Dover Reports First Quarter 2015 Results

- Reports quarterly revenue of $1.7 billion, a decrease of 5% from the prior year

- Achieves quarterly diluted earnings per share from continuing operations of $0.72, including restructuring charges of $0.10

- Expects full year diluted earnings per share from continuing operations to be in the range of $4.20 to $4.40

News provided by

Dover Corporation

Apr 21, 2015, 07:00 ET

DOWNERS GROVE, Ill., April 21, 2015 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the first quarter ended March 31, 2015, revenue was $1.7 billion, a decrease of 5% from the prior year. The decrease in revenue was driven by an organic revenue decline of 6% and a 4% unfavorable impact from foreign exchange, offset in part by 5% growth from acquisitions. Earnings from continuing operations were $117.2 million, a decrease of 31% as compared to $170.0 million for the prior year period. Diluted earnings per share ("EPS") for the first quarter ended March 31, 2015 was $0.72, compared to $0.99 EPS in the prior year period, representing a decrease of 27%. Excluding discrete tax benefits recognized in the prior year period, EPS from continuing operations for the first quarter of 2015 decreased 26% from an adjusted EPS of $0.97 in the prior year period.

Commenting on the first quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our businesses continued to perform well against the backdrop of significant headwinds in our energy-related markets, as well as the ongoing FX impact of the strengthening US dollar and slower than expected activity in our core refrigeration case and systems markets. To better align our costs with anticipated demand, we incurred $24 million in restructuring charges in the quarter, primarily in Energy. These restructuring actions were in addition to $37 million in charges incurred in the fourth quarter of 2014. We expect to pursue additional cost reduction actions as we move through the year."

"As we deal with these headwinds we will remain focused on growth investments, as well as investment in productivity initiatives, including supply chain optimization and shared infrastructure. I am confident the combination of these actions positions us well to continue our long-term track record of strong performance."

"Looking forward, we are re-affirming our recently updated 2015 guidance. We expect full-year revenue to decline 4% to 6%. Within our revenue forecast, organic growth is anticipated to decline 2% to 4%, completed acquisitions will provide approximately 2% growth, and FX is expected to be a 4% headwind. In total, full year adjusted EPS is expected to be in the range of $4.20 to $4.40, inclusive of $0.15 to $0.18 of restructuring charges."

Net earnings for the quarter ended March 31, 2015, were $209.5 million, or $1.28 EPS, which included earnings from discontinued operations of $92.3 million, or $0.57 EPS, compared to net earnings of $160.1 million, or $0.93 EPS, for the same period of 2014, which included a loss from discontinued operations of $9.9 million, or $0.06 EPS. First quarter 2015 earnings from discontinued operations included a gain of $87.4 million, or $0.53 EPS, resulting from the disposition of a business held for sale.

Dover will host a webcast of its first quarter 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, April 21, 2015. 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 approaching $7.5 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 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, changes in operations, 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; 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; changes in customer demand or 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, and tax policies; 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 - FIRST QUARTER 2015 DOVER CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)(in thousands, except per share data)

	Three Months Ended March 31,
	2015		2014
Revenue	$	1,715,501	$	1,802,570
Cost of goods and services	1,088,342		1,094,710
Gross profit	627,159		707,860
Selling and administrative expenses	434,634		433,404
Operating earnings	192,525		274,456
Interest expense, net	32,037		32,655
Other (income) expense, net	(4,187)		191
Earnings before provision for income taxes and discontinued operations	164,675		241,610
Provision for income taxes	47,485		71,569
Earnings from continuing operations	117,190		170,041
Earnings (loss) from discontinued operations, net	92,320		(9,903)
Net earnings	$	209,510	$	160,138

Basic earnings per common share:
Earnings from continuing operations	$	0.72	$	1.00
Earnings (loss) from discontinued operations, net	0.57		(0.06)
Net earnings	1.30		0.94

Weighted average shares outstanding	161,650		169,750

Diluted earnings per common share:
Earnings from continuing operations	$	0.72	$	0.99
Earnings (loss) from discontinued operations, net	0.57		(0.06)
Net earnings	1.28		0.93

Weighted average shares outstanding	163,323		172,013

Dividends paid per common share	$	0.40	$	0.375

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

	2015			2014
	Q1			Q1			Q2			Q3			Q4			FY 2014
REVENUE
Energy	$	430,423		$	478,773		$	481,016		$	507,334		$	550,116		$	2,017,239

Engineered Systems
Printing & Identification	230,181			231,679			252,354			257,282			247,569			988,884
Industrials	343,015			335,995			361,467			355,019			344,600			1,397,081
	573,196			567,674			613,821			612,301			592,169			2,385,965

Fluids	340,236			345,009			346,275			361,797			377,485			1,430,566

Refrigeration & Food Equipment	372,097			411,493			522,357			528,807			458,532			1,921,189

Intra-segment eliminations	(451)			(379)			(833)			(664)			(355)			(2,231)
Total consolidated revenue	$	1,715,501		$	1,802,570		$	1,962,636		$	2,009,575		$	1,977,947		$	7,752,728

NET EARNINGS
Segment Earnings:
Energy	$	52,305		$	118,968		$	114,991		$	122,738		$	105,118		$	461,815
Engineered Systems	88,149			83,227			101,766			108,800			93,205			386,998
Fluids	54,634			57,942			63,112			67,559			63,026			251,639
Refrigeration & Food Equipment	36,150			44,862			84,926			78,012			30,934			238,734
Total Segments	231,238			304,999			364,795			377,109			292,283			1,339,186
Corporate expense / other	34,526			30,734			29,287			27,815			29,964			117,800
Net interest expense	32,037			32,655			31,961			31,231			31,332			127,179
Earnings from continuing operations before provision for income taxes	164,675			241,610			303,547			318,063			230,987			1,094,207
Provision for income taxes	47,485			71,569			92,966			92,380			59,152			316,067
Earnings from continuing operations	117,190			170,041			210,581			225,683			171,835			778,140
Earnings (loss) from discontinued operations, net	92,320			(9,903)			3,378			6,161			(2,541)			(2,905)
Net earnings	$	209,510		$	160,138		$	213,959		$	231,844		$	169,294		$	775,235

SEGMENT OPERATING MARGIN
Energy	12.2		%	24.8		%	23.9		%	24.2		%	19.1		%	22.9		%
Engineered Systems	15.4		%	14.7		%	16.6		%	17.8		%	15.7		%	16.2		%
Fluids	16.1		%	16.8		%	18.2		%	18.7		%	16.7		%	17.6		%
Refrigeration & Food Equipment	9.7		%	10.9		%	16.3		%	14.8		%	6.7		%	12.4		%
Total Segment	13.5		%	16.9		%	18.6		%	18.8		%	14.8		%	17.3		%

DEPRECIATION AND AMORTIZATION EXPENSE
Energy	$	34,427		$	25,575		$	25,807		$	27,145		$	33,429		$	111,956
Engineered Systems	14,526			15,850			15,982			15,334			14,780			61,946
Fluids	13,848			16,366			15,308			14,019			15,210			60,903
Refrigeration & Food Equipment	16,458			17,212			17,451			17,073			16,965			68,701
Corporate	923			870			1,000			910			902			3,682
	$	80,182		$	75,873		$	75,548		$	74,481		$	81,286		$	307,188

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

	2015		2014
	Q1		Q1		Q2		Q3		Q4		FY 2014
BOOKINGS
Energy	$	416,628	$	478,469	$	477,162	$	526,134	$	534,646	$	2,016,411

Engineered Systems
Printing & Identification	235,636		250,434		245,445		249,299		248,082		993,260
Industrials	337,070		370,949		363,773		342,687		374,438		1,451,847
Eliminations	(19)		(18)		(16)		(11)		(11)		(56)
	572,687		621,365		609,202		591,975		622,509		2,445,051

Fluids	339,310		362,943		375,009		350,853		345,553		1,434,358

Refrigeration & Food Equipment	419,659		493,731		542,810		459,099		367,567		1,863,207

Intra-segment eliminations	(628)		(506)		(1,089)		(737)		(644)		(2,976)

Total consolidated bookings	$	1,747,656	$	1,956,002	$	2,003,094	$	1,927,324	$	1,869,631	$	7,756,051

BACKLOG
Energy	$	212,060	$	210,846	$	206,415	$	232,739	$	233,347

Engineered Systems
Printing & Identification	108,151		131,298		128,912		115,352		110,359
Industrials	276,598		266,517		268,680		254,612		282,598
	384,749		397,815		397,592		369,964		392,957

Fluids	259,504		328,617		348,508		323,424		277,834

Refrigeration & Food Equipment	337,084		431,298		450,065		376,141		282,507

Intra-segment eliminations	(595)		(374)		(211)		(302)		(431)

Total consolidated backlog	$	1,192,802	$	1,368,202	$	1,402,369	$	1,301,966	$	1,186,214

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

	2015		2014
	Q1		Q1		Q2		Q3		Q4		FY 2014
Basic earnings (loss) per common share:
Continuing operations	$	0.72	$	1.00	$	1.26	$	1.36	$	1.04	$	4.67
Discontinued operations	0.57		(0.06)		0.02		0.04		(0.02)		(0.02)
Net earnings	1.30		0.94		1.29		1.40		1.03		4.65

Diluted earnings (loss) per common share:
Continuing operations	$	0.72	$	0.99	$	1.25	$	1.34	$	1.03	$	4.61
Discontinued operations	0.57		(0.06)		0.02		0.04		(0.02)		(0.02)
Net earnings	1.28		0.93		1.27		1.38		1.02		4.59

Adjusted diluted earnings per common share (calculated below):
Continuing operations	$	0.72	$	0.97	$	1.25	$	1.31	$	1.01	$	4.54

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

Net earnings (loss):
Continuing operations	$	117,190	$	170,041	$	210,581	$	225,683	$	171,835	$	778,140
Discontinued operations	92,320		(9,903)		3,378		6,161		(2,541)		(2,905)
Net earnings	209,510		160,138		213,959		231,844		169,294		775,235

Average shares outstanding:
Basic	161,650		169,750		166,474		166,021		164,589		166,692
Diluted	163,323		172,013		168,857		168,343		166,467		168,842

Note:
Earnings from continuing operations are adjusted by discrete tax items and other one-time gains to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:

	2015		2014
	Q1		Q1		Q2		Q3		Q4		FY 2014
Adjusted earnings from continuing operations:
Earnings from continuing operations		$ 117,190		$ 170,041		$ 210,581		$ 225,683		$ 171,835		$ 778,140
Gains (losses) from discrete and other tax items	—		2,541		(635)		5,524		3,860		11,290
Adjusted earnings from continuing operations		$ 117,190		$ 167,500		$ 211,216		$ 220,159		$ 167,975		$ 766,850

Adjusted diluted earnings per common share:
Earnings from continuing operations		$ 0.72	$	$ 0.99		$ 1.25		$ 1.34		$ 1.03		$ 4.61
Gains (losses) from discrete and other tax items	—		0.01		—		0.03		0.02		0.07
Adjusted earnings from continuing operations		$ 0.72	$	$ 0.97		$ 1.25		$ 1.31		$ 1.01		$ 4.54

* Per share data may not add due to rounding.

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

	2015			2014
	Q1			Q1		Q2			Q3			Q4			FY 2014
Cash flow from operating activities	$	131,332		$	28,361	$	185,013		$	292,012		$	444,778		$	950,164
Less: Additions to property, plant and equipment	(27,956)			(32,695)		(42,550)			(33,532)			(57,256)			(166,033)
Free cash flow	$	103,376		$	(4,334)	$	142,463		$	258,480		$	387,522		$	784,131

Free cash flow as a percentage of earnings from continuing operations	88.2		%	(2.5)%		67.7		%	114.5		%	225.5		%	100.8		%

Free cash flow as a percentage of revenue	6.0		%	(0.2)%		7.3		%	12.9		%	19.6		%	10.1		%