Dover Reports Second Quarter 2017 Results And Raises Full Year Revenue And EPS Guidance

- Reports quarterly revenue of $2.0 billion, an increase of 18% from the prior year

- Delivers quarterly diluted net earnings per share of $1.04, up 37%

- Increases full year revenue growth forecast; now expected to be 12% to 14%

- Raises 2017 full year diluted earnings per share guidance to now be in the range of $4.23 to $4.33, an increase of $0.15 at the mid-point of guidance

News provided by

Dover Corporation

Jul 20, 2017, 06:45 ET

DOWNERS GROVE, Ill., July 20, 2017 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the second quarter ended June 30, 2017, revenue was $2.0 billion, an increase of 18% from the prior year. The increase in the quarter was driven by organic growth of 10% and acquisition growth of 12%, partially offset by a 3% impact from dispositions and an unfavorable impact from foreign exchange ("FX") of 1%. Net earnings were $164.1 million, an increase of 39% as compared to $118.3 million for the prior year period. Diluted net earnings per share ("EPS") for the second quarter ended June 30, 2017, were $1.04, compared to $0.76 EPS in the prior year period, representing an increase of 37%. EPS for the second quarter ended June 30, 2017, and June 30, 2016, include restructuring costs of $0.01 EPS and $0.04 EPS, respectively.

Dover's President and Chief Executive Officer, Robert A. Livingston, said, "The second quarter reflected the continuation of a trend that began to develop late last year, namely improving global markets and strong results reflecting solid execution by our teams. In all, we achieved revenue growth and margin expansion that exceeded our forecasts.

"All of our segments posted sequential increases in revenue and margin, which was most notable in Refrigeration & Food Equipment and Fluids. In addition, we benefited from strong broad-based activity in Engineered Systems, and also from higher than expected U.S. rig count and increased well completions, which resulted in significant growth in Energy.

"As a result of our strong second quarter performance and increased confidence in the back half of the year, we are raising our full year guidance for revenue and EPS. Our revised guidance is based on full year revenue growth of 12% to 14% versus our prior forecast of 11% to 13%, and includes organic growth of 5% to 7%, which has been increased one percentage point. Our revenue forecast also includes acquisition growth of 10%, a 2% impact from dispositions, and a 1% headwind from FX, all of which remain unchanged from our prior forecast. Lastly, we now expect full year diluted earnings per share to be in the range of $4.23 to $4.33, versus our prior guidance of $4.05 to $4.20."

Dover will host a webcast of its second quarter 2017 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, July 20, 2017. The webcast can be accessed on the Dover website at 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 be found on the Company's website.

About Dover:

Dover is a diversified global manufacturer with annual revenue exceeding $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through four operating segments: Engineered Systems, Fluids, Refrigeration & Food Equipment, and Energy. 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 29,000 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 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 concern future events and 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 address matters that are uncertain, including, by way of example only: operating and strategic plans, future sales, earnings, cash flows, margins, organic growth, growth from acquisitions, restructuring charges, cost structure, capital expenditures, capital allocation, capital structure, dividends, cash flows, exchange rates, tax rates, interest rates, interest expense, changes in operations and trends in industries in which our businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. 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, economic conditions generally and changes in economic conditions globally and in the markets and industries served by our businesses, including oil and gas activity and U.S. industrials activity; conditions and events affecting domestic and global financial and capital markets; oil and natural gas demand, production growth, and prices; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; risks related to our international operations and the ability of our businesses to expand into new geographic markets; the impact of interest rate and currency exchange rate fluctuations; increased competition and pricing pressures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of our businesses to adapt to technological developments; the ability of our 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; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; domestic and foreign governmental and public policy changes or developments, including import/export laws and sanctions, tax policies, environmental regulations and conflict minerals disclosure requirements; increases in the cost of raw materials; our ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures, and to realize anticipated earnings and synergies from acquired businesses and joint ventures; our 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 legal compliance risks and litigation, including product recalls; indemnification obligations related to acquired or divested businesses; cybersecurity and privacy risks; protection and validity of patent and other intellectual property rights; goodwill or intangible asset impairment charges; a downgrade in our credit ratings which, among other matters, could make obtaining financing more difficult and costly; and work stoppages, union and works council campaigns and other labor disputes which could impact our productivity. 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 2017

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenue	$	1,993,351	$	1,686,345	$	3,806,723	$	3,308,618
Cost of goods and services	1,243,905		1,055,132		2,396,103		2,088,141
Gross profit	749,446		631,213		1,410,620		1,220,477
Selling, general, and administrative expenses	484,046		437,411		969,336		880,859
Operating earnings	265,400		193,802		441,284		339,618
Interest expense	36,932		33,779		73,341		67,097
Interest income	(2,338)		(1,622)		(4,918)		(3,226)
Gain on sale of businesses	—		(801)		(90,093)		(12,029)
Other expense (income), net	15		(2,053)		191		(4,347)
Earnings before provision for income taxes	230,791		164,499		462,763		292,123
Provision for income taxes	66,733		46,209		126,458		74,477
Net earnings	$	164,058	$	118,290	$	336,305	$	217,646

Net earnings per share:
Basic	$	1.05	$	0.76	$	2.16	$	1.40
Diluted	$	1.04	$	0.76	$	2.14	$	1.39

Weighted average shares outstanding:
Basic	155,703		155,180		155,622		155,122
Diluted	157,513		156,595		157,457		156,414

Dividends paid per common share	$	0.44	$	0.42	$	0.88	$	0.84

DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
	2017									2016
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2016
REVENUE
Engineered Systems
Printing & Identification	$	249,238		$	278,220		$	527,458		$	239,681		$	263,648		$	503,329		$	253,091		$	266,082		$	1,022,502
Industrials	358,397			377,210			735,607			337,314			328,784			666,098			317,471			360,212			1,343,781
	607,635			655,430			1,263,065			576,995			592,432			1,169,427			570,562			626,294			2,366,283

Fluids	525,195			553,259			1,078,454			399,062			405,838			804,900			412,822			482,852			1,700,574

Refrigeration & Food Equipment	356,834			426,304			783,138			363,252			429,386			792,638			451,328			376,373			1,620,339

Energy	324,088			359,168			683,256			283,230			259,008			542,238			273,248			292,952			1,108,438

Intra-segment eliminations	(380)			(810)			(1,190)			(266)			(319)			(585)			(197)			(510)			(1,292)
Total consolidated revenue	$	1,813,372		$	1,993,351		$	3,806,723		$	1,622,273		$	1,686,345		$	3,308,618		$	1,707,763		$	1,777,961		$	6,794,342

NET EARNINGS
Segment Earnings:
Engineered Systems	$	174,398		$	106,820		$	281,218		$	93,748		$	104,034		$	197,782		$	97,240		$	96,807		$	391,829
Fluids	52,639			73,558			126,197			46,047			54,033			100,080			66,178			34,663			200,921
Refrigeration & Food Equipment	33,562			65,829			99,391			38,161			63,230			101,391			64,111			118,126			283,628
Energy	41,691			53,368			95,059			11,244			(75)			11,169			13,279			30,888			55,336
Total segments	302,290			299,575			601,865			189,200			221,222			410,422			240,808			280,484			931,714
Corporate expense / other	36,489			34,190			70,679			29,862			24,566			54,428			26,638			31,674			112,740
Interest expense	36,409			36,932			73,341			33,318			33,779			67,097			33,789			35,515			136,401
Interest income	(2,580)			(2,338)			(4,918)			(1,604)			(1,622)			(3,226)			(795)			(2,738)			(6,759)
Earnings before provision for income taxes	231,972			230,791			462,763			127,624			164,499			292,123			181,176			216,033			689,332
Provision for income taxes	59,725			66,733			126,458			28,268			46,209			74,477			51,092			54,871			180,440
Net earnings	$	172,247		$	164,058		$	336,305		$	99,356		$	118,290		$	217,646		$	130,084		$	161,162		$	508,892

SEGMENT MARGIN
Engineered Systems	28.7		%	16.3		%	22.3		%	16.2		%	17.6		%	16.9		%	17.0		%	15.5		%	16.6		%
Fluids	10.0		%	13.3		%	11.7		%	11.5		%	13.3		%	12.4		%	16.0		%	7.2		%	11.8		%
Refrigeration & Food Equipment	9.4		%	15.4		%	12.7		%	10.5		%	14.7		%	12.8		%	14.2		%	31.4		%	17.5		%
Energy	12.9		%	14.9		%	13.9		%	4.0		%	—		%	2.1		%	4.9		%	10.5		%	5.0		%
Total segment operating margin	16.7		%	15.0		%	15.8		%	11.7		%	13.1		%	12.4		%	14.1		%	15.8		%	13.7		%

DEPRECIATION AND AMORTIZATION EXPENSE
Engineered Systems	$	19,575		$	20,259		$	39,834		$	16,036		$	16,075		$	32,111		$	16,238		$	25,597		$	73,946
Fluids	28,503			29,473			57,976			20,511			20,981			41,492			20,833				22,899			85,224
Refrigeration & Food Equipment	15,035			14,522			29,557			16,728			16,881			33,609			16,146				15,263			65,018
Energy	31,365			32,000			63,365			34,160			33,289			67,449			32,605				31,366			131,420
Corporate	1,120			1,164			2,284			1,169			868			2,037			901				2,193			5,131
Total depreciation and amortization expense	$	95,598		$	97,418		$	193,016		$	88,604		$	88,094		$	176,698		$	86,723		$	97,318		$	360,739

DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
	2017						2016
	Q1		Q2		Q2 YTD		Q1		Q2		Q2 YTD		Q3		Q4		FY 2016
BOOKINGS
Engineered Systems
Printing & Identification	$	256,665	$	282,157	$	538,822	$	242,569	$	266,490	$	509,059	$	248,443	$	268,951	$	1,026,453
Industrials	419,455		367,352		786,807		329,957		304,345		634,302		331,435		374,073		1,339,810
	676,120		649,509		1,325,629		572,526		570,835		1,143,361		579,878		643,024		2,366,263

Fluids	565,987		554,656		1,120,643		418,345		413,767		832,112		413,535		457,283		1,702,930

Refrigeration & Food Equipment	438,576		466,276		904,852		411,367		468,661		880,028		429,134		336,645		1,645,807

Energy	348,317		352,617		700,934		273,445		246,021		519,466		270,685		299,771		1,089,922

Intra-segment eliminations	(1,149)		(529)		(1,678)		(90)		(944)		(1,034)		(245)		(308)		(1,587)

Total consolidated bookings	$	2,027,851	$	2,022,529	$	4,050,380	$	1,675,593	$	1,698,340	$	3,373,933	$	1,692,987	$	1,736,415	$	6,803,335

BACKLOG
Engineered Systems
Printing & Identification	$	109,347	$	115,763			$	102,640	$	104,509			$	101,190	$	98,924
Industrials	310,008		301,474				235,384		210,646				224,892		252,780
	419,355		417,237				338,024		315,155				326,082		351,704

Fluids	371,717		378,774				286,457		315,786				318,246		331,238

Refrigeration & Food Equipment	341,530		382,598				303,479		332,312				309,462		258,329

Energy	156,255		147,568				144,828		129,873				$	126,519	$	134,181

Intra-segment eliminations	(729)		(378)				(36)		(265)				(252)		(102)

Total consolidated backlog	$	1,288,128	$	1,325,799			$	1,072,752	$	1,092,861			$	1,080,057	$	1,075,350

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

Earnings Per Share
	2017							2016
	Q1		Q2		Q2 YTD			Q1		Q2			Q2 YTD			Q3			Q4			FY 2016
Net earnings per share:
Basic	$	1.11	$	1.05	$	2.16		$	0.64	$	0.76		$	1.40		$	0.84		$	1.04		$	3.28
Diluted	$	1.09	$	1.04	$	2.14		$	0.64	$	0.76		$	1.39		$	0.83		$	1.03		$	3.25

Net earnings and weighted average shares used in calculated earnings per share amounts are as follows:

Net earnings	$	172,247	$	164,058	$	336,305		$	99,356	$	118,290		$	217,646		$	130,084		$	161,162		$	508,892

Weighted average shares outstanding:
Basic	155,540		155,703		155,622			155,064		155,180			155,122			155,300			155,376			155,231
Diluted	157,399		157,513		157,457			156,161		156,595			156,414			156,798			156,816			156,636

Adjusted Earnings Per Share (Non-GAAP)
Net earnings are adjusted by gains on disposition of businesses and a product recall charge to derive adjusted net earnings and adjusted diluted earnings per common share as follows:

	2017						2016
	Q1		Q2		Q2 YTD				Q1		Q2				Q2 YTD			Q3			Q4			FY 2016
Adjusted net earnings:
Net earnings	$	172,247	$	164,058	$	336,305		$	99,356	$	118,290			$	217,646		$	130,084		$	161,162		$	508,892
Gain on dispositions, pre-tax	(88,402)		—		(88,402)			(11,853)				—		(11,853)				—			(85,035)			(96,888)
Gain on dispositions, tax impact ¹	26,682		—		26,682			625				—		625				—			28,060			28,685
Product recall charge, pre-tax	—		—		—			—				—		—				—			23,150			23,150
Product recall charge, tax impact ¹	—		—		—			—				—		—				—			(8,913)			(8,913)
Adjusted net earnings	$	110,527	$	164,058	$	$274,585		$	88,128	$	118,290			$	206,418		$	130,084		$	118,424		$	454,926

Adjusted diluted earnings per common share:
Net earnings	$	1.09	$	1.04	$	2.14		$	0.64	$	0.76			$	1.39		$	0.83		$	1.03		$	3.25
Gain on dispositions, pre-tax	(0.56)		—		(0.56)			(0.08)		—				(0.08)				—		(0.54)				(0.62)
Gain on dispositions, tax impact	0.17		—		0.17			—		—				—				—		0.18				0.18
Product recall charge, pre-tax	—		—		—			—		—				—				—		0.15				0.15
Product recall charge, tax impact	—		—		—			—		—				—				—		(0.06)				(0.06)
Adjusted net earnings	$	0.70	$	1.04	$	1.75		$	0.56	$	0.76			$	1.31		$	0.83		$	0.76		$	2.90

¹ Gain on dispositions and the product recall charge were tax effected using the statutory tax rates in the specific jurisdiction for each period.

* Per share data may be impacted by rounding.

DOVER CORPORATION
ADDITIONAL INFORMATION
(unaudited)(in thousands)
Quarterly Cash Flow
	2017									2016
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2016
Net Cash Flows Provided By (Used In):
Operating activities	$	78,071		$	155,877		$	233,948		$	133,413		$	207,868		$	341,281		$	231,665		$	289,029		$	861,975
Investing activities	81,780			(51,137)			30,643			(425,857)			(69,415)			(495,272)			(66,110)			(942,461)			(1,503,843)
Financing activities	(93,293)			(216,273)			(309,566)			178,507			(127,678)			50,829			98,491			484,288			633,608

Quarterly Free Cash Flow (Non-GAAP)
	2017									2016
	Q1			Q2			Q2 YTD			Q1			Q2			Q2 YTD			Q3			Q4			FY 2016
Cash flow from operating activities	$	78,071		$	155,877		$	233,948		$	133,413		$	207,868		$	341,281		$	231,665		$	289,029		$	861,975
Less: Capital expenditures	(42,259)			(48,335)			(90,594)			(37,230)			(35,422)			(72,652)			(43,116)			(49,437)			(165,205)
Plus: Cash taxes paid from gains on dispositions¹	—			42,955			42,955			—			435			435			217			217			869
Free cash flow	$	35,812		$	150,497		$	186,309		$	96,183		$	172,881		$	269,064		$	188,766		$	239,809		$	697,639

Free cash flow as a percentage of revenue	2.0		%	7.5		%	4.9		%	5.9		%	10.3		%	8.1		%	11.1		%	13.5		%	10.3		%

Free cash flow as a percentage of net earnings	20.8		%	91.7		%	55.4		%	96.8		%	146.2		%	123.6		%	145.1		%	148.8		%	137.1		%

¹ Federal and state tax payments related to the gains on the dispositions of Performance Motorsports in 2017 and Tipper Tie and Texas Hydraulics in 2016.


Revenue Growth Factors
	Three Months Ended June 30, 2017
	Engineered Systems		Fluids		Refrigeration & Food Equipment		Energy		Total
Organic	5	%	4	%	5	%	39	%	10	%
Acquisitions	10	%	34	%	—	%	—	%	12	%
Dispositions	(4)	%	—	%	(6)	%	—	%	(3)	%
Currency translation	(1)	%	(2)	%	—	%	(1)	%	(1)	%
Total *	11	%	36	%	(1)	%	38	%	18	%

* Totals may be impacted by rounding.

	Six Months Ended June 30, 2017
	Engineered Systems		Fluids		Refrigeration & Food Equipment		Energy		Total
Organic	4	%	1	%	5	%	39	%	7	%
Acquisitions	9	%	35	%	—	%	—	%	12	%
Dispositions	(4)	%	—	%	(6)	%	—	%	(3)	%
Currency translation	(1)	%	(2)	%	—	%	(1)	%	(1)	%
Total *	8	%	34	%	(1)	%	38	%	15	%

* Totals may be impacted by rounding.

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 net earnings, 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 net earnings, 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 net earnings represents net earnings adjusted for gains on disposition of businesses and a product recall charge. Adjusted diluted earnings per common share represents adjusted net earnings 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, plus the add back of cash taxes paid for gains on dispositions (which reflect tax payments on disposition-related investing activities). 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 and dispositions, provides a useful comparison of our revenue performance and trends between periods.

SOURCE Dover Corporation