Market Overview

Apergy Reports Second Quarter 2018 Results

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  • Revenue of $306 million in Q2-18, up 19% year-over-year
  • Net income of $22 million & adjusted net income of $29 million in Q2-18
  • Diluted EPS of $0.29 & adjusted diluted EPS of $0.38 in Q2-18
  • Adjusted EBITDA of $77 million in Q2-18, up 33% year-over-year with margins improving 260 bps to 25%
  • Cash from operating activities of $52 million in Q2-18
  • Solid growth year-over-year across both segments, plus continued strong operational execution

THE WOODLANDS, Texas, July 25, 2018 (GLOBE NEWSWIRE) -- Apergy Corporation ("Apergy") (NYSE:APY) today reported net income in the second quarter of 2018 of $22.2 million, compared to net income of $18.8 million in the second quarter of 2017. Diluted earnings per share in the second quarter of 2018 was $0.29 and include total after-tax charges of $7.2 million, or $0.09 per diluted share, related to spin-off and other restructuring activities. Adjusted diluted earnings per share in the second quarter of 2018 was $0.38.

Revenue was $305.9 million in the second quarter of 2018, an increase of $49.8 million, or 19%, compared to $256.2 million in the second quarter of 2017, and an increase of $22.0 million, or 8%, compared to $283.9 million in the first quarter of 2018. 

Adjusted EBITDA was $76.5 million in the second quarter of 2018, an increase of $19.1 million, or 33%, compared to $57.4 million for the second quarter of 2017, and an increase of $12.1 million, or 19%, compared to $64.5 million in the first quarter of 2018. Adjusted EBITDA margins were 25.0%, an increase of 260 bps year-over-year.

    Three Months Ended   Variance  
(dollars in thousands, except per share amounts)   June 30, 2018   March 31, 2018   June 30, 2017   Sequential Year-over-year  
Revenue   $ 305,928     $ 283,922     $ 256,161       8 %   19 %  
                                         
Net income attributable to Apergy   $ 22,183     $ 24,543     $ 18,754       (10 )%   18 %  
Diluted earnings per share attributable to Apergy   $ 0.29     $ 0.32     $ 0.24       (9 )%   21 %  
                                         
Adjusted net income attributable to Apergy   $ 29,392     $ 26,647     $ 20,567       10 %   43 %  
Adjusted diluted earnings per share attributable to Apergy   $ 0.38     $ 0.34     $ 0.26       12 %   46 %  
                                         
Adjusted EBITDA   $ 76,548     $ 64,456     $ 57,409       19 %   33 %  
Adjusted EBITDA margin     25.0 %     22.7 %     22.4 %     230 bps     260 bps    
                                         
Net cash provided by operating activities   $ 51,553     $ 7,347     $ 6,215     $ 44,206   $ 45,338    
Capital expenditures   $ 17,518     $ 13,683     $ 9,685     $ 3,835   $ 7,833    

"We are excited to begin our journey as Apergy. Our team did an exceptional job of successfully completing our separation from Dover, while maintaining continued focus on our customers and generating strong results. I want to thank all of our employees and customers for their support through this transition," said Sivasankaran "Soma" Somasundaram, President and Chief Executive Officer. "As a stand-alone publicly traded company, we are focused on delivering differentiated performance by being relentless advocates for our customers, developing and deploying leading technology with proven impact, and driving continuous improvement across our organization.

"I am pleased with our second quarter results. We executed well and both of our segments delivered sound operational results. Apergy's strong performance was driven by solid U.S. onshore activity, improving international activity, and our continued execution in the marketplace. On a year-over-year basis, all of our major products, including polycrystalline diamond cutters and bearings, artificial lift, and digital products and services, posted strong revenue growth. Artificial lift as well as digital products and services posted particularly strong growth in the quarter. In addition to revenue growth, margins expanded due to operating leverage driven by our continued focus on execution, productivity improvements, and cost discipline. 

"We expect oil and gas prices for the second half of 2018 will remain constructive for market activity, continued E&P investments, and further improvement in international market activity. Accordingly, we believe our business is well positioned to take advantage of these market factors. With respect to the recent Permian take-away capacity issues, we remain in continuing conversations with our customers as their plans evolve. If there is some pull-back in the Permian, then we believe producers will direct capital to other basins in which we are well positioned to serve their needs," concluded Somasundaram.

    Three Months Ended   Variance  
(dollars in thousands)   June 30, 2018   March 31, 2018   June 30, 2017   Sequential   Year-over-year  
Production & Automation Technologies                      
  Segment revenue   $ 240,686     $ 214,691     $ 198,175     12 %   21 %  
  Segment operating profit   $ 23,349     $ 10,351     $ 9,967     126 %   134 %  
  Segment operating profit margin     9.7 %     4.8 %     5.0 %   490 bps     470 bps    
  Adjusted segment EBITDA   $ 54,322     $ 39,868     $ 36,759     36 %   48 %  
  Adjusted segment EBITDA margin     22.6 %     18.6 %     18.5 %   400 bps     410 bps    
                                       
Drilling Technologies                                      
  Segment revenue   $ 65,242     $ 69,231     $ 57,986     (6 )%   13 %  
  Segment operating profit   $ 21,340     $ 24,189     $ 19,927     (12 )%   7 %  
  Segment operating profit margin     32.7 %     34.9 %     34.4 %   (220) bps     (170) bps    
  Adjusted segment EBITDA   $ 24,135     $ 27,056     $ 22,915     (11 )%   5 %  
  Adjusted segment EBITDA margin     37.0 %     39.1 %     39.5 %   (210) bps     (250) bps    

Production & Automation Technologies

Production and Automation Technologies revenue increased $42.5 million, or 21%, year-over-year driven by strong growth in artificial lift, digital products, and improving international activity. We experienced robust growth in our ESP product line driven by continued penetration in U.S. onshore ESP markets. Segment operating profit increased $13.4 million, or 134%, year-over-year. Adjusted segment EBITDA increased $17.6 million, or 48%, year-over-year primarily driven by revenue growth and related operating leverage, with margins expanding to 22.6% from 18.5% in the prior year period.

On a sequential basis, revenue increased $26.0 million, or 12%. Segment operating profit increased $13.0 million, or 126% as a result of the higher volume. Adjusted segment EBITDA increased $14.5 million, or 36%, sequentially benefitting from operating leverage associated with the strong topline growth.

Revenue from digital products within Production and Automation Technologies was $29.9 million in the second quarter of 2018, an increase of $8.9 million, or 43%, compared to $20.9 million in the second quarter of 2017, and an increase of $5.5 million, or 23%, from $24.4 million in the first quarter of 2018. Revenue growth in digital products was driven by the launch of new products and strong market activity.

Drilling Technologies

Drilling Technologies revenue increased $7.3 million, or 13%, year-over-year as a result of increased worldwide rig count and footage drilled. Segment operating profit increased $1.4 million, or 7%, year-over-year driven by higher revenue, partially offset by increased spending to support diamond bearings growth. Adjusted Segment EBITDA increased by $1.2 million, or 5%, year-over-year driven by the increased volume.

On a sequential basis, revenue decreased by $4.0 million, or 6%, primarily due to the 14% sequential decline in North America average rig count, driven by the seasonally lower rig counts in Canada. As expected, during the quarter average Canadian rig counts declined by approximately 60% sequentially, which was only partially offset by the increase in U.S. average rig count. As we exited the second quarter, order rates have rebounded with the increasing Canadian rig count. Segment operating profit decreased $2.8 million, or 12%, sequentially. Adjusted segment EBITDA decreased by $2.9 million, or 11%, due to the lower sequential revenue.

Other Business Updates

  • Leading Permian operator increased spending on Apergy's ESP offering by 350% in Q2-18.
  • Accelerated adoption of Apergy's ESP SmartenTM Controller and Gen II LookoutTM Monitoring services.
  • Apergy received a 30 well commitment from an existing ESP customer and an 8 well commitment from competitor ESP customer for rod lift conversion.
  • Twenty-two U.S. Patents have been issued to Drilling Technologies year to date in 2018.
  • Apergy's new Windrock Spotlight cloud based remote monitoring and predictive analysis platform received two large orders of 121 and 77 units from a large U.S. pipeline company and a large international oil company, respectively.

Conference Call Details

Apergy Corporation will host a conference call on Thursday, July 26, 2018, to discuss its second quarter 2018 financial results. The call will begin at 9:00 a.m. Eastern Time. Presentation materials that supplement the conference call are available on Apergy's website at www.apergy.com.

To listen to the call via a live webcast, please visit Apergy's website at www.apergy.com. The call will also be available by dialing 1-888-424-8151 in the United States and Canada or 1-847-585-4422 for international calls. Please call approximately 15 minutes prior to the scheduled start time and reference Apergy conference call number 6812 573.

A replay of the conference call will be available on Apergy's website. Also, a replay may be accessed by dialing 1-888-843-7419 in the United States and Canada, or 1-630-652-3042 for international calls. The access code is 6812 573#.

About Non-GAAP Measures

This release presents information about Apergy's adjusted EBITDA, adjusted EBITDA margin, adjusted segment EBITDA, adjusted segment EBITDA margin, adjusted net income attributable to Apergy, adjusted net income, adjusted diluted earnings per share and adjusted working capital, which are non-GAAP financial measures made available as a supplement, and not an alternative, to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). See Reconciliations of GAAP to Non-GAAP Financial Measures included in the accompanying financial tables for the reconciliation of each non-GAAP financial measure to its most directly comparable financial measure.

Adjusted EBITDA and adjusted segment EBITDA are defined as, or as a result of, net income excluding income taxes, interest income and expense, depreciation and amortization expense, separation and supplemental benefit costs associated with the spinoff from Dover Corporation, royalty expense incurred only prior to the spinoff, and restructuring and other related charges. Adjusted EBITDA margin and adjusted segment EBITDA are defined as adjusted EBITDA and adjusted segment EBITDA, respectively, divided by revenue.

Adjusted net income and adjusted diluted earnings per share are defined as net income and earnings per share, respectively, excluding separation and supplemental benefit costs associated with the spinoff from Dover Corporation, royalty expense incurred only prior to the spinoff, and restructuring and other related charges.

Adjusted working capital is defined as accounts receivable, plus inventory, less accounts payable. We believe adjusted working capital provides a meaningful measure of our operational results by showing changes caused by revenue or our operational initiatives.

References to net income, diluted earnings per share, adjusted net income and adjusted diluted earnings per share are exclusive of noncontrolling interests.

These non-GAAP financial measures are included to help facilitate comparisons of Apergy's operating performance across periods by excluding items that do not reflect the core operating results of our businesses. As such, Apergy's management believes making available non-GAAP financial measures as a supplemental measurement to investors is useful because it allows investors to evaluate Apergy's performance using the same methodology and information used by Apergy management.

About Apergy

Apergy is a leading provider of highly engineered equipment and technologies that help companies drill for and produce oil and gas safely and efficiently around the world. Apergy's products provide efficient functioning throughout the lifecycle of a well - from drilling to completion to production. The company's Production and Automation offerings consist of artificial lift equipment and solutions, including rod pumping systems, electric submersible pump systems, progressive cavity pumps and drive systems and plunger lifts, as well as a full automation and digital offering consisting of equipment and software for Industrial Internet of Things ("IIoT") solutions for downhole monitoring, wellsite productivity enhancement, and asset integrity management. Apergy's Drilling Technologies offering provides market leading polycrystalline diamond cutters and bearings that result in cost effective and efficient drilling. To learn more about Apergy, visit our website at http://www.apergy.com.

Forward-Looking Statements

This press release contains statements relating to future actions and results, which are "forward-looking statements" within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, Apergy's market position and growth opportunities. Forward-looking statements include, but are not limited to, statements related to Apergy's expectations regarding the performance of the business, financial results, liquidity and capital resources of Apergy, the benefits resulting from Apergy's separation from Dover Corporation, the effects of competition, and the effects of future legislation or regulations and other non-historical statements. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, the risk that the anticipated benefits from our separation from Dover Corporation may not be fully realized or may take longer to realize than expected; tax and regulatory matters; and changes in economic, competitive, strategic, technological, regulatory or other factors that affect the operation of Apergy's businesses. You are encouraged to refer to the documents that Apergy files from time to time with the Securities and Exchange Commission (the "SEC"), including the "Risk "Factors" section of Apergy's Registration Statement on Form 10, originally filed with the SEC on March 26, 2018, as amended and supplemented, and in Apergy's other filings with the SEC, for a discussion of these and other risks and uncertainties. Readers are cautioned not to place undue reliance on Apergy's forward-looking statements. Forward-looking statements speak only as of the day they are made and Apergy undertakes no obligation to update any forward-looking statement, except as required by applicable law.

Investor Contact: David Skipper
david.skipper@apergy.com
713-203-8031

Media Contact: John Breed
john.breed@apergy.com
281-403-5751


APERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
(in thousands, except per share amounts) 2018   2018   2017   2018   2017
Revenue $ 305,928     $ 283,922     $ 256,161     $ 589,850     $ 486,439  
Cost of goods and services 202,210     189,661     171,531     391,871     326,449  
Gross profit 103,718     94,261     84,630     197,979     159,990  
Selling, general and administrative expense 65,807     59,739     54,892     125,546     107,531  
Interest expense, net 6,062     167     70     6,229     120  
Other expense, net 364     2,450     2,109     2,814     4,988  
Income before income taxes 31,485     31,905     27,559     63,390     47,351  
Provision for income taxes 9,381     7,220     8,526     16,601     14,732  
Net income 22,104     24,685     19,033     46,789     32,619  
Net income (loss) attributable to noncontrolling interest (79 )   142     279     63     596  
Net income attributable to Apergy $ 22,183     $ 24,543     $ 18,754     $ 46,726     $ 32,023  
                   
Earnings per share attributable to Apergy:                  
Basic $ 0.29     $ 0.32     $ 0.24     $ 0.60     $ 0.41  
Diluted $ 0.29     $ 0.32     $ 0.24     $ 0.60     $ 0.41  
                   
Weighted-average shares outstanding:                  
Basic 77,340     77,340     77,340     77,340     77,340  
Diluted 77,770     77,890     77,890     77,904     77,890  


APERGY CORPORATION
BUSINESS SEGMENT DATA
(UNAUDITED)

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
(in thousands) 2018   2018   2017   2018   2017
Segment revenue:                  
Production & Automation Technologies $ 240,686     $ 214,691     $ 198,175     $ 455,377     $ 378,975  
Drilling Technologies 65,242     69,231     57,986     134,473     107,464  
Total revenue $ 305,928     $ 283,922     $ 256,161     $ 589,850     $ 486,439  
                   
Income before income taxes:                
Segment operating profit:                  
Production & Automation Technologies $ 23,349     $ 10,351     $ 9,967     $ 33,700     $ 17,844  
Drilling Technologies 21,340     24,189     19,927     45,529     34,647  
Total segment operating profit 44,689     34,540     29,894     79,229     52,491  
Corporate expense and other (1) 13,204     2,635     2,335     15,839     5,140  
Income before income taxes $ 31,485     $ 31,905     $ 27,559     $ 63,390     $ 47,351  
                   
Bookings:                  
Production & Automation Technologies $ 249,461     $ 216,934     $ 189,644     $ 466,395     $ 386,681  
Book-to-bill ratio (2) 1.04     1.01     0.96     1.02     1.02  
Drilling Technologies $ 70,450     $ 69,184     $ 60,834     $ 139,634     $ 114,644  
Book-to-bill ratio (2) 1.08     1.00     1.05     1.04     1.07  

_______________________

  1. Corporate expense and other includes costs not directly attributable to our reporting segments such as corporate executive management and other administrative functions, costs related to our separation from Dover Corporation, interest associated with debt and the results attributable to our noncontrolling interest.
  2. The book-to-bill ratio compares the dollar value of orders received (bookings) relative to revenues realized during the period.


APERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(in thousands) June 30, 2018   December 31, 2017
Assets      
Cash and cash equivalents $ 30,833     $ 23,712  
Receivables, net 254,342     202,024  
Inventories, net 215,164     201,591  
Prepaid expenses and other current assets 21,937     14,038  
Total current assets 522,276     441,365  
       
Property, plant and equipment, net 233,530     211,832  
Goodwill 906,731     910,088  
Intangible assets, net 310,308     338,510  
Other non-current assets 7,421     2,980  
Total assets 1,980,266     1,904,775  
       
Liabilities      
Accounts payable 131,221     98,826  
Other current liabilities 90,380     52,239  
Total current liabilities 221,601     151,065  
       
Long-term debt 707,337     3,742  
Other long-term liabilities 115,800     109,934  
Equity      
Apergy Corporation stockholder's equity 933,475      
Net parent equity in Apergy     1,635,285  
Noncontrolling interest 2,053     4,749  
Total liabilities and equity $ 1,980,266     $ 1,904,775  


APERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

  Six Months Ended
June 30,
(in thousands) 2018   2017
Cash provided (required) by operating activities:      
Net income $ 46,789     $ 32,619  
Depreciation 35,128     26,904  
Amortization 26,330     26,827  
Receivables, net (53,496 )   (44,684 )
Inventories, net (14,837 )   (13,734 )
Accounts payable 31,361     25,950  
Other (12,375 )   (28,269 )
Net cash provided by operating activities 58,900     25,613  
       
Cash provided (required) by investing activities:      
Capital expenditures (31,201 )   (15,945 )
Other 115     2,301  
Net cash required by investing activities (31,086 )   (13,644 )
       
Cash provided (required) by financing activities:      
Issuances of debt, net of debt issuance costs 698,112      
Distributions to Dover Corporation (716,126 )   (15,090 )
Other (2,720 )   (1,212 )
Net cash required by financing activities (20,734 )   (16,302 )
       
Effect of exchange rate changes on cash and cash equivalents 41     1,037  
       
Net increase (decrease) in cash and cash equivalents 7,121     (3,296 )
Cash and cash equivalents at beginning of period 23,712     26,026  
Cash and cash equivalents at end of period $ 30,833     $ 22,730  


APERGY CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
(in thousands) 2018   2018   2017   2018   2017
Net income attributable to Apergy $ 22,183     $ 24,543     $ 18,754     $ 46,726     $ 32,023  
Pre-tax adjustments:                  
Separation and supplemental benefit costs (1) 5,137             5,137      
Royalty expense (2)     2,277     2,591     2,277     4,933  
Restructuring and other related charges 2,030     482     7     2,512     13  
Tax impact of adjustments (3) 42     (655 )   (785 )   (613 )   (1,494 )
Adjusted net income attributable to Apergy $ 29,392     $ 26,647     $ 20,567     $ 56,039     $ 35,475  
Tax impact of adjustments (3) (42 )   655     785     613     1,494  
Net income (loss) attributable to noncontrolling interest (79 )   142     279     63     596  
Depreciation and amortization 31,834     29,625     27,182     61,459     53,732  
Provision for income taxes 9,381     7,220     8,526     16,601     14,732  
Interest expense, net 6,062     167     70     6,229     120  
Adjusted EBITDA $ 76,548     $ 64,456     $ 57,409     $ 141,004     $ 106,149  
                   
Earnings per share attributable to Apergy:                  
Reported $ 0.29     $ 0.32     $ 0.24     $ 0.60     $ 0.41  
Adjusted $ 0.38     $ 0.34     $ 0.26     $ 0.72     $ 0.46  

_______________________

  1. Supplemental benefit costs relate to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These costs are expected to be incurred through the end of 2020.
  2. Patents and other intangible assets related to our business were conveyed by Dover Corporation to Apergy on April 1, 2018. No royalty charges were incurred after March 31, 2018.
  3. We generally tax effect adjustments using a combined federal and state statutory income tax rate of approximately 24 percent in 2018, and approximately 30 percent for periods prior to 2018. Includes tax expense of $1.7 million during the three and six months ended June 30, 2018, associated with capital gains related to certain reorganizations of our subsidiaries as part of the Separation from Dover Corporation.


  Three months ended
  June 30, 2018
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling
Technologies
  Corporate
expense and
other
  Total
Revenue $ 240,686     $ 65,242     $     $ 305,928  
               
Operating profit (income before income taxes), as reported $ 23,349     $ 21,340     $ (13,204 )   $ 31,485  
Depreciation and amortization 28,943     2,795     96     31,834  
Separation and supplemental benefit costs (1)         5,137     5,137  
Restructuring and other charges 2,030             2,030  
Interest expense, net         6,062     6,062  
Adjusted EBITDA $ 54,322     $ 24,135     $ (1,909 )   $ 76,548  
               
Operating profit margin, as reported 9.7 %   32.7 %       10.3 %
Adjusted EBITDA margin 22.6 %   37.0 %       25.0 %

_______________________

  1. Supplemental benefit costs relate to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These costs are expected to be incurred through the end of 2020.


  Three months ended
  March 31, 2018
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling
Technologies
  Corporate
expense and
other
  Total
Revenue $ 214,691     $ 69,231     $     $ 283,922  
               
Operating profit (income before income taxes), as reported $ 10,351     $ 24,189     $ (2,635 )   $ 31,905  
Depreciation and amortization 26,758     2,867         29,625  
Royalty expense (1) 2,277             2,277  
Restructuring and other charges 482             482  
Interest expense, net         167     167  
Adjusted EBITDA $ 39,868     $ 27,056     $ (2,468 )   $ 64,456  
               
Operating profit margin, as reported 4.8 %   34.9 %       11.2 %
Adjusted EBITDA margin 18.6 %   39.1 %       22.7 %

_______________________

  1. Royalty expense represents charges for the right to use of Dover Corporation patents and other intangible assets.


  Three months ended
  June 30, 2017
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling
Technologies
  Corporate
expense and
other
  Total
Revenue $ 198,175     $ 57,986     $     $ 256,161  
               
Operating profit (income before income taxes), as reported $ 9,967     $ 19,927     $ (2,335 )   $ 27,559  
Depreciation and amortization 24,194     2,988         27,182  
Royalty expense (1) 2,591             2,591  
Restructuring and other charges 7             7  
Interest expense, net         70     70  
Adjusted EBITDA $ 36,759     $ 22,915     $ (2,265 )   $ 57,409  
               
Operating profit margin, as reported 5.0 %   34.4 %       10.8 %
Adjusted EBITDA margin 18.5 %   39.5 %       22.4 %

_______________________

  1. Royalty expense represents charges for the right to use of Dover Corporation patents and other intangible assets.


  Six months ended
  June 30, 2018
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling
Technologies
  Corporate
expense and
other
  Total
Revenue $ 455,377     $ 134,473     $     $ 589,850  
               
Operating profit (income before income taxes), as reported $ 33,700     $ 45,529     $ (15,839 )   $ 63,390  
Depreciation and amortization 55,701     5,662     96     61,459  
Separation and supplemental benefit costs (1)         5,137     5,137  
Royalty expense (2) 2,277             2,277  
Restructuring and other charges 2,512             2,512  
Interest expense, net         6,229     6,229  
Adjusted EBITDA $ 94,190     $ 51,191     $ (4,377 )   $ 141,004  
               
Operating profit margin, as reported 7.4 %   33.9 %       10.7 %
Adjusted EBITDA margin 20.7 %   38.1 %       23.9 %

_______________________

  1. Supplemental benefit costs related to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These costs are expected to be incurred through the end of 2020.
  2. Royalty expense represents charges for the right to use of Dover Corporation patents and other intangible assets.


  Six months ended
  June 30, 2017
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling
Technologies
  Corporate
expense and
other
  Total
Revenue $ 378,975     $ 107,464     $     $ 486,439  
               
Operating profit (income before income taxes), as reported $ 17,844     $ 34,647     $ (5,140 )   $ 47,351  
Depreciation and amortization 47,785     5,947         53,732  
Royalty expense (1) 4,933             4,933  
Restructuring and other charges 13             13  
Interest expense, net         120     120  
Adjusted EBITDA (2) $ 70,575     $ 40,594     $ (5,020 )   $ 106,149  
               
Operating profit margin, as reported 4.7 %   32.2 %       9.7 %
Adjusted EBITDA margin 18.6 %   37.8 %       21.8 %

_______________________

  1. Royalty expense represents charges for the right to use of Dover Corporation patents and other intangible assets.


Adjusted Working Capital

(in thousands) June 30, 2018   December 31, 2017
Receivables, net of allowances $ 254,342     $ 202,024  
Inventories, net 215,164     201,591  
Accounts payable (131,221 )   (98,826 )
Adjusted working capital $ 338,285     $ 304,789  

 

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