Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DOVER Corp | a201704208-k.htm |
| EX-99.1 - EXHIBIT 99.1 - DOVER Corp | a201704208-kexhibit991.htm |
Earnings Conference Call
First Quarter 2017
April 20, 2017 – 9:00am CT
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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
2016, 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, 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 first 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
Earnings per share Adj. EPS*
Q1 2017 Performance
Earnings Per Share
Q1 Q1/Q1
* Excludes gains on dispositions of $0.07 in Q1 2016, $0.36 in Q4 2016, $0.39 in
Q1 2017, and a $0.09 voluntary product recall charge in Q4 2016
(d) See Press Release for free cash flow reconciliation
3
Quarterly Comments
2016
Revenue growth largely driven by acquisitions and strong
recovery in Drilling & Production
Printing & Identification, Refrigeration, Retail Fueling, Hygienic &
Pharma, and most other industrial end markets were solid,
offsetting declines in longer cycle oil & gas markets and the
impact of dispositions
Solid organic growth in U.S., Europe and China
Adjusted segment margin improvement largely driven by strong
conversion on volume in the Energy segment
Bookings growth reflects broad-based organic increases and
acquisitions
Book-to-bill at a seasonally strong 1.12 Note: EPS and Adj. EPS include restructuring costs of $0.07 in Q1 2016, $0.04
in Q2 2016, $0.04 in Q3 2016, $0.04 in Q4 2016, and $0.03 in Q1 2017
Revenue $1.8B 12%
EPS $1.09 70%
Adj. EPS (a) $0.70 25%
Bookings $2.0B 21%
Seg. Margin 16.7% 500 bps
Adj. Seg. Margin (a) 11.8% 80 bps
Organic Rev. (b) 4%
Net Acq. Growth (c) 9%
Cash flow from Ops $78M -41%
FCF (d) $36M -63%
(a) Adjusted for gains on dispositions of $11M in Q1 2016 and $88M in Q1 2017
(b) Change in revenue from businesses owned over 12 months, excluding FX impact
(c) Change in revenue from acquisitions, less revenue from dispositions
2017
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Revenue
Q1 2017
Energy
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Dover
Organic 15% 2% -2% 5% 4%
Acquisitions - 9% 35% - 12%
Dispositions - -4% - -7% -3%
Currency -1% -1% -1% - -1%
Total 14% 5% 32% -2% 12%
Note: Totals may be impacted due to rounding
5
Energy
Revenue increase driven by
significant improvement in
early cycle oil & gas
fundamentals, particularly U.S.
rig count and well completions
– Q1 revenue up 11%
sequentially
– Bearings & Compression
growth driven by improved
OEM build rates
– Automation benefitting from
customer capex increases
Margin of 12.9% exceeds
expectation, reflecting higher
volume and strong
incrementals
Bookings growth is broad-
based
Book-to-bill at 1.07
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$ in millions
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue $324 $283 14% 15%
Earnings $ 42 $ 11 271%
Margin 12.9% 4.0% 890 bps
Bookings $348 $273 27% 28%
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Drilling & Production 67% 14% 14%
Bearings & Compression 22% 13% 16%
Automation 11% 19% 19%
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Engineered Systems
Organic revenue growth of 2%
– Organic growth in Printing &
Identification driven by strong
marking & coding and digital
textile markets
– Industrial’s organic decline
driven by chassis availability
challenges in Environmental
Solutions Group
Adjusted margin in-line with
expectations
Organic bookings growth is
broad-based
Book-to-bill of 1.11
6
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue(a) $608 $577 5% 2%
Earnings $174 $ 94 86%
Margin 28.7% 16.2% NM
Adj. Earnings* $ 86 $ 83 4%
Adj. Margin* 14.2% 14.3% -10 bps
Bookings(b) $676 $573 18% 12%
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Printing & Identification 41% 4% 5%
Industrial 59% 6% -1%
$ in millions
(a) Revenue increased 5% overall, reflecting organic growth of 2% and
acquisition growth of 8%, offset by a 4% impact from dispositions and a 1%
unfavorable impact from FX
(b) Bookings growth of 18% reflects organic growth of 12% and acquisition
growth of 9%, partially offset by a 2% impact from dispositions and a 1%
unfavorable impact from FX
* Earnings adjusted for gains on dispositions of $11M in Q1 2016 and $88M in
Q1 2017
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Fluids
Revenue growth driven by
acquisitions
– Dover Fueling Solutions off
to very strong start
– Organic revenue impacted
by continued weakness in
longer cycle oil & gas
markets, especially
transport
Solid retail fueling and
strong Hygienic &
Pharma markets
Margin primarily impacted by
acquisitions and business mix
Bookings growth is broad-
based
Book-to-bill at 1.08
7
$ in millions
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Pumps 29% -4% -2%
Fueling & Transport 60% 69% -4%
Hygienic & Pharma 11% 2% 5%
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue $525 $399 32% -2%
Earnings $ 53 $ 46 14%
Margin 10.0% 11.5% -150 bps
Bookings $566 $418 35% 2%
8
Refrigeration & Food Equipment
Organic revenue growth
reflects strong activity in
retail refrigeration market
– Door and specialty case
product lines doing very
well
– Within Food Equipment,
can-shaping equipment
project timing offsets solid
commercial food
equipment activity
Margin performance reflects
impact of dispositions and
$2 million in restructuring
Organic bookings growth is
broad-based
Book-to-bill at seasonally
strong 1.23
8
$ in millions
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Refrigeration 84% 7% 7%
Food Equipment 16% -31% -3%
(a) Revenue decline of 2% reflects organic growth of 5%, offset by a 7% impact
from dispositions
(b) Bookings growth of 7% reflects organic growth of 13% and a 6% impact
from dispositions
Q1
2017
Q1
2016
%
Change
%
Organic
Revenue(a) $357 $363 -2% 5%
Earnings $34 $ 38 -12%
Margin 9.4% 10.5% -110 bps
Bookings(b) $439 $411 7% 13%
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Q1 2017 Overview
9
Q1 2017
Net Interest Expense $34 million, in-line with forecast
Corporate Expense $36 million, in-line with forecast
Effective Tax Rate Q1 rate was 25.7%, lower than forecast,
reflecting the impact of a disposition and other
discrete items. Excluding these items,
normalized rate was 27.8%
Capex $42 million, generally in-line with forecast
Share Repurchases No activity
10
FY 2017F Updated Guidance
Corporate expense: ≈ $130 million
Net interest expense: ≈ $133 million
Q2 – Q4 tax rate: ≈ 28%
Capital expenditures: ≈ 2.4% of revenue
FY free cash flow: ≈ 11% of revenue or 140% of net income*
2017F
Energy
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Organic rev. 20% - 23% 2% - 3% 1% - 2% 1% - 3% 4% - 6%
Acquisitions - ≈ 8% ≈ 31% - ≈ 10%
Dispositions - (3%) - (5%) (2%)
Currency - (1%) (1%) - (1%)
Total revenue 20% - 23% 6% - 7% 31% - 32% (4% - 2%) 11% - 13%
* Excludes the gain on sale of business
11
2017F EPS Guidance – Updated Bridge
2016 EPS – Continuing Ops (GAAP): $3.25
– Less 2016 gain on dispositions(1): (0.44)
– Less 2016 earnings from dispositions(2) : (0.05)
– Plus 2016 charges related to recall: 0.09
2016 Adjusted EPS $2.85
– Net restructuring(3): 0.08 - 0.10
– Performance including restructuring benefits: 1.12 – 1.21
– Compensation & investment: (0.17 - 0.15)
– Interest / Corp. / Tax rate / Shares / Other (net): (0.18 - 0.16)
– Net benefit of disposition(4) 0.35
2017F EPS – Continuing Ops $4.05 - $4.20
(2) Includes 2016 operating earnings from THI and Tipper Tie
(3) Includes restructuring costs of approximately $0.18 in FY 2016 and $0.08 - $0.10 in FY 2017F
(1) Includes $0.07 gain on the disposition of THI in Q1 2016 and $0.36 gain on the disposition of Tipper Tie in Q4 2016
(4) Includes $0.39 gain on the disposition of PMI, partially offset by ($0.04) of PMI operational earnings in the prior forecast
