $2.82 in the prior year period. EPS for the nine months ended September 30, 2016, and September 30, 2015, also includes restructuring costs of $0.14 EPS and $0.17 EPS, respectively.
Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our third quarter results were disappointing. The continuing weak macro environment, further declines in longer cycle oil & gas exposed markets, and production inefficiencies in our retail refrigeration business impacted both volume and earnings. These results were well below our expectations, and more than offset solid improvements in our upstream drilling and production businesses, as well as continued strong performance in our Printing & Identification platform.
"As we announced on October 10, given these factors, we expect 2016 full year EPS to be in the range of $3.00 to $3.05. Within this guidance, organic revenue is forecasted to decline 7% to 8%.
"Regarding the fourth quarter, we expect further improvements in our early cycle upstream oil & gas markets, strong performance in Printing & Identification, and continued sequential growth in Fluids. We also expect a seasonal decline in Refrigeration & Food Equipment. These factors will result in our fourth quarter EPS to be largely in-line with the third quarter."
Net earnings for the third quarter ended September 30, 2016, were $130.1 million, or $0.83 EPS, compared to net earnings of $186.1 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $0.4 million.
Net earnings for the nine months ended September 30, 2016, were $347.7 million, or $0.83 EPS, compared to net earnings of $728.0 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $268.7 million, or $1.68 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.66 EPS, resulting from the disposition of two businesses held for sale.
Dover will host a webcast of its third quarter 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, October 19, 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 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 revenue approaching $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 over 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, trade sanctions, 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 - THIRD QUARTER 2016
----------------------------------------
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2016 2015 2016 2015
---- ---- ---- ----
Revenue $1,707,763 $1,787,582 $5,016,381 $5,261,711
Cost of goods and services 1,075,975 1,114,974 3,164,116 3,307,376
--------- --------- --------- ---------
Gross profit 631,788 672,608 1,852,265 1,954,335
Selling and administrative expenses 421,042 395,688 1,301,901 1,233,017
------- ------- --------- ---------
Operating earnings 210,746 276,920 550,364 721,318
Interest expense, net 32,994 31,983 96,865 96,008
Other income, net (3,424) (367) (19,800) (5,810)
------ ---- ------- ------
Earnings before provision for income taxes and 181,176 245,304 473,299 631,120
discontinued operations
Provision for income taxes 51,092 58,821 125,569 171,813
------ ------ ------- -------
Earnings from continuing operations 130,084 186,483 347,730 459,307
Earnings (loss) from discontinued operations, net - (385) - 268,697
Net earnings $130,084 $186,098 $347,730 $728,004
======== ======== ======== ========
Basic earnings per common share:
Earnings from continuing operations $0.84 $1.20 $2.24 $2.90
Earnings from discontinued operations, net - - - 1.70
Net earnings 0.84 1.20 2.24 4.59
Weighted average shares outstanding 155,300 155,300 155,182 158,507
======= ======= ======= =======
Diluted earnings per common share:
Earnings from continuing operations $0.83 $1.19 $2.22 $2.87
Earnings from discontinued operations, net - - - 1.68
Net earnings 0.83 1.19 2.22 4.55
Weighted average shares outstanding 156,798 156,560 156,562 160,112
======= ======= ======= =======
Dividends paid per common share $0.44 $0.42 $1.28 $1.22
===== ===== ===== =====
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2016 2015
---- ----
Q1 Q2 Q3 Q3 YTD Q1 Q2 Q3 Q3 YTD Q4 FY 2015
--- --- --- ------ --- --- --- ------ --- -------
REVENUE
-------
Energy $283,230 $259,008 $273,248 $815,486 $430,423 $366,044 $363,872 $1,160,339 $323,341 $1,483,680
-------- -------- -------- -------- -------- -------- -------- ---------- -------- ----------
Engineered Systems
Printing & Identification 239,681 263,648 253,091 756,420 230,181 229,934 227,992 688,107 255,563 943,670
Industrials 337,314 328,784 317,471 983,569 343,015 363,157 351,404 1,057,576 341,667 1,399,243
------- ------- ------- ------- ------- ------- ------- --------- ------- ---------
576,995 592,432 570,562 1,739,989 573,196 593,091 579,396 1,745,683 597,230 2,342,913
------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
Fluids 399,062 405,838 412,822 1,217,722 340,236 351,511 352,018 1,043,765 355,508 1,399,273
------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
Refrigeration & Food 363,252 429,386 451,328 1,243,966 372,097 448,115 492,460 1,312,672 418,758 1,731,430
Equipment
Intra-segment eliminations (266) (319) (197) (782) (451) (133) (164) (748) (237) (985)
---- ---- ---- ----
Total consolidated revenue $1,622,273 $1,686,345 $1,707,763 $5,016,381 $1,715,501 $1,758,628 $1,787,582 $5,261,711 $1,694,600 $6,956,311
========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
NET EARNINGS
------------
Segment Earnings:
Energy $11,244 $(75) $13,279 $24,448 $52,305 $40,909 $48,726 $141,940 $31,250 $173,190
Engineered Systems 93,748 104,034 97,240 295,022 88,149 96,702 102,866 287,717 89,244 376,961
Fluids 46,047 54,033 66,178 166,258 54,634 70,168 74,911 199,713 62,404 262,117
Refrigeration & Food 38,161 63,230 64,111 165,502 36,150 65,732 76,665 178,547 42,752 221,299
Equipment
Total segments 189,200 221,222 240,808 651,230 231,238 273,511 303,168 807,917 225,650 1,033,567
Corporate expense / other 29,862 24,566 26,638 81,066 34,526 20,382 25,881 80,789 24,911 105,700
Interest expense, net 31,714 32,157 32,994 96,865 32,037 31,988 31,983 96,008 31,249 127,257
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Earnings from continuing 127,624 164,499 181,176 473,299 164,675 221,141 245,304 631,120 169,490 800,610
operations before provision
for income taxes
Provision for income taxes 28,268 46,209 51,092 125,569 47,485 65,507 58,821 171,813 32,916 204,729
------ ------ ------ ------- ------ ------ ------ ------- ------ -------
Earnings from continuing 99,356 118,290 130,084 347,730 117,190 155,634 186,483 459,307 136,574 595,881
operations
Earnings (loss) from - - - - 92,320 176,762 (385) 268,697 5,251 273,948
discontinued operations, net
Net earnings $99,356 $118,290 $130,084 $347,730 $209,510 $332,396 $186,098 $728,004 $141,825 $869,829
======= ======== ======== ======== ======== ======== ======== ======== ======== ========
SEGMENT OPERATING MARGIN
------------------------
Energy 4.0% - % 4.9% 3.0% 12.2% 11.2% 13.4% 12.2% 9.7% 11.7%
Engineered Systems 16.2% 17.6% 17.0% 17.0% 15.4% 16.3% 17.8% 16.5% 14.9% 16.1%
Fluids 11.5% 13.3% 16.0% 13.7% 16.1% 20.0% 21.3% 19.1% 17.6% 18.7%
Refrigeration & Food 10.5% 14.7% 14.2% 13.3% 9.7% 14.7% 15.6% 13.6% 10.2% 12.8%
Equipment
Total segment operating 11.7% 13.1% 14.1% 13.0% 13.5% 15.6% 17.0% 15.4% 13.3% 14.9%
margin
DEPRECIATION AND AMORTIZATION EXPENSE
-------------------------------------
Energy $34,160 $33,289 $32,605 $100,054 $34,427 $32,740 $31,858 $99,025 $42,754 $141,779
Engineered Systems 16,036 16,075 16,238 48,349 14,526 14,392 14,503 43,421 16,493 59,914
Fluids 20,511 20,981 20,833 62,325 13,848 13,648 13,367 40,863 15,215 56,078
Refrigeration & Food 16,728 16,881 16,146 49,755 16,458 16,406 16,609 49,473 16,601 66,074
Equipment
Corporate 1,169 868 901 2,938 923 841 837 2,601 643 3,244
Total depreciation and $88,604 $88,094 $86,723 $263,421 $80,182 $78,027 $77,174 $235,383 $91,706 $327,089
amortization expense
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2016 2015
---- ----
Q1 Q2 Q3 Q3 YTD Q1 Q2 Q3 Q3 YTD Q4 FY 2015
--- --- --- ------ --- --- --- ------ --- -------
BOOKINGS
--------
Energy $273,445 $246,021 $270,685 $790,151 $416,628 $345,079 $351,557 $1,113,264 $315,996 $1,429,260
-------- -------- -------- -------- -------- -------- -------- ---------- -------- ----------
Engineered Systems
Printing & Identification 242,569 266,490 248,443 757,502 235,617 224,203 226,756 686,576 250,639 937,215
Industrials 329,957 304,345 331,435 965,737 337,070 336,173 338,744 1,011,987 357,451 1,369,438
572,526 570,835 579,878 1,723,239 572,687 560,376 565,500 1,698,563 608,090 2,306,653
------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
Fluids 418,345 413,767 413,535 1,245,647 339,310 333,695 357,032 1,030,037 321,154 1,351,191
------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
Refrigeration & Food 411,367 468,661 429,134 1,309,162 419,659 486,793 430,681 1,337,133 379,967 1,717,100
Equipment
Intra-segment eliminations (90) (944) (245) (1,279) (628) (417) (385) (1,430) (486) (1,916)
--- ---- ---- ------ ---- ---- ---- ------ ---- ------
Total consolidated bookings $1,675,593 $1,698,340 $1,692,987 $5,066,920 $1,747,656 $1,725,526 $1,704,385 $5,177,567 $1,624,721 $6,802,288
========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
BACKLOG
-------
Energy $144,828 $129,873 $126,519 $212,060 $194,819 $156,631 $155,586
-------- -------- -------- -------- -------- -------- --------
Engineered Systems
Printing & Identification 102,640 104,509 101,190 108,151 103,403 100,476 98,288
Industrials 235,384 210,646 224,892 276,598 248,592 236,298 250,725
------- ------- ------- ------- ------- ------- -------
338,024 315,155 326,082 384,749 351,995 336,774 349,013
------- ------- ------- ------- ------- ------- -------
Fluids 286,457 315,786 318,246 259,504 240,389 236,608 243,459
------- ------- ------- ------- ------- ------- -------
Refrigeration & Food 303,479 332,312 309,462 337,084 373,193 307,351 247,352
Equipment
Intra-segment eliminations (36) (265) (252) (595) (354) (598) (808)
--- ---- ---- ---- ---- ---- ----
Total consolidated backlog $1,072,752 $1,092,861 $1,080,057 $1,192,802 $1,160,042 $1,036,766 $994,602
========== ========== ========== ========== ========== ========== ========
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
Earnings Per Share
------------------
2016 2015
---- ----
Q1 Q2 Q3 Q3 YTD Q1 Q2 Q3 Q3 YTD Q4 FY 2015
--- --- --- ------ --- --- --- ------ --- -------
Basic earnings (loss) per common share:
Continuing operations $0.64 $0.76 $0.84 $2.24 $0.72 $0.98 $1.20 $2.90 $0.88 $3.78
Discontinued operations - - - - 0.57 1.11 - 1.70 0.03 1.74
Net earnings $0.64 $0.76 $0.84 $2.24 $1.30 $2.10 $1.20 $4.59 $0.92 $5.52
Diluted earnings (loss) per common share:
Continuing operations $0.64 $0.76 $0.83 $2.22 $0.72 $0.97 $1.19 $2.87 $0.87 $3.74
Discontinued operations - - - - 0.57 1.10 - 1.68 0.03 1.72
Net earnings $0.64 $0.76 $0.83 $2.22 $1.28 $2.07 $1.19 $4.55 $0.91 $5.46
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:
Net earnings (loss):
Continuing operations $99,356 $118,290 $130,084 $347,730 $117,190 $155,634 $186,483 $459,307 $136,574 $595,881
Discontinued operations - - - - 92,320 176,762 (385) 268,697 5,251 273,948
Net earnings $99,356 $118,290 $130,084 $347,730 $209,510 $332,396 $186,098 $728,004 $141,825 $869,829
Average shares outstanding:
Basic 155,064 155,180 155,300 155,182 161,650 158,640 155,300 158,507 154,986 157,619
Diluted 156,161 156,595 156,798 156,562 163,323 160,398 156,560 160,112 156,254 159,172
Adjusted Earnings Per Share (Non-GAAP)
-------------------------------------
Earnings from continuing operations are adjusted by gains (losses) from discrete and other tax items and gain on disposition of business to derive
adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:
2016 2015
---- ----
Q1 Q2 Q3 Q3 YTD Q1 Q2 Q3 Q3 YTD Q4 FY 2015
--- --- --- ------ --- --- --- ------ --- -------
Adjusted earnings from continuing operations:
Earnings from continuing operations $99,356 $118,290 $130,084 $347,730 $117,190 $155,634 $186,483 $459,307 $136,574 $595,881
Gains (losses) from discrete and 7,348 (1,221) (304) 5,823 - - 8,131 8,131 9,382 17,513
other tax items
Gain on disposition of business 11,228 - - 11,228 - - - - - -
------ --- --- ------ --- --- --- --- --- ---
Adjusted earnings from continuing $80,780 $119,511 $130,388 $330,679 $117,190 $155,634 $178,352 $451,176 $127,192 $578,368
operations
Adjusted diluted earnings per common share:
Earnings from continuing operations $0.64 $0.76 $0.83 $2.22 $0.72 $0.97 $1.19 $2.87 $0.87 $3.74
Gains (losses) from discrete and 0.05 (0.01) - 0.04 - - 0.05 0.05 0.06 0.11
other tax items
Gain on disposition of business 0.07 - - 0.07 - - - - - -
Adjusted earnings from continuing $0.52 $0.76 $0.83 $2.11 $0.72 $0.97 $1.14 $2.82 $0.81 $3.63
operations
* Per share data may not add due to rounding.
DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)
Quarterly Cash Flow
-------------------
2016 2015
---- ----
Q1 Q2 Q3 Q3 YTD Q1 Q2 Q3 Q3 YTD Q4 FY 2015
--- --- --- ------ --- --- --- ------ --- -------
Net Cash Flows Provided By
(Used In):
Operating activities $133,413 $207,868 $231,665 $572,946 $131,332 $218,911 $282,213 $632,456 $316,603 $949,059
Investing activities (425,857) (69,415) (66,110) (561,382) 156,585 457,875 (33,454) 581,006 (615,584) (34,578)
Financing activities 178,507 (127,678) 98,491 149,320 (416,603) (608,329) (86,033) (1,110,965) 19,079 (1,091,886)
Quarterly Free Cash Flow (Non-GAAP)
----------------------------------
2016 2015
---- ----
Q1 Q2 Q3 Q3 YTD Q1 Q2 Q3 Q3 YTD Q4 FY 2015
--- --- --- ------ --- --- --- ------ --- -------
Cash flow from operating $133,413 $207,868 $231,665 $572,946 $131,332 $218,911 $282,213 $632,456 $316,603 $949,059
activities
Less: Capital expenditures (37,230) (35,422) (43,116) (115,768) (27,956) (43,807) (39,516) (111,279) (42,972) (154,251)
------- ------- ------- -------- ------- ------- ------- -------- ------- --------
Free cash flow $96,183 $172,446 $188,549 $457,178 $103,376 $175,104 $242,697 $521,177 $273,631 $794,808
======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Free cash flow as a 96.8% 145.8% 144.9% 131.5% 88.2% 112.5% 130.1% 113.5% 200.4% 133.4%
percentage of earnings from
continuing operations
Free cash flow as a 5.9% 10.2% 11.0% 9.1% 6.0% 10.0% 13.6% 9.9% 16.1% 11.4%
percentage of revenue
Revenue Growth Factors
----------------------
Three Months Ended September 30, 2016
-------------------------------------
Energy Engineered Fluids Refrigeration Total
Systems & Food
Equipment
Organic (decline) growth (24)% 1% (9)% (2)% (7)%
Acquisitions - % 3% 27% - % 6%
Dispositions - % (5)% - % (7)% (3)%
Currency translation (1)% (1)% (1)% - % (1)%
--- --- --- --- --- ---
(25)% (2)% 17% (9)% (5)%
==== === === === ===
Nine Months Ended September 30, 2016
------------------------------------
Energy Engineered Fluids Refrigeration Total
Systems & Food
Equipment
Organic (decline) growth (29)% 2% (7) 1% (7)%
%
Acquisitions - % 3% 25% - % 6%
Dispositions - % (4)% - % (6)% (3)%
Currency translation (1) (1) (1) - % (1)
% % % %
--- --- --- ---
(30) - % 17% (5)% (5)%
%
===
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 common share, free cash flow 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 common share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for gains or losses from discrete and other tax items and for gain on disposition of business. Adjusted diluted earnings per common share represents adjusted earnings from continuing operations divided by average diluted shares. Management believes this information is useful to investors to better understand the company's ongoing profitability and facilitates easier comparisons of the company's profitability to prior and future periods and to its peers. Free cash flow represents net cash provided by operating activities minus capital expenditures. Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock. Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of our revenue performance and trends between periods.
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SOURCE Dover
