Dover Corporation (DOV - Free Report) reported third-quarter 2016 adjusted earnings per share from continuing operations of 87 cents, which declined over 27% year over year. However, earnings beat the Zacks Consensus Estimate of 82 cents, resulting in a positive earnings surprise of 6%.
The prevailing weak macro environment, ongoing declines in longer cycle oil & gas exposed markets and production inefficiencies in the retail refrigeration business impacted both volume and earnings in the quarter. This offset solid improvements in the upstream drilling and production businesses as well as continued strong performance in the Printing & Identification platform.
Including one-time items, earnings came in at 83 cents per share, down from the prior-year figure of $1.19.
Total revenue declined 4.5% year on year to $1.707 billion in the quarter, which fell marginally short of the Zacks Consensus Estimate of $1.712 billion. The year-over-year slump in revenues was due to a fall of 7% in organic revenues, partly neutralized by 3% growth from acquisitions.
Costs and Margins
Cost of sales came down 3.5% year over year to $1.08 billion in the reported quarter. Gross profit decreased 6.1% year over year to $632 million and subsequently gross margin slumped 60 basis points (bps) to 37%.
Selling, general and administrative expenses increased to $421 million from $396 million in the prior-year quarter. Operating profit plunged 24% to $211 million from $277 million in the year-ago quarter. Operating margin contracted 320 bps to 12.3%.
Segmental Performance
Energy revenues slumped 25% year over year to $273 million in the quarter. The segment reported an operating profit of $13.3 million, a 73% plunge from $48.7 million a year ago.
Revenues in the Engineered Systems segment decreased to $570.6 million from $579 million in the year-ago quarter. The segment’s income declined 5% year over year to $97 million.
Revenues in the Fluids segment surged 17% year over year to $413 million in the reported quarter. The segment’s income dropped 12% year over year to $66 million.
The Refrigeration & Food Equipment segment’s revenues decreased 8% to $451 million from $492 million in the prior-year quarter. The segment reported an operating income of $64 million, down from $77 million a year ago.
Bookings and Backlog
Dover’s bookings at the end of third-quarter were worth $1.69 billion, which fell roughly 1% from $1.70 billion at the end of third-quarter 2015. Backlog increased to $1.08 billion at the end of the reported quarter from $1.04 billion at the year-ago quarter end.
Financial Position
Dover generated free cash flow of $189 million in the third quarter, compared with $243 million in the prior-year quarter. Cash flow from operations came in at $231.7 million in the reported quarter compared with $282 million in the year-ago quarter.
DOVER CORP Price, Consensus and EPS Surprise
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Dover Corporation (DOV - Free Report) reported third-quarter 2016 adjusted earnings per share from continuing operations of 87 cents, which declined over 27% year over year. However, earnings beat the Zacks Consensus Estimate of 82 cents, resulting in a positive earnings surprise of 6%.
The prevailing weak macro environment, ongoing declines in longer cycle oil & gas exposed markets and production inefficiencies in the retail refrigeration business impacted both volume and earnings in the quarter. This offset solid improvements in the upstream drilling and production businesses as well as continued strong performance in the Printing & Identification platform.
Including one-time items, earnings came in at 83 cents per share, down from the prior-year figure of $1.19.
Total revenue declined 4.5% year on year to $1.707 billion in the quarter, which fell marginally short of the Zacks Consensus Estimate of $1.712 billion. The year-over-year slump in revenues was due to a fall of 7% in organic revenues, partly neutralized by 3% growth from acquisitions.
Costs and Margins
Cost of sales came down 3.5% year over year to $1.08 billion in the reported quarter. Gross profit decreased 6.1% year over year to $632 million and subsequently gross margin slumped 60 basis points (bps) to 37%.
Selling, general and administrative expenses increased to $421 million from $396 million in the prior-year quarter. Operating profit plunged 24% to $211 million from $277 million in the year-ago quarter. Operating margin contracted 320 bps to 12.3%.
Segmental Performance
Energy revenues slumped 25% year over year to $273 million in the quarter. The segment reported an operating profit of $13.3 million, a 73% plunge from $48.7 million a year ago.
Revenues in the Engineered Systems segment decreased to $570.6 million from $579 million in the year-ago quarter. The segment’s income declined 5% year over year to $97 million.
Revenues in the Fluids segment surged 17% year over year to $413 million in the reported quarter. The segment’s income dropped 12% year over year to $66 million.
The Refrigeration & Food Equipment segment’s revenues decreased 8% to $451 million from $492 million in the prior-year quarter. The segment reported an operating income of $64 million, down from $77 million a year ago.
Bookings and Backlog
Dover’s bookings at the end of third-quarter were worth $1.69 billion, which fell roughly 1% from $1.70 billion at the end of third-quarter 2015. Backlog increased to $1.08 billion at the end of the reported quarter from $1.04 billion at the year-ago quarter end.
Financial Position
Dover generated free cash flow of $189 million in the third quarter, compared with $243 million in the prior-year quarter. Cash flow from operations came in at $231.7 million in the reported quarter compared with $282 million in the year-ago quarter.
DOVER CORP Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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