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Form 8-K DOVER Corp For: Oct 19

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October 19, 2016 6:48 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): October 19, 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 October 19, 2016, Dover Corporation (i) issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended September 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 September 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 October 19, 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:
October 19, 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 October 19, 2016
 
 
 
99.2
 
Presentation Slides posted on Dover Corporation’s website at http://www.dovercorporation.com






Exhibit 99.1

image1.jpg                            
                                            
Investor Contact:
 
Media Contact:
Paul Goldberg
 
Adrian Sakowicz
Vice President - Investor Relations
 
Vice President - Communications
(212) 922-1640
 
(630) 743-5039
 

DOVER REPORTS THIRD QUARTER 2016 RESULTS

•
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 $0.83, including third quarter restructuring costs of $0.04
•
Reaffirms recently reduced guidance for diluted earnings per share from continuing operations to be in the range of $3.00 to $3.05 for full year 2016

Downers Grove, Illinois, October 19, 2016 — Dover (NYSE: DOV) announced today that for the third quarter ended September 30, 2016, revenue was $1.7 billion, a decrease of 4% from the prior year. Organic revenue declined 7% and acquisition revenue, net of dispositions, provided 3% growth in the quarter. Earnings from continuing operations were $130.1 million, a decrease of 30% as compared to $186.5 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the third quarter ended September 30, 2016, were $0.83, compared to $1.19 EPS in the prior year period, representing a decrease of 30%. Third quarter 2016 EPS of $0.83 decreased 27% as compared to third quarter 2015 adjusted EPS of $1.14, which excludes $0.05 of discrete tax benefits. There were no discrete tax benefits in the third quarter of 2016. EPS for the quarters ended September 30, 2016, and September 30, 2015, includes restructuring costs of $0.04 EPS and $0.05 EPS, respectively.

Revenue for the nine months ended September 30, 2016, was $5.0 billion, a decrease of 5% from the prior year, reflecting an organic revenue decline of 7% and an unfavorable impact from foreign exchange of 1%, offset by 3% growth from acquisition revenue, net of dispositions. Earnings from continuing operations for the nine months ended September 30, 2016, were $347.7 million, a decrease of 24% as compared to $459.3 million for the prior year period. Diluted EPS for the nine months ended September 30, 2016, was $2.22, compared to $2.87 EPS in the prior year period, representing a decrease of 23%. EPS from continuing operations for the nine months ended September 30, 2016, includes discrete tax benefits of $0.04 and a gain on disposition of $0.07. Excluding discrete tax benefits and the gain on disposition, adjusted EPS from continuing operations decreased 25% to $2.11 from a comparable EPS of $2.82 in the prior year period. EPS for the nine months ended September 30, 2016, and September 30, 2015, also includes restructuring costs of $0.14 EPS and $0.17 EPS, respectively.

Dover’s President and Chief Executive Officer, Robert A. Livingston, said, “Our third quarter results were disappointing. The continuing weak macro environment, further declines in longer cycle oil & gas exposed markets, and production inefficiencies in our retail refrigeration business impacted both volume and earnings. These results were well below our expectations, and more than offset solid improvements in our upstream drilling and production businesses, as well as continued strong performance in our Printing & Identification platform.





“As we announced on October 10, given these factors, we expect 2016 full year EPS to be in the range of $3.00 to $3.05. Within this guidance, organic revenue is forecasted to decline 7% to 8%.

“Regarding the fourth quarter, we expect further improvements in our early cycle upstream oil & gas markets, strong performance in Printing & Identification, and continued sequential growth in Fluids. We also expect a seasonal decline in Refrigeration & Food Equipment. These factors will result in our fourth quarter EPS to be largely in-line with the third quarter.”

Net earnings for the third quarter ended September 30, 2016, were $130.1 million, or $0.83 EPS, compared to net earnings of $186.1 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $0.4 million.

Net earnings for the nine months ended September 30, 2016, were $347.7 million, or $0.83 EPS, compared to net earnings of $728.0 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $268.7 million, or $1.68 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.66 EPS, resulting from the disposition of two businesses held for sale.

Dover will host a webcast of its third quarter 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, October 19, 2016. The webcast can be accessed on the Dover website at www.dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover’s third quarter results and its operating segments can also be found on the Company’s website.

About Dover:

Dover is a diversified global manufacturer with annual revenue approaching $7 billion. We deliver innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve.  Recognized for our entrepreneurial approach for over 60 years, our team of 26,000 employees takes an ownership mindset, collaborating with customers to redefine what’s possible.  Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under “DOV.” Additional information is available at www.dovercorporation.com.

Forward-Looking Statements:

This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, foreign exchange, changes in operations, acquisitions, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as “anticipates,” “expects,” “believes,” “suggests,” “will,” “plans,” “should,” “would,” “could,” and “forecast”, or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover’s customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange




rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, tax policies, trade sanctions, and export/import laws; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.






INVESTOR SUPPLEMENT - THIRD QUARTER 2016

DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$
1,707,763

 
$
1,787,582

 
$
5,016,381

 
$
5,261,711

Cost of goods and services
1,075,975

 
1,114,974

 
3,164,116

 
3,307,376

Gross profit
631,788

 
672,608

 
1,852,265

 
1,954,335

Selling and administrative expenses
421,042

 
395,688

 
1,301,901

 
1,233,017

Operating earnings
210,746

 
276,920

 
550,364

 
721,318

Interest expense, net
32,994

 
31,983

 
96,865

 
96,008

Other income, net
(3,424
)
 
(367
)
 
(19,800
)
 
(5,810
)
Earnings before provision for income taxes and discontinued operations
181,176

 
245,304

 
473,299

 
631,120

Provision for income taxes
51,092

 
58,821

 
125,569

 
171,813

Earnings from continuing operations
130,084

 
186,483

 
347,730

 
459,307

Earnings (loss) from discontinued operations, net
—

 
(385
)
 
—

 
268,697

Net earnings
$
130,084

 
$
186,098

 
$
347,730

 
$
728,004

 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.84

 
$
1.20

 
$
2.24

 
$
2.90

Earnings from discontinued operations, net
—

 
—

 
—

 
1.70

Net earnings
0.84

 
1.20

 
2.24

 
4.59

 
 
 
 
 
 
 
 
Weighted average shares outstanding
155,300
 
155,300
 
155,182
 
158,507
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.83

 
$
1.19

 
$
2.22

 
$
2.87

Earnings from discontinued operations, net
—

 
—

 
—

 
1.68

Net earnings
0.83

 
1.19

 
2.22

 
4.55

 
 
 
 
 
 
 
 
Weighted average shares outstanding
156,798
 
156,560
 
156,562
 
160,112
 
 
 
 
 
 
 
 
Dividends paid per common share
$
0.44

 
$
0.42

 
$
1.28

 
$
1.22

 
 
 
 
 
 
 
 





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

$
259,008

$
273,248

$
815,486

 
$
430,423

$
366,044

$
363,872

$
1,160,339

$
323,341

$
1,483,680

 
 
 
 
 
 
 
 
 
 
 
 
Engineered Systems
 
 
 
 
 
 
 
 
 
 
 
Printing & Identification
239,681

263,648

253,091

756,420

 
230,181

229,934

227,992

688,107

255,563

943,670

Industrials
337,314

328,784

317,471

983,569

 
343,015

363,157

351,404

1,057,576

341,667

1,399,243

 
576,995

592,432

570,562

1,739,989

 
573,196

593,091

579,396

1,745,683

597,230

2,342,913

 
 
 
 
 
 
 
 
 
 
 
 
Fluids
399,062

405,838

412,822

1,217,722

 
340,236

351,511

352,018

1,043,765

355,508

1,399,273

 
 
 
 
 
 
 
 
 
 
 
 
Refrigeration & Food Equipment
363,252

429,386

451,328

1,243,966

 
372,097

448,115

492,460

1,312,672

418,758

1,731,430

 
 
 
 
 
 
 
 
 
 
 
 
Intra-segment eliminations
(266
)
(319
)
(197
)
(782
)
 
(451
)
(133
)
(164
)
(748
)
(237
)
(985
)
Total consolidated revenue
$
1,622,273

$
1,686,345

$
1,707,763

$
5,016,381

 
$
1,715,501

$
1,758,628

$
1,787,582

$
5,261,711

$
1,694,600

$
6,956,311

 
 
 
 
 
 
 
 
 
 
 
 
NET EARNINGS
 
 
 
 
 
 
 
 
 
 
 
Segment Earnings:
 
 
 
 
 
 
 
 
 
 
 
Energy
$
11,244

$
(75
)
$
13,279

$
24,448

 
$
52,305

$
40,909

$
48,726

$
141,940

$
31,250

$
173,190

Engineered Systems
93,748

104,034

97,240

295,022

 
88,149

96,702

102,866

287,717

89,244

376,961

Fluids
46,047

54,033

66,178

166,258

 
54,634

70,168

74,911

199,713

62,404

262,117

Refrigeration & Food Equipment
38,161

63,230

64,111

165,502

 
36,150

65,732

76,665

178,547

42,752

221,299

Total segments
189,200

221,222

240,808

651,230

 
231,238

273,511

303,168

807,917

225,650

1,033,567

Corporate expense / other
29,862

24,566

26,638

81,066

 
34,526

20,382

25,881

80,789

24,911

105,700

Interest expense, net
31,714

32,157

32,994

96,865

 
32,037

31,988

31,983

96,008

31,249

127,257

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

164,499

181,176

473,299

 
164,675

221,141

245,304

631,120

169,490

800,610

Provision for income taxes
28,268

46,209

51,092

125,569

 
47,485

65,507

58,821

171,813

32,916

204,729

Earnings from continuing operations
99,356

118,290

130,084

347,730

 
117,190

155,634

186,483

459,307

136,574

595,881

Earnings (loss) from discontinued operations, net
—

—

—

—

 
92,320

176,762

(385
)
268,697

5,251

273,948

Net earnings
$
99,356

$
118,290

$
130,084

$
347,730

 
$
209,510

$
332,396

$
186,098

$
728,004

$
141,825

$
869,829

 
 
 
 
 
 
 
 
 
 
 
 
SEGMENT OPERATING MARGIN
 
 
 
 
 
 
 
 
 
Energy
4.0
%
—
 %
4.9
%
3.0
%
 
12.2
%
11.2
%
13.4
%
12.2
%
9.7
%
11.7
%
Engineered Systems
16.2
%
17.6
 %
17.0
%
17.0
%
 
15.4
%
16.3
%
17.8
%
16.5
%
14.9
%
16.1
%
Fluids
11.5
%
13.3
 %
16.0
%
13.7
%
 
16.1
%
20.0
%
21.3
%
19.1
%
17.6
%
18.7
%
Refrigeration & Food Equipment
10.5
%
14.7
 %
14.2
%
13.3
%
 
9.7
%
14.7
%
15.6
%
13.6
%
10.2
%
12.8
%
Total segment operating margin
11.7
%
13.1
 %
14.1
%
13.0
%
 
13.5
%
15.6
%
17.0
%
15.4
%
13.3
%
14.9
%
 
 
 
 
 
 
 
 
 
 
 
 
DEPRECIATION AND AMORTIZATION EXPENSE
 
 
 
 
 
 
 
 
 
Energy
$
34,160

$
33,289

$
32,605

$
100,054

 
$
34,427

$
32,740

$
31,858

$
99,025

$
42,754

$
141,779

Engineered Systems
16,036

16,075

16,238

48,349

 
14,526

14,392

14,503

43,421

16,493

59,914

Fluids
20,511

20,981

20,833

62,325

 
13,848

13,648

13,367

40,863

15,215

56,078

Refrigeration & Food Equipment
16,728

16,881

16,146

49,755

 
16,458

16,406

16,609

49,473

16,601

66,074

Corporate
1,169

868

901

2,938

 
923

841

837

2,601

643

3,244

Total depreciation and amortization expense
$
88,604

$
88,094

$
86,723

$
263,421

 
$
80,182

$
78,027

$
77,174

$
235,383

$
91,706

$
327,089

 
 
 
 
 
 
 
 
 
 
 
 




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

$
246,021

$
270,685

$
790,151

 
$
416,628

$
345,079

$
351,557

$
1,113,264

$
315,996

$
1,429,260

 
 
 
 
 
 
 
 
 
 
 
 
Engineered Systems
 
 
 
 
 
 
 
 
 
 
 
Printing & Identification
242,569

266,490

248,443

757,502

 
235,617

224,203

226,756

686,576

250,639

937,215

Industrials
329,957

304,345

331,435

965,737

 
337,070

336,173

338,744

1,011,987

357,451

1,369,438

 
572,526

570,835

579,878

1,723,239

 
572,687

560,376

565,500

1,698,563

608,090

2,306,653

 
 
 
 
 
 
 
 
 
 
 
 
Fluids
418,345

413,767

413,535

1,245,647

 
339,310

333,695

357,032

1,030,037

321,154

1,351,191

 
 
 
 
 
 
 
 
 
 
 
 
Refrigeration & Food Equipment
411,367

468,661

429,134

1,309,162

 
419,659

486,793

430,681

1,337,133

379,967

1,717,100

 
 
 
 
 
 
 
 
 
 
 
 
Intra-segment eliminations
(90
)
(944
)
(245
)
(1,279
)
 
(628
)
(417
)
(385
)
(1,430
)
(486
)
(1,916
)
 
 
 
 
 
 
 
 
 
 
 
 
Total consolidated bookings
$
1,675,593

$
1,698,340

$
1,692,987

$
5,066,920

 
$
1,747,656

$
1,725,526

$
1,704,385

$
5,177,567

$
1,624,721

$
6,802,288

 
 
 
 
 
 
 
 
 
 
 
 
BACKLOG
 
 
 
 
 
 
 
 
 
 
 
Energy
$
144,828

$
129,873

$
126,519

 
 
$
212,060

$
194,819

$
156,631

 
$
155,586

 
 
 
 
 
 
 
 
 
 
 
 
 
Engineered Systems
 
 
 
 
 
 
 
 
 
 
 
Printing & Identification
102,640

104,509

101,190

 
 
108,151

103,403

100,476

 
98,288

 
Industrials
235,384

210,646

224,892

 
 
276,598

248,592

236,298

 
250,725

 
 
338,024

315,155

326,082

 
 
384,749

351,995

336,774

 
349,013

 
 
 
 
 
 
 
 
 
 
 
 
 
Fluids
286,457

315,786

318,246

 
 
259,504

240,389

236,608

 
243,459

 
 
 
 
 
 
 
 
 
 
 
 
 
Refrigeration & Food Equipment
303,479

332,312

309,462

 
 
337,084

373,193

307,351

 
247,352

 
 
 
 
 
 
 
 
 
 
 
 
 
Intra-segment eliminations
(36
)
(265
)
(252
)
 
 
(595
)
(354
)
(598
)

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

$
1,092,861

$
1,080,057

 
 
$
1,192,802

$
1,160,042

$
1,036,766

 
$
994,602

 






DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
Earnings Per Share
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
 
Q1
Q2
Q3
Q3 YTD
 
Q1
Q2
Q3
Q3 YTD
Q4
FY 2015
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.64

$
0.76

$
0.84

$
2.24

 
$
0.72

$
0.98

$
1.20

$
2.90

$
0.88

$
3.78

Discontinued operations
—

—

—

—

 
0.57

1.11

—

1.70

0.03

1.74

Net earnings
$
0.64

$
0.76

$
0.84

$
2.24

 
$
1.30

$
2.10

$
1.20

$
4.59

$
0.92

$
5.52

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

$
0.76

$
0.83

$
2.22

 
$
0.72

$
0.97

$
1.19

$
2.87

$
0.87

$
3.74

Discontinued operations
—

—

—

—

 
0.57

1.10

—

1.68

0.03

1.72

Net earnings
$
0.64

$
0.76

$
0.83

$
2.22

 
$
1.28

$
2.07

$
1.19

$
4.55

$
0.91

$
5.46

 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss):
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
99,356

$
118,290

$
130,084

$
347,730

 
$
117,190

$
155,634

$
186,483

$
459,307

$
136,574

$
595,881

Discontinued operations
—

—

—

—

 
92,320

176,762

(385
)
268,697

5,251

273,948

Net earnings
$
99,356

$
118,290

$
130,084

$
347,730

 
$
209,510

$
332,396

$
186,098

$
728,004

$
141,825

$
869,829

 
 
 
 
 
 
 
 
 
 
 
 
Average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
155,064

155,180

155,300

155,182

 
161,650

158,640

155,300

158,507

154,986

157,619

Diluted
156,161

156,595

156,798

156,562

 
163,323

160,398

156,560

160,112

156,254

159,172

Adjusted Earnings Per Share (Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations are adjusted by gains (losses) from discrete and other tax items and gain on disposition of business to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
 
Q1
Q2
Q3
Q3 YTD
 
Q1
Q2
Q3
Q3 YTD
Q4
FY 2015
Adjusted earnings from continuing operations:
 
 
 
 
 
 
 
 
Earnings from continuing operations
$
99,356

$
118,290

$
130,084

$
347,730

 
$
117,190

$
155,634

$
186,483

$
459,307

$
136,574

$
595,881

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

(1,221
)
(304
)
5,823

 
—

—

8,131

8,131

9,382

17,513

Gain on disposition of business
11,228

—

—

11,228

 
—

—

—

—

—

—

Adjusted earnings from continuing operations
$
80,780

$
119,511

$
130,388

$
330,679

 
$
117,190

$
155,634

$
178,352

$
451,176

$
127,192

$
578,368

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

$
0.76

$
0.83

$
2.22

 
$
0.72

$
0.97

$
1.19

$
2.87

$
0.87

$
3.74

Gains (losses) from discrete and other tax items
0.05

(0.01
)
—

0.04

 
—

—

0.05

0.05

0.06

0.11

Gain on disposition of business
0.07

—

—

0.07

 
—

—

—

—

—

—

Adjusted earnings from continuing operations
$
0.52

$
0.76

$
0.83

$
2.11

 
$
0.72

$
0.97

$
1.14

$
2.82

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

$
207,868

$
231,665

$
572,946

 
$
131,332

$
218,911

$
282,213

$
632,456

$
316,603

$
949,059

Investing activities
(425,857
)
(69,415
)
(66,110
)
(561,382
)
 
156,585

457,875

(33,454
)
581,006

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

(127,678
)
98,491

149,320

 
(416,603
)
(608,329
)
(86,033
)
(1,110,965
)
19,079

(1,091,886
)

Quarterly Free Cash Flow (Non-GAAP)

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

$
207,868

$
231,665

$
572,946

 
$
131,332

$
218,911

$
282,213

$
632,456

$
316,603

$
949,059

Less: Capital expenditures
(37,230
)
(35,422
)
(43,116
)
(115,768
)
 
(27,956
)
(43,807
)
(39,516
)
(111,279
)
(42,972
)
(154,251
)
Free cash flow
$
96,183

$
172,446

$
188,549

$
457,178

 
$
103,376

$
175,104

$
242,697

$
521,177

$
273,631

$
794,808

 
 
 
 
 
 
 
 
 
 
 
 
Free cash flow as a percentage of earnings from continuing operations
96.8
%
145.8
%
144.9
%
131.5
%
 
88.2
%
112.5
%
130.1
%
113.5
%
200.4
%
133.4
%
 
 
 
 
 
 
 
 
 
 
 
 
Free cash flow as a percentage of revenue
5.9
%
10.2
%
11.0
%
9.1
%
 
6.0
%
10.0
%
13.6
%
9.9
%
16.1
%
11.4
%


Revenue Growth Factors

 
Three Months Ended September 30, 2016
 
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
 
Organic (decline) growth
(24
)%
 
1
 %
 
(9
)%
 
(2
)%
 
(7
)%
 
Acquisitions
—
 %
 
3
 %
 
27
 %
 
—
 %
 
6
 %
 
Dispositions
—
 %
 
(5
)%
 
—
 %
 
(7
)%
 
(3
)%
 
Currency translation
(1
)%
 
(1
)%
 
(1
)%
 
—
 %
 
(1
)%
 
 
(25
)%
 
(2
)%
 
17
 %
 
(9
)%
 
(5
)%
 





 
Nine Months Ended September 30, 2016
 
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
 
Organic (decline) growth
(29
)%
 
2
 %
 
(7
)%
 
1
 %
 
(7
)%
 
Acquisitions
—
 %
 
3
 %
 
25
 %
 
—
 %
 
6
 %
 
Dispositions
—
 %
 
(4
)%
 
—
 %
 
(6
)%
 
(3
)%
 
Currency translation
(1
)%
 
(1
)%
 
(1
)%
 
—
 %
 
(1
)%
 
 
(30
)%
 
—
 %
 
17
 %
 
(5
)%
 
(5
)%
 


Non-GAAP Disclosures

In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted earnings from continuing operations, adjusted diluted earnings per common share, free cash flow and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for earnings from continuing operations, diluted earnings per common share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.  Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for gains or losses from discrete and other tax items and for gain on disposition of business. Adjusted diluted earnings per common share represents adjusted earnings from continuing operations divided by average diluted shares. Management believes this information is useful to investors to better understand the company’s ongoing profitability and facilitates easier comparisons of the company’s profitability to prior and future periods and to its peers. Free cash flow represents net cash provided by operating activities minus capital expenditures. Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock. Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of our revenue performance and trends between periods.






Earnings Conference Call Third Quarter 2016 October 19, 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 third 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 Q3 Earnings per share Adj. EPS* Q3 2016 Performance Earnings Per Share (continuing operations) Q3 Q3/Q3 * 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 strong markets in Product ID, offset by the impact of weak macro environment, further declines in longer cycle oil & gas markets, and dispositions  Lower US and China activity, improved European activity  Segment margin impacted by lower volume, production inefficiencies, acquisition-related costs and deal costs  Bookings decline largely driven by oil & gas exposure and dispositions, partially offset by impact of acquisitions  Book-to-bill of 0.99 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, $0.04 in Q2 2016 and $0.04 in Q3 2016 Revenue $1.7B -4% $5.0B -5% EPS (cont.) $0.83 -30% $2.22 -23% Adj. EPS (cont.) $0.83 -27% $2.11 -25% Bookings $1.7B -1% $5.1B -2% Seg. Margin 14.1% -290 bps 13.0% -240 bps Adj. Seg. Margin (a) 14.6% -300 bps 13.6% -250 bps Organic Rev. (b) -7% -7% Net Acq. Growth (c) 3% 3% Cash flow from Ops $232M -18% $573M -9% FCF (d) $189M -22% $457M -12% (a) Adjusted for $7.7M of restructuring in Q3 2016, $9.2M in Q2 2016, $14.4M in Q1 2016, $11.5M in Q3 2015, $3.1M in Q2 2015 and $24.1M in Q1 2015 9M 9M/9M (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 Q3 2016 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Dover Organic -24% 1% -9% -2% -7% Acquisitions - 3% 27% - 6% Dispositions - -5% - -6% -4% Currency -1% -1% -1% - - Total -25% -2% 17% -8% -5% 9M 2016 Energy Engineered Systems Fluids Refrigeration & Food Equip Total Dover Organic -29% 2% -7% 1% -7% Acquisitions - 3% 25% - 6% Dispositions - -4% - -6% -3% Currency -1% -1% -1% - -1% Total -30% - 17% -5% -5%

 
5 Energy  Revenue decrease driven by year-over-year declines in oil & gas market fundamentals – Q3 2016 revenue up 5% sequentially  Market macros were more constructive – NA rig count grew in Q3 – Oil prices in $45 - $50 range  Adjusted margin of 6.8% reflects volume and price declines  Bookings decline of 23% reflects weak market conditions – Bookings up 10% sequentially  Book-to-bill at 0.99 5 $ in millions * Q3 2016 earnings adjusted for $5M restructuring, Q3 2015 adjusted for $6M in restructuring costs Q3 2016 Q3 2015 % Change % Organic Revenue $273 $364 -25% -24% Earnings $ 13 $ 49 -73% Margin 4.9% 13.4% -850 bps Adj. Earnings* $ 18 $ 55 -67% Adj. Margin* 6.8% 15.1% -830 bps Bookings $271 $352 -23% -22% Revenue by End-Market % of Q3 Revenue Q3/Q3 Growth Organic Growth Drilling & Production 65% -28% -27% Bearings & Compression 26% -13% -12% Automation 9% -32% -32%

 
6 Engineered Systems  Organic revenue growth of 1% – 5% organic growth in P & I driven by strong marking & coding and digital textile markets – Industrial’s organic decline of 2% primarily driven by activity deferrals and tough comps in Environmental Solutions  Margin of 17.0% primarily reflects unfavorable product mix in Industrial platform  Bookings growth reflects strong Environmental Solutions order activity and acquisition growth, partially offset by dispositions and FX  Book-to-bill of 1.02 6 Q3 2016 Q3 2015 % Change % Organic Revenue(a) $571 $579 -2% 1% Earnings $ 97 $103 -5% Margin 17.0% 17.8% -80 bps Adj. Earnings* $ 99 $107 -7% Adj. Margin* 17.3% 18.5% -120 bps Bookings(b) $580 $565 3% 5% Revenue by End-Market % of Q3 Revenue Q3/Q3 Growth Organic Growth Printing & Identification 44% 11% 5% Industrial 56% -10% -2% $ in millions (a) Revenue declined 2% overall, reflecting organic growth of 1% and acquisition growth of 3%, offset by a 4% impact from dispositions and a 2% unfavorable impact from FX (b) Bookings growth of 3% reflects organic growth of 5% and acquisition growth of 3%, partially offset by a 4% impact from dispositions and a 1% unfavorable impact from FX * Q3 2016 earnings adjusted for $1M restructuring, Q3 2015 adjusted for $4M in restructuring costs

 
7 Fluids  Revenue growth driven by acquisitions and strong hygienic & pharma markets – Organic revenue decline driven by  Project timing  Weak longer cycle upstream & midstream markets  Lower capital spending from integrated energy customers  Margin impacted by lower organic volume, acquisitions, and deal costs  Bookings growth driven by acquisitions  Book-to-bill at 1.00 7 $ in millions Q3 2016 Q3 2015 % Change % Organic Revenue $413 $352 17% -9% Earnings $ 66 $ 75 -12% Margin 16.0% 21.3% -530 bps Bookings $414 $357 16% -9% Revenue by End-Market % of Q3 Revenue Q3/Q3 Growth Organic Growth Pumps 38% 4% -16% Fluid Transfer 62% 27% -4%

 
8 Refrigeration & Food Equipment  Organic revenue decline of 2% primarily driven by project timing in can-shaping equipment business  Margin performance reflects production inefficiencies at Hillphoenix and product mix  Organic bookings growth of 6% driven by strong order activity in can-shaping business that will ship in 2017  Book-to-bill at 0.95 8 $ in millions Q3 2016 Q3 2015 % Change % Organic Revenue(a) $451 $492 -8% -2% Earnings $ 64 $ 77 -16% Margin 14.2% 15.6% -140 bps Bookings(b) $429 $431 ≈ Flat 6% Revenue by End-Market % of Q3 Revenue Q3/Q3 Growth Organic Growth Refrigeration 79% -9% Flat Food Equipment 21% -8% -8% (a) Revenue decline of 8% reflects organic decline of 2% and a 6% impact from dispositions (b) Flat bookings reflects organic growth of 6%, offset by a 6% impact from dispositions

 
9 Q3 2016 Overview 9 Q3 2016 Net Interest Expense $33 million, in-line with forecast Corporate Expense $27 million, in-line with forecast Effective Tax Rate (ETR) Q3 rate was 28% Capex $43 million, generally in-line with forecast Share Repurchases No activity

 
10 FY 2016 Guidance  Revenue – Organic revenue: (8% - 7%) – Acquisitions: ≈ 7% – Dispositions: (≈ 3%) – FX impact: (≈ 1%) – Total revenue: (5% - 4%)  Corporate expense: ≈ $110 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 (29% - 26%) Engineered Systems 0% - 1% Fluids (7% - 6%) Refrigeration & Food Equipment (-1%) - 0% Total organic (8% - 7%) Acquisitions ≈ 7% Dispositions (≈ 3%) FX Impact (≈ 1%) Total revenue (5% - 4%)

 
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): ≈ 0.05 – Performance including restructuring benefits(3): (0.73 - 0.71) – Compensation & investment: (0.11 - 0.09) – Net acquisitions(4): ≈ 0.07 – Shares(5): ≈ 0.08 – Interest / Corp. / Tax rate / Other (net): (0.03 - 0.02) – 2016 tax items(6): ≈ 0.04  2016F EPS – Continuing Ops $3.00 - $3.05 (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 $0.20 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, $0.03 of Q3 2016 deal costs, and $0.01 of anticipated Q4 2016 deal costs (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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