Dover Corporation (DOV)

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Dover Corporation (DOV)

Q4 2009 Earnings Call

January 29, 2010 9:00 am ET


Paul Goldberg – Treasure, Director Investor Relations

Robert Livingston – President, Chief Executive Officer

Brad Cerepak – Vice President, Chief Financial Officer


John Inch – BofA/Merrill Lynch

Nigel Coe – Deutsche Bank

Alexander Blanton – Ingalls & Snyder

Robert McCarthy – Robert Baird

Scott Davis – Morgan Stanley

Shannon O’Callaghan – Barclays Capital



Welcome to the fourth quarter 2009 Dover Corporation Earnings conference call. With us today are Bob Livingston, President and Chief Executive Officer of Dover Corporation, Brad Cerepak, Vice President and CFO of Dover Corporation and Paul Goldberg, Treasurer and Director of Investor Relations of Dover Corporation. (Operator Instructions) I would now like to turn the call over to Mr. Paul Goldberg.

Paul Goldberg

Good morning and welcome to Dover’s fourth quarter earnings call. With me today are Bob Livingston, Dover’s President and Chief Executive Officer and Brad Cerepak, our CFO.

Today’s call will begin with some comments from Bob and Brad on Dover’s fourth quarter and full year operating and financial performance and our outlook for 2010. We will then open the call up to questions. In the interest of time we kindly ask that you limit yourself to one question with a follow up.

Please note that our current earnings release, investor supplement and associated presentation can be found on our website This call will be available for playback through 11:00 pm February 12 and the audio portion of this call will be archived on our website for three months. The replay telephone number is 800-642-1687. When accessing the playback you’ll need to supply the following reservation code: 49660424.

Before we get started I’d like to remind everybody that our comments today which are intended to supplement your understanding of Dover may contain certain forward-looking statements that are inherently subject to uncertainties. We caution everyone to be guided in their analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements.

Also, we undertake no obligation to publicly update or revise any forward-looking statements except as required by law. We would also direct your attention to our website where considerably more information can be found.

And with that, I’d like to turn this call over to Bob.

Robert Livingston

Thanks Paul. Good morning everyone and thank you for joining us for this morning’s conference call. Before we get into our results I’d like to provide some general comments on our end markets and the current business climate.

I’m pleased to report we finished the fourth quarter better than expected across the majority of our companies. Sequentially, order rates continue to be stable or up in virtually all our end markets.

Improving trends in electronic technologies, energy and product ID were supported by several factors such as increased demand for a new wave of consumer electronics, modest but steady improvement in the North American rig count, channel restocking and a relatively stable pricing environment.

We are encouraged by the way our business activities have developed the last two quarters and are entering 2010 with expectations of revenue growth across our segments.

With that, let me move to our fourth quarter and full year results. Today we reported fourth quarter earnings per share of $0.55 down 40% from last year. Fourth quarter revenue was $1.5 billion down 13% from last year and flat sequentially.

Fourth quarter revenue was stronger than anticipated at Fluid Management and Electronic Technologies while the revenue seasonality posted at Engineered Systems was as expected.

Net earnings from continuing operations were $102 million, down 40%. For the full year, Dover’s revenue was $5.8 billion down 24% from the prior year and in line with our previously provided guidance. Full year EPS of $1.99 and earnings from continuing operations of $372 million were down 46%.

Bookings for the quarter were $1.6 billion up 10% over the prior year and up 10% sequentially. I am very pleased to report all segments and platforms posted sequential improvements in order rates and all segments achieved book to bills of greater than one.

Operating margin for the quarter was 13.1% down 220 basis points. That said, operating margin sequentially improved at Fluid Management and Industrial products resulting from higher volume and the continuing benefits of restructuring actions taken earlier in the year.

For the full year operating margin was 12.3%, a 300 basis point decline but a performance we are pleased with given the economic environment. I am confident the restructuring actions taken throughout the year have positioned us well as we enter 2010.

In the fourth quarter we generated free cash flow of $211 million or 14% of revenue. For the full year free cash flow was $682 million, 12% of revenue. We continued to invest in strategic target markets, namely, product ID, energy, fluid solutions, refrigeration and food equipment and communication components.

We closed on four strategic add on acquisitions during the fourth quarter; Barker, Inpro/Seal, A La Cart, and Extech for a total investment of $184 million. These acquisitions fit squarely within our strategy and expand our product offerings in niche growth applications.

Our acquisition pipeline remains active as we continue to look for opportunities which complement our existing strong positions in our target markets.

Now let me turn the call over to Brad for comments on our segment performance.

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