Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DOVER Corp | a201710198-k.htm |
| EX-99.1 - EXHIBIT 99.1 - DOVER Corp | a201710198-kexhibit991.htm |
Earnings Conference Call
Third Quarter 2017
October 19, 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 third 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 Q3
Earnings per share Adj. EPS*
Q3 2017 Performance
Earnings Per Share
Q3 Q3/Q3
* Excludes gains on dispositions of $0.07 in Q1 2016, $0.36 in Q4 2016, $0.39 in
Q1 2017, a $0.09 voluntary product recall charge in Q4 2016, and Wellsite
separation and Warn disposition related costs of $0.02 in Q3 2017
(e) 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
Segment margin improvement largely driven by strong
conversion on volume and the benefits of integration and
productivity
Bookings growth reflects organic increases in Engineered
Systems, Fluids and Energy, and the impact of acquisitions
Signed agreement to sell the Warn consumer and industrial
winch business for $250 million, expected to close in Q4 2017
Book-to-bill at 0.97
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, $0.01 in Q2
2017 and $0.02 in Q3 2017
Revenue $2.0B 17%
EPS $1.14 37%
Adjusted EPS (a) $1.16 40%
Bookings $1.9B 14%
Segment margin 15.1% 100 bps
Adj. seg. margin (b) 15.3% 120 bps
Organic Rev. (c) 9%
Net Acq. Growth (d) 7%
Cash flow from Ops. $268M 16%
FCF (e) $214M 14%
(c) Change in revenue from businesses owned over 12 months, excluding FX impact
(d) Change in revenue from acquisitions, less revenue from dispositions
2017
(a) Excludes Warn disposition-related costs and Wellsite separation costs totaling $0.02 EPS
(b) Excludes Warn disposition-related costs of $3 million, included in segment results
4
Revenue
Q3 2017
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Dover
Organic 7% 5% 2% 31% 9%
Acquisitions 8% 30% - - 10%
Dispositions -3% - -6% - -3%
Currency 1% 1% 1% - 1%
Total 13% 36% -3% 32% 17%
Note: Totals may be impacted due to rounding
5
Engineered Systems
Organic revenue growth of 7%
– Printing & Identification driven
by strong digital printing
markets and solid growth in
marking & coding
– Industrial’s growth was broad-
based with particular strength
in waste handling
Margin slightly below
expectations reflecting timing on
investments and modest
material cost inflation
Organic bookings growth is
broad-based
Book-to-bill of 0.98
5
Q3
2017
Q3
2016
%
Change
%
Organic
Revenue(a) $646 $571 13% 7%
Earnings $ 98 $ 97 1%
Adj. Earnings * $102 $ 97 5%
Margin 15.2% 17.0% -180 bps
Adj. Margin * 15.7% 17.0% -130 bps
Bookings(b) $635 $580 10% 3%
Revenue by End-Market
% of Q3
Revenue
Q3/Q3
Growth
Organic
Growth
Printing & Identification 42% 8% 4%
Industrial 58% 18% 9%
$ in millions
(a) Revenue increased 13% overall, reflecting organic growth of 7%,
acquisition growth of 8%, and a favorable 1% impact from FX, partially offset
by a 3% impact from dispositions
(b) Bookings growth of 10% reflects organic growth of 3%, acquisition growth
of 9%, and a favorable 1% impact from FX, partially offset by a 3% impact from
dispositions
Excludes $3M of costs related to pending
Warn disposition
*
6
Fluids
Revenue growth driven by
acquisitions and 5% organic
growth
Return to organic revenue
growth driven by:
– Solid retail fueling,
industrial pump and
hygienic & pharma markets
– Transport markets remain
weak
Margin primarily impacted by
acquisitions
– Sequentially up 220 basis
points, supported by retail
fueling integration
Bookings growth reflects
broad-based activity
Book-to-bill at 1.02
6
$ in millions
Revenue by End-Market
% of Q3
Revenue
Q3/Q3
Growth
Organic
Growth
Fueling & Transport 59% 61% 1%
Pumps 30% 12% 9%
Hygienic & Pharma 11% 12% 12%
Q3
2017
Q3
2016
%
Change
%
Organic
Revenue $563 $413 36% 5%
Earnings $ 87 $ 66 32%
Margin 15.5% 16.0% -50 bps
Bookings $577 $414 39% 10%
7
Refrigeration & Food Equipment
Organic revenue growth
reflects strong Refrigeration
activity
– Solid results in retail
refrigeration
– Within Food Equipment,
continued softness in
commercial cooking
equipment
Margin performance reflects
improved productivity and
volume leverage in retail
refrigeration
Organic bookings decline
driven by soft retail
refrigeration order activity
Book-to-bill at 0.82
7
$ in millions
Revenue by End-Market
% of Q3
Revenue
Q3/Q3
Growth
Organic
Growth
Refrigeration 85% 4% 4%
Food Equipment(c) 15% -29% -2%
(a) Revenue decline of 3% reflects organic growth of 2% and a favorable 1%
impact from FX, offset by a 6% impact from dispositions
(b) Bookings decline of 17% reflects an organic decline of 11% and a 6%
impact from dispositions
Q3
2017
Q3
2016
%
Change
%
Organic
Revenue(a) $439 $451 -3% 2%
Earnings $ 65 $ 64 2%
Margin 14.9% 14.2% 70 bps
Bookings(b) $358 $429 -17% -11%
(c) Revenue decline of 29% reflects an organic decline of 2% and a 27% impact
from dispositions
8
Energy
Organic revenue growth of
31%
– Drilling & Production growth
driven by continued
improvement in U.S. rig
count and increased well
completions
– Bearings & Compression
growth driven by improved
OEM build rates and strong
service activity
– Automation growth reflects
improved customer capex
spending
Margin of 14.5% reflects
significantly higher volume and
strong conversion
Bookings growth is broad-
based
Book-to-bill at 1.03
8
$ in millions
Q3
2017
Q3
2016
%
Change
%
Organic
Revenue $359 $273 32% 31%
Earnings $ 52 $ 13 291%
Margin 14.5% 4.9% 960 bps
Bookings $368 $271 36% 36%
Revenue by End-Market
% of Q3
Revenue
Q3/Q3
Growth
Organic
Growth
Drilling & Production 68% 38% 39%
Bearings & Compression 21% 9% 9%
Automation 11% 45% 45%
9
Q3 2017 Overview
9
Q3 2017
Net Interest Expense $34 million
Corporate Expense $32 million, includes Wellsite separation costs
of $2 million
Effective Tax Rate Q3 rate was 24.6%, reflecting the negative
impact of geographic mix, more than offset by
discrete tax benefits
Capex $60 million
Share Repurchases No activity
10
FY 2017F Updated Guidance
Corporate expense: ≈ $133 million
Net interest expense: ≈ $134 million
Q4 tax rate: ≈ 28%
Capital expenditures: ≈ 2.4% of revenue
FY free cash flow: ≈ 10% - 11% of revenue or 130% - 140%
net income*
2017F
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Organic rev. 3% - 4% 2% - 3% 2% - 3% 26% - 27% 6% - 7%
Acquisitions ≈ 8% ≈ 31% - - ≈ 10%
Dispositions (3%) - (5%) - (2%)
Currency (1%) (1%) - - -
Total revenue 7% - 8% 32% - 33% (3% - 2%) 26% - 27% 14% - 15%
* 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: 1.31 - 1.35
– Compensation & investment: (0.18 - 0.16)
– Interest / Corp. / Tax rate / Shares / Other (net): (0.16 - 0.14)
– Net benefits of dispositions(4): 0.34
– Wellsite separation costs(5): (0.01)
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, and disposition-related
costs of $0.01 incurred in Q3 2017 related to the planned sale of Warn Industries consumer and industrial winch business
(5) Includes $0.01 incurred in Q3 2017