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Dover's Q4 & FY13 Earnings In Line - Analyst Blog

By: Zacks.com
Posted: 1/30/2014 1:00:00 PM
Referenced Stocks: AIMC;B;DOV;MIDD

Dover Corporation ( DOV ) reported fourth-quarter 2013 adjusted earnings from continuing operations of $1.28 per share, in line with the Zacks Consensus Estimate and up 17% from the prior-year quarter's earnings of $1.09 per share. Organic growth across all segments, strength in refrigeration and food equipment, fast moving consumer goods, fluids, drilling and downstream energy markets helped the year-over-year increase.

Including one-time items, earnings from continuing operations were $1.22 per share, up 5% from $1.16 per share earned in the prior-year quarter. Earnings in the reported quarter included tax benefit of 3 cents per share and a charge of 9 cents per share related to the Knowles spin-off. The year-ago quarter included tax benefit of 7 cents per share.

Revenues and Margins

Total revenue rose 10% year on year to $2.21 billion in the quarter, ahead of the Zacks Consensus Estimate of $2.18 billion. The year-over-year rise includes an organic growth of 5% and a 5% contribution from acquisitions.

Cost of sales increased 11% to $1.38 billion in the quarter from $1.24 billion in the year-ago quarter. Gross profit went up 7% year over year to $830 million. Gross margin contracted 80 basis points (bps) to 37.6% in the quarter.

Selling, general and administrative expenses increased 9% year over year to $513 million. Operating profit in the reported quarter increased 4% to $317 million. Operating margin contracted 70 bps to 14.4% in the quarter.

Segmental Performance

Revenues in the Communication Technologies segment rose 7% year over year to $428 million in the reported quarter. The segment's income increased 12% year over year to $66 million.

Energy revenues went up 8% to $584 million in the quarter. The segment's operating income edged up 1% to $135 million from $133 million in the prior-year quarter.

Revenues in the Engineered Systems segment increased 12% to $919 million in the quarter. The segment's income also improved 19% to $121 million.

Printing & Identification segment revenues were $276 million in the quarter compared with $254 million in the prior-year quarter. The segment reported an operating income of $44 million, increasing 8% from $40.6 million a year ago.

Bookings and Backlog

Dover ended 2013 with bookings worth $8.7 billion versus $8.1 billion at the end of fiscal 2012. Backlog increased year over year to $1.55 billion at the end of the reported quarter compared with $1.48 million in the year-ago quarter.

Financial Position

Dover generated cash flow from operating activities of $1.18 billion in fiscal 2013, up from $1.26 billion in the prior year. Free cash flow was $942 million compared with $964 million in the prior year.

Long-term debt was $229 million as of 2013-end compared with $610 million as of 2012-end. Net debt to net capitalization was 27.4% as of fiscal 2013-end compared with 28.9% as of fiscal 2012-end.

During the quarter, Dover completed four acquisitions, three in the Energy segment and one in the Engineered Systems segment.  For fiscal 2013, Dover has made 10 acquisitions for $323 million.

Fiscal 2013 Performance

Dover reported adjusted earnings per share of $5.28, a 19% increase over $4.44 per share earned in the prior fiscal year and in line with the Zacks Consensus Estimate. Including one-time items, such as Knowles spin-off costs, discrete tax benefits, and other one-time gains, earnings stood at $5.57 per share compared with $4.53 in the prior year, reflecting a 23% increase.

Revenues came in at $8.7 billion, up 8% year over year, reflecting organic growth of 3% and a 5% increase from acquisitions and in line with the Zacks Consensus Estimate.  

Fiscal 2014 Outlook

Dover expects earnings in the range of $4.60-$4.80 per share. Dover projects revenue growth of 5%-6% in fiscal 2014.

Dover currently retains a short-term Zacks Rank #3 (Hold). Some better-performing stocks in the sector include Middleby Corp. ( MIDD ), Altra Industrial Motion Corp. ( AIMC ) and Barnes Group Inc. ( B ). While Middleby carries a Zacks Rank #1 (Strong Buy), Altra Industrial Motion and Baroup have a Zacks Rank #2 (Buy).



ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

BARNES GRP (B): Free Stock Analysis Report

DOVER CORP (DOV): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

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