Dover Reports First Quarter 2013 Results; Reaffirms Full-Year Outlook

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Apr 17, 2013, 07:00 ET

DOWNERS GROVE, Ill., April 17, 2013 /PRNewswire/ --

Reports quarterly revenue of $2.0 billion, an increase of 4% over the prior year
Delivers quarterly diluted earnings per share from continuing operations of $1.12, an increase of 12% over last year
Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.10, excluding tax benefits of $0.02, up 9% from an adjusted prior year
Reaffirms outlook for full year revenue growth at 7% to 9%, and diluted earnings per share from continuing operations of $5.05 to $5.35

Dover (NYSE: DOV) announced today that for the first quarter ended March 31, 2013, revenue was $2.0 billion, an increase of 4% over the prior-year period. The revenue increase was driven by a 6% increase from acquisitions offset by organic decline of 1% and a minor impact from foreign exchange. Earnings from continuing operations were $197.0 million, or $1.12 diluted earnings per share ("EPS"), compared to $186.4 million, or $1.00 EPS, in the prior-year period, representing increases of 6% and 12%, respectively. Excluding the impact of discrete tax items of $0.02 EPS recognized in the current quarter and $0.01 EPS recognized in the prior-year period, adjusted EPS from continuing operations for the first quarter of 2013 was $1.10, reflecting an increase of 9% over an adjusted EPS of $1.01 in the prior-year period.

Commenting on the first quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "We were pleased with our first quarter results. We achieved solid revenue growth from our businesses serving the production and downstream energy markets and the consumer electronics market. These results helped offset the anticipated revenue decline driven by a lower North American rig count and reduced refrigeration activity, principally associated with a major retailer, as well as soft European industrial markets. In addition, our recently acquired refrigeration business, Anthony International, is off to a great start and we are enthusiastic about Dover's continued strength in that market. We also made progress on our $1 billion share repurchase program, repurchasing 4 million shares in the first quarter."

"I am encouraged by our solid seasonal bookings growth as we begin the second quarter. In total, bookings grew 7% and resulted in a book-to-bill of 1.09."

"Looking ahead, our full year view of 2013 is essentially unchanged from our previous guidance. We continue to expect full year organic growth of 3% to 5%, complemented by acquisition growth of 4%, resulting in total revenue growth of 7% to 9%. Accordingly, we are reaffirming our full year diluted EPS from continuing operations will be in the range of $5.05 - $5.35."

Net earnings for the first quarter of 2013 were $210.0 million or $1.20 EPS, including earnings from discontinued operations of $13.0 million, or $0.07 EPS, compared to net earnings of $196.1 million, or $1.05 EPS, for the same period of 2012, which included earnings from discontinued operations of $9.7 million, or $0.05 EPS.

Dover will host a webcast of its first quarter 2013 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, April 17, 2013. 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 first 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 revenues of over $8 billion. For over 50 years, Dover has been delivering outstanding products and services that reflect its market leadership and commitment to operational and technical excellence. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Dover 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. Headquartered in Downers Grove, Illinois, Dover employs 35,000 people worldwide. Dover is traded on the New York Stock Exchange under "DOV." Additional information is available on our 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, operating and strategic plans, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover businesses operate and the U.S. and global economies. Statements in this press release that are not historical are hereby identified as "forward-looking statements" and 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," 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, the state of the worldwide economy and sovereign credit, especially in Europe; political events that could impact the worldwide economy; the impact of natural disasters and their effect on global supply chains and energy markets; current economic conditions and uncertainties in the credit and capital markets; instability in countries where Dover conducts business; possible future terrorist threats and their effect on the worldwide economy; the ability of Dover's businesses to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; increased competition and pricing pressures in the markets served by Dover's businesses; the impact of loss of a single-source manufacturing facility; changes in customer demand or loss of a significant customer; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes including environmental regulations, conflict minerals disclosure requirements, and tax policies (including domestic and international export subsidy programs, R&E credits and other similar programs); protection and validity of patent and other intellectual property rights; the ability to identify and successfully consummate value-adding acquisition opportunities; Dover's ability to achieve expected savings from integration, synergy and other cost-control initiatives; unforeseen developments in contingencies such as litigation; international economic conditions including interest rate and currency exchange rate fluctuations; and a downgrade in Dover's credit ratings. 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 in this press release. Dover undertakes no obligation to update any forward-looking statement, except as required by law.

INVESTOR SUPPLEMENT - FIRST QUARTER 2013

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

	Three Months Ended March 31,
	2013		2012
Revenue	$	2,039,573	$	1,954,614
Cost of goods and services	1,262,951		1,208,534
Gross profit	776,622		746,080
Selling and administrative expenses	484,421		453,989
Operating earnings	292,201		292,091
Interest expense, net	30,244		30,031
Other (income) expense, net	(4,719)		1,785
Earnings before provision for income taxes and discontinued operations	266,676		260,275
Provision for income taxes	69,687		73,866
Earnings from continuing operations	196,989		186,409
Earnings from discontinued operations, net	13,014		9,654
Net earnings	$	210,003	$	196,063

Comprehensive earnings	$	178,724	$	237,305

Basic earnings per common share:
Earnings from continuing operations	$	1.14	$	1.01
Earnings from discontinued operations, net	0.08		0.05
Net earnings	1.21		1.07

Weighted average shares outstanding	173,448		183,737

Diluted earnings per common share:
Earnings from continuing operations	$	1.12	$	1.00
Earnings from discontinued operations, net	0.07		0.05
Net earnings	1.20		1.05

Weighted average shares outstanding	175,567		186,706

Dividends paid per common share	$	0.35	$	0.315

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

	2013			2012
	Q1			Q1			Q2			Q3			Q4			FY 2012
REVENUE
Communication Technologies	$	372,790		$	357,575		$	361,689		$	396,470		$	400,851		$	1,516,585

Energy	561,198			531,570			538,786			562,263			539,985			2,172,604

Engineered Systems
Fluid Solutions	203,991			180,364			211,974			218,324			206,500			817,162
Refrigeration & Industrial	664,294			642,213			674,501			674,116			613,012			2,603,842
Eliminations	(352)			(453)			(352)			(319)			(336)			(1,460)
	867,933			822,124			886,123			892,121			819,176			3,419,544

Printing & Identification	237,877			243,570			251,875			246,945			254,141			996,531

Intra-segment eliminations	(225)			(225)			(184)			(194)			(322)			(925)

Total consolidated revenue	$	2,039,573		$	1,954,614		$	2,038,289		$	2,097,605		$	2,013,831		$	8,104,339

NET EARNINGS
Segment Earnings:
Communication Technologies	$	44,208		$	46,556		$	50,322		$	63,706		$	58,376		$	218,960
Energy	139,545			132,115			133,936			139,038			133,561			538,650
Engineered Systems	117,178			122,092			133,808			144,245			101,807			501,952
Printing & Identification	29,752			26,089			28,918			39,502			40,650			135,159
Total Segments	330,683			326,852			346,984			386,491			334,394			1,394,721
Corporate expense / other	33,763			36,546			36,335			32,001			31,127			136,009
Net interest expense	30,244			30,031			29,715			30,399			30,996			121,141
Earnings from continuing operations before provision for income taxes	266,676			260,275			280,934			324,091			272,271			1,137,571
Provision for income taxes	69,687			73,866			75,778			90,761			64,047			304,452
Earnings from continuing operations	196,989			186,409			205,156			233,330			208,224			833,119
Earnings (loss) from discontinued operations, net	13,014			9,654			8,945			7,716			(48,364)			(22,049)
Net earnings	$	210,003		$	196,063		$	214,101		$	241,046		$ 159,860			$	811,070

SEGMENT OPERATING MARGIN
Communication Technologies	11.9		%	13.0		%	13.9		%	16.1		%	14.6		%	14.4		%
Energy	24.9		%	24.9		%	24.9		%	24.7		%	24.7		%	24.8		%
Engineered Systems	13.5		%	14.9		%	15.1		%	16.2		%	12.4		%	14.7		%
Printing & Identification	12.5		%	10.7		%	11.5		%	16.0		%	16.0		%	13.6		%
Total Segment	16.2		%	16.7		%	17.0		%	18.4		%	16.6		%	17.2		%

DEPRECIATION AND AMORTIZATION EXPENSE
Communication Technologies	$	35,501		$	31,513		$	32,828		$	32,997		$	35,281		$	132,619
Energy	26,298			21,184			23,533			24,639			25,721			95,077
Engineered Systems	31,551			19,582			23,913			23,060			27,066			93,621
Printing & Identification	7,630			8,331			8,496			8,777			7,998			33,602
Corporate	859			700			765			842			359			2,666
	$	101,839		$	81,310		$	89,535		$	90,315		$	96,425		$	357,585

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

	2013		2012
	Q1		Q1		Q2		Q3		Q4		FY 2012
BOOKINGS
Communication Technologies	$	379,122	$	347,291	$	387,058	$	411,005	$	363,624	$	1,508,978

Energy	620,640		585,775		530,352		526,824		550,091		2,193,042

Engineered Systems
Fluid Solutions	223,764		184,711		204,139		197,767		209,872		796,489
Refrigeration & Industrial	755,026		711,911		666,223		600,065		606,931		2,585,130
Eliminations	(373)		(408)		(376)		(258)		(399)		(1,441)
	978,417		896,214		869,986		797,574		816,404		3,380,178

Printing & Identification	237,217		249,773		251,733		244,611		252,937		999,054

Intra-segment eliminations	(720)		(609)		(221)		(759)		(1,020)		(2,609)

Total consolidated bookings	$	2,214,676	$	2,078,444	$	2,038,908	$	1,979,255	$	1,982,036	$	8,078,643

BACKLOG
Communication Technologies	$	458,765	$	451,110	$	476,745	$	491,041	$	453,172

Energy	311,793		296,360		282,364		248,233		256,093

Engineered Systems
Fluid Solutions	178,854		191,327		172,300		156,191		160,890
Refrigeration & Industrial	592,922		598,910		586,824		515,285		516,559
Eliminations	(178)		(132)		(155)		(94)		(157)
	771,598		790,105		758,969		671,382		677,292

Printing & Identification	95,353		102,117		98,216		98,356		97,857

Intra-segment eliminations	(886)		(986)		(648)		(324)		(591)

Total consolidated backlog	$	1,636,623	$	1,638,706	$	1,615,646	$	1,508,688	$	1,483,823

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

	2013		2012
	Q1		Q1		Q2		Q3		Q4		FY 2012
Basic earnings (loss) per common share:
Continuing operations	$	1.14	$	1.01	$	1.12	$	1.28	$	1.17	$	4.59
Discontinued operations	0.08		0.05		0.05		0.04		(0.27)		(0.12)
Net earnings	1.21		1.07		1.17		1.33		0.90		4.47

Diluted earnings (loss) per common share:
Continuing operations	$	1.12	$	1.00	$	1.10	$	1.27	$	1.16	$	4.53
Discontinued operations	0.07		0.05		0.05		0.04		(0.27)		(0.12)
Net earnings	1.20		1.05		1.15		1.31		0.89		4.41

Adjusted diluted earnings per common share (calculated below):
Continuing operations	$	1.10	$	1.01	$	1.10	$	1.25	$	1.09	$	4.44

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

Net earnings (loss):
Continuing operations	$	196,989	$	186,409	$	205,156	$	233,330	$	208,224	$	833,119
Discontinued operations	13,014		9,654		8,945		7,716		(48,364)		(22,049)
Net earnings	210,003		196,063		214,101		241,046		159,860		811,070

Average shares outstanding:
Basic	173,448		183,737		183,494		181,763		177,257		181,551
Diluted	175,567		186,706		185,780		183,932		179,365		183,993

Note:

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


	2013		2012
	Q1		Q1		Q2		Q3		Q4		FY 2012
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	196,989	$	186,409	$	205,156	$	233,330	$	208,224	$	833,119
Gains (losses) from discrete and other tax items	4,525		(1,610)		(372)		4,513		13,606		16,137
Adjusted earnings from continuing operations	$	192,464	$	188,019	$	205,528	$	228,817	$	194,618	$	816,982

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	1.12	$	1.00	$	1.10	$	1.27	$	1.16	$	4.53
Gains (losses) from discrete and other tax items	0.02		(0.01)		—		0.02		0.07		0.09
Adjusted earnings from continuing operations	$	1.10	$	1.01	$	1.10	$	1.25	$	1.09	$	4.44

* Per share data may not add due to rounding.

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

	2013			2012
	Q1			Q1			Q2			Q3			Q4			FY 2012
Cash flow from operating activities	$	78,326		$	161,327		$	243,363		$	285,811		$	570,659		$	1,261,160
Less: Additions to property, plant and equipment	(47,153)			(68,249)			(72,758)			(67,842)			(88,163)			(297,012)
Free cash flow	$	31,173		$	93,078		$	170,605		$	217,969		$	482,496		$	964,148

Free cash flow as a percentage of earnings from continuing operations	15.8		%	49.9		%	83.2		%	93.4		%	231.7		%	115.7		%

Free cash flow as a percentage of revenue	1.5		%	4.8		%	8.4		%	10.4		%	24.0		%	11.9		%