Dover Announces New Segment Structure And Executive Appointments

New Segment Structure Focused on Driving Growth

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Mar 05, 2014, 08:30 ET

DOWNERS GROVE, Ill., March 5, 2014 /PRNewswire/ -- Dover (NYSE: DOV) today announced that the company has realigned its businesses into a new segment structure organized around its key end-markets to better focus on growth strategies. The new structure will also provide increased opportunities to leverage its scale and capitalize on productivity initiatives. Supporting this new structure, the company also announced, effective immediately, the promotions of C. Anderson (Andy) Fincher and William (Bill) Johnson. Mr. Fincher and Mr. Johnson have been named President & CEO of the Engineered Systems and President & CEO of the Refrigeration & Food Equipment segments, respectively.

The four segments are as follows:

Dover Energy is a leading provider of customer driven solutions and services for safe and efficient production and processing of fuels worldwide, and has a strong presence in the bearings and compression components markets. Under the new structure, the Energy segment had 2013 full-year revenue of approximately $1.9 billion. Soma Somasundaram will continue to serve as President and CEO of the Energy segment.

Dover Engineered Systems is focused on the design, manufacture and service of critical equipment and components serving the printing & identification, transportation, waste handling and industrial end-markets. Under the new structure, Engineered Systems had 2013 full-year revenue of approximately $2.5 billion. Andy Fincher, formerly EVP of Engineered Systems, has been appointed President and CEO of the Engineered Systems segment.

Dover Fluids is focused on the safe handling of critical fluids across the oil & gas, retail fueling, chemical, hygienic and industrial end-markets. Under the new structure, this segment had 2013 full-year revenue of approximately $1.2 billion. William (Bill) Spurgeon has been named President and CEO of Fluids.

Dover Refrigeration & Food Equipment is the leading provider of innovative and energy efficient equipment and systems serving the commercial refrigeration and food service industries. Under the new structure, this segment had 2013 full-year revenue of approximately $1.9 billion. Bill Johnson, formerly President of Hillphoenix, has been appointed President and CEO of Refrigeration & Food Equipment.

Commenting on this announcement, Robert A. Livingston, Dover's President and Chief Executive Officer, said, "I am pleased to announce our new segment structure which will better enable us to focus on our key markets and leverage our scale, while we continue our emphasis on geographic market expansion, innovation and exceptional customer service."

Mr. Livingston added, "I am also happy to see the benefits of our talent development program with the promotions of Andy Fincher and Bill Johnson. Both executives have developed long track records of accomplishment at Dover and are proven leaders. Their continued focus on serving customers and driving productivity has enabled them to build strong and profitable businesses throughout their careers. I'm confident that both Andy and Bill will excel in their new positions."

The realignment will be reflected in Dover's quarterly and full-year 2014 financial results. Going forward, Dover will provide customary segment data, including revenue and bookings data, as well as market commentary, on the new segment basis.

About William (Bill) Johnson
Mr. Johnson, 50, joined Dover in August 2006 as Executive Vice President at Hillphoenix with responsibility for the Case and Refrigeration Systems divisions. A year later he became President of Dover's Triton Systems business. In August 2008 he returned to Hillphoenix where he became President. Prior to joining Hillphoenix, Bill was President and CEO of Graham Corporation, a leading designer and manufacturer of vacuum and heat transfer equipment for energy markets and process industries worldwide. Mr. Johnson earned his Bachelor of Science degree in ceramic engineering from Alfred University and his MBA from Rollins College. He also served as an officer in the United States Navy from 1985 to 1990 as a nuclear engineer for submarines.

About C. Anderson (Andy) Fincher
Mr. Fincher, 43, joined Dover in 1994 as part of The Heil Company, where he held several positions of leadership in the areas of international business development, marketing, sales and operations. He was then named President of Heil Trailer in 2005. In May 2009 Andy was appointed Executive Vice President of Dover Industrial Products. Prior to his recent promotion, Andy had held the position of Executive Vice President of Dover Engineered Systems since November 2011. Mr. Fincher holds a Bachelor of Science degree in mechanical engineering from Tennessee Technological University and an Executive MBA degree from University of Tennessee.

About Dover:
Dover is a diversified global manufacturer with annual revenues of $8 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 nearly 60 years, our team of 25,000 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.

Non-GAAP Information:
The following Investor Supplement tables contain historical financial information presented under Dover's new segment structure, as discussed within this release. These segment level disclosures are considered "Non-GAAP" financial information until such time that the new segment reporting structure is included within a periodic filing with the Securities and Exchange Commission. Management believes this non-GAAP financial information is useful to investors to better understand historical trends under the revised segment structure, which the company will be reporting under in its Form 10-Q for the quarter ending March 31, 2014.

Dover makes information available to the public, orally and in writing, which may use "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that concern future events and the performance of Dover. 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 risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained in this press release. Dover undertakes no obligation to update any forward-looking statement.

INVESTOR SUPPLEMENT

DOVER CORPORATION Revenue, Earnings & Other Data by Segment (unaudited)(in thousands, except per share data)

	Years Ended December 31,
	2013			2012			2011
REVENUE:
Energy	$	1,853,853		$	1,788,295		$	1,546,684
Engineered Systems	2,538,562			2,498,800			2,453,129
Fluids	1,236,838			1,087,526			890,989
Refrigeration & Food Equipment	1,887,840			1,607,602			1,495,361
Intra-segment eliminations	(1,440)			(768)			440
Total consolidated revenue	$	7,515,653		$	6,981,455		$	6,386,603

EARNINGS FROM CONTINUING OPERATIONS:
Segment earnings:
Energy	$	459,649		$	466,801		$	393,978
Engineered Systems	399,448			369,842			350,363
Fluids	224,523			182,544			162,297
Refrigeration & Food Equipment	267,307			223,397			191,484
Total segments	1,350,927			1,242,584			1,098,122
Corporate expense / other	129,776			135,811			137,395
Net interest expense	120,672			121,268			115,485
Earnings from continuing operations before provision for income taxes	1,100,479			985,505			845,242
Provision for income taxes	266,407			301,027			229,786
Earnings from continuing operations	$	834,072		$	684,478		$	615,456

BASIC EARNINGS PER COMMON SHARE:
Earnings from continuing operations	$	4.87		$	3.77		$	3.31
Weighted average shares outstanding	171,271			181,551			185,882

DILUTED EARNINGS PER COMMON SHARE:
Earnings from continuing operations	$	4.81		$	3.72		$	3.26
Weighted average shares outstanding	173,547			183,993			188,887

ADJUSTED DILUTED EARNINGS PER COMMON SHARE:
Earnings from continuing operations	$	4.81		$	3.72		$	3.26
Gains from discrete and other tax items	0.46			0.09			0.23
Other one-time gains, net of tax	0.02			—			—
Adjusted earnings from continuing operations	$	4.33		$	3.63		$	3.03

OPERATING MARGINS:
Energy	24.8		%	26.1		%	25.5		%
Engineered Systems	15.7		%	14.8		%	14.3		%
Fluids	18.2		%	16.8		%	18.2		%
Refrigeration & Food Equipment	14.2		%	13.9		%	12.8		%
Total segments	18.0		%	17.8		%	17.2		%

DEPRECIATION AND AMORTIZATION EXPENSE:
Energy	$	99,075		$	87,922		$	70,652
Engineered Systems	71,582			74,158			76,423
Fluids	48,812			41,381			24,824
Refrigeration & Food Equipment	67,227			37,295			32,658
Corporate	3,861			2,666			2,560
Consolidated total	$	290,557		$	243,422		$	207,117

DOVER CORPORATION QUARTERLY SEGMENT INFORMATION (unaudited)(in thousands)

	2013										2012
	Q1		Q2		Q3		Q4		FY 2013		Q1		Q2		Q3		Q4		FY 2012
REVENUE:
Energy	$	462,679	$	465,906	$	467,688	$	457,580	$	1,853,853	$	437,438	$	442,493	$	463,046	$	445,318		$	1,788,295
Engineered Systems	605,325		639,426		642,205		651,606		2,538,562		619,966		633,355		623,944		621,535			2,498,800
Fluids	273,638		310,137		309,241		343,822		1,236,838		246,603		278,782		285,939		276,202			1,087,526
Refrigeration & Food Equipment	422,468		517,574		521,322		426,476		1,887,840		390,227		423,579		425,416		368,380			1,607,602
Intra-segment eliminations	(133)		(632)		(245)		(430)		(1,440)		(221)		(224)		84		(407)			(768)
Total consolidated revenue	$	1,763,977	$	1,932,411	$	1,940,211	$	1,879,054	$	7,515,653	$	1,694,013	$	1,777,985	$	1,798,429	$	1,711,028		$	6,981,455

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES:
Segment earnings:
Energy	$	118,708	$	109,662	$	119,086	$	112,193	$	459,649	$	116,424	$	115,688	$	118,379	$	116,310		$	466,801
Engineered Systems	83,283		102,804		111,850		101,511		399,448		82,305		92,817		98,926		95,794			369,842
Fluids	47,601		58,768		63,056		55,098		224,523		41,989		43,325		51,138		46,092			182,544
Refrigeration & Food Equipment	52,110		82,177		86,446		46,574		267,307		56,361		62,789		71,869		32,378			223,397
Total segments	301,702		353,411		380,438		315,376		1,350,927		297,079		314,619		340,312		290,574			1,242,584
Corporate expense / other	33,632		34,860		32,532		28,752		129,776		36,216		36,762		31,874		30,959			135,811
Net interest expense	30,284		30,232		30,236		29,920		120,672		30,027		29,680		30,495		31,066			121,268
Earnings from continuing operations before provision for income taxes	$	237,786	$	288,319	$	317,670	$	256,704	$	1,100,479	$	230,836	$	248,177	$	277,943	$	228,549		$	985,505

SEGMENT OPERATING MARGIN:
Energy	25.7%		23.5%		25.5%		24.5%		24.8%		26.6%		26.1%		25.6%		26.1%			26.1%
Engineered Systems	13.8%		16.1%		17.4%		15.6%		15.7%		13.3%		14.7%		15.9%		15.4%			14.8%
Fluids	17.4%		18.9%		20.4%		16.0%		18.2%		17.0%		15.5%		17.9%		16.7%			16.8%
Refrigeration & Food Equipment	12.3%		15.9%		16.6%		10.9%		14.2%		14.4%		14.8%		16.9%		8.8%			13.9%
Total segments	17.1%		18.3%		19.6%		16.8%		18.0%		17.5%		17.7%		18.9%		17.0%			17.8%

DOVER CORPORATION QUARTERLY SEGMENT INFORMATION (continued) (unaudited)(in thousands)
	2013										2012
	Q1		Q2		Q3		Q4		FY 2013		Q1		Q2		Q3		Q4		FY 2012
BOOKINGS:
Energy	$	515,388	$	416,892	$	481,021	$	440,261	$	1,853,562	$	482,045	$	438,167	$	427,395	$	453,973	$	1,801,580
Engineered Systems	642,764		656,137		600,969		642,468		2,542,338		649,471		624,124		609,813		616,796		2,500,204
Fluids	303,609		298,817		307,729		351,767		1,261,922		259,726		266,554		270,720		276,665		1,073,665
Refrigeration & Food Equipment	482,742		515,320		433,426		450,850		1,882,338		441,607		409,738		375,898		369,126		1,596,369
Intra-segment eliminations	(560)		(708)		(416)		734		(950)		(262)		(425)		(933)		(1,147)		(2,767)
Total consolidated bookings	$	1,943,943	$	1,886,458	$	1,822,729	$	1,886,080	$	7,539,210	$	1,832,587	$	1,738,158	$	1,682,893	$	1,715,413	$	6,969,051

BACKLOG:
Energy	$	274,733	$	218,764	$	233,820	$	206,790			$	257,424	$	249,056	$	216,011	$	224,284
Engineered Systems	510,831		525,697		485,155		474,040				525,446		509,064		495,830		488,714
Fluids	222,255		228,212		228,880		310,330				233,080		208,195		195,966		195,794
Refrigeration & Food Equipment	417,246		412,366		324,042		347,004				416,608		400,354		351,943		360,059
Intra-segment eliminations	(385)		(526)		(387)		(592)				(526)		(311)		(297)		(408)
Total consolidated backlog	$	1,424,680	$	1,384,513	$	1,271,510	$	1,337,572			$	1,432,032	$	1,366,358	$	1,259,453	$	1,268,443

Details of New Segment Structure

Dover's new segment structure is comprised of the following four segments and their respective business units:

The Energy segment is comprised of Norris Production Systems, Tulsa Winch Group, US Synthetic, Cook Compression, Waukesha Bearings and Quartzdyne;
The Engineered Systems segment is comprised of two platforms, Printing & Identification and Industrial. Within the Printing & Identification platform is Datamax O'Neil, Markem Imaje, MS Printing Solutions and OK International. The Industrial platform includes De-Sta-Co, Environmental Solutions Group, Performance Motorsports, Texas Hydraulics, Vehicle Service Group, Warn, Microwave Products Group and Sargent;
The Fluids segment is comprised of Pump Solutions Group, OPW, PDQ, HydroSystems and Colder;
The Refrigeration & Food Equipment segment is comprised Hillphoenix, SWEP, Tipper Tie, Unified Brands and Belvac.

SOURCE Dover Corporation