Attached files
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| EX-99.1 - EXHIBIT 99.1 - DOVER Corp | a201707208-kexhibit991.htm |
| 8-K - 8-K - DOVER Corp | a201707208-k.htm |
Earnings Conference Call
Second Quarter 2017
July 20, 2017 – 9:00am CT
Exhibit 99.2
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
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 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 2017 Performance
Earnings Per Share
Q2 Q2/Q2
* 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
(c) See Press Release for free cash flow reconciliation
3
Quarterly Comments
2016
Revenue growth driven by broad-based organic growth and
acquisitions
Solid organic growth in U.S., Europe and China
Strong sequential margin improvement in Fluids and
Refrigeration & Food Equipment
Segment margin improvement largely driven by strong
conversion on volume and the benefits of integration and
productivity
Bookings growth reflects broad-based organic increases and
acquisitions
Book-to-bill at 1.01
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, $0.03 in Q1 2017, and $0.01 in
Q2 2017
Revenue $2.0B 18%
EPS $1.04 37%
Bookings $2.0B 19%
Segment margin 15.0% (d) 190 bps
Organic Rev. (a) 10%
Net Acq. Growth (b) 9%
Cash flow from Ops $165M -21%
FCF (c) $150M -13%
(a) Change in revenue from businesses owned over 12 months, excluding FX impact
(b) Change in revenue from acquisitions, less revenue from dispositions
2017
(d) Up 320 basis points sequentially vs. Q1 2017 adjusted margin of 11.8%, which
excludes gain on disposition of $88M
4
Revenue
Q2 2017
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Dover
Organic 5% 4% 5% 39% 10%
Acquisitions 10% 34% - - 12%
Dispositions -4% - -6% - -3%
Currency -1% -2% - -1% -1%
Total 11% 36% -1% 39% 18%
Note: Totals may be impacted due to rounding
5
Engineered Systems
Organic revenue growth of 5%
– Printing & Identification driven
by strong marking & coding
markets
– Industrial’s growth was broad-
based with particular strength
in waste handling
Recent acquisitions performing
well, driving 10% acquisition
growth
Margin in-line with expectations
Organic bookings growth is
broad-based
Book-to-bill of 0.99
5
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue(a) $655 $592 11% 5%
Earnings $107 $104 3%
Margin 16.3% 17.6% -130 bps
Bookings(b) $650 $571 14% 9%
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Printing & Identification 42% 6% 5%
Industrial 58% 15% 5%
$ in millions
(a) Revenue increased 11% overall, reflecting organic growth of 5% and
acquisition growth of 10%, offset by a 4% impact from dispositions and a 1%
unfavorable impact from FX
(b) Bookings growth of 14% reflects organic growth of 9% and acquisition
growth of 9%, partially offset by a 4% impact from dispositions
6
Fluids
Revenue growth driven by
acquisitions and 4% organic
growth
Return to organic revenue
growth driven by:
– Solid retail fueling markets
and industrial pump
markets
– Continued strong Hygienic
& Pharma markets
Margin primarily impacted by
acquisitions and business mix
– Sequentially up 330 basis
points, benefiting from retail
fueling integration
Bookings growth reflecting
acquisitions and solid Pumps
and Hygienic & Pharma
markets
Book-to-bill at 1.00
6
$ in millions
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Pumps 29% 7% 7%
Fueling & Transport 60% 69% 1%
Hygienic & Pharma 11% 4% 5%
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue $553 $406 36% 4%
Earnings $ 74 $ 54 36%
Margin 13.3% 13.3% Flat
Bookings $555 $414 34% 4%
7
Refrigeration & Food Equipment
Organic revenue growth
reflects strong activity in
retail refrigeration market
– Door and specialty case
product lines continue to
perform well
– Within Food Equipment,
can-shaping equipment
growth offsets softness in
commercial food equip.
Margin performance reflects
improved productivity and
volume leverage in retail
refrigeration, offset, in part,
by material cost inflation
– Margin up 600 points
sequentially
Organic bookings growth
driven by Food Equipment
Book-to-bill at 1.09
7
$ in millions
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Refrigeration 83% 6% 6%
Food Equipment 17% -24% 1%
(a) Revenue decline of 1% reflects organic growth of 5%, offset by a 6% impact
from dispositions
(b) Bookings decline of 1% reflects organic growth of 6%, offset by a 6%
impact from dispositions and 1% impact from FX
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue(a) $426 $429 -1% 5%
Earnings $ 66 $ 63 4%
Margin 15.4% 14.7% 70 bps
Bookings(b) $466 $469 -1% 6%
8
Energy
Revenue increase driven by
continued improvement in U.S.
rig count and increased well
completions
– Bearings & Compression
growth driven by improved
OEM build rates
– Automation benefitting from
customer capex increases
Margin of 14.9% reflects
significantly higher volume and
strong incrementals
Bookings growth is broad-
based
Book-to-bill at 0.98
8
$ in millions
Q2
2017
Q2
2016
%
Change
%
Organic
Revenue $359 $259 39% 39%
Earnings $ 53 $ 0 NM
Margin 14.9% 0% NM
Bookings $353 $246 43% 44%
Revenue by End-Market
% of Q2
Revenue
Q2/Q2
Growth
Organic
Growth
Drilling & Production 67% 47% 47%
Bearings & Compression 22% 17% 19%
Automation 11% 45% 45%
9
Q2 2017 Overview
9
Q2 2017
Net Interest Expense $35 million
Corporate Expense $34 million
Effective Tax Rate Q2 rate was 28.9%, including the impact of
discrete costs. Excluding these costs,
normalized rate was 27.8%
Capex $48 million
Share Repurchases No activity
10
FY 2017F Updated Guidance
Corporate expense: ≈ $135 million
Net interest expense: ≈ $134 million
Q3 – Q4 tax rate: ≈ 28%
Capital expenditures: ≈ 2.4% of revenue
FY free cash flow: ≈ 11% of revenue or 140% of net income*
2017F
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Organic rev. 3% - 4% 2% - 3% 1% - 3% 24% - 27% 5% - 7%
Acquisitions ≈ 8% ≈ 31% - - ≈ 10%
Dispositions (3%) - (5%) - (2%)
Currency (1%) (1%) - - (1%)
Total revenue 7% - 8% 32% - 33% (4% - 2%) 24% - 27% 12% - 14%
* Excludes the gain on sale of business
12
Appendix
13
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: 1.36 – 1.40
– Compensation & investment: (0.19 - 0.17)
– Interest / Corp. / Tax rate / Shares / Other (net): (0.22 - 0.20)
– Net benefit of disposition(4) 0.35
2017F EPS – Continuing Ops $4.23 - $4.33
(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 in Q1 2017, partially offset by ($0.04) of PMI operational earnings in the prior forecast