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dover 1Q06_Slides

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  • 1. Dover Corporation First Quarter 2006 Conference Call April 28, 2006 9:00 a.m. Eastern 1
  • 2. Forward Looking Statements We want to remind everyone that our comments 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. We would also direct your attention to our internet site, www.dovercorporation.com, where considerably more information can be found. 2
  • 3. Dover’s 2006 Performance YTD Earnings Per Share Performance 2006 Q 1 Highlights 0.70 Revenue $1.7 billion + 22% 0.65 0.60 EPS $0.65 + 40% 0.55 Organic Growth 16.3% 0.50 0.45 Segment Margin 13.9% + 230 bps 0.40 0.35 Operating Leverage 24.2% 0.30 0.25 Revenue, earnings, margins, and 0.20 backlogs up at all segments. 0.15 Bookings up at 5 out of 6. 0.10 0.05 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2004 2005 2006 YTD 3
  • 4. Results From Continuing Operations Q1 2006 Q1 2005 % Change Revenue $1,668.4 $1,367.8 22% EBT $191.6 $127.6 50% Earnings $133.5 $95.4 40% EPS $0.65 $0.47 40% Bookings $1,842.3 $1,503.3 23% Backlog $1,424.5 $1,105.0 29% Record Revenue, Backlog and Bookings SFAS 123(R) expense was $5.1 million, net of tax or $0.025 EPS in Q1 2006 ($ in millions except per share figures) 4
  • 5. Performance Counts Targets Q1 2006 Q1 2005 Inventory turns* 8 6.1 4.8 Earnings growth 10% 40% 15% Operating margin 15% 13.9% 11.6% Working capital as % of revenue* 20% 19.7% 23.8% ROI (Operating) 25% 24.4% 21.7% * Annualized 5
  • 6. Diversified ($ in millions) Q1 2006 Q1 2005 % Change Revenue $199.9 $185.1 8% Income $22.7 $20.4 11% Operating Margin 11.3% 11.0% Revenue, earnings and margin growth influenced by market strength and operational efficiencies. Industrial Equipment: Revenue +5%; Earnings +4% Strong revenue gains in the commercial aerospace market, partially offset by a soft powersports market. Earnings up and margins flat due to business mix. Process Equipment: Revenue +16%; Earnings +47% Strong HVAC, Boiler, and Oil and Gas markets primary revenue growth factors. Positive leverage on increased revenue, pricing adjustments and productivity gains. 6
  • 7. Electronics ($ in millions) Q1 2006 Q1 2005 % Change Revenue $216.9 $135.1 61% Income $21.0 $10.5 100% Operating Margin 9.7% 7.8% Knowles and Colder acquisitions drove revenue, earnings and margin growth, despite higher acquisition-related amortization charges. Order levels remained at the brisk level experienced in the previous quarter with broad strength in military, aerospace, commercial, telecom and medical markets. Components: Revenue +87%; Earnings +340% Acquisitions and improved margins in core companies drove revenue and income growth. Continued margin improvements and strong bookings at the hearing aid, microphone, crystal, ceramic and microwave product businesses. Commercial Equipment: Revenue -5%; Earnings -50% Revenue and earnings declined in the ATM business, offsetting gains in fluid dispensing. Strong ATM order activity in March resulted in healthy backlog going into the second quarter. 7
  • 8. Industries ($ in millions) Q1 2006 Q1 2005 % Change Revenue $216.4 $201.8 7% Income $27.5 $22.3 23% Operating Margin 12.7% 11.1% Revenue increases primarily due to strong bulk and waste transportation markets including market share gains. Improved operating efficiencies resulted in positive operating leverage for the quarter. Mobile Equipment Group: Revenue +14%; Earnings +52% Commercial transportation strength across all market segments drove revenue and earnings growth. Earnings improved for the fifth consecutive quarter on higher revenues and improved leverage. Service Equipment Group: Revenue - 5%; Earnings -13%. Volume shortfall due to continued weakness in the automotive service industry, principally the vehicle wash market. Earnings negatively impacted by revenue decline and closing costs associated with a facility shutdown. 8
  • 9. Resources ($ in millions) Q1 2006 Q1 2005 % Change Revenue $425.2 $356.3 19% Income $82.8 $62.7 32% Operating Margin 19.5% 17.6% Record revenue, earnings, margin, bookings, backlog, inventory velocity, and working capital reflected strength in most markets although automotive and retail fueling were a bit soft. All companies continue to expand their efforts in lean manufacturing and global sourcing. Oil & Gas Equipment Group: Revenue +41%; Earnings +59% Select capacity additions underway - reviewing need for additional investments. Increased global demand, coupled with market/political uncertainties has led to high energy prices and a positive impact. Fluid Solutions: Revenue +6%; Earnings +6% Softness in retail fueling offset continued strength in other markets particularly railroad transport. Material Handling: Revenue +15%; Earnings +18% Softness in automotive sector more than offset by market growth in other areas. 9
  • 10. Systems ($ in millions) Q1 2006 Q1 2005 % Change Revenue $181.3 $155.9 16% Income $27.0 $22.0 22% Operating Margin 14.9% 14.1% Margin increased on volume leverage and continued emphasis on productivity programs. Backlog was up 79% over prior year quarter, reflecting strength in both groups. Food Equipment: Revenue + 20%; Earnings +36% Revenue increase driven by strong supermarket equipment sales. Margin improvement due to positive leverage in supermarket and foodservice equipment. Bookings increased significantly over prior year quarter. Packaging Equipment: Revenue +8%; Earnings +5% Leverage hurt by exceptional prior period comparisons in the beverage machinery markets. Strong increase in bookings over prior year quarter. 10
  • 11. Technologies ($ in millions) Q1 2006 Q1 2005 % Change Revenue $431.8 $336.0 29% Income $50.6 $20.9 142% Operating Margin 11.7% 6.2% Revenue and earnings increase reflects continued strength in primary markets served, particularly related to test handling; solder equipment and product identification companies. Circuit Assembly & Test (CAT): Revenue +43%; Earnings +366% Strong market activity carryover from the fourth quarter of 2005. Record results from test handling and solder equipment companies. Order activity positive with backlog up 24% from year-end. Product Identification & Printing (PIP): Revenue + 5%; Earnings +30% Strong first quarter of 2006, compared to traditionally slow first quarter, with all regions reporting gains. Good spending controls across all companies while investing in new products, geographic markets and synergies. 11
  • 12. First Quarter Overview Revenue Growth Current Quarter Organic Growth 16% Acquisitions 7% Currency Translation -1% Total 22% Free Cash Flow (defined as Cash from operations less Capex) Strong quarter at 4.4% of revenue Full year expectations: 8% - 9% of revenue YTD Capital Expenditures: $39.2 million - up 50% over prior year Acquisitions Two add-ons (Electronics) for $14 million, net of cash Net Debt to Capital Ratio Currently 24.2%, down from YE 2005 at 28.8% Effective Tax Rate (ETR) First quarter : 30.3% vs. 25.2% prior year. The 2006 increase is largely due to a $5.5 million benefit in 2005 related to a favorable tax court decision. Full year rate expected to remain in the range of 28 --30%. Closed previously announced sale of Tranter PHE for $153 million; gain net of tax, was $85.1 million. 12