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Form 8-K DOVER Corp For: Jul 21

July 21, 2016 6:45 AM EDT


 
 
 
 
 

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): July 21, 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 July 21, 2016, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended June 30, 2016; and (ii) posted on its website at
http://www.dovercorporation.com the presentation slides attached hereto as Exhibit 99.2 for the quarter ended June 30, 2016.
 
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 July 21, 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:
July 21, 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 July 21, 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 SECOND QUARTER 2016 RESULTS AND UPDATES FULL YEAR GUIDANCE

Reports quarterly revenue of $1.7 billion, a decrease of 4% from the prior year
Delivers quarterly diluted earnings per share from continuing operations of $0.76, including second quarter restructuring costs of $0.04, deal costs of $0.02, and one-time costs of $0.04
Expects full year organic revenue to decline 6% to 8%, versus prior forecast of a 5% to 8% decline
Reduces full year 2016 diluted earnings per share from continuing operations to now be in the range of $3.35 to $3.45, including approximately $0.18 of restructuring costs, $0.05 of deal costs, and $0.04 of one-time costs
Believes the second quarter will mark the low point of 2016 Energy segment performance

Downers Grove, Illinois, July 21, 2016 — Dover (NYSE: DOV) announced today that for the second quarter ended June 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 $118.3 million, a decrease of 24% as compared to $155.6 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the second quarter ended June 30, 2016, were $0.76, compared to $0.97 EPS in the prior year period, representing a decrease of 22%. EPS from continuing operations for the second quarter of 2016 includes discrete tax costs of approximately $0.01, deal costs of $0.02, and one-time costs of $0.04. EPS for the second quarter ended June 30, 2016, and 2015, also includes restructuring costs of $0.04 EPS and $0.01 EPS, respectively.

Revenue for the six months ended June 30, 2016, was $3.3 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 six months ended June 30, 2016, were $217.6 million, a decrease of 20% as compared to $272.8 million for the prior year period. Diluted EPS for the six months ended June 30, 2016, was $1.39, compared to $1.69 EPS in the prior year period, representing a decrease of 18%. EPS from continuing operations for the six months ended June 30, 2016, includes discrete tax benefits of $0.04, a gain on disposition of $0.07, deal costs of $0.02, and one-time costs of $0.04. Excluding discrete tax benefits and the gain on disposition, adjusted EPS from continuing operations decreased 24% to $1.28 from a comparable EPS of $1.69 in the prior year period. EPS for the six months ended June 30, 2016, and 2015, also includes restructuring costs of $0.11 EPS and $0.12 EPS, respectively.






Robert A. Livingston, Dover's President and Chief Executive Officer, said, “Our second quarter results, excluding deal costs and certain one-time items, were generally in-line with our expectations, but disappointing nonetheless. These results included deal costs of approximately $5 million, or $0.02 EPS, and one-time items of approximately $7 million, or $0.04 EPS, which included costs resulting from our in-quarter decision to suspend production for two weeks at several facilities in our Energy segment, as well as other costs. In addition, our results included $9 million, or $0.04 EPS, of restructuring costs.

“While our Energy businesses continued to be challenged by weak market dynamics, we believe the second quarter will mark the low point of our 2016 performance in our Energy segment. The continued stabilization of North American rig count and constructive oil prices positions us for modestly improved results in the back half of 2016, and growth in 2017.

“The markets served by Engineered Systems and Refrigeration & Food Equipment remained solid, resulting in organic growth of 2% and 1%, respectively. Our Fluids segment was impacted by direct oil & gas exposure, lower capital spending from integrated energy customers, and project timing, resulting in an organic decline of 8%.
 
“While there are positive indicators in several areas, we are slightly reducing our full year expectations for Refrigeration & Food Equipment and Fluids to account for project timing and continued headwinds. In Refrigeration & Food Equipment, we anticipate certain large can shaping equipment orders and shipments will slip into 2017. Within Fluids, we expect continued softness in our oil & gas related markets.

“We now expect full year revenue to decline approximately 3% to 5% as compared to our prior forecast of a revenue decline of 2% to 5%. Within this forecast, organic revenue is expected to decline 6% to 8%, versus an organic decline of 5% to 8% in our prior forecast. Our forecast for acquisitions, net of dispositions, of 4%, and the unfavorable impact of FX of 1%, is unchanged. In total, full year EPS is expected to be in the range of $3.35 to $3.45, as compared to the prior forecast of $3.51 to $3.66. The reduction of $0.19, at the mid-point, is comprised of one-time items of $0.04 EPS, second quarter deal costs of $0.02 EPS, forecasted third quarter deal costs of $0.03 EPS, as well as the combined impact of lower revenue, reduced corporate expense, and a lower tax rate. Also included in this forecast are full year restructuring costs of $0.18, the gain on a disposition of $0.07 and $0.04 of discrete tax benefits.”

Net earnings for the second quarter ended June 30, 2016, were $118.3 million, or $0.76 EPS, compared to net earnings of $332.4 million, or $2.07 EPS, for the same period of 2015, which included earnings from discontinued operations of $176.8 million, or $1.10 EPS. Second quarter 2015 earnings from discontinued operations included a gain of $177.8 million, or $1.11 EPS, resulting from the disposition of a business held for sale.

Net earnings for the six months ended June 30, 2016, were $217.6 million, or $1.39 EPS, compared to net earnings of $541.9 million, or $3.35 EPS, for the same period of 2015, which included earnings from discontinued operations of $269.1 million, or $1.66 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.64 EPS, resulting from the disposition of two businesses held for sale.

Dover will host a webcast of its second quarter 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 21, 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 second 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 of 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 - SECOND QUARTER 2016

DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$
1,686,345

 
$
1,758,628

 
$
3,308,618

 
$
3,474,129

Cost of goods and services
1,055,132

 
1,104,060

 
2,088,141

 
2,192,402

Gross profit
631,213

 
654,568

 
1,220,477

 
1,281,727

Selling and administrative expenses
437,411

 
402,695

 
880,859

 
837,329

Operating earnings
193,802

 
251,873

 
339,618

 
444,398

Interest expense, net
32,157

 
31,988

 
63,871

 
64,025

Other income, net
(2,854
)
 
(1,256
)
 
(16,376
)
 
(5,443
)
Earnings before provision for income taxes and discontinued operations
164,499

 
221,141

 
292,123

 
385,816

Provision for income taxes
46,209

 
65,507

 
74,477

 
112,992

Earnings from continuing operations
118,290

 
155,634

 
217,646

 
272,824

Earnings from discontinued operations, net

 
176,762

 

 
269,082

Net earnings
$
118,290

 
$
332,396

 
$
217,646

 
$
541,906

 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.76

 
$
0.98

 
$
1.40

 
$
1.70

Earnings from discontinued operations, net

 
1.11

 

 
1.68

Net earnings
0.76

 
2.10

 
1.40

 
3.38

 
 
 
 
 
 
 
 
Weighted average shares outstanding
155,180
 
158,640
 
155,122
 
160,137
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.76

 
$
0.97

 
$
1.39

 
$
1.69

Earnings from discontinued operations, net

 
1.10

 

 
1.66

Net earnings
0.76

 
2.07

 
1.39

 
3.35

 
 
 
 
 
 
 
 
Weighted average shares outstanding
156,595
 
160,398
 
156,414
 
161,876
 
 
 
 
 
 
 
 
Dividends paid per common share
$
0.42

 
$
0.40

 
$
0.84

 
$
0.80

 
 
 
 
 
 
 
 






DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
 
2016
 
2015
 
Q1
Q2
Q2 YTD
 
Q1
Q2
Q2 YTD
Q3
Q4
FY 2015
REVENUE
 
 
 
 
 
 
 
 
 
 
Energy
$
283,230

$
259,008

$
542,238

 
$
430,423

$
366,044

$
796,467

$
363,872

$
323,341

$
1,483,680

 
 
 
 
 
 
 
 
 
 
 
Engineered Systems
 
 
 
 
 
 
 
 
 
 
Printing & Identification
239,681

263,648

503,329

 
230,181

229,934

460,115

227,992

255,563

943,670

Industrials
337,314

328,784

666,098

 
343,015

363,157

706,172

351,404

341,667

1,399,243

 
576,995

592,432

1,169,427

 
573,196

593,091

1,166,287

579,396

597,230

2,342,913

 
 
 
 
 
 
 
 
 
 
 
Fluids
399,062

405,838

804,900

 
340,236

351,511

691,747

352,018

355,508

1,399,273

 
 
 
 
 
 
 
 
 
 
 
Refrigeration & Food Equipment
363,252

429,386

792,638

 
372,097

448,115

820,212

492,460

418,758

1,731,430

 
 
 
 
 
 
 
 
 
 
 
Intra-segment eliminations
(266
)
(319
)
(585
)
 
(451
)
(133
)
(584
)
(164
)
(237
)
(985
)
Total consolidated revenue
$
1,622,273

$
1,686,345

$
3,308,618

 
$
1,715,501

$
1,758,628

$
3,474,129

$
1,787,582

$
1,694,600

$
6,956,311

 
 
 
 
 
 
 
 
 
 
 
NET EARNINGS
 
 
 
 
 
 
 
 
 
 
Segment Earnings:
 
 
 
 
 
 
 
 
 
 
Energy
$
11,244

$
(75
)
$
11,169

 
$
52,305

$
40,909

$
93,214

$
48,726

$
31,250

$
173,190

Engineered Systems
93,748

104,034

197,782

 
88,149

96,702

184,851

102,866

89,244

376,961

Fluids
46,047

54,033

100,080

 
54,634

70,168

124,802

74,911

62,404

262,117

Refrigeration & Food Equipment
38,161

63,230

101,391

 
36,150

65,732

101,882

76,665

42,752

221,299

Total Segments
189,200

221,222

410,422

 
231,238

273,511

504,749

303,168

225,650

1,033,567

Corporate expense / other
29,862

24,566

54,428

 
34,526

20,382

54,908

25,881

24,911

105,700

Net interest expense
31,714

32,157

63,871

 
32,037

31,988

64,025

31,983

31,249

127,257

Earnings from continuing operations before provision for income taxes
127,624

164,499

292,123

 
164,675

221,141

385,816

245,304

169,490

800,610

Provision for income taxes
28,268

46,209

74,477

 
47,485

65,507

112,992

58,821

32,916

204,729

Earnings from continuing operations
99,356

118,290

217,646

 
117,190

155,634

272,824

186,483

136,574

595,881

Earnings (loss) from discontinued operations, net



 
92,320

176,762

269,082

(385
)
5,251

273,948

Net earnings
$
99,356

$
118,290

$
217,646

 
$
209,510

$
332,396

$
541,906

$
186,098

$
141,825

$
869,829

 
 
 
 
 
 
 
 
 
 
 
SEGMENT OPERATING MARGIN
 
 
 
 
 
 
 
 
Energy
4.0
%
 %
2.1
%
 
12.2
%
11.2
%
11.7
%
13.4
%
9.7
%
11.7
%
Engineered Systems
16.2
%
17.6
 %
16.9
%
 
15.4
%
16.3
%
15.8
%
17.8
%
14.9
%
16.1
%
Fluids
11.5
%
13.3
 %
12.4
%
 
16.1
%
20.0
%
18.0
%
21.3
%
17.6
%
18.7
%
Refrigeration & Food Equipment
10.5
%
14.7
 %
12.8
%
 
9.7
%
14.7
%
12.4
%
15.6
%
10.2
%
12.8
%
Total Segment
11.7
%
13.1
 %
12.4
%
 
13.5
%
15.6
%
14.5
%
17.0
%
13.3
%
14.9
%
 
 
 
 
 
 
 
 
 
 
 
DEPRECIATION AND AMORTIZATION EXPENSE
 
 
 
 
 
 
 
 
Energy
$
34,160

$
33,289

$
67,449

 
$
34,427

$
32,740

$
67,167

$
31,858

$
42,754

$
141,779

Engineered Systems
16,036

16,075

32,111

 
14,526

14,392

28,918

14,503

16,493

59,914

Fluids
20,511

20,981

41,492

 
13,848

13,648

27,496

13,367

15,215

56,078

Refrigeration & Food Equipment
16,728

16,881

33,609

 
16,458

16,406

32,864

16,609

16,601

66,074

Corporate
1,169

868

2,037

 
923

841

1,764

837

643

3,244

 
$
88,604

$
88,094

$
176,698

 
$
80,182

$
78,027

$
158,209

$
77,174

$
91,706

$
327,089

 
 
 
 
 
 
 
 
 
 
 





DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
 
2016
 
2015
 
Q1
Q2
Q2 YTD
 
Q1
Q2
Q2 YTD
Q3
Q4
FY 2015
BOOKINGS
 
 
 
 
 
 
 
 
 
 
Energy
$
273,445

$
246,021

$
519,466

 
$
416,628

$
345,079

$
761,707

$
351,557

$
315,996

$
1,429,260

 
 
 
 
 
 
 
 
 
 
 
Engineered Systems
 
 
 
 
 
 
 
 
 
 
Printing & Identification
242,569

266,490

509,059

 
235,617

224,203

459,820

226,756

250,639

937,215

Industrials
329,957

304,345

634,302

 
337,070

336,173

673,243

338,744

357,451

1,369,438

 
572,526

570,835

1,143,361

 
572,687

560,376

1,133,063

565,500

608,090

2,306,653

 
 
 
 
 
 
 
 
 
 
 
Fluids
418,345

413,767

832,112

 
339,310

333,695

673,005

357,032

321,154

1,351,191

 
 
 
 
 
 
 
 
 
 
 
Refrigeration & Food Equipment
411,367

468,661

880,028

 
419,659

486,793

906,452

430,681

379,967

1,717,100

 
 
 
 
 
 
 
 
 
 
 
Intra-segment eliminations
(90
)
(944
)
(1,034
)
 
(628
)
(417
)
(1,045
)
(385
)
(486
)
(1,916
)
 
 
 
 
 
 
 
 
 
 
 
Total consolidated bookings
$
1,675,593

$
1,698,340

$
3,373,933

 
$
1,747,656

$
1,725,526

$
3,473,182

$
1,704,385

$
1,624,721

$
6,802,288

 
 
 
 
 
 
 
 
 
 
 
BACKLOG
 
 
 
 
 
 
 
 
 
 
Energy
$
144,828

$
129,873

 
 
$
212,060

$
194,819

 
$
156,631

$
155,586

 
 
 
 
 
 
 
 
 
 
 
 
Engineered Systems
 
 
 
 
 
 
 
 
 
 
Printing & Identification
102,640

104,509

 
 
108,151

103,403

 
100,476

98,288

 
Industrials
235,384

210,646

 
 
276,598

248,592

 
236,298

250,725

 
 
338,024

315,155

 
 
384,749

351,995

 
336,774

349,013

 
 
 
 
 
 
 
 
 
 
 
 
Fluids
286,457

315,786

 
 
259,504

240,389

 
236,608

243,459

 
 
 
 
 
 
 
 
 
 
 
 
Refrigeration & Food Equipment
303,479

332,312

 
 
337,084

373,193

 
307,351

247,352

 
 
 
 
 
 
 
 
 
 
 
 
Intra-segment eliminations
(36
)
(265
)
 
 
(595
)
(354
)

(598
)
(808
)
 
 
 
 
 
 
 
 
 
 
 
 
Total consolidated backlog
$
1,072,752

$
1,092,861

 
 
$
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
Q2 YTD
 
Q1
Q2
Q2 YTD
Q3
Q4
FY 2015
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
Continuing operations
$
0.64

$
0.76

$
1.40

 
$
0.72

$
0.98

$
1.70

$
1.20

$
0.88

$
3.78

Discontinued operations



 
0.57

1.11

1.68


0.03

1.74

Net earnings
$
0.64

0.76

1.40

 
$
1.30

$
2.10

$
3.38

$
1.20

$
0.92

$
5.52

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share:
 
 
 
 
 
 
 
Continuing operations
$
0.64

$
0.76

$
1.39

 
$
0.72

$
0.97

$
1.69

$
1.19

$
0.87

$
3.74

Discontinued operations



 
0.57

1.10

1.66


0.03

1.72

Net earnings
$
0.64

0.76

1.39

 
$
1.28

$
2.07

$
3.35

$
1.19

$
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

$
217,646

 
$
117,190

$
155,634

$
272,824

$
186,483

$
136,574

$
595,881

Discontinued operations



 
92,320

176,762

269,082

(385
)
5,251

273,948

Net earnings
$
99,356

118,290

217,646

 
$
209,510

$
332,396

$
541,906

$
186,098

$
141,825

$
869,829

 
 
 
 
 
 
 
 
 
 
 
Average shares outstanding:
 
 
 
 
 
 
 
Basic
155,064

155,180

155,122

 
161,650

158,640

160,137

155,300

154,986

157,619

Diluted
156,161

156,595

156,414

 
163,323

160,398

161,876

156,560

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
Q2 YTD
 
Q1
Q2
Q2 YTD
Q3
Q4
FY 2015
Adjusted earnings from continuing operations:
 
 
 
 
 
 
 
Earnings from continuing operations
$
99,356

$
118,290

$
217,646

 
$
117,190

$
155,634

$
272,824

$
186,483

$
136,574

$
595,881

Gains (losses) from discrete and other tax items
7,348

(1,221
)
6,127

 



8,131

9,382

17,513

Gain on disposition of business
11,228


11,228

 






Adjusted earnings from continuing operations
$
80,780

$
119,511

$
200,291

 
$
117,190

$
155,634

$
272,824

$
178,352

$
127,192

$
578,368

 
 
 
 
 
 
 
 
 
 
 
Adjusted diluted earnings per common share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.64

$
0.76

$
1.39

 
$
0.72

$
0.97

$
1.69

$
1.19

$
0.87

$
3.74

Gains (losses) from discrete and other tax items
0.05

(0.01
)
0.04

 



0.05

0.06

0.11

Gain on disposition of business
0.07


0.07

 






Adjusted earnings from continuing operations
$
0.52

$
0.76

$
1.28

 
$
0.72

$
0.97

$
1.69

$
1.14

$
0.81

$
3.63

 
 
 
 
 
 
 
 
 
 
 
* Per share data may not add due to rounding.
 
 
 
 
 
 
 








DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)

Quarterly Cash Flow

 
2016
 
2015
 
Q1
Q2
Q2 YTD
 
Q1
Q2
Q2 YTD
Q3
Q4
FY 2015
Net Cash Flows Provided By (Used In):
 
 
 
 
 
 
 
 
 
 
Operating activities
$
133,413

$
207,868

$
341,281

 
$
131,332

$
218,911

$
350,243

$
282,213

$
316,603

$
949,059

Investing activities
(425,857
)
(69,415
)
(495,272
)
 
156,585

457,875

614,460

(33,454
)
(615,584
)
(34,578
)
Financing activities
178,507

(127,678
)
50,829

 
(416,603
)
(608,329
)
(1,024,932
)
(86,033
)
19,079

(1,091,886
)

Quarterly Free Cash Flow (Non-GAAP)

 
2016
 
2015
 
Q1
Q2
Q2 YTD
 
Q1
Q2
Q2 YTD
Q3
Q4
FY 2015
Cash flow from operating activities
$
133,413

$
207,868

$
341,281

 
$
131,332

$
218,911

$
350,243

$
282,213

$
316,603

$
949,059

Less: Capital expenditures
(37,230
)
(35,422
)
(72,652
)
 
(27,956
)
(43,807
)
(71,763
)
(39,516
)
(42,972
)
(154,251
)
Free cash flow
$
96,183

$
172,446

$
268,629

 
$
103,376

$
175,104

$
278,480

$
242,697

$
273,631

$
794,808

 
 
 
 
 
 
 
 
 
 
 
Free cash flow as a percentage of earnings from continuing operations
96.8
%
145.8
%
123.4
%
 
88.2
%
112.5
%
102.1
%
130.1
%
200.4
%
133.4
%
 
 
 
 
 
 
 
 
 
 
 
Free cash flow as a percentage of revenue
5.9
%
10.2
%
8.1
%
 
6.0
%
10.0
%
8.0
%
13.6
%
16.1
%
11.4
%


Revenue Growth Factors

 
Three Months Ended June 30, 2016
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
 
Organic
(28
)%
 
2
 %
 
(8
)%
 
1
 %
 
(7
)%
 
Acquisitions
 %
 
3
 %
 
24
 %
 
 %
 
6
 %
 
Dispositions
 %
 
(4
)%
 
 %
 
(5
)%
 
(3
)%
 
Currency translation
(1
)%
 
(1
)%
 
 %
 
 %
 
 %
 
 
(29
)%
 
 %
 
16
 %
 
(4
)%
 
(4
)%
 

 
Six Months Ended June 30, 2016
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
 
Organic
(31
)%
 
2
 %
 
(6
)%
 
2
 %
 
(7
)%
 
Acquisitions
 %
 
3
 %
 
23
 %
 
 %
 
6
 %
 
Dispositions
 %
 
(4
)%
 
 %
 
(5
)%
 
(3
)%
 
Currency translation
(1
)%
 
(2
)%
 
(1
)%
 
 %
 
(1
)%
 
 
(32
)%
 
(1
)%
 
16
 %
 
(3
)%
 
(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.






Earnings Conference Call Second Quarter 2016 July 21, 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 2015, 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 second quarter, which are available on our website. 2


 
3 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 Q1 Q2 Q3* Q4* Q1* Q2 Earnings per share Adj. EPS* Q2 2016 Performance Earnings Per Share (continuing operations) Q2 Q2/Q2 * Excludes discrete tax benefits of $0.05 in Q3 2015, $0.06 in Q4 2015, $0.05 in Q1 2016, a $0.01 discrete tax expense in Q2 2016, and $0.07 gain on a disposition in Q1 2016 (d) See Press Release for free cash flow reconciliation 3 Quarterly Comments 2015 2016  Revenue growth from acquisitions and solid markets in Engineered Systems and Refrigeration & Food Equipment, offset by the impact of weak oil & gas markets and dispositions  US activity remains solid, excluding oil & gas markets. Asian and European activity remained soft  Segment margin impacted by lower volume, acquisition-related costs, deal costs and one-time items, partially offset by productivity and the net benefits of prior period restructuring  Bookings decline largely driven by oil & gas exposure and dispositions, partially offset by impact of acquisitions  Book-to-bill of 1.01 Note: EPS and Adj. EPS include restructuring costs of $0.10 in Q1 2015, $0.01 in Q2 2015, $0.05 in Q3 2015, $0.08 in Q4 2015, $0.07 in Q1 2016, and $0.04 in Q2 2016 Revenue $1.7B -4% $3.3B -5% EPS (cont.) $0.76 -22% $1.39 -18% Adj. EPS (cont.) $0.76 -22% $1.28 -24% Bookings $1.7B -2% $3.4B -3% Seg. Margin 13.1% -250 bps 12.4% -210 bps Adj. Seg. Margin (a) 13.7% -210 bps 13.1% -220 bps Organic Rev. (b) -7% -7% Net Acq. Growth (c) 3% 3% Cash flow from Ops $208M -5% $341M -3% FCF (d) $172M -2% $269M -4% (a) Adjusted for $9.2 million of restructuring in Q2 2016, $14.4M in Q1 2016, $3.1M in Q2 2015 and $24.1M in Q1 2015 6M 6M/6M (b) Change in revenue from businesses owned over 12 months, excluding FX impact (c) Change in revenue from acquisitions, less revenue from dispositions


 
4 Revenue Q2 2016 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Dover Organic -28% 2% -8% 1% -7% Acquisitions - 3% 24% - 6% Dispositions - -4% - -5% -3% Currency -1% -1% - - - Total -29% - 16% -4% -4% 6M 2016 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Dover Organic -31% 2% -6% 2% -7% Acquisitions - 3% 23% - 6% Dispositions - -4% - -5% -3% Currency -1% -1% -1% - -1% Total -32% - 16% -3% -5%


 
5 Energy  Revenue decrease driven by declines in oil & gas market fundamentals  Q2 2016 expected to be low point in Energy performance  Market macro stabilization – NA rig count steadied in Q2 – Oil prices remained in $45 - $50 range  Adjusted margin of 5.0% reflects volume and price declines  Bookings decline of 29% reflects weak market conditions  Book-to-bill at 0.95 5 $ in millions * Q2 2016 earnings adjusted for $5M related to temporary plant closure, $2M other one-time costs and $6M restructuring, Q2 2015 adjusted for $3M in restructuring costs Q2 2016 Q2 2015 % Change % Organic Revenue $259 $366 -29% -28% Earnings - $ 41 NM Margin - 11.2% -1120 bps Adj. Earnings* $ 13 $ 44 -66% Adj. Margin* 5.0% 12.0% -700 bps Bookings $246 $345 -29% -28% Revenue by End-Market % of Q2 Revenue Y / Y Growth Organic Growth Drilling & Production 63% -34% -32% Bearings & Compression 27% -14% -12% Automation 10% -34% -34%


 
6 Engineered Systems  Organic revenue growth of 2% – 9% organic growth in P & I driven by strong marking & coding and digital textile printing equipment markets – Industrial’s organic decline of 2% primarily driven by activity deferrals and tough comps in Environmental Solutions  Margin of 17.6% reflects the benefits of productivity, leverage on organic volume and favorable product mix  Bookings reflects organic and acquisition growth, partially offset by dispositions and FX  Book-to-bill of 0.96 6 Q2 2016 Q2 2015 % Change % Organic Revenue(a) $592 $593 Flat 2% Earnings $104 $ 97 8% Margin 17.6% 16.3% 130 bps Bookings(b) $571 $560 2% 4% Revenue by End-Market % of Q2 Revenue Y / Y Growth Organic Growth Printing & Identification 45% 15% 9% Industrial 55% -10% -2% $ in millions (a) Revenue was flat overall, reflecting organic growth of 2% and acquisition growth of 3%, offset by a 4% impact from dispositions and a 1% unfavorable impact from FX (b) Bookings growth of 2% reflects organic growth of 4% and acquisition growth of 3%, partially offset by a 4% impact from dispositions and a 1% unfavorable impact from FX


 
7 Fluids  Revenue growth driven by acquisitions and hygienic & pharma markets – Organic revenue decline driven by  Direct oil & gas exposure  Lower capital spending from integrated energy customers  Project timing  Margin impacted by lower organic volume, acquisitions, restructuring costs and deal costs  Bookings growth driven by acquisitions  Book-to-bill at 1.02 7 $ in millions Q2 2016 Q2 2015 % Change % Organic Revenue $406 $352 16% -8% Earnings $ 54 $ 70 -23% Margin 13.3% 20.0% -670 bps Adj. Earnings* $ 61 $ 70 -13% Adj. Margin* 15.0% 20.0% -500 bps Bookings $414 $334 24% -1% Revenue by End-Market % of Q2 Revenue Y / Y Growth Organic Growth Pumps 39% 2% -17% Fluid Transfer 61% 26% -2% * Q2 2016 earnings adjusted for $4M related to deal costs and $3M restructuring


 
8 Refrigeration & Food Equipment  Organic revenue growth of 1% offset by dispositions and FX – Retail refrigeration wins driving organic growth – Can shaping and commercial foodservice businesses are solid, food processing business is soft  Margin performance reflects product mix  Organic bookings growth of 4% driven by retail refrigeration, partially offset by dispositions and FX  Book-to-bill at 1.09 8 $ in millions Q2 2016 Q2 2015 % Change % Organic Revenue(a) $429 $448 -4% 1% Earnings $ 63 $ 66 -4% Margin 14.7% 14.7% Flat Bookings(b) $469 $487 -4% 4% Revenue by End-Market % of Q2 Revenue Y / Y Growth Organic Growth Refrigeration 77% -5% 2% Food Equipment 23% -3% -3% (a) Revenue decline of 4% reflects organic growth of 1%, offset by a 5% impact from dispositions (b) Bookings decline of 4% reflects organic growth of 4%, offset by a 7% impact from dispositions and a 1% unfavorable impact from acquisitions


 
9 Q2 2016 Overview 9 Q2 2016 Net Interest Expense $32 million, in-line with forecast Corporate Expense $25 million, in-line with forecast Effective Tax Rate (ETR) Q2 rate was 28.1%. Excluding discrete tax costs, tax rate was 27.3%, slightly lower than expected Capex $35 million, generally in-line with forecast Share Repurchases No activity


 
10 FY 2016 Guidance  Revenue – Organic revenue: (8% - 6%) – Acquisitions: ≈ 7% – Dispositions: (≈ 3%) – FX impact: (≈ 1%) – Total revenue: (5% - 3%)  Corporate expense: ≈ $108 million  Interest expense: ≈ $128 million  Full-year tax rate: ≈ 27.5% - 28%  Capital expenditures: ≈ 2.3% of revenue  FY free cash flow: ≈ 11% of revenue 2016 organic growth rate Energy (30% - 27%) Engineered Systems 1% - 3% Fluids (5% - 4%) Refrigeration & Food Equipment 2% - 3% Total organic (8% - 6%) Acquisitions ≈ 7% Dispositions (≈ 3%) FX Impact (≈ 1%) Total revenue (5% - 3%)


 
11 2016F EPS Guidance – Bridge  2015 EPS – Continuing Ops (GAAP) $ 3.74 – Less 2015 tax items(1): (0.11)  2015 Adjusted EPS $ 3.63 – Net restructuring(2): ≈ 0.07 – Performance including restructuring benefits(3): (0.37 - 0.31) – Compensation & investment: (0.20 - 0.17) – Net acquisitions(4): ≈ 0.12 – Shares(5): ≈ 0.08 – Interest / Corp. / Tax rate / Other (net): (0.02 - 0.01) – 2016 tax items(6): ≈ 0.04  2016F EPS – Continuing Ops $3.35 - $3.45 (1) Includes discrete tax benefits of $0.05 in Q3 2015 and $0.06 in Q4 2015 (4) Reflects operating earnings of acquisitions completed less dispositions completed, as well as the associated gain on disposition (5) Based on carryover benefit from 2015 share repurchase activity (2) Includes restructuring costs of $0.25 in FY 2015 and approximately $0.18 in FY 2016 (3) Includes restructuring benefits of $0.44 - $0.48, $0.02 of Q2 2016 deal costs, $0.04 of Q2 2016 one-time costs, and $0.03 of deal costs anticipated in Q3 2016 (6) Includes discrete tax benefits of $0.05 in Q1 2016 and a discrete tax cost of $0.01 in Q2 2016


 


 


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