10-QPeriod: Q2 FY2008

DOVER Corp Quarterly Report for Q2 Ended Jun 30, 2008

Filed July 23, 2008For Securities:DOV

Summary

Dover Corporation reported solid revenue and earnings growth for the second quarter and first half of 2008, driven by strong performance across most of its segments, particularly Fluid Management. Revenue increased by 10% and 7% for the respective periods compared to the prior year, with an overall organic growth of 5% in the quarter. Diluted EPS from continuing operations saw a 7% increase to $0.98 for the quarter and $1.74 for the first six months. The company also saw an increase in its cash and cash equivalents, ending the quarter at $742.6 million. However, the company reported a significant loss from discontinued operations due to a $51.1 million write-down related to the Triton business. Financially, Dover strengthened its balance sheet by issuing $594.1 million in new debt, which was used to repay commercial paper. While total debt increased, the net debt to total capitalization ratio remained manageable at 27.3% as of year-end 2007, slightly increasing to 28.8% by the end of the second quarter of 2008. The company also continued its share repurchase program, acquiring approximately 4 million shares in the second quarter. Management indicated a positive outlook, with increased bookings and backlog in key segments, despite some headwinds in specific markets.

Financial Highlights

29 data points
Beta

Revenue

$2.01B

36.8% Gross Margin

Net Income

$135.28M

6.7% Net Margin

EPS (Diluted)

$0.71

Cash & Equivalents

$742.61M

Free Cash Flow

$300.86M

Financial Statements
Beta
Revenue$2.01B
Cost of Revenue$1.27B
Gross Profit$739.62M
SG&A Expenses$446.53M
Operating Income$293.09M
Net Income$135.28M
EPS (Basic)$0.72
EPS (Diluted)$0.71
Shares Outstanding (Basic)189.09M
Shares Outstanding (Diluted)190.59M

Key Highlights

  • 1Revenue for Q2 2008 increased 10% year-over-year to $2.01 billion, and H1 2008 revenue grew 9% to $3.88 billion.
  • 2Diluted EPS from continuing operations rose 7% to $0.98 in Q2 2008 and to $1.74 in H1 2008.
  • 3Fluid Management segment was a strong performer, with Q2 revenue up 23% and earnings up 34%.
  • 4Significant loss from discontinued operations in Q2 2008 ($51.6 million) due to a $51.1 million write-down on the Triton business.
  • 5Company issued $594.1 million in new long-term debt and used proceeds to repay commercial paper, strengthening its liquidity.
  • 6Cash and cash equivalents increased to $742.6 million at June 30, 2008, up from $606.1 million at December 31, 2007.
  • 7Dover repurchased approximately 4.1 million shares of its common stock in Q2 2008 under its authorized share repurchase program.

Frequently Asked Questions

The significant loss from discontinued operations in the second quarter of 2008 was primarily driven by a $51.1 million write-down of the carrying value of the Triton business (within the Engineered Systems segment) to its estimated fair market value, as well as other adjustments related to discontinued operations.

Dover issued $594.1 million in new long-term debt (5.45% notes due 2018 and 6.60% notes due 2038) and used the proceeds to repay borrowings under its commercial paper program. This strategy, along with strong operating cash flows, helped maintain robust liquidity, with cash and cash equivalents increasing to $742.6 million at quarter-end.

The Fluid Management segment demonstrated the strongest performance, with revenue increasing 23% and segment earnings rising 34% in the second quarter of 2008 compared to the prior year. The Product Identification platform within Engineered Systems and the Energy platform within Fluid Management also showed significant growth.

Yes, acquisitions contributed to revenue growth. For the second quarter, acquisition growth accounted for 1% of the total revenue increase, with the Industrial Products segment benefiting from acquisitions like Lantec Winch and Gear, Inc., Hanmecson International, and Industrial Motion Control LLC.