2. Forward Looking Statements
We want to remind everyone that our comments
may contain forward-looking statements that are
inherently subject to uncertainties. We caution
everyone to be guided in their analysis of Dover
Corporation by referring to our Form 10K for a list of
factors that could cause our results to differ from
those anticipated in any such forward looking
statements.
We would also direct your attention to our internet
site, www.dovercorporation.com, where
considerably more information can be found.
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3. Dover’s 2007 Performance
Q4 FY Q/ Q FY/FY
Revenue $1.9B $7.2B +11% +14%
Continuing Earnings Per Share
EPS $0.86 $3.22 +14% +12%
0.90
0.85 Segment Margins 14.3% 14.7% +20bps -70bps
0.80
Organic Growth 2.8% 2.3%
0.75
Acquisition Growth 5.0% 9.7%
0.70
0.65 Free Cash Flow $321 $728 +38% +8%
0.60
$3.22
0.55
• 5.2% full year organic growth for core industrial
0.50
companies
0.45 $2.88
0.40 •Record 4th quarter revenue and earnings
0.35 $2.12
• Full year bookings & backlog up 14% & 13%,
0.30
respectively
0.25 $1.72
0.20 • Strong performance led by Product ID, Energy and
0.15 Fluid Solutions platforms
0.10
• Full year free cash flow was strong at 10.1% of
0.05
revenue, with favorable Q4 results at 17.2% of
0.00
revenue, reflecting decreases in working capital
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2004 2005 2006 2007 • Full year capital expenditures were $174.3 million,
down 9%
3
4. Industrial Products
Revenue Operating Earnings
$297
($ in millions) ($ in millions)
Mobile Equipment
• $2,221
(17% of Dover) $251
$1,926
– Petroleum and military
orders remain strong with
solid backlog
– Chinese acquisition
improves global auto
service footprint
$529 $555 ↑ 15% ↑ 18%
$66
Material Handling $61
•
(13% of Dover)
– Synergy initiatives being
implemented across a
number of companies to ↑ 5% ↑ 8%
improve profitability
– Industrial automation
acquisition broadens
customer base
Q4 Q4 FY FY Q4 Q4 FY FY
2006 2007 2006 2007 2006 2007 2006 2007
3.6% 1.4% 5.2% 1.9%
Organic
16.8% 1.8% 5.9% 12.3%
Acquisition
4
0.8% 1.5% 0.2% 1.1%
FX
5. Engineered Systems
Revenue Operating Earnings
($ in millions) ($ in millions)
$282
Engineered Products
• $2,147
(17% of Dover)
– Food equipment and $242
HVAC businesses
$1,674
continue to perform well
long-term
– Business conditions
remain solid with
moderate growth and $74
$559 ↑ 28% ↑ 17%
positive leverage across
$450
most markets $55
Product Identification
•
(13% of Dover) ↑ 24% ↑ 35%
– Core direct marking
business, with significant
recurring revenue,
remains strong
– Integration of direct Q4 Q4 FY FY
Q4 Q4 FY FY
marking group is 2006 2007 2006 2007
2006 2007 2006 2007
progressing
12.9% 7.5% 14.0% 6.5%
Organic
5 11.1% 13.2% 4.9% 19.1%
Acquisition
2.4% 3.6% 0.3% 2.6%
FX
6. Fluid Management
Revenue Operating Earnings
($ in millions) ($ in millions)
Energy
• $1,482 $305
(11% of Dover)
$1,330
– Worldwide demand for
$267
energy remains strong
– Global drilling activities
will be slightly offset by
Canadian weakness
Fluid Solutions
• $385 ↑ 11% ↑ 14%
$78
$350
(10% of Dover) $66
– Pump and dispenser
businesses show
consistency
↑ 10% ↑ 18%
– Synergy opportunities are
being actively pursued
within the pump group
Q4 Q4 FY FY
Q4 Q4 FY FY
2006 2007 2006 2007
2006 2007 2006 2007
16.9% 6.0% 19.1% 8.5%
Organic
6 2.0% 1.2% 4.6% 1.1%
Acquisition
1.5% 2.9% 0.8% 1.9%
FX
7. Electronic Technologies
Revenue Operating Earnings
($ in millions) ($ in millions)
$1,412
Electronics Technology
• $1,390
19% of Dover $215
– Commercial, medical &
military end-markets $180
show strength; telecom
markets remain generally
flat
– Demographics remain
↓ 2% ↓ 16%
$353 $365
positive for hearing aid $54
business; handset
$47
customer base continues
to improve
– Soft semicon capex
↑ 3% ↓ 12%
spending partially offset
by renewed focus on
recurring revenue
Q4 Q4 FY FY
Q4 Q4 FY FY
2006 2007 2006 2007
2006 2007 2006 2007
11.0% -4.1% 26.3% -7.7%
Organic
7 0.0% 3.1% 23.1% 3.0%
Acquisition
3.2% 4.4% 0.6% 3.2%
FX
8. Geographic Revenue Mix (FY 2007)
Dover Growth Rate: 14%
Rest Of World
10.9%
12.5%
5.3%
ASIA
12.9%
United States
55.0%
Europe
12.2%
21.2%
28.8%
2007
Growth Rate
8
9. PERFORMANCECOUNTS
Target FY 2007
Inventory Turns 8 6.5
Earnings Growth 10% 10.3%
Operating Margins 15% 14.7%
WC as a % of Revenue 20% 19.2%
ROI (Operating) 25% 25.1%
Dover exceeded 3 out 5 metrics for 2007
9
10. 2007 Overview
Net Debt to Capital Ratio
•
– 27.4%: up 60 bps over prior year, reflective of higher commercial paper balances to fund share repurchase
program
Free Cash Flow
•
– Fourth Quarter 2007: $320.8 million; 17.2% of revenue
– Full Year 2007: $727.7 million; 10.1% of revenue
• Free Cash Flow to Net Earnings from Continuing Operations: 111.4%
Effective Tax Rate (ETR)
•
– Fourth Quarter 2007: 24.1%, up 120 bps
– Full Year 2007: 26.4%, down 40 bps
• Qtr and YTD impacted by FIN 48
Acquisitions
•
– Fourth Quarter 2007: Two add-ons for $97 million, net of cash acquired
– Full Year 2007: Seven add-ons totaling $274 million, net of cash acquired
Share Repurchase Programs
•
– Fourth Quarter 2007: Repurchased 4.8 million shares for $222 million
– Full Year 2007: Repurchased 12.4 million shares for $591 million
– 2008 YTD (through January 29, 2008): 1 million shares for $40 million
Dispositions
•
– Fourth Quarter 2007: Closed on sale of previously discontinued businesses and recorded other adjustments
totaling $0.3 million gain, net of tax.
– Full Year 2007: Finalized sale of six businesses for a net after tax loss of $17 million.
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12. 2008 Outlook
Better-Positioned to Deliver Results
Over the past several years, Dover has:
• Increased revenue in higher growth, higher margin markets,
including Product Identification and Energy from below 10%
to nearly 25%
• Reduced its exposure to the volatile “semicon” market from
over 25% to below 10% of total revenue
• Increased recurring revenue: now approximately 25% of total
revenue
• Strategically reduced its “capital goods” exposure
• Broadened its geographic revenue mix, reducing United
States from 60% to 55%
12
13. 2008 Outlook
Product ID:
•
– Market dynamics continue to be favorable
(traceability, product safety)
– Broad global engagement (NA<30%)
Energy:
•
– Energy consumption and depletion rates
remain high; underlying commodity pricing
remains strong with global growth
opportunities
Electronics:
•
– Consumer electronics spending remains
uncertain Mobile
Material
– Strong military and healthcare markets Equipment
somewhat offset weak semicon markets Handling
Core Industrial:
•
– Strength in Mobile Equipment and Fluid
Fluid
Solutions markets, particularly in
Engineered Solutions
transportation, refuse, infrastructure and
Products
environmental compliance
– Stable markets for most Material Handling
and Engineered Products companies
– Softness in heavy construction related
exposure
13
14. 2008 Outlook
• Quantitative (estimates)
– Organic growth: mid single digits
– Margin improvement: 50 – 100 bps in seasonally
stronger 2nd & 3rd quarters.
– Capital expenditures: $150 – $175 million
– Interest expense: $88 - $92 million
– Tax rate: 26% – 28% (quarterly variance)
– Share repurchases: $460 million
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