DOV
$94.77
Dover
$.29
.31%
Earnings Details
2nd Quarter June 2017
Thursday, July 20, 2017 6:45:00 AM
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Summary

Dover Beats

Dover (DOV) reported 2nd Quarter June 2017 earnings of $1.04 per share on revenue of $2.0 billion. The consensus earnings estimate was $1.01 per share on revenue of $1.9 billion. The Earnings Whisper number was $1.02 per share. Revenue grew 18.2% on a year-over-year basis.

The company said it expects 2017 non-GAAP earnings of $4.23 to $4.33 per share on revenue of $7.60 billion to $7.74 billion. The company's previous guidance was earnings of $4.05 to $4.20 per share on revenue of $7.54 billion to $7.67 billion and the current consensus earnings estimate is $4.16 per share on revenue of $7.71 billion for the year ending December 31, 2017.

Dover Corp owns and operates a portfolio of manufacturing companies providing components and equipment, specialty systems and support services for a variety of applications in the industrial products, engineered systems, fluid management.

Results
Reported Earnings
$1.04
Earnings Whisper
$1.02
Consensus Estimate
$1.01
Reported Revenue
$1.99 Bil
Revenue Estimate
$1.94 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Dover Reports Second Quarter 2017 Results And Raises Full Year Revenue And EPS Guidance

Dover (DOV) announced today that for the second quarter ended June 30, 2017, revenue was $2.0 billion, an increase of 18% from the prior year. The increase in the quarter was driven by organic growth of 10% and acquisition growth of 12%, partially offset by a 3% impact from dispositions and an unfavorable impact from foreign exchange ("FX") of 1%. Net earnings were $164.1 million, an increase of 39% as compared to $118.3 million for the prior year period. Diluted net earnings per share ("EPS") for the second quarter ended June 30, 2017, were $1.04, compared to $0.76 EPS in the prior year period, representing an increase of 37%. EPS for the second quarter ended June 30, 2017, and June 30, 2016, include restructuring costs of $0.01 EPS and $0.04 EPS, respectively.

Dover’s President and Chief Executive Officer, Robert A. Livingston, said, "The second quarter reflected the continuation of a trend that began to develop late last year, namely improving global markets and strong results reflecting solid execution by our teams. In all, we achieved revenue growth and margin expansion that exceeded our forecasts.

"All of our segments posted sequential increases in revenue and margin, which was most notable in Refrigeration & Food Equipment and Fluids. In addition, we benefited from strong broad-based activity in Engineered Systems, and also from higher than expected U.S. rig count and increased well completions, which resulted in significant growth in Energy.

"As a result of our strong second quarter performance and increased confidence in the back half of the year, we are raising our full year guidance for revenue and EPS. Our revised guidance is based on full year revenue growth of 12% to 14% versus our prior forecast of 11% to 13%, and includes organic growth of 5% to 7%, which has been increased one percentage point. Our revenue forecast also includes acquisition growth of 10%, a 2% impact from dispositions, and a 1% headwind from FX, all of which remain unchanged from our prior forecast. Lastly, we now expect full year diluted earnings per share to be in the range of $4.23 to $4.33, versus our prior guidance of $4.05 to $4.20."

Dover will host a webcast of its second quarter 2017 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 20, 2017. The webcast can be accessed on the Dover website at dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover’s second quarter results and its operating segments can be found on the Company’s website.

About Dover:

Dover is a diversified global manufacturer with annual revenue exceeding $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through four operating segments: Engineered Systems, Fluids, Refrigeration & Food Equipment, and Energy. 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 29,000 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 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 concern future events and 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 address matters that are uncertain, including, by way of example only: operating and strategic plans, future sales, earnings, cash flows, margins, organic growth, growth from acquisitions, restructuring charges, cost structure, capital expenditures, capital allocation, capital structure, dividends, cash flows, exchange rates, tax rates, interest rates, interest expense, changes in operations and trends in industries in which our businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. 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, economic conditions generally and changes in economic conditions globally and in the markets and industries served by our businesses, including oil and gas activity and U.S. industrials activity; conditions and events affecting domestic and global financial and capital markets; oil and natural gas demand, production growth, and prices; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; risks related to our international operations and the ability of our businesses to expand into new geographic markets; the impact of interest rate and currency exchange rate fluctuations; increased competition and pricing pressures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of our businesses to adapt to technological developments; the ability of our 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; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; domestic and foreign governmental and public policy changes or developments, including import/export laws and sanctions, tax policies, environmental regulations and conflict minerals disclosure requirements; increases in the cost of raw materials; our ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures, and to realize anticipated earnings and synergies from acquired businesses and joint ventures; our 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 legal compliance risks and litigation, including product recalls; indemnification obligations related to acquired or divested businesses; cybersecurity and privacy risks; protection and validity of patent and other intellectual property rights; goodwill or intangible asset impairment charges; a downgrade in our credit ratings which, among other matters, could make obtaining financing more difficult and costly; and work stoppages, union and works council campaigns and other labor disputes which could impact our productivity. 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 - SECOND QUARTER 2017
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2017
2016
2017
2016
Revenue
$
1,993,351
$
1,686,345
$
3,806,723
$
3,308,618
Cost of goods and services
1,243,905
1,055,132
2,396,103
2,088,141
Gross profit
749,446
631,213
1,410,620
1,220,477
Selling, general, and administrative expenses 484,046
437,411
969,336
880,859
Operating earnings
265,400
193,802
441,284
339,618
Interest expense
36,932
33,779
73,341
67,097
Interest income
(2,338)
(1,622)
(4,918)
(3,226)
Gain on sale of businesses
--
(801)
(90,093)
(12,029)
Other expense (income), net
15
(2,053)
191
(4,347)
Earnings before provision for income taxes
230,791
164,499
462,763
292,123
Provision for income taxes
66,733
46,209
126,458
74,477
Net earnings
$
164,058
$
118,290
$
336,305
$
217,646
Net earnings per share:
Basic
$
1.05
$
0.76
$
2.16
$
1.40
Diluted
$
1.04
$
0.76
$
2.14
$
1.39
Weighted average shares outstanding:
Basic
155,703
155,180
155,622
155,122
Diluted
157,513
156,595
157,457
156,414
Dividends paid per common share
$
0.44
$
0.42
$
0.88
$
0.84
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2017
2016
Q1
Q2
Q2 YTD
Q1
Q2
Q2 YTD
Q3
Q4
FY 2016
REVENUE
Engineered Systems
Printing & Identification
$
249,238
$
278,220
$
527,458
$
239,681
$
263,648
$
503,329
$
253,091
$
266,082
$
1,022,502
Industrials
358,397
377,210
735,607
337,314
328,784
666,098
317,471
360,212
1,343,781
607,635
655,430
1,263,065
576,995
592,432
1,169,427
570,562
626,294
2,366,283
Fluids
525,195
553,259
1,078,454
399,062
405,838
804,900
412,822
482,852
1,700,574
Refrigeration & Food
356,834
426,304
783,138
363,252
429,386
792,638
451,328
376,373
1,620,339
Equipment
Energy
324,088
359,168
683,256
283,230
259,008
542,238
273,248
292,952
1,108,438
Intra-segment
(380)
(810)
(1,190)
(266)
(319)
(585)
(197)
(510)
(1,292)
eliminations
Total consolidated
$
1,813,372
$
1,993,351
$
3,806,723
$
1,622,273
$
1,686,345
$
3,308,618
$
1,707,763
$
1,777,961
$
6,794,342
revenue
NET EARNINGS
Segment Earnings:
Engineered Systems
$
174,398
$
106,820
$
281,218
$
93,748
$
104,034
$
197,782
$
97,240
$
96,807
$
391,829
Fluids
52,639
73,558
126,197
46,047
54,033
100,080
66,178
34,663
200,921
Refrigeration & Food
33,562
65,829
99,391
38,161
63,230
101,391
64,111
118,126
283,628
Equipment
Energy
41,691
53,368
95,059
11,244
(75)
11,169
13,279
30,888
55,336
Total segments
302,290
299,575
601,865
189,200
221,222
410,422
240,808
280,484
931,714
Corporate expense /
36,489
34,190
70,679
29,862
24,566
54,428
26,638
31,674
112,740
other
Interest expense
36,409
36,932
73,341
33,318
33,779
67,097
33,789
35,515
136,401
Interest income
(2,580)
(2,338)
(4,918)
(1,604)
(1,622)
(3,226)
(795)
(2,738)
(6,759)
Earnings before
231,972
230,791
462,763
127,624
164,499
292,123
181,176
216,033
689,332
provision for income
taxes
Provision for income
59,725
66,733
126,458
28,268
46,209
74,477
51,092
54,871
180,440
taxes
Net earnings
$
172,247
$
164,058
$
336,305
$
99,356
$
118,290
$
217,646
$
130,084
$
161,162
$
508,892
SEGMENT MARGIN
Engineered Systems
28.7
% 16.3
% 22.3
%
16.2
% 17.6
% 16.9
%
17.0
% 15.5
% 16.6
%
Fluids
10.0
% 13.3
% 11.7
%
11.5
% 13.3
% 12.4
%
16.0
% 7.2
% 11.8
%
Refrigeration & Food
9.4
% 15.4
% 12.7
%
10.5
% 14.7
% 12.8
%
14.2
% 31.4
% 17.5
%
Equipment
Energy
12.9
% 14.9
% 13.9
%
4.0
% --
% 2.1
%
4.9
% 10.5
% 5.0
%
Total segment
16.7
% 15.0
% 15.8
%
11.7
% 13.1
% 12.4
%
14.1
% 15.8
% 13.7
%
operating margin
DEPRECIATION AND AMORTIZATION EXPENSE
Engineered Systems
$
19,575
$
20,259
$
39,834
$
16,036
$
16,075
$
32,111
$
16,238
$
25,597
$
73,946
Fluids
28,503
29,473
57,976
20,511
20,981
41,492
20,833
22,899
85,224
Refrigeration & Food
15,035
14,522
29,557
16,728
16,881
33,609
16,146
15,263
65,018
Equipment
Energy
31,365
32,000
63,365
34,160
33,289
67,449
32,605
31,366
131,420
Corporate
1,120
1,164
2,284
1,169
868
2,037
901
2,193
5,131
Total depreciation and
$
95,598
$
97,418
$
193,016
$
88,604
$
88,094
$
176,698
$
86,723
$
97,318
$
360,739
amortization expense
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2017
2016
Q1
Q2
Q2 YTD
Q1
Q2
Q2 YTD
Q3
Q4
FY 2016
BOOKINGS
Engineered Systems
Printing & Identification
$
256,665
$
282,157
$
538,822
$
242,569
$
266,490
$
509,059
$
248,443
$
268,951
$
1,026,453
Industrials
419,455
367,352
786,807
329,957
304,345
634,302
331,435
374,073
1,339,810
676,120
649,509
1,325,629
572,526
570,835
1,143,361
579,878
643,024
2,366,263
Fluids
565,987
554,656
1,120,643
418,345
413,767
832,112
413,535
457,283
1,702,930
Refrigeration & Food
438,576
466,276
904,852
411,367
468,661
880,028
429,134
336,645
1,645,807
Equipment
Energy
348,317
352,617
700,934
273,445
246,021
519,466
270,685
299,771
1,089,922
Intra-segment eliminations
(1,149)
(529)
(1,678)
(90)
(944)
(1,034)
(245)
(308)
(1,587)
Total consolidated bookings $
2,027,851
$
2,022,529
$
4,050,380
$
1,675,593
$
1,698,340
$
3,373,933
$
1,692,987
$
1,736,415
$
6,803,335
BACKLOG
Engineered Systems
Printing & Identification
$
109,347
$
115,763
$
102,640
$
104,509
$
101,190
$
98,924
Industrials
310,008
301,474
235,384
210,646
224,892
252,780
419,355
417,237
338,024
315,155
326,082
351,704
Fluids
371,717
378,774
286,457
315,786
318,246
331,238
Refrigeration & Food
341,530
382,598
303,479
332,312
309,462
258,329
Equipment
Energy
156,255
147,568
144,828
129,873
$
126,519
$
134,181
Intra-segment eliminations
(729)
(378)
(36)
(265)
(252)
(102)
Total consolidated backlog
$
1,288,128
$
1,325,799
$
1,072,752
$
1,092,861
$
1,080,057
$
1,075,350
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
Earnings Per Share
2017
2016
Q1
Q2
Q2 YTD
Q1
Q2
Q2 YTD
Q3
Q4
FY 2016
Net earnings per share:
Basic
$
1.11
$
1.05
$
2.16
$
0.64
$
0.76
$
1.40
$
0.84
$
1.04
$
3.28
Diluted
$
1.09
$
1.04
$
2.14
$
0.64
$
0.76
$
1.39
$
0.83
$
1.03
$
3.25
Net earnings and weighted average shares used in calculated earnings per share amounts are as follows:
Net earnings
$
172,247
$
164,058
$
336,305
$
99,356
$
118,290
$
217,646
$
130,084
$
161,162
$
508,892
Weighted average shares outstanding:
Basic
155,540
155,703
155,622
155,064
155,180
155,122
155,300
155,376
155,231
Diluted
157,399
157,513
157,457
156,161
156,595
156,414
156,798
156,816
156,636
Adjusted Earnings Per Share (Non-GAAP)
Net earnings are adjusted by gains on disposition of businesses and a product recall charge to derive adjusted net earnings and adjusted diluted earnings per
common share as follows:
2017
2016
Q1
Q2
Q2 YTD
Q1
Q2
Q2 YTD
Q3
Q4
FY 2016
Adjusted net earnings:
Net earnings
$
172,247
$
164,058
$
336,305
$
99,356
$
118,290
$
217,646
$
130,084
$
161,162
$
508,892
Gain on dispositions, pre-tax
(88,402)
--
(88,402)
(11,853)
--
(11,853)
--
(85,035)
(96,888)
Gain on dispositions, tax impact 1
26,682
--
26,682
625
--
625
--
28,060
28,685
Product recall charge, pre-tax
--
--
--
--
--
--
--
23,150
23,150
Product recall charge, tax impact 1 --
--
--
--
--
--
--
(8,913)
(8,913)
Adjusted net earnings
$
110,527
$
164,058
$
$274,585
$
88,128
$
118,290
$
206,418
$
130,084
$
118,424
$
454,926
Adjusted diluted earnings per common share:
Net earnings
$
1.09
$
1.04
$
2.14
$
0.64
$
0.76
$
1.39
$
0.83
$
1.03
$
3.25
Gain on dispositions, pre-tax
(0.56)
--
(0.56)
(0.08)
--
(0.08)
--
(0.54)
(0.62)
Gain on dispositions, tax impact
0.17
--
0.17
--
--
--
--
0.18
0.18
Product recall charge, pre-tax
--
--
--
--
--
--
--
0.15
0.15
Product recall charge, tax impact
--
--
--
--
--
--
--
(0.06)
(0.06)
Adjusted net earnings
$
0.70
$
1.04
$
1.75
$
0.56
$
0.76
$
1.31
$
0.83
$
0.76
$
2.90
1 Gain on dispositions and the product recall charge were tax effected using the statutory tax rates in the specific jurisdiction for each period.
* Per share data may be impacted by rounding.
DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)
Quarterly Cash Flow
2017
2016
Q1
Q2
Q2 YTD
Q1
Q2
Q2 YTD
Q3
Q4
FY 2016
Net Cash Flows Provided By (Used In):
Operating activities
$
78,071
$
155,877
$
233,948
$
133,413
$
207,868
$
341,281
$
231,665
$
289,029
$
861,975
Investing activities
81,780
(51,137)
30,643
(425,857)
(69,415)
(495,272)
(66,110)
(942,461)
(1,503,843)
Financing activities
(93,293)
(216,273)
(309,566)
178,507
(127,678)
50,829
98,491
484,288
633,608
Quarterly Free Cash Flow (Non-GAAP)
2017
2016
Q1
Q2
Q2 YTD
Q1
Q2
Q2 YTD
Q3
Q4
FY 2016
Cash flow from operating activities
$
78,071
$
155,877
$
233,948
$
133,413
$
207,868
$
341,281
$
231,665
$
289,029
$
861,975
Less: Capital expenditures
(42,259)
(48,335)
(90,594)
(37,230)
(35,422)
(72,652)
(43,116)
(49,437)
(165,205)
Plus: Cash taxes paid from gains on dispositions1 --
42,955
42,955
--
435
435
217
217
869
Free cash flow
$
35,812
$
150,497
$
186,309
$
96,183
$
172,881
$
269,064
$
188,766
$
239,809
$
697,639
Free cash flow as a percentage of revenue
2.0
% 7.5
% 4.9
%
5.9
% 10.3
% 8.1
% 11.1
% 13.5
% 10.3
%
Free cash flow as a percentage of net earnings
20.8
% 91.7
% 55.4
%
96.8
% 146.2
% 123.6
% 145.1
% 148.8
% 137.1
%
1 Federal and state tax payments related to the gains on the dispositions of Performance Motorsports in 2017 and Tipper Tie and Texas Hydraulics in 2016.
Revenue Growth Factors
Three Months Ended June 30, 2017
Engineered Systems
Fluids
Refrigeration & Food Equipment
Energy
Total
Organic
5
%
4
%
5
%
39
%
10
%
Acquisitions
10
%
34
%
--
%
--
%
12
%
Dispositions
(4)
%
--
%
(6)
%
--
%
(3) %
Currency translation
(1)
%
(2) %
--
%
(1) %
(1) %
Total *
11
%
36
%
(1)
%
38
%
18
%
* Totals may be impacted by rounding.
Six Months Ended June 30, 2017
Engineered Systems
Fluids
Refrigeration & Food Equipment
Energy
Total
Organic
4
%
1
%
5
%
39
%
7
%
Acquisitions
9
%
35
%
--
%
--
%
12
%
Dispositions
(4)
%
--
%
(6)
%
--
%
(3) %
Currency translation
(1)
%
(2) %
--
%
(1) %
(1) %
Total *
8
%
34
%
(1)
%
38
%
15
%
* Totals may be impacted by rounding.

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 net earnings, 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 net earnings, 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 net earnings represents net earnings adjusted for gains on disposition of businesses and a product recall charge. Adjusted diluted earnings per common share represents adjusted net earnings 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, plus the add back of cash taxes paid for gains on dispositions (which reflect tax payments on disposition-related investing activities). 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 and dispositions, provides a useful comparison of our revenue performance and trends between periods.

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SOURCE Dover Corporation

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