Dover Reports Third Quarter 2016 Results

- 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 $0.83, including third quarter restructuring costs of $0.04

- Reaffirms recently reduced guidance for diluted earnings per share from continuing operations to be in the range of $3.00 to $3.05 for full year 2016

News provided by

Dover

Oct 19, 2016, 06:45 ET

DOWNERS GROVE, Ill., Oct. 19, 2016 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the third quarter ended September 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 $130.1 million, a decrease of 30% as compared to $186.5 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the third quarter ended September 30, 2016, were $0.83, compared to $1.19 EPS in the prior year period, representing a decrease of 30%. Third quarter 2016 EPS of $0.83 decreased 27% as compared to third quarter 2015 adjusted EPS of $1.14, which excludes $0.05 of discrete tax benefits. There were no discrete tax benefits in the third quarter of 2016. EPS for the quarters ended September 30, 2016, and September 30, 2015, includes restructuring costs of $0.04 EPS and $0.05 EPS, respectively.

Revenue for the nine months ended September 30, 2016, was $5.0 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 nine months ended September 30, 2016, were $347.7 million, a decrease of 24% as compared to $459.3 million for the prior year period. Diluted EPS for the nine months ended September 30, 2016, was $2.22, compared to $2.87 EPS in the prior year period, representing a decrease of 23%. EPS from continuing operations for the nine months ended September 30, 2016, includes discrete tax benefits of $0.04 and a gain on disposition of $0.07. Excluding discrete tax benefits and the gain on disposition, adjusted EPS from continuing operations decreased 25% to $2.11 from a comparable EPS of $2.82 in the prior year period. EPS for the nine months ended September 30, 2016, and September 30, 2015, also includes restructuring costs of $0.14 EPS and $0.17 EPS, respectively.

Dover's President and Chief Executive Officer, Robert A. Livingston, said, "Our third quarter results were disappointing. The continuing weak macro environment, further declines in longer cycle oil & gas exposed markets, and production inefficiencies in our retail refrigeration business impacted both volume and earnings. These results were well below our expectations, and more than offset solid improvements in our upstream drilling and production businesses, as well as continued strong performance in our Printing & Identification platform.

"As we announced on October 10, given these factors, we expect 2016 full year EPS to be in the range of $3.00 to $3.05. Within this guidance, organic revenue is forecasted to decline 7% to 8%.

"Regarding the fourth quarter, we expect further improvements in our early cycle upstream oil & gas markets, strong performance in Printing & Identification, and continued sequential growth in Fluids. We also expect a seasonal decline in Refrigeration & Food Equipment. These factors will result in our fourth quarter EPS to be largely in-line with the third quarter."

Net earnings for the third quarter ended September 30, 2016, were $130.1 million, or $0.83 EPS, compared to net earnings of $186.1 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $0.4 million.

Net earnings for the nine months ended September 30, 2016, were $347.7 million, or $0.83 EPS, compared to net earnings of $728.0 million, or $1.19 EPS, for the same period of 2015, which included earnings from discontinued operations of $268.7 million, or $1.68 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.66 EPS, resulting from the disposition of two businesses held for sale.

Dover will host a webcast of its third quarter 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, October 19, 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 third 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 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 - THIRD QUARTER 2016

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue	$	1,707,763	$	1,787,582	$	5,016,381	$	5,261,711
Cost of goods and services	1,075,975		1,114,974		3,164,116		3,307,376
Gross profit	631,788		672,608		1,852,265		1,954,335
Selling and administrative expenses	421,042		395,688		1,301,901		1,233,017
Operating earnings	210,746		276,920		550,364		721,318
Interest expense, net	32,994		31,983		96,865		96,008
Other income, net	(3,424)		(367)		(19,800)		(5,810)
Earnings before provision for income taxes and discontinued operations	181,176		245,304		473,299		631,120
Provision for income taxes	51,092		58,821		125,569		171,813
Earnings from continuing operations	130,084		186,483		347,730		459,307
Earnings (loss) from discontinued operations, net	—		(385)		—		268,697
Net earnings	$	130,084	$	186,098	$	347,730	$	728,004

Basic earnings per common share:
Earnings from continuing operations	$	0.84	$	1.20	$	2.24	$	2.90
Earnings from discontinued operations, net	—		—		—		1.70
Net earnings	0.84		1.20		2.24		4.59

Weighted average shares outstanding	155,300		155,300		155,182		158,507

Diluted earnings per common share:
Earnings from continuing operations	$	0.83	$	1.19	$	2.22	$	2.87
Earnings from discontinued operations, net	—		—		—		1.68
Net earnings	0.83		1.19		2.22		4.55

Weighted average shares outstanding	156,798		156,560		156,562		160,112

Dividends paid per common share	$	0.44	$	0.42	$	1.28	$	1.22

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

	2016												2015
	Q1			Q2			Q3			Q3 YTD			Q1			Q2			Q3			Q3 YTD			Q4			FY 2015
REVENUE
Energy	$	283,230		$	259,008		$	273,248		$	815,486		$	430,423		$	366,044		$	363,872		$	1,160,339		$	323,341		$	1,483,680

Engineered Systems
Printing & Identification	239,681			263,648			253,091			756,420			230,181			229,934			227,992			688,107			255,563			943,670
Industrials	337,314			328,784			317,471			983,569			343,015			363,157			351,404			1,057,576			341,667			1,399,243
	576,995			592,432			570,562			1,739,989			573,196			593,091			579,396			1,745,683			597,230			2,342,913

Fluids	399,062			405,838			412,822			1,217,722			340,236			351,511			352,018			1,043,765			355,508			1,399,273

Refrigeration & Food Equipment	363,252			429,386			451,328			1,243,966			372,097			448,115			492,460			1,312,672			418,758			1,731,430

Intra-segment eliminations	(266)			(319)			(197)			(782)			(451)			(133)			(164)			(748)			(237)			(985)
Total consolidated revenue	$	1,622,273		$	1,686,345		$	1,707,763		$	5,016,381		$	1,715,501		$	1,758,628		$	1,787,582		$	5,261,711		$	1,694,600		$	6,956,311

NET EARNINGS
Segment Earnings:
Energy	$	11,244		$	(75)		$	13,279		$	24,448		$	52,305		$	40,909		$	48,726		$	141,940		$	31,250		$	173,190
Engineered Systems	93,748			104,034			97,240			295,022			88,149			96,702			102,866			287,717			89,244			376,961
Fluids	46,047			54,033			66,178			166,258			54,634			70,168			74,911			199,713			62,404			262,117
Refrigeration & Food Equipment	38,161			63,230			64,111			165,502			36,150			65,732			76,665			178,547			42,752			221,299
Total segments	189,200			221,222			240,808			651,230			231,238			273,511			303,168			807,917			225,650			1,033,567
Corporate expense / other	29,862			24,566			26,638			81,066			34,526			20,382			25,881			80,789			24,911			105,700
Interest expense, net	31,714			32,157			32,994			96,865			32,037			31,988			31,983			96,008			31,249			127,257
Earnings from continuing operations before provision for income taxes	127,624			164,499			181,176			473,299			164,675			221,141			245,304			631,120			169,490			800,610
Provision for income taxes	28,268			46,209			51,092			125,569			47,485			65,507			58,821			171,813			32,916			204,729
Earnings from continuing operations	99,356			118,290			130,084			347,730			117,190			155,634			186,483			459,307			136,574			595,881
Earnings (loss) from discontinued operations, net	—			—			—			—			92,320			176,762			(385)			268,697			5,251			273,948
Net earnings	$	99,356		$	118,290		$	130,084		$	347,730		$	209,510		$	332,396		$	186,098		$	728,004		$	141,825		$	869,829

SEGMENT OPERATING MARGIN
Energy	4.0		%	—		%	4.9		%	3.0		%	12.2		%	11.2		%	13.4		%	12.2		%	9.7		%	11.7		%
Engineered Systems	16.2		%	17.6		%	17.0		%	17.0		%	15.4		%	16.3		%	17.8		%	16.5		%	14.9		%	16.1		%
Fluids	11.5		%	13.3		%	16.0		%	13.7		%	16.1		%	20.0		%	21.3		%	19.1		%	17.6		%	18.7		%
Refrigeration & Food Equipment	10.5		%	14.7		%	14.2		%	13.3		%	9.7		%	14.7		%	15.6		%	13.6		%	10.2		%	12.8		%
Total segment operating margin	11.7		%	13.1		%	14.1		%	13.0		%	13.5		%	15.6		%	17.0		%	15.4		%	13.3		%	14.9		%

DEPRECIATION AND AMORTIZATION EXPENSE
Energy	$	34,160		$	33,289		$	32,605		$	100,054		$	34,427		$	32,740		$	31,858		$	99,025		$	42,754		$	141,779
Engineered Systems	16,036			16,075			16,238			48,349			14,526			14,392			14,503			43,421			16,493			59,914
Fluids	20,511			20,981			20,833			62,325			13,848			13,648			13,367			40,863			15,215			56,078
Refrigeration & Food Equipment	16,728			16,881			16,146			49,755			16,458			16,406			16,609			49,473			16,601			66,074
Corporate	1,169			868			901			2,938			923			841			837			2,601			643			3,244
Total depreciation and amortization expense	$	88,604		$	88,094		$	86,723		$	263,421		$	80,182		$	78,027		$	77,174		$	235,383		$	91,706		$	327,089

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

	2016								2015
	Q1		Q2		Q3		Q3 YTD		Q1		Q2		Q3		Q3 YTD		Q4		FY 2015
BOOKINGS
Energy	$	273,445	$	246,021	$	270,685	$	790,151	$	416,628	$	345,079	$	351,557	$	1,113,264	$	315,996	$	1,429,260

Engineered Systems
Printing & Identification	242,569		266,490		248,443		757,502		235,617		224,203		226,756		686,576		250,639		937,215
Industrials	329,957		304,345		331,435		965,737		337,070		336,173		338,744		1,011,987		357,451		1,369,438
	572,526		570,835		579,878		1,723,239		572,687		560,376		565,500		1,698,563		608,090		2,306,653

Fluids	418,345		413,767		413,535		1,245,647		339,310		333,695		357,032		1,030,037		321,154		1,351,191

Refrigeration & Food Equipment	411,367		468,661		429,134		1,309,162		419,659		486,793		430,681		1,337,133		379,967		1,717,100

Intra-segment eliminations	(90)		(944)		(245)		(1,279)		(628)		(417)		(385)		(1,430)		(486)		(1,916)

Total consolidated bookings	$	1,675,593	$	1,698,340	$	1,692,987	$	5,066,920	$	1,747,656	$	1,725,526	$	1,704,385	$	5,177,567	$	1,624,721	$	6,802,288

BACKLOG
Energy	$	144,828	$	129,873	$	126,519			$	212,060	$	194,819	$	156,631			$	155,586

Engineered Systems
Printing & Identification	102,640		104,509		101,190				108,151		103,403		100,476				98,288
Industrials	235,384		210,646		224,892				276,598		248,592		236,298				250,725
	338,024		315,155		326,082				384,749		351,995		336,774				349,013

Fluids	286,457		315,786		318,246				259,504		240,389		236,608				243,459

Refrigeration & Food Equipment	303,479		332,312		309,462				337,084		373,193		307,351				247,352

Intra-segment eliminations	(36)		(265)		(252)				(595)		(354)		(598)				(808)

Total consolidated backlog	$	1,072,752	$	1,092,861	$	1,080,057			$	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		Q3		Q3 YTD		Q1		Q2		Q3		Q3 YTD		Q4		FY 2015
Basic earnings (loss) per common share:
Continuing operations	$	0.64	$	0.76	$	0.84	$	2.24	$	0.72	$	0.98	$	1.20	$	2.90	$	0.88	$	3.78
Discontinued operations	—		—		—		—		0.57		1.11		—		1.70		0.03		1.74
Net earnings	$	0.64	$	0.76	$	0.84	$	2.24	$	1.30	$	2.10	$	1.20	$	4.59	$	0.92	$	5.52

Diluted earnings (loss) per common share:
Continuing operations	$	0.64	$	0.76	$	0.83	$	2.22	$	0.72	$	0.97	$	1.19	$	2.87	$	0.87	$	3.74
Discontinued operations	—		—		—		—		0.57		1.10		—		1.68		0.03		1.72
Net earnings	$	0.64	$	0.76	$	0.83	$	2.22	$	1.28	$	2.07	$	1.19	$	4.55	$	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	$	130,084	$	347,730	$	117,190	$	155,634	$	186,483	$	459,307	$	136,574	$	595,881
Discontinued operations	—		—		—		—		92,320		176,762		(385)		268,697		5,251		273,948
Net earnings	$	99,356	$	118,290	$	130,084	$	347,730	$	209,510	$	332,396	$	186,098	$	728,004	$	141,825	$	869,829

Average shares outstanding:
Basic	155,064		155,180		155,300		155,182		161,650		158,640		155,300		158,507		154,986		157,619
Diluted	156,161		156,595		156,798		156,562		163,323		160,398		156,560		160,112		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		Q3		Q3 YTD		Q1		Q2		Q3		Q3 YTD		Q4		FY 2015
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	99,356	$	118,290	$	130,084	$	347,730	$	117,190	$	155,634	$	186,483	$	459,307	$	136,574	$	595,881
Gains (losses) from discrete and other tax items	7,348		(1,221)		(304)		5,823		—		—		8,131		8,131		9,382		17,513
Gain on disposition of business	11,228		—		—		11,228		—		—		—		—		—		—
Adjusted earnings from continuing operations	$	80,780	$	119,511	$	130,388	$	330,679	$	117,190	$	155,634	$	178,352	$	451,176	$	127,192	$	578,368

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	0.64	$	0.76	$	0.83	$	2.22	$	0.72	$	0.97	$	1.19	$	2.87	$	0.87	$	3.74
Gains (losses) from discrete and other tax items	0.05		(0.01)		—		0.04		—		—		0.05		0.05		0.06		0.11
Gain on disposition of business	0.07		—		—		0.07		—		—		—		—		—		—
Adjusted earnings from continuing operations	$	0.52	$	0.76	$	0.83	$	2.11	$	0.72	$	0.97	$	1.14	$	2.82	$	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		Q3		Q3 YTD		Q1		Q2		Q3		Q3 YTD		Q4		FY 2015
Net Cash Flows Provided By (Used In):
Operating activities	$	133,413	$	207,868	$	231,665	$	572,946	$	131,332	$	218,911	$	282,213	$	632,456	$	316,603	$	949,059
Investing activities	(425,857)		(69,415)		(66,110)		(561,382)		156,585		457,875		(33,454)		581,006		(615,584)		(34,578)
Financing activities	178,507		(127,678)		98,491		149,320		(416,603)		(608,329)		(86,033)		(1,110,965)		19,079		(1,091,886)

Quarterly Free Cash Flow (Non-GAAP)

	2016												2015
	Q1			Q2			Q3			Q3 YTD			Q1			Q2			Q3			Q3 YTD			Q4			FY 2015
Cash flow from operating activities	$	133,413		$	207,868		$	231,665		$	572,946		$	131,332		$	218,911		$	282,213		$	632,456		$	316,603		$	949,059
Less: Capital expenditures	(37,230)			(35,422)			(43,116)			(115,768)			(27,956)			(43,807)			(39,516)			(111,279)			(42,972)			(154,251)
Free cash flow	$	96,183		$	172,446		$	188,549		$	457,178		$	103,376		$	175,104		$	242,697		$	521,177		$	273,631		$	794,808

Free cash flow as a percentage of earnings from continuing operations	96.8		%	145.8		%	144.9		%	131.5		%	88.2		%	112.5		%	130.1		%	113.5		%	200.4		%	133.4		%

Free cash flow as a percentage of revenue	5.9		%	10.2		%	11.0		%	9.1		%	6.0		%	10.0		%	13.6		%	9.9		%	16.1		%	11.4		%

Revenue Growth Factors

	Three Months Ended September 30, 2016
	Energy		Engineered Systems		Fluids		Refrigeration & Food Equipment		Total
Organic (decline) growth	(24)	%	1	%	(9)	%	(2)	%	(7)	%
Acquisitions	—	%	3	%	27	%	—	%	6	%
Dispositions	—	%	(5)	%	—	%	(7)	%	(3)	%
Currency translation	(1)	%	(1)	%	(1)	%	—	%	(1)	%
	(25)	%	(2)	%	17	%	(9)	%	(5)	%

	Nine Months Ended September 30, 2016
	Energy		Engineered Systems		Fluids		Refrigeration & Food Equipment		Total
Organic (decline) growth	(29)	%	2	%	(7)	%	1	%	(7)	%
Acquisitions	—	%	3	%	25	%	—	%	6	%
Dispositions	—	%	(4)	%	—	%	(6)	%	(3)	%
Currency translation	(1)	%	(1)	%	(1)	%	—	%	(1)	%
	(30)	%	—	%	17	%	(5)	%	(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