10-QPeriod: Q1 FY2019

DOVER Corp Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 18, 2019For Securities:DOV

Summary

Dover Corporation's (DOV) first quarter 2019 results show a solid revenue increase of 5.3% year-over-year, reaching $1.72 billion. This growth was primarily driven by an 8.3% organic increase, particularly strong in the Fluids and Engineered Systems segments, and further boosted by a strategic acquisition in the Fluids segment. However, net earnings saw a significant decline of 19.6% to $105.7 million, largely impacted by a $46.9 million loss on assets held for sale related to the Finder business. Despite the net earnings dip, the company demonstrated operational improvements. Selling, general, and administrative expenses decreased by 6.1% due to benefits from prior year restructuring actions, leading to improved SG&A as a percentage of revenue. While free cash flow was negative for the quarter at $(12.6) million, it improved significantly from the prior year's $(29.1) million due to higher operating cash flow and lower capital expenditures. The company's financial position remains strong with a net debt to net capitalization ratio of 51.8%.

Financial Highlights

48 data points
Beta

Revenue

$1.72B

36.2% Gross Margin

Net Income

$105.70M

6.1% Net Margin

EPS (Diluted)

$0.72

Total Assets

$8.66B

Cash & Equivalents

$243.01M

Free Cash Flow

-$12.60M

Financial Statements
Beta
Revenue$1.72B
Cost of Revenue$1.10B
Gross Profit$623.54M
SG&A Expenses$408.47M
Operating Income$168.13M
Interest Expense$31.81M
Net Income$105.70M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)145.09M
Shares Outstanding (Diluted)146.91M

Key Highlights

  • 1Revenue increased by 5.3% to $1.72 billion, driven by 8.3% organic growth.
  • 2Net earnings decreased by 19.6% to $105.7 million, impacted by a $46.9 million loss on assets held for sale.
  • 3Selling, general and administrative expenses decreased by 6.1%, improving operating leverage.
  • 4Acquired Belanger, Inc. for $175.1 million to strengthen the Fluids segment's vehicle wash business.
  • 5Entered into an agreement to sell Finder Pompe S.r.l., resulting in a $46.9 million loss on assets held for sale recognized in the quarter.
  • 6Free cash flow improved year-over-year, though remained negative at $(12.6) million for the quarter.
  • 7Net debt to net capitalization ratio was 51.8% as of March 31, 2019.

Frequently Asked Questions

Revenue growth was primarily driven by an 8.3% organic increase across the company, with particular strength in the Fluids and Engineered Systems segments. This was supported by a 0.5% contribution from acquisitions, notably the acquisition of Belanger, Inc.

The significant decrease in net earnings was primarily due to a $46.9 million loss recognized on assets held for sale related to the Finder business, which met the criteria for classification as held for sale during the quarter.

Dover demonstrated improved operational efficiency with a 6.1% decrease in selling, general and administrative expenses year-over-year, largely due to benefits from prior year restructuring actions. This led to a favorable decrease in SG&A as a percentage of revenue.

The company maintains a strong financial position. As of March 31, 2019, cash and cash equivalents were $243.0 million. The net debt to net capitalization ratio was 51.8%, indicating a moderate level of financial leverage. The company also has a $1.0 billion revolving credit facility for liquidity back-up.