Dover Reports Second Quarter 2015 Results

- Reports quarterly revenue of $1.8 billion, a decrease of 10% from the prior year

- Achieves quarterly diluted earnings per share from continuing operations of $0.97

- Expects full year diluted earnings per share from continuing operations to be in the range of $3.75 to $3.90

News provided by

Jul 21, 2015, 07:00 ET

DOWNERS GROVE, Ill., July 21, 2015 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2015, revenue was $1.8 billion, a decrease of 10% from the prior year. The decrease in revenue was driven by an organic revenue decline of 10% and a 4% unfavorable impact from foreign exchange, partially offset by 4% growth from acquisitions. Earnings from continuing operations were $155.6 million, a decrease of 26% as compared to $210.6 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the second quarter ended June 30, 2015 were $0.97, compared to $1.25 EPS in the prior year period, representing a decrease of 22%. EPS for the second quarter ended June 30, 2015 includes restructuring costs of $0.01.

Revenue for the six months ended June 30, 2015 was $3.5 billion, a decrease of 8% over the prior year, reflecting an organic revenue decline of 8% and a 4% unfavorable impact from foreign exchange, partially offset by 4% growth from acquisitions. Earnings from continuing operations for the six months ended June 30, 2015 were $272.8 million, a decrease of 28% as compared to $380.6 million for the prior year period. Diluted EPS for the six months ended June 30, 2015 was $1.69, compared to $2.23 EPS in the prior year period, representing a decrease of 24%. Excluding discrete tax benefits recognized in the prior year period, EPS from continuing operations for the six months ended June 30, 2015 decreased 24% from an adjusted EPS of $2.22 in the prior year period. EPS for the six months ended June 30, 2015 includes restructuring costs of $0.12.

Commenting on the second quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "In the quarter, we continued to be impacted by diminished demand and customer inventory reductions in our North American Energy markets. We were also affected by reduced customer capital spending in retail refrigeration, oil & gas related pump markets and our industrial businesses within Engineered Systems. These factors offset the benefits of our broad-based cost containment initiatives and restructuring actions, causing our overall results to be below our prior expectations.

"We will continue to manage through these headwinds, especially energy-related, as well as the ongoing impact of a stronger U.S. dollar, with an eye towards future growth and enhanced profitability. I remain confident that the strength of our market positions, combined with the actions we are taking, will enable Dover to deliver an improved second half of 2015.

"Looking forward, our forecast remains unchanged from our recently updated 2015 guidance. We expect full-year revenue to decline 8% to 9%. Within this revenue forecast, organic growth is anticipated to decline 7% to 8%, completed acquisitions will provide approximately 3% growth, and FX is expected to be a 4% headwind. In total, full year adjusted EPS is expected to be in the range of $3.75 to $3.90, inclusive of $0.16 to $0.19 of restructuring charges."

Net earnings for the second quarter ended June 30, 2015, were $332.4 million, or $2.07 EPS, which included earnings from discontinued operations of $176.8 million, or $1.10 EPS, compared to net earnings of $214.0 million, or $1.27 EPS, for the same period of 2014, which included earnings from discontinued operations of $3.4 million, or $0.02 EPS. Second quarter 2015 earnings from discontinued operations included a gain of $177.8 million, or $1.11 EPS, resulting from the disposition of a business held for sale.

Net earnings for the six months ended June 30, 2015, were $541.9 million, or $3.35 EPS, which included earnings from discontinued operations of $269.1 million, or $1.66 EPS, compared to net earnings of $374.1 million, or $2.19 EPS, for the same period of 2014, which included a loss from discontinued operations of $6.5 million, or $0.04 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.64 EPS, resulting from the disposition of two businesses held for sale.

Dover will host a webcast of its second quarter 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, July 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 second 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 in excess of $7 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." 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; changes in customer demand and capital spending; 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; 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 - SECOND QUARTER 2015

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue	$	1,758,628	$	1,962,636	$	3,474,129	$	3,765,206
Cost of goods and services	1,104,060		1,194,537		2,192,402		2,289,247
Gross profit	654,568		768,099		1,281,727		1,475,959
Selling and administrative expenses	402,695		438,824		837,329		872,228
Operating earnings	251,873		329,275		444,398		603,731
Interest expense, net	31,988		31,961		64,025		64,616
Other income, net	(1,256)		(6,233)		(5,443)		(6,042)
Earnings before provision for income taxes and discontinued operations	221,141		303,547		385,816		545,157
Provision for income taxes	65,507		92,966		112,992		164,535
Earnings from continuing operations	155,634		210,581		272,824		380,622
Earnings (loss) from discontinued operations, net	176,762		3,378		269,082		(6,525)
Net earnings	$	332,396	$	213,959	$	541,906	$	374,097

Basic earnings per common share:
Earnings from continuing operations	$	0.98	$	1.26	$	1.70	$	2.26
Earnings (loss) from discontinued operations, net	1.11		0.02		1.68		(0.04)
Net earnings	2.10		1.29		3.38		2.23

Weighted average shares outstanding	158,640		166,474		160,137		168,103

Diluted earnings per common share:
Earnings from continuing operations	$	0.97	$	1.25	$	1.69	$	2.23
Earnings (loss) from discontinued operations, net	1.10		0.02		1.66		(0.04)
Net earnings	2.07		1.27		3.35		2.19

Weighted average shares outstanding	160,398		168,857		161,876		170,450

Dividends paid per common share	$	0.40	$	0.375	$	0.80	$	0.75

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

	2015									2014
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2014
REVENUE
Energy	$	430,423		$	366,044		$	796,467		$	478,773		$	481,016		$	959,789		$	507,334		$	550,116		$	2,017,239

Engineered Systems
Printing & Identification	230,181			229,934			460,115			231,679			252,354			484,033			257,282			247,569			988,884
Industrials	343,015			363,157			706,172			335,995			361,467			697,462			355,019			344,600			1,397,081
	573,196			593,091			1,166,287			567,674			613,821			1,181,495			612,301			592,169			2,385,965

Fluids	340,236			351,511			691,747			345,009			346,275			691,284			361,797			377,485			1,430,566

Refrigeration & Food Equipment	372,097			448,115			820,212			411,493			522,357			933,850			528,807			458,532			1,921,189

Intra-segment eliminations	(451)			(133)			(584)			(379)			(833)			(1,212)			(664)			(355)			(2,231)
Total consolidated revenue	$	1,715,501		$	1,758,628		$	3,474,129		$	1,802,570		$	1,962,636		$	3,765,206		$	2,009,575		$	1,977,947		$	7,752,728

NET EARNINGS
Segment Earnings:
Energy	$	52,305		$	40,909		$	93,214		$	118,968		$	114,991		$	233,959		$	122,738		$	105,118		$	461,815
Engineered Systems	88,149			96,702			184,851			83,227			101,766			184,993			108,800			93,205			386,998
Fluids	54,634			70,168			124,802			57,942			63,112			121,054			67,559			63,026			251,639
Refrigeration & Food Equipment	36,150			65,732			101,882			44,862			84,926			129,788			78,012			30,934			238,734
Total Segments	231,238			273,511			504,749			304,999			364,795			669,794			377,109			292,283			1,339,186
Corporate expense / other	34,526			20,382			54,908			30,734			29,287			60,021			27,815			29,964			117,800
Net interest expense	32,037			31,988			64,025			32,655			31,961			64,616			31,231			31,332			127,179
Earnings from continuing operations before provision for income taxes	164,675			221,141			385,816			241,610			303,547			545,157			318,063			230,987			1,094,207
Provision for income taxes	47,485			65,507			112,992			71,569			92,966			164,535			92,380			59,152			316,067
Earnings from continuing operations	117,190			155,634			272,824			170,041			210,581			380,622			225,683			171,835			778,140
Earnings (loss) from discontinued operations, net	92,320			176,762			269,082			(9,903)			3,378			(6,525)			6,161			(2,541)			(2,905)
Net earnings	$	209,510		$	332,396		$	541,906		$	160,138		$	213,959		$	374,097		$	231,844		$	169,294		$	775,235

SEGMENT OPERATING MARGIN
Energy	12.2		%	11.2		%	11.7		%	24.8		%	23.9		%	24.4		%	24.2		%	19.1		%	22.9		%
Engineered Systems	15.4		%	16.3		%	15.8		%	14.7		%	16.6		%	15.7		%	17.8		%	15.7		%	16.2		%
Fluids	16.1		%	20.0		%	18.0		%	16.8		%	18.2		%	17.5		%	18.7		%	16.7		%	17.6		%
Refrigeration & Food Equipment	9.7		%	14.7		%	12.4		%	10.9		%	16.3		%	13.9		%	14.8		%	6.7		%	12.4		%
Total Segment	13.5		%	15.6		%	14.5		%	16.9		%	18.6		%	17.8		%	18.8		%	14.8		%	17.3		%

DEPRECIATION AND AMORTIZATION EXPENSE
Energy	$	34,427		$	32,740		$	67,167		$	25,575		$	25,807		$	51,382		$	27,145		$	33,429		$	111,956
Engineered Systems	14,526			14,392			28,918			15,850			15,982			31,832			15,334			14,780			61,946
Fluids	13,848			13,648			27,496			16,366			15,308			31,674			14,019			15,210			60,903
Refrigeration & Food Equipment	16,458			16,406			32,864			17,212			17,451			34,663			17,073			16,965			68,701
Corporate	923			841			1,764			870			1,000			1,870			910			902			3,682
	$	80,182		$	78,027		$	158,209		$	75,873		$	75,548		$	151,421		$	74,481		$	81,286		$	307,188

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

	2015						2014
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2014
BOOKINGS
Energy	$	416,628	$	345,079	$	761,707	$	478,469	$	477,162	$	955,631	$	526,134	$	534,646	$	2,016,411

Engineered Systems
Printing & Identification	235,636		224,209		459,845		250,434		245,445		495,879		249,299		248,082		993,260
Industrials	337,070		336,173		673,243		370,949		363,773		734,722		342,687		374,438		1,451,847
Eliminations	(19)		(6)		(25)		(18)		(16)		(34)		(11)		(11)		(56)
	572,687		560,376		1,133,063		621,365		609,202		1,230,567		591,975		622,509		2,445,051

Fluids	339,310		333,695		673,005		362,943		375,009		737,952		350,853		345,553		1,434,358

Refrigeration & Food Equipment	419,659		486,793		906,452		493,731		542,810		1,036,541		459,099		367,567		1,863,207

Intra-segment eliminations	(628)		(417)		(1,045)		(506)		(1,089)		(1,595)		(737)		(644)		(2,976)

Total consolidated bookings	$	1,747,656	$	1,725,526	$	3,473,182	$	1,956,002	$	2,003,094	$	3,959,096	$	1,927,324	$	1,869,631	$	7,756,051

BACKLOG
Energy	$	212,060	$	194,819			$	210,846	$	206,415			$	232,739	$	233,347

Engineered Systems
Printing & Identification	108,151		103,403				131,298		128,912				115,352		110,359
Industrials	276,598		248,592				266,517		268,680				254,612		282,598
	384,749		351,995				397,815		397,592				369,964		392,957

Fluids	259,504		240,389				328,617		348,508				323,424		277,834

Refrigeration & Food Equipment	337,084		373,193				431,298		450,065				376,141		282,507

Intra-segment eliminations	(595)		(354)				(374)		(211)				(302)		(431)

Total consolidated backlog	$	1,192,802	$	1,160,042			$	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		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2014
Basic earnings (loss) per common share:
Continuing operations	$	0.72	$	0.98	$	1.70	$	1.00	$	1.26	$	2.26	$	1.36	$	1.04	$	4.67
Discontinued operations	0.57		1.11		1.68		(0.06)		0.02		(0.04)		0.04		(0.02)		(0.02)
Net earnings	1.30		2.10		3.38		0.94		1.29		2.23		1.40		1.03		4.65

Diluted earnings (loss) per common share:
Continuing operations	$	0.72	$	0.97	$	1.69	$	0.99	$	1.25	$	2.23	$	1.34	$	1.03	$	4.61
Discontinued operations	0.57		1.10		1.66		(0.06)		0.02		(0.04)		0.04		(0.02)		(0.02)
Net earnings	1.28		2.07		3.35		0.93		1.27		2.19		1.38		1.02		4.59

Adjusted diluted earnings per common share (calculated below):
Continuing operations	$	0.72	$	0.97	$	1.69	$	0.97	$	1.25	$	2.22	$	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	$	155,634	$	272,824	$	170,041	$	210,581	$	380,622	$	225,683	$	171,835	$	778,140
Discontinued operations	92,320		176,762		269,082		(9,903)		3,378		(6,525)		6,161		(2,541)		(2,905)
Net earnings	209,510		332,396		541,906		160,138		213,959		374,097		231,844		169,294		775,235

Average shares outstanding:
Basic	161,650		158,640		160,137		169,750		166,474		168,103		166,021		164,589		166,692
Diluted	163,323		160,398		161,876		172,013		168,857		170,450		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		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2014
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	117,190	$	155,634	$	272,824	$	170,041	$	210,581	$	380,622	$	225,683	$	171,835	$	778,140
Gains (losses) from discrete and other tax items	—		—		—		2,541		(635)		1,906		5,524		3,860		11,290
Adjusted earnings from continuing operations	$	117,190	$	155,634	$	272,824	$	167,500	$	211,216	$	378,716	$	220,159	$	167,975	$	766,850

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	0.72	$	0.97	$	1.69	$	0.99	$	1.25	$	2.23	$	1.34	$	1.03	$	4.61
Gains (losses) from discrete and other tax items	—		—		—		0.01		—		0.01		0.03		0.02		0.07
Adjusted earnings from continuing operations	$	0.72	$	0.97	$	1.69	$	0.97	$	1.25	$	2.22	$	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			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2014
Cash flow from operating activities	$	131,332		$	218,911		$	350,243		$	28,361		$	185,013		$	213,374		$	292,012		$	444,778		$	950,164
Less: Additions to property, plant and equipment	(27,956)			(43,807)			(71,763)			(32,695)			(42,550)			(75,245)			(33,532)			(57,256)			(166,033)
Free cash flow	$	103,376		$	175,104		$	278,480		$	(4,334)		$	142,463		$	138,129		$	258,480		$	387,522		$	784,131

Free cash flow as a percentage of earnings from continuing operations	88.2		%	112.5		%	102.1		%	(2.5)		%	67.7		%	36.3		%	114.5		%	225.5		%	100.8		%

Free cash flow as a percentage of revenue	6.0		%	10.0		%	8.0		%	(0.2)		%	7.3		%	3.7		%	12.9		%	19.6		%	10.1		%