10-QPeriod: Q2 FY2019

DOVER Corp Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 18, 2019For Securities:DOV

Summary

Dover Corporation reported solid financial results for the second quarter and first half of 2019, demonstrating resilience and operational improvements. Revenue saw a modest increase of 0.7% for the quarter and a more substantial 2.9% for the six-month period, driven by organic growth and strategic acquisitions, despite headwinds from foreign currency translation and divestitures. Profitability improved significantly, with earnings from continuing operations up 19.0% for the quarter and 10.1% for the first half. This was fueled by effective pricing initiatives, productivity gains, benefits from rightsizing actions, and improved cost management, which offset rising material costs and unfavorable mix. The company also successfully managed its SG&A expenses, which decreased as a percentage of revenue, reflecting operational leverage. Dover's financial position remains strong, supported by healthy operating cash flow and a stable leverage ratio.

Financial Highlights

47 data points
Beta

Revenue

$1.81B

37.1% Gross Margin

Net Income

$198.09M

10.9% Net Margin

EPS (Diluted)

$1.35

Total Assets

$8.78B

Cash & Equivalents

$321.33M

Free Cash Flow

$154.74M

Financial Statements
Beta
Revenue$1.81B
Cost of Revenue$1.14B
Gross Profit$672.59M
SG&A Expenses$396.63M
Operating Income$275.96M
Interest Expense$31.75M
Net Income$198.09M
EPS (Basic)$1.36
EPS (Diluted)$1.35
Shares Outstanding (Basic)145.37M
Shares Outstanding (Diluted)147.18M

Key Highlights

  • 1Revenue increased by 0.7% to $1.81 billion in Q2 2019 and by 2.9% to $3.54 billion in the first six months of 2019 compared to the prior year periods.
  • 2Earnings from continuing operations rose significantly by 19.0% to $198.1 million in Q2 2019 and by 10.1% to $303.8 million in the first six months of 2019.
  • 3Diluted EPS from continuing operations grew to $1.35 in Q2 2019 and $2.07 in the first six months of 2019.
  • 4The Fluids segment showed strong performance with revenue up 5.2% in Q2 and 8.4% year-to-date, driven by significant organic growth.
  • 5SG&A expenses decreased by 7.5% in Q2 and 6.8% year-to-date, improving as a percentage of revenue, due to rightsizing actions.
  • 6The company completed the acquisition of All-Flo Pump Company, Limited and Belanger, Inc. in the first half of 2019, strengthening its Fluids segment.
  • 7Dover generated $142.1 million in free cash flow for the first six months of 2019, an increase of $63.8 million compared to the prior year.

Frequently Asked Questions

For the second quarter of 2019, Dover Corporation's revenue increased by 0.7% to $1.81 billion compared to the same period in 2018. For the first six months of 2019, revenue grew by 2.9% to $3.54 billion year-over-year. This growth was primarily driven by organic increases and acquisitions, partially offset by unfavorable foreign currency translation and dispositions.

Dover Corporation showed strong profitability improvement. Earnings from continuing operations increased by 19.0% to $198.1 million in the second quarter of 2019 and by 10.1% to $303.8 million in the first six months of 2019. Diluted earnings per share from continuing operations were $1.35 for the quarter and $2.07 for the year-to-date period.

The Fluids segment demonstrated robust performance, with revenue increasing by 5.2% in the second quarter and 8.4% in the first six months, largely due to strong organic growth across its Fueling & Transport, Pumps, and Process Solutions end markets. The company also highlighted the strong organic growth in the Industrials platform within the Engineered Systems segment.

Profitability was enhanced by several factors, including effective pricing initiatives, productivity gains from ongoing rightsizing actions and cost reduction programs, and improved operational leverage as SG&A expenses decreased both in absolute terms and as a percentage of revenue. These benefits helped to absorb increased material costs and unfavorable business mix.

Dover Corporation generated $142.1 million in free cash flow for the first six months of 2019, a significant increase of $63.8 million from the prior year, supported by higher operating cash flows and lower capital expenditures. The company's net debt to net capitalization ratio remained stable at 50.2% as of June 30, 2019, indicating a consistent leverage position. The company has sufficient liquidity from operating cash flow and access to capital markets to fund its ongoing operations, strategic acquisitions, and capital allocation plans.