Dover's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Dover Corporation (DOV)

Q1 2012 Earnings Call

April 18, 2012 10:00 a.m. ET


Bob Livingston - President and CEO

Brad Cerepak - SVP and CFO

Paul Goldberg - VP IR


Shannon O'Callaghan - Nomura

Jeff Sprague - Vertical Research

Nigel Coe - Morgan Stanley

Terry Darling - Goldman Sachs

John Inch - Bank of America

Scott Davis - Barclays Capital

Steve Tusa - JPMorgan

Jim Lucas - Janney Capital Markets

Charlie Brady - BMO Capital Markets



Good morning. And welcome to the First Quarter 2012 Dover Corporation Earnings Conference Call. With us today are Bob Livingston, President and Chief Executive Officer, Brad Cerepak, Senior Vice President and CFO and Paul Goldberg, VP of Investor Relations. After the speakers opening remarks, there will be a question-and-answer period. (Operator Instructions)

As a reminder, ladies and gentlemen, this conference is being recorded and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time.

Thank you. I would now like to turn the call over to Mr. Paul Goldberg. Mr. Goldberg, please go ahead.

Paul Goldberg

Thank you, Maria. Good morning and welcome to Dover’s first quarter earnings call. Today’s call will begin with some comments from Bob and Brad on Dover’s first quarter operating and financial performance and follow with our outlook for the balance of 2012. We will then open the call up for questions. As a courtesy, we kindly ask that you limit yourself to one question with a follow-up.

Please note that our current earnings release, investor supplement and associated presentation can be found on our website, This call will be available for playback through May 2nd and the audio portion of this call will be archived on our website for three months. The replay telephone number is 800-585-8367. When accessing the playback, you’ll need to supply the following access code, 68614955.

Before we get started, I’d like to remind everyone that our comments today, which are intended to supplement your understanding of Dover, may contain certain forward-looking statements that are inherently subject to uncertainties.

We caution everyone to be guided in their analysis of Dover by referring to our Form 10-K for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statement.

Also, we undertake no obligation to publicly update or revise any forward-looking statements except as required by law. We would also direct your attention to our website, where considerably more information can be found.

And with that, I’d like to turn the call over to Bob.

Bob Livingston

Thanks, Paul. Good morning, everyone, and thank you for joining us for this morning's conference call. We are off to a very solid start this year with first quarter revenue and segment earnings both up 14% over last year. Organic revenue growth was 9%. We delivered first quarter EPS of $1.05, a 19% improvement over the prior year adjusted EPS.

These results illustrate the strength of our business mix and reflect the positive portfolio changes we've made over the last three years.

In our Energy segment, we continued to see strong activity across all end markets, with double-digit sequential order growth. Market dynamics including the ongoing shift from gas to oil remained very positive for us and we anticipate the strength in this segment to continue.

Within our Engineered Systems segment, our refrigeration and food equipment businesses had a great quarter capitalizing on strong customer service and product innovation. We saw strong seasonal increase in bookings in refrigeration and our well positioned to have an outstanding year.

Fluids and our other industrial businesses also performed very well. The fluids' performance was driven by the significant investments we've made the last several quarters. Solid business trends continue as bookings grew nicely. I am very pleased with the first quarter performance in Engineered Systems and am confident they'll have a great year.

At our Communication Technology segment, we saw a solid life science and commercial aerospace markets and strong MEMS microphone activity in the first quarter. We continued to ramp production at Sound Solutions and expand capacity at Knowles. We anticipate a stronger back half of the year as Knowles and Sound Solutions benefit from new design wins connected with anticipated OEM product releases.

Within our Printing and Identification segment, the new products introduced by the Markem-Imaje team are winning in the marketplace. We believe our new products coupled with our stronger sales and service organization has enabled us to grow even in slower markets. We will continue to invest in products and people to draw a stronger global growth at Markem-Imaje.

Overall, I am pleased with our margin performance in the first quarter. Our productivity and cost takeout initiatives enable us to continue to invest for growth. We ended the quarter with a solid book-to-bill of 1.06 despite some anticipated market softness, most notably in Europe.

I am also very pleased with the significant progress we achieved on several other fronts during the quarter. We continued to work on the ramp of new customers and products at Sound Solutions. The magnitude of this undertaking and the related market opportunity is significant. By the end of our first quarter, we had two semi automated lines up and running in our Beijing factory and we expect that number to at least double by the end of the second quarter. These lines enable us to increase volume, improve yield and margin and increase our customer service flexibility.

We also made progress on our globalization efforts. I'm happy to report these efforts are bearing fruit as we are now winning business in smaller markets like the Middle East, Australia and Russia. For example, our Energy segment recently won a major contract, significantly increasing our business in Australia.

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