Dover Reports Full Year Diluted Earnings Per Share From Cont

|Jan 30|magazine89 min read

DOWNERS GROVE, Ill., Jan. 30, 2020 /PRNewswire/ -- Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the fourth quarter and full year ended December 31, 2019.


Three Months Ended
December 31,


Twelve Months Ended
December 31,

($ in millions, except per share data)

2019


2018


%
Change 


2019


2018


%
Change

 U.S. GAAP from continuing operations




Revenue

$   1,776


$   1,809


(1.8)%


$   7,136


$   6,992


2.1 %

Earnings

168


158


6.4 %


678


591


14.7 %

Diluted EPS

1.15


1.07


7.5 %


4.61


3.89


18.5 %













Non-GAAP from continuing operations












Organic revenue growth





(1.1)%






3.8 %

Adjusted earnings 1

226


211


7.0 %


872


756


15.4 %

Adjusted diluted EPS

1.54


1.43


7.7 %


5.93


4.97


19.3 %













1 For the three months ended December 31, 2019 and 2018, adjusted earnings excluded after tax acquisition-related amortization costs of $25.1 million and $26.3 million, respectively, and rightsizing and other costs of $14.2 million and $29.6 million, respectively. In addition, the three months ended December 31, 2019, also excluded a $18.4 million loss on extinguishment of debt, and the three months ended December 31, 2018 excluded a $2.8 million net benefit from the Tax Cuts & Jobs Act.
For the full years ended December 31, 2019 and December 31, 2018, adjusted earnings excluded after tax acquisition-related amortization costs of $103.6 million and $109.3 million, respectively, and rightsizing and other costs of $25.4 million and $58.3 million, respectively. In addition, full year 2019 excluded a $46.9 million non-cash after-tax loss on assets held for sale related to Finder, as well as a $18.4 million loss on extinguishment of debt. Full year 2018 excluded a $2.8 million net benefit from the Tax Cuts & Jobs Act.

For the quarter ended December 31, 2019, Dover generated revenue of $1.8 billion, a decline of 2% (-1% organic) compared to the fourth quarter of the prior year. GAAP earnings from continuing operations of $168 million increased 6%, and GAAP diluted EPS of $1.15 was up 7%. On an adjusted basis, earnings from continuing operations of $226 million grew 7%, and adjusted diluted EPS of $1.54 was up 8% versus the comparable quarter of the prior year.

For the full year ended December 31, 2019, Dover generated revenue of $7.1 billion, up 2% (+4% organic) compared to the prior year. GAAP earnings from continuing operations of $678 million increased by 15%, and GAAP diluted EPS of $4.61 was up 19%. On an adjusted basis, earnings from continuing operations of $872 million grew 15%, and adjusted diluted EPS of $5.93 was up 19% versus the prior year.

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, "Dover delivered solid results in the fourth quarter. As expected, revenue declined slightly as we faced a difficult comparable from the fourth quarter of 2018. Segment EBIT margin continued to expand year-over-year, consistent with prior quarters as our margin improvement and operational efficiency programs continue to deliver tangible results.

"During the fourth quarter, our Fueling Solutions segment grew despite a challenging comparable quarter in 2018, driven by strong global demand, most notably in North America on a pickup in EMV compliance activity. Solid growth in Engineered Products was driven by healthy activity in both the waste handling equipment and software business and aftermarket vehicle services.

"The Imaging & Identification segment declined slightly in the quarter, a result of continued slower  marking & coding activity in Asia, as well as slower activity in the digital textile printing business. The Pumps & Process Solutions segment posted a revenue decline, primarily due to comparable calendarization in our plastics processing business as well as slower demand in our pumps and precision components businesses as a result of channel inventory drawdowns. The segment's biopharma business continued its double-digit growth trajectory. Finally, Refrigeration & Food Equipment segment had a slower quarter due to continued softness in new food retail store builds negatively impacting our systems volumes, partially offset by continued strength in core food retail case products and return to growth in our beverage can making and heat exchangers businesses.

"Overall, Dover delivered strong results for the full year 2019 despite an uncertain economic backdrop. Revenue growth was healthy across a majority of the portfolio and our businesses converted it well into earnings. Our strong operational execution delivered a significant increase in comparable cash flow and was complemented by value-creating and disciplined capital allocation, including large capital projects focused on growth and productivity, several attractive bolt-on acquisitions, and opportunistic share repurchases.

"As we enter 2020, most markets remain constructive. Order backlog is up year-over-year in four out of five segments, we are progressing well on multiple in-flight cost and productivity initiatives, and our M&A pipeline remains active. We are well-positioned to deliver top-line growth, margin expansion and solid  EPS accretion in 2020, as outlined in our September investor meeting. Our strategy remains unchanged for 2020: drive value-creation through sustained growth, continued profitability improvement, strong cash flow and smart organic and inorganic capital deployment."

FULL YEAR 2020 GUIDANCE:

In 2020, Dover expects to generate GAAP EPS in the range of $5.48 to $5.68 (adjusted EPS of $6.20 to $6.40), based on full year revenue growth of 2% to 3%. A full reconciliation between forecasted GAAP  and forecasted adjusted measures is included as an exhibit herein.

SUBSEQUENT EVENTS:

On January 24, 2020, Dover closed the previously-announced acquisition of Systech International, a leading provider of traceability and brand-protection software solutions to global pharmaceutical and FMCG manufacturers. The transaction is expected to deliver accretive first year adjusted EPS.

On January 24, 2020, Dover signed an agreement to acquire Soft-Pak, Incorporated, a provider of software solutions for waste handling fleets. The transaction is expected to close in Q1 2020.

CONFERENCE CALL INFORMATION:

Dover will host a webcast and conference call to discuss its fourth quarter and full year 2019 results and 2020 guidance at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, January 30, 2020. 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 fourth quarter and full year 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 over $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through five operating segments: Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, 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 - FOURTH QUARTER AND FULL YEAR 2019

 

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



Three Months Ended
December 31,


Years Ended December 31,


2019

2018


2019

2018

Revenue

$     1,775,589

$     1,808,950


$     7,136,397

$     6,992,118

Cost of goods and services

1,124,274

1,163,979


4,515,459

4,432,562

Gross profit

651,315

644,971


2,620,938

2,559,556

Selling, general, and administrative expenses

403,223

426,198


1,599,098

1,716,444

Loss on assets held for sale


46,946

Operating earnings

248,092

218,773


974,894

843,112

Interest expense

30,846

32,015


125,818

130,972

Interest income

(1,428)

(2,201)


(4,526)

(8,881)

Loss on extinguishment of debt

23,543


23,543

Other (income) loss, net

(1,891)

2,284


(12,950)

(4,357)

Earnings before provision for income taxes

197,022

186,675


843,009

725,378

Provision for income taxes

28,900

28,700


165,091

134,233

Earnings from continuing operations

168,122

157,975


677,918

591,145

Loss from discontinued operations, net

(16,406)


(20,878)

Net earnings

$        168,122

$        141,569


$        677,918

$        570,267







Basic earnings (loss) per share*:






Earnings from continuing operations

$              1.16

$              1.08


$              4.67

$              3.94

Loss from discontinued operations, net

(0.11)


(0.14)

Net earnings

$              1.16

$              0.97


$              4.67

$              3.80







Weighted average shares outstanding

144,966

146,007


145,198

149,874

Diluted earnings (loss) per common share*:






Earnings from continuing operations

$              1.15

$              1.07


$              4.61

$              3.89

Loss from discontinued operations, net

(0.11)


(0.14)

Net earnings

$              1.15

$              0.96


$              4.61

$              3.75







Weighted average shares outstanding

146,790

147,940


146,992

152,133







Dividends paid per common share

$              0.49

$              0.48


$              1.94

$              1.90







* Per share data may be impacted by rounding.






 

DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)



2019

2018


Q1

Q2

Q3

Q4

FY

Q1

Q2

Q3

Q4

FY

REVENUE











Engineered Products

$   418,851

$   429,928

$   426,689

$    422,089

$ 1,697,557

$   402,980

$   416,552

$   401,243

$   412,372

$ 1,633,147

Fueling Solutions

373,050

390,586

411,769

444,772

1,620,177

319,304

363,355

367,617

415,314

1,465,590

Imaging & Identification

268,354

266,588

275,109

274,420

1,084,471

268,654

286,458

270,299

284,432

1,109,843

Pumps & Process Solutions

330,219

338,924

341,337

328,048

1,338,528

308,840

330,337

322,506

370,210

1,331,893

Refrigeration & Food Equipment

334,643

385,474

370,335

306,165

1,396,617

338,235

401,766

386,214

326,878

1,453,093

Intra-segment eliminations

(360)

(794)

106

95

(953)

(342)

(374)

(476)

(256)

(1,448)

Total consolidated revenue  

$ 1,724,757

$ 1,810,706

$ 1,825,345

$ 1,775,589

$ 7,136,397

$ 1,637,671

$ 1,798,094

$ 1,747,403

$ 1,808,950

$  6,992,118












NET EARNINGS


Segment Earnings:











Engineered Products

$      67,119

$       77,129

$      74,367

$        73,233

$    291,848

$       59,363

$       67,331

$      64,570

$       61,104

$   252,368

Fueling Solutions

37,230

52,637

68,069

73,937

231,873

22,709

35,342

40,615

53,589

152,255

Imaging & Identification

55,955

54,641

61,655

57,233

229,484

42,703

59,318

44,144

52,737

198,902

Pumps & Process Solutions 1

14,991

76,278

77,433

71,379

240,081

44,639

57,686

60,592

74,632

237,549

Refrigeration & Food Equipment

24,807

44,375

35,211

14,439

118,832

29,182

51,372

42,434

13,131

136,119

Total segment earnings (EBIT)

200,102

305,060

316,735

290,221

1,112,118

198,596

271,049

252,355

255,193

977,193

Corporate expense / other 2

30,866

24,512

28,658

63,781

147,817

30,763

30,050

30,207

38,704

129,724

Interest expense

31,808

31,754

31,410

30,846

125,818

35,640

32,125

31,192

32,015

130,972

Interest income

(890)

(945)

(1,263)

(1,428)

(4,526)

(2,057)

(2,563)

(2,060)

(2,201)

(8,881)

Earnings before provision for
income taxes

 

138,318

 

249,739

 

257,930

 

197,022

 

843,009

 

134,250

 

211,437

 

193,016

 

186,675

 

725,378

Provision for income taxes

32,613

51,654

51,924

28,900

165,091

24,841

44,981

35,711

28,700

134,233

Earnings from continuing operations

105,705

198,085

206,006

168,122

677,918

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

$198,085

$206,006

$168,122

$677,918

$131,434

$139,959

$157,305

$141,569

$570,267












SEGMENT MARGIN











Engineered Products

16.0 %

17.9 %

17.4 %

17.4 %

17.2 %

14.7 %

16.2 %

16.1 %

14.8 %

15.5 %

Fueling Solutions

10.0 %

13.5 %

16.5 %

16.6 %

14.3 %

7.1 %

9.7 %

11.0 %

12.9 %

10.4 %

Imaging & Identification

20.9 %

20.5 %

22.4 %

20.9 %

21.2 %

15.9 %

20.7 %

16.3 %

18.5 %

17.9 %

Pumps & Process Solutions 1

4.5 %

22.5 %

22.7 %

21.8 %

17.9 %

14.5 %

17.5 %

18.8 %

20.2 %

17.8 %

Refrigeration & Food Equipment

7.4 %

11.5 %

9.5 %

4.7 %

8.5 %

8.6 %

12.8 %

11.0 %

4.0 %

9.4 %

Total segment operating margin

11.6 %

16.8 %

17.4 %

16.3 %

15.6 %

12.1 %

15.1 %

14.4 %

14.1 %

14.0 %












DEPRECIATION AND AMORTIZATION EXPENSE











Engineered Products

$      10,359

$     10,452

$       10,095

$      10,126

$        41,032

$     11,443

$     11,286

$       10,528

$       11,739

$       44,996

Fueling Solutions

17,879

18,945

18,744

19,477

75,045

17,017

17,241

16,877

17,328

68,463

Imaging & Identification

7,435

7,413

7,360

8,322

30,530

7,797

7,916

7,675

7,494

30,882

Pumps & Process Solutions 1

17,548

16,201

16,018

17,817

67,584

17,431

17,741

18,078

18,732

71,982

Refrigeration & Food Equipment

13,011

12,777

13,047

12,525

51,360

13,579

13,524

13,533

19,841

60,477

Corporate

1,506

1,981

1,523

1,726

6,736

1,358

1,595

1,399

1,428

5,780

Total depreciation and amortization
expense

 

$      67,738

 

$     67,769

 

$     66,787

 

$      69,993

 

$    272,287

 

$     68,625

 

$     69,303

 

$     68,090

 

$     76,562

 

$   282,580

1  Q1 and FY 2019 include a $46,946 loss on assets held for sale for Finder Pompe S.r.l. ("Finder").

2  Q4 and FY 2019 include a $23,543 loss on early extinguishment of debt.

 

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


Earnings Per Share




2019


2018


Q1

Q2

Q3

Q4

FY 2019


Q1

Q2

Q3

Q4

FY 2018



 Basic earnings (loss) per common share:

Continuing operations

$      0.73

$      1.36

$      1.42

$      1.16

$      4.67


$      0.71

$      1.10

$    1.07

$      1.08

$   3.94

Discontinued operations


0.14

(0.17)

(0.11)

(0.14)

Net earnings

$      0.73

$      1.36

$      1.42

$      1.16

$      4.67


$      0.85

$      0.92

1.07

$      0.97

$   3.80



 Diluted earnings (loss) per common share:

 Continuing operations

$      0.72

$       1.35

$       1.40

$      1.15

$      4.61


$      0.70

$     1.08

$    1.05

$      1.07

$   3.89

 Discontinued operations


0.14

(0.17)

(0.11)

(0.14)

 Net earnings

$      0.72

$       1.35

$       1.40

$      1.15

$      4.61


$      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

$198,085

$206,006

$168,122

$677,918


$109,409

$166,456

$157,305

$157,975

$591,145

Discontinued operations


22,025

(26,497)

(16,406)

(20,878)

Net earnings

$105,705

$198,085

$206,006

$168,122

$677,918


$131,434

$139,959

$157,305

$141,569

$570,267













Weighted average shares outstanding:

Basic

145,087

145,366

145,372

144,966

145,198


154,520

151,744

147,344

146,007

149,874

Diluted

146,911

147,179

147,051

146,790

146,992


157,090

153,938

149,457

147,940

152,133


* Per share data may be impacted by rounding.

 

DOVER CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)(in thousands)





December 31, 2019

December 31, 2018

Assets:



Cash and cash equivalents

$                        397,253

$                        396,221

Receivables, net of allowances

1,217,190

1,231,859

Inventories, net

806,141

748,796

Prepaid and other current assets

127,846

126,878

Property, plant and equipment, net

842,318

806,497

Goodwill

3,783,347

3,677,328

Intangible assets, net

1,055,014

1,134,256

Other assets and deferred charges

440,368

243,936

                 Total assets

$                     8,669,477

$                     8,365,771




Liabilities and Stockholders' Equity:



Notes payable

$                          84,700

$                        220,318

Payables and accrued expenses

1,665,191

1,607,103

Deferred taxes and other non-current liabilities

901,210

826,024

Long-term debt

2,985,716

2,943,660

Stockholders' equity

3,032,660

2,768,666

                Total liabilities and stockholders' equity  

$                     8,669,477

$                     8,365,771

 

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)(in thousands)



Years Ended December 31,


2019

2018

Operating activities:



Net earnings

$                    677,918

$                    570,267

Loss from discontinued operations, net

20,878

Loss on assets held for sale

46,946

Loss on extinguishment of debt

23,543

Depreciation and amortization

272,287

282,580

Stock-based compensation

29,702

23,698

Contributions to employee benefit plans

(21,436)

(25,933)

Net change in assets and liabilities

(83,654)

(82,297)

Net cash provided by operating activities

945,306

789,193




Investing Activities



Additions to property, plant and equipment

(186,804)

(170,994)

Acquisitions (net of cash and cash equivalents acquired)

(215,687)

(68,557)

Proceeds from the sale of property, plant and equipment

4,168

5,908

Proceeds from the sale of businesses

24,218

3,937

Other

(10,150)

(15,774)

Net cash used in investing activities

(384,255)

(245,480)




Financing Activities



Cash received from Apergy, net of cash distributed

689,643

Change in commercial paper and notes payable, net

(135,650)

(10,722)

Net increase (decrease) in long-term debt

42,357

(350,000)

Dividends to stockholders

(282,197)

(283,570)

Purchase of common stock

(143,280)

(894,977)

Payments to settle employee tax obligations on exercise

(37,370)

(46,254)

Other

(1,902)

(1,958)

Net cash used in financing activities

(558,042)

(897,838)




Net cash used in discontinued operations

(14,263)




Effect of exchange rate changes on cash

(1,977)

10,645




Net (decrease) increase in cash and cash equivalents

1,032

(357,743)

Cash and cash equivalents at beginning of period

396,221

753,964

 Cash and cash equivalents at end of period

$                   397,253

$                   396,221

 

DOVER CORPORATION
QUARTERLY ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (NON-GAAP)
(unaudited)(in thousands, except per share data*)



2019

2018


     Q1

Q2

Q3

Q4

FY 2019

Q1

Q2

Q3

Q4

FY 2018

Adjusted earnings:











 Earnings from continuing operations  

$105,705

$198,085

$206,006

$168,122

$677,918

$109,409

$166,456

$157,305

$157,975

$591,145

Acquisition-related amortization, pre-
tax 1

35,635

34,997

34,244

33,460

138,336

38,150

38,072

34,997

35,078

$146,297

Acquisition-related amortization, tax
impact 2

(8,964)

 

(8,777)

 

(8,624)

 

(8,403)

 

(34,768)

 

(9,716)

 

(9,683)

 

(8,785)

 

(8,817)

(37,001)

Rightsizing and other costs, pre-tax 3

3,963

6,457

3,807

17,926

32,153

4,371

6,808

24,201

37,448

72,828

Rightsizing and other costs, tax
impact 2

(861)

 

(1,377)

 

(806)

 

(3,745)

 

(6,789)

 

(797)

 

(1,448)

 

(4,477)

 

(7,809)

 

(14,531)

Loss on extinguishment of debt, pre-
tax 4

 

23,543

23,543

Loss on extinguishment of debt, tax
impact 2

(5,163)

(5,163)

 

 

 

 

Loss on assets held for sale 5

46,946

46,946

Tax Cuts and Jobs Act 6

(2,832)

(2,832)

Adjusted earnings from continuing
operations

$182,424

$229,385

$234,627

$225,740

$872,176

$141,417

$200,205

$203,241

$211,043

$755,906

Adjusted diluted earnings per share:











Diluted earnings per share from
continuing operations

$            0.72

$            1.35

$            1.40

$            1.15

$            4.61

$            0.70

$            1.08

$            1.05

$            1.07

$          3.89

Acquisition-related amortization, pre-
tax 1

0.24

0.24

0.23

0.23

0.94

0.24

0.25

0.23

0.24

0.96

Acquisition-related amortization, tax
impact 2

(0.06)

 

(0.06)

 

(0.06)

 

(0.06)

 

(0.24)

 

(0.06)

 

(0.06)

 

(0.06)

 

(0.06)

 

(0.24)

Rightsizing and other costs, pre-
tax 3

0.03

0.04

0.03

0.12

0.22

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)

 

(0.06)

 

(0.01)

 

(0.01)

 

(0.03)

 

(0.05)

 

(0.10)

Loss on extinguishment of debt, pre-
tax 4

 

 

 

0.16

 

0.16

 

 

 

 

 

Loss on extinguishment of debt, tax
impact 2

 

 

 

(0.04)

 

(0.04)

 

 

 

 

 

Loss on assets held for sale 5

0.32

0.32

Tax Cuts and Jobs Act 6

(0.02)

(0.02)

Adjusted diluted earnings per share
from continuing operations

$             1.24

$             1.56

$             1.60

$             1.54

$             5.93

$             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 early extinguishment of €300,000 2.125% notes due 2020 and $450,000 4.30% notes due 2021.

5 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.

6 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

QUARTERLY SEGMENT ADJUSTED EBIT AND ADJUSTED EBITDA (NON-GAAP)

(unaudited)(in thousands)

Non-GAAP Reconciliations


2019


2018


Q1

Q2

Q3

Q4

FY 2019


Q1

Q2

Q3

Q4

FY 2018













ADJUSTED SEGMENT EBIT AND ADJUSTED EBITDA























Engineered Products:












      Segment earnings (EBIT)

$     67,119

$      77,129

$      74,367

$      73,233

$   291,848


$     59,363

$      67,331

$      64,570

$         61,104

$   252,368

        Rightsizing and other costs

80

1,125

590

1,355

3,150


463

417

2,713

3,693

7,286

      Adjusted EBIT - Segment

67,199

78,254

74,957

74,588

294,998


59,826

67,748

67,283

64,797

259,654

        Adjusted EBIT %

16.0 %

18.2 %

17.6 %

17.7 %

17.4 %


14.8 %

16.3 %

16.8 %

15.7 %

15.9 %

        Adjusted D&A 2

10,359

9,855

10,095

10,126

40,435


11,443

11,286

10,528

11,230

44,487

      Adjusted EBITDA - segment

$     77,558

$      88,109

$      85,052

$      84,714

$   335,433


$     71,269

$      79,034

$      77,811

$        76,027

$   304,141

        Adjusted EBITDA %

18.5 %

20.5 %

19.9 %

20.1 %

19.8 %


17.7 %

19.0 %

19.4 %

18.4 %

18.6 %

Fueling Solutions:












       Segment earnings (EBIT)

$     37,230

$      52,637

$      68,069

$      73,937

$   231,873


$     22,709

$      35,342

$      40,615

$         53,589

$   152,255

          Rightsizing and other costs

752

1,768

811

1,554

4,885


1,112

1,623

5,922

6,675

15,332

       Adjusted EBIT - Segment

37,982

54,405

68,880

75,491

236,758


23,821

36,965

46,537

60,264

167,587

          Adjusted EBIT %

10.2 %

13.9 %

16.7 %

17.0 %

14.6 %


7.5 %

10.2 %

12.7 %

14.5 %

11.4 %

          Adjusted D&A 2

17,879

18,945

18,744

19,477

75,045


17,017

17,241

16,877

17,328

68,463

      Adjusted EBITDA - segment

$     55,861

$      73,350

$      87,624

$      94,968

$   311,803


$     40,838

$      54,206

$      63,414

$         77,592

$   236,050

          Adjusted EBITDA %

15.0 %

18.8 %

21.3 %

21.4 %

19.2 %


12.8 %

14.9 %

17.3 %

18.7 %

16.1 %

Imaging & Identification:












       Segment earnings (EBIT)

$     55,955

$      54,641

$      61,655

$      57,233

$   229,484


$     42,703

$      59,318

$      44,144

$          52,737

$   198,902













         Rightsizing and other costs

389

1,268

301

4,392

6,350


899

347

7,923

3,476

12,645

      Adjusted EBIT - Segment

56,344

55,909

61,956

61,625

235,834


43,602

59,665

52,067

56,213

211,547

         Adjusted EBIT %

21.0 %

21.0 %

22.5 %

22.5 %

21.7 %


16.2 %

20.8 %

19.3 %

19.8 %

19.1 %

         Adjusted D&A 2

7,336

7,317

7,286

7,892

29,831


7,797

7,916

7,675

7,392

30,780

      Adjusted EBITDA - segment

$     63,680

$      63,226

$      69,242

$      69,517

$   265,665


$     51,399

$      67,581

$      59,742

$         63,605

$   242,327

         Adjusted EBITDA %

23.7 %

23.7 %

25.2 %

25.3 %

24.5 %


19.1 %

23.6 %

22.1 %

22.4 %

21.8 %

Pumps & Process Solutions:












      Segment earnings (EBIT)

$     14,991

$      76,278

$      77,433

$      71,379

$   240,081


$     44,639

$      57,686

$      60,592

$         74,632

$   237,549

         Rightsizing and other costs

414

903

943

3,868

6,128


653

2,071

4,552

6,099

13,375

         Loss on assets held for sale 1

46,946

46,946


      Adjusted EBIT - Segment

62,351

77,181

78,376

75,247

293,155


45,292

59,757

65,144

80,731

250,924

         Adjusted EBIT %

18.9 %

22.8 %

23.0 %

22.9 %

21.9 %


14.7 %

18.1 %

20.2 %

21.8 %

18.8 %

         Adjusted D&A 2

17,548

16,199

16,018

17,004

66,769


17,431

17,741

18,078

17,823

71,073

      Adjusted EBITDA - segment

$     79,899

$      93,380

$      94,394

$      92,251

$   359,924


$     62,723

$      77,498

$      83,222

$         98,554

$   321,997

         Adjusted EBITDA  %

24.2 %

27.6 %

27.7 %

28.1 %

26.9 %


20.3 %

23.5 %

25.8 %

26.6 %

24.2 %

Refrigeration & Food Equipment:












       Segment earnings (EBIT)

$     24,807

$      44,375

$      35,211

$      14,439

$   118,832


$     29,182

$      51,372

$      42,434

$         13,131

$   136,119

         Rightsizing and other costs

2,293

666

840

2,243

6,042


451

9,498

9,949

      Adjusted EBIT - Segment

27,100

45,041

36,051

16,682

124,874


29,182

51,372

42,885

22,629

146,068

         Adjusted EBIT %

8.1 %

11.7 %

9.7 %

5.4 %

8.9 %


8.6 %

12.8 %

11.1 %

6.9 %

10.1 %

         Adjusted D&A 2

13,011

12,777

13,047

12,525

51,360


13,579

13,524

13,533

13,541

54,177

     Adjusted EBITDA - segment

$      40,111

$      57,818

$      49,098

$      29,207

$   176,234


$      42,761

$   64,896

$   56,418

$         36,170

$ 200,245

         Adjusted EBITDA %

12.0 %

15.0 %

13.3 %

9.5 %

12.6 %


12.6 %

16.2 %

14.6 %

11.1 %

13.8 %

Total Segments:












Segment earnings (EBIT) 3

$    200,102

$ 305,060

$ 316,735

$ 290,221

$ 1,112,118


$    198,596

$  271,049

$   252,355

$       255,193

$  977,193

     Rightsizing and other costs

3,928

5,730

3,485

13,412

26,555


3,127

 

4,458

 

21,561

 

29,441

 

58,587

     Loss on assets held for sale 1

46,946

46,946


 

 

 

Adjusted EBIT - Segment 4

250,976

 

310,790

 

320,220

 

303,633

1,185,619


201,723

275,507

273,916

284,634

1,035,780

     Adjusted EBIT % 4

14.5 %

 

17.2 %

 

17.5 %

 

17.1 %

16.6 %


12.3 %

15.3 %

15.7 %

15.7 %

14.8 %

     Adjusted D&A 2

66,133

65,093

65,190

67,024

263,440


67,267

67,708

66,691

67,314

268,980

     Adjusted EBITDA - segment 4

$    317,109

$  375,883

$ 385,410

$ 370,657

$ 1,449,059


$    268,990

$  343,215

$   340,607

$       351,948

$ 1,304,760

Adjusted EBITDA % 4

18.4 %

20.7 %

21.1 %

20.9 %

20.3 %


16.4 %

19.1 %

19.5 %

19.5 %

18.7 %



1 Q1 and FY 2019 include a $46,946 loss on assets held for sale for Finder Pompe S.r.l. ("Finder").

2 Adjusted D&A is depreciation and amortization expense, excluding depreciation and amortization included within rightsizing and other costs.

3 Refer to Quarterly Segment Information section for reconciliation of total segment earnings (EBIT) to net earnings.

4 Refer to Additional Information section for definition.

 

DOVER CORPORATION

REVENUE GROWTH FACTORS & ADJUSTED GUIDANCE (NON-GAAP)

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



Other Non-GAAP Reconciliations




Revenue Growth Factors



2019


Q1 

Q2  

Q3 

Q4

Full Year

Organic






Engineered Products

6.1 %

4.9 %

7.4 %

3.1 %

5.4 %

Fueling Solutions

20.0 %

8.3 %

10.7 %

5.0 %

10.5 %

Imaging & Identification

5.5 %

(3.1)%

4.6 %

(1.8)%

1.2 %

Pumps & Process Solutions

10.0 %

6.7 %

8.7 %

(8.0)%

3.9 %

Refrigeration & Food Equipment

0.7 %

(2.8)%

(3.2)%

(5.6)%

(2.7)%

Total Organic

8.3 %

2.9 %

5.6 %

(1.1)%

3.8 %

Acquisitions

0.5 %

0.8 %

1.0 %

0.9 %

0.8 %

Dispositions

(0.1)%

(0.5)%

(0.5)%

(0.6)%

(0.5)%

Currency translation

(3.4)%

(2.5)%

(1.6)%

(1.0)%

(2.0)%

Total*

5.3 %

0.7 %

4.5 %

(1.8)%

2.1 %

* Totals may be impacted by rounding.






 


2019


      Full Year

Organic



United States


3.6 %

Other Americas


1.2 %

Europe


6.5 %

Asia


2.4 %

Other


2.3 %

Total Organic


3.8 %

Acquisitions


0.8 %

Dispositions


(0.5)%

Currency translation


(2.0)%

Total*


2.1 %

* Totals may be impacted by rounding.



Adjusted Guidance Reconciliation

 

 

     2019 Actual    

 

 

2020 Guidance

Adjusted net earnings per share*:



Net earnings (GAAP)

$                   4.61

$        5.48 - 5.68

Acquisition-related amortization, net

0.70

0.66

Rightsizing and other costs, net

0.16

0.06

Loss on extinguishment of debt

0.12

Loss on assets held for sale

0.32

Adjusted net earnings (Non-GAAP)

$                   5.93

$        6.20 - 6.40

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



 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)



2019


2018


Q1 

Q2

Q3

Q4

FY 2019


Q1

Q2

Q3

Q4

FY 2018

BOOKINGS
























Engineered Products

$   427,697

$   397,420

$   426,059

$    457,145

$ 1,708,321


$   480,513

$   425,322

$   403,098

$   494,622

$ 1,803,555













Fueling Solutions

343,083

394,256

450,727

425,698

1,613,764


360,519

392,100

383,749

376,651

1,513,019













Imaging & Identification

267,762

264,175

284,527

276,451

1,092,915


270,653

294,248

258,883

282,519

1,106,303













Pumps & Process Solutions

369,801

375,905

329,642

318,482

1,393,830


342,991

345,278

340,287

358,319

1,386,875













Refrigeration & Food Equipment

376,998

384,365

323,422

361,970

1,446,755


372,701

428,816

331,979

341,221

1,474,717













Intra-segment eliminations

(725)

(490)

(528)

872

(871)


(680)

(25)

(597)

(617)

(1,919)





Total consolidated bookings

$ 1,784,616

$ 1,815,631

$ 1,813,849

$ 1,840,618

$ 7,254,714


$ 1,826,697

$ 1,885,739

$ 1,717,399

$ 1,852,715

$ 7,282,550

 

BACKLOG












Engineered Products

$   451,335

$   418,154

$   416,025

$    452,142


$   380,846

$   375,975

$   370,948

$   442,519











Fueling Solutions

185,847

186,202

223,081

205,842


229,234

246,087

251,212

208,574











Imaging & Identification

118,177

116,810

121,877

125,775


131,544

133,570

123,624

118,057











Pumps & Process Solutions

353,066

378,427

361,478

353,073


315,020

318,891

337,420

315,230











Refrigeration & Food Equipment

311,632

310,454

262,870

320,577


283,250

309,440

255,783

268,991











Intra-segment eliminations

(403)

(141)

(252)

(249)


(394)

(154)

(58)

(200)











Total consolidated backlog

$ 1,419,654

$ 1,409,906

$ 1,385,079

$ 1,457,160


$ 1,339,500

$ 1,383,809

$ 1,338,929

$ 1,353,171

 

Bookings Growth Factors



2019


Q1

Q2

Q3

Q4

Full Year

Organic






Engineered Products

(9.3)%

(4.9)%

6.9 %

(6.8)%

(4.0)%

Fueling Solutions

(2.3)%

1.9 %

16.5 %

11.0 %

6.9 %

Imaging & Identification

4.5 %

(6.4)%

13.0 %

(0.3)%

2.3 %

Pumps & Process Solutions

11.0 %

12.8 %

(0.8)%

(9.2)%

3.3 %

Refrigeration & Food Equipment

2.8 %

(9.2)%

(1.5)%

6.8 %

(0.7)%

Total Organic

0.4 %

(1.5)%

6.8 %

(0.1)%

1.3 %

Acquisitions

0.6 %

0.6 %

0.9 %

0.9 %

0.8 %

Dispositions

(0.1)%

(0.5)%

(0.4)%

(0.3)%

(0.3)%

Currency translation

(3.2)%

(2.3)%

(1.7)%

(1.2)%

(2.1)%

Total*

(2.3)%

(3.7)%

5.6 %

(0.7)%

(0.4)%

* Totals may be impacted by rounding.






 

ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2019
(Amounts in thousands except share data and where otherwise indicated)

Change in Segments

Effective October 1, 2019, the Company transitioned from a three-segment to a five-segment structure as a result of a change to its internal organization. This new structure will increase management efficiency and better align the Company's operations with  its strategic initiatives and capital allocation priorities across its businesses. All periods are presented under the new structure.

Acquisitions

The Company did not complete any acquisitions during the fourth quarter of 2019. For the full year 2019, the Company acquired three businesses in separate transactions for total consideration of $216.4 million, net of cash acquired and including contingent consideration. The businesses were acquired to complement and expand upon existing operations within the Fueling Solutions and Pumps & Process Solutions segments.

Discontinued and Disposed Businesses

The Company did not dispose of any businesses during the fourth quarter of 2019. For the full year 2019, the Company completed the sale of Finder, which generated total cash proceeds of $24.2 million. The Finder business was included in the results of the Pumps & Process Solutions segment. The sale does not represent a strategic shift that will have a major effect on operations and financial results and, therefore, did not qualify for presentation as a discontinued operation.

Rightsizing and Other Costs

During the year ended December 31, 2019, the Company executed several programs in order to further optimize operations. Rightsizing programs in 2019 included 1) broad-based selling, general and administrative expense reduction and 2) initiation of footprint consolidation actions. During the fourth quarter of 2019, the Company recorded rightsizing and other related costs of $17.9 million which is comprised of $14.8 million of restructuring costs and $3.1 million of other charges. During the full year 2019, the Company recorded rightsizing and other related costs of $32.2 million which is comprised of $26.8 million of restructuring costs and $5.3 million of other charges. These costs primarily relate to actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges. During the fourth quarter and full year 2019, rightsizing and other charges were broad based across all segments as well as corporate, with costs incurred by segment as follows:

($ in millions) 

2019


2018


Q4


FY


Q4


FY

Engineered Products

$

1.4


$

3.2


$

3.7


$

7.3

Fueling Solutions


1.6



4.9



6.7



15.3

Imaging & Identification


4.4



6.4



3.5



12.6

Pumps & Process Solutions


3.9



6.1



6.1



13.4

Refrigeration & Food Equipment


2.2



6.0



9.5



10.0

Corporate


4.5



5.6



8.0



14.2

Total*

$

17.9


$

32.2


$

37.4


$

72.8

* Totals may be impacted by rounding.

Tax Rate

The effective tax rate was 14.7% and 15.4% for the fourth quarters of 2019 and 2018, respectively. On a full year basis, the effective tax rate for 2019 and 2018 was 19.6% and 18.5%, respectively. The 2019 tax rate was primarily driven by the tax deduction for share-based awards and other favorable discrete items, partially offset by the exclusion of capital losses on a disposition of a business under local tax law. The 2018 tax rate was impacted by the tax deduction for share-based awards, the impact of SAB 118 from US Tax Reform, and other favorable discrete items.

ADDITIONAL INFORMATION (CONTINUED)
FOURTH QUARTER AND FULL YEAR 2019
(Amounts in thousands except share data and where otherwise indicated)

Share Repurchases

During the year ended December 31, 2019, the Company purchased approximately 1.3 million shares of its common stock for a total cost of $143.3 million, or $106.64 per share. As of December 31, 2019, 8,360,044 shares remain authorized for repurchase under the February 2018 share repurchase authorization.

Borrowings

On November 4, 2019, the Company issued €500 million of 0.750% euro-denominated notes due 2027 and $300 million of  2.950% notes due 2029. The proceeds from the sale of euro-denominated notes of €494.7 million, net of discounts and issuance costs, were used in part to redeem the €300 million 2.125% notes due 2020. The proceeds from the sale of notes of $296.9  million, net of discounts and issuance costs, and the remaining funds from the sale of the euro-denominated notes, were used to fund the redemption of the $450 million 4.30% notes due 2021. The remainder of the proceeds will be used for general corporate purposes. The early extinguishment of debt resulted in a pre-tax loss of $23.5 million.

Capitalization

The following table provides a reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (Non-GAAP)

December 31, 2019

December 31, 2018

Commercial paper

84,700

220,318

Notes payable

84,700

220,318

Long-term debt

2,985,716

2,943,660

Total debt

3,070,416

3,163,978

Less: Cash and cash equivalents

(397,253)

(396,221)

Net debt

2,673,163

2,767,757

Add: Stockholders' equity

3,032,660

2,768,666

Net capitalization

$                    5,705,823

$                    5,536,423

Net debt to net capitalization 

46.8%

50.0 %

 

Quarterly Cash Flow


2019

2018


Q1

Q2

Q3

Q4

 FY 2019

Q1

Q2

Q3

Q4

FY 2018

Net Cash Flows Provided
By (Used In):











Operating activities

$     24,524

$   208,709

$   350,865

$   361,208

$   945,306

$     15,535

$   159,205

$   243,944

$   370,509

$  789,193

Investing activities

(217,690)

(69,755)

(48,612)

(48,198)

(384,255)

(122,597)

(51,606)

(35,922)

(35,355)

(245,480)

Financing activities

36,067

(60,596)

(277,901)

(255,612)

(558,042)

(289,103)

(227,734)

(232,476)

(148,525)

(897,838)


Quarterly Free Cash Flow (Non-GAAP)


2019

2018


Q1 

Q2

Q3

Q4

FY 2019

Q1

Q2

Q3 

Q4

FY 2018

Cash flow from operating
activities

$ 24,524

$   208,709

$   350,865

$   361,208

$   945,306

$ 15,535

$   159,205

$   243,944

$   370,509

$  789,193

Less: Capital expenditures

(37,122)

(53,970)

(46,184)

(49,528)

(186,804)

(44,678)

(51,686)

(38,192)

(36,438)

(170,994)

Free cash flow * 

$    (12,598)

$   154,739

$   304,681

$   311,680

$   758,502

$    (29,143)

$   107,519

$   205,752

$   334,071

$   618,199












Free cash flow as a
percentage of revenue

 

(0.7)%

 

8.5 %

 

16.7 %

 

17.6 %

 

10.6 %

 

(1.8)%

 

6.0 %

 

11.8 %

 

18.5 %

 

8.8 %

Free cash flow as a
percentage of earnings
from continuing operations

 

 

(11.9)%

 

 

78.1 %

 

 

147.9 %

 

 

185.4 %

 

 

111.9 %

 

 

(26.6)%

 

 

64.6 %

 

 

130.8 %

 

 

211.5 %

 

 

104.6 %

* FY 2019 and 2018 free cash flow includes cash payments related to restructuring initiatives of $33.3 million and $52.0 million, respectively. Q4 2019 and 2018 free cash flow includes cash payments related to restructuring initiatives of $7.4 million and $13.4 million, respectively.

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, total segment earnings (EBIT), adjusted EBIT by segment, adjusted EBIT margin by segment, adjusted EBITDA by segment, adjusted EBITDA margin by segment, net debt, net capitalization, net debt to net capitalization ratios, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of earnings, 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, debt or equity, 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 extinguishment of debt, 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.

Adjusted diluted earnings per share from continuing operations represents adjusted earnings from continuing operations divided  by average diluted shares.

Total segment earnings (EBIT) is defined as earnings from continuing operations before income taxes, net interest expense and corporate expenses. Total segment earnings (EBIT) margin is defined as total segment earnings (EBIT) divided by revenue.

Adjusted EBIT by Segment is defined as earnings from continuing operations before income taxes, net interest expense,  corporate expenses, rightsizing and other costs and a 2019 loss on assets held for sale. Adjusted EBIT Margin by Segment is defined as adjusted EBIT by segment divided by segment revenue.

Adjusted EBITDA by Segment is defined as adjusted EBIT by segment plus depreciation and amortization, excluding depreciation and amortization included within rightsizing and other costs. Adjusted EBITDA Margin by Segment is defined as adjusted EBITDA by segment divided by segment revenue.

Management believes these measures are 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.

Net debt represents total debt minus cash and cash equivalents. Net capitalization represents net debt plus stockholders' equity. Net debt to net capitalization ratio equals net debt divided by net capitalization. Management believes the net debt to net capitalization ratio is useful to assess our overall financial leverage and capacity.

Free cash flow represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of earnings from continuing operations equals free cash flow divided by earnings from continuing operations. Management believes that free cash flow and free cash flow ratios are important measures 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 and bookings performance and trends between periods.

Investor Contact:

Media Contact:

Andrey Galiuk

Adrian Sakowicz

Vice President - Corporate Development

Vice President - Communications and Investor Relations

(630) 743-5039

(630) 743-5131

[email protected]

[email protected]  

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SOURCE Dover