Dover Reports Fourth Quarter and Full Year 2023 Results
DOWNERS GROVE, Ill., Feb. 1, 2024 /PRNewswire/ -- Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the fourth quarter and full year ended December 31, 2023. All comparisons are to the comparable period of the prior fiscal year, unless otherwise noted.
Three Months Ended December 31, Years Ended December 31,
($ in millions, except per share data) 2023 2022 % Change 2023 2022 % Change
U.S. GAAP
Revenue $2,106 $2,139 (2) % $8,438 $8,508 (1) %
Net earnings 296 264 12 % 1,057 1,065 (1) %
Diluted EPS 2.11 1.87 13 % 7.52 7.42 1 %
Non-GAAP
Organic revenue change (3) % (1) %
Adjusted net earnings (1) 345 305 13 % 1,237 1,213 2 %
Adjusted diluted EPS 2.45 2.16 13 % 8.80 8.45 4 %
(1) Q4 and full year 2023 and 2022 adjusted net earnings exclude after tax purchase accounting expenses, disposition costs and restructuring and other costs. Q4 and full year 2023 include the net income tax benefit of an internal reorganization executed in 2023, and full year 2022 excludes a reduction to income taxes previously recorded related to the Tax Cuts and Jobs Act.
For the quarter ended December 31, 2023, Dover generated revenue of $2.1 billion, a decrease of 2% (-3% organic). GAAP net earnings of $296 million increased 12%, and GAAP diluted EPS of $2.11 was up 13%. On an adjusted basis, net earnings of $345 million increased 13% and adjusted diluted EPS of $2.45 was up 13%.
For the year ended December 31, 2023, Dover generated revenue of $8.4 billion, a decrease of 1% (-1% organic). GAAP net earnings of $1.1 billion decreased 1%, and GAAP diluted EPS of $7.52 was up 1%. On an adjusted basis, net earnings of $1.2 billion increased 2%, and adjusted diluted EPS of $8.80 was up 4%.
A full reconciliation between GAAP and adjusted measures and definitions of non-GAAP and other performance measures are included as an exhibit herein.
MANAGEMENT COMMENTARY:
Dover's President and Chief Executive Officer, Richard J. Tobin, said, "The fourth quarter market conditions and our business posture were in line with our forecasts. In the end markets where secular demand trends inflected positively, such as CO(2) refrigeration systems, waste handling and precision components, we were able to capitalize on the market conditions and drive margin mix higher benefiting the consolidated portfolio in the quarter. We reduced production volumes in certain product lines in line with our mid-year forecasts in response to destocking trends that resulted from lead time normalization and higher inventory carrying costs driven by interest rate increases. We believe these proactive actions balanced channel inventories in the majority of our markets with forecasted demand for 2024. This operating posture drove an exemplary operating cash flow performance in the quarter and positions us to match production performance with prevailing demand in the coming year.
"Our solid operational execution was complemented by active portfolio enhancement in line with the priorities we reiterated at our investor day last March. In the past few months we completed several accretive and synergistic bolt-on acquisitions that improve our revenue mix with high-growth recurring and software revenue streams. We anticipate completing the De-Sta-Co sale by the end of the first quarter. Bolstered by our proactive working capital management and margin enhancement, we enter 2024 with a strong balance sheet and ample capacity to execute against a strong acquisition pipeline and pursue opportunistic capital return strategies, as we continue our portfolio enhancement strategy.
"We have a constructive outlook for 2024. We expect demand conditions to progressively improve from the fourth quarter exit rate through the year on solid underlying end markets across most of the portfolio, supported by the recent positive year-over-year order momentum. There is significant runway in our margin improvement plan with numerous cost and performance levers available to continue driving strong margin conversion. With this backdrop, we are confident in our ability to continue to deliver long-term value creation for our shareholders through a combination of accretive top line growth, capital allocation, and portfolio enhancement."
FULL YEAR 2024 GUIDANCE:
In 2024, Dover expects to generate GAAP EPS in the range of $7.90 to $8.10 (adjusted EPS of $8.95 to $9.15), based on full year revenue growth of 2% to 4% (1% to 3% on an organic basis).
CONFERENCE CALL INFORMATION:
Dover will host a webcast and conference call to discuss its fourth quarter and full year 2023 results at 9:30 A.M. Eastern Time (8:30 A.M. Central Time) on Thursday, February 1, 2024. 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 results and its operating segments can be found on the Company's website.
ABOUT DOVER:
Dover is a diversified global manufacturer and solutions provider with annual revenue of over $8 billion. We deliver innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions and Climate & Sustainability Technologies. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 65 years, our team of over 25,000 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. All statements in this document other than statements of historical fact are statements that are, or could be deemed, "forward-looking" statements. Forward-looking statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control. Factors that could cause actual results to differ materially from current expectations include, among other things, general economic conditions and conditions in the particular markets in which we operate; supply chain constraints and labor shortages that could result in production stoppages, inflation in material input costs and freight logistics; the impact of interest rate and currency exchange rate fluctuations; the impacts of natural or human-induced disasters, acts of war, terrorism, international conflicts, and public health crises on the global economy and on our customers, suppliers, employees, business and cash flows; changes in customer demand and capital spending; competitive factors and pricing pressures; our ability to develop and launch new products in a cost-effective manner; our ability to realize synergies from newly acquired businesses; and our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions. For details on the risks and uncertainties that could cause our results to differ materially from the forward-looking statements contained herein, we refer you to the documents we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These documents are available from the Securities and Exchange Commission, and on our website, dovercorporation.com. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2023
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DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data*)
Three Months Ended December 31, Years Ended December 31,
2023 2022 2023 2022
Revenue $2,105,757 $2,139,181 $8,438,134 $8,508,088
Cost of goods and services 1,319,994 1,372,852 5,353,501 5,444,532
Gross profit 785,763 766,329 3,084,633 3,063,556
Selling, general and administrative expenses 431,291 413,611 1,718,290 1,684,226
Operating earnings 354,472 352,718 1,366,343 1,379,330
Interest expense 30,898 33,126 131,305 116,456
Interest income (4,944) (1,462) (13,496) (4,430)
Other income, net (713) (2,359) (21,472) (20,201)
Earnings before provision for income taxes 329,231 323,413 1,270,006 1,287,505
Provision for income taxes 32,969 59,834 213,178 222,129
Net earnings $296,262 $263,579 $1,056,828 $1,065,376
Net earnings per share:
Basic $2.12 $1.88 $7.56 $7.47
Diluted $2.11 $1.87 $7.52 $7.42
Weighted average shares outstanding:
Basic 139,893 140,343 139,848 142,681
Diluted 140,586 141,168 140,599 143,595
Dividends paid per common share $0.51 $0.505 $2.03 $2.01
* Per share data may be impacted by rounding.
DOVER CORPORATION
QUARTERLY
SEGMENT INFORMATION
(unaudited)(in thousands)
2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
REVENUE
---
Engineered Products $497,549 $473,687 $504,271 $529,080 $2,004,587 $487,647 $514,436 $516,501 $525,048 $2,043,632
Clean Energy & Fueling 430,729 441,166 466,959 449,423 1,788,277 458,395 494,075 464,022 462,015 1,878,507
Imaging & Identification 283,091 271,932 276,179 285,530 1,116,732 272,255 275,951 282,371 293,238 1,123,815
Pumps & Process Solutions 413,881 465,626 431,373 444,811 1,755,691 435,195 441,127 433,558 418,355 1,728,235
Climate & Sustainability Technologies 455,325 449,001 475,911 398,345 1,778,582 399,078 434,164 462,671 441,811 1,737,724
Intersegment eliminations (1,552) (1,326) (1,425) (1,432) (5,735) (669) (1,038) (832) (1,286) (3,825)
Total consolidated revenue $2,079,023 $2,100,086 $2,153,268 $2,105,757 $8,438,134 $2,051,901 $2,158,715 $2,158,291 $2,139,181 $8,508,088
NET EARNINGS
---
Segment Earnings:
Engineered Products $84,275 $73,076 $101,610 $118,464 $377,425 $71,130 $81,671 $90,145 $103,573 $346,519
Clean Energy & Fueling 73,605 83,616 92,483 78,900 328,604 72,962 99,034 90,208 90,789 352,993
Imaging & Identification 68,315 61,336 70,316 72,545 272,512 58,598 61,392 74,477 73,617 268,084
Pumps & Process Solutions 115,244 129,337 117,907 121,917 484,405 146,617 138,048 128,573 119,780 533,018
Climate & Sustainability Technologies 73,778 76,074 84,060 71,468 305,380 53,609 64,181 75,190 61,504 254,484
Total segment earnings 415,217 423,439 466,376 463,294 1,768,326 402,916 444,326 458,593 449,263 1,755,098
Purchase accounting 42,679 40,200 40,320 41,744 164,943 53,286 47,019 40,526 40,272 181,103
expenses (1)
Restructuring and other costs (2) 14,053 18,143 12,327 19,150 63,673 10,552 7,944 8,613 11,881 38,990
Disposition costs (3) - 1,302 1,302 194 194
Corporate expense 40,072 33,922 30,686 45,913 150,593 37,404 27,967 27,876 42,033 135,280
/ other 4
Interest expense 34,214 33,804 32,389 30,898 131,305 26,552 26,989 29,789 33,126 116,456
Interest income (2,091) (2,653) (3,808) (4,944) (13,496) (775) (949) (1,244) (1,462) (4,430)
Earnings before provision for income taxes 286,290 300,023 354,462 329,231 1,270,006 275,703 335,356 353,033 323,413 1,287,505
Provision for income taxes 5 57,716 57,784 64,709 32,969 213,178 49,550 45,738 67,007 59,834 222,129
Net earnings $228,574 $242,239 $289,753 $296,262 $1,056,828 $226,153 $289,618 $286,026 $263,579 $1,065,376
SEGMENT EARNINGS MARGIN
---
Engineered Products 16.9 % 15.4 % 20.1 % 22.4 % 18.8 % 14.6 % 15.9 % 17.5 % 19.7 % 17.0 %
Clean Energy & Fueling 17.1 % 19.0 % 19.8 % 17.6 % 18.4 % 15.9 % 20.0 % 19.4 % 19.7 % 18.8 %
Imaging & Identification 24.1 % 22.6 % 25.5 % 25.4 % 24.4 % 21.5 % 22.2 % 26.4 % 25.1 % 23.9 %
Pumps & Process Solutions 27.8 % 27.8 % 27.3 % 27.4 % 27.6 % 33.7 % 31.3 % 29.7 % 28.6 % 30.8 %
Climate & Sustainability Technologies 16.2 % 16.9 % 17.7 % 17.9 % 17.2 % 13.4 % 14.8 % 16.3 % 13.9 % 14.6 %
Total segment earnings margin 20.0 % 20.2 % 21.7 % 22.0 % 21.0 % 19.6 % 20.6 % 21.2 % 21.0 % 20.6 %
(1) Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period.
(2) Restructuring and other costs relate to actions taken for headcount reductions, facility consolidations and site closures, product line exits, and other asset charges.
(3) Q4 and FY 2023 disposition costs relate to the sale of De-Sta-Co which is expected to close in Q1 2024. Q1 and FY 2022 represents working capital adjustments related to the disposition of Unified Brands and the Race Winning Brands equity method investment in Q4 2021.
4 Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, shared business services and digital overhead costs, deal-related expenses and various administrative expenses relating to the corporate headquarters.
5 Q4 and FY 2023 include the net income tax benefit of internal reorganizations executed in 2023. Q2 and FY 2022 include a reduction to income taxes previously recorded related to the Tax Cuts and Jobs Act.
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
Earnings Per Share
---
2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
Net earnings per share:
Basic $1.64 $1.73 $2.07 $2.12 $7.56 $1.57 $2.01 $2.01 $1.88 $7.47
Diluted $1.63 $1.72 $2.06 $2.11 $7.52 $1.56 $2.00 $2.00 $1.87 $7.42
Net earnings and weighted average shares used in calculated earnings per share amounts are as follows:
Net earnings $228,574 $242,239 $289,753 $296,262 $1,056,828 $226,153 $289,618 $286,026 $263,579 $1,065,376
Weighted average shares outstanding:
Basic 139,757 139,862 139,878 139,893 139,848 144,087 143,832 142,506 140,343 142,681
Diluted 140,616 140,578 140,615 140,586 140,599 145,329 144,669 143,257 141,168 143,595
* Per share data may be impacted by rounding.
DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)(in thousands)
December 31, 2023 December 31, 2022
Assets:
Cash and cash equivalents $398,561 $380,868
Receivables, net 1,432,040 1,516,871
Inventories, net 1,225,452 1,366,608
Prepaid and other current assets 141,538 159,118
Assets held for sale 192,644
Property, plant and equipment, net 1,031,816 1,004,825
Goodwill 4,881,687 4,669,494
Intangible assets, net 1,483,913 1,333,735
Other assets and deferred charges 560,862 465,000
Total assets $11,348,513 $10,896,519
Liabilities and Stockholders' Equity:
Short-term borrowings $468,282 $735,772
Payables, accrued expenses and other current liabilities 1,880,920 2,037,502
Liabilities held for sale 64,568
Deferred taxes and other non-current liabilities 836,379 894,366
Long-term debt 2,991,759 2,942,513
Stockholders' equity 5,106,605 4,286,366
Total liabilities and stockholders' equity $11,348,513 $10,896,519
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)(in thousands)
Years Ended December 31,
2023 2022
Operating activities:
Net earnings $1,056,828 $1,065,376
Depreciation and amortization 317,463 307,538
Stock-based compensation 31,465 30,821
Contributions to employee benefit plans (16,098) (12,890)
Net change in assets and liabilities (53,313) (585,121)
Net cash provided by operating activities 1,336,345 805,724
Investing activities:
Additions to property, plant and equipment (192,592) (220,962)
Acquisitions, net of cash and cash equivalents acquired (533,623) (312,855)
Proceeds from the sale of property, plant and equipment 4,234 6,061
Other (4,649) (13,168)
Net cash used in investing activities (726,630) (540,924)
Financing activities:
Change in commercial paper and other short-term borrowings, net (267,490) 629,891
Dividends paid to stockholders (284,297) (287,551)
Repurchase of common stock, including accelerated share repurchase program - (585,000)
Payments to settle employee tax obligations on exercise of share-based awards (12,137) (14,637)
Other (4,132) (2,968)
Net cash used in financing activities (568,056) (260,265)
Effect of exchange rate changes on cash and cash equivalents (6,666) (9,171)
Net increase (decrease) in cash and cash equivalents, including cash held for sale 34,993 (4,636)
Cash and cash equivalents at beginning of year 380,868 385,504
Cash and cash equivalents, including cash held for sale at end of year $415,861 $380,868
Years Ended December 31,
2023 2022
Cash and cash equivalents $398,561 $380,868
Cash and cash equivalents held for sale 17,300
Cash and cash equivalents, including cash held for sale $415,861 $380,868
DOVER CORPORATION
QUARTERLY ADJUSTED SEGMENT EBITDA (NON-GAAP)
(unaudited)(in thousands)
Non-GAAP Reconciliations
---
2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
ADJUSTED SEGMENT EBITDA
---
Engineered Products:
---
Segment earnings $84,275 $73,076 $101,610 $118,464 $377,425 $71,130 $81,671 $90,145 $103,573 $346,519
Other depreciation and amortization (1) 7,070 7,300 7,306 6,397 28,073 7,274 6,799 6,819 6,853 27,745
Adjusted segment EBITDA (2) 91,345 80,376 108,916 124,861 405,498 78,404 88,470 96,964 110,426 374,264
Adjusted segment EBITDA margin (2) 18.4 % 17.0 % 21.6 % 23.6 % 20.2 % 16.1 % 17.2 % 18.8 % 21.0 % 18.3 %
Clean Energy & Fueling:
---
Segment earnings $73,605 $83,616 $92,483 $78,900 $328,604 $72,962 $99,034 $90,208 $90,789 $352,993
Other depreciation and amortization (1) 7,046 7,541 7,686 7,844 30,117 8,466 6,533 6,893 6,923 28,815
Adjusted segment EBITDA (2) 80,651 91,157 100,169 86,744 358,721 81,428 105,567 97,101 97,712 381,808
Adjusted segment EBITDA margin (2) 18.7 % 20.7 % 21.5 % 19.3 % 20.1 % 17.8 % 21.4 % 20.9 % 21.1 % 20.3 %
Imaging & Identification:
---
Segment earnings $68,315 $61,336 $70,316 $72,545 $272,512 $58,598 $61,392 $74,477 $73,617 $268,084
Other depreciation and amortization (1) 3,394 3,745 3,972 4,182 15,293 3,497 3,496 3,372 3,820 14,185
Adjusted segment EBITDA (2) 71,709 65,081 74,288 76,727 287,805 62,095 64,888 77,849 77,437 282,269
Adjusted segment EBITDA margin (2) 25.3 % 23.9 % 26.9 % 26.9 % 25.8 % 22.8 % 23.5 % 27.6 % 26.4 % 25.1 %
Pumps & Process Solutions:
---
Segment earnings $115,244 $129,337 $117,907 $121,917 $484,405 $146,617 $138,048 $128,573 $119,780 $533,018
Other depreciation and amortization (1) 10,939 11,609 12,052 11,744 46,344 9,922 9,787 10,137 10,993 40,839
Adjusted segment EBITDA (2) 126,183 140,946 129,959 133,661 530,749 156,539 147,835 138,710 130,773 573,857
Adjusted segment EBITDA margin (2) 30.5 % 30.3 % 30.1 % 30.0 % 30.2 % 36.0 % 33.5 % 32.0 % 31.3 % 33.2 %
Climate & Sustainability Technologies:
---
Segment earnings $73,778 $76,074 $84,060 $71,468 $305,380 $53,609 $64,181 $75,190 $61,504 $254,484
Other depreciation and amortization (1) 6,624 6,895 6,954 7,084 27,557 6,495 6,443 6,736 6,530 26,204
Adjusted segment EBITDA (2) 80,402 82,969 91,014 78,552 332,937 60,104 70,624 81,926 68,034 280,688
Adjusted segment EBITDA margin (2) 17.7 % 18.5 % 19.1 % 19.7 % 18.7 % 15.1 % 16.3 % 17.7 % 15.4 % 16.2 %
Total Segments:
---
Total segment earnings 2, 3 $415,217 $423,439 $466,376 $463,294 $1,768,326 $402,916 $444,326 $458,593 $449,263 $1,755,098
Other depreciation and amortization (1) 35,073 37,090 37,970 37,251 147,384 35,654 33,058 33,957 35,119 137,788
Total Adjusted segment EBITDA (2) 450,290 460,529 504,346 500,545 1,915,710 438,570 477,384 492,550 484,382 1,892,886
Total Adjusted segment EBITDA margin (2) 21.7 % 21.9 % 23.4 % 23.8 % 22.7 % 21.4 % 22.1 % 22.8 % 22.6 % 22.2 %
1 Other depreciation and amortization relates to property, plant, and equipment and intangibles, and excludes amounts related to purchase accounting expenses and restructuring and other costs.
(2) Refer to Non-GAAP Disclosures section for definition.
(3) Refer to Quarterly Segment Information section for reconciliation of total segment earnings to net earnings.
DOVER CORPORATION
QUARTERLY ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
---
2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
Adjusted net earnings:
Net earnings $228,574 $242,239 $289,753 $296,262 $1,056,828 $226,153 $289,618 $286,026 $263,579 $1,065,376
Purchase accounting expenses, pre-tax (1) 42,679 40,200 40,320 41,744 164,943 53,286 47,019 40,526 40,272 181,103
Purchase accounting expenses, tax impact (2) (9,599) (9,012) (8,966) (9,143) (36,720) (12,538) (11,013) (9,494) (8,689) (41,734)
Restructuring and other costs, pre-tax (3) 14,053 18,143 12,327 19,150 63,673 10,552 7,944 8,613 11,881 38,990
Restructuring and other costs, tax impact (2) (2,990) (3,665) (2,556) (3,970) (13,181) (2,191) (1,803) (1,921) (2,311) (8,226)
Disposition costs, pre-tax 4 - 1,302 1,302 194 194
Disposition costs, tax impact (2) - (270) (270) (27) (27)
Tax Cuts and Jobs Act 5 - (22,579) (22,579)
Adjusted net earnings $272,717 $287,905 $330,878 $345,075 $1,236,575 $275,429 $309,186 $323,750 $304,732 $1,213,097
Adjusted diluted net earnings per share:
Diluted net earnings per share $1.63 $1.72 $2.06 $2.11 $7.52 $1.56 $2.00 $2.00 $1.87 $7.42
Purchase accounting expenses, pre-tax (1) 0.30 0.29 0.29 0.30 1.18 0.37 0.33 0.28 0.29 1.27
Purchase accounting expenses, tax impact (2) (0.07) (0.06) (0.06) (0.07) (0.26) (0.09) (0.08) (0.07) (0.06) (0.30)
Restructuring and other costs, pre-tax (3) 0.10 0.13 0.09 0.14 0.46 0.07 0.05 0.06 0.08 0.26
Restructuring and other costs, tax impact (2) (0.02) (0.03) (0.02) (0.03) (0.10) (0.02) (0.01) (0.01) (0.02) (0.06)
Disposition costs, pre-tax 4 - 0.01 0.01
Disposition costs, tax impact (2) -
Tax Cuts and Jobs Act 5 - (0.16) (0.16)
Adjusted diluted net earnings per share $1.94 $2.05 $2.35 $2.45 $8.80 $1.90 $2.14 $2.26 $2.16 $8.45
(1) Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period. Q1, Q2, and FY 2022 include $12,487, $7,158, and $19,869 of amortization of inventory step-up, respectively, primarily related to the Q4 2021 acquisitions within our Clean Energy & Fueling segment.
(2) Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period.
(3) Restructuring and other costs relate to actions taken for headcount reductions, facility consolidations and site closures, product line exits, and other asset charges. Q3 and FY 2023 include $3,302 of non-cash asset impairment charges for our Climate & Sustainability Technologies segment. Q1 and FY 2022 include $5,457 of non-cash foreign currency translation losses reclassified to earnings included within restructuring and other costs and $2,117 related to write-off of assets due to an
exit from certain Latin America countries for our Climate & Sustainability Technologies segment.
4 Q4 and FY 2023 disposition costs relate to the sale of De-Sta-Co which is expected to close in Q1 2024. Q1 and FY 2022 represents working capital adjustments related to the disposition of Unified Brands and the Race Winning Brands equity method investment in Q4 2021.
5 Q2 and FY 2022 represent a reduction to income taxes previously recorded related to the Tax Cuts and Jobs Act.
* Per share data and totals may be impacted by rounding.
DOVER CORPORATION
QUARTERLY NET EARNINGS TO ADJUSTED SEGMENT EBITDA RECONCILIATION (NON-GAAP)
(unaudited)(in thousands)
Non-GAAP Reconciliations
---
2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
Net earnings $228,574 $242,239 $289,753 $296,262 $1,056,828 $226,153 $289,618 $286,026 $263,579 $1,065,376
Provision for income taxes (1) 57,716 57,784 64,709 32,969 213,178 49,550 45,738 67,007 59,834 222,129
Earnings before provision for income taxes 286,290 300,023 354,462 329,231 1,270,006 275,703 335,356 353,033 323,413 1,287,505
Interest income (2,091) (2,653) (3,808) (4,944) (13,496) (775) (949) (1,244) (1,462) (4,430)
Interest expense 34,214 33,804 32,389 30,898 131,305 26,552 26,989 29,789 33,126 116,456
Corporate expense / other (2) 40,072 33,922 30,686 45,913 150,593 37,404 27,967 27,876 42,033 135,280
Disposition costs (3) - 1,302 1,302 194 194
Restructuring and other costs 4 14,053 18,143 12,327 19,150 63,673 10,552 7,944 8,613 11,881 38,990
Purchase accounting expenses 5 42,679 40,200 40,320 41,744 164,943 53,286 47,019 40,526 40,272 181,103
Total segment earnings 6 415,217 423,439 466,376 463,294 1,768,326 402,916 444,326 458,593 449,263 1,755,098
Add: Other depreciation and amortization 7 35,073 37,090 37,970 37,251 147,384 35,654 33,058 33,957 35,119 137,788
Total adjusted segment EBITDA 6 $450,290 $460,529 $504,346 $500,545 $1,915,710 $438,570 $477,384 $492,550 $484,382 $1,892,886
(1) Q4 and FY 2023 include the net income tax benefit of internal reorganizations executed in 2023. Q2 and FY 2022 include a reduction to income taxes previously recorded related to the Tax Cuts and Jobs Act.
(2) Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, shared business services and digital overhead costs, deal-related expenses and various administrative expenses relating to the corporate headquarters.
(3) Q4 and FY 2023 disposition costs relate to the sale of De-Sta-Co which is expected to close in Q1 2024. Q1 and FY 2022 represents working capital adjustments related to the disposition of Unified Brands and the Race Winning Brands equity method investment in Q4 2021.
4 Restructuring and other costs relate to actions taken for headcount reductions, facility consolidations and site closures, product line exits, and other asset charges.
5 Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period.
6 Refer to Non-GAAP Disclosures section for definition.
7 Other depreciation and amortization relates to property, plant, and equipment and intangibles, and excludes amounts related to purchase accounting expenses and restructuring and other costs.
DOVER CORPORATION
REVENUE GROWTH FACTORS AND ADJUSTED EPS GUIDANCE RECONCILIATIONS (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
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Revenue Growth Factors
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2023
Q1 Q2 Q3 Q4 Q4 YTD
Organic
Engineered Products 3.4 % (7.7) % (3.0) % - % (1.9) %
Clean Energy & Fueling (2.6) % (9.3) % (0.2) % (3.5) % (4.0) %
Imaging & Identification 8.2 % 0.3 % (3.6) % (3.5) % 0.2 %
Pumps & Process Solutions (7.1) % 0.9 % (7.3) % 0.5 % (3.3) %
Climate & Sustainability Technologies 16.2 % 4.0 % 1.8 % (10.9) % 2.4 %
Total Organic 2.9 % (3.0) % (2.4) % (3.4) % (1.5) %
Acquisitions 0.9 % 0.9 % 1.0 % 0.9 % 0.9 %
Currency translation (2.5) % (0.6) % 1.2 % 0.9 % (0.2) %
Total* 1.3 % (2.7) % (0.2) % (1.6) % (0.8) %
* Totals may be impacted by rounding.
2023
Q1 Q2 Q3 Q4 Q4 YTD
Organic
United States 2.6 % (8.6) % (7.3) % 1.7 % (3.0) %
Other Americas 16.8 % 13.9 % 13.1 % (22.5) % 3.4 %
Europe (0.3) % (0.9) % (5.2) % (16.1) % (5.7) %
Asia (3.9) % 1.9 % (3.4) % 4.9 % (0.2) %
Other 20.8 % 33.0 % 72.8 % 26.8 % 38.5 %
Total Organic 2.9 % (3.0) % (2.4) % (3.4) % (1.5) %
Acquisitions 0.9 % 0.9 % 1.0 % 0.9 % 0.9 %
Currency translation (2.5) % (0.6) % 1.2 % 0.9 % (0.2) %
Total* 1.3 % (2.7) % (0.2) % (1.6) % (0.8) %
* Totals may be impacted by rounding.
Adjusted EPS Guidance Reconciliation
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2023 Actual 2024 Guidance
Adjusted net earnings per share*:
Net earnings (GAAP) $7.52
$7.90 - $8.10
Purchase accounting expenses, net 0.92 0.98
Restructuring and other costs, net 0.36 0.07
Adjusted net earnings per share (Non-GAAP) $8.80
$8.95 - $9.15
* Per share data and totals may be impacted by rounding.
DOVER CORPORATION
PERFORMANCE MEASURES
(unaudited)(in thousands)
2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
BOOKINGS
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Engineered Products $536,472 $489,131 $576,641 $494,528 $2,096,772 $541,035 $452,668 $512,374 $498,249 $2,004,326
Clean Energy & Fueling 454,526 440,137 449,663 401,195 1,745,521 501,491 487,861 432,259 399,414 1,821,025
Imaging & Identification 290,712 262,092 271,113 297,312 1,121,229 307,104 292,136 281,789 273,170 1,154,199
Pumps & Process Solutions 464,297 394,317 363,111 455,390 1,677,115 459,790 471,693 415,253 362,468 1,709,204
Climate & Sustainability Technologies(1) 371,643 310,911 340,474 325,625 1,348,653 430,465 458,181 404,150 377,120 1,669,916
Intersegment eliminations (1,530) (1,918) (849) (2,125) (6,422) (2,295) (1,207) (423) (1,391) (5,316)
Total consolidated bookings $2,116,120 $1,894,670 $2,000,153 $1,971,925 $7,982,868 $2,237,590 $2,161,332 $2,045,402 $1,909,030 $8,353,354
1 For comparability, prior periods were revised to exclude non-binding orders and previously disclosed de-bookings. Refer to Performance Measures Definitions section.
2023
Q1 Q2 Q3 Q4 Q4 YTD
BOOKINGS GROWTH FACTORS
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Organic
Engineered Products 0.9 % 8.4 % 11.6 % (1.6) % 4.7 %
Clean Energy & Fueling (6.1) % (8.4) % 3.5 % (0.1) % (3.1) %
Imaging & Identification (1.8) % (8.5) % (5.4) % 7.7 % (2.1) %
Pumps & Process Solutions (1.2) % (19.4) % (15.6) % 22.6 % (4.7) %
Climate & Sustainability Technologies(1) (11.6) % (31.5) % (16.8) % (14.8) % (19.1) %
Total Organic (3.9) % (12.2) % (3.5) % 2.0 % (4.6) %
Acquisitions 1.0 % 0.7 % 0.3 % 0.4 % 0.6 %
Currency translation (2.5) % (0.8) % 1.0 % 0.9 % (0.4) %
Total* (5.4) % (12.3) % (2.2) % 3.3 % (4.4) %
* Totals may be impacted by rounding.
1 For comparability, prior periods were revised to exclude non-binding orders and previously disclosed de-bookings. Refer to Performance Measures Definitions section.
ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2023
(unaudited)(amounts in thousands except share data and where otherwise indicated)
During the fourth quarter of 2023, the Company completed the acquisition of FW Murphy Production Controls, LLC, within the Pumps & Process Solutions segment for $526.5 million, subject to customary post-closing adjustments.
For the full year 2023, the Company acquired two businesses in separate transactions for total consideration of $535.3 million, net of cash acquired and including contingent consideration. The businesses were acquired to complement and expand upon existing operations within the Pumps & Process Solutions and Climate & Sustainability Technologies segments. The purchase price allocations for these acquisitions are preliminary and subject to change during the measurement period.
DispositionsOn October 11, 2023 the Company entered into a definitive agreement to sell De-Sta-Co, an operating company within the Engineered Products segment, for approximately $680.0 million enterprise value, subject to customary post-closing adjustments. De-Sta-Co's assets and liabilities are classified as held for sale in the condensed consolidated balance sheets as of December 31, 2023. The transaction is expected to close in Q1 2024, subject to customary closing conditions, including receipt of regulatory approvals.
Restructuring and Other Costs (Benefits)During the fourth quarter and year ended December 31, 2023, restructuring and other costs (benefits) included restructuring charges of $16.6 million and $50.4 million, respectively, and other costs of $2.5 million and $13.2 million, respectively. The restructuring expenses incurred during the year ended December 31, 2023 were primarily related to headcount reductions and exit costs in the Clean Energy & Fueling, Engineered Products and Pumps & Process Solutions segments. These restructuring programs were initiated in 2022 and 2023 and were undertaken in light of current market conditions. Other costs (benefits) were primarily due to an asset impairment in our Climate & Sustainability Technologies segment and product line rationalization and footprint reduction in our Clean Energy & Fueling segment.
($ in millions) 2023 2022
Q4 FY Q4 FY
Engineered Products $3.5 $9.8 $0.5 $6.5
Clean Energy & Fueling 5.6 24.7 4.8 9.6
Imaging & Identification 4.8 7.1 2.9 6.4
Pumps & Process Solutions 1.5 7.9 2.0 4.7
Climate & Sustainability Technologies 2.1 9.3 0.9 9.3
Corporate 1.6 4.9 0.8 2.6
Total* $19.2 $63.7 $11.9 $39.0
* Totals may be impacted by rounding.
Tax RateThe effective tax rate was 10.0% and 18.5% for the fourth quarters of 2023 and 2022, respectively. On a full year basis, the effective tax rate for 2023 and 2022 was 16.8% and 17.3%, respectively. The 2023 tax rate was primarily driven by the release of a net valuation allowance against non-U.S. tax loss carryforwards mainly related to an internal reorganization, partially offset by an accrual of withholding taxes on current and future repatriation of certain foreign earnings. The 2022 tax rate was primarily driven by favorable audit resolutions, including a reduction to income taxes previously recorded related to the Tax Cut and Jobs Act.
ADDITIONAL INFORMATION (CONTINUED)
FOURTH QUARTER AND FULL YEAR 2023
(unaudited)(amounts in thousands except share data and where otherwise indicated)
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, 2023 December 31, 2022
Commercial paper $467,600 $734,936
Other 682 836
Short-term borrowings $468,282 $735,772
Long-term debt 2,991,759 2,942,513
Total debt 3,460,041 3,678,285
Less: Cash and cash equivalents, including cash held for sale (415,861) (380,868)
Net debt 3,044,180 3,297,417
Add: Stockholders' equity 5,106,605 4,286,366
Net capitalization $8,150,785 $7,583,783
Net debt to net capitalization 37.3 % 43.5 %
Quarterly Cash Flow
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2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
Net Cash Flows Provided By (Used In):
Operating activities $241,284 $195,254 $383,457 $516,350 $1,336,345 $23,683 $178,773 $264,625 $338,643 $805,724
Investing activities (43,556) (42,454) (50,243) (590,377) (726,630) (46,963) (68,890) (286,208) (138,863) (540,924)
Financing activities (306,565) (137,924) (312,716) 189,149 (568,056) (75,204) 120,469 (178,844) (126,686) (260,265)
Quarterly Free Cash Flow (Non-GAAP)
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2023 2022
Q1 Q2 Q3 Q4 FY 2023 Q1 Q2 Q3 Q4 FY 2022
Cash flow from operating activities $241,284 $195,254 $383,457 $516,350 $1,336,345 $23,683 $178,773 $264,625 $338,643 $805,724
Less: Capital expenditures (48,375) (40,079) (43,128) (61,010) (192,592) (50,381) (50,196) (65,462) (54,923) (220,962)
Free cash flow $192,909 $155,175 $340,329 $455,340 $1,143,753 $(26,698) $128,577 $199,163 $283,720 $584,762
Cash flow from operating 11.6 % 9.3 % 17.8 % 24.5 % 15.8 % 1.2 % 8.3 % 12.3 % 15.8 % 9.5 %
activities as a percentage of
revenue
Cash flow from operating 88.5 % 67.8 % 115.9 % 149.6 % 108.1 % 8.6 % 57.8 % 81.7 % 111.1 % 66.4 %
activities as a percentage of
adjusted net earnings
Free cash flow as a 9.3 % 7.4 % 15.8 % 21.6 % 13.6 % (1.3) % 6.0 % 9.2 % 13.3 % 6.9 %
percentage of revenue
Free cash flow as a 70.7 % 53.9 % 102.9 % 132.0 % 92.5 % (9.7) % 41.6 % 61.5 % 93.1 % 48.2 %
percentage of adjusted net
earnings
Non-GAAP Measures DefinitionsIn 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 net earnings, adjusted diluted net earnings per share, total segment earnings, total segment earnings margin, adjusted segment EBITDA, adjusted segment EBITDA margin, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of adjusted net earnings, net debt, net capitalization, net debt to net capitalization ratio, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for net earnings, diluted net earnings per share, 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 net earnings represents net earnings adjusted for the effect of purchase accounting expenses, restructuring and other costs/benefits, Tax Cuts and Jobs Act, disposition costs and gain/loss on dispositions. Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period. We exclude after-tax purchase accounting expenses because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. While we have a history of acquisition activity, our acquisitions do not happen in a predictive cycle. Exclusion of purchase accounting expenses facilitates more consistent comparisons of operating results over time. We believe it is important to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. We exclude the other items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or management believes they are not indicative of the Company's ongoing operating costs or gains in a given period.
Adjusted diluted net earnings per share or adjusted earnings per share represent diluted EPS adjusted for the effect of purchase accounting expenses, restructuring and other costs/benefits, Tax Cuts and Jobs Act, disposition costs and gain/loss on dispositions.
Total segment earnings is defined as the sum of earnings before purchase accounting expenses, restructuring and other costs/benefits, disposition costs, gain/loss on dispositions, corporate expenses/other, interest expense, interest income and provision for income taxes for all segments. Total segment earnings margin is defined as total segment earnings divided by revenue.
Adjusted segment EBITDA is defined as segment earnings plus other depreciation and amortization expense, which relates to property, plant, and equipment and intangibles, and excludes amounts related to purchase accounting expenses and restructuring and other costs/benefits. Adjusted segment EBITDA margin is defined as adjusted segment EBITDA divided by revenue.
Management believes the non-GAAP measures above are useful to investors to better understand the Company's ongoing profitability as they will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers.
Net debt represents total debt minus cash and cash equivalents, including cash held for sale. Net capitalization represents net debt plus stockholders' equity. Net debt to net capitalization ratio is net debt divided by net capitalization. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ.
Free cash flow represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of adjusted net earnings equals free cash flow divided by adjusted net earnings. Management believes that free cash flow and free cash flow ratios are important measures of liquidity because they provide 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 and trends between periods. We do not provide a reconciliation of forward-looking organic revenue to the most directly comparable GAAP financial measure pursuant to the exception provided in Item 10(e)(1)(i)(B) of Regulation S-K because we are not able to provide a meaningful or accurate compilation of reconciling items. This is due to the inherent difficulty in accurately forecasting the timing and amounts of the items that would be excluded from the most directly comparable GAAP financial measure or are out of our control. For the same reasons, we are unable to address the probable significance of unavailable information which may be material.
Performance Measures DefinitionsBookings represent total orders received from customers in the current reporting period and now exclude de-bookings. This metric is an important measure of performance and an indicator of order trends.
Organic bookings represent bookings excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of order trends.
We use the above operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments.
Investor Contact: Media Contact:
Jack Dickens
Adrian Sakowicz
Senior Director - Investor Relations Vice President -
Communications
(630) 743-2566
(630) 743-5039
jdickens@dovercorp.com asakowicz@dovercorp.com
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SOURCE Dover
