) reported second-quarter 2014 adjusted earnings from continuing
operations of $1.29 per share, in line with the Zacks Consensus
Estimate. Adjusted earnings grew 14% from the prior-year quarter
earnings of $1.13 cents per share, driven by solid revenue growth,
strength in bookings and increase in earnings across all segments.
Including one-time items, earnings from continuing operations were
$1.29 per share, down 13% from $1.49 per share earned in the
prior-year quarter. Earnings in the year-ago quarter included tax
benefit of 36 cents per share while current quarter's earnings had
Revenues and Margins
Total revenue rose 6% year on year to $2 billion in the quarter,
lagging the Zacks Consensus Estimate of $2.07 billion. The
year-over-year rise includes 3% contribution each from organic
growth and acquisitions.
Cost of sales increased 6.4% to $1.25 billion in the quarter from
$1.18 billion in the year-ago quarter. Gross profit went up 5.4%
year over year to $796 million. Gross margin decreased 20 basis
points (bps) to 38.9% in the quarter.
Selling, general and administrative expenses increased 4.7% year
over year to $456 million. Operating profit in the reported quarter
increased 6.3% to $340 million from $320 million in the year-ago
quarter. Operating margin was flat at 16.6% in the quarter.
revenues went up 3.2% to $481 million in the quarter. The segment's
operating income also rose 4.9% year over year to $115 million.
Revenues in the
segment increased 9.3% to $698.9 million in the quarter. The
segment's income improved 9.4% year over year to $112.4 million.
Revenues in the
segment rose 11.7% year over year to $346 million in the reported
quarter. The segment's income increased 7.4% year over year to $63
Refrigeration & Food Equipment
segment revenues increased to $522 million in the quarter compared
with $517.5 million in the prior-year quarter. The segment reported
an operating income of $84.9 million, up 3.3% from $82 million a
Bookings and Backlog
The company ended the second quarter with bookings worth $2.086
billion, which grew 11% versus $1.886 billion at the end of the
second quarter of 2013. Backlog increased to $1.55 billion at end
of the reported quarter from $1.38 billion at the year-ago quarter
The company generated cash flow from operating activities of $197.7
million in the reported quarter, down from $249.4 million in the
prior-year quarter. Free cash flow was $153.8 million compared with
$217.4 million in the prior-year quarter.
Fiscal 2014 Guidance
Dover raised full year 2014 earnings guidance to the new range of
$4.75-$4.85 per share from its previous band of $4.60-$4.80 per
share. The company now expects organic revenue growth of 4%, close
to the upper end of its prior forecast of 3%-4%. Acquisitions are
expected to contribute 3% to the growth, resulting in revenue
growth of 6%-7% in fiscal 2014. The full-year segment margin
expectation of around 18% also remains unchanged.
During the quarter Dover shifted to its consolidated manufacturing
centers in Houston and Atlanta which is expected provide increased
productivity and enhanced customer service capabilities for Energy
and Refrigeration & Food Equipment segments. Dover's continuous
focus on the development and delivery of products and solutions to
customers will drive growth.
The company will benefit from the Knowles spin-off, which will
provide it with flexibility to focus on growth strategies. In
addition, Dover has realigned its businesses into a new segment
structure. This will also provide greater opportunity to leverage
scale and capitalize on productivity initiatives. Moreover Dover
remains optimistic about the acquisitions in its pipeline which are
expected to close in the coming quarters.
Illinois-based Dover is an industrial conglomerate producing a wide
range of specialized industrial products and manufacturing
equipment. It operates through four major operating segments:
Energy, Engineered Systems, Fluids and Refrigeration & Food
Dover currently carries a Zacks Rank #3 (Hold). Some better-ranked
stocks in the sector include
Broadwind Energy, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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