2. Results From Continuing Operations
Q3 2005 Q3 2004 % Change
Revenue $1,562.8 $1,383.9 13%
EBT $178.9 $152.8 17%
Net Income $132.6 $112.6 18%
EPS $0.65 $0.55 18%
Bookings $1,549.6 $1,320.7 17%
Backlog $1,177.2 $1,003.9 17%
Record revenue.
Best Income and EPS since Q3 2000
($ in millions except per share figures)
3. Diversified
Q3 2005 Q3 2004 % Change
($ in millions)
Revenue $185.2 $148.1 25%
Income $23.1 $16.6 39%
Operating Margin 12.5% 11.2%
Diversified experienced revenue, income and margin growth driven
by market strength and operational efficiencies.
Industrial Equipment: Revenue +26%; Income +25%
Strong revenue driven by the commercial aerospace and construction
markets.
Mixed performance in the automotive and powersports markets
resulted in lower income.
Process Equipment: Revenue +23%; Income +57%
Oil & Gas and HVAC markets drove revenue growth.
Positive leverage on increased revenue driven by pricing adjustments,
productivity gains, and higher volume.
4. Electronics
Q3 2005 Q3 2004 % Change
($ in millions)
Revenue $132.3 $118.0 12%
Income $6.3 $9.2 -32%
Operating Margin 4.8% 7.8%
Acquisitions drove revenue growth, but income was down due to
costs related to Hurricane Katrina.
Components: Revenue +25%; Income +133%
Revenue growth from the CFC and Colder acquisitions.
Margin improvements, offset by realignment costs represent more than
half of the income increase with acquisitions accounting for the balance.
Commercial Equipment: Revenue -15%; Income -92%
ATM business disrupted by Hurricane Katrina. Revenue and income
shortfalls reflect impact of business disruption as well as storm-related
costs of $5-$6million.
Return to normal production levels expected in fourth quarter.
5. Industries
Q3 2005 Q3 2004 % Change
($ in millions)
Revenue $219.3 $201.5 9%
Income $29.3 $23.7 23%
Operating Margin 13.3% 11.8%
Industries revenue increases were primarily driven by strong military
shipments, along with pricing moves initiated earlier in the year to
cover material cost increases. Income was at record levels.
Mobile Equipment Group: Revenue +19%; Income + 52%
Revenues grew behind strong military shipments and robust energy
markets.
Income increase driven by volume and strong cost control initiatives,
aided by the sale of a facility (gain of $1.4 million).
Service Equipment Group: Revenue - 5%; Income + 3%.
Industry weakness in the automotive service industry contributed to a
volume shortfall.
Income growth was driven by continued improvements in operating
efficiencies and pricing increases.
6. Resources
Q3 2005 Q3 2004 % Change
($ in millions)
Revenue $404.7 $337.1 20%
Income $65.9 $55.8 18%
Operating Margin 16.3% 16.6%
Dover Resources revenue and income increases were led by the Oil and
Gas Equipment Group
Margin decline for the quarter resulted from higher costs related to market
development initiatives, system implementations and one time charges.
Oil & Gas Equipment Group: Revenue +56%; Income +50%
Results reflect global energy demand, the hurricane impact, the acquisition of C-Tech
and continued new product development.
Fluid Solutions: Revenue +4%; Income – Flat
Service station market slowing due to market trends, some hurricane effect, and
slowdown in regulatory driven demand.
Rail and chemical/industrial markets are strong.
European markets are soft.
Material Handling: Revenue +16%; Income +12%
Price increases are partially offsetting material cost increases.
Petroleum, crane, and utility markets especially strong; automotive market moderating.
7. Systems
Q3 2005 Q3 2004 % Change
($ in millions)
Revenue $197.1 $169.1 17%
Income $29.2 $19.1 53%
Operating Margin 14.8% 11.3%
Systems’ margin increased on volume leverage and continued emphasis
on productivity programs. Backlog was up 35% with increases in both
Groups.
Food Equipment: Revenue + 23%; Income +122%
Double digit increases in both supermarket equipment and food service
equipment revenues; income comparables aided by prior year food service
loss.
Supermarket equipment sales remained strong with a year-over-year increase
of 24%.
The book-to-bill ratio was 0.99 with bookings up 18% over last year.
Packaging Equipment: Revenue -2%; Income -31%
Revenue was up 18% year-to-date with a 43% year-over-year increase in
backlog.
Income decline due to timing of beverage equipment shipments and weak
demand in Europe.
8. Technologies
Q3 2005 Q3 2004 % Change
($ in millions)
Revenue $426.8 $412.4 3%
Income $54.6 $58.1 -6%
Operating Margin 12.8% 14.1%
Circuit Assembly & Test (CAT): Revenue -5%; Income - 17%
Negative comparison with last year’s robust back-end semiconductor
market; business rationalization costs of $4-5 million expected in Q4.
Sequentially, revenue increased 13% and income was up 69% driven
by improved results in CAT businesses that address lead free regulation
implementation. Market trends appear to have plateaued.
Product Identification & Printing (PIP): Revenue + 26%; Income
+23%
Datamax acquisition accounted for all of the revenue increase and a
significant portion of the income increase.
Product identification markets continue to be sensitive to price
pressures and slow European growth. Market share gains and cost
improvements are contributing to better margins.
Printing products results reflect uneven market demands.
9. Third Quarter Acquisitions
Colder Products - acquired August 5, 2005 (DEL)
Premier developer/manufacturer of highly engineered quick disconnect
couplings (“QDC’s”)
2005 Annualized revenue: $50 million
Highly diversified customer base: 50% + medical/life sciences
Knowles Electronics - acquired Sept. 27, 2005 (DEL)
2 businesses:
Hearing aid transducers -75% market share; 6-8% CAGR
MEMS microphones – technological market leader in high growth, high end
acoustics market
2005 Annualized revenue: $210 million
Harbor Electronics – acquired Sept. 2, 2005 (DTI)
Add-on to Everett Charles Technologies (CAT)
Leading manufacturer of printed circuit boards for semiconductor test
applications.
Total Cost (net of cash): $962 million; YTD: $1,080 million
10. Third Quarter Overview
Revenue Growth Current Quarter
Organic Growth 7%
Acquisitions 6%
Currency Translation --
Total 13%
Free Cash Flow (defined as Cash from operations less Capex)
Strong quarter at 6.9% of revenue; 6.0% YTD
Full year expectations: 7% -- 9% of revenue
YTD Capital Expenditures: up $35.7 million (+52%) over prior year
Net Debt to Capital Ratio
Currently 32.3%, up from YE 2004 at 19.1%
Increase reflects level of acquisition spending
Effective Tax Rate (ETR)
Third quarter – 25.9% vs. 26.3% prior year.
Nine months – 26.8% vs. 28.1% prior year
Nine months reflected $27.4 million of benefits related to favorable conclusion of tax issues,
offset by $9.7 million provision related to the repatriation of approximately $290 million of foreign
dividends.
Before non-recurring items, full year ETR estimate is 30%
In the third quarter, increased CP capability to $1 billion. In October, Dover
issued $300 million of 10 year notes at 4.875% and $300 million of 30 year
debentures at 5.375% to pay down CP outstanding.
