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January 26, 2016 7:01 AM EST


 
 
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________ 

FORM 8-K
________________________________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2016
________________________________
 
DOVER CORPORATION
(Exact name of registrant as specified in its charter)
________________________________
 

State of Delaware
1-4018
53-0257888
(State or other jurisdiction of incorporation)
 (Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
3005 Highland Parkway
 
 
Downers Grove, Illinois
 
60515
(Address of principal executive offices)
 
(Zip Code)
(630) 541-1540
(Registrant’s telephone number, including area code)
 
______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 
 
 





Item 2.02 Results of Operations and Financial Condition.
 
On January 26, 2016, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter and year ended December 31, 2015; and (ii) posted on its website at
http://www.dovercorporation.com the presentation slides attached hereto as Exhibit 99.2 for the quarter and year ended December 31, 2015.
 
The information in this Current Report on Form 8-K, including exhibits, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be incorporated by reference into any of Dover’s filings with the SEC under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished as part of this report:
 
99.1 Dover Corporation Press Release dated January 26, 2016.
99.2 Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com.





SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
Date:
January 26, 2016
DOVER CORPORATION
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
By:
/s/ Ivonne M. Cabrera
 
 
 
 
Ivonne M. Cabrera
 
 
 
 
Senior Vice President, General Counsel & Secretary
 
 
 
 
 
 







EXHIBIT INDEX
Number
 
Exhibit
99.1
 
Press Release of Dover Corporation dated January 26, 2016
 
 
 
99.2
 
Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com





Exhibit 99.1

Investor Contact:
 
Media Contact:
Paul Goldberg
 
Adrian Sakowicz
Vice President - Investor Relations
 
Vice President - Communications
(212) 922-1640
 
(630) 743-5039
 

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

Downers Grove, Illinois, January 26, 2016 — 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.



Earnings Conference Call Fourth Quarter 2015 January 26, 2016 – 9:00am CT

 
2 Forward looking statements and non-GAAP measures We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties and risks. We caution everyone to be guided in their analysis of Dover Corporation by referring to the documents we file from time to time with the SEC, including our Form 10-K for 2014, for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. We would also direct your attention to our website, www.dovercorporation.com, where considerably more information can be found. This document contains non-GAAP financial information. Reconciliations of non-GAAP measures are included either in this presentation or Dover’s earnings release and investor supplement for the fourth quarter and full year 2015, which are available on our website. 2

 
3 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Q1* Q2 Q3* Q4* Q1 Q2 Q3* Q4* Q4 2015 Performance Adjusted Earnings Per Share* (continuing operations) Q4 Q4/Q4 * Excludes discrete & other tax benefits of $0.01 in Q1 2014, $0.03 in Q3 2014, $0.02 in Q4 2014, $0.05 in Q3 2015 and $0.06 in Q4 2015 (b) See Press Release for free cash flow reconciliation 3 Quarterly Comments 2014 2015  Revenue impacted by weak global macros, FX, and tough oil & gas markets, partially offset by acquisition growth  US activity declined, largely driven by oil & gas markets and tough comps in retail refrigeration. Asian and European activity softened on reduced capex spending  Segment margin impacted by lower volume and acquisition- related costs, partially offset by productivity and the net benefits of prior period restructuring  Bookings decline largely driven by oil & gas exposure and FX  Book-to-bill of 0.96 Note: Q4 2014 includes restructuring and other costs of $0.17; includes restructuring costs of $0.10 in Q1 2015, $0.01 in Q2 2015, $0.05 in Q3 2015 and $0.08 in Q4 2015 Revenue $1.7B -14% $7.0B -10% Adj. EPS (cont.) $0.81 -20% $3.63 -20% Bookings $1.6B -13% $6.8B -12% Seg. Margin 13.3% -150 bps 14.9% -240 bps Adj. Seg. Margin (a) 14.3% -230 bps 15.7% -220 bps Organic Rev. -12% -10% Acq. Growth 2% 4% FCF (b) $274M -29% $795M 1% FY FY/FY (a) Adjusted for $16.5 million of restructuring in Q4 2015 and $55.2 million for FY 2015, and $37.1 million in Q4 2014 and $44.8 million for FY 2014

 
4 Revenue Q4 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -40% 4% -6% -6% -12% Acquisitions - 3% 5% 1% 2% Currency -1% -6% -5% -2% -4% Total -41% 1% -6% -7% (a) -14% (a) FY 2015 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Organic -34% 3% 1% -8% -10% Acquisitions 9% 1% 2% 1% 4% Currency -1% -6% -5% -2% -4% Total -26% -2% -2% -9% (a) -10% (a) (a) Adjusted for the impact of the disposition of a product line in Refrigeration & Food Equipment in Q4 2015

 
5 Printing & ID Industrial $339 $357 $352 $316 $227 $251 $357 $321 $406 $365 $0 $200 $400 $600 $800 DE Q3 DE Q4 DES Q3 DES Q4 DF Q3 DF Q4 DRE Q3 DRE Q4 Sequential Results – Q3 2015 → Q4 2015 5 $351 $342 $364 $323 $228 $255 $352 $356 $459 $402 $0 $200 $400 $600 $800 DE Q3 DE Q4 DES Q3 DES Q4 DF Q3 DF Q4 DRE Q3 DRE Q4 Revenue -11% -10%* -12%* -10% +1% +8% +3% -10% Bookings * Adjusted for the impact of the disposition of a product line in Refrigeration & Food Equipment in Q4 2015 * * * *

 
6 Energy  Revenue decline driven by significantly lower North American oil & gas markets – Middle East markets holding up well – Bearings & Compression’s energy-related markets remain weak on slower OEM build rates  Adjusted margin of 10.8% reflects negative product mix and price pressure, partially offset by the benefits of restructuring  Bookings decline of 41% driven by macro oil & gas trends  Book-to-bill at 0.98 6 Q4 2015 Q4 2014 % Change Revenue $323 $550 -41% Earnings $ 31 $105 -70% Margin 9.7% 19.1% -940 bps Adj. Earnings* $ 35 $111 -68% Adj. Margin* 10.8% 20.2% -940 bps Bookings $316 $535 -41% Revenue by End-Market % of Q4 Revenue Y / Y Growth Drilling & Production 68% -45% Bearings & Compression 21% -23% Automation 11% -41% $ in millions * Q4 2015 and Q4 2014 earnings adjusted for $4M and $6M in restructuring costs, respectively

 
7 Engineered Systems  Solid organic revenue growth, partially offset by impact of FX – 8% organic growth in Printing & Identification reflects strong digital printing markets and solid NA marking and coding markets – Industrial’s organic growth of 1% was led by Environmental Solutions  Adjusted margin of 15.7% reflects the impact of a business consolidation, offset by the benefits of completed restructuring  Bookings decline primarily reflects impact of FX, up 1% organically  Book-to-bill of 1.02 7 Q4 2015 Q4 2014 % Change Revenue $597 $592 1% Earnings $ 89 $ 93 -4% Margin 14.9% 15.7% -80 bps Adj. Earnings* $ 94 $ 97 -3% Adj. Margin* 15.7% 16.4% -70 bps Bookings $608 $623 -2% Revenue by End-Market % of Q4 Revenue Y / Y Growth Printing & Identification 43% 3% Industrial 57% -1% $ in millions * Q4 2015 and Q4 2014 earnings adjusted for $5M and $4M in restructuring costs, respectively

 
8 Fluids  Revenue decline driven by oil & gas related exposure, project timing and FX: – Solid fluid transfer businesses up 1% organically – Pumps reflects oil & gas market weakness  Improved margin reflects strong execution and positive business mix  Margin adjusted for acquisitions and related purchase accounting and deal costs was 19.3%  Bookings decline primarily related to reduced year-end capex activity, and the impact of oil & gas exposure in our pump markets  Book-to-bill at 0.90 8 Q4 2015 Q4 2014 % Change Revenue $356 $377 -6% Earnings $ 62 $ 63 -1% Margin 17.6% 16.7% 90 bps Bookings $321 $346 -7% Revenue by End-Market % of Q4 Revenue Y / Y Growth Pumps 44% -8% Fluid Transfer 56% -4% $ in millions

 
9 Refrigeration & Food Equipment  Adjusted revenue decline primarily reflects anticipated reduced volume from a key retail refrigeration customer – Within Food Equipment, can- shaping equipment results were improved  Adjusted margin reflects the impact of lower volume, partially offset by the benefits of prior restructuring  Bookings growth primarily driven by a 20% improvement in orders from core refrigeration customers at Hillphoenix, partially offset by order timing for can-shaping equipment  Book-to-bill at 0.91 9 Q4 2015 Q4 2014 % Change Revenue $419 $459 -9% Adj. Revenue(1) $402 $433 -7% Earnings $ 43 $ 31 38% Margin 10.2% 6.7% 350 bps Adj. Earnings(2) $ 49 $ 56 -13% Adj. Margin(2) 11.7% 12.2% -50 bps Bookings $380 $368 3% Revenue by End-Market % of Q4 Revenue Y / Y Growth Refrigeration 74% -11% Food Equipment 26% -3% $ in millions (2) Q4 2015 and Q4 2014 earnings adjusted for $6M and $25M in restructuring costs, respectively (1) Adjusted for the impact of the disposition of a product line in Refrigeration & Food Equipment in Q4 2015. $17M in Q4 2015 and $26M in Q4 2014.

 
10 Q4 2015 Overview 10 Q4 2015 Net Interest Expense $31 million, in-line with forecast Corporate Expense $25 million, down $5 million from last year; reflects continuing cost management initiatives Effective Tax Rate (ETR) Q4 rate was 25.0%, excluding discrete tax benefits of $0.06 cents. Rate reflects the benefits from passage of the Tax Relief Extension Act Capex $43 million, generally in-line with expectations Share Repurchases No activity

 
11 FY 2016 Guidance  Revenue – Adjusted organic revenue(1): (4%) – (1%) – Completed acquisitions: ≈ 7% – FX impact: (2%) – Total revenue: 1% - 4%  Corporate expense: ≈ $120 million  Interest expense: ≈ $128 million  Full-year tax rate: ≈ 28%  Capital expenditures: ≈ 2.3% of revenue  FY free cash flow: ≈ 11% of revenue 2016 adjusted organic growth rate Energy (14% - 11%) Engineered Systems 1% - 3% (1) Fluids (1%) - 2% Refrigeration & Food Equipment 2% - 4% (1) Total organic (4% - 1%) (1) Acquisitions ≈ 7% (2) FX Impact (2%) Total revenue 1% - 4% (2) Reflects completed acquisitions (1) Adjusted for the impact of Q4 2015 disposition in Refrigeration & Food Equipment and a pending disposition in Engineered Systems. On an un- adjusted basis, expected 2016 organic growth is (4%) – (2%) in Refrigeration & Food Equipment, (3%) – (1%) in Engineered Systems, and (7%) – (4%) for total Dover

 
12 2016F EPS Guidance – Bridge  2015 EPS – Continuing Ops (GAAP) $ 3.74 – Less 2015 tax items(1): (0.11) – Less dispositions(2): (0.08)  2015 Adjusted EPS $ 3.55 – Net restructuring(3): 0.15 - 0.17 – Performance including restructuring benefits(4): 0.26 - 0.40 – Compensation & investment: (0.28 - 0.26) – Acquisitions(5): ≈ 0.18 – Shares(6): ≈ 0.08 – Interest / Corp. / Tax rate / Other (net): (0.09 - 0.07)  2016F EPS – Continuing Ops $3.85 - $4.05 (1) $0.05 in Q3 2015 and $0.06 in Q4 2015 (5) Deals completed (6) Based on carryover benefit from 2015 share repurchase activity (3) Includes restructuring costs of $0.25 in FY 2015 and approximately $0.08 - $0.10 in FY 2016 (4) Includes restructuring benefits of $0.23- $0.24 (2) Reflecting the Q4 2015 disposition of a product line in Refrigeration & Food Equipment and the pending disposition of a business in Engineered Systems

 

 

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