10-KPeriod: FY2015

DOVER Corp Annual Report, Year Ended Dec 31, 2015

Filed February 12, 2016For Securities:DOV

Summary

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 billion, 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 million in 2015, bolstering its Fluids and Engineered Systems segments, while also divesting non-core businesses.

Financial Highlights

57 data points
Beta

Revenue

$6.96B

36.9% Gross Margin

Net Income

$869.83M

12.5% Net Margin

EPS (Diluted)

$5.46

Total Assets

$8.61B

Cash & Equivalents

$362.19M

Free Cash Flow

$794.81M

Financial Statements
Beta
Revenue$6.96B
Cost of Revenue$4.39B
Gross Profit$2.57B
R&D Expenses$115.04M
SG&A Expenses$1.65B
Operating Income$920.76M
Interest Expense$131.68M
Net Income$869.83M
EPS (Basic)$5.52
EPS (Diluted)$5.46
Shares Outstanding (Basic)157.62M
Shares Outstanding (Diluted)159.17M

Key Highlights

  • 1Revenue 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.
  • 2Organic revenue decreased by 9.8%, with foreign currency translation having an unfavorable impact of 3.9%.
  • 3Despite revenue challenges, Dover generated strong free cash flow of $794.8 million, representing 11.4% of revenue.
  • 4The company increased its annual dividend to shareholders for the 60th consecutive year.
  • 5Dover completed four acquisitions in 2015 for a net consideration of $567.8 million, primarily to enhance its Fluids and Engineered Systems segments.
  • 6The company repurchased approximately 8.2 million shares of its common stock for $600.2 million in 2015.
  • 7Restructuring charges of $55.2 million were incurred in 2015, primarily within the Energy segment, to align costs with market conditions.

Frequently Asked Questions

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.

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.

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.

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.