Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DOVER Corp | a201301248-k.htm |
| EX-99.2 - EX-99.2 - DOVER Corp | a201301248kexhibit992.htm |
Exhibit 99.1
CONTACT: | ||
Paul Goldberg | ||
Vice President - Investor Relations | ||
(212) 922-1640 | ||
DOVER REPORTS FOURTH QUARTER AND FULL YEAR 2012 RESULTS; REAFFIRMS 2013 GUIDANCE
• | Reports quarterly revenue of $2.0 billion, an increase of 6% over the prior year |
• | Delivers quarterly diluted earnings per share from continuing operations of $1.16, an increase of 10% over last year |
• | Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.09, excluding tax benefits of $0.07, up 7% from an adjusted prior year |
• | Reaffirms 2013 full year revenue growth of 7% to 9% and diluted earnings per share from continuing operations in the range of $5.05 to $5.35 |
Downers Grove, Illinois, January 24, 2013 — Dover (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2012, revenue was $2.0 billion, an increase of 6% over the prior year period. The revenue increase was driven by organic growth of 2% and a 5% increase from acquisitions, offset in part by a 1% unfavorable impact from foreign exchange. Earnings from continuing operations were $208.2 million, or $1.16 diluted earnings per share (“EPS”), compared to $197.3 million, or $1.05 EPS, in the prior year period, representing increases in earnings from continuing operations and EPS of 6% and 10%, respectively. Excluding the impact of tax benefits of $0.07 EPS recognized in the current quarter and $0.03 EPS recognized in the prior year period, adjusted EPS from continuing operations for the fourth quarter of 2012 was $1.09, reflecting an increase of 7% over an adjusted EPS of $1.02 in the prior year period.
Revenue for the year ended December 31, 2012 was $8.1 billion, an increase of 10% over the prior year, reflecting organic growth of 5%, a 6% increase from acquisitions and a 1% unfavorable impact from foreign exchange. Earnings from continuing operations for the year ended December 31, 2012 were $833.1 million, or $4.53 EPS, compared to $773.2 million, or $4.09 EPS in the prior year period, representing an increase in earnings from continuing operations of 8% and an increase in EPS of 11%. Excluding the impact of tax benefits of $0.09 EPS in the current year and $0.22 EPS in the prior year, adjusted EPS from continuing operations for the year ended December 31, 2012 was $4.44, an increase of 15% over an adjusted EPS of $3.87 in the prior year.
Commenting on the fourth quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, “I am pleased with our fourth quarter results as all our segments recorded organic growth, and the majority of our end-markets continued to show strength in orders, despite uncertain economic conditions. Within Communication Technologies, we saw the continuation of a strong smart phone market and we achieved improved sequential performance at Sound Solutions. Our Energy segment demonstrated its resiliency by posting modest organic growth despite a lower North American rig count. Engineered Systems continued to see a very active refrigeration and food equipment market, while Printing & Identification's fast moving consumer goods market continued to expand. We also closed several acquisitions in the quarter, most notably
Anthony, which will strengthen our refrigeration product offering and expand our markets and channels.”
“For the year, we generated nearly $1 billion in free cash flow, supported by strong cash conversion in the fourth quarter. Our solid cash flow is a key element in the continued execution of our capital allocation strategy. Specifically, we made significant internal and acquisition investments in our five key growth spaces, we returned cash in the form of expanded dividends and began execution on our $1 billion share repurchase program announced in November.”
“Looking ahead, our full year view of 2013 is unchanged from our December 10, 2012 investor day guidance. We expect full year organic growth of 3% to 5% complemented by acquisition growth of 4%, resulting in revenue growth of 7% to 9%. The benefits of leverage on volume coupled with a lower share count from our repurchase program will help us deliver solid earnings growth. Accordingly, we are reaffirming full year diluted EPS from continuing operations in the range of $5.05 - $5.35.”
Net earnings for the fourth quarter of 2012 were $159.9 million or $0.89 EPS, including a net loss from discontinued operations of $48.4 million, or $0.27 EPS, compared to net earnings of $278.3 million, or $1.49 EPS, for the same period of 2011, which included net income from discontinued operations of $81.0 million, or $0.43 EPS. As previously announced, two non-core businesses serving the electronic assembly and test markets were reclassified to discontinued operations during the fourth quarter, with the intent to divest these businesses in 2013. In connection with the plan to divest, a goodwill impairment charge of $51.9 million, net of tax, or $0.29 EPS was recognized, which is reflected within discontinued operations in the fourth quarter and full year periods. Net earnings for the year ended December 31, 2012 were $811.1 million, or $4.41 EPS, including a net loss from discontinued operations of $22.0 million, or $0.12 EPS, compared to net earnings of $895.2 million, or $4.74 EPS for the same period of 2011, which included net income from discontinued operations of $122.1 million or $0.65 EPS.
Dover will host a webcast of its fourth quarter 2012 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, January 24, 2013. The webcast can be accessed on the Dover website at www.dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover’s fourth quarter results and its operating segments can also be found on the Company’s website.
About Dover:
Dover is a diversified global manufacturer with annual revenues of over $8 billion. For over 50 years, Dover has been delivering outstanding products and services that reflect its market leadership and commitment to operational and technical excellence. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Dover focuses on innovative equipment and components, specialty systems and support services through its four major operating segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Headquartered in Downers Grove, Illinois, Dover employs 35,000 people worldwide. Dover is traded on the New York Stock Exchange under “DOV.” Additional information is available on our website at www.dovercorporation.com.
Forward-Looking Statement:
This press release contains “forward-looking” statements within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover companies operate and the U.S. and global economies. Statements in this press release that are not historical may be indicated by words or phrases such as “anticipates,” “expects,” “believes,” “indicates,” “suggests,” “will,” “plans,” “supports,” “projects,” “should,” “would,” “could,” “hope,” “forecast” and “management is of the opinion,” use of future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, uncertainties in the credit and capital markets, interest rates, currency exchange rates, the world economy and sovereign credit, especially in Europe; political events and possible future terrorist threats that could impact countries where Dover does business or the worldwide economy; the impact of natural disasters and their effect on global supply chains and energy markets; increases in the cost of raw materials; the Company's ability to achieve expected savings from integration, synergy and other cost-control initiatives; the ability to identify and successfully consummate value-adding acquisition opportunities; increased competition and pricing pressures in the markets served by Dover's operating companies; the ability of Dover's companies to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; the impact of loss of a single-source manufacturing facility; changes in customer demand; a downgrade in Dover's credit ratings; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; domestic and foreign governmental and public policy changes including environmental regulations, tax policies, export subsidy programs, R&E credits and other similar programs; unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; and the cyclical nature of some of Dover's companies. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained in this press release. Dover undertakes no obligation to update any forward-looking statement.
INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2012
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenue | $ | 2,013,831 | $ | 1,890,962 | $ | 8,104,339 | $ | 7,369,154 | |||||||
Cost of goods and services | 1,240,087 | 1,172,629 | 4,997,274 | 4,524,351 | |||||||||||
Gross profit | 773,744 | 718,333 | 3,107,065 | 2,844,803 | |||||||||||
Selling and administrative expenses | 469,668 | 434,732 | 1,841,688 | 1,720,954 | |||||||||||
Operating earnings | 304,076 | 283,601 | 1,265,377 | 1,123,849 | |||||||||||
Interest expense, net | 30,996 | 29,057 | 121,141 | 115,525 | |||||||||||
Other expense (income), net | 809 | (3,265 | ) | 6,665 | (1,938 | ) | |||||||||
Earnings before provision for income taxes and discontinued operations | 272,271 | 257,809 | 1,137,571 | 1,010,262 | |||||||||||
Provision for income taxes | 64,047 | 60,542 | 304,452 | 237,076 | |||||||||||
Earnings from continuing operations | 208,224 | 197,267 | 833,119 | 773,186 | |||||||||||
Earnings (loss) from discontinued operations, net (1) | (48,364 | ) | 81,022 | (22,049 | ) | 122,057 | |||||||||
Net earnings | $ | 159,860 | $ | 278,289 | $ | 811,070 | $ | 895,243 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.17 | $ | 1.07 | $ | 4.59 | $ | 4.16 | |||||||
Earnings (loss) from discontinued operations, net (1) | (0.27 | ) | 0.44 | (0.12 | ) | 0.66 | |||||||||
Net earnings | 0.90 | 1.51 | 4.47 | 4.82 | |||||||||||
Weighted average shares outstanding | 177,257 | 184,686 | 181,551 | 185,882 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 1.16 | $ | 1.05 | $ | 4.53 | $ | 4.09 | |||||||
Earnings (loss) from discontinued operations, net (1) | (0.27 | ) | 0.43 | (0.12 | ) | 0.65 | |||||||||
Net earnings | 0.89 | 1.49 | 4.41 | 4.74 | |||||||||||
Weighted average shares outstanding | 179,365 | 187,208 | 183,993 | 188,887 | |||||||||||
Dividends paid per common share | $ | 0.35 | $ | 0.315 | $ | 1.33 | $ | 1.18 | |||||||
(1) | For the three months and year ended December 31, 2012, the loss from discontinued operations, net reflects a goodwill impairment charge of approximately $64 million ($52 million, net of tax) recognized in connection with the reclassification of Everett Charles Technologies and DEK to discontinued operations. |
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2012 | 2011 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2012 | Q1 | Q2 | Q3 | Q4 | FY 2011 | ||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||
Communication Technologies | $ | 357,575 | $ | 361,689 | $ | 396,470 | $ | 400,851 | $ | 1,516,585 | $ | 269,582 | $ | 288,843 | $ | 405,357 | $ | 396,295 | $ | 1,360,077 | |||||||||||
Energy | 531,570 | 538,786 | 562,263 | 539,985 | 2,172,604 | 425,424 | 454,327 | 510,608 | 510,390 | 1,900,749 | |||||||||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Fluid Solutions | 180,364 | 211,974 | 218,324 | 206,500 | 817,162 | 163,196 | 178,031 | 173,804 | 162,590 | 677,621 | |||||||||||||||||||||
Refrigeration & Industrial | 642,213 | 674,501 | 674,116 | 613,012 | 2,603,842 | 560,453 | 645,573 | 649,768 | 568,844 | 2,424,638 | |||||||||||||||||||||
Eliminations | (453 | ) | (352 | ) | (319 | ) | (336 | ) | (1,460 | ) | (382 | ) | (424 | ) | (431 | ) | (287 | ) | (1,524 | ) | |||||||||||
822,124 | 886,123 | 892,121 | 819,176 | 3,419,544 | 723,267 | 823,180 | 823,141 | 731,147 | 3,100,735 | ||||||||||||||||||||||
Printing & Identification | 243,570 | 251,875 | 246,945 | 254,141 | 996,531 | 240,775 | 253,226 | 260,546 | 253,689 | 1,008,236 | |||||||||||||||||||||
Intra-segment eliminations | (225 | ) | (184 | ) | (194 | ) | (322 | ) | (925 | ) | — | 18 | (102 | ) | (559 | ) | (643 | ) | |||||||||||||
Total consolidated revenue | $ | 1,954,614 | $ | 2,038,289 | $ | 2,097,605 | $ | 2,013,831 | $ | 8,104,339 | $ | 1,659,048 | $ | 1,819,594 | $ | 1,999,550 | $ | 1,890,962 | $ | 7,369,154 | |||||||||||
NET EARNINGS | |||||||||||||||||||||||||||||||
Segment Earnings: | |||||||||||||||||||||||||||||||
Communication Technologies | $ | 46,556 | $ | 50,322 | $ | 63,706 | $ | 58,376 | $ | 218,960 | $ | 47,325 | $ | 54,527 | $ | 53,433 | $ | 71,097 | $ | 226,382 | |||||||||||
Energy | 132,115 | 133,936 | 139,038 | 133,561 | 538,650 | 93,051 | 110,447 | 125,268 | 121,871 | 450,637 | |||||||||||||||||||||
Engineered Systems | 122,092 | 133,808 | 144,245 | 101,807 | 501,952 | 98,235 | 128,570 | 125,529 | 92,852 | 445,186 | |||||||||||||||||||||
Printing & Identification | 26,089 | 28,918 | 39,502 | 40,650 | 135,159 | 31,985 | 35,294 | 40,843 | 33,439 | 141,561 | |||||||||||||||||||||
Total Segments | 326,852 | 346,984 | 386,491 | 334,394 | 1,394,721 | 270,596 | 328,838 | 345,073 | 319,259 | 1,263,766 | |||||||||||||||||||||
Corporate expense / other | 36,546 | 36,335 | 32,001 | 31,127 | 136,009 | 36,112 | 35,391 | 34,083 | 32,393 | 137,979 | |||||||||||||||||||||
Net interest expense | 30,031 | 29,715 | 30,399 | 30,996 | 121,141 | 28,319 | 28,093 | 30,056 | 29,057 | 115,525 | |||||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 260,275 | 280,934 | 324,091 | 272,271 | 1,137,571 | 206,165 | 265,354 | 280,934 | 257,809 | 1,010,262 | |||||||||||||||||||||
Provision for income taxes | 73,866 | 75,778 | 90,761 | 64,047 | 304,452 | 51,020 | 52,095 | 73,419 | 60,542 | 237,076 | |||||||||||||||||||||
Earnings from continuing operations | 186,409 | 205,156 | 233,330 | 208,224 | 833,119 | 155,145 | 213,259 | 207,515 | 197,267 | 773,186 | |||||||||||||||||||||
Earnings (loss) from discontinued operations, net | 9,654 | 8,945 | 7,716 | (48,364 | ) | (22,049 | ) | 39,760 | 36,510 | (35,235 | ) | 81,022 | 122,057 | ||||||||||||||||||
Net earnings | $ | 196,063 | $ | 214,101 | $ | 241,046 | $ | 159,860 | $ | 811,070 | $ | 194,905 | $ | 249,769 | $ | 172,280 | 278,289 | $ | 895,243 | ||||||||||||
SEGMENT OPERATING MARGIN | |||||||||||||||||||||||||||||||
Communication Technologies | 13.0 | % | 13.9 | % | 16.1 | % | 14.6 | % | 14.4 | % | 17.6 | % | 18.9 | % | 13.2 | % | 17.9 | % | 16.6 | % | |||||||||||
Energy | 24.9 | % | 24.9 | % | 24.7 | % | 24.7 | % | 24.8 | % | 21.9 | % | 24.3 | % | 24.5 | % | 23.9 | % | 23.7 | % | |||||||||||
Engineered Systems | 14.9 | % | 15.1 | % | 16.2 | % | 12.4 | % | 14.7 | % | 13.6 | % | 15.6 | % | 15.2 | % | 12.7 | % | 14.4 | % | |||||||||||
Printing & Identification | 10.7 | % | 11.5 | % | 16.0 | % | 16.0 | % | 13.6 | % | 13.3 | % | 13.9 | % | 15.7 | % | 13.2 | % | 14.0 | % | |||||||||||
Total Segment | 16.7 | % | 17.0 | % | 18.4 | % | 16.6 | % | 17.2 | % | 16.3 | % | 18.1 | % | 17.3 | % | 16.9 | % | 17.1 | % | |||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||||||||||||||
Communication Technologies | $ | 31,513 | $ | 32,828 | $ | 32,997 | $ | 35,281 | $ | 132,619 | $ | 18,685 | $ | 18,533 | $ | 34,360 | $ | 30,261 | $ | 101,839 | |||||||||||
Energy | 21,184 | 23,533 | 24,639 | 25,721 | 95,077 | 18,573 | 18,765 | 19,399 | 21,082 | 77,819 | |||||||||||||||||||||
Engineered Systems | 19,582 | 23,913 | 23,060 | 27,066 | 93,621 | 18,415 | 18,816 | 18,332 | 19,213 | 74,776 | |||||||||||||||||||||
Printing & Identification | 8,331 | 8,496 | 8,777 | 7,998 | 33,602 | 8,163 | 8,476 | 8,364 | 8,479 | 33,482 | |||||||||||||||||||||
Corporate | 700 | 765 | 842 | 359 | 2,666 | 586 | 626 | 636 | 713 | 2,561 | |||||||||||||||||||||
$ | 81,310 | $ | 89,535 | $ | 90,315 | $ | 96,425 | $ | 357,585 | $ | 64,422 | $ | 65,216 | $ | 81,091 | $ | 79,748 | $ | 290,477 | ||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2012 | 2011 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2012 | Q1 | Q2 | Q3 | Q4 | FY 2011 | ||||||||||||||||||||||
BOOKINGS | |||||||||||||||||||||||||||||||
Communication Technologies | $ | 356,386 | $ | 383,135 | $ | 412,092 | $ | 352,629 | $ | 1,504,242 | $ | 274,611 | $ | 309,734 | $ | 410,616 | $ | 349,579 | $ | 1,344,540 | |||||||||||
Energy | 585,775 | 530,352 | 526,824 | 550,091 | 2,193,042 | 495,125 | 472,543 | 498,212 | 519,525 | 1,985,405 | |||||||||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Fluid Solutions | 184,711 | 204,139 | 197,767 | 209,872 | 796,489 | 173,626 | 175,539 | 174,772 | 158,895 | 682,832 | |||||||||||||||||||||
Refrigeration & Industrial | 711,911 | 666,223 | 600,065 | 606,931 | 2,585,130 | 660,449 | 623,929 | 602,488 | 625,840 | 2,512,706 | |||||||||||||||||||||
Eliminations | (408 | ) | (376 | ) | (258 | ) | (399 | ) | (1,441 | ) | (733 | ) | (884 | ) | 179 | (1,378 | ) | (2,816 | ) | ||||||||||||
896,214 | 869,986 | 797,574 | 816,404 | 3,380,178 | 833,342 | 798,584 | 777,439 | 783,357 | 3,192,722 | ||||||||||||||||||||||
Printing & Identification | 249,773 | 251,733 | 244,611 | 252,937 | 999,054 | 247,812 | 254,226 | 262,685 | 253,632 | 1,018,355 | |||||||||||||||||||||
Intra-segment eliminations | (609 | ) | (222 | ) | (760 | ) | (1,017 | ) | (2,608 | ) | (2,736 | ) | (3,370 | ) | (2,453 | ) | (3,153 | ) | (11,712 | ) | |||||||||||
Total consolidated bookings | $ | 2,087,539 | $ | 2,034,984 | $ | 1,980,341 | $ | 1,971,044 | $ | 8,073,908 | $ | 1,848,154 | $ | 1,831,717 | $ | 1,946,499 | $ | 1,902,940 | $ | 7,529,310 | |||||||||||
BACKLOG | |||||||||||||||||||||||||||||||
Communication Technologies | $ | 435,912 | $ | 457,624 | $ | 473,007 | $ | 424,144 | $ | 410,843 | $ | 431,558 | $ | 483,512 | $ | 437,320 | |||||||||||||||
Energy | 296,360 | 282,364 | 248,233 | 256,093 | 240,198 | 255,889 | 243,401 | 246,351 | |||||||||||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Fluid Solutions | 191,327 | 172,300 | 156,191 | 160,890 | 57,357 | 54,945 | 55,230 | 54,194 | |||||||||||||||||||||||
Refrigeration & Industrial | 598,910 | 586,824 | 515,285 | 516,559 | 544,995 | 523,011 | 469,876 | 528,118 | |||||||||||||||||||||||
Eliminations | (132 | ) | (155 | ) | (94 | ) | (157 | ) | (339 | ) | (526 | ) | (94 | ) | (177 | ) | |||||||||||||||
790,105 | 758,969 | 671,382 | 677,292 | 602,013 | 577,430 | 525,012 | 582,135 | ||||||||||||||||||||||||
Printing & Identification | 102,117 | 98,216 | 98,356 | 97,857 | 100,231 | 101,426 | 97,405 | 94,557 | |||||||||||||||||||||||
Intra-segment eliminations | (986 | ) | (647 | ) | (324 | ) | $ | (590 | ) | (704 | ) | (1,177 | ) | (890 | ) | (193 | ) | ||||||||||||||
Total consolidated backlog | $ | 1,623,508 | $ | 1,596,526 | $ | 1,490,654 | $ | 1,454,796 | $ | 1,352,581 | $ | 1,365,126 | $ | 1,348,440 | $ | 1,360,170 | |||||||||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
2012 | 2011 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2012 | Q1 | Q2 | Q3 | Q4 | FY 2011 | ||||||||||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.01 | $ | 1.12 | $ | 1.28 | $ | 1.17 | $ | 4.59 | $ | 0.83 | $ | 1.14 | $ | 1.12 | $ | 1.07 | $ | 4.16 | |||||||||||
Discontinued operations | 0.05 | 0.05 | 0.04 | (0.27 | ) | (0.12 | ) | 0.21 | 0.20 | (0.19 | ) | 0.44 | 0.66 | ||||||||||||||||||
Net earnings | 1.07 | 1.17 | 1.33 | 0.90 | 4.47 | 1.04 | 1.34 | 0.93 | 1.51 | 4.82 | |||||||||||||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.00 | $ | 1.10 | $ | 1.27 | $ | 1.16 | $ | 4.53 | $ | 0.82 | $ | 1.12 | $ | 1.10 | $ | 1.05 | $ | 4.09 | |||||||||||
Discontinued operations | 0.05 | 0.05 | 0.04 | (0.27 | ) | (0.12 | ) | 0.21 | 0.19 | (0.19 | ) | 0.43 | 0.65 | ||||||||||||||||||
Net earnings | 1.05 | 1.15 | 1.31 | 0.89 | 4.41 | 1.03 | 1.32 | 0.91 | 1.49 | 4.74 | |||||||||||||||||||||
Adjusted diluted earnings per common share (calculated below): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 1.01 | $ | 1.10 | $ | 1.25 | $ | 1.09 | $ | 4.44 | $ | 0.78 | $ | 0.99 | $ | 1.08 | $ | 1.02 | $ | 3.87 | |||||||||||
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows: | |||||||||||||||||||||||||||||||
Net earnings (loss): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 186,409 | $ | 205,156 | $ | 233,330 | $ | 208,224 | $ | 833,119 | $ | 155,145 | $ | 213,259 | $ | 207,515 | $ | 197,267 | $ | 773,186 | |||||||||||
Discontinued operations | 9,654 | 8,945 | 7,716 | (48,364 | ) | (22,049 | ) | 39,760 | 36,510 | (35,235 | ) | 81,022 | 122,057 | ||||||||||||||||||
Net earnings | 196,063 | 214,101 | 241,046 | 159,860 | 811,070 | 194,905 | 249,769 | 172,280 | 278,289 | 895,243 | |||||||||||||||||||||
Average shares outstanding: | |||||||||||||||||||||||||||||||
Basic | 183,737 | 183,494 | 181,763 | 177,257 | 181,551 | 186,659 | 186,443 | 185,770 | 184,686 | 185,882 | |||||||||||||||||||||
Diluted | 186,706 | 185,780 | 183,932 | 179,365 | 183,993 | 190,090 | 189,705 | 188,436 | 187,208 | 188,887 | |||||||||||||||||||||
Note: | |||||||||||||||||||||||||||||||
Earnings from continuing operations are adjusted by discrete and other tax items to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows: | |||||||||||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2012 | Q1 | Q2 | Q3 | Q4 | FY 2011 | ||||||||||||||||||||||
Adjusted earnings from continuing operations: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 186,409 | $ | 205,156 | $ | 233,330 | $ | 208,224 | $ | 833,119 | $ | 155,145 | $ | 213,259 | $ | 207,515 | $ | 197,267 | $ | 773,186 | |||||||||||
Gains (losses) from discrete and other tax items | (1,610 | ) | (372 | ) | 4,513 | 13,606 | 16,137 | 8,016 | 24,983 | 2,777 | 4,967 | 40,743 | |||||||||||||||||||
Adjusted earnings from continuing operations | $ | 188,019 | $ | 205,528 | $ | 228,817 | $ | 194,618 | $ | 816,982 | $ | 147,129 | $ | 188,276 | $ | 204,738 | $ | 192,300 | $ | 732,443 | |||||||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 1.00 | $ | 1.10 | $ | 1.27 | $ | 1.16 | $ | 4.53 | $ | 0.82 | $ | 1.12 | $ | 1.10 | $ | 1.05 | $ | 4.09 | |||||||||||
Gains (losses) from discrete and other tax items | (0.01 | ) | — | 0.02 | 0.07 | 0.09 | 0.04 | 0.13 | 0.02 | 0.03 | 0.22 | ||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 1.01 | $ | 1.10 | $ | 1.25 | $ | 1.09 | $ | 4.44 | $ | 0.78 | $ | 0.99 | $ | 1.08 | $ | 1.02 | $ | 3.87 | |||||||||||
* Per share data may not add due to rounding. | |||||||||||||||||||||||||||||||
DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)(in thousands)
December 31, 2012 | December 31, 2011 | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 800,076 | $ | 1,206,755 | |||
Receivables, net of allowances | 1,225,898 | 1,118,848 | |||||
Inventories, net | 872,841 | 733,807 | |||||
Deferred tax and other current assets | 129,029 | 188,768 | |||||
Property, plant and equipment, net | 1,167,052 | 970,703 | |||||
Goodwill | 4,094,650 | 3,506,975 | |||||
Intangible assets, net | 1,645,420 | 1,184,505 | |||||
Other assets | 111,432 | 103,331 | |||||
Assets of discontinued operations | 397,545 | 486,860 | |||||
Total assets | $ | 10,443,943 | $ | 9,500,552 | |||
Liabilities and Stockholders' Equity: | |||||||
Notes payable and current maturities of long-term debt | $ | 610,766 | $ | 1,022 | |||
Payables and accrued expenses | 1,375,862 | 1,148,500 | |||||
Deferred taxes and other noncurrent liabilities | 1,139,777 | 958,341 | |||||
Long-term debt | 2,189,350 | 2,186,230 | |||||
Liabilities of discontinued operations | 208,958 | 275,904 | |||||
Stockholders' equity | 4,919,230 | 4,930,555 | |||||
Total liabilities and stockholders' equity | $ | 10,443,943 | $ | 9,500,552 | |||
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)(in thousands)
Years Ended December 31, | |||||||
2012 | 2011 | ||||||
Operating activities: | |||||||
Net earnings | $ | 811,070 | $ | 895,243 | |||
Loss (gain) from discontinued operations, net | 22,049 | (122,057 | ) | ||||
Depreciation and amortization | 357,585 | 290,477 | |||||
Stock-based compensation | 30,884 | 25,130 | |||||
Contributions to employee benefit plans | (48,576 | ) | (63,567 | ) | |||
Net change in assets and liabilities | 88,148 | (76,362 | ) | ||||
Net cash provided by operating activities of continuing operations | 1,261,160 | 948,864 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (297,012 | ) | (262,676 | ) | |||
Acquisitions, including adjustment for prior year acquisition purchase price (net of cash and cash equivalents acquired) | (1,035,433 | ) | (1,382,217 | ) | |||
Proceeds from sale of short-term investments | — | 124,410 | |||||
Proceeds from the sale of businesses | — | 516,901 | |||||
Other | (13,443 | ) | (8,848 | ) | |||
Net cash used in investing activities of continuing operations | (1,345,888 | ) | (1,012,430 | ) | |||
Financing activities: | |||||||
Net increase in debt and notes payable | 603,918 | 371,315 | |||||
Purchase of common stock | (748,955 | ) | (242,488 | ) | |||
Proceeds from exercise of stock options and SARs, including tax benefits | 43,054 | 39,826 | |||||
Dividends to stockholders | (240,959 | ) | (219,154 | ) | |||
Net cash used in financing activities of continuing operations | (342,942 | ) | (50,501 | ) | |||
Net cash provided by discontinued operations | 4,879 | 117,311 | |||||
Effect of exchange rate changes on cash | 16,112 | 16,150 | |||||
Net (decrease) increase in cash and cash equivalents | (406,679 | ) | 19,394 | ||||
Cash and cash equivalents at beginning of period | 1,206,755 | 1,187,361 | |||||
Cash and cash equivalents at end of period | $ | 800,076 | $ | 1,206,755 | |||
DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)
2012 | 2011 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2012 | Q1 | Q2 | Q3 | Q4 | FY 2011 | ||||||||||||||||||||||
Cash flow from operating activities | $ | 161,327 | $ | 243,363 | $ | 285,811 | $ | 570,659 | $ | 1,261,160 | $ | 100,153 | $ | 195,250 | $ | 323,355 | $ | 330,106 | $ | 948,864 | |||||||||||
Less: Additions to property, plant and equipment | (68,249 | ) | (72,758 | ) | (67,842 | ) | (88,163 | ) | (297,012 | ) | (49,528 | ) | (71,106 | ) | (63,741 | ) | (78,301 | ) | (262,676 | ) | |||||||||||
Free cash flow | $ | 93,078 | $ | 170,605 | $ | 217,969 | $ | 482,496 | $ | 964,148 | $ | 50,625 | $ | 124,144 | $ | 259,614 | $ | 251,805 | $ | 686,188 | |||||||||||
Free cash flow as a percentage of earnings from continuing operations | 49.9 | % | 83.2 | % | 93.4 | % | 231.7 | % | 115.7 | % | 32.6 | % | 58.2 | % | 125.1 | % | 127.6 | % | 88.7 | % | |||||||||||
Free cash flow as a percentage of revenue | 4.8 | % | 8.4 | % | 10.4 | % | 24.0 | % | 11.9 | % | 3.1 | % | 6.8 | % | 13.0 | % | 13.3 | % | 9.3 | % | |||||||||||
ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2012
Acquisitions
During the fourth quarter of 2012, the Company completed four acquisitions, three in the Engineered Systems segment and one in the Energy segment. The fourth quarter acquisitions were largely funded with commercial paper borrowings. For the full year 2012, Dover made a total of seven acquisitions for consideration totaling $1.2 billion. This included the Engineered Systems' acquisitions of Maag Pump Systems in the first quarter and Anthony International in the fourth quarter.
Discontinued Operations
The Company did not dispose of any businesses in 2012. However, in the fourth quarter, the Company announced its intent to divest Everett Charles Technologies and DEK, two non-core businesses serving the electronic assembly and test markets. The results of operations and cash flows of these businesses have been reclassified to discontinued operations and the assets and liabilities of these businesses have been segregated within assets and liabilities of discontinued operations for all periods presented herein. In the fourth quarter of 2012, the Company recognized a goodwill impairment charge of $63.8 million ($51.9 million, net of tax) in connection with the intended divestiture. As a result, for the fourth quarter and full year periods of 2012, the Company generated net after-tax losses from discontinued operations of $0.27 diluted earnings per share ("EPS") and $0.12 EPS, respectively, reflecting the earnings from discontinued operations, offset by the fourth quarter goodwill impairment charge.
Tax Rate
The effective tax rate on continuing operations was 23.5% for the fourth quarters of 2012 and 2011. On a full year basis, the effective tax rates on continuing operations for 2012 and 2011 were 26.8% and 23.5%, respectively. The 2012 and 2011 rates were favorably impacted by discrete and other items, as shown in the reconciliation for quarterly earnings per share included herein. After adjusting for discrete and other items, the fourth quarter effective tax rates were 28.5% and 25.4% for 2012 for 2011, respectively, and the full year rates were 28.2% and 27.5% for 2012 and 2011, respectively. The higher rates for the quarter and full year of 2012 reflect the impact of a higher proportion of U.S. earnings, partly offset by lower effective tax rates in foreign jurisdictions.
Revenue Growth Factors
2012 | ||||||||||||||
Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||
Organic | 12.6 | % | 6.1 | % | 2.3 | % | 2.1 | % | 5.5 | % | ||||
Acquisitions | 5.9 | % | 7.8 | % | 4.8 | % | 4.8 | % | 5.8 | % | ||||
Currency translation | (0.7 | )% | (1.9 | )% | (2.2 | )% | (0.4 | )% | (1.3 | )% | ||||
17.8 | % | 12.0 | % | 4.9 | % | 6.5 | % | 10.0 | % | |||||
Free Cash Flow
The following table is a reconciliation of free cash flow (a non-GAAP measure) from cash flow provided by operating activities:
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Free Cash Flow (dollars in thousands) | |||||||||||||||
Cash flow provided by operating activities | $ | 570,659 | $ | 330,106 | $ | 1,261,160 | $ | 948,864 | |||||||
Less: Capital expenditures | (88,163 | ) | (78,301 | ) | (297,012 | ) | (262,676 | ) | |||||||
Free cash flow | $ | 482,496 | $ | 251,805 | $ | 964,148 | $ | 686,188 | |||||||
Free cash flow as a percentage of revenue | 24.0 | % | 13.3 | % | 11.9 | % | 9.3 | % | |||||||
Free cash flow as a percentage of earnings from continuing operations | 115.7 | % | 88.7 | % | |||||||||||
The full year increase in 2012 free cash flow reflects higher earnings from continuing operations before depreciation and amortization and a $129 million positive change in working capital year-over-year, offset in part by higher capital expenditures in 2012 necessary to fund expansion in the Company’s high-growth businesses.
Share Repurchases
During the year ended December 31, 2012, the Company purchased approximately 12.3 million shares of its common stock in the open market at an average price of $60.36 per share. The repurchases through November 1 were made pursuant to the Company's standing five-year authorization, which was renewed in May of 2012. At December 31, 2012, approximately 3.9 million shares remain authorized for repurchase under the current authorization, which expires in May of 2017. Repurchases subsequent to November 1 were made pursuant to an additional share repurchase program approved in November 2012, which authorized $1 billion for share repurchases over the next 12 to 18 months. At December 31, 2012, approximately $750 million remains available for repurchases under this program.
Capitalization
The following table provides a summary reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:
Net Debt to Net Capitalization Ratio (in thousands) | December 31, 2012 | December 31, 2011 | ||||||
Current maturities of long-term debt | $ | 3,266 | $ | 1,022 | ||||
Commercial paper | 607,500 | — | ||||||
Long-term debt | 2,189,350 | 2,186,230 | ||||||
Total debt | 2,800,116 | 2,187,252 | ||||||
Less: Cash and cash equivalents | (800,076 | ) | (1,206,755 | ) | ||||
Net debt | 2,000,040 | 980,497 | ||||||
Add: Stockholders' equity | 4,919,230 | 4,930,555 | ||||||
Net capitalization | $ | 6,919,270 | $ | 5,911,052 | ||||
Net debt to net capitalization | 28.9 | % | 16.6 | % | ||||
Non-GAAP Information:
These Investor Supplement tables contain non-GAAP measures of adjusted earnings from continuing operations used in calculating adjusted diluted earnings per common share, as management believes this information is useful to investors to better understand the company’s ongoing profitability and facilitates easier comparisons of the company’s profitability to prior and future periods and to its peers. The company has also disclosed herein a number of non-GAAP measures related to free cash flow and the ratio of net debt to net capitalization. Management believes these metrics are important measures of the company's operating performance and liquidity. Free cash flow information provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase common stock, while the net debt to net capitalization ratio is helpful in evaluating the company's capital structure and the amount of leverage employed.