Dover Corporation Reports Third Quarter 2012 Results

News provided by

Oct 17, 2012, 07:00 ET

DOWNERS GROVE, Ill., Oct. 17, 2012 /PRNewswire-FirstCall/ --

Reports revenue of $2.2 billion, an increase of 3% over the prior year
Delivers quarterly diluted earnings per share from continuing operations of $1.32, an increase of 11%
Revises outlook for full-year revenue growth and earnings per share; now expects revenue growth to be approximately 7%, and earnings per share to be $4.55 - $4.65

Dover Corporation (NYSE: DOV) announced today that for the third quarter ended September 30, 2012, revenue was $2.2 billion, an increase of 3% over the prior-year period. The revenue increase was driven by organic growth of 1% and a 4% increase from acquisitions, offset in part by a 2% unfavorable impact from foreign exchange. Earnings from continuing operations were $242.2 million, or $1.32 diluted earnings per share ("EPS"), compared to $223.4 million, or $1.19 EPS, in the prior-year period, representing increases in earnings from continuing operations and EPS of 8% and 11%, respectively, inclusive of minor tax benefits realized in both periods.

Revenue for the nine months ended September 30, 2012 was $6.4 billion, an increase of 8% over the prior-year period, reflecting organic growth of 4%, a 6% increase from acquisitions and a 2% unfavorable impact from foreign exchange. Earnings from continuing operations for the nine months ended September 30, 2012 were $651.9 million, or $3.51 EPS, compared to $637.4 million, or $3.37 EPS in the prior-year period, representing an increase in earnings from continuing operations of 2% and an increase in EPS of 4%. Excluding the impact of tax benefits of $0.03 EPS in the nine months ended September 30, 2012 and $0.17 EPS in the prior-year period, adjusted diluted EPS from continuing operations increased 9%.

Commenting on the third quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "The third quarter demonstrated the strength of our businesses as we leveraged modest revenue growth with 18% segment margin and delivered $1.32 EPS. The margin performance was especially encouraging because it was broad-based, as Communication Technologies, Printing & Identification and Engineered Systems all showed significant sequential improvement, while Energy remained very strong."

"While the quarter was solid and the majority of our businesses are performing very well, we are facing near-term revenue challenges in the Handset and Electronics markets, along with the continuing uncertain global economic environment."

"Taking these challenges into account, we now expect full-year 2012 revenue growth of approximately 7%, comprised of organic growth of 3% (inclusive of a 2% unfavorable impact from foreign exchange), plus growth from completed acquisitions of 4%. Based on this revenue assumption, we expect full-year diluted EPS from continuing operations to be in the range of $4.55 - $4.65."

Net earnings for the third quarter of 2012 were $241.0 million or $1.31 EPS, including a net loss from discontinued operations of $1.2 million, or $0.01 EPS, compared to net earnings of $172.3 million, or $0.91 EPS, for the same period of 2011, which included a loss from discontinued operations of $51.2 million, or $0.27 EPS. Net earnings for the nine months ended September 30, 2012 were $651.2 million, or $3.51 EPS, including a net loss from discontinued operations of $0.7 million, compared to net earnings of $617.0 million, or $3.26 EPS for the same period of 2011, which included a loss from discontinued operations of $20.5 million or $0.11 EPS.

Dover will host a webcast of its third quarter 2012 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, October 17, 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 third 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 - THIRD QUARTER 2012

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Revenue	$	2,208,699	$	2,138,606	$	6,428,571	$	5,945,654
Cost of goods and services	1,361,769		1,332,324		3,983,720		3,651,625
Gross profit	846,930		806,282		2,444,851		2,294,029
Selling and administrative expenses	476,573		476,640		1,451,503		1,378,466
Operating earnings	370,357		329,642		993,348		915,563
Interest expense, net	30,388		30,061		90,132		86,536
Other expense, net	3,962		48		6,726		2,713
Earnings before provision for income taxes and discontinued operations	336,007		299,533		896,490		826,314
Provision for income taxes	93,794		76,095		244,548		188,887
Earnings from continuing operations	242,213		223,438		651,942		637,427
Loss from discontinued operations, net	(1,167)		(51,158)		(732)		(20,473)
Net earnings	$	241,046	$	172,280	$	651,210	$	616,954

Comprehensive earnings	$	334,327	$	47,957	$	692,146	$	583,927

Basic earnings per common share:
Earnings from continuing operations	$	1.33	$	1.20	$	3.56	$	3.42
Loss from discontinued operations, net	(0.01)		(0.28)		—		(0.11)
Net earnings	1.33		0.93		3.56		3.31

Weighted average shares outstanding	181,763		185,770		183,000		186,246

Diluted earnings per common share:
Earnings from continuing operations	$	1.32	$	1.19	$	3.51	$	3.37
Loss from discontinued operations, net	(0.01)		(0.27)		—		(0.11)
Net earnings	1.31		0.91		3.51		3.26

Weighted average shares outstanding	183,932		188,436		185,489		189,420

Dividends paid per common share	$	0.35	$	0.315	$	0.98	$	0.865

DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
	2012
	Q1			Q2			Q3			Q3 YTD			Q1			Q2			Q3			Q3 YTD			Q4			FY 2011
REVENUE
Communication Technologies	$	357,575		$	361,689		$	396,470		$	1,115,734		$	269,582		$	288,843		$	405,357		$	963,782		$	396,295		$	1,360,077

Energy	531,570			538,786			562,263			1,632,619			425,424			454,327			510,608			1,390,359			510,390			1,900,749

Engineered Systems
Fluid Solutions	180,364			211,974			218,324			610,662			163,196			178,031			173,804			515,031			162,590			677,621
Refrigeration & Industrial	642,213			674,501			674,116			1,990,830			560,453			645,573			649,768			1,855,794			568,844			2,424,638
Eliminations	(453)			(352)			(319)			(1,124)			(382)			(424)			(431)			(1,237)			(287)			(1,524)
	822,124			886,123			892,121			2,600,368			723,267			823,180			823,141			2,369,588			731,147			3,100,735

Printing & Identification	352,332			370,173			358,086			1,080,591			394,627			429,497			400,515			1,224,639			368,325			1,592,964

Intra-segment eliminations	(237)			(263)			(241)			(741)			(822)			(877)			(1,015)			(2,714)			(1,671)			(4,385)

Total consolidated revenue	$	2,063,364		$	2,156,508		$	2,208,699		$	6,428,571		$	1,812,078		$	1,994,970		$	2,138,606		$	5,945,654		$	2,004,486		$	7,950,140

NET EARNINGS
Segment Earnings:
Communication Technologies	$	46,556		$	50,322		$	63,706		$	160,584		$	47,325		$	54,527		$	53,433		$	155,285		$	71,097		$	226,382
Energy	132,115			133,936			139,038			405,089			93,051			110,447			125,268			328,766			121,871			450,637
Engineered Systems	122,092			133,808			144,245			400,145			98,235			128,570			125,529			352,334			92,852			445,186
Printing & Identification	32,605			41,674			51,407			125,686			54,637			67,967			59,447			182,051			44,483			226,534
Total Segments	333,368			359,740			398,396			1,091,504			293,248			361,511			363,677			1,018,436			330,303			1,348,739
Corporate expense / other	36,546			36,335			32,001			104,882			36,112			35,391			34,083			105,586			32,393			137,979
Net interest expense	30,027			29,717			30,388			90,132			28,318			28,157			30,061			86,536			29,060			115,596
Earnings from continuing operations before provision for income taxes	266,795			293,688			336,007			896,490			228,818			297,963			299,533			826,314			268,850			1,095,164
Provision for income taxes	69,968			80,786			93,794			244,548			54,027			58,765			76,095			188,887			59,912			248,799
Earnings from continuing operations	196,827			212,902			242,213			651,942			174,791			239,198			223,438			637,427			208,938			846,365
Earnings (loss) from discontinued operations, net	(764)			1,199			(1,167)			(732)			20,114			10,571			(51,158)			(20,473)			69,351			48,878
Net earnings	$	196,063		$	214,101		$	241,046		$	651,210		$	194,905		$	249,769		$	172,280		$	616,954		278,289			$	895,243

SEGMENT OPERATING MARGIN
Communication Technologies	13.0		%	13.9		%	16.1		%	14.4		%	17.6		%	18.9		%	13.2		%	16.1		%	17.9		%	16.6		%
Energy	24.9		%	24.9		%	24.7		%	24.8		%	21.9		%	24.3		%	24.5		%	23.6		%	23.9		%	23.7		%
Engineered Systems	14.9		%	15.1		%	16.2		%	15.4		%	13.6		%	15.6		%	15.2		%	14.9		%	12.7		%	14.4		%
Printing & Identification	9.3		%	11.3		%	14.4		%	11.6		%	13.8		%	15.8		%	14.8		%	14.9		%	12.1		%	14.2		%
Total Segment	16.2		%	16.7		%	18.0		%	17.0		%	16.2		%	18.1		%	17.0		%	17.1		%	16.5		%	17.0		%

DEPRECIATION AND AMORTIZATION EXPENSE
Communication Technologies	$	31,513		$	32,828		$	32,997		$	97,338		$	18,685		$	18,533		$	34,360		$	71,578		$	30,261		$	101,839
Energy	21,184			23,533			24,639			69,356			18,573			18,765			19,399			56,737			21,082			77,819
Engineered Systems	19,582			23,913			23,060			66,555			18,415			18,816			18,332			55,563			19,213			74,776
Printing & Identification	11,206			11,448			11,604			34,258			11,372			11,685			11,548			34,605			11,543			46,148
Corporate	700			765			842			2,307			586			626			636			1,848			713			2,561
	$	84,185		$	92,487		$	93,142		$	269,814		$	67,631		$	68,425		$	84,275		$	220,331		$	82,812		$	303,143

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

	2012
	Q1		Q2		Q3		Q3 YTD		Q1		Q2		Q3		Q3 YTD		Q4		FY 2011
BOOKINGS
Communication Technologies	$	356,386	$	383,135	$	412,092	$	1,151,613	$	274,611	$	309,734	$	410,616	$	994,961	$	349,579	$	1,344,540

Energy	585,775		530,352		526,824		1,642,951		495,125		472,543		498,212		1,465,880		519,525		1,985,405

Engineered Systems
Fluid Solutions	184,711		204,139		197,767		586,617		173,626		175,539		174,772		523,937		158,895		682,832
Refrigeration & Industrial	711,911		666,223		600,065		1,978,199		660,449		623,929		602,488		1,886,866		625,840		2,512,706
Eliminations	(408)		(376)		(258)		(1,042)		(733)		(884)		179		(1,438)		(1,378)		(2,816)
	896,214		869,986		797,574		2,563,774		833,342		798,584		777,439		2,409,365		783,357		3,192,722

Printing & Identification	347,368		357,648		342,834		1,047,850		438,526		386,259		384,085		1,208,870		353,849		1,562,719

Intra-segment eliminations	(609)		(222)		(759)		(1,590)		(2,736)		(3,370)		(2,452)		(8,558)		(3,153)		(11,711)

Total consolidated bookings	$	2,185,134	$	2,140,899	$	2,078,565	$	6,404,598	$	2,038,868	$	1,963,750	$	2,067,900	$	6,070,518	$	2,003,157	$	8,073,675

BACKLOG
Communication Technologies	$	435,912	$	457,624	$	473,007			$	410,843	$	431,558	$	483,512			$	437,320

Energy	296,360		282,364		248,233				240,198		255,889		243,401				246,351

Engineered Systems
Fluid Solutions	191,327		172,300		156,191				57,357		54,945		55,230				54,194
Refrigeration & Industrial	598,910		586,824		515,285				544,995		523,011		469,876				528,118
Eliminations	(132)		(155)		(94)				(339)		(526)		(94)				(177)
	790,105		758,969		671,382				602,013		577,430		525,012				582,135

Printing & Identification	177,511		160,311		148,144				262,629		220,619		197,792				180,871

Intra-segment eliminations	(987)		(647)		(324)				(704)		(1,178)		(891)				(193)

Total consolidated backlog	$	1,698,901	$	1,658,621	$	1,540,442			$	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
	Q1		Q2				Q3			Q3 YTD			Q1			Q2			Q3			Q3 YTD			Q4			FY 2011
Basic earnings (loss) per common share:
Continuing operations	$	1.07		$		1.16		$	1.33		$	3.56		$	0.94		$	1.28		$	1.20		$	3.42		$	1.13		$	4.55
Discontinued operations	—			0.01				(0.01)			—			0.11			0.06			(0.28)			(0.11)			0.38			0.26
Net earnings	1.07			1.17				1.33			3.56			1.04			1.34			0.93			3.31			1.51			4.82


Diluted earnings (loss) per common share:
Continuing operations	$	1.05		$		1.15		$	1.32		$	3.51		$	0.92		$	1.26		$	1.19		$	3.37		$	1.12		$	4.48
Discontinued operations	—			0.01				(0.01)			—			0.11			0.06			(0.27)			(0.11)			0.37			0.26
Net earnings	1.05			1.15				1.31			3.51			1.03			1.32			0.91			3.26			1.49			4.74

Adjusted diluted earnings per common share (calculated below):
Continuing operations	$	1.05		$	1.15			$	1.30		$	3.48		$	0.88		$	1.14		$	1.18		$	3.20		$	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		$	242,213		$	651,942		$	174,791		$	239,198		$	223,438		$	637,427		$	208,938		$	846,365
Discontinued operations	(764)			1,199				(1,167)			(732)			20,114			10,571			(51,158)			(20,473)			69,351			48,878
Net earnings	196,063			214,101				241,046			651,210			194,905			249,769			172,280			616,954			278,289			895,243

Average shares outstanding:
Basic	183,737			183,494				181,763			183,000			186,659			186,443			185,770			186,246			184,686			185,882
Diluted	186,706			185,780				183,932			185,489			190,090			189,705			188,436			189,420			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
	Q1		Q2				Q3			Q3 YTD			Q1			Q2			Q3			Q3 YTD			Q4			FY 2011
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	196,827			$	212,902		$	242,213		$	651,942		$	174,791		$	239,198		$	223,438		$	637,427		$	208,938		$	846,365
Gains (losses) from discrete and other tax items	1,432					(372)			4,513			5,573			8,016			22,338			2,390			32,744			8,590			41,334
Adjusted earnings from continuing operations	$	195,395			$	213,274		$	237,700		$	646,369		$	166,775		$	216,860		$	221,048		$	604,683		$	200,348		$	805,031

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	1.05			$	1.15		$	1.32		$	3.51		$	0.92		$	1.26		$	1.19		$	3.37		$	1.12		$	4.48
Gains (losses) from discrete and other tax items	—					—			0.02			0.03			0.04			0.12			0.01			0.17			0.05			0.22
Adjusted earnings from continuing operations	$	1.05			$	1.15		$	1.30		$	3.48		$	0.88		$	1.14		$	1.18		$	3.20		$	1.07		$	4.26

* Per share data may not add due to rounding.

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

	2012
	Q1			Q2			Q3			Q3 YTD			Q1			Q2			Q3			Q3 YTD			Q4			FY 2011
Cash flow from operating activities	$	160,127		$	252,120		$	298,987		$	711,234		$	117,503		$	205,260		$	376,614		$	699,377		$	358,852		$	1,058,229
Less: Additions to property, plant and equipment	(71,429)			(74,358)			(69,329)			(215,116)			(51,379)			(72,338)			(65,000)			(188,717)			(83,092)			(271,809)
Free cash flow	$	88,698		$	177,762		$	229,658		$	496,118		$	66,124		$	132,922		$	311,614		$	510,660		$	275,760		$	786,420

Free cash flow as a percentage of earnings from continuing operations	45.1		%	83.5		%	94.8		%	76.1		%	37.8		%	55.6		%	139.5		%	80.1		%	132.0		%	92.9		%

Free cash flow as a percentage of revenue	4.3		%	8.2		%	10.4		%	7.7		%	3.6		%	6.7		%	14.6		%	8.6		%	13.8		%	9.9		%