Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DOVER Corp | a201601268-k.htm |
| EX-99.2 - EXHIBIT 99.2 - DOVER Corp | a20160126exhibit992.htm |
Exhibit 99.1
Investor Contact: | Media Contact: | |
Paul Goldberg | Adrian Sakowicz | |
Vice President - Investor Relations | Vice President - Communications | |
(212) 922-1640 | (630) 743-5039 | |
peg@dovercorp.com | asakowicz@dovercorp.com | |
DOVER REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS
AND REAFFIRMS 2016 EPS GUIDANCE
• | Reports quarterly revenue of $1.7 billion, a decrease of 14% from the prior year |
• | Delivers quarterly diluted earnings per share from continuing operations of $0.87, including $0.06 of discrete tax benefits |
• | Generates $274 million in free cash flow in the fourth quarter of 2015, and $795 million for the full year |
• | Adjusts full year 2016 revenue forecast to reflect weaker oil & gas markets; now expects full year organic revenue to decline 1% to 4%, one point lower than the previous forecast |
• | Reaffirms 2016 full year diluted earnings per share from continuing operations to be in the range of $3.85 to $4.05 |
Downers Grove, Illinois, January 26, 2016 — Dover (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2015, revenue was $1.7 billion, a decrease of 14% from the prior year. The decrease in revenue was driven by an organic revenue decline of 12% and an unfavorable impact from foreign exchange of 4%, partially offset by 2% growth from acquisitions. Earnings from continuing operations were $136.6 million, a decrease of 21% as compared to $171.8 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the fourth quarter ended December 31, 2015 were $0.87, compared to $1.03 EPS in the prior year period, representing a decrease of 16%. EPS from continuing operations for the fourth quarter of 2015 included discrete tax benefits of $0.06, compared to $0.02 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations for the fourth quarter of 2015 was $0.81, a decrease of 20% over an adjusted EPS of $1.01 in the prior year period. EPS for the fourth quarter ended December 31, 2015 and December 31, 2014 includes restructuring costs of $0.08 EPS and $0.16 EPS, respectively.
Revenue for the year ended December 31, 2015 was $7.0 billion, a decrease of 10% over the prior year, reflecting an organic revenue decline of 10% and an unfavorable impact from foreign exchange of 4%, offset by 4% growth from acquisitions. Earnings from continuing operations for the year ended December 31, 2015 were $595.9 million, a decrease of 23% as compared to $778.1 million for the prior year period. Diluted EPS for the year ended December 31, 2015 was $3.74, compared to $4.61 EPS in the prior year period, representing a decrease of 19%. EPS from continuing operations for the year ended December 31, 2015 included discrete tax benefits of $0.11, compared to $0.07 EPS in the prior year period. Excluding these items, adjusted EPS from continuing operations decreased 20% to $3.63 from an adjusted EPS of $4.54 in the prior year period. EPS for the year ended December 31, 2015 and 2014 includes restructuring costs of $0.25 EPS and $0.19 EPS, respectively.
Robert A. Livingston, Dover's President and Chief Executive Officer, said, "Fourth quarter and full year results continued to be impacted by tough business conditions, particularly in oil & gas markets. In this environment, we delivered fourth quarter adjusted EPS of $0.81, driven by solid execution, as our teams continued to pursue customer wins, cost actions and productivity initiatives.
“During 2015, we increased our efforts around operating efficiencies through our Dover Excellence program. One key element of this program focuses on free cash flow generation, which increased to $795 million for the year. This program also supports our ongoing investment in product innovation and customer expansion activities. Additionally, during the year we took multiple steps to right-size our businesses to reflect difficult market conditions, especially in our Energy segment. These initiatives will remain a focus as we move into 2016.
“Regarding 2016, we are reaffirming EPS to be in the range of $3.85 to $4.05. This guidance reflects a lower revenue forecast driven by weaker oil & gas markets, essentially offset by an improved tax rate. In total, our full-year revenue growth, on an adjusted basis, is now anticipated to be in the range of 1% to 4%, comprising an organic revenue decline of (4%) to (1%), one point below our prior forecast. Acquisition growth of 7% and a 2% impact from FX remain unchanged from our prior forecast.”
Net earnings for the fourth quarter ended December 31, 2015, were $141.8 million, or $0.91 EPS, which included earnings from discontinued operations of $5.3 million, compared to net earnings of $169.3 million, or $1.02 EPS, for the same period of 2014, which included a loss from discontinued operations of $2.5 million, or $0.02 EPS.
Net earnings for the year ended December 31, 2015, were $869.8 million, or $5.46 EPS, which included earnings from discontinued operations of $273.9 million, or $1.72 EPS, compared to net earnings of $775.2 million, or $4.59 EPS, for the same period of 2014, which included a loss from discontinued operations of $2.9 million, or $0.02 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.67 EPS, resulting from the disposition of two businesses held for sale.
Dover will host a webcast of its fourth quarter 2015 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, January 26, 2016. 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 approximately $7 billion. We deliver innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for 60 years, our team of 26,000 employees takes an ownership mindset, collaborating with customers to redefine what’s possible. Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under “DOV.” Additional information is available at www.dovercorporation.com.
Forward-Looking Statements:
This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, foreign exchange, changes in operations, acquisitions, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as “anticipates,” “expects,” “believes,” “suggests,” “will,” “plans,” “should,” “would,” “could,” and “forecast”, or the use of the 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, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover’s customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, tax policies, and export/import laws; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. 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 herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.
INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2015
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 1,694,600 | $ | 1,977,947 | $ | 6,956,311 | $ | 7,752,728 | |||||||
Cost of goods and services | 1,080,791 | 1,254,079 | 4,388,167 | 4,778,479 | |||||||||||
Gross profit | 613,809 | 723,868 | 2,568,144 | 2,974,249 | |||||||||||
Selling and administrative expenses | 414,365 | 460,377 | 1,647,382 | 1,758,765 | |||||||||||
Operating earnings | 199,444 | 263,491 | 920,762 | 1,215,484 | |||||||||||
Interest expense, net | 31,249 | 31,332 | 127,257 | 127,179 | |||||||||||
Other (income) expense, net | (1,295 | ) | 1,172 | (7,105 | ) | (5,902 | ) | ||||||||
Earnings before provision for income taxes and discontinued operations | 169,490 | 230,987 | 800,610 | 1,094,207 | |||||||||||
Provision for income taxes | 32,916 | 59,152 | 204,729 | 316,067 | |||||||||||
Earnings from continuing operations | 136,574 | 171,835 | 595,881 | 778,140 | |||||||||||
Earnings (loss) from discontinued operations, net | 5,251 | (2,541 | ) | 273,948 | (2,905 | ) | |||||||||
Net earnings | $ | 141,825 | $ | 169,294 | $ | 869,829 | $ | 775,235 | |||||||
Basic earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 0.88 | $ | 1.04 | $ | 3.78 | $ | 4.67 | |||||||
Earnings (loss) from discontinued operations, net | 0.03 | (0.02 | ) | 1.74 | (0.02 | ) | |||||||||
Net earnings | 0.92 | 1.03 | 5.52 | 4.65 | |||||||||||
Weighted average shares outstanding | 154,986 | 164,589 | 157,619 | 166,692 | |||||||||||
Diluted earnings per common share: | |||||||||||||||
Earnings from continuing operations | $ | 0.87 | $ | 1.03 | $ | 3.74 | $ | 4.61 | |||||||
Earnings (loss) from discontinued operations, net | 0.03 | (0.02 | ) | 1.72 | (0.02 | ) | |||||||||
Net earnings | 0.91 | 1.02 | 5.46 | 4.59 | |||||||||||
Weighted average shares outstanding | 156,254 | 166,467 | 159,172 | 168,842 | |||||||||||
Dividends paid per common share | $ | 0.42 | $ | 0.40 | $ | 1.64 | $ | 1.55 | |||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2015 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||
Energy | $ | 430,423 | $ | 366,044 | $ | 363,872 | $ | 323,341 | $ | 1,483,680 | $ | 478,773 | $ | 481,016 | $ | 507,334 | $ | 550,116 | $ | 2,017,239 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 230,181 | 229,934 | 227,992 | 255,563 | 943,670 | 231,679 | 252,354 | 257,282 | 247,569 | 988,884 | |||||||||||||||||||||
Industrials | 343,015 | 363,157 | 351,404 | 341,667 | 1,399,243 | 335,995 | 361,467 | 355,019 | 344,600 | 1,397,081 | |||||||||||||||||||||
573,196 | 593,091 | 579,396 | 597,230 | 2,342,913 | 567,674 | 613,821 | 612,301 | 592,169 | 2,385,965 | ||||||||||||||||||||||
Fluids | 340,236 | 351,511 | 352,018 | 355,508 | 1,399,273 | 345,009 | 346,275 | 361,797 | 377,485 | 1,430,566 | |||||||||||||||||||||
Refrigeration & Food Equipment | 372,097 | 448,115 | 492,460 | 418,758 | 1,731,430 | 411,493 | 522,357 | 528,807 | 458,532 | 1,921,189 | |||||||||||||||||||||
Intra-segment eliminations | (451 | ) | (133 | ) | (164 | ) | (237 | ) | (985 | ) | (379 | ) | (833 | ) | (664 | ) | (355 | ) | (2,231 | ) | |||||||||||
Total consolidated revenue | $ | 1,715,501 | $ | 1,758,628 | $ | 1,787,582 | $ | 1,694,600 | $ | 6,956,311 | $ | 1,802,570 | $ | 1,962,636 | $ | 2,009,575 | $ | 1,977,947 | $ | 7,752,728 | |||||||||||
NET EARNINGS | |||||||||||||||||||||||||||||||
Segment Earnings: | |||||||||||||||||||||||||||||||
Energy | $ | 52,305 | $ | 40,909 | $ | 48,726 | $ | 31,250 | $ | 173,190 | $ | 118,968 | $ | 114,991 | $ | 122,738 | $ | 105,118 | $ | 461,815 | |||||||||||
Engineered Systems | 88,149 | 96,702 | 102,866 | 89,244 | 376,961 | 83,227 | 101,766 | 108,800 | 93,205 | 386,998 | |||||||||||||||||||||
Fluids | 54,634 | 70,168 | 74,911 | 62,404 | 262,117 | 57,942 | 63,112 | 67,559 | 63,026 | 251,639 | |||||||||||||||||||||
Refrigeration & Food Equipment | 36,150 | 65,732 | 76,665 | 42,752 | 221,299 | 44,862 | 84,926 | 78,012 | 30,934 | 238,734 | |||||||||||||||||||||
Total Segments | 231,238 | 273,511 | 303,168 | 225,650 | 1,033,567 | 304,999 | 364,795 | 377,109 | 292,283 | 1,339,186 | |||||||||||||||||||||
Corporate expense / other | 34,526 | 20,382 | 25,881 | 24,911 | 105,700 | 30,734 | 29,287 | 27,815 | 29,964 | 117,800 | |||||||||||||||||||||
Net interest expense | 32,037 | 31,988 | 31,983 | 31,249 | 127,257 | 32,655 | 31,961 | 31,231 | 31,332 | 127,179 | |||||||||||||||||||||
Earnings from continuing operations before provision for income taxes | 164,675 | 221,141 | 245,304 | 169,490 | 800,610 | 241,610 | 303,547 | 318,063 | 230,987 | 1,094,207 | |||||||||||||||||||||
Provision for income taxes | 47,485 | 65,507 | 58,821 | 32,916 | 204,729 | 71,569 | 92,966 | 92,380 | 59,152 | 316,067 | |||||||||||||||||||||
Earnings from continuing operations | 117,190 | 155,634 | 186,483 | 136,574 | 595,881 | 170,041 | 210,581 | 225,683 | 171,835 | 778,140 | |||||||||||||||||||||
Earnings (loss) from discontinued operations, net | 92,320 | 176,762 | (385 | ) | 5,251 | 273,948 | (9,903 | ) | 3,378 | 6,161 | (2,541 | ) | (2,905 | ) | |||||||||||||||||
Net earnings | $ | 209,510 | $ | 332,396 | $ | 186,098 | $ | 141,825 | $ | 869,829 | $ | 160,138 | $ | 213,959 | $ | 231,844 | $ | 169,294 | $ | 775,235 | |||||||||||
SEGMENT OPERATING MARGIN | |||||||||||||||||||||||||||||||
Energy | 12.2 | % | 11.2 | % | 13.4 | % | 9.7 | % | 11.7 | % | 24.8 | % | 23.9 | % | 24.2 | % | 19.1 | % | 22.9 | % | |||||||||||
Engineered Systems | 15.4 | % | 16.3 | % | 17.8 | % | 14.9 | % | 16.1 | % | 14.7 | % | 16.6 | % | 17.8 | % | 15.7 | % | 16.2 | % | |||||||||||
Fluids | 16.1 | % | 20.0 | % | 21.3 | % | 17.6 | % | 18.7 | % | 16.8 | % | 18.2 | % | 18.7 | % | 16.7 | % | 17.6 | % | |||||||||||
Refrigeration & Food Equipment | 9.7 | % | 14.7 | % | 15.6 | % | 10.2 | % | 12.8 | % | 10.9 | % | 16.3 | % | 14.8 | % | 6.7 | % | 12.4 | % | |||||||||||
Total Segment | 13.5 | % | 15.6 | % | 17.0 | % | 13.3 | % | 14.9 | % | 16.9 | % | 18.6 | % | 18.8 | % | 14.8 | % | 17.3 | % | |||||||||||
DEPRECIATION AND AMORTIZATION EXPENSE | |||||||||||||||||||||||||||||||
Energy | $ | 34,427 | $ | 32,740 | $ | 31,858 | $ | 42,754 | $ | 141,779 | $ | 25,575 | $ | 25,807 | $ | 27,145 | $ | 33,429 | $ | 111,956 | |||||||||||
Engineered Systems | 14,526 | 14,392 | 14,503 | 16,493 | 59,914 | 15,850 | 15,982 | 15,334 | 14,780 | 61,946 | |||||||||||||||||||||
Fluids | 13,848 | 13,648 | 13,367 | 15,215 | 56,078 | 16,366 | 15,308 | 14,019 | 15,210 | 60,903 | |||||||||||||||||||||
Refrigeration & Food Equipment | 16,458 | 16,406 | 16,609 | 16,601 | 66,074 | 17,212 | 17,451 | 17,073 | 16,965 | 68,701 | |||||||||||||||||||||
Corporate | 923 | 841 | 837 | 643 | 3,244 | 870 | 1,000 | 910 | 902 | 3,682 | |||||||||||||||||||||
$ | 80,182 | $ | 78,027 | $ | 77,174 | $ | 91,706 | $ | 327,089 | $ | 75,873 | $ | 75,548 | $ | 74,481 | $ | 81,286 | $ | 307,188 | ||||||||||||
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2015 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||||||||||
BOOKINGS | |||||||||||||||||||||||||||||||
Energy | $ | 416,628 | $ | 345,079 | $ | 351,557 | $ | 315,996 | $ | 1,429,260 | $ | 478,469 | $ | 477,162 | $ | 526,134 | $ | 534,646 | $ | 2,016,411 | |||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 235,617 | 224,203 | 226,756 | 250,639 | 937,215 | 250,416 | 245,429 | 249,288 | 248,071 | 993,204 | |||||||||||||||||||||
Industrials | 337,070 | 336,173 | 338,744 | 357,451 | 1,369,438 | 370,949 | 363,773 | 342,687 | 374,438 | 1,451,847 | |||||||||||||||||||||
572,687 | 560,376 | 565,500 | 608,090 | 2,306,653 | 621,365 | 609,202 | 591,975 | 622,509 | 2,445,051 | ||||||||||||||||||||||
Fluids | 339,310 | 333,695 | 357,032 | 321,154 | 1,351,191 | 362,943 | 375,009 | 350,853 | 345,553 | 1,434,358 | |||||||||||||||||||||
Refrigeration & Food Equipment | 419,659 | 486,793 | 430,681 | 379,967 | 1,717,100 | 493,731 | 542,810 | 459,099 | 367,567 | 1,863,207 | |||||||||||||||||||||
Intra-segment eliminations | (628 | ) | (417 | ) | (385 | ) | (486 | ) | (1,916 | ) | (506 | ) | (1,089 | ) | (737 | ) | (644 | ) | (2,976 | ) | |||||||||||
Total consolidated bookings | $ | 1,747,656 | $ | 1,725,526 | $ | 1,704,385 | $ | 1,624,721 | $ | 6,802,288 | $ | 1,956,002 | $ | 2,003,094 | $ | 1,927,324 | $ | 1,869,631 | $ | 7,756,051 | |||||||||||
BACKLOG | |||||||||||||||||||||||||||||||
Energy | $ | 212,060 | $ | 194,819 | $ | 156,631 | $ | 155,586 | $ | 210,846 | $ | 206,415 | $ | 232,739 | $ | 233,347 | |||||||||||||||
Engineered Systems | |||||||||||||||||||||||||||||||
Printing & Identification | 108,151 | 103,403 | 100,476 | 98,288 | 131,298 | 128,912 | 115,352 | 110,359 | |||||||||||||||||||||||
Industrials | 276,598 | 248,592 | 236,298 | 250,725 | 266,517 | 268,680 | 254,612 | 282,598 | |||||||||||||||||||||||
384,749 | 351,995 | 336,774 | 349,013 | 397,815 | 397,592 | 369,964 | 392,957 | ||||||||||||||||||||||||
Fluids | 259,504 | 240,389 | 236,608 | 243,459 | 328,617 | 348,508 | 323,424 | 277,834 | |||||||||||||||||||||||
Refrigeration & Food Equipment | 337,084 | 373,193 | 307,351 | 247,352 | 431,298 | 450,065 | 376,141 | 282,507 | |||||||||||||||||||||||
Intra-segment eliminations | (595 | ) | (354 | ) | (598 | ) | (808 | ) | (374 | ) | (211 | ) | (302 | ) | (431 | ) | |||||||||||||||
Total consolidated backlog | $ | 1,192,802 | $ | 1,160,042 | $ | 1,036,766 | $ | 994,602 | $ | 1,368,202 | $ | 1,402,369 | $ | 1,301,966 | $ | 1,186,214 | |||||||||||||||
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2015 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.98 | $ | 1.20 | $ | 0.88 | $ | 3.78 | $ | 1.00 | $ | 1.26 | $ | 1.36 | $ | 1.04 | $ | 4.67 | |||||||||||
Discontinued operations | 0.57 | 1.11 | — | 0.03 | 1.74 | $ | (0.06 | ) | $ | 0.02 | $ | 0.04 | $ | (0.02 | ) | $ | (0.02 | ) | |||||||||||||
Net earnings | 1.30 | 2.10 | 1.20 | 0.92 | 5.52 | $ | 0.94 | $ | 1.29 | $ | 1.40 | $ | 1.03 | $ | 4.65 | ||||||||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.19 | $ | 0.87 | $ | 3.74 | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | |||||||||||
Discontinued operations | 0.57 | 1.10 | — | 0.03 | 1.72 | $ | (0.06 | ) | $ | 0.02 | $ | 0.04 | $ | (0.02 | ) | $ | (0.02 | ) | |||||||||||||
Net earnings | 1.28 | 2.07 | 1.19 | 0.91 | 5.46 | $ | 0.93 | $ | 1.27 | $ | 1.38 | $ | 1.02 | $ | 4.59 | ||||||||||||||||
Adjusted diluted earnings per common share (calculated below): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.14 | $ | 0.81 | $ | 3.63 | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 1.01 | $ | 4.54 | |||||||||||
Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows: | |||||||||||||||||||||||||||||||
Net earnings (loss): | |||||||||||||||||||||||||||||||
Continuing operations | $ | 117,190 | $ | 155,634 | $ | 186,483 | $ | 136,574 | $ | 595,881 | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | |||||||||||
Discontinued operations | 92,320 | 176,762 | (385 | ) | 5,251 | 273,948 | (9,903 | ) | 3,378 | 6,161 | (2,541 | ) | (2,905 | ) | |||||||||||||||||
Net earnings | 209,510 | 332,396 | 186,098 | 141,825 | 869,829 | 160,138 | 213,959 | 231,844 | 169,294 | 775,235 | |||||||||||||||||||||
Average shares outstanding: | |||||||||||||||||||||||||||||||
Basic | 161,650 | 158,640 | 155,300 | 154,986 | 157,619 | 169,750 | 166,474 | 166,021 | 164,589 | 166,692 | |||||||||||||||||||||
Diluted | 163,323 | 160,398 | 156,560 | 156,254 | 159,172 | 172,013 | 168,857 | 168,343 | 166,467 | 168,842 | |||||||||||||||||||||
Note: | |||||||||||||||||||||||||||||||
Earnings from continuing operations are adjusted by discrete tax items to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows: | |||||||||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2015 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||||||||||
Adjusted earnings from continuing operations: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 117,190 | $ | 155,634 | $ | 186,483 | $ | 136,574 | $ | 595,881 | $ | 170,041 | $ | 210,581 | $ | 225,683 | $ | 171,835 | $ | 778,140 | |||||||||||
Gains (losses) from discrete and other tax items | — | — | 8,131 | 9,382 | 17,513 | 2,541 | (635 | ) | 5,524 | 3,860 | 11,290 | ||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 117,190 | $ | 155,634 | $ | 178,352 | $ | 127,192 | $ | 578,368 | $ | 167,500 | $ | 211,216 | $ | 220,159 | $ | 167,975 | $ | 766,850 | |||||||||||
Adjusted diluted earnings per common share: | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.19 | $ | 0.87 | $ | 3.74 | $ | 0.99 | $ | 1.25 | $ | 1.34 | $ | 1.03 | $ | 4.61 | |||||||||||
Gains (losses) from discrete and other tax items | — | — | 0.05 | 0.06 | 0.11 | 0.01 | — | 0.03 | 0.02 | 0.07 | |||||||||||||||||||||
Adjusted earnings from continuing operations | $ | 0.72 | $ | 0.97 | $ | 1.14 | $ | 0.81 | $ | 3.63 | $ | 0.97 | $ | 1.25 | $ | 1.31 | $ | 1.01 | $ | 4.54 | |||||||||||
* Per share data may not add due to rounding. | |||||||||||||||||||||||||||||||
DOVER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 31, 2015 | December 31, 2014 | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 362,185 | $ | 681,581 | |||
Receivables, net of allowances | 1,120,490 | 1,186,746 | |||||
Inventories, net | 802,895 | 863,737 | |||||
Other current assets | 135,209 | 101,905 | |||||
Property, plant and equipment, net | 854,269 | 837,069 | |||||
Goodwill | 3,737,389 | 3,491,557 | |||||
Intangible assets, net | 1,413,223 | 1,369,520 | |||||
Deferred taxes and other assets | 194,103 | 171,005 | |||||
Assets of discontinued operations | — | 327,171 | |||||
Total assets | $ | 8,619,763 | $ | 9,030,291 | |||
Liabilities and Stockholders' Equity: | |||||||
Notes payable and current maturities of long-term debt | $ | 151,122 | $ | 777,956 | |||
Payables and accrued expenses | 1,216,060 | 1,260,893 | |||||
Deferred taxes and other non-current liabilities | 990,664 | 986,958 | |||||
Long-term debt | 2,617,342 | 2,253,041 | |||||
Liabilities of discontinued operations | — | 50,718 | |||||
Stockholders' equity | 3,644,575 | 3,700,725 | |||||
Total liabilities and stockholders' equity | $ | 8,619,763 | $ | 9,030,291 | |||
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)(in thousands)
Years Ended December 31, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net earnings | $ | 869,829 | $ | 775,235 | |||
(Earnings) loss from discontinued operations, net | (273,948 | ) | 2,905 | ||||
Depreciation and amortization | 327,089 | 307,188 | |||||
Stock-based compensation | 30,697 | 31,628 | |||||
Contributions to employee benefit plans | (21,942 | ) | (24,232 | ) | |||
Net change in assets and liabilities | 17,334 | (142,560 | ) | ||||
Net cash provided by operating activities of continuing operations | 949,059 | 950,164 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (154,251 | ) | (166,033 | ) | |||
Acquisitions (net of cash and cash equivalents acquired) | (567,843 | ) | (802,254 | ) | |||
Proceeds from the sale of property, plant and equipment | 14,604 | 14,373 | |||||
Proceeds from the sale of businesses | 689,314 | 191,348 | |||||
Settlement of net investment hedge | (17,752 | ) | — | ||||
Other | 1,350 | (19,991 | ) | ||||
Net cash used in investing activities of continuing operations | (34,578 | ) | (782,557 | ) | |||
Financing activities: | |||||||
Cash received from Knowles Corporation, net of cash distributed | — | 359,955 | |||||
Change in notes payable, net | (327,000 | ) | 251,500 | ||||
Net increase in debt | 94,252 | (6,566 | ) | ||||
Dividends to stockholders | (257,969 | ) | (258,487 | ) | |||
Purchase of common stock | (600,164 | ) | (601,077 | ) | |||
Net proceeds from exercise of share-based awards | (1,005 | ) | (814 | ) | |||
Net cash used in financing activities of continuing operations | (1,091,886 | ) | (255,489 | ) | |||
Net cash (used in) provided by discontinued operations | (115,930 | ) | 6,007 | ||||
Effect of exchange rate changes on cash | (26,061 | ) | (40,426 | ) | |||
Net decrease in cash and cash equivalents | (319,396 | ) | (122,301 | ) | |||
Cash and cash equivalents at beginning of period | 681,581 | 803,882 | |||||
Cash and cash equivalents at end of period | $ | 362,185 | $ | 681,581 | |||
DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY 2015 | Q1 | Q2 | Q3 | Q4 | FY 2014 | ||||||||||||||||||||||
Cash flow from operating activities | $ | 131,332 | $ | 218,911 | $ | 282,213 | $ | 316,603 | $ | 949,059 | $ | 28,361 | $ | 185,013 | $ | 292,012 | $ | 444,778 | $ | 950,164 | |||||||||||
Less: Additions to property, plant and equipment | (27,956 | ) | (43,807 | ) | (39,516 | ) | (42,972 | ) | (154,251 | ) | (32,695 | ) | (42,550 | ) | (33,532 | ) | (57,256 | ) | (166,033 | ) | |||||||||||
Free cash flow | $ | 103,376 | $ | 175,104 | $ | 242,697 | $ | 273,631 | $ | 794,808 | $ | (4,334 | ) | $ | 142,463 | $ | 258,480 | $ | 387,522 | $ | 784,131 | ||||||||||
Free cash flow as a percentage of earnings from continuing operations | 88.2 | % | 112.5 | % | 130.1 | % | 200.4 | % | 133.4 | % | (2.5 | )% | 67.7 | % | 114.5 | % | 225.5 | % | 100.8 | % | |||||||||||
Free cash flow as a percentage of revenue | 6.0 | % | 10.0 | % | 13.6 | % | 16.1 | % | 11.4 | % | (0.2 | )% | 7.3 | % | 12.9 | % | 19.6 | % | 10.1 | % | |||||||||||
ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2015
Acquisitions
During the fourth quarter of 2015, the Company completed three acquisitions across the Fluids segment and the Printing & Identification platform of the Engineered Systems segment. For the full year 2015, Dover made a total of four acquisitions for consideration totaling $567.8 million.
Discontinued Operations
For the fourth quarter of 2015, the Company recognized a gain from discontinued operations of $5.3 million, or $0.03 EPS. On a full-year basis, the Company generated net earnings of $273.9 million, or $1.72 EPS. Included in this amount is a $87.8 million gain on sale of Datamax O'Neil, which was sold in the first quarter of 2015 and a $177.8 million gain on sale of Sargent Aerospace, which was sold in the second quarter of 2015. Also included in the results of discontinued operations is $6.3 million of earnings, or $0.04 EPS, attributable to the operations of Datamax O'Neil and Sargent Aerospace.
Restructuring and Other Costs
During the quarter, the Company took actions to adjust our costs and streamline our businesses, resulting in $16.5 million, or $0.08 EPS, of restructuring charges. These charges were incurred primarily at each of our business segments, including $4.2 million in Energy, $4.5 million in Engineered Systems, $1.3 million in Fluids, and $6.3 million in Refrigeration & Food Equipment. For full year, restructuring costs totaled $55.2 million, or $0.25 EPS, of which primarily $30.8 million was incurred in Energy, $13.3 million in Engineered Systems, $4.9 million in Fluids, and $5.8 million in Refrigeration and Food Equipment.
Tax Rate
The effective tax rate on continuing operations was 19.4% and 25.6% for the fourth quarters of 2015 and 2014, respectively. On a full year basis, the effective tax rates on continuing operations for 2015 and 2014 were 25.6% and 28.9%, respectively. The 2015 and 2014 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 25.0% and 27.3% for 2015 and 2014, respectively, and the full year rates were 27.8% and 29.9% for 2015 and 2014, respectively. The reduction in the effective tax rate year over year is principally due to a change in the geographic mix of earnings as well as restructuring of foreign operations.
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Free Cash Flow (dollars in thousands) | |||||||||||||||
Cash flow provided by operating activities | $ | 316,603 | 444,778 | $ | 949,059 | $ | 950,164 | ||||||||
Less: Capital expenditures | (42,972 | ) | (57,256 | ) | (154,251 | ) | (166,033 | ) | |||||||
Free cash flow | $ | 273,631 | $ | 387,522 | $ | 794,808 | $ | 784,131 | |||||||
Free cash flow as a percentage of revenue | 16.1 | % | 19.6 | % | 11.4 | % | 10.1 | % | |||||||
Free cash flow as a percentage of earnings from continuing operations | 133.4 | % | 100.8 | % | |||||||||||
The fourth quarter 2015 decrease in free cash flow reflects lower earnings relative to the prior year driven by lower volume and product mix.
Revenue Growth Factors
2015 | |||||||||||||||
Q1 | Q2 | Q3 | Q4 | Full Year | |||||||||||
Organic | (6 | )% | (10 | )% | (10 | )% | (12 | )% | (10 | )% | |||||
Acquisitions | 5 | % | 4 | % | 3 | % | 2 | % | 4 | % | |||||
Currency translation | (4 | )% | (4 | )% | (4 | )% | (4 | )% | (4 | )% | |||||
(5 | )% | (10 | )% | (11 | )% | (14 | )% | (1) | (10 | )% | (1) | ||||
(1) Includes a decline in revenue in Q4 within the Refrigeration & Food Equipment segment due to the divestiture of a product line.
Share Repurchases
In January 2015, the Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 15 million shares of its common stock over the following three years. This plan replaced the Company's $1.0 billion share repurchase program, which it completed in 2014. During the year ended December 31, 2015, the Company purchased a total of approximately 8.2 million shares of its common stock in the open market at a total cost of $600.2 million, or $72.94 per share. As of December 31, 2015, the approximate number of shares still available for repurchase under the January 2015 share repurchase authorization was 6.8 million.
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, 2015 | December 31, 2014 | ||||||
Current maturities of long-term debt | $ | 122 | $ | 299,956 | ||||
Commercial paper | 151,000 | 478,000 | ||||||
Long-term debt | 2,617,342 | 2,253,041 | ||||||
Total debt | 2,768,464 | 3,030,997 | ||||||
Less: Cash and cash equivalents | (362,185 | ) | (681,581 | ) | ||||
Net debt | 2,406,279 | 2,349,416 | ||||||
Add: Stockholders' equity | 3,644,575 | 3,700,725 | ||||||
Net capitalization | $ | 6,050,854 | $ | 6,050,141 | ||||
Net debt to net capitalization | 39.8 | % | 38.8 | % | ||||
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.