Dover Reports Fourth Quarter And Full Year 2016 Results

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Dover Reports Fourth Quarter And Full Year 2016 Results

-- Reports quarterly revenue of $1.8 billion, an increase of 5% from the prior year
-- Delivers quarterly diluted earnings per share from continuing operations of $1.03, including $0.36 gain on disposition, a recall charge of $0.09, and $0.05 of discrete tax benefits
-- Posts full year diluted earnings per share from continuing operations of $3.25, including gains on dispositions of $0.44, a recall charge of $0.09, and $0.09 of discrete tax benefits
-- Confirms 2017 full year diluted earnings per share from continuing operations to be in the range of $3.40 to $3.60

DOWNERS GROVE, Ill., Jan. 26, 2017 /PRNewswire/ -- Dover (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2016, revenue was $1.8 billion, an increase of 5% from the prior year. The increase in the quarter was driven by acquisition growth of 11%, offset by an organic revenue decline of 2%, a 3% impact from dispositions, and an unfavorable impact from foreign exchange of 1%. Earnings from continuing operations were $161.2 million, an increase of 18% as compared to $136.6 million for the prior year period. Diluted earnings per share from continuing operations ("EPS") for the fourth quarter ended December 31, 2016, were $1.03, compared to $0.87 EPS in the prior year period, representing an increase of 18%. EPS from continuing operations for the fourth quarter of 2016 included a gain on a disposition of $0.36, a charge of $0.09 for a voluntary product recall, and $0.05 of discrete tax benefits. EPS from continuing operations for the prior year period include discrete tax benefits of $0.06 EPS. Excluding these items, adjusted EPS from continuing operations for the fourth quarter of 2016 was $0.71, a decrease of 12% from an adjusted EPS of $0.81 in the prior year period. EPS for the fourth quarter ended December 31, 2016 and 2015 include restructuring costs of $0.04 EPS and $0.08 EPS, respectively.

Revenue for the year ended December 31, 2016 was $6.8 billion, a decrease of 2% from the prior year, reflecting an organic revenue decline of 5%, a 3% impact from dispositions, and an unfavorable impact from foreign exchange of 1%, offset by acquisition growth of 7%. Earnings from continuing operations for the year ended December 31, 2016, were $508.9 million, a decrease of 15% as compared to $595.9 million for the prior year period. Diluted EPS for the year ended December 31, 2016, was $3.25, compared to $3.74 EPS in the prior year period, representing a decrease of 13%. EPS from continuing operations for the year ended December 31, 2016, includes gains on dispositions of $0.44, a charge of $0.09 for a voluntary product recall, and discrete tax benefits of $0.09. EPS from continuing operations for the year ended December 31, 2015, includes discrete tax benefits of $0.11. Excluding these items adjusted EPS from continuing operations decreased 22% to $2.82 from a comparable EPS of $3.63 in the prior year period. EPS for the years ended December 31, 2016 and 2015 also include restructuring costs of $0.18 EPS and $0.25 EPS, respectively.

Dover's President and Chief Executive Officer, Robert A. Livingston, said, "I was pleased with our fourth quarter business activity and results.  And, I was especially pleased we were able to close the Wayne transaction earlier than previously expected.

"Among the highlights in the quarter were a continued recovery in our shorter cycle drilling and artificial lift markets, along with strong results in our Printing & Identification platform.  We also saw solid activity in our Bearings & Compression and Petrochemical & Polymer markets.  These positive developments helped mitigate continued soft conditions in longer cycle oil & gas markets, especially within transport, and challenges in retail refrigeration.

"With regard to 2017, we confirm our guidance for full year diluted earnings per share from continuing operations to be in the range of $3.40 to $3.60.  Within this guidance, revenue growth is expected to be 10% to 12%, including organic growth of 3% to 5% and acquisition growth of approximately 10%, partially offset by a 1% impact from dispositions and a 2% headwind from FX."

Net earnings for the fourth quarter ended December 31, 2016, were $161.2 million, or $1.03 EPS, compared to net earnings of $141.8 million, or $0.91 EPS, for the same period of 2015, which included earnings from discontinued operations of $5.3 million.

Net earnings for the year ended December 31, 2016, were $508.9 million, or $3.25 EPS, compared to net earnings of $869.8 million, or $5.46 EPS, for the same period of 2015, which included earnings from discontinued operations of $273.9 million, or $1.72 EPS. 2015 earnings from discontinued operations included gains of $265.6 million, or $1.67 EPS, resulting from the disposition of two businesses.

Dover will host a webcast of its fourth quarter 2016 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, January 26, 2017. The webcast can be accessed on the Dover website at dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover's fourth quarter results and its operating segments can also be found on the Company's website.

About Dover:

Dover is a diversified global manufacturer with annual revenue exceeding $7 billion. We deliver innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve.  Recognized for our entrepreneurial approach for over 60 years, our team of 29,000 employees takes an ownership mindset, collaborating with customers to redefine what's possible.  Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under "DOV." Additional information is available at dovercorporation.com.

Forward-Looking Statements:

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, foreign exchange, changes in operations, acquisitions, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as "anticipates," "expects," "believes," "suggests," "will," "plans," "should," "would," "could," and "forecast", or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover's customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover's ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, and tax policies; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks, including product recalls; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. Dover 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, for a discussion of these and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.

 

 


INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2016

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited)(in thousands, except per share data)


Three Months Ended December 31,

Years Ended December 31,

2016

2015

2016

2015

Revenue

$

1,777,961

$

1,694,600

$

6,794,342

$

6,956,311

Cost of goods and services

1,158,257

1,080,791

4,322,373

4,388,167

Gross profit

619,704

613,809

2,471,969

2,568,144

Selling, general, and administrative expenses

455,622

414,365

1,757,523

1,647,382

Operating earnings

164,082

199,444

714,446

920,762

Interest expense

35,515

32,520

136,401

131,676

Interest income

(2,738)

(1,271)

(6,759)

(4,419)

Other income, net

(191)

(1,295)

(7,930)

(7,105)

Gain on sale of businesses

(84,537)

—

(96,598)

—

Earnings before provision for income taxes and discontinued operations

216,033

169,490

689,332

800,610

Provision for income taxes

54,871

32,916

180,440

204,729

Earnings from continuing operations

161,162

136,574

508,892

595,881

Earnings from discontinued operations, net

—

5,251

—

273,948

Net earnings

$

161,162

$

141,825

$

508,892

$

869,829








Basic earnings per common share:






Earnings from continuing operations

$

1.04

$

0.88

$

3.28

$

3.78

Earnings from discontinued operations, net

—

0.03

—

1.74

Net earnings

1.04

0.92

3.28

5.52








Weighted average shares outstanding

155,376

154,986

155,231

157,619








Diluted earnings per common share:






Earnings from continuing operations

$

1.03

$

0.87

$

3.25

$

3.74

Earnings from discontinued operations, net

—

0.03

—

1.72

Net earnings

1.03

0.91

3.25

5.46








Weighted average shares outstanding

156,816

156,254

156,636

159,172








Dividends paid per common share

$

0.44

$

0.42

$

1.72

$

1.64








 

 


DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)



2016

2015

Q1

Q2

Q3

Q4

FY 2016

Q1

Q2

Q3

Q4

FY 2015

REVENUE











Energy

$

283,230

$

259,008

$

273,248

$

292,952

$

1,108,438

$

430,423

$

366,044

$

363,872

$   323,341

$

1,483,680













Engineered Systems











Printing & Identification

239,681

263,648

253,091

266,082

1,022,502

230,181

229,934

227,992

255,563

943,670

Industrials

337,314

328,784

317,471

360,212

1,343,781

343,015

363,157

351,404

341,667

1,399,243

576,995

592,432

570,562

626,294

2,366,283

573,196

593,091

579,396

597,230

2,342,913













Fluids

399,062

405,838

412,822

482,852

1,700,574

340,236

351,511

352,018

355,508

1,399,273













Refrigeration & Food Equipment

363,252

429,386

451,328

376,373

1,620,339

372,097

448,115

492,460

418,758

1,731,430













Intra-segment eliminations

(266)

(319)

(197)

(510)

(1,292)

(451)

(133)

(164)

(237)

(985)

Total consolidated revenue

$

1,622,273

$

1,686,345

$

1,707,763

$

1,777,961

$

6,794,342

$

1,715,501

$

1,758,628

$

1,787,582

$1,694,600

$

6,956,311













NET EARNINGS











Segment Earnings:











Energy

$

11,244

$

(75)

$

13,279

$

30,888

$

55,336

$

52,305

$

40,909

$

48,726

$   31,250

$

173,190

Engineered Systems

93,748

104,034

97,240

96,807

391,829

88,149

96,702

102,866

89,244

376,961

Fluids

46,047

54,033

66,178

34,663

200,921

54,634

70,168

74,911

62,404

262,117

Refrigeration & Food Equipment

38,161

63,230

64,111

118,126

283,628

36,150

65,732

76,665

42,752

221,299

Total segments

189,200

221,222

240,808

280,484

931,714

231,238

273,511

303,168

225,650

1,033,567

Corporate expense / other

29,862

24,566

26,638

31,674

112,740

34,526

20,382

25,881

24,911

105,700

Interest expense

33,318

33,779

33,789

35,515

136,401

33,005

33,053

33,098

32,520

131,676

Interest income

(1,604)

(1,622)

(795)

(2,738)

(6,759)

(968)

(1,065)

(1,115)

(1,271)

(4,419)

Earnings from continuing operations before provision for income taxes

127,624

164,499

181,176

216,033

689,332

164,675

221,141

245,304

169,490

800,610

Provision for income taxes

28,268

46,209

51,092

54,871

180,440

47,485

65,507

58,821

32,916

204,729

Earnings from continuing operations

99,356

118,290

130,084

161,162

508,892

117,190

155,634

186,483

136,574

595,881

Earnings (loss) from discontinued operations, net

—

—

—

—

—

92,320

176,762

(385)

5,251

273,948

Net earnings

$

99,356

$

118,290

$

130,084

$

161,162

$

508,892

$

209,510

$

332,396

$

186,098

$ 141,825

$

869,829













SEGMENT OPERATING MARGIN









Energy

4.0

%

—

%

4.9

%

10.5

%

5.0

%

12.2

%

11.2

%

13.4

%

9.7

%

11.7

%

Engineered Systems

16.2

%

17.6

%

17.0

%

15.5

%

16.6

%

15.4

%

16.3

%

17.8

%

14.9

%

16.1

%

Fluids

11.5

%

13.3

%

16.0

%

7.2

%

11.8

%

16.1

%

20.0

%

21.3

%

17.6

%

18.7

%

Refrigeration & Food Equipment

10.5

%

14.7

%

14.2

%

31.4

%

17.5

%

9.7

%

14.7

%

15.6

%

10.2

%

12.8

%

Total segment operating margin

11.7

%

13.1

%

14.1

%

15.8

%

13.7

%

13.5

%

15.6

%

17.0

%

13.3

%

14.9

%













DEPRECIATION AND AMORTIZATION EXPENSE









Energy

$

34,160

$

33,289

$

32,605

$

31,366

$

131,420

$

34,427

$

32,740

$

31,858

$    42,754

$

141,779

Engineered Systems

16,036

16,075

16,238

25,597

73,946

14,526

14,392

14,503

16,493

59,914

Fluids

20,511

20,981

20,833

22,899

85,224

13,848

13,648

13,367

15,215

56,078

Refrigeration & Food Equipment

16,728

16,881

16,146

15,263

65,018

16,458

16,406

16,609

16,601

66,074

Corporate

1,169

868

901

2,193

5,131

923

841

837

643

3,244

Total depreciation and amortization expense

$

88,604

$

88,094

$

86,723

$

97,318

$

360,739

$

80,182

$

78,027

$

77,174

$    91,706

$

327,089

 

 

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)


2016

2015

Q1

Q2

Q3

Q4

FY 2016

Q1

Q2

Q3

Q4

FY 2015

BOOKINGS










Energy

$

273,445

$

246,021

$

270,685

$

299,771

$

1,089,922

$

416,628

$

345,079

$

351,557

$

315,996

$

1,429,260












Engineered Systems










Printing & Identification

242,569

266,490

248,443

268,951

1,026,453

235,617

224,203

226,756

250,639

937,215

Industrials

329,957

304,345

331,435

374,073

1,339,810

337,070

336,173

338,744

357,451

1,369,438

572,526

570,835

579,878

643,024

2,366,263

572,687

560,376

565,500

608,090

2,306,653












Fluids

418,345

413,767

413,535

457,283

1,702,930

339,310

333,695

357,032

321,154

1,351,191












Refrigeration & Food Equipment

411,367

468,661

429,134

336,645

1,645,807

419,659

486,793

430,681

379,967

1,717,100












Intra-segment eliminations

(90)

(944)

(245)

(308)

(1,587)

(628)

(417)

(385)

(486)

(1,916)












Total consolidated bookings

$

1,675,593

$

1,698,340

$

1,692,987

$

1,736,415

$

6,803,335

$

1,747,656

$

1,725,526

$

1,704,385

$

1,624,721

$

6,802,288












BACKLOG










Energy

$

144,828

$

129,873

$

126,519

$

134,181


$

212,060

$

194,819

$

156,631

$

155,586













Engineered Systems










Printing & Identification

102,640

104,509

101,190

98,924


108,151

103,403

100,476

98,288

Industrials

235,384

210,646

224,892

252,780


276,598

248,592

236,298

250,725


338,024

315,155

326,082

351,704


384,749

351,995

336,774

349,013













Fluids

286,457

315,786

318,246

331,238


259,504

240,389

236,608

243,459













Refrigeration & Food Equipment

303,479

332,312

309,462

258,329


337,084

373,193

307,351

247,352













Intra-segment eliminations

(36)

(265)

(252)

(102)


(595)

(354)

(598)

(808)













Total consolidated backlog

$

1,072,752

$

1,092,861

$

1,080,057

$

1,075,350


$

1,192,802

$

1,160,042

$

1,036,766

$

994,602

 

 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

(unaudited)(in thousands, except per share data*)

Earnings Per Share











2016

2015

Q1

Q2

Q3

Q4

FY 2016

Q1

Q2

Q3

Q4

FY 2015

Basic earnings (loss) per common share:








Continuing operations

$

0.64

$

0.76

$

0.84

$

1.04

$

3.28

$

0.72

$

0.98

$

1.20

$

0.88

$

3.78

Discontinued operations

—

—

—

—

—

0.57

1.11

—

0.03

1.74

Net earnings

$

0.64

$

0.76

$

0.84

$

1.04

$

3.28

$

1.30

$

2.10

$

1.20

$

0.92

$

5.52












Diluted earnings (loss) per common share:








Continuing operations

$

0.64

$

0.76

$

0.83

$

1.03

$

3.25

$

0.72

$

0.97

$

1.19

$

0.87

$

3.74

Discontinued operations

—

—

—

—

—

0.57

1.10

—

0.03

1.72

Net earnings

$

0.64

$

0.76

$

0.83

$

1.03

$

3.25

$

1.28

$

2.07

$

1.19

$

0.91

$

5.46












Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:












Net earnings (loss):










Continuing operations

$

99,356

$

118,290

$

130,084

$

161,162

$

508,892

$

117,190

$

155,634

$

186,483

$

136,574

$

595,881

Discontinued operations

—

—

—

—

—

92,320

176,762

(385)

5,251

273,948

Net earnings

$

99,356

$

118,290

$

130,084

$

161,162

$

508,892

$

209,510

$

332,396

$

186,098

$

141,825

$

869,829












Average shares outstanding:








Basic

155,064

155,180

155,300

155,376

155,231

161,650

158,640

155,300

154,986

157,619

Diluted

156,161

156,595

156,798

156,816

156,636

163,323

160,398

156,560

156,254

159,172






















Adjusted Earnings Per Share (Non-GAAP)




















Earnings from continuing operations are adjusted by gains (losses) from discrete and other tax items, gain on disposition of businesses, and a product recall charge to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:




















2016

2015

Q1

Q2

Q3

Q4

FY 2016

Q1

Q2

Q3

Q4

FY 2015

Adjusted earnings from continuing operations:




















Earnings from continuing operations

$

99,356

$

118,290

$

130,084

$

161,162

$

508,892

$

117,190

$

155,634

$

186,483

$

136,574

$

595,881

Gains (losses) from discrete and other tax items

7,348

(1,221)

(304)

7,752

13,575

—

—

8,131

9,382

17,513

Gain on dispositions, net of tax

11,228

—

—

56,975

68,203

—

—

—

—

—

Product recall charge, net of tax

—

—

—

(14,237)

(14,237)

—

—

—

—

—

Adjusted earnings from continuing operations

$

80,780

$

119,511

$

130,388

$

110,672

$

441,351

$

117,190

$

155,634

$

178,352

$

127,192

$

578,368












Adjusted diluted earnings per common share:








Earnings from continuing operations

$

0.64

$

0.76

$

0.83

$

1.03

$

3.25

$

0.72

$

0.97

$

1.19

$

0.87

$

3.74

Gains (losses) from discrete and other tax items

0.05

(0.01)

—

0.05

0.09

—

—

0.05

0.06

0.11

Gain on dispositions, net of tax

0.07

—

—

0.36

0.44

—

—

—

—

—

Product recall charge, net of tax

—

—

—

(0.09)

(0.09)

—

—

—

—

—

Adjusted earnings from continuing operations

$

0.52

$

0.76

$

0.83

$

0.71

$

2.82

$

0.72

$

0.97

$

1.14

$

0.81

$

3.63

* Per share data may not add due to rounding.

 

 

DOVER CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)(in thousands)


December 31, 2016

December 31, 2015

Assets:


Cash and cash equivalents

$

349,146

$

362,185

Receivables, net of allowances

1,265,201

1,120,490

Inventories, net

870,487

802,895

Prepaid and other current assets

104,357

133,440

Property, plant and equipment, net

945,670

854,269

Goodwill

4,562,677

3,737,389

Intangible assets, net

1,802,923

1,413,223

Other assets and deferred charges

215,530

182,185

Total assets

$

10,115,991

$

8,606,076




Liabilities and Stockholders' Equity:


Notes payable and current maturities of long-term debt

$

414,550

$

151,122

Payables and accrued expenses

1,525,768

1,216,060

Deferred taxes and other non-current liabilities

1,169,290

990,664

Long-term debt

3,206,637

2,603,655

Stockholders' equity

3,799,746

3,644,575

Total liabilities and stockholders' equity

$

10,115,991

$

8,606,076

 

 

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)(in thousands)


Years Ended December 31,

2016

2015

Operating activities:


Net earnings

$

508,892

$

869,829

Earnings from discontinued operations, net

—

(273,948)

Depreciation and amortization

360,739

327,089

Stock-based compensation

21,015

30,697

Contributions to employee benefit plans

(25,691)

(21,942)

Gain on sale of businesses

(96,598)

—

Net change in assets and liabilities

93,618

17,334

Net cash provided by operating activities of continuing operations

861,975

949,059




Investing activities:


Additions to property, plant and equipment

(165,205)

(154,251)

Acquisitions (net of cash and cash equivalents acquired)

(1,561,737)

(567,843)

Proceeds from the sale of property, plant and equipment

17,749

14,604

Proceeds from the sale of businesses

206,407

689,314

Settlement of net investment hedge

—

(17,752)

Other

(1,057)

1,350

Net cash used in investing activities of continuing operations

(1,503,843)

(34,578)




Financing activities:


Change in commercial paper and notes payable, net

254,834

(327,000)

Net increase in debt

654,382

94,252

Dividends to stockholders

(268,339)

(257,969)

Purchase of common stock

—

(600,164)

Net proceeds from exercise of share-based awards

(7,269)

(1,005)

Net cash provided by (used in) financing activities of continuing operations

633,608

(1,091,886)




Net cash used in discontinued operations

—

(115,930)




Effect of exchange rate changes on cash

(4,779)

(26,061)




Net decrease in cash and cash equivalents

(13,039)

(319,396)

Cash and cash equivalents at beginning of period

362,185

681,581

Cash and cash equivalents at end of period

$

349,146

$

362,185

 

 

ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2016 
(Amounts in thousands except share data and where otherwise indicated)

Acquisitions

During the fourth quarter of 2016, the Company completed the acquisitions of Ravaglioli S.p.A. Group, a provider of automotive service equipment, and Wayne Fueling Systems Ltd., a provider of fuel dispensing, payment, systems and aftermarket services for retail and commercial fuel stations. These acquisitions were acquired to complement and expand upon existing operations within the Engineered Systems and Fluids segments, respectively. For the full year 2016, Dover made a total of six acquisitions for a net cash consideration totaling $1,561.7 million.

Disposed Businesses

For the full year 2016, the Company completed the sale of Texas Hydraulics, a custom manufacturer of fluid power components, during the first quarter of 2016 as well as Tipper Tie, a global supplier of processing and clip packaging machines, during the fourth quarter of 2016. These disposals did not represent strategic shifts in operations and, therefore, did not qualify for presentation as a discontinued operation. Upon disposal of these businesses, the Company recognized total proceeds of $47.3 million and $158.9 million, which resulted in an after-tax gain on sale of $11.2 million and $57.0 million, respectively.

Restructuring

During the quarter, the Company took actions to adjust our costs and streamline our businesses, resulting in $8.8 million, or $0.04 EPS, of restructuring charges. These charges were incurred primarily within our Fluids segment with costs incurred of $7.8 million. For full year, restructuring costs totaled $40.2 million, or $0.18 EPS, of which primarily $18.5 million was incurred in Energy and $16.9 million in Fluids.

Tax Rate

The effective tax rate on continuing operations was 25.4% and 19.4% for the fourth quarters of 2016 and 2015, respectively. On a full year basis, the effective tax rates on continuing operations for 2016 and 2015 were 26.2% and 25.6%, respectively. The 2016 and 2015 rates were favorably impacted by discrete and other items, as shown in the reconciliation for quarterly earnings per share included herein. After adjusting for discrete and other items, the fourth quarter effective tax rates were 29.0% and 25.0% for 2016 and 2015, respectively, and the full year rates were 28.1% and 27.8% for 2016 and 2015, respectively. The increase in the effective tax rate year over year is principally due to adjustments of the tax accounts to the U.S. tax return filed.

Capitalization

The following table provides a reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (Non-GAAP)

December 31, 2016

December 31, 2015

Current maturities of long-term debt

$

6,950

$

122

Commercial paper

407,600

151,000

Notes payable and current maturities of long-term debt

414,550

151,122

Long-term debt

3,206,637

2,603,655

Total debt

3,621,187

2,754,777

Less: Cash and cash equivalents

(349,146)

(362,185)

Net debt

3,272,041

2,392,592

Add: Stockholders' equity

3,799,746

3,644,575

Net capitalization

$

7,071,787

$

6,037,167

Net debt to net capitalization

46.3

%

39.6

%

 

Quarterly Cash Flow

2016

2015

Q1

Q2

Q3

Q4

FY 2016

Q1

Q2

Q3

Q4

FY 2015

Net Cash Flows Provided By (Used In):










Operating activities

$

133,413

$

207,868

$

231,665

$

289,029

$

861,975

$

131,332

$

218,911

$

282,213

$

316,603

$

949,059

Investing activities

(425,857)

(69,415)

(66,110)

(942,461)

(1,503,843)

156,585

457,875

(33,454)

(615,584)

(34,578)

Financing activities

178,507

(127,678)

98,491

484,288

633,608

(416,603)

(608,329)

(86,033)

19,079

(1,091,886)

 

Quarterly Free Cash Flow (Non-GAAP)

2016

2015

Q1

Q2

Q3

Q4

FY 2016

Q1

Q2

Q3

Q4

FY 2015

Cash flow from operating activities

$

133,413

$

207,868

$

231,665

$

289,029

$

861,975

$

131,332

$

218,911

$

282,213

$

316,603

$

949,059

Less: Capital expenditures

(37,230)

(35,422)

(43,116)

(49,437)

(165,205)

(27,956)

(43,807)

(39,516)

(42,972)

(154,251)

Free cash flow

$

96,183

$

172,446

$

188,549

$

239,592

$

696,770

$

103,376

$

175,104

$

242,697

$

273,631

$

794,808












Free cash flow as a percentage of earnings from continuing operations

96.8

%

145.8

%

144.9

%

148.7

%

136.9

%

88.2

%

112.5

%

130.1

%

200.4

%

133.4

%












Free cash flow as a percentage of revenue

5.9

%

10.2

%

11.0

%

13.5

%

10.3

%

6.0

%

10.0

%

13.6

%

16.1

%

11.4

%

 

Revenue Growth Factors

2016

Q1

Q2

Q3

Q4

Full Year

Organic

(7)

%

(7)

%

(7)

%

(2)

%

(5)

%

Acquisitions

6

%

6

%

6

%

11

%

7

%

Dispositions

(3)

%

(3)

%

(3)

%

(3)

%

(3)

%

Currency translation

(1)

%

—

%

(1)

%

(1)

%

(1)

%

(5)

%

(4)

%

(5)

%

5

%

(2)

%

 

Non-GAAP Disclosures

In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted earnings from continuing operations, adjusted diluted earnings per common share, net debt, net capitalization, net debt to net capitalization ratio, free cash flow, organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for earnings from continuing operations, diluted earnings per common share, debt or equity, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.  Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for gains or losses from discrete and other tax items, gain on disposition of businesses, and a product recall charge.  Adjusted diluted earnings per common share represents adjusted earnings from continuing operations divided by average diluted shares.  Management believes this information is useful to investors to better understand the company's ongoing profitability and facilitates easier comparisons of the company's profitability to prior and future periods and to its peers.  Net debt represents total debt minus cash and cash equivalents.  Net capitalization represents net debt plus stockholders' equity.  Management believes the net debt to net capitalization ratio is useful to assess our overall financial leverage and capacity. Free cash flow represents net cash provided by operating activities minus capital expenditures.  Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.  Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue performance and trends between periods.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/dover-reports-fourth-quarter-and-full-year-2016-results-300397177.html

SOURCE Dover Corporation

Investor Contact: Paul Goldberg, Vice President - Investor Relations, (212) 922-1640, peg@dovercorp.com; Media Contact: Adrian Sakowicz, Vice President - Communications, (630) 743-5039, asakowicz@dovercorp.com