Dover Reports Fourth Quarter and Full Year 2012 Results; Reaffirms 2013 Guidance
DOWNERS GROVE, Ill., Jan. 24, 2013 /PRNewswire-FirstCall/ —
- 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
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 Years Ended December 31,
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 272,271 257,809 1,137,571 1,010,262
discontinued operations
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, (0.27) 0.44 (0.12) 0.66
net (1)
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, (0.27) 0.43 (0.12) 0.65
net (1)
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 & 642,213 674,501 674,116 613,012 2,603,842 560,453 645,573 649,768 568,844 2,424,638
Industrial
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 $46,556 $50,322 $63,706 $58,376 $218,960 $47,325 $54,527 $53,433 $71,097 $226,382
Technologies
Energy 132,115 133,936 139,038 133,561 538,650 93,051 110,447 125,268 121,871 450,637
Engineered 122,092 133,808 144,245 101,807 501,952 98,235 128,570 125,529 92,852 445,186
Systems
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 13.0% 13.9% 16.1% 14.6% 14.4% 17.6% 18.9% 13.2% 17.9% 16.6%
Technologies
Energy 24.9% 24.9% 24.7% 24.7% 24.8% 21.9% 24.3% 24.5% 23.9% 23.7%
Engineered 14.9% 15.1% 16.2% 12.4% 14.7% 13.6% 15.6% 15.2% 12.7% 14.4%
Systems
Printing & 10.7% 11.5% 16.0% 16.0% 13.6% 13.3% 13.9% 15.7% 13.2% 14.0%
Identification
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 184,711 204,139 197,767 209,872 796,489 173,626 175,539 174,772 158,895 682,832
Solutions
Refrigeration 711,911 666,223 600,065 606,931 2,585,130 660,449 623,929 602,488 625,840 2,512,706
& Industrial
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 191,327 172,300 156,191 160,890 57,357 54,945 55,230 54,194
Solutions
Refrigeration 598,910 586,824 515,285 516,559 544,995 523,011 469,876 528,118
& Industrial
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 1,261,160 948,864
operations
Investing activities:
Additions to
property, plant and
equipment (297,012) (262,676)
Acquisitions,
including adjustment
for prior year
acquisition (1,035,433) (1,382,217)
purchase price (net
of cash and cash
equivalents
acquired)
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 (1,345,888) (1,012,430)
operations
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 43,054 39,826
tax benefits
Dividends to
stockholders (240,959) (219,154)
-------- --------
Net cash used in
financing activities
of continuing (342,942) (50,501)
operations
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 Years Ended December 31,
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.
SOURCE Dover
