10-QPeriod: Q1 FY2022

DOVER Corp Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 21, 2022For Securities:DOV

Summary

Dover Corporation (DOV) reported its first quarter 2022 results, showcasing a 9.9% increase in revenue year-over-year, reaching $2.05 billion. This growth was primarily driven by organic revenue increases across most segments, particularly Engineered Products, Pumps & Process Solutions, and Climate & Sustainability Technologies, supported by pricing initiatives. However, net earnings saw a slight decrease of 2.8% to $226.2 million ($1.56 diluted EPS) compared to the prior year, impacted by rising material, labor, and logistics costs, alongside higher restructuring charges and acquisition-related expenses. The company experienced a significant drop in operating cash flow, leading to negative free cash flow for the quarter, largely due to increased inventory levels and higher compensation payouts. Despite these challenges, Dover maintains a strong balance sheet with a net debt to net capitalization ratio of 39.3%. The company also completed an acquisition of intellectual property assets related to electric refuse collection vehicles post-quarter end, indicating continued strategic investment.

Financial Highlights

46 data points
Beta

Revenue

$2.05B

36.2% Gross Margin

Net Income

$226.15M

11.0% Net Margin

EPS (Diluted)

$1.56

Total Assets

$10.50B

Cash & Equivalents

$289.98M

Free Cash Flow

-$26.70M

Financial Statements
Beta
Revenue$2.05B
Cost of Revenue$1.31B
Gross Profit$743.19M
SG&A Expenses$443.84M
Operating Income$299.35M
Interest Expense$26.55M
Net Income$226.15M
EPS (Basic)$1.57
EPS (Diluted)$1.56
Shares Outstanding (Basic)144.09M
Shares Outstanding (Diluted)145.33M

Key Highlights

  • 1Revenue increased by 9.9% to $2.05 billion, driven by organic growth and pricing initiatives.
  • 2Net earnings decreased by 2.8% to $226.2 million, impacted by cost inflation and increased expenses.
  • 3Operating cash flow declined significantly, resulting in negative free cash flow for the quarter.
  • 4Inventories increased to support backlog growth and mitigate supply chain issues.
  • 5Acquisition of electric refuse collection vehicle IP completed post-quarter.
  • 6Bookings decreased by 3.4% year-over-year but remained strong, with a book-to-bill ratio above 1.00 across all segments.
  • 7Backlog increased significantly to $3.4 billion, indicating strong future revenue potential.

Frequently Asked Questions

Revenue growth of 9.9% to $2.05 billion was primarily driven by a 9.3% organic revenue increase across most segments, supported by customer pricing initiatives that favorably impacted revenue by approximately 6.0%. Key contributing segments included Engineered Products, Pumps & Process Solutions, and Climate & Sustainability Technologies.

Net earnings decreased by 2.8% due to significant cost inflation in materials, labor, and logistics, which outpaced the benefits from pricing initiatives and productivity actions. Additionally, higher restructuring charges and acquisition-related amortization expenses contributed to the decline in profitability.

The decrease in operating cash flow and resulting negative free cash flow were primarily due to higher compensation payouts compared to the prior year, increased investments in inventory to support business growth and mitigate supply chain disruptions, and higher capital expenditures. These factors led to a significant portion of cash being utilized rather than generated during the quarter.

Dover is managing these challenges through pricing initiatives to offset increased costs, increasing inventory levels to ensure supply, and continuing productivity and cost reduction actions. Management anticipates these inflationary and supply chain pressures will persist throughout 2022.