Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DOVER Corp | a201501278-k.htm |
| EX-99.2 - EXHIBIT 99.2 - DOVER Corp | a20150127exhibit992.htm |
Exhibit 99.1
CONTACT: | ||
Paul Goldberg | ||
Vice President - Investor Relations | ||
(212) 922-1640 | ||
DOVER REPORTS FOURTH QUARTER AND FULL YEAR 2014 RESULTS
AND UPDATES 2015 GUIDANCE
• | Reports quarterly revenue of $2.0 billion, an increase of 11% over the prior year |
• | Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.01, excluding discrete tax benefits; this result includes $0.17 in restructuring and other costs |
• | Plans to divest two businesses, which are now reported as discontinued operations |
• | Updates guidance for 2015 full year diluted earnings per share from continuing operations to be in the range of $4.70 to $4.95, a reduction to prior guidance reflecting the combined impact of global energy markets and discontinued operations, net of share repurchase activity |
Downers Grove, Illinois, January 27, 2015 — Dover (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2014, revenue was $2.0 billion, an increase of 11% over the prior year. The revenue increase was driven by organic growth of 6% and an increase of 7% from acquisitions, partially offset by a 2% impact from foreign exchange. Earnings from continuing operations were $171.8 million, essentially flat compared to $172.2 million for the prior year period. Diluted earnings per share ("EPS") for the fourth quarter ended December 31, 2014 was $1.03, compared to $1.00 EPS in the prior year period, representing an increase of 3%. EPS from continuing operations for the fourth quarter of 2014 included discrete tax benefits of $0.02, compared to $0.01 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations for the fourth quarter of 2014 was $1.01, an increase of 2% over an adjusted EPS of $0.99 in the prior year period.
Revenue for the year ended December 31, 2014 was $7.8 billion, an increase of 8% over the prior year, reflecting organic growth of 4% and a 4% increase from acquisitions. Foreign exchange had a negligible impact. Earnings from continuing operations for the year ended December 31, 2014 were $778.1 million, compared to $797.5 million in the prior year period, representing a decrease of 2%. EPS for the year ended December 31, 2014 was $4.61 EPS, essentially flat compared to $4.60 EPS in the prior year. EPS from continuing operations during this period includes discrete tax benefits of $0.07 EPS compared to $0.43 EPS in the prior year, as well as $0.02 of other one-time gains recognized in the prior year. Excluding these items, adjusted EPS from continuing operations for the year ended December 31, 2014 was $4.54, an increase of 10% over an adjusted EPS of $4.14 in the prior year.
Dover also announced today its intention to divest Sargent Aerospace (“Sargent”), a supplier of precision-engineered components and aftermarket services in the aerospace and defense industries, and part of Dover’s Engineered Systems segment. Both Sargent and Datamax O’Neil (“D-O”) are reported as discontinued operations for the fourth quarter and full year 2014 results.
Dover expects to complete the sale of D-O in the first quarter, with the sale of Sargent expected to occur in the second quarter of 2015.
Commenting on the fourth quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, “We finished the year with a very strong fourth quarter, achieving 11% revenue growth and earnings growth that exceeded expectations. We saw robust topline growth at each segment led by Energy and Fluids at 20% and 10%, respectively, and achieved solid volume leverage. In the quarter, we made the decision to divest Sargent and, as previously announced, Datamax O’Neil. While both are excellent companies with strong positions, they serve markets where others have greater scale. We expect after-tax proceeds of the divestitures to be used for share repurchases and growth opportunities."
“As previously announced, we took decisive actions in the quarter to adjust our costs and streamline our businesses, which accounted for the majority of nonrecurring charges of $0.17. Regarding our energy markets, there continues to be significant uncertainty driven by the rapid decline in oil prices. Accordingly, we took additional cost reduction steps in our Energy businesses during the quarter and continue to review further actions, including additional restructuring costs in the first quarter of 2015."
"As a result, we are updating our 2015 guidance to reflect the anticipated combined impact of lower oil prices, discontinued operations, share repurchase activity and FX. We now expect total revenue growth of 1% to -2%, principally reflecting our new Energy revenue estimate of -6% to -9%, a 15 point reduction from our prior forecast. Within our total revenue forecast, organic growth is anticipated to be approximately 1% to -2%, completed acquisitions will provide approximately 2% growth and FX is expected to be a 2% headwind. In total, we now expect full year adjusted EPS to be in the range of $4.70 to $4.95, a $0.35 reduction to our prior guidance.”
Net earnings for the quarter ended December 31, 2014, were $169.3 million, or $1.02 EPS, which included a loss from discontinued operations of $2.5 million, or $0.02 EPS compared to net earnings of $194.0 million, or $1.13 EPS, for the same period of 2013, which included earnings from discontinued operations of $21.7 million, or $0.13 EPS.
Net earnings for the year ended December 31, 2014 were $775.2 million, or $4.59 EPS, compared to net earnings of $1.0 billion, or $5.78 EPS, for the same period of 2013. 2014 results reflected a loss from discontinued operations of $2.9 million, or $0.02 EPS, which included $27.1 million in spin-off costs. 2013 results reflected earnings from discontinued operations of $205.6 million or $1.18 EPS, which included spin-off costs of $30.1 million.
Dover will host a webcast of its fourth quarter 2014 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, January 27, 2015. 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 fourth 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 revenues of $8 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 nearly 60 years, our team of 27,000 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, changes in operations, industries in which Dover businesses operate, 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; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity, U.S. industrials activity and the status of economic recovery in Europe; 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; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs; changes in customer demand or 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, and tax policies; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; the impact of interest rate and currency exchange rate fluctuations; 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 - FOURTH QUARTER AND FULL YEAR 2014
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 1,977,947 | $ | 1,785,922 | $ | 7,752,728 | $ | 7,155,096 | |||||||
Cost of goods and services | 1,254,079 | 1,106,213 | 4,778,479 | 4,376,505 | |||||||||||
Gross profit | 723,868 | 679,709 | 2,974,249 | 2,778,591 | |||||||||||
Selling and administrative expenses | 460,377 | 412,487 | 1,758,765 | 1,616,921 | |||||||||||
Operating earnings | 263,491 | 267,222 | 1,215,484 | 1,161,670 | |||||||||||
Interest expense, net | 31,332 | 29,912 | 127,179 | 120,654 | |||||||||||
Other expense (income), net | 1,172 | (3,500 | ) | (5,902 | ) | (4,970 | ) | ||||||||
Earnings before provision for income taxes and discontinued operations | 230,987 | 240,810 | 1,094,207 | 1,045,986 | |||||||||||
Provision for income taxes | 59,152 | 68,583 | 316,067 | 248,459 | |||||||||||
Earnings from continuing operations | 171,835 | 172,227 | 778,140 | 797,527 | |||||||||||
(Loss) earnings from discontinued operations, net | (2,541 | ) | 21,736 | (2,905 | ) | 205,602 | |||||||||
Net earnings | $ | 169,294 | $ | 193,963 | $ | 775,235 | $ | 1,003,129 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.04 | $ | 1.01 | $ | 4.67 | $ | 4.66 | |||||||
(Loss) earnings from discontinued operations, net | (0.02 | ) | 0.13 | (0.02 | ) | 1.20 | |||||||||
Net earnings | 1.03 | 1.14 | 4.65 | 5.86 | |||||||||||
Weighted average shares outstanding | 164,589 | 170,027 | 166,692 | 171,271 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.03 | $ | 1.00 | $ | 4.61 | $ | 4.60 | |||||||
(Loss) earnings from discontinued operations, net | (0.02 | ) | 0.13 | (0.02 | ) | 1.18 | |||||||||
Net earnings | 1.02 | 1.13 | 4.59 | 5.78 | |||||||||||
Weighted average shares outstanding | 166,467 | 172,265 | 168,842 | 173,547 | |||||||||||
Dividends paid per common share | $ | 0.40 | $ | 0.375 | $ | 1.55 | $ | 1.45 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2014 | Q1 | Q2 | Q3 | Q4 | FY 2013 | ||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||
Energy | $ | 478,773 | $ | 481,016 | $ | 507,334 | $ | 550,116 | $ | 2,017,239 | $ | 462,679 | $ | 465,906 | $ | 467,688 | $ | 457,580 | $ | 1,853,853 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 231,679 | 252,354 | 257,282 | 247,569 | 988,884 | 205,828 | 213,573 | 220,538 | 237,936 | 877,875 | |||||||||||||||||||||
Industrials | 335,995 | 361,467 | 355,019 | 344,600 | 1,397,081 | 317,059 | 330,423 | 332,095 | 320,518 | 1,300,095 | |||||||||||||||||||||
567,674 | 613,821 | 612,301 | 592,169 | 2,385,965 | 522,887 | 543,996 | 552,633 | 558,454 | 2,177,970 | ||||||||||||||||||||||
Fluids | 345,009 | 346,275 | 361,797 | 377,485 | 1,430,566 | 273,638 | 310,137 | 309,241 | 343,822 | 1,236,838 | |||||||||||||||||||||
Refrigeration & Food Equipment | 411,493 | 522,357 | 528,807 | 458,532 | 1,921,189 | 422,468 | 517,574 | 521,322 | 426,476 | 1,887,840 | |||||||||||||||||||||
Intra-segment eliminations | (379 | ) | (833 | ) | (664 | ) | (355 | ) | (2,231 | ) | (132 | ) | (632 | ) | (231 | ) | (410 | ) | (1,405 | ) | |||||||||||
Total consolidated revenue | $ | 1,802,570 | $ | 1,962,636 | $ | 2,009,575 | $ | 1,977,947 | $ | 7,752,728 | $ | 1,681,540 | $ | 1,836,981 | $ | 1,850,653 | $ | 1,785,922 | $ | 7,155,096 | |||||||||||
NET EARNINGS | |||||||||||||||||||||||||||||||
Segment Earnings: | |||||||||||||||||||||||||||||||
Energy | $ | 118,968 | $ | 114,991 | $ | 122,738 | $ | 105,118 | $ | 461,815 | $ | 118,708 | $ | 109,662 | $ | 119,086 | $ | 112,193 | $ | 459,649 | |||||||||||
Engineered Systems | 83,227 | 101,766 | 108,800 | 93,205 | 386,998 | 74,162 | 87,818 | 98,044 | 87,473 | 347,497 | |||||||||||||||||||||
Fluids | 57,942 | 63,112 | 67,559 | 63,026 | 251,639 | 47,601 | 58,768 | 63,056 | 55,098 | 224,523 | |||||||||||||||||||||
Refrigeration & Food Equipment | 44,862 | 84,926 | 78,012 | 30,934 | 238,734 | 52,110 | 82,177 | 86,446 | 46,574 | 267,307 | |||||||||||||||||||||
Total Segments | 304,999 | 364,795 | 377,109 | 292,283 | 1,339,186 | 292,581 | 338,425 | 366,632 | 301,338 | 1,298,976 | |||||||||||||||||||||
Corporate expense / other | 30,734 | 29,287 | 27,815 | 29,964 | 117,800 | 33,885 | 35,078 | 32,757 | 30,616 | 132,336 | |||||||||||||||||||||
Net interest expense | 32,655 | 31,961 | 31,231 | 31,332 | 127,179 | 30,282 | 30,230 | 30,230 | 29,912 | 120,654 | |||||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 241,610 | 303,547 | 318,063 | 230,987 | 1,094,207 | 228,414 | 273,117 | 303,645 | 240,810 | 1,045,986 | |||||||||||||||||||||
Provision for income taxes | 71,569 | 92,966 | 92,380 | 59,152 | 316,067 | 68,147 | 25,129 | 86,600 | 68,583 | 248,459 | |||||||||||||||||||||
Earnings from continuing operations | 170,041 | 210,581 | 225,683 | 171,835 | 778,140 | 160,267 | 247,988 | 217,045 | 172,227 | 797,527 | |||||||||||||||||||||
(Loss) earnings from discontinued operations, net | (9,903 | ) | 3,378 | 6,161 | (2,541 | ) | (2,905 | ) | 49,736 | 82,061 | 52,069 | 21,736 | 205,602 | ||||||||||||||||||
Net earnings | $ | 160,138 | $ | 213,959 | $ | 231,844 | $ | 169,294 | $ | 775,235 | $ | 210,003 | $ | 330,049 | $ | 269,114 | $ | 193,963 | $ | 1,003,129 | |||||||||||
SEGMENT OPERATING MARGIN | |||||||||||||||||||||||||||||||
Energy | 24.8 | % | 23.9 | % | 24.2 | % | 19.1 | % | 22.9 | % | 25.7 | % | 23.5 | % | 25.5 | % | 24.5 | % | 24.8 | % | |||||||||||
Engineered Systems | 14.7 | % | 16.6 | % | 17.8 | % | 15.7 | % | 16.2 | % | 14.2 | % | 16.1 | % | 17.7 | % | 15.7 | % | 16.0 | % | |||||||||||
Fluids | 16.8 | % | 18.2 | % | 18.7 | % | 16.7 | % | 17.6 | % | 17.4 | % | 18.9 | % | 20.4 | % | 16.0 | % | 18.2 | % | |||||||||||
Refrigeration & Food Equipment | 10.9 | % | 16.3 | % | 14.8 | % | 6.7 | % | 12.4 | % | 12.3 | % | 15.9 | % | 16.6 | % | 10.9 | % | 14.2 | % | |||||||||||
Total Segment | 16.9 | % | 18.6 | % | 18.8 | % | 14.8 | % | 17.3 | % | 17.4 | % | 18.4 | % | 19.8 | % | 16.9 | % | 18.2 | % | |||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||||||||||||||
Energy | $ | 25,575 | $ | 25,807 | $ | 27,145 | $ | 33,429 | $ | 111,956 | $ | 24,448 | $ | 24,714 | $ | 24,707 | $ | 25,206 | $ | 99,075 | |||||||||||
Engineered Systems | 15,850 | 15,982 | 15,334 | 14,780 | 61,946 | 14,309 | 14,774 | 14,950 | 15,025 | 59,058 | |||||||||||||||||||||
Fluids | 16,366 | 15,308 | 14,019 | 15,210 | 60,903 | 11,361 | 11,570 | 11,790 | 14,091 | 48,812 | |||||||||||||||||||||
Refrigeration & Food Equipment | 17,212 | 17,451 | 17,073 | 16,965 | 68,701 | 16,585 | 16,611 | 16,962 | 17,070 | 67,228 | |||||||||||||||||||||
Corporate | 870 | 1,000 | 910 | 902 | 3,682 | 859 | 1,028 | 1,030 | 943 | 3,860 | |||||||||||||||||||||
$ | 75,873 | $ | 75,548 | $ | 74,481 | $ | 81,286 | $ | 307,188 | $ | 67,562 | $ | 68,697 | $ | 69,439 | $ | 72,335 | $ | 278,033 | ||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2014 | Q1 | Q2 | Q3 | Q4 | FY 2013 | ||||||||||||||||||||||
BOOKINGS | |||||||||||||||||||||||||||||||
Energy | $ | 478,469 | $ | 477,162 | $ | 526,134 | $ | 534,646 | $ | 2,016,411 | $ | 515,388 | $ | 416,892 | $ | 481,021 | $ | 440,261 | $ | 1,853,562 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 250,434 | 245,445 | 249,299 | 248,082 | 993,260 | 205,386 | 221,458 | 219,316 | 233,308 | 879,468 | |||||||||||||||||||||
Industrials | 370,949 | 363,773 | 342,687 | 374,438 | 1,451,847 | 346,539 | 343,194 | 300,655 | 325,840 | 1,316,228 | |||||||||||||||||||||
Eliminations | (18 | ) | (16 | ) | (11 | ) | (11 | ) | (56 | ) | (81 | ) | (129 | ) | (5 | ) | 278 | 63 | |||||||||||||
621,365 | 609,202 | 591,975 | 622,509 | 2,445,051 | 551,844 | 564,523 | 519,966 | 559,426 | 2,195,759 | ||||||||||||||||||||||
Fluids | 362,943 | 375,009 | 350,853 | 345,553 | 1,434,358 | 303,609 | 298,817 | 307,729 | 351,767 | 1,261,922 | |||||||||||||||||||||
Refrigeration & Food Equipment | 493,731 | 542,810 | 459,099 | 367,567 | 1,863,207 | 482,792 | 515,270 | 433,426 | 450,850 | 1,882,338 | |||||||||||||||||||||
Intra-segment eliminations | (506 | ) | (1,089 | ) | (737 | ) | (644 | ) | (2,976 | ) | (560 | ) | (708 | ) | (417 | ) | 735 | (950 | ) | ||||||||||||
Total consolidated bookings | $ | 1,956,002 | $ | 2,003,094 | $ | 1,927,324 | $ | 1,869,631 | $ | 7,756,051 | $ | 1,853,073 | $ | 1,794,794 | $ | 1,741,725 | $ | 1,803,039 | $ | 7,192,631 | |||||||||||
BACKLOG | |||||||||||||||||||||||||||||||
Energy | $ | 210,846 | $ | 206,415 | $ | 232,739 | $ | 233,347 | $ | 274,733 | $ | 218,764 | $ | 233,820 | $ | 206,790 | |||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 131,298 | 128,912 | 115,352 | 110,359 | 91,020 | 98,624 | 99,615 | 95,597 | |||||||||||||||||||||||
Industrials | 266,517 | 268,680 | 254,612 | 282,598 | 250,480 | 261,600 | 228,605 | 231,748 | |||||||||||||||||||||||
397,815 | 397,592 | 369,964 | 392,957 | 341,500 | 360,224 | 328,220 | 327,345 | ||||||||||||||||||||||||
Fluids | 328,617 | 348,508 | 323,424 | 277,834 | 222,255 | 228,212 | 228,880 | 310,330 | |||||||||||||||||||||||
Refrigeration & Food Equipment | 431,298 | 450,065 | 376,141 | 282,507 | 417,246 | 412,366 | 324,042 | 347,004 | |||||||||||||||||||||||
Intra-segment eliminations | (374 | ) | (211 | ) | (302 | ) | (431 | ) | (596 | ) | (526 | ) | (387 | ) | (592 | ) | |||||||||||||||
Total consolidated backlog | $ | 1,368,202 | $ | 1,402,369 | $ | 1,301,966 | $ | 1,186,214 | $ | 1,255,138 | $ | 1,219,040 | $ | 1,114,575 | $ | 1,190,877 | |||||||||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2014 | Q1 | Q2 | Q3 | Q4 | FY 2013 | ||||||||||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.00 | $ | 1.26 | $ | 1.36 | $ | 1.04 | $ | 4.67 | $ | 0.92 | $ | 1.45 | $ | 1.27 | $ | 1.01 | $ | 4.66 | |||||||||||
Discontinued operations | (0.06 | ) | 0.02 | 0.04 | (0.02 | ) | (0.02 | ) | 0.29 | 0.48 | 0.31 | 0.13 | 1.20 | ||||||||||||||||||
Net earnings | 0.94 | 1.29 | 1.40 | 1.03 | 4.65 | 1.21 | 1.93 | 1.58 | 1.14 | 5.86 | |||||||||||||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | $ | 0.91 | $ | 1.43 | $ | 1.26 | $ | 1.00 | $ | 4.60 | |||||||||||
Discontinued operations | (0.06 | ) | 0.02 | 0.04 | (0.02 | ) | (0.02 | ) | 0.28 | 0.47 | 0.30 | 0.13 | 1.18 | ||||||||||||||||||
Net earnings | 0.93 | 1.27 | 1.38 | 1.02 | 4.59 | 1.20 | 1.91 | 1.56 | 1.13 | 5.78 | |||||||||||||||||||||
Adjusted diluted earnings per common share (calculated below): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 1.01 | $ | 4.54 | $ | 0.89 | $ | 1.08 | $ | 1.20 | $ | 0.99 | $ | 4.14 | |||||||||||
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows: | |||||||||||||||||||||||||||||||
Net earnings (loss): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | $ | 160,267 | $ | 247,988 | $ | 217,045 | $ | 172,227 | $ | 797,527 | |||||||||||
Discontinued operations | (9,903 | ) | 3,378 | 6,161 | (2,541 | ) | (2,905 | ) | 49,736 | 82,061 | 52,069 | 21,736 | 205,602 | ||||||||||||||||||
Net earnings | 160,138 | 213,959 | 231,844 | 169,294 | 775,235 | 210,003 | 330,049 | 269,114 | 193,963 | 1,003,129 | |||||||||||||||||||||
Average shares outstanding: | |||||||||||||||||||||||||||||||
Basic | 169,750 | 166,474 | 166,021 | 164,589 | 166,692 | 173,448 | 171,111 | 170,544 | 170,027 | 171,271 | |||||||||||||||||||||
Diluted | 172,013 | 168,857 | 168,343 | 166,467 | 168,842 | 175,567 | 173,097 | 172,734 | 172,265 | 173,547 | |||||||||||||||||||||
Note: | |||||||||||||||||||||||||||||||
Earnings from continuing operations are adjusted by discrete tax items and other one-time gains to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows: | |||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2014 | Q1 | Q2 | Q3 | Q4 | FY 2013 | ||||||||||||||||||||||
Adjusted earnings from continuing operations: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | $ | 160,267 | $ | 247,988 | $ | 217,045 | $ | 172,227 | $ | 797,527 | |||||||||||
Gains (losses) from discrete and other tax items | 2,541 | (635 | ) | 5,524 | 3,860 | 11,290 | 3,893 | 61,477 | 7,751 | 2,338 | 75,459 | ||||||||||||||||||||
Other one-time gains, net of tax (1) | — | — | — | — | — | — | — | 2,866 | — | 2,866 | |||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 167,500 | $ | 211,216 | $ | 220,159 | $ | 167,975 | $ | 766,850 | $ | 156,374 | $ | 186,511 | $ | 206,428 | $ | 169,889 | $ | 719,202 | |||||||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | $ | 0.91 | $ | 1.43 | $ | 1.26 | $ | 1.00 | $ | 4.60 | |||||||||||
Gains from discrete and other tax items | 0.01 | — | 0.03 | 0.02 | 0.07 | 0.02 | 0.36 | 0.04 | 0.01 | 0.43 | |||||||||||||||||||||
Other one-time gains, net of tax (1) | — | — | — | — | — | — | — | 0.02 | — | 0.02 | |||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 1.01 | $ | 4.54 | $ | 0.89 | $ | 1.08 | $ | 1.20 | $ | 0.99 | $ | 4.14 | |||||||||||
(1) Reflects a one-time curtailment gain recognized in the third quarter of 2013 in connection with the freeze of the Company's defined benefit pension plans. | |||||||||||||||||||||||||||||||
* Per share data may not add due to rounding. | |||||||||||||||||||||||||||||||
DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)(in thousands)
December 31, 2014 | December 31, 2013 | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 681,581 | $ | 803,882 | |||
Receivables, net of allowances | 1,186,746 | 1,076,641 | |||||
Inventories, net | 863,737 | 715,311 | |||||
Deferred tax and other current assets | 164,758 | 122,138 | |||||
Property, plant and equipment, net | 837,069 | 787,849 | |||||
Goodwill | 3,491,557 | 3,032,991 | |||||
Intangible assets, net | 1,369,520 | 1,258,911 | |||||
Other assets | 168,246 | 202,806 | |||||
Assets of discontinued operations | 327,171 | 2,854,652 | |||||
Total assets | $ | 9,090,385 | $ | 10,855,181 | |||
Liabilities and Stockholders' Equity: | |||||||
Notes payable and current maturities of long-term debt | $ | 777,956 | $ | 229,278 | |||
Payables and accrued expenses | 1,261,398 | 1,112,863 | |||||
Deferred taxes and other non-current liabilities | 1,046,547 | 975,823 | |||||
Long-term debt | 2,253,041 | 2,599,201 | |||||
Liabilities of discontinued operations | 50,718 | 560,620 | |||||
Stockholders' equity | 3,700,725 | 5,377,396 | |||||
Total liabilities and stockholders' equity | $ | 9,090,385 | $ | 10,855,181 | |||
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)(in thousands)
Years Ended December 31, | |||||||
2014 | 2013 | ||||||
Operating activities: | |||||||
Net earnings | $ | 775,235 | $ | 1,003,129 | |||
Loss (earnings) from discontinued operations, net | 2,905 | (205,602 | ) | ||||
Depreciation and amortization | 307,188 | 278,033 | |||||
Stock-based compensation | 31,628 | 30,480 | |||||
Contributions to employee benefit plans | (24,232 | ) | (40,258 | ) | |||
Net change in assets and liabilities | (139,908 | ) | (86,170 | ) | |||
Net cash provided by operating activities of continuing operations | 952,816 | 979,612 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (166,033 | ) | (141,694 | ) | |||
Acquisitions (net of cash and cash equivalents acquired) | (802,254 | ) | (322,838 | ) | |||
Proceeds from the sale of businesses | 191,348 | 76,457 | |||||
Other | (5,618 | ) | 26,398 | ||||
Net cash used in investing activities of continuing operations | (782,557 | ) | (361,677 | ) | |||
Financing activities: | |||||||
Cash received from Knowles Corporation, net of cash distributed | 359,955 | — | |||||
Net increase in debt and notes payable | 244,934 | 19,530 | |||||
Dividends to stockholders | (258,487 | ) | (247,820 | ) | |||
Purchase of common stock | (601,077 | ) | (457,871 | ) | |||
Net proceeds from exercise of share-based awards | (814 | ) | 7,619 | ||||
Net cash used in financing activities of continuing operations | (255,489 | ) | (678,542 | ) | |||
Net cash provided by discontinued operations | 3,355 | 65,764 | |||||
Effect of exchange rate changes on cash | (40,426 | ) | (1,351 | ) | |||
Net (decrease) increase in cash and cash equivalents | (122,301 | ) | 3,806 | ||||
Cash and cash equivalents at beginning of period | 803,882 | 800,076 | |||||
Cash and cash equivalents at end of period | $ | 681,581 | $ | 803,882 | |||
DOVER CORPORATION
ADDITIONAL QUARTERLY INFORMATION
(unaudited)(in thousands, except per share data*)
FREE CASH FLOW
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2014 | Q1 | Q2 | Q3 | Q4 | FY 2013 | ||||||||||||||||||||||
Cash flow from operating activities | $ | 28,361 | $ | 185,013 | $ | 292,012 | $ | 447,430 | $ | 952,816 | $ | 58,222 | $ | 241,881 | $ | 261,659 | $ | 417,850 | $ | 979,612 | |||||||||||
Less: Additions to property, plant and equipment | (32,695 | ) | (42,550 | ) | (33,532 | ) | (57,256 | ) | (166,033 | ) | (25,082 | ) | (30,561 | ) | (39,191 | ) | (46,860 | ) | (141,694 | ) | |||||||||||
Free cash flow | $ | (4,334 | ) | $ | 142,463 | $ | 258,480 | $ | 390,174 | $ | 786,783 | $ | 33,140 | $ | 211,320 | $ | 222,468 | $ | 370,990 | $ | 837,918 | ||||||||||
Free cash flow as a percentage of earnings from continuing operations | (2.5 | )% | 67.7 | % | 114.5 | % | 227.1 | % | 101.1 | % | 20.7 | % | 85.2 | % | 102.5 | % | 215.4 | % | 105.1 | % | |||||||||||
Free cash flow as a percentage of revenue | (0.2 | )% | 7.3 | % | 12.9 | % | 19.7 | % | 10.1 | % | 2.0 | % | 11.5 | % | 12.0 | % | 20.8 | % | 11.7 | % | |||||||||||
RESULTS OF SARGENT AEROSPACE AND DATAMAX O'NEIL
The following tables present the impact the operating results of Sargent Aerospace ("Sargent") and Datamax O'Neil ("D-O") had on the consolidated results of Dover Corporation. Sargent and D-O have been included in the consolidated financial statements as discontinued operations for all periods presented. See "Discontinued Operations" in this Investor Supplement for a discussion of the results and components of discontinued operations.
2014 | 2013 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2014 | Q1 | Q2 | Q3 | Q4 | FY 2013 | ||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||
Revenue including Sargent and D-O | $ | 1,884,647 | $ | 2,047,738 | $ | 2,092,467 | $ | 2,056,063 | $ | 8,080,915 | $ | 1,763,977 | $ | 1,932,411 | $ | 1,940,211 | $ | 1,879,054 | $ | 7,515,653 | |||||||||||
Revenue of Sargent and D-O | 82,077 | 85,102 | 82,892 | 78,116 | 328,187 | 82,437 | 95,430 | 89,558 | 93,132 | 360,557 | |||||||||||||||||||||
Continuing revenue as reported | $ | 1,802,570 | $ | 1,962,636 | $ | 2,009,575 | $ | 1,977,947 | $ | 7,752,728 | $ | 1,681,540 | $ | 1,836,981 | $ | 1,850,653 | $ | 1,785,922 | $ | 7,155,096 | |||||||||||
Earnings: | |||||||||||||||||||||||||||||||
Earnings including Sargent and D-O | $ | 176,324 | $ | 217,443 | $ | 232,825 | $ | 177,837 | $ | 804,429 | $ | 167,213 | $ | 258,058 | $ | 226,235 | $ | 182,566 | $ | 834,072 | |||||||||||
Earnings attributable to Sargent and D-O | 6,283 | 6,862 | 7,142 | 6,002 | 26,289 | 6,946 | 10,070 | 9,190 | 10,339 | 36,545 | |||||||||||||||||||||
Earnings from continuing operations as reported | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | $ | 160,267 | $ | 247,988 | $ | 217,045 | $ | 172,227 | $ | 797,527 | |||||||||||
Diluted earnings per common share: | |||||||||||||||||||||||||||||||
Earnings including Sargent and D-O | $ | 1.02 | $ | 1.29 | $ | 1.38 | $ | 1.07 | $ | 4.76 | $ | 0.95 | $ | 1.49 | $ | 1.31 | $ | 1.06 | $ | 4.81 | |||||||||||
Earnings attributable to Sargent and D-O | 0.04 | 0.04 | 0.04 | 0.04 | 0.16 | 0.04 | 0.06 | 0.05 | 0.06 | 0.21 | |||||||||||||||||||||
Earnings from continuing operations as reported | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | $ | 0.91 | $ | 1.43 | $ | 1.26 | $ | 1.00 | $ | 4.60 | |||||||||||
* Per share data may not add due to rounding. | |||||||||||||||||||||||||||||||
ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2014
Acquisitions
During the fourth quarter of 2014, the Company completed one acquisition within the Energy segment. For the full year 2014, Dover made a total of seven acquisitions for consideration totaling $802.3 million.
Discontinued Operations
The Company did not dispose of any businesses in the fourth quarter of 2014; however, in the fourth quarter, the Company announced its intent to divest Datamax O'Neil and Sargent Aerospace, two non-core businesses within the Engineered Systems segment. The results of operations and cash flows of these businesses have been reclassified to discontinued operations and the assets and liabilities of these businesses have been segregated within assets and liabilities of discontinued operations for all periods presented herein. For the fourth quarter of 2014, the Company recognized a loss from discontinued operations of $2.5 million, or $0.02 EPS, which includes $6.0 million of earnings, or $0.04 EPS, of the aforementioned businesses.
On a full-year basis, the Company generated a net loss of $2.9 million, or $0.02 EPS. Included in this amount is a $6.9 million loss on sale of DEK International, which was sold in the third quarter of 2014 and a $3.2 million gain to adjust the gain on sale of Everett Charles Technologies, which was sold in the fourth quarter of 2013. Also included in the results of discontinued operations is $26.3 million of earnings, or $0.16 EPS, attributable to the operations of Datamax O'Neil and Sargent Aerospace. Earnings from discontinued operations also include the results of Knowles Corporation, prior to the distribution on February 28, 2014, as well as the related spin-off costs incurred by Dover during the period, which totaled a loss of approximately $21.8 million, or $0.13 EPS.
Restructuring and Other Costs
During the quarter, the Company took actions to adjust our costs and streamline our businesses, resulting in $37.4 million, or $0.16 EPS, of restructuring charges. These charges were incurred at each of our business segments, including $5.8 million in Energy, $3.7 million in Engineered Systems, $2.8 million in Fluids, and $24.9 million in Refrigeration & Food Equipment. The Company expects to record an additional $17 to $20 million in restructuring charges in the first quarter of 2015, with the majority of these charges in the Energy segment. The Company also recorded a $3.6 million, or $0.01 EPS, pension settlement charge in the fourth quarter of 2014.
Tax Rate
The effective tax rate on continuing operations was 25.6% and 28.5% for the fourth quarters of 2014 and 2013, respectively. On a full year basis, the effective tax rates on continuing operations for 2014 and 2013 were 28.9% and 23.8%, respectively. The 2014 and 2013 rates were favorably impacted by discrete and other items, as shown in the reconciliation for quarterly earnings per share included herein. After adjusting for discrete and other items, the fourth quarter effective tax rates were 27.3% and 29.5% for 2014 and 2013, respectively, and the full year rates were 29.9% and 31.0% for 2014 and 2013, respectively. The lower rates for the quarter and full year primarily reflect the tax benefits associated with restructuring charges and lower rates in foreign jurisdictions. The fourth quarter rate was also favorably impacted by the extension of the R&D credit.
Revenue Growth Factors
2014 | ||||||||||||||
Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||
Organic | 4 | % | 4 | % | 5 | % | 6 | % | 4 | % | ||||
Acquisitions | 3 | % | 3 | % | 4 | % | 7 | % | 4 | % | ||||
Currency translation | — | % | — | % | — | % | (2 | )% | — | % | ||||
7 | % | 7 | % | 9 | % | 11 | % | 8 | % | |||||
Free Cash Flow
The following table is a reconciliation of free cash flow (a non-GAAP measure) from cash flow provided by operating activities:
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Free Cash Flow (dollars in thousands) | |||||||||||||||
Cash flow provided by operating activities | $ | 447,430 | $ | 417,850 | $ | 952,816 | $ | 979,612 | |||||||
Less: Capital expenditures | (57,256 | ) | (46,860 | ) | (166,033 | ) | (141,694 | ) | |||||||
Free cash flow | $ | 390,174 | $ | 370,990 | $ | 786,783 | $ | 837,918 | |||||||
Free cash flow as a percentage of revenue | 19.7 | % | 20.8 | % | 10.1 | % | 11.7 | % | |||||||
Free cash flow as a percentage of earnings from continuing operations | 101.1 | % | 105.1 | % | |||||||||||
The full year decrease in 2014 free cash flow reflects a higher investment in working capital year over year, higher capital expenditures, and lower earnings from continuing operations.
Share Repurchases
During the year ended December 31, 2014, the Company purchased a total of approximately 7.5 million shares of its common stock in the open market at a total cost of $601.1 million, or $80.50 per share. The Company completed its November 2012 $1.0 billion stock repurchase program in 2014 through the repurchase of 3.6 million shares. The remaining 3.9 million of share repurchases in 2014 were made pursuant to the share repurchase program approved in May 2012. As of December 31, 2014, the approximate number of shares still available for repurchase under the May 2012 share repurchase authorization was 38,041.
Capitalization
The following table provides a summary reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:
Net Debt to Net Capitalization Ratio (in thousands) | December 31, 2014 | December 31, 2013 | ||||||
Current maturities of long-term debt | $ | 299,956 | $ | 2,778 | ||||
Commercial paper | 478,000 | 226,500 | ||||||
Long-term debt | 2,253,041 | 2,599,201 | ||||||
Total debt | 3,030,997 | 2,828,479 | ||||||
Less: Cash and cash equivalents | (681,581 | ) | (803,882 | ) | ||||
Net debt | 2,349,416 | 2,024,597 | ||||||
Add: Stockholders' equity | 3,700,725 | 5,377,396 | ||||||
Net capitalization | $ | 6,050,141 | $ | 7,401,993 | ||||
Net debt to net capitalization | 38.8 | % | 27.4 | % | ||||
Non-GAAP Information:
These Investor Supplement tables contain non-GAAP measures such as revenue including Sargent Aerospace and Datamax O'Neil and earnings including Sargent Aerospace and Datamax O'Neil, which is used in calculating earnings per share attributable to Sargent Aerospace and Datamax O'Neil. These tables also contain non-GAAP measures of adjusted earnings from continuing operations used in calculating adjusted diluted earnings per common share. 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. The company has also disclosed herein a number of non-GAAP measures related to free cash flow and the ratio of net debt to net capitalization. Management believes these metrics are important measures of the company's operating performance and liquidity. Free cash flow information provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase common stock, while the net debt to net capitalization ratio is helpful in evaluating the company's capital structure and the amount of leverage employed.