Attached files
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| EX-99.1 - EXHIBIT 99.1 - DOVER Corp | a201804278-kexhibit991.htm |
| 8-K - 8-K - DOVER Corp | a201804278-k.htm |
Earnings Conference Call
First Quarter 2018
April 27, 2018 – 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/A for 2017, 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. Dover provides adjusted EPS excluding after-
tax acquisition-related amortization. The Company believes reporting adjusted EPS on this basis better
reflects its core operating results, offers more transparency and facilitates easier comparability with
peer companies. 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.
Guidance for 2018 revenue and adjusted EPS is presented on a pro forma basis, which excludes the
2018 operating results of Dover’s upstream energy businesses. These businesses (Apergy
Corporation) will be spun off as a public company on May 9, 2018.
2
3
Revenue $1.9B 6%
EPS $0.84 -23%
Adjusted EPS (a) $1.16 26%
Bookings $2.1B 4%
Segment margin 12.3% -440 bps
Adj. seg. margin (b) 12.5% 70 bps
Organic Rev. (c) 4%
Net Acq. Growth (d) -2%
Cash flow from Ops. $35M -55%
Adjusted FCF (e) ($3M) -107%
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
Q1 Q2 Q3 Q4 Q1
Earnings per share Adj. EPS*
Q1 2018 Performance
Earnings Per Share
Q1 Q1/Q1
* Excludes net gains on dispositions of $0.39 in Q1 2017, and $0.70 in Q4 2017,
$0.32 net gain from enactment of Tax Cuts and Jobs Act in Q4 2017, $0.03 product
recall reversal in Q4 2017, acquisition-related amortization costs of $0.22 in Q1
2017, $0.22 in Q2 2017, $0.21 in Q3 2017, $0.21 in Q4 2017 and $0.24 in Q1 2018.
Apergy separation costs of $0.01 in Q3 2017, $0.05 in Q4 2017 and $0.06 in Q1 2018,
Warn disposition related costs of $0.01 in Q3 2017 and $0.01 in Q4 2017, and
rightsizing and other related costs of $0.25 in Q4 2017 and $0.02 in Q1 2018.
(e) See Press Release for adjusted free cash flow reconciliation
3
Quarterly Comments
2017
Revenue growth driven by Engineered Systems and Energy plus impact
of FX; solid growth in U.S., Europe and China
Strong growth in waste handling, digital printing, pumps, heat exchanger
and upstream energy businesses and solid growth in the majority of our
other industrial businesses, offsets tough comps in retail fueling and soft
market conditions and tough comps in retail refrigeration
Adjusted segment margin improvement driven by volume leverage
Bookings growth reflects organic increases in Engineered Systems,
Fluids and Energy
Book-to-bill at 1.10
(c) Change in revenue from businesses owned over 12 months, excluding FX impact
(d) Change in revenue from acquisitions, less revenue from dispositions
2018
(a) Excludes acquisition-related amortization costs of $0.24, Apergy separation costs of $0.06, and rightsizing and other
related costs of $0.02
(b) Excludes rightsizing costs of $3M in Q1 2018 and a gain on disposition of $88M in Q1 2017
4
Revenue
Q1 2018
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Energy
Total
Dover
Organic 8% - -7% 17% 4%
Acquisitions - 1% 1% - 1%
Dispositions -8% - -1% - -3%
Currency 6% 4% 2% 1% 4%
Total 6% 5% -5% 18% 6%
Note: Columns may not sum due to rounding
5
Engineered Systems
Organic revenue growth of 8%
– Printing & Identification’s
solid growth led by ongoing
conversion to digital printing
technology and solid
marking & coding markets
– Industrial’s growth is broad-
based with particularly
strong shipments of waste
handling equipment
Adjusted margin reflects solid
conversion on higher volume
Organic bookings growth is
broad-based
Book-to-bill of 1.11
5
Q1
2018
Q1
2017
%
Change
%
Organic
Revenue(a) $647 $608 6% 8%
Earnings $ 98 $174 -44%
Margin 15.1% 28.7% NM
Adj. Earnings * $ 99 $ 86 15%
Adj. Margin * 15.3% 14.2% 110 bps
Bookings(b) $720 $676 6% 8%
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Printing & Identification 44% 13% 4%
Industrial 56% 2% 10%
$ in millions
(a) Revenue increased 6% overall, reflecting organic growth of 8% and a favorable 6% impact from FX, partially offset by a 8%
impact from dispositions
(b) Bookings growth of 6% reflects organic growth of 8%, acquisition growth of 1%, and a favorable 4% impact from FX, partially
offset by a 7% impact from dispositions
* Excludes $1M of rightsizing costs in Q1 2018 and an $88M gain on disposition in Q1 2017
6
Fluids
Organic revenue is flat
– Pumps growth driven by
industrial markets
– Pharma markets remain
very strong
– Solid international retail
fueling activity, offset by
expected tough comps in
US EMV activity and soft
transport markets
Adjusted margin impacted by
temporary inefficiencies
related to factory consolidation
and supply-chain disruptions
Bookings growth is broad-
based
Book-to-bill at 1.13
6
$ in millions
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Fueling & Transport 58% 1% -3%
Pumps 30% 12% 3%
Hygienic & Pharma 12% 11% 8%
Q1
2018
Q1
2018
%
Change
%
Organic
Revenue $553 $525 5% Flat
Earnings $ 55 $ 53 4%
Margin 9.9% 10.0% -10 bps
Adj. Earnings * $ 56 $ 53 7%
Adj. Margin * 10.2% 10.0% 20 bps
Bookings $625 $566 11% 6%
* Excludes $2M in rightsizing costs in Q1 2018
7
Refrigeration & Food Equipment
Organic revenue decline
reflects tough comps and
weak market conditions in
retail refrigeration
– Within Refrigeration, heat
exchanger business
performing well
Margin reflects reduced
volume
Organic bookings decline
primarily reflects soft retail
refrigeration markets and
order timing in can-shaping
equipment
Book-to-bill at 1.10
7
$ in millions
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Refrigeration 82% -7% -8%
Food Equipment 18% 3% -1%
(a) Flat revenue reflects organic decline of 7% a favorable 2% impact from FX, and a neutral impact from net acquisitions
(b) Bookings decline of 15% reflects an organic decline of 14% and a 3% impact from dispositions, partially offset by 2%
benefit from FX
Q1
2018
Q1
2017
%
Change
%
Organic
Revenue(a) $338 $356 -5% -7%
Earnings $ 29 $34 -13%
Margin 8.6% 9.4% -80 bps
Bookings(b) $373 $439 -15% -14%
8
Energy
Strong organic revenue growth
continues:
– Drilling & Production driven
by continued improvement
in U.S. rig count and
increased well completions
– Automation driven by
improved customer capex
spending
– Industrial winch business
remains solid
Margin reflects solid
conversion on higher volume
Bookings growth is broad-
based
Book-to-bill at 1.03
8
$ in millions
Q1
2018
Q1
2017
%
Change
%
Organic
Revenue $384 $324 18% 17%
Earnings $ 55 $ 42 31%
Margin 14.2% 12.9% 130 bps
Bookings $396 $348 14% 13%
Revenue by End-Market
% of Q1
Revenue
Q1/Q1
Growth
Organic
Growth
Drilling & Production 70% 24% 23%
Bearings & Compression 19% 3% 1%
Automation 11% 16% 16%
9
Q1 2018 Overview
9
Q1 2018
Net Interest Expense $34 million
Corporate Expense $42 million, includes separation costs of $12 million
and rightsizing
Effective Tax Rate (“ETR”) ETR was 22.6%, excluding discrete tax benefits
Capex $58 million
Share Repurchases 441K shares for $45 million
10
Updated FY 2018F Guidance - Pro forma - Excluding Apergy
Corporate expense: ≈ $129 million
Net interest expense: ≈ $125 million
Tax rate: ≈ 22%
Capital expenditures: ≈ 2.4% of revenue
Adj. free cash flow: ≈ 10% of revenue
2018
Engineered
Systems
Fluids
Refrigeration
& Food Equip
Total
Organic revenue 4% - 5% 4% - 5% 0% - 2% 3% - 4%
Acquisitions - 1% 1% 1%
Dispositions (5%) - (3%) (3%)
Currency 4% 2% 1% 3%
Total revenue 3% - 4% 7% - 8% (1%) - 1% 4% - 5%
Adjusted EPS: $4.70 - $4.85*
* Adjusted for acquisition-related amortization and rightsizing costs. See exhibit on page 13 of this presentation for a bridge from prior adjusted EPS guidance to current pro forma adjusted EPS guidance
12
Appendix
13
Updated Guide (including Apergy) - 2018F EPS Continuing Ops – GAAP: $4.82 - $4.97
– Add back 2018F rightsizing costs (1): 0.05
– Add back acquisition-related amortization (2): 0.95
Updated Guide (including Apergy) - 2018F Adjusted EPS – Continuing Ops: $5.82 - $5.97
– Less 2018F acquisition-related amortization related to Apergy (4): (0.23)
– Less 2018F Apergy earnings: (0.94) (0.94)
– Less 2018 Q1 2018 Apergy separation costs (5): (0.06)
– Incremental 2018 share repurchases (6): 0.05 0.05
Updated Guide – Pro forma 2018F EPS Continuing Ops – GAAP: $3.87 – $4.02
Updated Guide – Pro forma 2018F Adjusted EPS Continuing Ops: $4.70 – $4.85
Updated Pro forma 2018F EPS guidance – Excluding Apergy
(2) Includes acquisition-related intangible amortization and inventory step-up amortization totaling $149 million, on an after tax basis
(5) Includes $0.06 or $12 million of Apergy-related separation costs
(1) Includes $11 million of rightsizing and other costs
Note: Columns may not sum due to rounding
(6) Includes $0.05 benefit from incremental share repurchases not in previous guide
GAAP Adjusted
(4) Includes acquisition-related intangible amortization and inventory step-up amortization totaling $38 million, on an after tax basis
(3)
(3) Comparable to Dover’s prior adjusted EPS guidance provided 1/30/18 of $5.73 to $5.93
(7)
(7) Does not include Q2 2018 Apergy separation costs estimated to be in the range of $33 to $35 million