Dover Corp. (DOV) reported its fourth quarter 2011 earnings with an EPS of $1.07, outperforming the Zacks Consensus Estimate of $1.03. Results were 19% above the year-ago earnings.
Including the impact of a tax benefit of 5 cents per share and gains from discontinued operations of 37 cents, reported earnings came in at $1.49 per share, higher than $1.04 earned in the year-ago quarter.
Full year 2011 adjusted earnings were $4.26, lagging the Zacks Consensus Estimate of $4.45. Earnings improved 26% over 2010.
Including the impact of a tax benefit of 22 cents per share and gains from discontinued operations of 26 cents per share, Dover reported earnings of $4.74 per share, comparing favorably with $3.70 per share earned in 2010.
Operational Update
Total revenue was $2.0 billion, improving 15% year over year. Revenue was almost in line with the Zacks Consensus Estimate of $2.01 billion. The revenue increase included an organic growth of 6% and a 9% increase from acquisitions.
Full year 2011 total revenue was $7.95 billion, increasing 20% over 2010. Revenue missed the Zacks Consensus Estimate of $8.14 billion. The revenue increase included an organic growth of 11%, a 7% increase from acquisitions and a 2% favorable impact from foreign exchange.
Dover reported cost of sales of $1.23 billion versus $1.05 billion in the year-ago quarter. Full year cost of sales was $4.9 billion versus $4.0 billion in 2010.
Gross profit of the company increased 10% year over year to $757 million in the quarter under review while full year gross profit improved 17% over 2010.
Selling and administrative expenses also increased to $462 million in the reported quarter versus $427 million in the year-ago quarter. Full year selling and administrative expenses escalated to $3 billion from $2.6 billion in 2010.
Operating profit soared to $295 million in the reported quarter versus $259 million in the prior-year quarter. Full year operating earnings improved to $1.2 billion from $1.0 billion in 2010.
Segmental Performance
Revenue in the Communication Technologies segment shot up to $396.3 million from $280.3 million in the prior-year quarter. Full year revenue improved to $1.36 billion from $1.08 billion in 2010.
The segment’s income increased substantially to $71.1 million from $50.6 million in the prior-year quarter, but operating margin contracted 20 basis points year over year to 17.9%.
Full year operating income increased to $226 million from $205 million in 2010 while operating margin contracted 250 basis points over 2010.
Energy reported total revenue of $510.4 million in the quarter under review compared with $361.3 million in the year-ago quarter. Full year revenue improved to $1.9 billion from $1.3 billion in 2010.
The segment’s operating income increased to $121.9 million from $87.3 million in the year-earlier quarter. However, segment’s margin declined 30 basis points year over year to 23.9% in the reported quarter.
Full year operating income increased to $450.6 million from $316 million in 2010 while operating margin contracted 60 basis points over 2010.
Net sales in Engineered Systems segment increased to $731 million in the quarter from $674 million in the year-ago quarter. Full year revenue improved to $3.1 billion from $2.8 billion in 2010.
The segment’s income surged to $93 million from $79 million in the year-earlier quarter. Operating margin of the segment expanded 100 basis points year over year to 12.7%.
Full year operating income increased to $445 million from $383 million in 2010 while operating margin expanded 70 basis points over 2010.
Total revenue of Printing & Identification segment fell to $368 million from $422 million in the prior-year quarter. Full year revenue improved to $1.6 billion from $1.5 billion in 2010.
Segment reported operating income of $44.5 million, down from $78.1 million in the last-year’s quarter, contracting the operating margin by 640 basis points year over year to 12.1%.
Full year operating income decreased to $226 million from $237 million in 2010 while operating margin contracted 190 basis points over 2010.
Bookings and Backlog
The company ended 2011 with $8.1 billion worth of bookings versus $6.9 billion for 2010. Backlog of the company increased to $1.4 billion at quarter end from $1.3 billion at fourth quarter 2010.
Financial Position
Cash and cash equivalents at 2011 end was $1.2 billion versus $1.89 billion at 2010 end. Long-term debt increased to $2.86 billion at 2011 form $1.79 billion at 2010.
Cash from operations in 2011 increased to $1.06 billion from $0.9 billion in 2010. Capital expenditure soared to $271.8 million from $174.8 million in the previous year. Dover's free cash flow of $786 million increased from $727 million in 2010.
Share Repurchase
In 2011, Dover bought back 4 million shares with 2.5 million shares remaining under its repurchase authorization.
Changes in Asset Portfolio
Dover wrapped up two add-on acquisitions in the Engineered Systems segment in the fourth quarter. In 2011, Dover made nine acquisitions for a total of about $1.4 billion.
Also, Dover completed the sale of Heil Trailer International in the fourth quarter of 2011.
Outlook
Dover expects full-year 2012 revenue growth of 7-10%, representing an organic revenue growth of 4-7%, and 3% growth from acquisitions.
Doverexpects to deliver earnings in the band of $4.70-$5.00 per share in 2012.
We retain our Neutral recommendation on Dover Corporation. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.
Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates primarily in the U.S. and has subsidiaries and affiliates in Canada, France, Germany, the Netherlands, Sweden, China and the United Kingdom. Dover caters to a diverse clientele primarily spread across the Americas, Europe and Asia.
Dover competes with the likes of Cooper Industries plc (CBE), Ingersoll-Rand Plc (IR), and Weatherford International Ltd. (WFT).
COOPER INDS PLC (CBE): Free Stock Analysis Report
DOVER CORP (DOV): Free Stock Analysis Report
INGERSOLL RAND (IR): Free Stock Analysis Report
WEATHERFORD INT (WFT): Free Stock Analysis Report
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