Exhibit 99.1
CONTACT: | READ IT ON THE WEB | |||
Robert G. Kuhbach | www.dovercorporation.com | |||
Vice President Finance & | ||||
Chief Financial Officer | ||||
(212) 922-1640 | July 25, 2006 |
DOVER REPORTS SECOND QUARTER 2006 RESULTS
Announces Second Quarter Revenue and Earnings
and Planned Divestiture of Seven Businesses
and Planned Divestiture of Seven Businesses
New York, New York, July 25, 2006 — Dover Corporation (NYSE: DOV) announced that for the second quarter ended June 30, 2006, it had record earnings from continuing operations of $158.7 million or $0.77 diluted earnings per share (“EPS”), compared to $109.5 million or $0.54 EPS from continuing operations in the prior-year period, representing significant increases of 45% and 44%, respectively. Revenue for the second quarter of 2006 was $1,655.4 million, an increase of 24% over the prior-year period. Earnings from continuing operations for the second quarter of 2006 included $0.02 EPS related to the expensing of stock options and stock appreciation rights.
Net earnings for the second quarter of 2006 were $71.9 million or $0.35 EPS, including a loss from discontinued operations of $86.7 million or $0.42 EPS, compared to net earnings of $173.2 million or $0.85 EPS for the same period of 2005, which included earnings from discontinued operations of $63.7 million or $0.31 EPS. Included in the 2005 period was a gain from the sale of a business, while the 2006 quarterly results include impairments related to discontinued companies.
Earnings from continuing operations for the six months ended June 30, 2006 were $290.0 million or $1.41 EPS, up 44%, compared to $201.1 million or $0.98 EPS in the prior year. Earnings from continuing operations for the six months ended June 30, 2006 included $0.04 EPS related to the expensing of stock options and stock appreciation rights. Net earnings were $275.7 million or $1.34 EPS, compared to $271.3 million or $1.33 EPS in the prior year.
Commenting on the second quarter results, Dover’s President and Chief Executive Officer, Ronald L. Hoffman, stated: “Dover had an excellent second quarter, generating record revenue and earnings, significant operating margin improvement and strong cash flow. Our record performance was driven by a strong organic growth rate of 17% as well as significant contributions from our recent acquisitions. Dover’s ability to deliver consecutive double-digit increases in organic growth validates our focus on operational excellence and our highly successful “Performance Counts“ initiative. Our operating margin increased 200 basis points over the previous year and is now approaching 16%. It’s also important to note that 74% of Dover’s second quarter revenue was generated by operating companies with margins above 15% and that 37% of our revenue in the quarter was attributable to companies with inventory turns of greater than eight. We reinvested a portion of Dover’s free cash flow, which was 8.4% of revenue, in the acquisition of O’Neil Product Development Inc., a synergistic addition to our Product Identification group. We also purchased 700,000 shares of Dover’s stock on the open market. Going forward, we anticipate the acquisition pipeline to remain active and are engaged in a number of evaluations and negotiations.”
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Dover also announced today that it discontinued seven businesses during the second quarter of 2006 – five from the Dover Technologies segment, one from Dover Electronics and one from Dover Industries. The five discontinued businesses from Dover Technologies are Universal Instruments, Hover-Davis, Vitronics Soltec and Alphasem from the Circuit Assembly and Test Group and Mark Andy from the Product Identification Group. In 2005, these five businesses had total revenue and earnings of $580.2 million and $26.7 million, respectively, and the 2006 year-to-date revenue and earnings were $291.8 million and $9.3 million, respectively. The two other businesses that Dover discontinued were Kurz-Kasch, from the Dover Electronics’ Components Group, and a product line in the Dover Industries’ segment. These seven businesses collectively generated an operating margin of 4.3% for the full year 2005 and 2.9% for 2006 year-to-date.
As a result of classifying these businesses as discontinued operations, Dover’s overall margin from continuing operations in both the second quarter and year-to-date 2006 have improved by 120 basis points, and by 100 basis points in both of the comparable 2005 periods. The company anticipates that continued strong organic growth, as well as the full-year effect of its 2005 acquisitions, should offset the majority of the reduction in revenue and earnings related to these discontinued operations in 2006.
Commenting on this announcement, Mr. Hoffman stated, “These divestitures represent the culmination of the strategic portfolio review that we initiated in January 2005, when I became Chief Executive Officer, to position Dover as a vehicle for more consistent and sustainable value creation over the long term. Each of our six subsidiary Presidents played a vital role in this important evaluation process. The majority of the companies identified for sale manufacture capital equipment where the served markets are narrow in scope and recurring revenue opportunities are limited. While making decisions of this kind is never easy, we are confident that the sale of these businesses will enhance our ability to generate more consistent and sustained revenue and earnings growth. Despite the substantial reduction of our exposure to the technology sector, Dover will maintain a solid presence in core technology markets where it has well-established leadership positions and can capitalize on attractive recurring revenue opportunities. Dover also remains keenly committed to maintaining its strong and growing position in the Product Identification market.
“This strategic rebalancing of our portfolio, which is now substantially complete, coupled with our improved operational performance driven by the “Performance Counts” program and the continued success of our organic growth initiatives, position Dover well in an increasingly competitive global marketplace,” concluded Mr. Hoffman.
In connection with the discontinuance of the seven businesses, Dover recorded an after-tax charge of $87.9 million, reflecting the anticipated loss on sale for certain of these businesses. Any gains from the sale of the seven businesses will be recorded upon the close of the transactions.
Assuming all businesses currently in discontinued operations are sold by the end of 2006, the Company anticipates receiving after-tax proceeds in the range of $325 million.
All of Dover’s results are presented on a comparable basis to reflect the discontinuance of the seven operations for all periods presented.
Dover will host a Webcast of its second quarter 2006 conference call at 9:00 AM Eastern Time on Wednesday July 26, 2006. The Webcast can be accessed at the Dover Corporation website at www.dovercorporation.com. The conference call will also be made available for replay on the website and additional information on Dover’s second quarter 2006 results and its operating companies can also be found on the Company website and in the Company’s Form 10-Q filed after this release.
Dover Corporation makes information available to the public, orally and in writing, which may use words like “anticipates,” “expects,” “believes,” “indicates,” “suggests,” and “should,” which are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. This
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press release contains forward-looking statements regarding future events and the performance of Dover Corporation that involve risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, failure to achieve expected synergies, the impact of continued events in the Middle East on the worldwide economy, economic conditions, increases in the cost of raw materials, changes in customer demand, increased competition in the markets served by Dover Corporation’s operating companies, the impact of natural disasters, such as hurricanes, and their effect on global energy markets and other risks. Dover Corporation refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K, Form 10-Q and Form 8-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release.
TABLES FOLLOW
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DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share figures)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share figures)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue | $ | 1,655,397 | $ | 1,333,319 | $ | 3,161,627 | $ | 2,558,174 | ||||||||
Cost of goods and services | 1,039,667 | 864,273 | 1,996,748 | 1,657,915 | ||||||||||||
Gross profit | 615,730 | 469,046 | 1,164,879 | 900,259 | ||||||||||||
Selling and administrative expenses | 367,232 | 304,163 | 703,866 | 599,359 | ||||||||||||
Operating earnings | 248,498 | 164,883 | 461,013 | 300,900 | ||||||||||||
Interest expense, net | 19,266 | 15,241 | 40,746 | 31,356 | ||||||||||||
Other expense (income), net | 4,139 | (5,711 | ) | 6,974 | (8,441 | ) | ||||||||||
Total interest/other expense, net | 23,405 | 9,530 | 47,720 | 22,915 | ||||||||||||
Earnings before provision for income taxes and discontinued operations | 225,093 | 155,353 | 413,293 | 277,985 | ||||||||||||
Provision for income taxes | 66,435 | 45,880 | 123,285 | 76,903 | ||||||||||||
Earnings from continuing operations | 158,658 | 109,473 | 290,008 | 201,082 | ||||||||||||
Earnings (loss) from discontinued operations, net | (86,747 | ) | 63,728 | (14,271 | ) | 70,253 | ||||||||||
Net earnings | $ | 71,911 | $ | 173,201 | $ | 275,737 | $ | 271,335 | ||||||||
Basic earnings (loss) per common share: | ||||||||||||||||
Earnings from continuing operations | $ | 0.78 | $ | 0.54 | $ | 1.42 | $ | 0.99 | ||||||||
Earnings (loss) from discontinued operations | (0.43 | ) | 0.31 | (0.07 | ) | 0.35 | ||||||||||
Net earnings | 0.35 | 0.85 | 1.35 | 1.33 | ||||||||||||
Weighted average shares outstanding | 203,897 | 202,959 | 203,602 | 203,303 | ||||||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||
Earnings from continuing operations | $ | 0.77 | $ | 0.54 | $ | 1.41 | $ | 0.98 | ||||||||
Earnings (loss) from discontinued operations | (0.42 | ) | 0.31 | (0.07 | ) | 0.34 | ||||||||||
Net earnings | 0.35 | 0.85 | 1.34 | 1.33 | ||||||||||||
Weighted average shares outstanding | 205,615 | 203,984 | 205,234 | 204,417 | ||||||||||||
Dividends paid per common share | $ | 0.17 | $ | 0.16 | $ | 0.34 | $ | 0.32 | ||||||||
The following table is a reconciliation of the share amounts used in computing earnings per share:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Weighted average shares outstanding — Basic | 203,897 | 202,959 | 203,602 | 203,303 | ||||||||||||
Dilutive effect of assumed exercise of employee stock options | 1,718 | 1,025 | 1,632 | 1,114 | ||||||||||||
Weighted average shares outstanding — Diluted | 205,615 | 203,984 | 205,234 | 204,417 | ||||||||||||
Anti-dilutive shares excluded from diluted EPS computation | 1,875 | 8,906 | 6,141 | 8,357 |
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DOVER CORPORATION
MARKET SEGMENT RESULTS
(unaudited)
MARKET SEGMENT RESULTS
(unaudited)
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
REVENUE | ||||||||||||||||
Diversified | $ | 208,148 | $ | 196,969 | $ | 408,012 | $ | 382,027 | ||||||||
Electronics | 222,751 | 121,700 | 422,246 | 238,680 | ||||||||||||
Industries | 215,338 | 210,450 | 423,909 | 404,405 | ||||||||||||
Resources | 435,341 | 377,135 | 860,503 | 733,442 | ||||||||||||
Systems | 234,124 | 177,735 | 415,409 | 333,606 | ||||||||||||
Technologies | 343,367 | 252,005 | 638,308 | 471,089 | ||||||||||||
Intramarket eliminations | (3,672 | ) | (2,675 | ) | (6,760 | ) | (5,075 | ) | ||||||||
Total consolidated revenue | $ | 1,655,397 | $ | 1,333,319 | $ | 3,161,627 | $ | 2,558,174 | ||||||||
EARNINGS FROM CONTINUING OPERATIONS | ||||||||||||||||
Segment Earnings: | ||||||||||||||||
Diversified | $ | 23,037 | $ | 22,975 | $ | 45,714 | $ | 43,399 | ||||||||
Electronics | 29,862 | 12,259 | 50,616 | 21,486 | ||||||||||||
Industries | 30,208 | 24,418 | 57,536 | 46,336 | ||||||||||||
Resources | 80,919 | 65,545 | 163,716 | 128,292 | ||||||||||||
Systems | 38,341 | 26,910 | 65,312 | 48,947 | ||||||||||||
Technologies | 60,684 | 33,284 | 108,396 | 50,874 | ||||||||||||
Total segments | 263,051 | 185,391 | 491,290 | 339,334 | ||||||||||||
Corporate expense / other | (18,692 | ) | (14,797 | ) | (37,251 | ) | (29,993 | ) | ||||||||
Net interest expense | (19,266 | ) | (15,241 | ) | (40,746 | ) | (31,356 | ) | ||||||||
Earnings before provision for income taxes and discontinued operations | 225,093 | 155,353 | 413,293 | 277,985 | ||||||||||||
Provision for income taxes | (66,435 | ) | (45,880 | ) | (123,285 | ) | (76,903 | ) | ||||||||
Earnings from continuing operations — total consolidated | $ | 158,658 | $ | 109,473 | $ | 290,008 | $ | 201,082 | ||||||||
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DOVER CORPORATION
QUARTERLY MARKET SEGMENT INFORMATION (1)
(unaudited) (In thousands)
QUARTERLY MARKET SEGMENT INFORMATION (1)
(unaudited) (In thousands)
DIVERSIFIED
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Revenue | $ | 185,058 | $ | 196,969 | $ | 185,050 | $ | 182,006 | $ | 199,864 | $ | 208,148 | ||||||||||||
Segment earnings | 20,424 | 22,975 | 23,121 | 20,770 | 22,676 | 23,037 | ||||||||||||||||||
Bookings | 231,308 | 199,741 | 184,191 | 194,965 | 214,317 | 216,659 | ||||||||||||||||||
Backlog | 294,605 | 296,607 | 296,561 | 308,587 | 321,310 | 327,943 | ||||||||||||||||||
Book-to-Bill | 1.25 | 1.01 | 1.00 | 1.07 | 1.07 | 1.04 | ||||||||||||||||||
Operating margin | 11.0 | % | 11.7 | % | 12.5 | % | 11.4 | % | 11.3 | % | 11.1 | % |
ELECTRONICS
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Revenue | $ | 116,980 | $ | 121,700 | $ | 112,781 | $ | 194,582 | $ | 199,495 | $ | 222,751 | ||||||||||||
Segment earnings | 9,227 | 12,259 | 5,208 | 20,194 | 20,753 | 29,862 | ||||||||||||||||||
Bookings | 122,960 | 117,234 | 118,483 | 213,304 | 223,559 | 219,784 | ||||||||||||||||||
Backlog | 83,269 | 78,197 | 93,459 | 141,102 | 165,253 | 163,182 | ||||||||||||||||||
Book-to-Bill | 1.05 | 0.96 | 1.05 | 1.10 | 1.12 | 0.99 | ||||||||||||||||||
Operating margin | 7.9 | % | 10.1 | % | 4.6 | % | 10.4 | % | 10.4 | % | 13.4 | % |
INDUSTRIES
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Revenue | $ | 193,955 | $ | 210,450 | $ | 206,274 | $ | 207,267 | $ | 208,571 | $ | 215,338 | ||||||||||||
Segment earnings | 21,918 | 24,418 | 28,180 | 29,764 | 27,328 | 30,208 | ||||||||||||||||||
Bookings | 196,455 | 209,887 | 214,974 | 224,942 | 219,423 | 232,185 | ||||||||||||||||||
Backlog | 197,043 | 196,445 | 205,286 | 222,793 | 234,174 | 251,301 | ||||||||||||||||||
Book-to-Bill | 1.01 | 1.00 | 1.04 | 1.09 | 1.05 | 1.08 | ||||||||||||||||||
Operating margin | 11.3 | % | 11.6 | % | 13.7 | % | 14.4 | % | 13.1 | % | 14.0 | % |
RESOURCES
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Revenue | $ | 356,307 | $ | 377,135 | $ | 390,249 | $ | 395,247 | $ | 425,162 | $ | 435,341 | ||||||||||||
Segment earnings | 62,747 | 65,545 | 65,077 | 67,302 | 82,797 | 80,919 | ||||||||||||||||||
Bookings | 387,122 | 375,164 | 394,567 | 393,148 | 454,669 | 441,761 | ||||||||||||||||||
Backlog | 167,810 | 165,087 | 169,580 | 167,561 | 196,379 | 203,757 | ||||||||||||||||||
Book-to-Bill | 1.09 | 0.99 | 1.01 | 0.99 | 1.07 | 1.01 | ||||||||||||||||||
Operating margin | 17.6 | % | 17.4 | % | 16.7 | % | 17.0 | % | 19.5 | % | 18.6 | % |
(1) | Excludes discontinued operations |
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QUARTERLY MARKET SEGMENT INFORMATION (continued) (1)
(unaudited) (In thousands)
(unaudited) (In thousands)
SYSTEMS
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Revenue | $ | 155,871 | $ | 177,735 | $ | 197,076 | $ | 174,695 | $ | 181,285 | $ | 234,124 | ||||||||||||
Segment earnings | 22,037 | 26,910 | 29,221 | 21,920 | 26,971 | 38,341 | ||||||||||||||||||
Bookings | 156,181 | 221,709 | 201,361 | 176,185 | 231,036 | 229,633 | ||||||||||||||||||
Backlog | 125,037 | 170,238 | 172,806 | 174,402 | 223,843 | 218,360 | ||||||||||||||||||
Book-to-Bill | 1.00 | 1.25 | 1.02 | 1.01 | 1.27 | 0.98 | ||||||||||||||||||
Operating margin | 14.1 | % | 15.1 | % | 14.8 | % | 12.5 | % | 14.9 | % | 16.4 | % |
TECHNOLOGIES
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Revenue | $ | 219,084 | $ | 252,005 | $ | 275,612 | $ | 287,151 | $ | 294,941 | $ | 343,367 | ||||||||||||
Segment earnings | 17,590 | 33,284 | 44,591 | 35,920 | 47,712 | 60,684 | ||||||||||||||||||
Bookings | 233,611 | 275,436 | 261,722 | 288,104 | 339,124 | 325,101 | ||||||||||||||||||
Backlog | 90,426 | 109,210 | 102,232 | 102,207 | 147,984 | 141,526 | ||||||||||||||||||
Book-to-Bill | 1.07 | 1.09 | 0.95 | 1.00 | 1.15 | 0.95 | ||||||||||||||||||
Operating margin | 8.0 | % | 13.2 | % | 16.2 | % | 12.5 | % | 16.2 | % | 17.7 | % |
(1) | Excludes discontinued operations. |
QUARTERLY EPS & EARNINGS
(unaudited) (in thousands)
(unaudited) (in thousands)
2005 | 2006 | |||||||||||||||||||||||
1 Qtr. | 2 Qtr. | 3 Qtr. | 4 Qtr. | 1 Qtr. | 2 Qtr. | |||||||||||||||||||
Net earnings (loss) | ||||||||||||||||||||||||
Continuing operations | $ | 91,607 | $ | 109,473 | $ | 123,042 | $ | 119,457 | $ | 131,350 | $ | 158,658 | ||||||||||||
Discontinued operations | 6,525 | 63,729 | (362 | ) | (3,328 | ) | 72,477 | (86,747 | ) | |||||||||||||||
Net earnings | 98,134 | 173,201 | 122,680 | 116,126 | 203,826 | 71,911 | ||||||||||||||||||
Basic earnings (loss) per common share: | ||||||||||||||||||||||||
Continuing operations | $ | 0.45 | $ | 0.54 | $ | 0.61 | $ | 0.59 | $ | 0.65 | $ | 0.78 | ||||||||||||
Discontinued operations | 0.03 | 0.31 | (0.00 | ) | (0.02 | ) | 0.36 | (0.43 | ) | |||||||||||||||
Net earnings | 0.48 | 0.85 | 0.61 | 0.57 | 1.00 | 0.35 | ||||||||||||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||||||||||
Continuing operations | $ | 0.45 | $ | 0.54 | $ | 0.60 | $ | 0.59 | $ | 0.64 | $ | 0.77 | ||||||||||||
Discontinued operations | 0.03 | 0.31 | (0.00 | ) | (0.02 | ) | 0.35 | (0.42 | ) | |||||||||||||||
Net earnings | 0.48 | 0.85 | 0.60 | 0.57 | 0.99 | 0.35 |