Dover Reports Second Quarter 2016 Results And Updates Full Year Guidance

- Reports quarterly revenue of $1.7 billion, a decrease of 4% from the prior year

- Delivers quarterly diluted earnings per share from continuing operations of $0.76, including second quarter restructuring costs of $0.04, deal costs of $0.02, and one-time costs of $0.04

- Expects full year organic revenue to decline 6% to 8%, versus prior forecast of a 5% to 8% decline

- Reduces full year 2016 diluted earnings per share from continuing operations to now be in the range of $3.35 to $3.45, including approximately $0.18 of restructuring costs, $0.05 of deal costs, and $0.04 of one-time costs

- Believes the second quarter will mark the low point of 2016 Energy segment performance

News provided by

Dover Corporation

Jul 21, 2016, 06:40 ET

DOWNERS GROVE, Ill., July 21, 2016 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2016, revenue was $1.7 billion, a decrease of 4% from the prior year. Organic revenue declined 7% and acquisition revenue, net of dispositions, provided 3% growth in the quarter. Earnings from continuing operations were $118.3 million, a decrease of 24% as compared to $155.6 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the second quarter ended June 30, 2016, were $0.76, compared to $0.97 EPS in the prior year period, representing a decrease of 22%. EPS from continuing operations for the second quarter of 2016 includes discrete tax costs of approximately $0.01, deal costs of $0.02, and one-time costs of $0.04. EPS for the second quarter ended June 30, 2016, and 2015, also includes restructuring costs of $0.04 EPS and $0.01 EPS, respectively.

Revenue for the six months ended June 30, 2016, was $3.3 billion, a decrease of 5% from the prior year, reflecting an organic revenue decline of 7% and an unfavorable impact from foreign exchange of 1%, offset by 3% growth from acquisition revenue, net of dispositions. Earnings from continuing operations for the six months ended June 30, 2016, were $217.6 million, a decrease of 20% as compared to $272.8 million for the prior year period. Diluted EPS for the six months ended June 30, 2016, was $1.39, compared to $1.69 EPS in the prior year period, representing a decrease of 18%. EPS from continuing operations for the six months ended June 30, 2016, includes discrete tax benefits of $0.04, a gain on disposition of $0.07, deal costs of $0.02, and one-time costs of $0.04. Excluding discrete tax benefits and the gain on disposition, adjusted EPS from continuing operations decreased 24% to $1.28 from a comparable EPS of $1.69 in the prior year period. EPS for the six months ended June 30, 2016, and 2015, also includes restructuring costs of $0.11 EPS and $0.12 EPS, respectively.

Robert A. Livingston, Dover's President and Chief Executive Officer, said, "Our second quarter results, excluding deal costs and certain one-time items, were generally in-line with our expectations, but disappointing nonetheless. These results included deal costs of approximately $5 million, or $0.02 EPS, and one-time items of approximately $7 million, or $0.04 EPS, which included costs resulting from our in-quarter decision to suspend production for two weeks at several facilities in our Energy segment, as well as other costs. In addition, our results included $9 million, or $0.04 EPS, of restructuring costs.

"While our Energy businesses continued to be challenged by weak market dynamics, we believe the second quarter will mark the low point of our 2016 performance in our Energy segment. The continued stabilization of North American rig count and constructive oil prices positions us for modestly improved results in the back half of 2016, and growth in 2017.

"The markets served by Engineered Systems and Refrigeration & Food Equipment remained solid, resulting in organic growth of 2% and 1%, respectively. Our Fluids segment was impacted by direct oil & gas exposure, lower capital spending from integrated energy customers, and project timing, resulting in an organic decline of 8%.

"While there are positive indicators in several areas, we are slightly reducing our full year expectations for Refrigeration & Food Equipment and Fluids to account for project timing and continued headwinds. In Refrigeration & Food Equipment, we anticipate certain large can shaping equipment orders and shipments will slip into 2017. Within Fluids, we expect continued softness in our oil & gas related markets.

"We now expect full year revenue to decline approximately 3% to 5% as compared to our prior forecast of a revenue decline of 2% to 5%. Within this forecast, organic revenue is expected to decline 6% to 8%, versus an organic decline of 5% to 8% in our prior forecast. Our forecast for acquisitions, net of dispositions, of 4%, and the unfavorable impact of FX of 1%, is unchanged. In total, full year EPS is expected to be in the range of $3.35 to $3.45, as compared to the prior forecast of $3.51 to $3.66. The reduction of $0.19, at the mid-point, is comprised of one-time items of $0.04 EPS, second quarter deal costs of $0.02 EPS, forecasted third quarter deal costs of $0.03 EPS, as well as the combined impact of lower revenue, reduced corporate expense, and a lower tax rate. Also included in this forecast are full year restructuring costs of $0.18, the gain on a disposition of $0.07 and $0.04 of discrete tax benefits."

Net earnings for the second quarter ended June 30, 2016, were $118.3 million, or $0.76 EPS, compared to net earnings of $332.4 million, or $2.07 EPS, for the same period of 2015, which included earnings from discontinued operations of $176.8 million, or $1.10 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, 2016, were $217.6 million, or $1.39 EPS, compared to net earnings of $541.9 million, or $3.35 EPS, for the same period of 2015, which included earnings from discontinued operations of $269.1 million, or $1.66 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 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 21, 2016. 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 revenue of approaching $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 over 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, foreign exchange, changes in operations, acquisitions, 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, tax policies, trade sanctions, and export/import laws; 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 2016 DOVER CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)(in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Revenue	$	1,686,345	$	1,758,628	$	3,308,618	$	3,474,129
Cost of goods and services	1,055,132		1,104,060		2,088,141		2,192,402
Gross profit	631,213		654,568		1,220,477		1,281,727
Selling and administrative expenses	437,411		402,695		880,859		837,329
Operating earnings	193,802		251,873		339,618		444,398
Interest expense, net	32,157		31,988		63,871		64,025
Other income, net	(2,854)		(1,256)		(16,376)		(5,443)
Earnings before provision for income taxes and discontinued operations	164,499		221,141		292,123		385,816
Provision for income taxes	46,209		65,507		74,477		112,992
Earnings from continuing operations	118,290		155,634		217,646		272,824
Earnings from discontinued operations, net	—		176,762		—		269,082
Net earnings	$	118,290	$	332,396	$	217,646	$	541,906

Basic earnings per common share:
Earnings from continuing operations	$	0.76	$	0.98	$	1.40	$	1.70
Earnings from discontinued operations, net	—		1.11		—		1.68
Net earnings	0.76		2.10		1.40		3.38

Weighted average shares outstanding	155,180		158,640		155,122		160,137

Diluted earnings per common share:
Earnings from continuing operations	$	0.76	$	0.97	$	1.39	$	1.69
Earnings from discontinued operations, net	—		1.10		—		1.66
Net earnings	0.76		2.07		1.39		3.35

Weighted average shares outstanding	156,595		160,398		156,414		161,876

Dividends paid per common share	$	0.42	$	0.40	$	0.84	$	0.80

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

	2016									2015
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2015
REVENUE
Energy	$	283,230		$	259,008		$	542,238		$	430,423		$	366,044		$	796,467		$	363,872		$	323,341		$	1,483,680

Engineered Systems
Printing & Identification	239,681			263,648			503,329			230,181			229,934			460,115			227,992			255,563			943,670
Industrials	337,314			328,784			666,098			343,015			363,157			706,172			351,404			341,667			1,399,243
	576,995			592,432			1,169,427			573,196			593,091			1,166,287			579,396			597,230			2,342,913

Fluids	399,062			405,838			804,900			340,236			351,511			691,747			352,018			355,508			1,399,273

Refrigeration & Food Equipment	363,252			429,386			792,638			372,097			448,115			820,212			492,460			418,758			1,731,430

Intra-segment eliminations	(266)			(319)			(585)			(451)			(133)			(584)			(164)			(237)			(985)
Total consolidated revenue	$	1,622,273		$	1,686,345		$	3,308,618		$	1,715,501		$	1,758,628		$	3,474,129		$	1,787,582		$	1,694,600		$	6,956,311

NET EARNINGS
Segment Earnings:
Energy	$	11,244		$	(75)		$	11,169		$	52,305		$	40,909		$	93,214		$	48,726		$	31,250		$	173,190
Engineered Systems	93,748			104,034			197,782			88,149			96,702			184,851			102,866			89,244			376,961
Fluids	46,047			54,033			100,080			54,634			70,168			124,802			74,911			62,404			262,117
Refrigeration & Food Equipment	38,161			63,230			101,391			36,150			65,732			101,882			76,665			42,752			221,299
Total Segments	189,200			221,222			410,422			231,238			273,511			504,749			303,168			225,650			1,033,567
Corporate expense / other	29,862			24,566			54,428			34,526			20,382			54,908			25,881			24,911			105,700
Net interest expense	31,714			32,157			63,871			32,037			31,988			64,025			31,983			31,249			127,257
Earnings from continuing operations before provision for income taxes	127,624			164,499			292,123			164,675			221,141			385,816			245,304			169,490			800,610
Provision for income taxes	28,268			46,209			74,477			47,485			65,507			112,992			58,821			32,916			204,729
Earnings from continuing operations	99,356			118,290			217,646			117,190			155,634			272,824			186,483			136,574			595,881
Earnings (loss) from discontinued operations, net	—			—			—			92,320			176,762			269,082			(385)			5,251			273,948
Net earnings	$	99,356		$	118,290		$	217,646		$	209,510		$	332,396		$	541,906		$	186,098		$	141,825		$	869,829

SEGMENT OPERATING MARGIN
Energy	4.0		%	—		%	2.1		%	12.2		%	11.2		%	11.7		%	13.4		%	9.7		%	11.7		%
Engineered Systems	16.2		%	17.6		%	16.9		%	15.4		%	16.3		%	15.8		%	17.8		%	14.9		%	16.1		%
Fluids	11.5		%	13.3		%	12.4		%	16.1		%	20.0		%	18.0		%	21.3		%	17.6		%	18.7		%
Refrigeration & Food Equipment	10.5		%	14.7		%	12.8		%	9.7		%	14.7		%	12.4		%	15.6		%	10.2		%	12.8		%
Total Segment	11.7		%	13.1		%	12.4		%	13.5		%	15.6		%	14.5		%	17.0		%	13.3		%	14.9		%

DEPRECIATION AND AMORTIZATION EXPENSE
Energy	$	34,160		$	33,289		$	67,449		$	34,427		$	32,740		$	67,167		$	31,858		$	42,754		$	141,779
Engineered Systems	16,036			16,075			32,111			14,526			14,392			28,918			14,503			16,493			59,914
Fluids	20,511			20,981			41,492			13,848			13,648			27,496			13,367			15,215			56,078
Refrigeration & Food Equipment	16,728			16,881			33,609			16,458			16,406			32,864			16,609			16,601			66,074
Corporate	1,169			868			2,037			923			841			1,764			837			643			3,244
	$	88,604		$	88,094		$	176,698		$	80,182		$	78,027		$	158,209		$	77,174		$	91,706		$	327,089

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

	2016						2015
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2015
BOOKINGS
Energy	$	273,445	$	246,021	$	519,466	$	416,628	$	345,079	$	761,707	$	351,557	$	315,996	$	1,429,260

Engineered Systems
Printing & Identification	242,569		266,490		509,059		235,617		224,203		459,820		226,756		250,639		937,215
Industrials	329,957		304,345		634,302		337,070		336,173		673,243		338,744		357,451		1,369,438
	572,526		570,835		1,143,361		572,687		560,376		1,133,063		565,500		608,090		2,306,653

Fluids	418,345		413,767		832,112		339,310		333,695		673,005		357,032		321,154		1,351,191

Refrigeration & Food Equipment	411,367		468,661		880,028		419,659		486,793		906,452		430,681		379,967		1,717,100

Intra-segment eliminations	(90)		(944)		(1,034)		(628)		(417)		(1,045)		(385)		(486)		(1,916)

Total consolidated bookings	$	1,675,593	$	1,698,340	$	3,373,933	$	1,747,656	$	1,725,526	$	3,473,182	$	1,704,385	$	1,624,721	$	6,802,288

BACKLOG
Energy	$	144,828	$	129,873			$	212,060	$	194,819			$	156,631	$	155,586

Engineered Systems
Printing & Identification	102,640		104,509				108,151		103,403				100,476		98,288
Industrials	235,384		210,646				276,598		248,592				236,298		250,725
	338,024		315,155				384,749		351,995				336,774		349,013

Fluids	286,457		315,786				259,504		240,389				236,608		243,459

Refrigeration & Food Equipment	303,479		332,312				337,084		373,193				307,351		247,352

Intra-segment eliminations	(36)		(265)				(595)		(354)				(598)		(808)

Total consolidated backlog	$	1,072,752	$	1,092,861			$	1,192,802	$	1,160,042			$	1,036,766	$	994,602

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

Earnings Per Share
	2016						2015
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2015
Basic earnings (loss) per common share:
Continuing operations	$	0.64	$	0.76	$	1.40	$	0.72	$	0.98	$	1.70	$	1.20	$	0.88	$	3.78
Discontinued operations	—		—		—		0.57		1.11		1.68		—		0.03		1.74
Net earnings	$	0.64	0.76		1.40		$	1.30	$	2.10	$	3.38	$	1.20	$	0.92	$	5.52

Diluted earnings (loss) per common share:
Continuing operations	$	0.64	$	0.76	$	1.39	$	0.72	$	0.97	$	1.69	$	1.19	$	0.87	$	3.74
Discontinued operations	—		—		—		0.57		1.10		1.66		—		0.03		1.72
Net earnings	$	0.64	0.76		1.39		$	1.28	$	2.07	$	3.35	$	1.19	$	0.91	$	5.46

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

Net earnings (loss):
Continuing operations	$	99,356	$	118,290	$	217,646	$	117,190	$	155,634	$	272,824	$	186,483	$	136,574	$	595,881
Discontinued operations	—		—		—		92,320		176,762		269,082		(385)		5,251		273,948
Net earnings	$	99,356	118,290		217,646		$	209,510	$	332,396	$	541,906	$	186,098	$	141,825	$	869,829

Average shares outstanding:
Basic	155,064		155,180		155,122		161,650		158,640		160,137		155,300		154,986		157,619
Diluted	156,161		156,595		156,414		163,323		160,398		161,876		156,560		156,254		159,172

Adjusted Earnings Per Share (Non-GAAP)
Earnings from continuing operations are adjusted by gains (losses) from discrete and other tax items and gain on disposition of business to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:

	2016						2015
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3			Q4		FY 2015
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	99,356	$	118,290	$	217,646	$	117,190	$	155,634	$	272,824		$	186,483	$	136,574	$	595,881
Gains (losses) from discrete and other tax items	7,348		(1,221)		6,127		—		—		—			8,131		9,382		17,513
Gain on disposition of business	11,228		—		11,228		—		—		—			—		—		—
Adjusted earnings from continuing operations	$	80,780	$	119,511	$	200,291	$	117,190	$	155,634	$	272,824		$	178,352	$	127,192	$	578,368

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	0.64	$	0.76	$	1.39	$	0.72	$	0.97	$	1.69		$	1.19	$	0.87	$	3.74
Gains (losses) from discrete and other tax items	0.05		(0.01)		0.04		—		—		—			0.05		0.06		0.11
Gain on disposition of business	0.07		—		0.07		—		—		—			—		—		—
Adjusted earnings from continuing operations	$	0.52	$	0.76	$	1.28	$	0.72	$	0.97	$	1.69		$	1.14	$	0.81	$	3.63

* Per share data may not add due to rounding.

DOVER CORPORATION ADDITIONAL INFORMATION (unaudited)(in thousands)
Quarterly Cash Flow
	2016						2015
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2015
Net Cash Flows Provided By (Used In):
Operating activities	$	133,413	$	207,868	$	341,281	$	131,332	$	218,911	$	350,243	$	282,213	$	316,603	$	949,059
Investing activities	(425,857)		(69,415)		(495,272)		156,585		457,875		614,460		(33,454)		(615,584)		(34,578)
Financing activities	178,507		(127,678)		50,829		(416,603)		(608,329)		(1,024,932)		(86,033)		19,079		(1,091,886)

Quarterly Free Cash Flow (Non-GAAP)
	2016									2015
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2015
Cash flow from operating activities	$	133,413		$	207,868		$	341,281		$	131,332		$	218,911		$	350,243		$	282,213		$	316,603		$	949,059
Less: Capital expenditures	(37,230)			(35,422)			(72,652)			(27,956)			(43,807)			(71,763)			(39,516)			(42,972)			(154,251)
Free cash flow	$	96,183		$	172,446		$	268,629		$	103,376		$	175,104		$	278,480		$	242,697		$	273,631		$	794,808

Free cash flow as a percentage of earnings from continuing operations	96.8		%	145.8		%	123.4		%	88.2		%	112.5		%	102.1		%	130.1		%	200.4		%	133.4		%

Free cash flow as a percentage of revenue	5.9		%	10.2		%	8.1		%	6.0		%	10.0		%	8.0		%	13.6		%	16.1		%	11.4		%

Revenue Growth Factors
	Three Months Ended June 30, 2016
	Energy		Engineered Systems		Fluids		Refrigeration & Food Equipment		Total
Organic	(28)	%	2	%	(8)	%	1	%	(7)	%
Acquisitions	—	%	3	%	24	%	—	%	6	%
Dispositions	—	%	(4)	%	—	%	(5)	%	(3)	%
Currency translation	(1)	%	(1)	%	—	%	—	%	—	%
	(29)	%	—	%	16	%	(4)	%	(4)	%

	Six Months Ended June 30, 2016
	Energy		Engineered Systems		Fluids		Refrigeration & Food Equipment		Total
Organic	(31)	%	2	%	(6)	%	2	%	(7)	%
Acquisitions	—	%	3	%	23	%	—	%	6	%
Dispositions	—	%	(4)	%	—	%	(5)	%	(3)	%
Currency translation	(1)	%	(2)	%	(1)	%	—	%	(1)	%
	(32)	%	(1)	%	16	%	(3)	%	(5)	%

Non-GAAP Disclosures
In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted earnings from continuing operations, adjusted diluted earnings per common share, free cash flow and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for earnings from continuing operations, diluted earnings per common share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for gains or losses from discrete and other tax items and for gain on disposition of business. Adjusted diluted earnings per common share represents adjusted earnings from continuing operations divided by average diluted shares. Management believes this information is useful to investors to better understand the company's ongoing profitability and facilitates easier comparisons of the company's profitability to prior and future periods and to its peers. Free cash flow represents net cash provided by operating activities minus capital expenditures. Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock. Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of our revenue performance and trends between periods.

SOURCE Dover Corporation