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Press release from PR Newswire

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

Thursday, October 17, 2013

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

07:00 EDT Thursday, October 17, 2013

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 discreteand 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

For further information: Paul Goldberg, Vice President - Investor Relations, (212) 922-1640

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