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Dover Corporation (DOV - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) from continuing operations of $2.35, in line with the Zacks Consensus Estimate. The bottom line increased 4% year over year aided by the company’s cost-containment actions. Also, improved productivity and disciplined pricing helped offset the impact of offset negative product mix on earnings.
On a reported basis, Dover delivered EPS of $2.06 in the quarter, up 3% year over year.
Total revenues in the third quarter were $2,153 million, flat compared with the year-ago quarter. The top line missed the Zacks Consensus Estimate of $2,216 million. Organic growth was a negative 2% in the quarter.
Dover Corporation Price, Consensus and EPS Surprise
The cost of sales fell 1.8% year over year to $1,360 million in the reported quarter. Gross profit was up 2.6% year over year to $793 million. The gross margin was 36.8% compared with the year-ago quarter’s 35.8%.
Selling, general and administrative expenses were up 4.5% to $420 million from the prior-year quarter. Adjusted EBITDA rose 2.4% year over year to $504 million. The adjusted EBITDA margin was 23.4% in the quarter compared with the prior-year quarter’s 22.8%.
Segment Performances
The Engineered Products segment’s revenues were down 2.49% year over year to $504 million in the quarter. The reported figure fell short of our expectation of $531 million. The segment’s adjusted EBITDA increased 12% year over year to $109 million. The figure beat our estimate of $100 million.
The Clean Energy & Fueling segment’s revenues were $467 million compared with the prior-year quarter’s $464 million. The figure beat our estimate of $435 million. The segment’s adjusted EBITDA was $100 million, up from the prior-year quarter’s $97 million. The figure topped our estimate of $89 million.
The Imaging & Identification segment’s revenues moved down 2% year over year to $276 million. The reported figure fell short of our expectation of $292 million. The segment’s adjusted EBITDA was $74 million, down from the year-ago quarter’s $78 million. The figure missed our estimate of $75 million.
The Pumps & Process Solutions segment’s revenues dipped 0.5% year over year to $431 million in the third quarter and also missed our estimate of $459 million. The adjusted EBITDA of the segment totaled $130 million, down 6% from the year-ago quarter’s $139 million. The reported figure came in lower than our projection of $152 million.
The Climate & Sustainability Technologies segment’s revenues increased 3% to $476 million from the $463 million reported in the year-earlier quarter. We had predicted revenues to be $496 million for this segment. The segment’s adjusted EBITDA totaled $91 million compared with $82 million in third-quarter 2022. The figure was higher than our estimate of $88 million.
Bookings and Backlog
Dover’s bookings at the end of the third quarter were worth $2.01 billion compared with the prior-year quarter’s $2.06 billion. Total booking was higher than our estimate of $1.99 billion.
Backlog fell 16% year over year to $2.65 billion at the end of the reported quarter. Our model projected a backlog worth $3.09 billion.
Financial Position
The company had a free cash inflow of $340 million in the third quarter compared with the year-ago quarter’s $199 million. Cash flow from operations amounted to $383 million in the quarter under review compared with the prior-year quarter’s $265 million.
Other Updates
Dover recently announced that it has entered into a definitive agreement to sell its De-Sta-Co business to Stabilus SE for $680 million enterprise value. De-Sta-Co is a part of its Engineered Products segment. It manufactures and markets workholding and automation components for industrial automation applications, and generated revenues of $213 million in 2022. This move will allow Dover to focus on growing its core platforms.
Dover has also entered into a definitive agreement to acquire FW Murphy Production Controls, LLC for $530 million in cash. The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions. On closing, FW Murphy will become part of the Dover Precision Components operating unit within its Pumps & Process Solutions segment.
Outlook
Dover expects to generate an adjusted EPS of $8.75 to $8.85, which is lower than its previously stated range of $8.85 to $9.00 in 2023. DOV now anticipates flat revenue growth for the year. The company had earlier expected revenue growth of 2% to 4%.
Dover trimmed its guidance for the year to reflect certain challenging market conditions. Biopharma demand and the curtailment of automotive production will remain headwinds for the balance of the year. The company also expects higher transaction and integration costs due to the abovementioned portfolio moves and ongoing pipeline activity. The higher carrying costs of channel inventory, driven by higher interest rates, will continue to impact volumes in several end markets in the near term.
Price Performance
Dover’s shares have gained 6.1% in the past year compared with the industry’s 9.6% growth.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. The estimate has moved up 2% in the past 60 days. Its shares have gained 34% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $3.24 per share. It indicates year-over-year growth of 163%. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. ASTE’s shares have gained 11% in the last year.
The Zacks Consensus Estimate for Brady’s 2023 EPS is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. It has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC have rallied 19% in the last year.
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Dover (DOV) Meets Q3 Earnings Estimates, Lowers 2023 View
Dover Corporation (DOV - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) from continuing operations of $2.35, in line with the Zacks Consensus Estimate. The bottom line increased 4% year over year aided by the company’s cost-containment actions. Also, improved productivity and disciplined pricing helped offset the impact of offset negative product mix on earnings.
On a reported basis, Dover delivered EPS of $2.06 in the quarter, up 3% year over year.
Total revenues in the third quarter were $2,153 million, flat compared with the year-ago quarter. The top line missed the Zacks Consensus Estimate of $2,216 million. Organic growth was a negative 2% in the quarter.
Dover Corporation Price, Consensus and EPS Surprise
Dover Corporation price-consensus-eps-surprise-chart | Dover Corporation Quote
Costs and Margins
The cost of sales fell 1.8% year over year to $1,360 million in the reported quarter. Gross profit was up 2.6% year over year to $793 million. The gross margin was 36.8% compared with the year-ago quarter’s 35.8%.
Selling, general and administrative expenses were up 4.5% to $420 million from the prior-year quarter. Adjusted EBITDA rose 2.4% year over year to $504 million. The adjusted EBITDA margin was 23.4% in the quarter compared with the prior-year quarter’s 22.8%.
Segment Performances
The Engineered Products segment’s revenues were down 2.49% year over year to $504 million in the quarter. The reported figure fell short of our expectation of $531 million. The segment’s adjusted EBITDA increased 12% year over year to $109 million. The figure beat our estimate of $100 million.
The Clean Energy & Fueling segment’s revenues were $467 million compared with the prior-year quarter’s $464 million. The figure beat our estimate of $435 million. The segment’s adjusted EBITDA was $100 million, up from the prior-year quarter’s $97 million. The figure topped our estimate of $89 million.
The Imaging & Identification segment’s revenues moved down 2% year over year to $276 million. The reported figure fell short of our expectation of $292 million. The segment’s adjusted EBITDA was $74 million, down from the year-ago quarter’s $78 million. The figure missed our estimate of $75 million.
The Pumps & Process Solutions segment’s revenues dipped 0.5% year over year to $431 million in the third quarter and also missed our estimate of $459 million. The adjusted EBITDA of the segment totaled $130 million, down 6% from the year-ago quarter’s $139 million. The reported figure came in lower than our projection of $152 million.
The Climate & Sustainability Technologies segment’s revenues increased 3% to $476 million from the $463 million reported in the year-earlier quarter. We had predicted revenues to be $496 million for this segment. The segment’s adjusted EBITDA totaled $91 million compared with $82 million in third-quarter 2022. The figure was higher than our estimate of $88 million.
Bookings and Backlog
Dover’s bookings at the end of the third quarter were worth $2.01 billion compared with the prior-year quarter’s $2.06 billion. Total booking was higher than our estimate of $1.99 billion.
Backlog fell 16% year over year to $2.65 billion at the end of the reported quarter. Our model projected a backlog worth $3.09 billion.
Financial Position
The company had a free cash inflow of $340 million in the third quarter compared with the year-ago quarter’s $199 million. Cash flow from operations amounted to $383 million in the quarter under review compared with the prior-year quarter’s $265 million.
Other Updates
Dover recently announced that it has entered into a definitive agreement to sell its De-Sta-Co business to Stabilus SE for $680 million enterprise value. De-Sta-Co is a part of its Engineered Products segment. It manufactures and markets workholding and automation components for industrial automation applications, and generated revenues of $213 million in 2022. This move will allow Dover to focus on growing its core platforms.
Dover has also entered into a definitive agreement to acquire FW Murphy Production Controls, LLC for $530 million in cash. The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions. On closing, FW Murphy will become part of the Dover Precision Components operating unit within its Pumps & Process Solutions segment.
Outlook
Dover expects to generate an adjusted EPS of $8.75 to $8.85, which is lower than its previously stated range of $8.85 to $9.00 in 2023. DOV now anticipates flat revenue growth for the year. The company had earlier expected revenue growth of 2% to 4%.
Dover trimmed its guidance for the year to reflect certain challenging market conditions. Biopharma demand and the curtailment of automotive production will remain headwinds for the balance of the year. The company also expects higher transaction and integration costs due to the abovementioned portfolio moves and ongoing pipeline activity. The higher carrying costs of channel inventory, driven by higher interest rates, will continue to impact volumes in several end markets in the near term.
Price Performance
Dover’s shares have gained 6.1% in the past year compared with the industry’s 9.6% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Dover currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Applied Industrial Technologies (AIT - Free Report) , Astec Industries, Inc. (ASTE - Free Report) , and Brady (BRC - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. The estimate has moved up 2% in the past 60 days. Its shares have gained 34% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $3.24 per share. It indicates year-over-year growth of 163%. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. ASTE’s shares have gained 11% in the last year.
The Zacks Consensus Estimate for Brady’s 2023 EPS is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. It has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC have rallied 19% in the last year.