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Dover Reports First Quarter 2019 Results; Reaffirms Full Year 2019 Guidance

Reports quarterly revenue of $1.7 billion; organic growth of 8.3%

DOWNERS GROVE, Ill., April 18, 2019 /PRNewswire/ -- Dover (DOV), a diversified global manufacturer, announced its financial results for the first quarter ended March 31, 2019.

First Quarter 2019 Financial Results:



Three Months Ended March 31,

(dollars in millions, except per share data)


2019


2018


% Change

U.S. GAAP from continuing operations

Revenue


$

1,725


$

1,638


5

%

Earnings


$

106


$

109


(3)

%

Diluted EPS


$

0.72


$

0.70


3

%








Non-GAAP from continuing operations

Adjusted earnings


$

182


$

141


29

%

Adjusted diluted EPS


$

1.24


$

0.90


38

%

For the first quarter ended March 31, 2019, Dover's revenue was $1.7 billion, an increase of 5.3% over the prior year. The increase in the quarter was driven by organic growth of 8.3% and acquisition growth of 0.5%, partially offset by a 3.4% unfavorable impact from foreign exchange ("FX") and decline of 0.1% due to dispositions. 

Earnings from continuing operations included acquisition-related amortization costs of $26.7 million and rightsizing and other costs of $3.1 million, representing $0.18 and $0.02 of diluted earnings per share from continuing operations ("EPS"), respectively. In addition, the first quarter included a $46.9 million, or $0.32 of EPS, non-cash after-tax loss on assets held for sale related to Finder Pompe S.r.l. (a supplier of pumps to the upstream oil & gas industry), which was sold on April 2, 2019. Excluding these items, adjusted earnings from continuing operations for the quarter were $182.4 million (+29% over the comparable period in 2018), and adjusted EPS was $1.24 (+38% over the comparable period in 2018).

A full reconciliation between GAAP and adjusted measures is included as an exhibit herein.

Management Commentary:

Dover's President and Chief Executive Officer, Richard J. Tobin, said, "Our solid results for the first quarter of 2019 were driven by our businesses winning with their customers and executing on their productivity and cost structure initiatives.

"Revenue growth was driven primarily by constructive trading conditions across our Fluids and Engineered Systems segments, which posted comparable organic growth rates of 15.1% and 5.8%, respectively, as a result of healthy backlogs and increased throughput in our retail fueling platforms. Refrigeration and Food Equipment organic revenue was up 0.7% in the first quarter, with Dover Food Retail posting a 1.9% organic revenue increase as a result of the modestly improved demand conditions as we had forecasted.

"As a result of our encouraging start in 2019, Dover is reaffirming our full year 2019 adjusted EPS guidance of $5.65 to $5.85."

Conference Call Information:

Dover will host a webcast and conference call to discuss its first quarter 2019 results at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, April 18, 2019. 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 first 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 of approximately $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through three operating segments: 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 24,000 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. All statements in this document other than statements of historical fact are statements that are, or could be deemed, "forward-looking" statements. Forward-looking statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control. Factors that could cause actual results to differ materially from current expectations include, among other things, general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner,  our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions. For details on the risks and uncertainties that could cause our results to differ materially from the forward-looking statements contained herein, we refer you to the documents we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These documents are available from the Securities and Exchange Commission, and on our website, dovercorporation.com. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

 

INVESTOR SUPPLEMENT - FIRST QUARTER 2019


DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited)(in thousands, except per share data)



Three Months Ended March 31,


2019


2018

Revenue

$

1,724,757


$

1,637,671

Cost of goods and services

1,101,215


1,034,842

Gross profit

623,542


602,829

Selling, general, and administrative expenses

408,466


435,026

Loss on assets held for sale

46,946


Operating earnings

168,130


167,803

Interest expense

31,808


35,640

Interest income

(890)


(2,057)

Other income, net

(1,106)


(30)

Earnings before provision for income taxes

138,318


134,250

Provision for income taxes

32,613


24,841

Earnings from continuing operations

105,705


109,409

Earnings from discontinued operations, net


22,025

Net earnings

$

105,705


$

131,434





Basic earnings per share*:




Earnings from continuing operations

$

0.73


$

0.71

Earnings from discontinued operations, net


0.14

Net earnings

$

0.73


$

0.85





Weighted average shares outstanding

145,087


154,520

Diluted earnings per common share*:




Earnings from continuing operations

$

0.72


$

0.70

Earnings from discontinued operations, net


0.14

Net earnings

$

0.72


$

0.84





Weighted average shares outstanding

146,911


157,090





Dividends paid per common share

$

0.48


$

0.47





* Per share data may be impacted by rounding.




 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)



2019


2018


Q1


Q1

Q2

Q3

Q4

FY 2018

REVENUE








Engineered Systems








Printing & Identification

$

282,086


$

282,522

$

299,834

$

283,232

$

296,843

$

1,162,431

Industrials

405,105


389,104

403,155

388,302

399,956

1,580,517


687,191


671,626

702,989

671,534

696,799

2,742,948









Fluids

703,224


628,098

693,666

690,065

785,509

2,797,338









Refrigeration & Food Equipment

334,643


338,235

401,766

386,214

326,878

1,453,093









Intra-segment eliminations

(301)


(288)

(327)

(410)

(236)

(1,261)

Total consolidated revenue

$

1,724,757


$

1,637,671

$

1,798,094

$

1,747,403

$

1,808,950

$

6,992,118









NET EARNINGS








Segment Earnings:








Engineered Systems

$

123,074


$

102,066

$

126,649

$

108,714

$

113,841

$

451,270

Fluids 1

52,221


67,348

93,028

101,207

128,221

389,804

Refrigeration & Food Equipment

24,807


29,182

51,372

42,434

13,131

136,119

Total segments

200,102


198,596

271,049

252,355

255,193

977,193

Corporate expense / other

30,866


30,763

30,050

30,207

38,704

129,724

Interest expense

31,808


35,640

32,125

31,192

32,015

130,972

Interest income

(890)


(2,057)

(2,563)

(2,060)

(2,201)

(8,881)

Earnings before provision for income taxes

138,318


134,250

211,437

193,016

186,675

725,378

Provision for income taxes

32,613


24,841

44,981

35,711

28,700

134,233

Earnings from continuing operations

105,705


109,409

166,456

157,305

157,975

591,145

Earnings (loss) from discontinued operations, net


22,025

(26,497)

(16,406)

(20,878)

Net earnings

$

105,705


$

131,434

$

139,959

$

157,305

$

141,569

$

570,267









SEGMENT MARGIN







Engineered Systems

17.9

%


15.2

%

18.0

%

16.2

%

16.3

%

16.5

%

Fluids 1

7.4

%


10.7

%

13.4

%

14.7

%

16.3

%

13.9

%

Refrigeration & Food Equipment

7.4

%


8.6

%

12.8

%

11.0

%

4.0

%

9.4

%

Total segment operating margin

11.6

%


12.1

%

15.1

%

14.4

%

14.1

%

14.0

%









DEPRECIATION AND AMORTIZATION EXPENSE







Engineered Systems

$

17,795


$

19,239

$

19,203

$

18,204

$

19,233

$

75,879

Fluids

35,426


34,449

34,981

34,954

36,060

140,444

Refrigeration & Food Equipment

13,011


13,579

13,524

13,533

19,841

60,477

Corporate

1,506


1,358

1,595

1,399

1,428

5,780

Total depreciation and amortization expense

$

67,738


$

68,625

$

69,303

$

68,090

$

76,562

$

282,580









 1 Q1 2019 includes a $46,946 loss on assets held for sale for Finder Pompe S.r.l. ("Finder"). Excluding this loss, Fluids segment earnings was $99,167 and segment margin was 14.1%.





















 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)



2019


2018


Q1


Q1

Q2

Q3

Q4

FY 2018

BOOKINGS








Engineered Systems








Printing & Identification

$

280,658


$

284,437

$

306,770

$

271,367

$

295,963

$

1,158,537

Industrials

414,786


466,722

412,780

390,606

481,172

1,751,280


695,444


751,159

719,550

661,973

777,135

2,909,817









Fluids

712,856


703,461

737,340

723,996

734,943

2,899,740









Refrigeration & Food Equipment

376,998


372,701

428,816

331,979

341,221

1,474,717









Intra-segment eliminations

(682)


(624)

33

(549)

(584)

(1,724)









Total consolidated bookings

$

1,784,616


$

1,826,697

$

1,885,739

$

1,717,399

$

1,852,715

$

7,282,550









BACKLOG








Engineered Systems








Printing & Identification

$

121,374


$

135,915

$

137,019

$

126,609

$

122,028


Industrials

448,137


376,474

372,525

367,963

438,546



569,511


512,389

509,544

494,572

560,574










Fluids

538,888


544,250

564,959

588,632

523,791










Refrigeration & Food Equipment

311,632


283,250

309,440

255,783

268,991










Intra-segment eliminations

(377)


(389)

(134)

(58)

(185)










Total consolidated backlog

$

1,419,654


$

1,339,500

$

1,383,809

$

1,338,929

$

1,353,171


 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

(unaudited)(in thousands, except per share data*)


Earnings Per Share









2019


2018


Q1


Q1

Q2

Q3

Q4

FY 2018

Basic earnings (loss) per common share:








Continuing operations

$

0.73


$

0.71

$

1.10

$

1.07

$

1.08

$

3.94

Discontinued operations


0.14

(0.17)

(0.11)

(0.14)

Net earnings

$

0.73


$

0.85

$

0.92

$

1.07

$

0.97

$

3.80









Diluted earnings (loss) per common share:







Continuing operations

$

0.72


$

0.70

$

1.08

$

1.05

$

1.07

$

3.89

Discontinued operations


0.14

(0.17)

(0.11)

(0.14)

Net earnings

$

0.72


$

0.84

$

0.91

$

1.05

$

0.96

$

3.75









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

Net earnings (loss):








Continuing operations

$

105,705


$

109,409

$

166,456

$

157,305

$

157,975

$

591,145

Discontinued operations


22,025

(26,497)

(16,406)

(20,878)

Net earnings

$

105,705


$

131,434

$

139,959

$

157,305

$

141,569

$

570,267









Weighted average shares outstanding:







Basic

145,087


154,520

151,744

147,344

146,007

149,874

Diluted

146,911


157,090

153,938

149,457

147,940

152,133









* Per share data may be impacted by rounding.



 

Non-GAAP Reconciliations




Adjusted Earnings Per Share (Non-GAAP)




Earnings from continuing operations are adjusted by the effect of acquisition-related amortization, rightsizing and other costs, loss on assets held for sale, and the Tax Cuts and Jobs Act to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:



2019


2018



Q1


Q1

Q2

Q3

Q4

FY 2018


Adjusted earnings:









Earnings from continuing operations

$

105,705


$

109,409

$

166,456

$

157,305

$

157,975

$

591,145


Acquisition-related amortization, pre-tax 1

35,635


38,150

38,072

34,997

35,078

146,297


Acquisition-related amortization, tax impact 2

(8,964)


(9,716)

(9,683)

(8,785)

(8,817)

(37,001)


Rightsizing and other costs, pre-tax 3

3,963


4,371

6,808

24,201

37,448

72,828


Rightsizing and other costs, tax impact 2

(861)


(797)

(1,448)

(4,477)

(7,809)

(14,531)


Loss on assets held for sale 4

46,946



Tax Cuts and Jobs Act  5


(2,832)

(2,832)


Adjusted earnings from continuing operations

$

182,424


$

141,417

$

200,205

$

203,241

$

211,043

$

755,906











Adjusted diluted earnings per common share*:








Diluted earnings per share from continuing operations

$

0.72


$

0.70

$

1.08

$

1.05

$

1.07

$

3.89


Acquisition-related amortization, pre-tax 1

0.24


0.24

0.25

0.23

0.24

0.96


Acquisition-related amortization, tax impact 2

(0.06)


(0.06)

(0.06)

(0.06)

(0.06)

(0.24)


Rightsizing and other costs, pre-tax 3

0.03


0.03

0.04

0.16

0.25

0.48


Rightsizing and other costs, tax impact 2

(0.01)


(0.01)

(0.01)

(0.03)

(0.05)

(0.10)


Loss on assets held for sale 4

0.32



Tax Cuts and Jobs Act  5


(0.02)

(0.02)


Adjusted diluted earnings per share from continuing operations

$

1.24


$

0.90

$

1.30

$

1.36

$

1.43

$

4.97











1 Includes amortization on acquisition-related intangible assets and inventory step-up.


2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period.


3 Rightsizing and other costs include actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges.


4 Represents a loss on assets held for sale of Finder. Under local law, no tax benefit is realized from the loss on the sale of a wholly-owned business.


5 2018 tax benefits related to additional Tax Cuts and Jobs Act regulatory guidance covered by SAB 118.


* Per share data and totals may be impacted by rounding.


 

DOVER CORPORATION

ADDITIONAL INFORMATION

(unaudited)(in thousands)


Quarterly Cash Flow



2019


2018


Q1


Q1

Q2

Q3

Q4

FY 2018

Net Cash Flows Provided By (Used In):








Operating activities

$

24,524


$

15,535

$

159,205

$

243,944

$

370,509

$

789,193

Investing activities

(217,690)


(122,597)

(51,606)

(35,922)

(35,355)

(245,480)

Financing activities

36,067


(289,103)

(227,734)

(232,476)

(148,525)

(897,838)















 

Quarterly Free Cash Flow (Non-GAAP)



2019


2018


Q1


Q1

Q2

Q3

Q4

FY 2018

Cash flow from operating activities

$

24,524


$

15,535

$

159,205

$

243,944

$

370,509

$

789,193

Less: Capital expenditures

(37,122)


(44,678)

(51,686)

(38,192)

(36,438)

(170,994)

Free cash flow

$

(12,598)


$

(29,143)

$

107,519

$

205,752

$

334,071

$

618,199









Free cash flow as a percentage of revenue

(0.7)

%


(1.8)

%

6.0

%

11.8

%

18.5

%

8.8

%





















 

Revenue Growth Factors



Three Months Ended March 31, 2019


Engineered
Systems


Fluids


Refrigeration
& Food
Equipment


Total

Organic

5.8

%


15.1

%


0.7

%


8.3

%

Acquisitions

%


1.3

%


%


0.5

%

Dispositions

%


(0.3)

%


%


(0.1)

%

Currency translation

(3.5)

%


(4.1)

%


(1.8)

%


(3.4)

%

Total *

2.3

%


12.0

%


(1.1)

%


5.3

%









* 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 earnings from continuing operations, adjusted diluted earnings per share from continuing operations, 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 share from continuing operations, 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 the effect of acquisition-related amortization, rightsizing and other costs, loss on assets held for sale, and the Tax Cuts and Jobs Act. We exclude after-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. We exclude the other items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or Management believes they are not indicative of the Company's ongoing operating costs or gains in a given period. Management believes this information is useful to investors to better understand the Company's ongoing profitability as it will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers. Adjusted diluted earnings per share from continuing operations represents adjusted earnings from continuing operations divided by average diluted shares.

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 and dispositions, provides a useful comparison of our revenue performance and trends between periods.

Cision

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