Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - DOVER Corp | a201607218-kexhibit991.htm |
| 8-K - 8-K - DOVER Corp | a201607218-k.htm |
Earnings Conference Call
Second Quarter 2016
July 21, 2016 – 9:00am CT
2
Forward looking statements and non-GAAP measures
We want to remind everyone that our comments may contain forward-looking
statements that are inherently subject to uncertainties and risks. We caution
everyone to be guided in their analysis of Dover Corporation by referring to the
documents we file from time to time with the SEC, including our Form 10-K for
2015, for a list of factors that could cause our results to differ from those
anticipated in any such forward-looking statements.
We would also direct your attention to our website, www.dovercorporation.com,
where considerably more information can be found.
This document contains non-GAAP financial information. Reconciliations of
non-GAAP measures are included either in this presentation or Dover’s earnings
release and investor supplement for the second quarter, which are available on
our website.
2
3
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
Q1 Q2 Q3* Q4* Q1* Q2
Earnings per share Adj. EPS*
Q2 2016 Performance
Earnings Per Share
(continuing operations)
Q2 Q2/Q2
* Excludes discrete tax benefits of $0.05 in Q3 2015, $0.06 in Q4 2015, $0.05 in
Q1 2016, a $0.01 discrete tax expense in Q2 2016, and $0.07 gain on a
disposition in Q1 2016
(d) See Press Release for free cash flow reconciliation
3
Quarterly Comments
2015 2016
Revenue growth from acquisitions and solid markets in
Engineered Systems and Refrigeration & Food Equipment,
offset by the impact of weak oil & gas markets and dispositions
US activity remains solid, excluding oil & gas markets. Asian
and European activity remained soft
Segment margin impacted by lower volume, acquisition-related
costs, deal costs and one-time items, partially offset by
productivity and the net benefits of prior period restructuring
Bookings decline largely driven by oil & gas exposure and
dispositions, partially offset by impact of acquisitions
Book-to-bill of 1.01
Note: EPS and Adj. EPS include restructuring costs of $0.10 in Q1 2015, $0.01
in Q2 2015, $0.05 in Q3 2015, $0.08 in Q4 2015, $0.07 in Q1 2016, and $0.04 in
Q2 2016
Revenue $1.7B -4% $3.3B -5%
EPS (cont.) $0.76 -22% $1.39 -18%
Adj. EPS (cont.) $0.76 -22% $1.28 -24%
Bookings $1.7B -2% $3.4B -3%
Seg. Margin 13.1% -250 bps 12.4% -210 bps
Adj. Seg. Margin (a) 13.7% -210 bps 13.1% -220 bps
Organic Rev. (b) -7% -7%
Net Acq. Growth (c) 3% 3%
Cash flow from Ops $208M -5% $341M -3%
FCF (d) $172M -2% $269M -4%
(a) Adjusted for $9.2 million of restructuring in Q2 2016, $14.4M in Q1 2016, $3.1M in Q2
2015 and $24.1M in Q1 2015
6M 6M/6M
(b) Change in revenue from businesses owned over 12 months, excluding FX impact
(c) Change in revenue from acquisitions, less revenue from dispositions
4
Revenue
Q2 2016
Energy
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Dover
Organic -28% 2% -8% 1% -7%
Acquisitions - 3% 24% - 6%
Dispositions - -4% - -5% -3%
Currency -1% -1% - - -
Total -29% - 16% -4% -4%
6M 2016
Energy
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Dover
Organic -31% 2% -6% 2% -7%
Acquisitions - 3% 23% - 6%
Dispositions - -4% - -5% -3%
Currency -1% -1% -1% - -1%
Total -32% - 16% -3% -5%
5
Energy
Revenue decrease driven by
declines in oil & gas market
fundamentals
Q2 2016 expected to be low
point in Energy performance
Market macro stabilization
– NA rig count steadied in Q2
– Oil prices remained in $45 -
$50 range
Adjusted margin of 5.0%
reflects volume and price
declines
Bookings decline of 29%
reflects weak market
conditions
Book-to-bill at 0.95
5
$ in millions
* Q2 2016 earnings adjusted for $5M related to temporary plant
closure, $2M other one-time costs and $6M restructuring, Q2 2015
adjusted for $3M in restructuring costs
Q2
2016
Q2
2015
%
Change
%
Organic
Revenue $259 $366 -29% -28%
Earnings - $ 41 NM
Margin - 11.2% -1120 bps
Adj. Earnings* $ 13 $ 44 -66%
Adj. Margin* 5.0% 12.0% -700 bps
Bookings $246 $345 -29% -28%
Revenue by End-Market
% of Q2
Revenue
Y / Y
Growth
Organic
Growth
Drilling & Production 63% -34% -32%
Bearings & Compression 27% -14% -12%
Automation 10% -34% -34%
6
Engineered Systems
Organic revenue growth of 2%
– 9% organic growth in P & I
driven by strong marking &
coding and digital textile
printing equipment markets
– Industrial’s organic decline
of 2% primarily driven by
activity deferrals and tough
comps in Environmental
Solutions
Margin of 17.6% reflects the
benefits of productivity,
leverage on organic volume
and favorable product mix
Bookings reflects organic and
acquisition growth, partially
offset by dispositions and FX
Book-to-bill of 0.96
6
Q2
2016
Q2
2015
%
Change
%
Organic
Revenue(a) $592 $593 Flat 2%
Earnings $104 $ 97 8%
Margin 17.6% 16.3% 130 bps
Bookings(b) $571 $560 2% 4%
Revenue by End-Market
% of Q2
Revenue
Y / Y
Growth
Organic
Growth
Printing & Identification 45% 15% 9%
Industrial 55% -10% -2%
$ in millions
(a) Revenue was flat overall, reflecting organic growth of 2% and
acquisition growth of 3%, offset by a 4% impact from dispositions
and a 1% unfavorable impact from FX
(b) Bookings growth of 2% reflects organic growth of 4% and
acquisition growth of 3%, partially offset by a 4% impact from
dispositions and a 1% unfavorable impact from FX
7
Fluids
Revenue growth driven by
acquisitions and hygienic &
pharma markets
– Organic revenue decline
driven by
Direct oil & gas exposure
Lower capital spending
from integrated energy
customers
Project timing
Margin impacted by lower
organic volume, acquisitions,
restructuring costs and deal
costs
Bookings growth driven by
acquisitions
Book-to-bill at 1.02
7
$ in millions
Q2
2016
Q2
2015
%
Change
%
Organic
Revenue $406 $352 16% -8%
Earnings $ 54 $ 70 -23%
Margin 13.3% 20.0% -670 bps
Adj. Earnings* $ 61 $ 70 -13%
Adj. Margin* 15.0% 20.0% -500 bps
Bookings $414 $334 24% -1%
Revenue by End-Market
% of Q2
Revenue
Y / Y
Growth
Organic
Growth
Pumps 39% 2% -17%
Fluid Transfer 61% 26% -2%
* Q2 2016 earnings adjusted for $4M related to deal costs and $3M
restructuring
8
Refrigeration & Food Equipment
Organic revenue growth of
1% offset by dispositions
and FX
– Retail refrigeration wins
driving organic growth
– Can shaping and
commercial foodservice
businesses are solid, food
processing business is
soft
Margin performance reflects
product mix
Organic bookings growth of
4% driven by retail
refrigeration, partially offset
by dispositions and FX
Book-to-bill at 1.09
8
$ in millions
Q2
2016
Q2
2015
%
Change
%
Organic
Revenue(a) $429 $448 -4% 1%
Earnings $ 63 $ 66 -4%
Margin 14.7% 14.7% Flat
Bookings(b) $469 $487 -4% 4%
Revenue by End-Market
% of Q2
Revenue
Y / Y
Growth
Organic
Growth
Refrigeration 77% -5% 2%
Food Equipment 23% -3% -3%
(a) Revenue decline of 4% reflects organic growth of 1%, offset by a
5% impact from dispositions
(b) Bookings decline of 4% reflects organic growth of 4%, offset by a
7% impact from dispositions and a 1% unfavorable impact from
acquisitions
9
Q2 2016 Overview
9
Q2 2016
Net Interest Expense $32 million, in-line with forecast
Corporate Expense $25 million, in-line with forecast
Effective Tax Rate (ETR) Q2 rate was 28.1%. Excluding discrete tax
costs, tax rate was 27.3%, slightly lower than
expected
Capex $35 million, generally in-line with forecast
Share Repurchases No activity
10
FY 2016 Guidance
Revenue
– Organic revenue: (8% - 6%)
– Acquisitions: ≈ 7%
– Dispositions: (≈ 3%)
– FX impact: (≈ 1%)
– Total revenue: (5% - 3%)
Corporate expense: ≈ $108 million
Interest expense: ≈ $128 million
Full-year tax rate: ≈ 27.5% - 28%
Capital expenditures: ≈ 2.3% of revenue
FY free cash flow: ≈ 11% of revenue
2016 organic
growth rate
Energy (30% - 27%)
Engineered
Systems
1% - 3%
Fluids (5% - 4%)
Refrigeration &
Food Equipment
2% - 3%
Total organic (8% - 6%)
Acquisitions ≈ 7%
Dispositions (≈ 3%)
FX Impact (≈ 1%)
Total revenue (5% - 3%)
11
2016F EPS Guidance – Bridge
2015 EPS – Continuing Ops (GAAP) $ 3.74
– Less 2015 tax items(1): (0.11)
2015 Adjusted EPS $ 3.63
– Net restructuring(2): ≈ 0.07
– Performance including restructuring benefits(3): (0.37 - 0.31)
– Compensation & investment: (0.20 - 0.17)
– Net acquisitions(4): ≈ 0.12
– Shares(5): ≈ 0.08
– Interest / Corp. / Tax rate / Other (net): (0.02 - 0.01)
– 2016 tax items(6): ≈ 0.04
2016F EPS – Continuing Ops $3.35 - $3.45
(1) Includes discrete tax benefits of $0.05 in Q3 2015 and $0.06 in Q4 2015
(4) Reflects operating earnings of acquisitions completed less dispositions completed, as well as the associated gain on disposition
(5) Based on carryover benefit from 2015 share repurchase activity
(2) Includes restructuring costs of $0.25 in FY 2015 and approximately $0.18 in FY 2016
(3) Includes restructuring benefits of $0.44 - $0.48, $0.02 of Q2 2016 deal costs, $0.04 of Q2 2016 one-time costs, and $0.03 of deal costs anticipated in Q3 2016
(6) Includes discrete tax benefits of $0.05 in Q1 2016 and a discrete tax cost of $0.01 in Q2 2016
