01—Abstract
Summary
Summary of the 10-K filed February 12, 2016. Cited figures are marked; the original filing is the authoritative source.
Dover Corporation's 2015 10-K filing reveals a challenging year marked by a significant revenue decline, primarily driven by the downturn in the Energy segment due to volatile oil prices.
The company's diversified business model, however, demonstrated resilience with growth in its Engineered Systems and Fluids segments, albeit impacted by unfavorable foreign currency translation. Dover continued its strategic focus on operational excellence, productivity initiatives, and disciplined capital allocation, including acquisitions to strengthen its portfolio and significant share repurchases and dividend payments to return value to shareholders. The outlook for 2016 projected continued revenue decline in the Energy segment but expected growth in other segments, driven by acquisitions and new product introductions.
Key financial highlights include a year-over-year revenue decrease of 10.3% to $7.0 billiona, with a notable organic revenue decline of 9.8%. Despite the revenue challenges, the company generated strong free cash flow, representing 11.4% of revenue.
Dover also continued its long-standing commitment to shareholder returns by increasing its annual dividend for the 60th consecutive year. The company made strategic acquisitions totaling $567.8 millionb in 2015, bolstering its Fluids and Engineered Systems segments, while also divesting non-core businesses.
02—Key points
Key Highlights
- Revenue declined by 10.3% to $7.0 billion in 2015, largely due to a 26.4% decrease in the Energy segment caused by falling oil prices.
- Organic revenue decreased by 9.8%, with foreign currency translation having an unfavorable impact of 3.9%.
- Despite revenue challenges, Dover generated strong free cash flow of $794.8 million, representing 11.4% of revenue.
- The company increased its annual dividend to shareholders for the 60th consecutive year.
- Dover completed four acquisitions in 2015 for a net consideration of $567.8 million, primarily to enhance its Fluids and Engineered Systems segments.
- The company repurchased approximately 8.2 million shares of its common stock for $600.2 million in 2015.
- Restructuring charges of $55.2 million were incurred in 2015, primarily within the Energy segment, to align costs with market conditions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Dover Corp kept $0.13.
- Revenue$6.96B100.0%
- Cost of revenue−$4.39B63.1%
- Gross profit$2.57B36.9%
- Operating costs−$1.65B23.7%
- Operating income$920.8M13.2%
- Interest, other & tax−$50.9M0.7%
- Net income$869.8M12.5%
Where FY2015 revenue went
$6.96B- Cost of revenue: $4.39B, 63% of revenue
- SG&A: $1.65B, 24% of revenue
- Net income: $869.8M, 13% of revenue
- R&D: $115.0M, 1.7% of revenue
- Interest, other & tax: $50.9M, 0.7% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 12, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $6.96B$7.75B | −10.3% |
| Cost of Revenue | $4.39B$4.78B | −8.2% |
| Gross Profit | $2.57B$2.97B | −13.7% |
| R&D Expenses | $115.04M$118.41M | −2.8% |
| SG&A Expenses | $1.65B$1.76B | −6.3% |
| Operating Income | $920.76M$1.22B | −24.2% |
| Interest Expense | $131.68M$131.69M | 0.0% |
| Net Income | $869.83M$775.24M | +12.2% |
| EPS (Basic) | $5.52$4.65 | +18.7% |
| EPS (Diluted) | $5.46$4.59 | +19.0% |
| Shares Outstanding (Basic) | 157.62M166.69M | −5.4% |
| Shares Outstanding (Diluted) | 159.17M168.84M | −5.7% |
05—Questions
Frequently Asked Questions
What were the main drivers of Dover's revenue performance in 2015?
Dover's revenue in 2015 declined by 10.3% to $7.0 billion. The primary driver was a significant 26.4% decrease in the Energy segment, attributed to the substantial drop in oil prices and reduced drilling activity. The Refrigeration & Food Equipment segment also saw a notable decline of 9.9%. The Engineered Systems and Fluids segments experienced modest decreases of 1.8% and 2.2% respectively, with foreign currency translation negatively impacting all segments.
How did Dover manage its costs and operations in response to the market conditions?
Dover focused on operational excellence and cost management through its 'Dover Excellence Program'. This included supply chain initiatives that generated approximately $40 million in cost savings in 2015. The company also implemented restructuring actions, incurring $55.2 million in charges, primarily to align its cost structure with lower demand, especially in the Energy segment. These actions were expected to yield $40-$50 million in cost savings in 2016.
What is Dover's strategy for future growth?
Dover's strategy focuses on achieving annual organic sales growth of 3% to 5% over the long term, complemented by acquisition growth. The company aims for segment margin expansion through productivity initiatives and portfolio shaping. Key growth areas include capitalizing on trends in global energy demand, sustainability, energy efficiency, and consumerism in emerging economies. Dover actively pursues acquisitions that enhance its existing businesses or expand into key growth markets.
How did currency fluctuations impact Dover's financial results?
Currency fluctuations had an unfavorable impact on Dover's revenue in 2015, decreasing it by 3.9%. The strengthening of the U.S. dollar against currencies like the Euro and others negatively affected reported results, particularly for the Engineered Systems segment which derives a significant portion of its revenue internationally.
06—Continue