Dover Corporation (DOV) Q2 2012 Earnings Call June 18, 2012 10:00 am ET Executives Paul Goldberg - Vice President, Investor Relations Bob Livingston - President and Chief Executive Officer, Dover Corporation Brad Cerepak - Senior Vice President & Chief Financial Officer Analysts Scott Davis - Barclays Robert McCarthy - Robert W. Baird Jeff Sprague - Vertical Research Terry Darling - Goldman Sachs Steve Tusa - JPMorgan Nigel Coe - Morgan Stanley Julian Mitchell - Credit Suisse Shannon O'Callaghan - Nomura Nathan Jones - Stifel Nicolaus Presentation Operator
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Please note that our current earnings release, investor supplement and associated presentation can be found on our website, www.dovercorporation.com. This call will be available for playback through August 1 st , 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. 98721212.Before we get started, I would 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 Corporation 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 would 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. Before I get to our second quarter results, I would like to share a few observations on the changes we saw in the macro environment during the quarter. We entered the second quarter knowing, we were dealing with some modest challenges in Europe and a slowing economy in China. The decline in Europe was greater than our expectations. These weaker conditions were felt most notably within our Fluids platform and our Printing & Identification segment. With respect to China, we experienced some of the effects of a slowing export market in a few of our businesses. Our U.S. markets held quite well, namely, refrigeration and food equipment, industrial, energy, commercial aerospace and life sciences.
Now, let me provide some comments on our second quarter results. We posted revenue of $2.2 billion in the quarter, an increase of 8%. Our second quarter EPS of $1.15 was a slight improvement over the prior year adjusted EPS.In our Energy segment, we continued to see growth across our end markets with production in downstream being the strongest. As a result, we posted strong organic revenue growth in the quarter. As I have shared with you before, while rig count has flattened, market dynamics provide a solid environment for our products and services. These dynamics include the ongoing shift from gas to oil, oil prices supporting continued CapEx for production and a strengthening downstream market. We expect Energy results to remain solid for the balance of the year. At our Communication Technology segment, we saw the continuation of a strong smartphone market as well as solid commercial aerospace and life science markets. Telecom markets remained weak. The highway was 25% organic growth in our MEM sales to the handset market in the second quarter and we expect even stronger MEMS performance in the second half. Although results at Sound Solutions continue to be significantly impacted by further OEM share shifts, I was especially encouraged by increasing order rates on new design wins in the quarter and expect shipments at Sound Solutions to accelerate through the second half. Within our Engineered Systems segment, refrigeration and food equipment markets were solid as were most of our U.S. industrial end markets. Regarding our Fluids platform. The strong start for Maag Pump was offset by a weaker Europe and China. The result for this segment was lower than anticipated revenue in fluids, largely offset by 8% revenue growth in refrigeration and food equipment. Going forward, we believe second half results in refrigeration will remain solid on the strength of an active remodeling market, our leading technology and our customers' continued focus on energy efficiency. Our U.S. industrial markets which account for 65% of segment revenue should be rather stable. Within our Printing & Identification segment, we continue to see a weak, but improving market for electronics equipment. Within our consumer goods and industrial markets, our focus on new products, channel expansion and service is making a difference. Read the rest of this transcript for free on seekingalpha.com