Dover Misses on Q1 Earnings - Analyst Blog

Dover Corporation DOV reported first-quarter 2014 adjusted earnings from continuing operations of $1.01 per share, up 9% from the prior-year quarter figure of 93 cents per share. The results, however, missed the Zacks Consensus Estimate by a penny. Solid revenue growth, strength in bookings and momentum in building helped the year-over-year increase.

Including one-time items, earnings from continuing operations were $1.02 per share, up 7% from 95 cents per share earned in the prior-year quarter. Earnings in the reported quarter included tax benefit of 1 cent per share. The year-ago quarter included tax benefit of 2 cents per share.

Revenues and Margins
 
Total revenue rose 7% year on year to $1.9 billion in the quarter, in line with the Zacks Consensus Estimate. The year-over-year rise includes organic growth of 4% and a 3% contribution from acquisitions. Revenue growth was led by Fluids and Engineered Systems, along with solid growth in the Energy segment.

Cost of sales increased 6% to $1.15 billion in the quarter from $1.08 billion in the year-ago quarter. Gross profit went up 8% year over year to $736 million. Gross margin increased 40 basis points (bps) to 39% in the quarter.

Selling, general and administrative expenses increased 8.6% year over year to $452 million. Operating profit in the reported quarter increased 7% to $283.9 million from $265.2 million in the year ago quarter. Operating margin was flat at 15% in the quarter.

Segmental Performance

Energy revenues went up 3.5% to $478.7 million in the quarter. The segment's operating income remained flat year over year at $119 million.

Revenues in the Engineered Systems segment increased 7% to $649.8 million in the quarter. The segment's income also improved 10.8% year over year to $92 million.

Revenues in the Fluids segment rose 26% year over year to $345 million in the reported quarter. The segment's income increased 21.7% year over year to $57.9 million.

Refrigeration & Food Equipment segment revenues were $411.5 million in the quarter compared with $422.5 million in the prior-year quarter. The segment reported an operating income of $44.9 million, down 14% from $52 million a year ago.

Bookings and Backlog

The company ended the first quarter with bookings worth $2.045 billion versus $1.944 billion at the end of the first quarter of 2013. Backlog increased to $1.52 billion at end of the reported quarter from $1.42 million at the year-ago quarter end.

Financial Position

The company generated cash flow from operating activities of $39.8 million in the reported quarter, down from $57.7 million in the prior-year quarter. Free cash flow was $6.4 million compared with $31.4 million in the prior-year quarter.

Fiscal 2014 Outlook

Dover reaffirmed earnings in the range of $4.60–$4.80 per share for 2014. It also reiterates revenue growth of 6%–7% in fiscal 2014 with organic revenue growth of 3% to 4%. The full-year segment margin expectations of around 18% also remains unchanged.

The company will benefit from the Knowles spin-off, which will provide it with flexibility to focus on growth strategies. In addition, Dover has realigned its businesses into a new segment structure. This will also provide greater opportunity to leverage scale and capitalize on productivity initiatives.

Dover currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the sector include Kadant Inc. KAI, Middleby Corp. MIDD and Altra Industrial Motion Corp. AIMC. While Kadant and Middleby sport a Zacks Rank #1 (Strong Buy), Altra Industrial Motion has a Zacks Rank #2 (Buy).
 


 
ALTRA HOLDINGS AIMC: Free Stock Analysis Report
 
DOVER CORP DOV: Free Stock Analysis Report
 
KADANT INC KAI: Free Stock Analysis Report
 
MIDDLEBY CORP MIDD: Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!