Dover Corporation Reports Second Quarter 2012 Results

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Jul 18, 2012, 07:00 ET

DOWNERS GROVE, Ill., July 18, 2012 /PRNewswire-FirstCall/ --

Reports revenue of $2.2 billion, an increase of 8% over the prior year
Delivers quarterly diluted earnings per share from continuing operations of $1.15
Expects full-year revenue growth of 8% - 10%, and full-year earnings per share from continuing operations to be $4.70 - $4.85

Dover Corporation (NYSE: DOV) announced today that for the second quarter ended June 30, 2012, revenue was $2.2 billion, an increase of 8% over the prior-year period. The revenue increase was driven by organic growth of 3% and a 7% increase from acquisitions, offset in part by a 2% unfavorable impact from foreign exchange. Earnings from continuing operations were $212.9 million, or $1.15 diluted earnings per share ("EPS"), compared to $239.2 million, or $1.26 EPS, in the prior-year period, representing decreases in earnings from continuing operations and EPS of 11% and 9%, respectively. Excluding $0.12 of tax benefits in the prior-year period, EPS from continuing operations increased 1% in the 2012 second quarter.

Revenue for the six months ended June 30, 2012 was $4.2 billion, an increase of 11% over the prior-year period, reflecting organic growth of 6%, a 6% increase from acquisitions and a 1% unfavorable impact from foreign exchange. Earnings from continuing operations for the six months ended June 30, 2012 were $409.7 million, or $2.20 EPS, compared to $414.0 million, or $2.18 EPS in the prior-year period, representing a decrease in earnings from continuing operations of 1% and an increase in EPS of 1%. Excluding the impact of tax benefits of $0.16 EPS in the prior-year period, adjusted diluted EPS for the six months ended June 30, 2012 increased 9%.

Commenting on the second quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our strong positions in the energy, handset and refrigeration & food equipment markets enabled us to offset significant macroeconomic headwinds, most notably a weak European economy. While our second quarter results were less than we expected, business activity remains solid in most of our businesses as evidenced by our 0.99 book-to-bill."

"I was especially encouraged with increasing order rates for our new products connected with OEM handset launches. The continuation of this activity, coupled with our solid outlook for our businesses serving the oil production, downstream energy, fast moving consumer goods and U.S. industrial markets, give me confidence that we will be able to deliver a stronger second half of 2012."

"Looking forward, we now expect full-year 2012 revenue growth of 8% - 10%, comprised of organic revenue growth of 3% - 5%, plus growth from completed acquisitions of 5%. Based on this revenue assumption, we expect full-year diluted EPS from continuing operations in the range of $4.70 - $4.85."

Net earnings for the second quarter of 2012 were $214.1 million or $1.15 EPS, including a net gain from discontinued operations of $1.2 million, compared to net earnings of $249.8 million, or $1.32 EPS, for the same period of 2011, which included a gain from discontinued operations of $10.6 million, or $0.06 EPS. Net earnings for the six months ended June 30, 2012 were $410.2 million, or $2.20 EPS, including a net gain from discontinued operations of $0.4 million, compared to net earnings of $444.7 million, or $2.34 EPS for the same period of 2011, which included a gain from discontinued operations of $30.7 million or $0.16 EPS.

Dover will host a webcast of its second quarter 2012 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, July 18, 2012. The webcast can be accessed at the Dover Corporation 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 Corporation is a multi-billion dollar diversified global manufacturer. For over 50 years, Dover has been providing its customers with outstanding products and services that reflect the company's commitment to operational excellence, innovation and market leadership. The company focuses on innovative equipment and components, specialty systems and support services through its four major operating segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Dover is headquartered in Downers Grove, Illinois and employs 35,000 people worldwide. Dover Corporation is traded on the New York Stock Exchange under "DOV." Additional information is available on the company's website at www.dovercorporation.com.

Forward-Looking Statement:

This press release contains "forward-looking" statements within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover companies operate and the U.S. and global economies. Statements in this press release that are not historical may be indicated by words or phrases such as "anticipates," "expects," "believes," "indicates," "suggests," "will," "plans," "supports," "projects," "should," "would," "could," "hope," "forecast" and "management is of the opinion," use of 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, uncertainties in the credit and capital markets, interest rates, currency exchange rates, the world economy and sovereign credit, especially in Europe; political events and possible future terrorist threats that could impact countries where Dover does business or the worldwide economy; the impact of natural disasters and their effect on global supply chains and energy markets; increases in the cost of raw materials; the Company's ability to achieve expected savings from integration, synergy and other cost-control initiatives; the ability to identify and successfully consummate value-adding acquisition opportunities; increased competition and pricing pressures in the markets served by Dover's operating companies; the ability of Dover's companies to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; the impact of loss of a single-source manufacturing facility; changes in customer demand; a downgrade in Dover's credit ratings; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; domestic and foreign governmental and public policy changes including environmental regulations, tax policies, export subsidy programs, R&E credits and other similar programs; unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; and the cyclical nature of some of Dover's companies. Dover Corporation 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 in this press release. Dover Corporation undertakes no obligation to update any forward-looking statement.

INVESTOR SUPPLEMENT - SECOND QUARTER 2012

DOVER CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited)(in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue	$	2,156,508	$	1,994,970	$	4,219,872	$	3,807,048
Cost of goods and services	1,338,911		1,218,974		2,621,951		2,319,301
Gross profit	817,597		775,996		1,597,921		1,487,747
Selling and administrative expenses	494,050		448,399		974,930		901,826
Operating earnings	323,547		327,597		622,991		585,921
Interest expense, net	29,717		28,157		59,744		56,475
Other expense, net	142		1,477		2,764		2,665
Earnings before provision for income taxes and discontinued operations	293,688		297,963		560,483		526,781
Provision for income taxes	80,786		58,765		150,754		112,792
Earnings from continuing operations	212,902		239,198		409,729		413,989
Earnings from discontinued operations, net	1,199		10,571		435		30,685
Net earnings	$	214,101	$	249,769	$	410,164	$	444,674

Comprehensive earnings	$	120,514	$	269,404	$	357,819	$	535,970

Basic earnings per common share:
Earnings from continuing operations	$	1.16	$	1.28	$	2.23	$	2.22
Earnings from discontinued operations, net	0.01		0.06		—		0.16
Net earnings	1.17		1.34		2.23		2.38

Weighted average shares outstanding	183,494		186,443		183,625		186,522

Diluted earnings per common share:
Earnings from continuing operations	$	1.15	$	1.26	$	2.20	$	2.18
Earnings from discontinued operations, net	0.01		0.06		—		0.16
Net earnings	1.15		1.32		2.20		2.34

Weighted average shares outstanding	185,780		189,705		186,171		189,905

Dividends paid per common share	$	0.315	$	0.275	$	0.63	$	0.55

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

	2012									2011
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2011
REVENUE
Communication Technologies	$	357,575		$	361,689		$	719,264		$	269,582		$	288,843		$	558,425		$	405,357		$	396,295		$	1,360,077

Energy	531,570			538,786			1,070,356			425,424			454,327			879,751			510,608			510,390			1,900,749

Engineered Systems
Fluid Solutions	180,364			211,974			392,338			163,196			178,031			341,227			173,804			162,590			677,621
Refrigeration & Industrial	642,213			674,501			1,316,714			560,453			645,573			1,206,026			649,768			568,844			2,424,638
Eliminations	(453)			(352)			(805)			(382)			(424)			(806)			(431)			(287)			(1,524)
	822,124			886,123			1,708,247			723,267			823,180			1,546,447			823,141			731,147			3,100,735

Printing & Identification	352,332			370,173			722,505			394,627			429,497			824,124			400,515			368,325			1,592,964

Intra-segment eliminations	(237)			(263)			(500)			(822)			(877)			(1,699)			(1,015)			(1,671)			(4,385)

Total consolidated revenue	$	2,063,364		$	2,156,508		$	4,219,872		$	1,812,078		$	1,994,970		$	3,807,048		$	2,138,606		$	2,004,486		$	7,950,140

NET EARNINGS
Segment Earnings:
Communication Technologies	$	46,556		$	50,322		$	96,878		$	47,325		$	54,527		$	101,852		$	53,433		$	71,097		$	226,382
Energy	132,115			133,936			266,051			93,051			110,447			203,498			125,268			121,871			450,637
Engineered Systems	122,092			133,808			255,900			98,235			128,570			226,805			125,529			92,852			445,186
Printing & Identification	32,605			41,674			74,279			54,637			67,967			122,604			59,447			44,483			226,534
Total Segments	333,368			359,740			693,108			293,248			361,511			654,759			363,677			330,303			1,348,739
Corporate expense / other	36,546			36,335			72,881			36,112			35,391			71,503			34,083			32,393			137,979
Net interest expense	30,027			29,717			59,744			28,318			28,157			56,475			30,061			29,060			115,596
Earnings from continuing operations before provision for income taxes	266,795			293,688			560,483			228,818			297,963			526,781			299,533			268,850			1,095,164
Provision for income taxes	69,968			80,786			150,754			54,027			58,765			112,792			76,095			59,912			248,799
Earnings from continuing operations	196,827			212,902			409,729			174,791			239,198			413,989			223,438			208,938			846,365
Earnings (loss) from discontinued operations, net	(764)			1,199			435			20,114			10,571			30,685			(51,158)			69,351			48,878
Net earnings	$	196,063		$	214,101		$	410,164		$	194,905		$	249,769		444,674			$	172,280		278,289			$	895,243

SEGMENT OPERATING MARGIN
Communication Technologies	13.0		%	13.9		%	13.5		%	17.6		%	18.9		%	18.2		%	13.2		%	17.9		%	16.6		%
Energy	24.9		%	24.9		%	24.9		%	21.9		%	24.3		%	23.1		%	24.5		%	23.9		%	23.7		%
Engineered Systems	14.9		%	15.1		%	15.0		%	13.6		%	15.6		%	14.7		%	15.2		%	12.7		%	14.4		%
Printing & Identification	9.3		%	11.3		%	10.3		%	13.8		%	15.8		%	14.9		%	14.8		%	12.1		%	14.2		%
Total Segment	16.2		%	16.7		%	16.4		%	16.2		%	18.1		%	17.2		%	17.0		%	16.5		%	17.0		%

DEPRECIATION AND AMORTIZATION EXPENSE
Communication Technologies	$	31,513		$	32,828		$	64,341		$	18,685		$	18,533		$	37,218		$	34,360		$	30,261		$	101,839
Energy	21,184			23,533			44,717			18,573			18,765			37,338			19,399			21,082			77,819
Engineered Systems	19,582			23,913			43,495			18,415			18,816			37,231			18,332			19,213			74,776
Printing & Identification	11,206			11,448			22,654			11,372			11,685			23,057			11,548			11,543			46,148
Corporate	700			765			1,465			586			626			1,212			636			713			2,561
	$	84,185		$	92,487		$	176,672		$	67,631		$	68,425		$	136,056		$	84,275		$	82,812		$	303,143

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

	2012						2011
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2011
BOOKINGS
Communication Technologies	$	356,386	$	383,135	$	739,521	$	274,611	$	309,734	$	584,345	$	410,616	$	349,579	$	1,344,540

Energy	585,775		530,352		1,116,127		495,125		472,543		967,668		498,212		519,525		1,985,405

Engineered Systems
Fluid Solutions	184,711		204,139		388,850		173,626		175,539		349,165		174,772		158,895		682,832
Refrigeration & Industrial	711,911		666,223		1,378,134		660,449		623,929		1,284,378		602,488		625,840		2,512,706
Eliminations	(408)		(376)		(784)		(733)		(884)		(1,617)		179		(1,378)		(2,816)
	896,214		869,986		1,766,200		833,342		798,584		1,631,926		777,439		783,357		3,192,722

Printing & Identification	347,368		357,648		705,016		438,526		386,259		824,785		384,085		353,849		1,562,719

Intra-segment eliminations	(609)		(222)		(831)		(2,736)		(3,370)		(6,106)		(2,452)		(3,153)		(11,711)

Total consolidated bookings	$	2,185,134	$	2,140,899	$	4,326,033	$	2,038,868	$	1,963,750	$	4,002,618	$	2,067,900	$	2,003,157	$	8,073,675

BACKLOG
Communication Technologies	$	435,912	$	457,624			$	410,843	$	431,558			$	483,512	$	437,320

Energy	296,360		282,364				240,198		255,889				243,401		246,351

Engineered Systems
Fluid Solutions	191,327		172,300				57,357		54,945				55,230		54,194
Refrigeration & Industrial	598,910		586,824				544,995		523,011				469,876		528,118
Eliminations	(132)		(155)				(339)		(526)				(94)		(177)
	790,105		758,969				602,013		577,430				525,012		582,135

Printing & Identification	177,511		160,311				262,629		220,619				197,792		180,871

Intra-segment eliminations	(987)		(647)				(704)		(1,178)				(891)		(193)

Total consolidated backlog	$	1,698,901	$	1,658,621			$	1,514,979	$	1,484,318			$	1,448,826	$	1,446,484

DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data)

	2012						2011
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2011
Basic earnings (loss) per common share:
Continuing operations	$	1.07	$	1.16	$	2.23	$	0.94	$	1.28	$	2.22	$	1.20	$	1.13	$	4.55
Discontinued operations	—		0.01		—		0.11		0.06		0.16		(0.28)		0.38		0.26
Net earnings	1.07		1.17		2.23		1.04		1.34		2.38		0.93		1.51		4.82

Diluted earnings (loss) per common share:
Continuing operations	$	1.05	$	1.15	$	2.20	$	0.92	$	1.26	$	2.18	$	1.19	$	1.12	$	4.48
Discontinued operations	—		0.01		—		0.11		0.06		0.16		(0.27)		0.37		0.26
Net earnings	1.05		1.15		2.20		1.03		1.32		2.34		0.91		1.49		4.74

Adjusted diluted earnings per common share (calculated below):
Continuing operations	$	1.05	$	1.15	$	2.20	$	0.88	$	1.14	$	2.02	$	1.18	$	1.07	$	4.26


Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:

Net earnings (loss):
Continuing operations	$	196,827	$	212,902	$	409,729	$	174,791	$	239,198	$	413,989	$	223,438	$	208,938	$	846,365
Discontinued operations	(764)		1,199		435		20,114		10,571		30,685		(51,158)		69,351		48,878
Net earnings	196,063		214,101		410,164		194,905		249,769		444,674		172,280		278,289		895,243

Average shares outstanding:
Basic	183,737		183,494		183,625		186,659		186,443		186,522		185,770		184,686		185,882
Diluted	186,706		185,780		186,171		190,090		189,705		189,905		188,436		187,208		188,887

NOTE:
Earnings from continuing operations are adjusted by discrete and other tax items to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:

	2012						2011
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2011
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	196,827	$	212,902	$	409,729	$	174,791	$	239,198	$	413,989	$	223,438	$	208,938	$	846,365
Gains (losses) from discrete and other tax items	1,432		(372)		1,060		8,016		22,338		30,354		2,390		8,590		41,334
Adjusted earnings from continuing operations	$	195,395	$	213,274	$	408,669	$	166,775	$	216,860	$	383,635	$	221,048	$	200,348	$	805,031

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	1.05	$	1.15	$	2.20	$	0.92	$	1.26	$	2.18	$	1.19	$	1.12	$	4.48
Gains (losses) from discrete and other tax items	—		—		—		0.04		0.12		0.16		0.01		0.05		0.22
Adjusted earnings from continuing operations	$	1.05	$	1.15	$	2.20	$	0.88	$	1.14	$	2.02	$	1.18	$	1.07	$	4.26

DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)

	2012									2011
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2011
Cash flow from operating activities	$	160,127		$	252,120		$	412,247		$	117,503		$	205,260		$	322,763		$	376,614		$	358,852		$	1,058,229
Less: Additions to property, plant and equipment	(71,429)			(74,358)			(145,787)			(51,379)			(72,338)			(123,717)			(65,000)			(83,092)			(271,809)
Free cash flow	$	88,698		$	177,762		$	266,460		$	66,124		$	132,922		$	199,046		$	311,614		$	275,760		$	786,420

Free cash flow as a percentage of earnings from continuing operations	45.1		%	83.5		%	65.0		%	37.8		%	55.6		%	48.1		%	139.5		%	132.0		%	92.9		%

Free cash flow as a percentage of revenue	4.3		%	8.2		%	6.3		%	3.6		%	6.7		%	5.2		%	14.6		%	13.8		%	9.9		%