10-KPeriod: FY2018

DOVER Corp Annual Report, Year Ended Dec 31, 2018

Filed February 15, 2019For Securities:DOV

Summary

Dover Corporation's 2018 10-K filing highlights a year of strategic portfolio management and operational focus. The company successfully completed the spin-off of its energy businesses into Apergy Corporation, streamlining its operations into three core segments: Engineered Systems, Fluids, and Refrigeration & Food Equipment. Revenue from continuing operations saw a modest increase of 2.5% to $7.0 billion, driven by organic growth in the Fluids and Engineered Systems segments, though partially offset by a decline in Refrigeration & Food Equipment due to weaker retail refrigeration markets. Financially, Dover demonstrated strong free cash flow generation, amounting to $618.2 million. The company actively managed its capital structure, returning approximately $1.2 billion to shareholders through share repurchases and dividends, underscoring a commitment to shareholder value. Management focused on operational excellence, initiating rightsizing programs to optimize costs and streamline its footprint, incurring $72.8 million in related charges. The company's diverse end-market exposure and ongoing investment in innovation and digital solutions position it for continued resilience and growth.

Financial Highlights

55 data points
Beta

Revenue

$6.99B

36.6% Gross Margin

Net Income

$570.27M

8.2% Net Margin

EPS (Diluted)

$3.75

Total Assets

$8.37B

Cash & Equivalents

$396.22M

Free Cash Flow

$618.20M

Financial Statements
Beta
Revenue$6.99B
Cost of Revenue$4.43B
Gross Profit$2.56B
R&D Expenses$143.03M
SG&A Expenses$1.72B
Operating Income$843.11M
Interest Expense$130.97M
Net Income$570.27M
EPS (Basic)$3.80
EPS (Diluted)$3.75
Shares Outstanding (Basic)149.87M
Shares Outstanding (Diluted)152.13M

Key Highlights

  • 1Completed the spin-off of Apergy Corporation, simplifying the business into three core segments: Engineered Systems, Fluids, and Refrigeration & Food Equipment.
  • 2Achieved consolidated revenue from continuing operations of $7.0 billion, a 2.5% increase year-over-year, with organic revenue growth of 3.7%.
  • 3Generated $618.2 million in free cash flow, reflecting strong operational performance and cash generation.
  • 4Returned approximately $1.2 billion to shareholders through share repurchases ($895 million) and dividends ($283.6 million).
  • 5Initiated rightsizing and footprint consolidation programs, incurring $72.8 million in charges to optimize costs and enhance long-term operating margins.
  • 6Invested in digital capabilities and innovation, including the opening of a new digital labs center.
  • 7Maintained a strong balance sheet with a net debt to net capitalization ratio of 50.0% at year-end 2018, supported by investment-grade credit ratings.

Frequently Asked Questions

The spin-off of Apergy Corporation on May 9, 2018, was a significant strategic move that simplified Dover's business structure into three core operating segments: Engineered Systems, Fluids, and Refrigeration & Food Equipment. This allowed for a more focused management approach and clearer operational strategies.

Dover reported consolidated revenue from continuing operations of $7.0 billion, a 2.5% increase, driven by organic growth of 3.7%, particularly in the Fluids and Engineered Systems segments. The company also generated strong free cash flow of $618.2 million. Financial performance was supported by disciplined capital allocation, including significant share repurchases and consistent dividend increases, alongside efforts to optimize operational costs through rightsizing and footprint consolidation.

Dover's strategy focuses on three pillars: capturing growth potential in key end markets through organic investments and strategic acquisitions, improving profitability and return on invested capital via operational excellence and cost management, and disciplined capital allocation to maximize shareholder returns. The company is also emphasizing innovation and digital solutions across its segments to enhance customer value and drive commercial growth.

The company noted that new tariffs, particularly Section 232 tariffs on steel and aluminum and Section 301 tariffs on goods from China, led to increased material costs. While Dover sought to pass these costs on through pricing, it impacted gross profit margins in certain segments, notably Refrigeration & Food Equipment and Fluids, due to unfavorable product mix and material cost increases.