10-QPeriod: Q3 FY2019

DOVER Corp Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 17, 2019For Securities:DOV

Summary

Dover Corporation (DOV) reported solid revenue growth for the third quarter and first nine months of 2019 compared to the prior year periods. Revenue increased by 4.5% in Q3 and 3.4% year-to-date, driven by organic growth across its key segments, particularly Fluids and Engineered Systems, as well as contributions from recent acquisitions. The company demonstrated improved profitability, with earnings from continuing operations up significantly year-over-year, benefiting from pricing initiatives, productivity gains, and cost management, including benefits from rightsizing actions. Despite some headwinds like increased material costs and unfavorable foreign currency translation, Dover maintained or improved its gross profit margins. Financially, Dover maintained a strong liquidity position, with increased cash flow from operations and a stable net debt to net capitalization ratio. The company also continued its focus on returning capital to shareholders through dividends and share repurchases. The strategic repositioning of the company, including the upcoming transition to a five-segment structure, suggests a continued focus on operational efficiency and strategic alignment.

Financial Highlights

47 data points
Beta

Revenue

$1.83B

36.9% Gross Margin

Net Income

$206.01M

11.3% Net Margin

EPS (Diluted)

$1.40

Total Assets

$8.67B

Cash & Equivalents

$340.53M

Free Cash Flow

$304.68M

Financial Statements
Beta
Revenue$1.83B
Cost of Revenue$1.15B
Gross Profit$673.49M
SG&A Expenses$390.77M
Operating Income$282.71M
Interest Expense$31.41M
Net Income$206.01M
EPS (Basic)$1.42
EPS (Diluted)$1.40
Shares Outstanding (Basic)145.37M
Shares Outstanding (Diluted)147.05M

Key Highlights

  • 1Consolidated revenue increased by 4.5% to $1.825 billion in Q3 2019 and by 3.4% to $5.361 billion for the first nine months of 2019, year-over-year.
  • 2Earnings from continuing operations saw significant growth, up 31.0% to $206.0 million in Q3 2019 and up 17.7% to $509.8 million for the nine months ended September 30, 2019.
  • 3Gross profit margin remained strong, at 36.9% for Q3 and 36.7% for the nine months ended September 30, 2019.
  • 4Selling, general and administrative expenses decreased by 8.4% in Q3 and 7.3% year-to-date, reflecting benefits from rightsizing actions.
  • 5The Fluids segment was a key growth driver, with revenue up 9.1% in Q3 and 8.6% year-to-date, driven by strong organic growth.
  • 6The company generated $446.8 million in free cash flow for the first nine months of 2019, an increase of $162.7 million year-over-year.
  • 7Dover is transitioning to a five-segment structure effective October 1, 2019, to enhance management efficiency and strategic alignment.

Frequently Asked Questions

Dover reported a 4.5% increase in consolidated revenue to $1.825 billion for the third quarter of 2019 and a 3.4% increase to $5.361 billion for the nine months ended September 30, 2019, compared to the respective prior year periods. This growth was primarily driven by organic revenue increases across its key segments, particularly Fluids and Engineered Systems, along with contributions from acquisitions.

Profitability improved significantly. Earnings from continuing operations increased by 31.0% to $206.0 million in the third quarter and by 17.7% to $509.8 million for the first nine months of 2019. This improvement was due to a combination of higher revenues, pricing initiatives, productivity gains, and cost management, including benefits from rightsizing actions which led to a decrease in SG&A expenses.

Dover maintained a strong liquidity position, with cash flow from operating activities increasing to $584.1 million for the first nine months of 2019. The company generated $446.8 million in free cash flow for the same period, an increase of $162.7 million year-over-year. The net debt to net capitalization ratio improved to 47.7% as of September 30, 2019, from 50.0% at the end of 2018, indicating a healthy financial leverage.

Yes, effective October 1, 2019, Dover is transitioning from a three-segment structure to a five-segment structure. This change is intended to improve management efficiency and better align operations with strategic initiatives and capital allocation priorities. The new segments are Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food Equipment.