01—Abstract
Summary
Summary of the 10-K filed February 15, 2019. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 billionb 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.
02—Key points
Key Highlights
- Completed the spin-off of Apergy Corporation, simplifying the business into three core segments: Engineered Systems, Fluids, and Refrigeration & Food Equipment.
- Achieved consolidated revenue from continuing operations of $7.0 billion, a 2.5% increase year-over-year, with organic revenue growth of 3.7%.
- Generated $618.2 million in free cash flow, reflecting strong operational performance and cash generation.
- Returned approximately $1.2 billion to shareholders through share repurchases ($895 million) and dividends ($283.6 million).
- Initiated rightsizing and footprint consolidation programs, incurring $72.8 million in charges to optimize costs and enhance long-term operating margins.
- Invested in digital capabilities and innovation, including the opening of a new digital labs center.
- Maintained 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Dover Corp kept $0.08.
- Revenue$6.99B100.0%
- Cost of revenue−$4.43B63.4%
- Gross profit$2.56B36.6%
- Operating costs−$1.72B24.5%
- Operating income$843.1M12.1%
- Interest, other & tax−$272.8M3.9%
- Net income$570.3M8.2%
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 15, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $6.99B$6.82B | +2.5% |
| Cost of Revenue | $4.43B$4.29B | +3.3% |
| Gross Profit | $2.56B$2.53B | +1.2% |
| R&D Expenses | $143.03M$130.54M | +9.6% |
| SG&A Expenses | $1.72B$1.72B | −0.3% |
| Operating Income | $843.11M$806.89M | +4.5% |
| Interest Expense | $130.97M$144.95M | −9.6% |
| Net Income | $570.27M$811.66M | −29.7% |
| EPS (Basic) | $3.80$5.21 | −27.1% |
| EPS (Diluted) | $3.75$5.15 | −27.2% |
| Shares Outstanding (Basic) | 149.87M155.69M | −3.7% |
| Shares Outstanding (Diluted) | 152.13M157.74M | −3.6% |
05—Questions
Frequently Asked Questions
What was the strategic impact of the Apergy spin-off on Dover Corporation?
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.
How did Dover Corporation perform financially in 2018, and what drove the results?
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.
What are Dover's key priorities and strategies for future growth?
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.
How did trade tariffs impact Dover's financial results?
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.
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