Dover(DOV) - 2024 Q3 - Quarterly Results

Consolidated Financial Statements This section provides an overview of the company's consolidated financial performance, focusing on earnings and key financial metrics Consolidated Statements of Earnings The company's consolidated statements of earnings show revenue and net income growth in Q2 and H1 2024, but a decline in gross and operating margins, with a significant gain from asset disposal in Q1 2024 boosting net income and EPS Consolidated Statements of Earnings Key Data (2024 Q2 YTD vs. 2023 Q2 YTD) | Metric (USD thousands) | 2024 Q2 YTD | 2023 Q2 YTD | Change (%) | | :--------------------- | :---------- | :---------- | :--------- | | Revenue | 3,832,501 | 3,821,236 | 0.3% | | Gross Profit | 1,449,710 | 1,409,260 | 2.9% | | Operating Profit | 577,674 | 577,875 | -0.0% | | Net Income | 914,043 | 470,813 | 94.1% | | Diluted EPS | 6.57 | 3.35 | 96.1% | - In the first quarter of 2024, the company recorded a significant gain of $529,943 thousand from asset disposal, leading to substantial growth in net income and earnings per share[1] Consolidated Statements of Earnings Key Data (FY 2023 vs. FY 2022 vs. FY 2021) | Metric (USD thousands) | FY 2023 | FY 2022 | FY 2021 | | :--------------------- | :---------- | :---------- | :---------- | | Revenue | 7,684,476 | 7,844,174 | 7,361,273 | | Gross Profit | 2,867,544 | 2,904,953 | 2,838,848 | | Operating Profit | 1,219,340 | 1,279,641 | 1,205,922 | | Net Income | 1,056,828 | 1,065,376 | 1,123,818 | | Diluted EPS | 7.52 | 7.42 | 7.74 | Segment Performance This section analyzes the financial performance of the company's various business segments, including revenue, earnings, and profitability margins Segment Revenue In Q2 2024, Clean Energy & Fueling, Imaging & Identification, and Pumps & Process Solutions segments reported year-over-year revenue growth, with Pumps & Process Solutions achieving the highest revenue, while Engineered Products and Climate & Sustainability Technologies segments experienced declines Segment Revenue (2024 Q2 vs. 2023 Q2) | Segment (USD thousands) | 2024 Q2 | 2023 Q2 | Year-over-Year Change (%) | | :---------------------------------- | :---------- | :---------- | :------------------------ | | Engineered Products | 285,297 | 287,408 | -0.7% | | Clean Energy & Fueling | 463,014 | 441,166 | 4.9% | | Imaging & Identification | 287,593 | 271,932 | 5.8% | | Pumps & Process Solutions | 477,239 | 465,626 | 2.5% | | Climate & Sustainability Technologies | 436,706 | 449,001 | -2.7% | | Total Consolidated Revenue | 1,948,782 | 1,913,807 | 1.8% | Segment Revenue (FY 2023 vs. FY 2022 vs. FY 2021) | Segment (USD thousands) | FY 2023 | FY 2022 | FY 2021 | | :---------------------------------- | :---------- | :---------- | :---------- | | Engineered Products | 1,250,925 | 1,379,512 | 1,234,695 | | Clean Energy & Fueling | 1,788,277 | 1,878,507 | 1,648,153 | | Imaging & Identification | 1,116,732 | 1,123,815 | 1,163,367 | | Pumps & Process Solutions | 1,755,691 | 1,728,235 | 1,708,634 | | Climate & Sustainability Technologies | 1,778,582 | 1,737,724 | 1,608,175 | | Total Consolidated Revenue | 7,684,476 | 7,844,174 | 7,361,273 | Segment Earnings from Continuing Operations In Q2 2024, all segments reported year-over-year growth in earnings from continuing operations, with Pumps & Process Solutions and Climate & Sustainability Technologies showing significant increases, and Pumps & Process Solutions consistently contributing the highest segment earnings Segment Earnings from Continuing Operations (2024 Q2 vs. 2023 Q2) | Segment (USD thousands) | 2024 Q2 | 2023 Q2 | Year-over-Year Change (%) | | :---------------------------------- | :---------- | :---------- | :------------------------ | | Engineered Products | 52,095 | 38,872 | 34.0% | | Clean Energy & Fueling | 87,536 | 83,616 | 4.7% | | Imaging & Identification | 75,786 | 61,336 | 23.6% | | Pumps & Process Solutions | 137,217 | 129,337 | 6.1% | | Climate & Sustainability Technologies | 79,127 | 76,074 | 4.0% | | Total Segment Earnings | 431,761 | 389,235 | 10.9% | Segment Earnings from Continuing Operations (FY 2023 vs. FY 2022 vs. FY 2021) | Segment (USD thousands) | FY 2023 | FY 2022 | FY 2021 | | :---------------------------------- | :---------- | :---------- | :---------- | | Engineered Products | 224,051 | 240,496 | 196,512 | | Clean Energy & Fueling | 328,604 | 352,993 | 327,186 | | Imaging & Identification | 272,512 | 268,084 | 266,932 | | Pumps & Process Solutions | 484,405 | 533,018 | 575,593 | | Climate & Sustainability Technologies | 305,380 | 254,484 | 185,517 | | Total Segment Earnings | 1,614,952 | 1,649,075 | 1,551,740 | Segment Earnings Margin In Q2 2024, all segments improved their earnings margins, with Pumps & Process Solutions leading at 28.8%, followed closely by Imaging & Identification, and the total segment earnings margin increased from 20.3% to 22.2% Segment Earnings Margin (2024 Q2 vs. 2023 Q2) | Segment | 2024 Q2 | 2023 Q2 | Change (percentage points) | | :---------------------------------- | :------ | :------ | :----------------------- | | Engineered Products | 18.3 % | 13.5 % | 4.8 | | Clean Energy & Fueling | 18.9 % | 19.0 % | -0.1 | | Imaging & Identification | 26.4 % | 22.6 % | 3.8 | | Pumps & Process Solutions | 28.8 % | 27.8 % | 1.0 | | Climate & Sustainability Technologies | 18.1 % | 16.9 % | 1.2 | | Total Segment Earnings Margin | 22.2 % | 20.3 % | 1.9 | Segment Earnings Margin (FY 2023 vs. FY 2022 vs. FY 2021) | Segment | FY 2023 | FY 2022 | FY 2021 | | :---------------------------------- | :------ | :------ | :------ | | Engineered Products | 17.9 % | 17.4 % | 15.9 % | | Clean Energy & Fueling | 18.4 % | 18.8 % | 19.9 % | | Imaging & Identification | 24.4 % | 23.9 % | 22.9 % | | Pumps & Process Solutions | 27.6 % | 30.8 % | 33.7 % | | Climate & Sustainability Technologies | 17.2 % | 14.6 % | 11.5 % | | Total Segment Earnings Margin | 21.0 % | 21.0 % | 21.1 % | Non-GAAP Financial Measures & Reconciliations This section presents non-GAAP financial metrics and their reconciliations to GAAP measures, offering additional insights into the company's operational performance and growth drivers Adjusted Earnings and Adjusted EPS from Continuing Operations The company reported adjusted earnings and adjusted EPS from continuing operations, excluding non-recurring items like acquisition accounting expenses, restructuring costs, disposal costs, and gains/losses on disposals, to better reflect core operating performance, with both metrics showing significant growth in H1 2024 Adjusted Earnings from Continuing Operations (2024 Q2 YTD vs. 2023 Q2 YTD) | Metric (USD thousands) | 2024 Q2 YTD | 2023 Q2 YTD | Change (%) | | :-------------------------------------- | :---------- | :---------- | :--------- | | Earnings from Continuing Operations | 848,689 | 423,702 | 100.3% | | Adjusted Earnings from Continuing Operations | 531,634 | 510,679 | 4.1% | | Diluted EPS (Continuing Operations) | 6.10 | 3.02 | 102.0% | | Adjusted Diluted EPS (Continuing Operations) | 3.82 | 3.63 | 5.2% | - In the first half of 2024, adjusted earnings from continuing operations reached $531,634 thousand, and adjusted diluted EPS was $3.82, both exceeding the prior year period, indicating robust core business performance[8][9] Adjusted Earnings from Continuing Operations (FY 2022 vs. FY 2021) | Metric (USD thousands) | FY 2022 | FY 2021 | | :-------------------------------------- | :---------- | :---------- | | Earnings from Continuing Operations | 989,912 | 1,065,320 | | Adjusted Earnings from Continuing Operations | 1,130,316 | 1,046,227 | | Diluted EPS (Continuing Operations) | 6.89 | 7.33 | | Adjusted Diluted EPS (Continuing Operations) | 7.87 | 7.20 | Adjusted Segment EBITDA In Q2 2024, all segments reported year-over-year growth in adjusted EBITDA and their respective margins, with Pumps & Process Solutions leading at an adjusted EBITDA margin of 31.4%, and the total adjusted segment EBITDA margin increasing from 22.2% to 24.0% Adjusted Segment EBITDA and Margin (2024 Q2 vs. 2023 Q2) | Segment | 2024 Q2 EBITDA (USD thousands) | 2024 Q2 EBITDA Margin | 2023 Q2 EBITDA (USD thousands) | 2023 Q2 EBITDA Margin | | :---------------------------------- | :----------------------------- | :-------------------- | :----------------------------- | :-------------------- | | Engineered Products | 56,873 | 19.9 % | 44,650 | 15.5 % | | Clean Energy & Fueling | 95,163 | 20.6 % | 91,157 | 20.7 % | | Imaging & Identification | 79,057 | 27.5 % | 65,081 | 23.9 % | | Pumps & Process Solutions | 149,854 | 31.4 % | 140,946 | 30.3 % | | Climate & Sustainability Technologies | 86,347 | 19.8 % | 82,969 | 18.5 % | | Total Adjusted Segment EBITDA | 467,294 | 24.0 % | 424,803 | 22.2 % | Adjusted Segment EBITDA and Margin (FY 2022 vs. FY 2021) | Segment | FY 2022 EBITDA (USD thousands) | FY 2022 EBITDA Margin | FY 2021 EBITDA (USD thousands) | FY 2021 EBITDA Margin | | :---------------------------------- | :----------------------------- | :-------------------- | :----------------------------- | :-------------------- | | Engineered Products | 263,067 | 19.1 % | 219,224 | 17.8 % | | Clean Energy & Fueling | 381,808 | 20.3 % | 353,028 | 21.4 % | | Imaging & Identification | 282,269 | 25.1 % | 281,121 | 24.2 % | | Pumps & Process Solutions | 573,857 | 33.2 % | 614,865 | 36.0 % | | Climate & Sustainability Technologies | 280,688 | 16.2 % | 212,504 | 13.2 % | | Total Adjusted Segment EBITDA | 1,781,689 | 22.7 % | 1,680,742 | 22.8 % | Reconciliation of Earnings from Continuing Operations to Adjusted Segment EBITDA This section provides a detailed reconciliation from earnings from continuing operations to adjusted segment EBITDA, itemizing adjustments such as income taxes, interest income/expense, corporate expenses, gains/losses on disposals, restructuring costs, and acquisition accounting expenses, to clearly illustrate the non-GAAP metric calculation Reconciliation of Earnings from Continuing Operations to Adjusted Segment EBITDA (2024 Q2 YTD vs. 2023 Q2 YTD) | Item (USD thousands) | 2024 Q2 YTD | 2023 Q2 YTD | | :------------------------------------------ | :---------- | :---------- | | Earnings from Continuing Operations | 848,689 | 423,702 | | Add: Provision for Income Taxes | 218,347 | 101,384 | | Less: Interest Income | (8,837) | (4,744) | | Add: Interest Expense | 68,739 | 68,017 | | Add: Corporate Expenses/Other | 81,685 | 74,439 | | Less: Gain (Loss) on Disposals | (529,280) | — | | Add: Restructuring and Other Costs | 35,561 | 32,196 | | Add: Acquisition Accounting Expenses | 88,519 | 79,247 | | Total Segment Earnings | 803,423 | 774,241 | | Add: Other Depreciation and Amortization | 71,386 | 69,242 | | Total Adjusted Segment EBITDA | 874,809 | 843,483 | Reconciliation of Earnings from Continuing Operations to Adjusted Segment EBITDA (FY 2022 vs. FY 2021) | Item (USD thousands) | FY 2022 | FY 2021 | | :------------------------------------------ | :---------- | :---------- | | Earnings from Continuing Operations | 989,912 | 1,065,320 | | Add: Provision for Income Taxes | 200,291 | 259,902 | | Less: Interest Income | (4,429) | (4,439) | | Add: Interest Expense | 116,456 | 106,316 | | Add: Corporate Expenses/Other | 136,045 | 156,202 | | Add: Gain (Loss) on Disposals | 194 | (206,338) | | Add: Restructuring and Other Costs | 36,209 | 37,242 | | Add: Acquisition Accounting Expenses | 174,397 | 137,535 | | Total Segment Earnings | 1,649,075 | 1,551,740 | | Add: Other Depreciation and Amortization | 132,614 | 129,002 | | Total Adjusted Segment EBITDA | 1,781,689 | 1,680,742 | Revenue Growth Factors In Q2 2024, total company revenue grew by 1.8% year-over-year, driven by 3.0% organic growth and 2.3% from acquisitions, partially offset by negative impacts from disposals and currency translation, with strong organic growth in the United States and Other Americas, but challenges in Europe and Asia Revenue Growth Factors (2024 Q2 vs. 2023 Q2) | Growth Factor | 2024 Q2 | 2023 Q2 | | :------------------ | :------ | :------ | | Organic Growth | 3.0 % | (4.1)% | | Acquisitions | 2.3 % | 1.0 % | | Disposals | (2.8)% | — % | | Currency Translation | (0.7)% | (0.7)% | | Total | 1.8 % | (3.8)% | Organic Revenue Growth by Region (2024 Q2 vs. 2023 Q2) | Region | 2024 Q2 | 2023 Q2 | | :------------ | :------ | :------ | | United States | 9.1 % | (11.5)% | | Other Americas | 18.2 % | 13.7 % | | Europe | (3.8)% | (0.9)% | | Asia | (8.6)% | 2.0 % | | Other | (28.0)% | 32.8 % | Revenue Growth Factors (FY 2022 vs. FY 2021) | Growth Factor | FY 2022 | FY 2021 | | :------------------ | :------ | :------ | | Organic Growth | 7.8 % | 16.5 % | | Acquisitions | 4.6 % | 1.3 % | | Disposals | (1.6)% | (0.2)% | | Currency Translation | (4.2)% | 2.1 % | | Total | 6.6 % | 19.7 % | Performance Metrics This section evaluates key operational performance indicators, including bookings, cash flow, and free cash flow, providing insights into the company's business momentum and liquidity Bookings In Q2 2024, total company bookings increased by 10.2% year-over-year to $1,877,373 thousand, with the Climate & Sustainability Technologies segment showing the strongest organic bookings growth at 31.6% Total Consolidated Bookings (2024 Q2 vs. 2023 Q2) | Metric (USD thousands) | 2024 Q2 | 2023 Q2 | Year-over-Year Change (%) | | :------------------------- | :---------- | :---------- | :------------------------ | | Total Consolidated Bookings | 1,877,373 | 1,703,206 | 10.2% | Segment Organic Bookings Growth (2024 Q2 vs. 2023 Q2) | Segment | 2024 Q2 | 2023 Q2 | | :---------------------------------- | :------ | :------ | | Engineered Products | 11.4 % | (9.2)% | | Clean Energy & Fueling | (1.6)% | (8.4)% | | Imaging & Identification | 11.1 % | (8.5)% | | Pumps & Process Solutions | 10.5 % | (19.4)% | | Climate & Sustainability Technologies | 31.6 % | (31.5)% | | Total Organic Growth | 11.5 % | (16.3)% | Total Consolidated Bookings (FY 2022 vs. FY 2021) | Metric (USD thousands) | FY 2022 | FY 2021 | | :------------------------- | :---------- | :---------- | | Total Consolidated Bookings | 7,669,459 | 8,669,911 | | Total Organic Growth | (10.3)% | 31.1% | Cash Flow and Free Cash Flow In the first half of 2024, net cash provided by operating activities was $295,637 thousand, and free cash flow was $219,765 thousand; despite a year-over-year decrease in operating cash flow, free cash flow as a percentage of revenue and adjusted earnings from continuing operations remained healthy Quarterly Cash Flow (2024 Q2 YTD vs. 2023 Q2 YTD vs. FY 2022) | Metric (USD thousands) | 2024 Q2 YTD | 2023 Q2 YTD | FY 2022 | | :-------------------------------------- | :---------- | :---------- | :---------- | | Net Cash Provided by Operating Activities | 295,637 | 389,187 | 746,754 | | Net Cash Used in Investing Activities | 465,631 | (82,543) | (520,844) | | Net Cash Used in Financing Activities | (911,439) | (444,489) | (260,265) | Free Cash Flow and Ratios (2024 Q2 YTD vs. 2023 Q2 YTD vs. FY 2022) | Metric | 2024 Q2 YTD | 2023 Q2 YTD | FY 2022 | | :------------------------------------------ | :---------- | :---------- | :------ | | Free Cash Flow (USD thousands) | 219,765 | 304,233 | 535,672 | | Net Cash Provided by Operating Activities as a % of Revenue | 7.7 % | 10.2 % | 9.5 % | | Free Cash Flow as a % of Revenue | 5.7 % | 8.0 % | 6.8 % | | Free Cash Flow as a % of Adjusted Earnings from Continuing Operations | 41.3 % | 59.6 % | 47.4 % | - In Q2 and the first half of 2024, the company paid $56 million in income taxes related to the De-Sta-Co disposal, with remaining taxes to be paid quarterly throughout 2024[33] Non-GAAP and Performance Measures Definitions This section provides clear definitions for the company's non-GAAP financial metrics and key performance indicators, explaining their calculation and relevance Non-GAAP Measures Definitions This section defines the company's non-GAAP financial measures, including adjusted earnings from continuing operations, adjusted diluted EPS from continuing operations, total segment earnings, total segment earnings margin, adjusted segment EBITDA, adjusted segment EBITDA margin, free cash flow, and their respective ratios, along with their purpose and calculation methodologies - Adjusted earnings from continuing operations exclude the impact of acquisition accounting expenses, restructuring and other costs/benefits, tax relief and employment acts, disposal costs, and gains/losses on disposals[37] - Adjusted segment EBITDA is defined as segment earnings plus other depreciation and amortization expenses, excluding amounts related to acquisition accounting expenses and restructuring and other costs/benefits[39] - Free cash flow represents net cash provided by operating activities less capital expenditures, serving as a key indicator of the company's liquidity[40] Performance Measures Definitions This section defines the company's performance measures, including bookings and organic bookings, clarifying their importance in monitoring business performance and evaluating segment results - Bookings represent the total orders received from customers during the current reporting period, excluding cancellations related to prior period orders[42] - Organic bookings refer to bookings excluding the impact of foreign currency exchange rates, acquisitions, and disposals[42]