• Reports fourth quarter and full year 2018 revenue of $1.8 billion and $7.0 billion, respectively, reflecting organic growth of 6.2% for the quarter and 3.7% for the year.
• Generates fourth quarter and full year 2018 diluted earnings per share from continuing operations on a GAAP basis of $1.07 and $3.89, respectively.
• Delivers fourth quarter and full year 2018 adjusted diluted earnings per share from continuing operations of $1.43 and $4.97, respectively, an increase of 25% for the quarter and 20% for the year.
• Provides 2019 guidance, reflecting 2% to 4% organic revenue growth and adjusted diluted earnings per share from continuing operations of $5.65 to $5.85.
DOWNERS GROVE, Ill., Jan. 29, 2019 /PRNewswire/ -- Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the fourth quarter and full year ended December 31, 2018.
Fourth Quarter 2018 Financial Results:For the fourth quarter ended December 31, 2018, Dover's revenue was $1.8 billion, which represents organic growth of 6.2%. Net earnings on a GAAP basis for the fourth quarter ended December 31, 2018, were $141.6 million, compared to net earnings of $296.4 million in the prior year period, including the results of discontinued operations.
Earnings from continuing operations were $158.0 million, a decrease of 45% as compared to $289.6 million for the prior year period, largely driven by a $110.0 million net benefit from a disposition (net of disposition costs) and a $54.9 million net benefit from the Tax Cuts and Jobs Act (the "Tax Reform Act"), both realized in the fourth quarter of 2017. Diluted earnings per share from continuing operations ("EPS") on a GAAP basis for the fourth quarter ended December 31, 2018, was $1.07, compared to $1.83 for the fourth quarter in the prior year.
For the fourth quarter ended December 31, 2018, earnings from continuing operations included acquisition-related amortization costs of $26.3 million and rightsizing and other costs of $29.6 million, representing $0.18 of EPS and $0.20 of EPS, respectively. In addition, the fourth quarter included a $2.8 million tax benefit ($0.02 of EPS) related to additional Tax Reform Act regulatory guidance covered by SAB 118. Excluding these items, adjusted earnings from continuing operations for the fourth quarter ended December 31, 2018, were $211.0 million (+17% over the comparable period in 2017), and adjusted EPS was $1.43 (+25% over the comparable period in 2017).
The adjusted EPS in the quarter was positively impacted by $0.08 due to a lower annualized effective tax rate (“ETR”) and discrete tax items.
Full Year 2018 Financial Results:For the full year ended December 31, 2018, Dover's revenue was $7.0 billion, driven by organic growth of 3.7%. Net earnings on a GAAP basis for the full year ended December 31, 2018, were $570.3 million, compared to net earnings of $811.7 million in the prior year. Full year 2018 results include a loss from discontinued operations of $20.9 million and the full year 2017 results include earnings from discontinued operations of $65.0 million attributable to Apergy Corporation, which was spun off in the second quarter of 2018.
Earnings from continuing operations were $591.1 million, a decrease of 21% compared to $746.7 million for the prior year, largely driven by net benefits from dispositions and a net benefit from the Tax Reform Act realized in 2017. Diluted EPS on a GAAP basis for the full year ended December 31, 2018, was $3.89, compared to $4.73 in the prior year.
For the full year ended December 31, 2018, earnings from continuing operations included acquisition-related amortization costs of $109.3 million and rightsizing and other costs of $58.3 million, representing $0.72 of EPS and $0.38 of EPS, respectively. In addition, the year included a $2.8 million benefit ($0.02 of EPS) related to additional Tax Reform Act regulatory guidance covered by SAB 118. Excluding these items, adjusted earnings from continuing operations for the full year ended December 31, 2018, were $755.9 million (+15% over full year 2017), and adjusted EPS was $4.97 (+20% over full year 2017).
Free cash flow for the year was $618.2 million, representing 8.8% cash conversion of revenue. Excluding $52.0 million of cash costs from restructuring initiatives, cash conversion was 9.6% of revenue. Capital expenditures from continuing operations for 2018 were $171.0 million, an increase of 1% compared to $170.1 million for the prior year.
The ETR for full year 2018 was 21.4% when normalized for discrete tax benefits, excluding additional Tax Reform Act regulatory guidance covered by SAB 118. The estimate for 2019 ETR is between 21%-23%.
A reconciliation between GAAP and adjusted earnings and EPS from continuing operations for the fourth quarter and full year ended December 31, 2018 is included as an exhibit herein.
Full Year 2019 Guidance: In 2019, Dover expects to generate adjusted EPS in the range of $5.65 to $5.85. This guidance is based on full year revenue growth of 2% to 3%, comprised of 2% to 4% organic growth and a 1% impact from completed acquisitions, partially offset by an estimated 2% unfavorable impact from foreign currency exchange. 2019 guidance does not include restructuring charges, including charges expected to be incurred as part of Dover’s footprint consolidation initiatives.
A full reconciliation between forecasted GAAP and forecasted adjusted measures is included as an exhibit herein.
Completion of Belanger Acquisition:On January 25, 2019, Dover announced the completion of its acquisition of the Belanger, Inc. business, a leading full-line car wash equipment manufacturer. With 2018 sales of approximately $55 million, Belanger employs more than 150 people and is headquartered in Northville, Michigan. Belanger now joins OPW within Dover's Fluids segment, and together with PDQ Vehicle Wash Systems, the combined offering will provide customers with a full set of vehicle wash solutions. Dover expects the acquisition to be accretive to margins and adjusted EPS in 2019 and to achieve double-digit return on capital in three years, consistent with Dover’s capital deployment criteria.
Management Commentary:Dover’s President and Chief Executive Officer, Richard J. Tobin, said, “Dover's solid results for the quarter and the year reflect broad-based demand strength in Engineered Systems and Fluids, which posted 2018 annual organic growth of 5.8% and 8.7%, respectively, and more than offset weak demand in Refrigeration & Food Equipment. Our $7.0 billion of revenue for the year reflects an organic growth rate of 3.7%, while adjusted net earnings and adjusted EPS improved 15% and 20%, respectively.
"Dover enters 2019 with solid momentum as represented by our Q4 organic growth rate, solid order backlogs across most of our portfolio, and margin expansion being driven by volume and cost initiatives. Our productivity and footprint initiatives are underway with several in the execution phase, and we have begun to reinvest a portion of our savings from rightsizing initiatives into our digital capabilities and customer-facing platforms.
“We believe we are well-positioned to deliver top-line growth and strong double-digit EPS accretion in 2019. Our guidance reflects a constructive demand environment, continued focus on our margin improvement and rightsizing programs, as well as disciplined deployment of capital, underscored by our recent acquisition of Belanger."
Conference Call Information:Dover will host a webcast and conference call to discuss its fourth quarter and full year 2018 results and 2019 guidance at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, January 29, 2019. 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 and full year results and its operating segments can be found on the Company’s website.
About Dover:Dover is a diversified global manufacturer with annual revenue of approximately $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through three operating segments: 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 24,000 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, 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, and our ability to realize synergies from newly acquired businesses. 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/A for the year ended December 31, 2017, 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.