8-K
DOVER Corp (DOV)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 8-K
_______________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 19, 2021
_______________________________
DOVER CORPORATION
(Exact name of registrant as specified in its charter)
______________________________________________
| Delaware | 1-4018 | 53-0257888 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 3005 Highland Parkway | ||
| Downers Grove, Illinois | 60515 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(630) 541-1540
(Registrant’s telephone number, including area code)
______________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | DOV | New York Stock Exchange |
| 1.250% Notes due 2026 | DOV 26 | New York Stock Exchange |
| 0.750% Notes due 2027 | DOV 27 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On October 19, 2021, Dover Corporation ("Dover") issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter ended September 30, 2021.
The information in this Current Report on Form 8-K, including Exhibit 99.1 and 99.2, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be incorporated by reference into any of Dover’s filings with the SEC under the Securities Act of 1933, as amended.
Item 7.01 Regulation FD Disclosure.
As previously announced, on October 19, 2021, Dover will hold an investor conference call and webcast at 9:00 a.m. Central time (10:00 a.m. Eastern time) to discuss its results of operations for the quarter ended September 30, 2021. A copy of the supplemental presentation materials that will be used during the conference call is furnished as Exhibit 99.2 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this report:
99.1 Press Release dated October 19, 2021.
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | October 19, 2021 | DOVER CORPORATION | |
|---|---|---|---|
| (Registrant) | |||
| By: | /s/ Ivonne M. Cabrera | ||
| Ivonne M. Cabrera | |||
| Senior Vice President, General Counsel & Secretary |
Document
Exhibit 99.1
| Investor Contacts: | Media Contact: |
|---|---|
| Andrey Galiuk | Adrian Sakowicz |
| Vice President - Corporate Development and Investor Relations | Vice President - Communications |
| (630) 743-5131 | (630) 743-5039 |
| agaliuk@dovercorp.com | asakowicz@dovercorp.com |
| Jack Dickens | |
| Director - Corporate Development and Investor Relations | |
| (630) 743-2566 | |
| jdickens@dovercorp.com |
DOVER REPORTS THIRD QUARTER 2021 RESULTS; RAISES FULL YEAR GUIDANCE
DOWNERS GROVE, Ill., October 19, 2021 — Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the third quarter ended September 30, 2021.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions, except per share data) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
| U.S. GAAP | ||||||||||||
| Revenue | $ | 2,018 | $ | 1,748 | 15 | % | $ | 5,918 | $ | 4,903 | 21 | % |
| Net earnings 1 | 264 | 200 | 32 | % | 761 | 501 | 52 | % | ||||
| Diluted EPS | 1.81 | 1.38 | 31 | % | 5.24 | 3.45 | 52 | % | ||||
| Non-GAAP | ||||||||||||
| Organic revenue change | 13 | % | 17 | % | ||||||||
| Adjusted net earnings 2 | 288 | 232 | 24 | % | 850 | 599 | 42 | % | ||||
| Adjusted diluted EPS | 1.98 | 1.60 | 24 | % | 5.86 | 4.12 | 42 | % |
1 Q3 2021 and 2020 net earnings include rightsizing and other (benefits) costs of $(2.3) million and $4.5 million, respectively. Q3 2020 also includes a $0.4 million expense related to the sale of AMS Chino. Year-to-date 2021 and 2020 net earnings include rightsizing and other costs of $9.0 million and $24.1 million, respectively. Year-to-date 2020 also includes a $3.9 million non-cash gain on the sale of AMS Chino.
2 Q3 2021 and 2020 adjusted net earnings exclude after tax acquisition-related amortization costs of $26.9 million and $26.5 million, respectively, and rightsizing and other (benefits) costs of $(2.3) million and $4.5 million, respectively. Q3 2020 also excludes a $0.4 million expense related to the sale of AMS Chino. Year-to-date 2021 and 2020 adjusted net earnings exclude acquisition-related amortization costs of $80.3 million and $77.8 million, respectively, and rightsizing and other costs of $9.0 million and $24.1 million, respectively. Year-to-date 2020 also excludes a $3.9 million non-cash gain on the sale of AMS Chino.
For the quarter ended September 30, 2021, Dover generated revenue of $2.0 billion, an increase of 15% (+13% organic) compared to the third quarter of the prior year. GAAP net earnings of $264 million increased 32%, and GAAP diluted EPS of $1.81 was up 31%. On an adjusted basis, net earnings of $288 million increased 24% and adjusted diluted EPS of $1.98 was also up 24% versus the comparable quarter of the prior year.
For the nine months ended September 30, 2021, Dover generated revenue of $5.9 billion, an increase of 21% (+17% organic) compared to the first nine months of the prior year. GAAP net earnings of $761 million increased 52%, and GAAP diluted EPS of $5.24 was also up 52% year-over-year. On an adjusted basis, net earnings of $850 million increased 42%, and adjusted diluted EPS of $5.86 was also up 42% versus the comparable period of the prior year.
A full reconciliation between GAAP and adjusted measures and definitions of non-GAAP and other performance measures are included as an exhibit herein.
MANAGEMENT COMMENTARY:
Dover’s President and Chief Executive Officer, Richard J. Tobin, said, “Our results in the third quarter reflect continued robust demand and solid execution by our teams in an increasingly complex supply chain and labor environment.
“During the quarter we demonstrated the strength of our portfolio with revenue and new order growth across all five of our operating segments. We improved margins year-over-year despite well-advertised supply chain, logistics, and labor availability challenges that adversely impacted shipment timing and margin performance in several businesses, most notably in our Refrigeration and Food Equipment and Engineered Products segments. Overall, our diversified end market exposures, ongoing productivity initiatives and time-tested localized manufacturing and sourcing strategy provide us an advantage as we execute against record backlogs and deliver critical products to our customers.
“We also continued to enhance and invest behind our portfolio. We progressed necessary capacity expansion in several high-growth businesses to meet their prevailing demand forecasts. Recently we completed three highly-complementary bolt-on acquisitions in radio signal intelligence solutions, industrial 3D visualization software and fueling solutions for alternative fuels like LNG and hydrogen. We also agreed to sell Unified Brands, Dover’s commercial foodservice business, to enable greater focus on our core growth platforms. Our balance sheet is healthy and we remain disciplined in pursuit of opportunities to further enhance our portfolio.
“As we enter the final quarter of the year, we do not anticipate the challenges from the third quarter to abate and therefore we remain focused on operational execution to deliver against robust demand in this strained operational environment. More positively, our high backlog levels provide beneficial near-term visibility for the remainder of the year and into 2022. As a result, we are raising our full year EPS guidance.”
FULL YEAR 2021 GUIDANCE UPDATE:
EPS guidance for full year 2021 was raised to $6.64 to $6.69 ($7.45 to $7.50 on an adjusted basis).
CONFERENCE CALL INFORMATION:
Dover will host a webcast and conference call to discuss its third quarter and year-to-date 2021 results as well as updated 2021 guidance at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, October 19, 2021. The webcast can be accessed on the Dover website at dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover’s third quarter results and its operating segments can be found on the Company’s website.
ABOUT DOVER:
Dover is a diversified global manufacturer and solutions provider with annual revenue of over $7 billion. We deliver innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 65 years, our team of over 24,000 employees takes an ownership mindset, collaborating with customers to redefine what's possible. Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under "DOV." Additional information is available at dovercorporation.com.
FORWARD-LOOKING STATEMENTS:
This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements in this document other than statements of historical fact are statements that are, or could be deemed, “forward-looking” statements. Forward-looking statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control. Factors that could cause actual results to differ materially from current expectations include, among other things, the impacts of COVID-19, or other future pandemics, on the global economy and on our customers, suppliers, employees, business and cash flows, supply chain constraints and labor shortages that could result in production stoppages, inflation in material input costs and freight logistics, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, our ability to realize synergies from newly acquired businesses, and our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions. For details on the risks and uncertainties that could cause our results to differ materially from the forward-looking statements contained herein, we refer you to the documents we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2020, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These documents are available from the Securities and Exchange Commission, and on our website, dovercorporation.com. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
INVESTOR SUPPLEMENT - THIRD QUARTER 2021
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Revenue | $ | 2,018,269 | $ | 1,748,256 | $ | 5,917,846 | $ | 4,903,370 |
| Cost of goods and services | 1,263,690 | 1,089,527 | 3,669,547 | 3,080,800 | ||||
| Gross profit | 754,579 | 658,729 | 2,248,299 | 1,822,570 | ||||
| Selling, general, and administrative expenses | 412,553 | 381,831 | 1,249,593 | 1,135,512 | ||||
| Operating earnings | 342,026 | 276,898 | 998,706 | 687,058 | ||||
| Interest expense | 26,433 | 27,724 | 79,917 | 83,703 | ||||
| Interest income | (1,466) | (960) | (3,088) | (2,871) | ||||
| Loss (gain) on sale of a business | — | 557 | — | (5,213) | ||||
| Other income, net | (10,460) | (1,420) | (18,236) | (9,887) | ||||
| Earnings before provision for income taxes | 327,519 | 250,997 | 940,113 | 621,326 | ||||
| Provision for income taxes | 63,763 | 50,697 | 179,080 | 119,981 | ||||
| Net earnings | $ | 263,756 | $ | 200,300 | $ | 761,033 | $ | 501,345 |
| Net earnings per share: | ||||||||
| Basic | $ | 1.83 | $ | 1.39 | $ | 5.29 | $ | 3.48 |
| Diluted | $ | 1.81 | $ | 1.38 | $ | 5.24 | $ | 3.45 |
| Weighted average shares outstanding: | ||||||||
| Basic | 143,976 | 144,032 | 143,895 | 144,082 | ||||
| Diluted | 145,440 | 145,289 | 145,220 | 145,313 | ||||
| Dividends paid per common share | $ | 0.50 | $ | 0.495 | $ | 1.49 | $ | 1.475 |
| * Per share data may be impacted by rounding. |
DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
| 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| REVENUE | ||||||||||||||||||||
| Engineered Products | 428,127 | $ | 442,091 | $ | 447,798 | $ | 1,318,016 | $ | 408,160 | $ | 342,380 | $ | 386,562 | $ | 1,137,102 | $ | 394,175 | $ | 1,531,277 | |
| Fueling Solutions | 437,042 | 410,561 | 1,237,281 | 359,982 | 326,495 | 380,511 | 1,066,988 | 409,294 | 1,476,282 | |||||||||||
| Imaging & Identification | 294,076 | 292,535 | 870,939 | 256,765 | 227,977 | 265,690 | 750,432 | 287,746 | 1,038,178 | |||||||||||
| Pumps & Process Solutions | 428,701 | 438,240 | 1,261,318 | 319,536 | 309,095 | 347,875 | 976,506 | 347,497 | 1,324,003 | |||||||||||
| Refrigeration & Food Equipment | 430,506 | 429,425 | 1,232,008 | 311,913 | 293,527 | 368,395 | 973,835 | 342,255 | 1,316,090 | |||||||||||
| Intra-segment eliminations | (740) | (290) | (1,716) | (417) | (299) | (777) | (1,493) | (577) | (2,070) | |||||||||||
| Total consolidated revenue | 1,867,901 | $ | 2,031,676 | $ | 2,018,269 | $ | 5,917,846 | $ | 1,655,939 | $ | 1,499,175 | $ | 1,748,256 | $ | 4,903,370 | $ | 1,780,390 | $ | 6,683,760 | |
| NET EARNINGS | ||||||||||||||||||||
| Segment Earnings: | ||||||||||||||||||||
| Engineered Products 1 | 68,779 | $ | 62,720 | $ | 71,717 | $ | 203,216 | $ | 69,094 | $ | 47,702 | $ | 64,890 | $ | 181,686 | $ | 56,481 | $ | 238,167 | |
| Fueling Solutions | 78,755 | 65,593 | 210,828 | 53,498 | 47,214 | 66,601 | 167,313 | 69,661 | 236,974 | |||||||||||
| Imaging & Identification | 60,747 | 63,419 | 181,158 | 51,482 | 38,046 | 51,928 | 141,456 | 52,017 | 193,473 | |||||||||||
| Pumps & Process Solutions | 138,632 | 142,414 | 404,691 | 66,079 | 67,702 | 89,786 | 223,567 | 81,709 | 305,276 | |||||||||||
| Refrigeration & Food Equipment 2 | 48,971 | 42,841 | 129,929 | 23,529 | 11,459 | 40,159 | 75,147 | 27,725 | 102,872 | |||||||||||
| Total segment earnings (EBIT) | 389,825 | 385,984 | 1,129,822 | 263,682 | 212,123 | 313,364 | 789,169 | 287,593 | 1,076,762 | |||||||||||
| Corporate expense / other | 40,762 | 33,498 | 112,880 | 24,097 | 27,311 | 35,603 | 87,011 | 39,651 | 126,662 | |||||||||||
| Interest expense | 26,661 | 26,433 | 79,917 | 27,268 | 28,711 | 27,724 | 83,703 | 28,234 | 111,937 | |||||||||||
| Interest income | (942) | (1,466) | (3,088) | (1,183) | (728) | (960) | (2,871) | (700) | (3,571) | |||||||||||
| Earnings before provision for income taxes | 323,344 | 327,519 | 940,113 | 213,500 | 156,829 | 250,997 | 621,326 | 220,408 | 841,734 | |||||||||||
| Provision for income taxes | 58,836 | 63,763 | 179,080 | 37,221 | 32,063 | 50,697 | 119,981 | 38,302 | 158,283 | |||||||||||
| Net earnings | 232,769 | $ | 264,508 | $ | 263,756 | $ | 761,033 | $ | 176,279 | $ | 124,766 | $ | 200,300 | $ | 501,345 | $ | 182,106 | $ | 683,451 | |
| SEGMENT MARGIN | ||||||||||||||||||||
| Engineered Products 1 | 14.2 % | 16.0 % | 15.4 % | 16.9 % | 13.9 % | 16.8 % | 16.0 % | 14.3 % | 15.6 % | |||||||||||
| Fueling Solutions | 18.0 % | 16.0 % | 17.0 % | 14.9 % | 14.5 % | 17.5 % | 15.7 % | 17.0 % | 16.1 % | |||||||||||
| Imaging & Identification | 20.7 % | 21.7 % | 20.8 % | 20.1 % | 16.7 % | 19.5 % | 18.8 % | 18.1 % | 18.6 % | |||||||||||
| Pumps & Process Solutions | 32.3 % | 32.5 % | 32.1 % | 20.7 % | 21.9 % | 25.8 % | 22.9 % | 23.5 % | 23.1 % | |||||||||||
| Refrigeration & Food Equipment 2 | 11.4 % | 10.0 % | 10.5 % | 7.5 % | 3.9 % | 10.9 % | 7.7 % | 8.1 % | 7.8 % | |||||||||||
| Total segment operating margin | 19.2 % | 19.1 % | 19.1 % | 15.9 % | 14.1 % | 17.9 % | 16.1 % | 16.2 % | 16.1 % | |||||||||||
| DEPRECIATION AND AMORTIZATION EXPENSE | ||||||||||||||||||||
| Engineered Products | 14,047 | $ | 11,981 | $ | 11,123 | $ | 37,151 | $ | 10,122 | $ | 9,722 | $ | 10,717 | $ | 30,561 | $ | 12,042 | $ | 42,603 | |
| Fueling Solutions | 19,475 | 19,920 | 58,664 | 18,339 | 17,968 | 18,014 | 54,321 | 18,482 | 72,803 | |||||||||||
| Imaging & Identification | 9,294 | 9,821 | 28,708 | 8,769 | 9,224 | 9,809 | 27,802 | 10,576 | 38,378 | |||||||||||
| Pumps & Process Solutions | 16,866 | 17,843 | 51,635 | 18,336 | 17,572 | 17,206 | 53,114 | 19,077 | 72,191 | |||||||||||
| Refrigeration & Food Equipment | 12,077 | 12,392 | 36,565 | 11,548 | 11,421 | 12,081 | 35,050 | 11,491 | 46,541 | |||||||||||
| Corporate | 1,826 | 1,812 | 5,513 | 1,638 | 1,696 | 1,662 | 4,996 | 1,539 | 6,535 | |||||||||||
| Total depreciation and amortization expense | 73,806 | $ | 71,519 | $ | 72,911 | $ | 218,236 | $ | 68,752 | $ | 67,603 | $ | 69,489 | $ | 205,844 | $ | 73,207 | $ | 279,051 | |
| 1 Q3 2021 includes a 9,078 payment received for previously incurred restructuring costs related to a product line exit. | ||||||||||||||||||||
| 2 Q1, Q2, Q3, FY 2020 include a 6,551 gain, a 781 expense, a 557 expense, and a 5,213 net gain, respectively, on the sale of the Chino, California branch of The AMS Group ("AMS Chino"). Q2, Q3 YTD and FY 2020 also include a 3,640 write-off of assets. |
All values are in US Dollars.
IS - 1
DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
| Earnings Per Share | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | ||||||||||||||||||||
| Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| Net earnings per share: | |||||||||||||||||||||
| Basic | $ | 1.62 | $ | 1.84 | $ | 1.83 | $ | 5.29 | $ | 1.22 | $ | 0.87 | $ | 1.39 | $ | 3.48 | $ | 1.27 | $ | 4.74 | |
| Diluted | $ | 1.61 | $ | 1.82 | $ | 1.81 | $ | 5.24 | $ | 1.21 | $ | 0.86 | $ | 1.38 | $ | 3.45 | $ | 1.25 | $ | 4.70 | |
| Net earnings and weighted average shares used in calculated earnings per share amounts are as follows: | |||||||||||||||||||||
| Net earnings | $ | 232,769 | $ | 264,508 | $ | 263,756 | $ | 761,033 | $ | 176,279 | $ | 124,766 | $ | 200,300 | $ | 501,345 | $ | 182,106 | $ | 683,451 | |
| Weighted average shares outstanding: | |||||||||||||||||||||
| Basic | 143,765 | 143,941 | 143,976 | 143,895 | 144,259 | 143,955 | 144,032 | 144,082 | 143,954 | 144,050 | |||||||||||
| Diluted | 144,938 | 145,118 | 145,440 | 145,220 | 145,782 | 144,995 | 145,289 | 145,313 | 145,355 | 145,393 | |||||||||||
| * Per share data may be impacted by rounding. |
IS - 2
DOVER CORPORATION
QUARTERLY ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
| 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| Adjusted net earnings: | ||||||||||||||||||||
| Net earnings | 232,769 | $ | 264,508 | $ | 263,756 | $ | 761,033 | $ | 176,279 | $ | 124,766 | $ | 200,300 | $ | 501,345 | $ | 182,106 | $ | 683,451 | |
| Acquisition-related amortization, pre-tax 1 | 35,162 | 35,587 | 106,265 | 34,062 | 34,101 | 35,325 | 103,488 | 35,027 | 138,515 | |||||||||||
| Acquisition-related amortization, tax impact 2 | (8,571) | (8,700) | (25,991) | (8,411) | (8,451) | (8,810) | (25,672) | (8,695) | (34,367) | |||||||||||
| Rightsizing and other costs (benefits), pre-tax 3 | 10,779 | (3,201) | 11,740 | 7,859 | 16,840 | 5,848 | 30,547 | 20,925 | 51,472 | |||||||||||
| Rightsizing and other costs (benefits), tax impact 2 | (2,597) | 902 | (2,726) | (1,605) | (3,452) | (1,343) | (6,400) | (4,402) | (10,802) | |||||||||||
| (Gain) loss on disposition, pre-tax 4 | — | — | — | (6,551) | 781 | 557 | (5,213) | — | (5,213) | |||||||||||
| (Gain) loss on disposition, tax-impact 2 | — | — | — | 1,592 | (190) | (135) | 1,267 | — | 1,267 | |||||||||||
| Adjusted net earnings | 262,696 | $ | 299,281 | $ | 288,344 | $ | 850,321 | $ | 203,225 | $ | 164,395 | $ | 231,742 | $ | 599,362 | $ | 224,961 | $ | 824,323 | |
| Adjusted diluted net earnings per share: | ||||||||||||||||||||
| Diluted net earnings per share | 1.61 | $ | 1.82 | $ | 1.81 | $ | 5.24 | $ | 1.21 | $ | 0.86 | $ | 1.38 | $ | 3.45 | $ | 1.25 | $ | 4.70 | |
| Acquisition-related amortization, pre-tax 1 | 0.24 | 0.24 | 0.73 | 0.23 | 0.24 | 0.24 | 0.71 | 0.24 | 0.95 | |||||||||||
| Acquisition-related amortization, tax impact 2 | (0.06) | (0.06) | (0.18) | (0.06) | (0.06) | (0.06) | (0.18) | (0.06) | (0.24) | |||||||||||
| Rightsizing and other costs (benefits), pre-tax 3 | 0.07 | (0.02) | 0.08 | 0.05 | 0.12 | 0.04 | 0.21 | 0.14 | 0.35 | |||||||||||
| Rightsizing and other costs (benefits), tax impact 2 | (0.02) | 0.01 | (0.02) | (0.01) | (0.02) | (0.01) | (0.04) | (0.03) | (0.07) | |||||||||||
| (Gain) loss on disposition, pre-tax 4 | — | — | — | (0.04) | — | — | (0.04) | — | (0.03) | |||||||||||
| (Gain) loss on disposition, tax-impact 2 | — | — | — | 0.01 | — | — | 0.01 | — | 0.01 | |||||||||||
| Adjusted diluted net earnings per share | 1.81 | $ | 2.06 | $ | 1.98 | $ | 5.86 | $ | 1.39 | $ | 1.13 | $ | 1.60 | $ | 4.12 | $ | 1.55 | $ | 5.67 | |
| 1 Includes amortization on acquisition-related intangible assets and inventory step-up. | ||||||||||||||||||||
| 2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period. | ||||||||||||||||||||
| 3 Rightsizing and other costs (benefits) include actions taken on employee reductions, facility consolidations and site closures, product line exits, and other asset charges. Q3 2021 includes a 9,078 payment received for previously incurred restructuring costs related to a product line exit in our Engineered Products segment. | ||||||||||||||||||||
| 4 Represents a (gain) loss on the disposition of AMS Chino within the Refrigeration & Food Equipment segment, including working capital adjustments. | ||||||||||||||||||||
| * Per share data and totals may be impacted by rounding. |
All values are in US Dollars.
IS - 3
DOVER CORPORATION
QUARTERLY SEGMENT ADJUSTED EBIT AND ADJUSTED EBITDA (NON-GAAP)
(unaudited)(in thousands)
Non-GAAP Reconciliations
| 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| ADJUSTED SEGMENT EBIT AND ADJUSTED EBITDA | ||||||||||||||||||||
| Engineered Products: | ||||||||||||||||||||
| Segment earnings (EBIT) | 68,779 | $ | 62,720 | $ | 71,717 | $ | 203,216 | $ | 69,094 | $ | 47,702 | $ | 64,890 | $ | 181,686 | $ | 56,481 | $ | 238,167 | |
| Rightsizing and other costs (benefits) 1 | 4,654 | (8,332) | 341 | 361 | 4,169 | 2,375 | 6,905 | 4,625 | 11,530 | |||||||||||
| Adjusted EBIT - Segment | 67,374 | 63,385 | 203,557 | 69,455 | 51,871 | 67,265 | 188,591 | 61,106 | 249,697 | |||||||||||
| Adjusted EBIT % | 15.2 % | 14.2 % | 15.4 % | 17.0 % | 15.2 % | 17.4 % | 16.6 % | 15.5 % | 16.3 % | |||||||||||
| Adjusted D&A 2 | 9,695 | 11,123 | 31,412 | 10,122 | 9,722 | 10,651 | 30,495 | 10,193 | 40,688 | |||||||||||
| Adjusted EBITDA - Segment | 83,392 | $ | 77,069 | $ | 74,508 | $ | 234,969 | $ | 79,577 | $ | 61,593 | $ | 77,916 | $ | 219,086 | $ | 71,299 | $ | 290,385 | |
| Adjusted EBITDA % | 17.4 % | 16.6 % | 17.8 % | 19.5 % | 18.0 % | 20.2 % | 19.3 % | 18.1 % | 19.0 % | |||||||||||
| Fueling Solutions: | ||||||||||||||||||||
| Segment earnings (EBIT) | 66,480 | $ | 78,755 | $ | 65,593 | $ | 210,828 | $ | 53,498 | $ | 47,214 | $ | 66,601 | $ | 167,313 | $ | 69,661 | $ | 236,974 | |
| Rightsizing and other costs | 1,657 | 1,584 | 3,299 | 1,493 | 868 | 1,615 | 3,976 | 2,727 | 6,703 | |||||||||||
| Adjusted EBIT - Segment | 80,412 | 67,177 | 214,127 | 54,991 | 48,082 | 68,216 | 171,289 | 72,388 | 243,677 | |||||||||||
| Adjusted EBIT % | 18.4 % | 16.4 % | 17.3 % | 15.3 % | 14.7 % | 17.9 % | 16.1 % | 17.7 % | 16.5 % | |||||||||||
| Adjusted D&A 2 | 19,475 | 19,335 | 57,990 | 18,339 | 17,783 | 18,014 | 54,136 | 18,225 | 72,361 | |||||||||||
| Adjusted EBITDA - Segment | 85,718 | $ | 99,887 | $ | 86,512 | $ | 272,117 | $ | 73,330 | $ | 65,865 | $ | 86,230 | $ | 225,425 | $ | 90,613 | $ | 316,038 | |
| Adjusted EBITDA % | 22.9 % | 21.1 % | 22.0 % | 20.4 % | 20.2 % | 22.7 % | 21.1 % | 22.1 % | 21.4 % | |||||||||||
| Imaging & Identification: | ||||||||||||||||||||
| Segment earnings (EBIT) | 56,992 | $ | 60,747 | $ | 63,419 | $ | 181,158 | $ | 51,482 | $ | 38,046 | $ | 51,928 | $ | 141,456 | $ | 52,017 | $ | 193,473 | |
| Rightsizing and other costs (benefits) | 178 | 1,291 | 2,151 | 264 | (527) | 99 | (164) | 6,191 | 6,027 | |||||||||||
| Adjusted EBIT - Segment | 60,925 | 64,710 | 183,309 | 51,746 | 37,519 | 52,027 | 141,292 | 58,208 | 199,500 | |||||||||||
| Adjusted EBIT % | 20.7 % | 22.1 % | 21.0 % | 20.2 % | 16.5 % | 19.6 % | 18.8 % | 20.2 % | 19.2 % | |||||||||||
| Adjusted D&A 2 | 9,184 | 9,821 | 28,223 | 8,769 | 9,224 | 9,809 | 27,802 | 10,201 | 38,003 | |||||||||||
| Adjusted EBITDA - Segment | 66,892 | $ | 70,109 | $ | 74,531 | $ | 211,532 | $ | 60,515 | $ | 46,743 | $ | 61,836 | $ | 169,094 | $ | 68,409 | $ | 237,503 | |
| Adjusted EBITDA % | 23.8 % | 25.5 % | 24.3 % | 23.6 % | 20.5 % | 23.3 % | 22.5 % | 23.8 % | 22.9 % | |||||||||||
| Pumps & Process Solutions: | ||||||||||||||||||||
| Segment earnings (EBIT) | 123,645 | $ | 138,632 | $ | 142,414 | $ | 404,691 | $ | 66,079 | $ | 67,702 | $ | 89,786 | $ | 223,567 | $ | 81,709 | $ | 305,276 | |
| Rightsizing and other (benefits) costs | 899 | 487 | (620) | 3,846 | 4,691 | 1,771 | 10,308 | 3,128 | 13,436 | |||||||||||
| Adjusted EBIT - Segment | 139,531 | 142,901 | 404,071 | 69,925 | 72,393 | 91,557 | 233,875 | 84,837 | 318,712 | |||||||||||
| Adjusted EBIT % | 32.5 % | 32.6 % | 32.0 % | 21.9 % | 23.4 % | 26.3 % | 24.0 % | 24.4 % | 24.1 % | |||||||||||
| Adjusted D&A 2 | 16,866 | 17,206 | 50,998 | 16,230 | 16,816 | 17,206 | 50,252 | 17,565 | 67,817 | |||||||||||
| Adjusted EBITDA - Segment | 138,565 | $ | 156,397 | $ | 160,107 | $ | 455,069 | $ | 86,155 | $ | 89,209 | $ | 108,763 | $ | 284,127 | $ | 102,402 | $ | 386,529 | |
| Adjusted EBITDA % | 36.5 % | 36.5 % | 36.1 % | 27.0 % | 28.9 % | 31.3 % | 29.1 % | 29.5 % | 29.2 % | |||||||||||
| Refrigeration & Food Equipment: | ||||||||||||||||||||
| Segment earnings (EBIT) | 38,117 | $ | 48,971 | $ | 42,841 | $ | 129,929 | $ | 23,529 | $ | 11,459 | $ | 40,159 | $ | 75,147 | $ | 27,725 | $ | 102,872 | |
| Rightsizing and other (benefits) costs | 2,539 | 1,520 | 4,021 | 704 | 6,016 | (971) | 5,749 | 726 | 6,475 | |||||||||||
| (Gain) loss on disposition 3 | — | — | — | (6,551) | 781 | 557 | (5,213) | — | (5,213) | |||||||||||
| Adjusted EBIT - Segment | 51,510 | 44,361 | 133,950 | 17,682 | 18,256 | 39,745 | 75,683 | 28,451 | 104,134 | |||||||||||
| Adjusted EBIT % | 12.0 % | 10.3 % | 10.9 % | 5.7 % | 6.2 % | 10.8 % | 7.8 % | 8.3 % | 7.9 % | |||||||||||
| Adjusted D&A 2 | 12,077 | 12,392 | 36,214 | 11,548 | 11,421 | 12,081 | 35,050 | 11,491 | 46,541 | |||||||||||
| Adjusted EBITDA - Segment | 49,824 | $ | 63,587 | $ | 56,753 | $ | 170,164 | $ | 29,230 | $ | 29,677 | $ | 51,826 | $ | 110,733 | $ | 39,942 | $ | 150,675 | |
| Adjusted EBITDA % | 14.8 % | 13.2 % | 13.8 % | 9.4 % | 10.1 % | 14.1 % | 11.4 % | 11.7 % | 11.4 % | |||||||||||
| Total Segments: | ||||||||||||||||||||
| Segment earnings (EBIT) 4 | 354,013 | $ | 389,825 | $ | 385,984 | $ | 1,129,822 | $ | 263,682 | $ | 212,123 | $ | 313,364 | $ | 789,169 | $ | 287,593 | $ | 1,076,762 | |
| Rightsizing and other costs (benefits) 1 | 9,927 | (3,450) | 9,192 | 6,668 | 15,217 | 4,889 | 26,774 | 17,397 | 44,171 | |||||||||||
| (Gain) loss on disposition 3 | — | — | — | (6,551) | 781 | 557 | (5,213) | — | (5,213) | |||||||||||
| Adjusted EBIT - Segment 5 | 399,752 | 382,534 | 1,139,014 | 263,799 | 228,121 | 318,810 | 810,730 | 304,990 | 1,115,720 | |||||||||||
| Adjusted EBIT % 5 | 19.7 % | 19.0 % | 19.2 % | 15.9 % | 15.2 % | 18.2 % | 16.5 % | 17.1 % | 16.7 % | |||||||||||
| Adjusted D&A 2 | 67,297 | 69,877 | 204,837 | 65,008 | 64,966 | 67,761 | 197,735 | 67,675 | 265,410 | |||||||||||
| Adjusted EBITDA - Segment 5 | 424,391 | $ | 467,049 | $ | 452,411 | $ | 1,343,851 | $ | 328,807 | $ | 293,087 | $ | 386,571 | $ | 1,008,465 | $ | 372,665 | $ | 1,381,130 | |
| Adjusted EBITDA % 5 | 23.0 % | 22.4 % | 22.7 % | 19.9 % | 19.5 % | 22.1 % | 20.6 % | 20.9 % | 20.7 % | |||||||||||
| 1 Q3 2021 includes a 9,078 payment received for previously incurred restructuring costs related to a product line exit. | ||||||||||||||||||||
| 2 Adjusted D&A is depreciation and amortization expense, excluding depreciation and amortization included within rightsizing and other costs. | ||||||||||||||||||||
| 3 Q1, Q2, Q3, and FY 2020 includes a 6,551 gain, a 781 expense, a 557 expense and a 5,213 net gain on the sale of a business for AMS Chino, respectively. | ||||||||||||||||||||
| 4 Refer to Quarterly Segment Information section for reconciliation of total segment earnings (EBIT) to net earnings. | ||||||||||||||||||||
| 5 Refer to Non-GAAP Disclosures section for definition. |
All values are in US Dollars.
IS - 4
DOVER CORPORATION
REVENUE GROWTH FACTORS (NON-GAAP)
(unaudited)(in thousands, except per share data*)
Non-GAAP Reconciliations
Revenue Growth Factors
| 2021 | ||||
|---|---|---|---|---|
| Q3 | Q3 YTD | |||
| Organic | ||||
| Engineered Products | 14.2 | % | 13.3 | % |
| Fueling Solutions | 3.0 | % | 9.7 | % |
| Imaging & Identification | 7.4 | % | 10.0 | % |
| Pumps & Process Solutions | 24.6 | % | 25.4 | % |
| Refrigeration & Food Equipment | 16.0 | % | 25.1 | % |
| Total Organic | 13.2 | % | 16.8 | % |
| Acquisitions | 1.1 | % | 1.2 | % |
| Dispositions | — | % | (0.1) | % |
| Currency translation | 1.1 | % | 2.8 | % |
| Total* | 15.4 | % | 20.7 | % |
* Totals may be impacted by rounding.
| 2021 | ||||
|---|---|---|---|---|
| Q3 | Q3 YTD | |||
| Organic | ||||
| United States | 15.7 | % | 15.6 | % |
| Other Americas | 8.7 | % | 18.9 | % |
| Europe | 15.5 | % | 18.9 | % |
| Asia | 4.6 | % | 19.4 | % |
| Other | 0.1 | % | 10.9 | % |
| Total Organic | 13.2 | % | 16.8 | % |
| Acquisitions | 1.1 | % | 1.2 | % |
| Dispositions | — | % | (0.1) | % |
| Currency translation | 1.1 | % | 2.8 | % |
| Total* | 15.4 | % | 20.7 | % |
* Totals may be impacted by rounding.
| Adjusted EPS Guidance Reconciliation | |||||
|---|---|---|---|---|---|
| Range | |||||
| 2021 Guidance for Earnings per Share (GAAP) | $ | 6.64 | $ | 6.69 | |
| Acquisition-related amortization, net | 0.74 | ||||
| Rightsizing and other costs, net | 0.07 | ||||
| 2021 Guidance for Adjusted Earnings per Share (Non-GAAP) | $ | 7.45 | $ | 7.50 |
Note: The above guidance reflects on going results of Unified Brands business within the Refrigeration & Food Equipment segment and, therefore, excludes the impact of the pending sale which is expected to close in Q4 2021.
IS - 5
DOVER CORPORATION
QUARTERLY CASH FLOW AND FREE CASH FLOW (NON-GAAP)
(unaudited)(in thousands)
Quarterly Cash Flow
| 2021 | 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| Net Cash Flows Provided By (Used In): | |||||||||||||||||||||
| Operating activities | $ | 177,184 | $ | 260,073 | $ | 351,329 | $ | 788,586 | $ | 75,863 | $ | 271,809 | $ | 339,247 | $ | 686,919 | $ | 417,891 | $ | 1,104,810 | |
| Investing activities | (29,572) | (121,631) | (135,439) | (286,642) | (230,511) | (67,763) | (64,724) | (362,998) | (118,381) | (481,379) | |||||||||||
| Financing activities | (124,239) | (75,949) | (74,610) | (274,798) | 280,954 | (67,458) | (496,832) | (283,336) | (222,954) | (506,290) |
Quarterly Free Cash Flow (Non-GAAP)
| 2021 | 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| Cash flow from operating activities1 | $ | 177,184 | $ | 260,073 | $ | 351,329 | $ | 788,586 | $ | 75,863 | $ | 271,809 | $ | 339,247 | $ | 686,919 | $ | 417,891 | $ | 1,104,810 | |
| Less: Capital expenditures | (31,260) | (41,971) | (47,926) | (121,157) | (40,172) | (38,999) | (44,393) | (123,564) | (42,128) | (165,692) | |||||||||||
| Free cash flow | $ | 145,924 | $ | 218,102 | $ | 303,403 | $ | 667,429 | $ | 35,691 | $ | 232,810 | $ | 294,854 | $ | 563,355 | $ | 375,763 | $ | 939,118 | |
| Free cash flow as a percentage of revenue | 7.8 % | 10.7 % | 15.0 % | 11.3 % | 2.2 % | 15.5 % | 16.9 % | 11.5 % | 21.1 % | 14.1 % | |||||||||||
| Free cash flow as a percentage of net earnings | 62.7 % | 82.5 % | 115.0 % | 87.7 % | 20.2 % | 186.6 % | 147.2 % | 112.4 % | 206.3 % | 137.4 % |
1 FY 2020 cash flow from operating activities reflects benefits from permitted deferrals of tax payments, most significantly in Q2, Q3, and Q4 and advanced
payments on contracts, most significantly in Q3.
IS - 6
DOVER CORPORATION
PERFORMANCE MEASURES
(unaudited)(in thousands)
| 2021 | 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q3 YTD | Q1 | Q2 | Q3 | Q3 YTD | Q4 | FY 2020 | ||||||||||||
| BOOKINGS | |||||||||||||||||||||
| Engineered Products | $ | 528,310 | $ | 497,200 | $ | 502,767 | $ | 1,528,277 | $ | 414,972 | $ | 278,373 | $ | 381,139 | $ | 1,074,484 | $ | 484,002 | $ | 1,558,486 | |
| Fueling Solutions | 422,668 | 453,146 | 467,821 | 1,343,635 | 373,070 | 311,498 | 383,902 | 1,068,470 | 403,400 | 1,471,870 | |||||||||||
| Imaging & Identification | 293,614 | 299,608 | 293,782 | 887,004 | 272,604 | 221,315 | 266,423 | 760,342 | 304,756 | 1,065,098 | |||||||||||
| Pumps & Process Solutions | 551,365 | 521,010 | 490,581 | 1,562,956 | 369,403 | 275,872 | 323,801 | 969,076 | 365,262 | 1,334,338 | |||||||||||
| Refrigeration & Food Equipment | 537,326 | 606,545 | 540,280 | 1,684,151 | 355,157 | 326,400 | 449,549 | 1,131,106 | 379,393 | 1,510,499 | |||||||||||
| Intra-segment eliminations | (863) | (498) | (407) | (1,768) | (375) | (460) | (926) | (1,761) | (425) | (2,186) | |||||||||||
| Total consolidated bookings | $ | 2,332,420 | $ | 2,377,011 | $ | 2,294,824 | $ | 7,004,255 | $ | 1,784,831 | $ | 1,412,998 | $ | 1,803,888 | $ | 5,001,717 | $ | 1,936,388 | $ | 6,938,105 | |
| BACKLOG | |||||||||||||||||||||
| Engineered Products | $ | 562,557 | $ | 613,517 | $ | 662,834 | $ | 453,867 | $ | 378,874 | $ | 373,458 | $ | 463,701 | |||||||
| Fueling Solutions | 238,822 | 256,497 | 312,176 | 211,518 | 199,305 | 204,574 | 201,521 | ||||||||||||||
| Imaging & Identification | 198,556 | 206,125 | 204,766 | 170,119 | 168,904 | 171,158 | 192,785 | ||||||||||||||
| Pumps & Process Solutions | 539,097 | 634,477 | 682,415 | 397,969 | 379,090 | 361,631 | 390,238 | ||||||||||||||
| Refrigeration & Food Equipment | 677,309 | 854,188 | 964,233 | 356,133 | 390,368 | 472,140 | 510,498 | ||||||||||||||
| Intra-segment eliminations | (544) | (262) | (252) | (159) | (367) | (269) | (192) | ||||||||||||||
| Total consolidated backlog | $ | 2,215,797 | $ | 2,564,542 | $ | 2,826,172 | $ | 1,589,447 | $ | 1,516,174 | $ | 1,582,692 | $ | 1,758,551 |
Bookings Growth Factors
| 2021 | ||||
|---|---|---|---|---|
| Q3 | Q3 YTD | |||
| Organic | ||||
| Engineered Products | 30.3 | % | 39.4 | % |
| Fueling Solutions | 15.8 | % | 18.0 | % |
| Imaging & Identification | 7.5 | % | 10.4 | % |
| Pumps & Process Solutions | 50.1 | % | 56.5 | % |
| Refrigeration & Food Equipment | 19.7 | % | 47.8 | % |
| Total Organic | 24.8 | % | 35.6 | % |
| Acquisitions | 1.1 | % | 1.6 | % |
| Dispositions | — | % | (0.1) | % |
| Currency translation | 1.3 | % | 2.9 | % |
| Total* | 27.2 | % | 40.0 | % |
* Totals may be impacted by rounding.
IS - 7
Non-GAAP Measures Definitions
In an effort to provide investors with additional information regarding our results as determined by GAAP, management also discloses non-GAAP information that management believes provides useful information to investors. Adjusted net earnings, adjusted diluted net earnings per share, total segment earnings (EBIT), adjusted EBIT by segment, adjusted EBIT margin by segment, adjusted EBITDA by segment, adjusted EBITDA margin by segment, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of net earnings, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for net earnings, diluted net earnings per share, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.
Adjusted net earnings represents net earnings adjusted for the effect of acquisition-related amortization, rightsizing and other costs/benefits, and a gain/loss on disposition. We exclude after-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. We exclude the other items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or Management believes they are not indicative of the Company's ongoing operating costs or gains in a given period.
Adjusted diluted net earnings per share represents adjusted net earnings divided by average diluted shares.
Total segment earnings (EBIT) is defined as net earnings before income taxes, net interest expense and corporate expenses. Total segment earnings (EBIT) margin is defined as total segment earnings (EBIT) divided by revenue.
Adjusted EBIT by Segment is defined as net earnings before income taxes, net interest expense, corporate expenses, rightsizing and other costs/benefits, and a 2020 gain/loss on disposition. Adjusted EBIT Margin by Segment is defined as adjusted EBIT by segment divided by segment revenue.
Adjusted EBITDA by Segment is defined as adjusted EBIT by segment plus depreciation and amortization, excluding depreciation and amortization included within rightsizing and other costs/benefits. Adjusted EBITDA Margin by Segment is defined as adjusted EBITDA by segment divided by segment revenue.
Management believes these measures are useful to investors to better understand the Company’s ongoing profitability as it will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers.
Free cash flow represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of net earnings equals free cash flow divided by net earnings. Management believes that free cash flow and free cash flow ratios are important measures of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.
Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue and bookings performance and trends between periods.
Performance Measures Definitions
Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends.
Organic bookings represent total orders received from customers in the current reporting period excluding the impact of foreign currency exchange rates and the impact of acquisition and dispositions. This metric is an important measure of performance and an indicator of revenue order trends.
Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet have satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future.
We use the above operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments.
IS - 8
a202110198-kexhibit992
Earnings Conference Call Third Quarter 2021 October 19, 2021 – 9:00am CT Exhibit 99.2
2 Forward-Looking Statements and Non-GAAP Measures We want to remind everyone that our comments may contain forward-looking statements that are inherently subject to uncertainties and risks, including the impacts of the novel coronavirus (COVID-19) on the global economy and on our customers, suppliers, employees, operations, business, liquidity and cash flow, supply chain constraints and labor shortages that could result in production stoppages, and inflation in material input costs and freight logistics. We caution everyone to be guided in their analysis of Dover Corporation by referring to the documents we file from time to time with the SEC, including our Annual Report on Form 10-K for 2020 and Quarterly Reports on Form 10-Q, 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 website, dovercorporation.com, where considerably more information can be found. In addition to financial measures based on U.S. GAAP, Dover provides supplemental non-GAAP financial information. Management uses non-GAAP measures in addition to GAAP measures to understand and compare operating results across periods, make resource allocation decisions, and for forecasting and other purposes. Management believes these non-GAAP measures reflect results in a manner that enables, in many instances, more meaningful analysis of trends and facilitates comparison of results across periods and to those of peer companies. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP and may not be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. The use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP. Reconciliations and definitions are included either in this presentation or in Dover’s earnings release and investor supplement for the third quarter, which are available on Dover’s website.
3 YTD Free Cash Flow(1) +80 bps Adj. Segment EBIT Margin(1) to 19.0% +$104M Y-o-Y Q3 2021 Highlights (1) Non-GAAP measures (definitions and reconciliations in appendix) (2) See performance measures definitions in appendix (3) Refer to definition of total segment earnings (EBIT) margin in appendix 1.4 Mar-21Sep-19 Sep-20 2.6 Jun-21 1.6 2.2 Sep-21 2.8$ Billions EPS: $6.64 - $6.69 (GAAP); $7.45 – $7.50 (Adjusted(1)) Revenue +25% organic(2) Book-to-bill(2): 1.14; 1+ across all segments +13% organic(1) Growth in all segments (Y-o-Y) Diluted EPS +24% Adjusted Diluted EPS(1) to $1.98 +15% Y-o-Y at $2.0B Bookings(2) +27% Y-o-Y to $2.3B Segment EBIT Margin(3) +120 bps to 19.1% +18% Y-o-Y +31% Y-o-Y to $1.81 Backlog(2) +79% Y-o-Y growth rate FY ’21 Guidance Revised upward
4 Summary Corporate Q3 Results Q3 2021 Highlights and Comments Revenue change (Y-o-Y) All-in Organic(1) +15% +13% Y-o-Y growth in all segments Q3 FX impact: +1%; acquisitions +1% Bookings change (Y-o-Y) All-in(2) Organic(2) +27% +25% Q3 book-to-bill(2): 1.14; bookings up Y-o-Y in all five segments Backlog +79% Y-o-Y; up across all five segments Segment EBIT margin improvement (Y-o-Y) Reported(3) Adjusted(1) +120 bps +80 bps Accretion driven by volume, mix, and productivity initiatives 24% Y-o-Y Adj. EBIT conversion margin(1) Net Earnings Reported Adjusted(1) $264M $288M Reported Q3 Y-o-Y change: +32% Adjusted(1) Q3 Y-o-Y change: +24% Diluted EPS Reported Adjusted(1) $1.81 $1.98 Reported Q3 Y-o-Y change: +31% Adjusted(1) Q3 Y-o-Y change: +24% Free Cash Flow (% of)(1) Revenue Adj. Earnings 15% 105% Q3 FCF(1) up $9M (3%) Y-o-Y YTD FCF(1) up $104M (18%) Y-o-Y Guidance and other activities 2021 revised guidance: ‒ EPS: $6.64 - $6.69 (GAAP); $7.45 - $7.50 (Adjusted(1)) (1) Non-GAAP measures (definitions and/or reconciliations in appendix) (2) See performance measures definitions in appendix (3) Refer to definition of total segment earnings (EBIT) margin in appendix
5 Segment Revenue ($M) / Organic Change % Adj. EBIT % / bps ∆ Y-o-Y Organic YTD Revenue Δ ‘21 vs. ‘19 Performance Commentary DEP $448 +14% 14.2% -320 bps +1% Top line strength across most end markets; soft shipments in European defense components; significant input shortages impacting shipment timing in ESG, VSG Backlog(2) up $289M Y-o-Y (+77%); book-to-bill(2) 1.12; organic bookings(2) up 30% driven by waste handling, vehicle aftermarket, and industrial winches DFS $411 +3% 16.4% -150 bps +0% Strength in NA retail fueling (above and below ground) and vehicle wash; continued softness in Asia (China) and fuel transport Backlog(2) up $108M Y-o-Y (+53%); book-to-bill(2) 1.14; organic bookings(2) up 16% on activity in NA retail fueling and vehicle wash DII $293 +7% 22.1% +250 bps +1% Constructive trading conditions in marking & coding, serialization software. Textiles improving (sequential and year-over-year growth) Backlog(2) up $34M Y-o-Y (+20%); book-to-bill(2) 1.00; organic bookings(2) up 8% driven by textiles and marking & coding DPPS $438 +25% 32.6% +630 bps +21% Growth in biopharma connectors and pumps, industrial pumps, and compression OEM and aftermarket. Y-o-Y decline in polymer processing on order timing Backlog(2) up $321M Y-o-Y (+89%); book-to-bill(2) 1.12; organic bookings(2) up 50% on double-digit growth across all operating units DRFE $429 +16% 10.3% -50 bps +16% Strength in can making and heat exchangers. Significant input shortages impacting shipment timing in food retail Backlog(2) up $492M Y-o-Y (+104%) to $964M, driven by food retail and can making ($487M and $327M as of 9/30/21, respectively); book-to-bill(2) 1.26; organic bookings(2) up 20% on growth in food retail and heat exchangers Segment Results Q3 2021(1) (1) Excluding revenue, non-GAAP (definitions and reconciliations in appendix) (2) See performance measures definitions in appendix
6 Q3 2020 Revenue & Bookings Q3 2021 Revenue Change in Organic Revenue(1): +$231M, or +13.2% DFS DII DPPS DRFE FX ACQ./ DISP. (2) Q3 2021 ACQ./ DISP. (3) DPPS Q3 2021Q3 2020 DEP DFS DII DRFE FX Note: $ in millions. Numbers may not add due to rounding Q3 2021 Bookings(4) Change in Organic Bookings(4): +$448M, or +24.8% (1) Non-GAAP measure (definition and reconciliation in appendix) (2) Acquisitions: $18M, dispositions: $0M DEP ($M) 1,748 11 21 2,0185955 8520 ($M) 18 61 23 2,29589115 16220 211,804 Q3 2021 % of Revenue 8% 23% 3% 55% 11%ASIA OTHER EUROPE OTHER AMER. US 0% 5% 16% 9% 16% ’21 Organic Rev Growth(1) Organic Organic (3) Acquisitions: $21M, dispositions: $0M (4) See performance measure definitions in appendix Q3 YTD 11% 19% 19% 19% 16%
7 Q3 2021 Adjusted Segment EBIT and Adjusted Net Earnings ADJ. ON SALE OF CHINO SEGMENT EBIT ADJ. EARNINGS GAAP EARNINGS RIGHT SIZING ACQ. AMORT. ADJ. EARNINGS CORP. EXPENSE INT./TAX EXPENSE ACQ. AMORT. RIGHT SIZING GAAP EARNINGS Change in Adjusted Net Earnings (3) +$57M 200 5 0 27 232 64 1 -9 288 -27 Q3 2020 Q3 2021 ($M) Note: $ in millions. Numbers may not add due to rounding 2642 DFSADJ. EBIT DPPSD&A (1) ADJ. EBITDA DRFEDEP ADJ. EBITDADII D&A (2) ADJ. EBIT 22.1% 19.0% Change in Adjusted Segment EBIT (3) +$64M Q3 2021 319 387 13-3 383 ($M)51 18.2% Q3 2020 -700 5 22.4% 45268 (1) Depreciation: $33M, Amortization: $35M (2) Depreciation: $34M, Amortization: $36M (3) Non-GAAP measures (definitions and reconciliations in appendix) 13.3% 14.3% +80 bps +100 bps
8 Year-to-Date Free Cash Flow 12.3% (1) Includes stock-based compensation and changes in other current and non-current assets and liabilities (2) Non-GAAP measures (reconciliations and definitions in appendix) Note: Numbers may not add due to rounding $M YTD ’21 YTD ’20 ∆ Net earnings 761 501 +260 Adjustment for gain on disposition - (5) +5 D&A 218 206 +12 Change in working capital (248) (92) -156 Change in other(1) 58 77 -19 Cash flow from operations 789 687 +102 Capex (121) (124) +3 Free cash flow(2) 667 563 +104 FCF % of revenue(2) 11.3% 11.5% -20 bps FCF % of adj. earnings(2) 78.5% 94.0% -1,550 bps
9 Portfolio Activity Update 2018-21 DealsInorganic Priorities as Communicated in September 2019 ~$150 ~$320 ~$210 ~$140 ~$15 (1) Total purchase consideration over 2018-2021 (on a cash free and debt free basis, including contingent consideration) (2) Sale price on a cash free and debt free basis subject to customary post-closing adjustments (3) Preliminarily estimated cash proceeds after taxes Software and services Traceability Value chain adjacencies Opportunistic consolidating bolt-ons Enhance software and diagnostic offerings Software add-ons Transportation components Vehicle wash Grow in pumps Hygienic and life science Fluid path adjacencies IoT solutions Synergistic tuck-ins Opportunistic pruning Imaging & Identification Engineered Products Refrigeration & Food Equipment Core Software / Services Adjacencies Pumps & Process Solutions Fueling Solutions Runway & Priority SaaS industrial 3D visualization AI-powered sensor systems used for signal intelligence LNG and Hydrogen fueling solutions ~$2442 (~$185)3 2018-2020 2021 Spend ($M)1 Divestiture Expect to close in Q4 SaaS software Wireless solutions IoT control solutions Hygienic pumps - highlighted are Q3’21 and October ’21 transactions
10 FY2021 Guidance Update Euro/Dollar assumption: 1.20 (1) Non-GAAP measure (definition and/or reconciliation in appendix) Post-Q2 Guide Revised Guide All-in Revenue Growth 15-17% No change EPS GAAP(3) Adj.(1) $6.45 - $6.55 $7.30 - $7.40 $6.64 - $6.69 $7.45 - $7.50 Tax rate 21% - 22% No change FCF(1) % of Revenue 12% - 14% No change Capex ~$175 – 200 million No change +12.5c(2) $7.0B $7.1B $6.7B 14.8% 2018 2020 16.6% 2019 16.7% 18.6% 2021E $7.7 – 7.8B Adj. Segment EBIT Margin (%) Revenue ($B) $4.97 $5.93 $5.67 0 2 4 6 8 10 2018 2019 2020 2021E $7.45-$7.50 +14-15% CAGR Revenue and Adj. Segment EBIT Margin(1) Adj. Earnings Per Share(1) 25-35 conversion(1) (2) At midpoint (3) Excludes any gain on sale of Unified Brands
11 Appendix
12 Organic Revenue and Bookings Bridges Note: Numbers may not add due to rounding Revenue Bookings 14.2% 30.3% 3.0% 15.8% 7.4% 7.5% 24.6% 50.1% 16.0% 19.7% 13.2% 24.8% 1.1% 1.1% 0.0% 0.0% 1.1% 1.3% Total 15.4% 27.2% Q3 2021 Q3 2021 YTD 15.7% 15.6% 8.7% 18.9% 15.5% 18.9% 4.6% 19.4% 0.1% 10.9% 13.2% 16.8% 1.1% 1.2% 0.0% -0.1% 1.1% 2.8% Total 15.4% 20.7% Currency translation Organic Refrigeration & Food Equipment Total Organic Engineered Products Pumps & Process Solutions Fueling Solutions Imaging & Identification Q3 2021 Organic Growth Segment Growth Factors Geographic Revenue Growth Factors Acquisitions Dispositions Currency translation Organic US Other Americas Europe Asia Other Total Organic Acquisitions Dispositions
13 Organic Revenue Growth and YTD 2021 vs. YTD 2019 Comparison Note: Numbers may not add due to rounding Segment Growth Factors YTD Q3 Organic Growth YTD Q3 '21 vs. Q3 '19 2020 2021 Organic Growth -10.9% 13.3% 1.0% -8.5% 9.7% 0.3% -8.6% 10.0% 0.5% -3.6% 25.4% 20.8% -7.6% 25.1% 15.6% -8.0% 16.8% 7.4% 0.8% 1.2% 2.0% -0.7% -0.1% -0.8% -0.7% 2.9% 2.2% Total -8.5% 20.7% 10.4% Acquisitions Dispositions Currency translation Organic Refrigeration & Food Equipment Total Organic Engineered Products Pumps & Process Solutions Fueling Solutions Imaging & Identification
14 Q3 2020 to Q3 2021 Revenue and Bookings Bridges by Segment Note: Numbers may not add due to rounding DEP DFS DII DPPS DRFE Total 387 381 266 348 368 1,748 55 11 20 85 59 231 5 5 4 4 2 21 1 14 3 1 - 18 448 411 293 438 429 2,018 DEP DFS DII DPPS DRFE Total 381 384 266 324 450 1,804 115 61 20 162 89 448 6 7 4 4 2 23 1 16 3 1 - 21 503 468 294 491 540 2,295 ($ in millions) Q3 2020 Revenue Bookings Bridge by Segment ($ in millions) Acquisitions / Dispositions Q3 2021 Revenue Organic Growth FX Revenue Bridge by Segment FX Q3 2021 Bookings Q3 2020 Bookings Organic Growth Acquisitions / Dispositions
15 Reconciliation of Q3 2021 Net Earnings to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs Note: Numbers may not add due to rounding DEP DFS DII DPPS DRFE Total 448 411 293 438 429 2,018 - - - - - 264 - - - - - 33 - - - - - 25 - - - - - 64 72 66 63 142 43 386 16.0% 16.0% 21.7% 32.5% 10.0% 19.1% (8) 2 1 0 2 (3) 63 67 65 143 44 383 14.2% 16.4% 22.1% 32.6% 10.3% 19.0% 11 19 10 17 12 70 75 87 75 160 57 452 16.6% 21.1% 25.5% 36.5% 13.2% 22.4% Q3 2021 ($ in millions) Revenue Net earnings Add back: Adjusted EBITDA - Segment Adjusted EBITDA % Income tax expense Segment earnings (EBIT) EBIT % Adjustments: Rightsizing and other costs Corporate expense Adjusted EBIT % Adjusted depreciation and amortization expense(1) Interest expense, net Adjusted EBIT - Segment
16 Reconciliation of Q3 2020 Net Earnings to Adj. EBIT and Adj. EBITDA and Calculation of Adj. EBIT Margin and Adj. EBITDA Margin by Segment DEP DFS DII DPPS DRFE Total 387 381 266 348 368 1,748 - - - - - 200 - - - - - 36 - - - - - 27 - - - - - 51 65 67 52 90 40 313 16.8% 17.5% 19.5% 25.8% 10.9% 17.9% 2 2 0 2 (1) 5 - - - - 1 1 67 68 52 92 40 319 17.4% 17.9% 19.6% 26.3% 10.8% 18.2% 11 18 10 17 12 68 78 87 62 109 52 387 20.2% 22.7% 23.3% 31.3% 14.1% 22.1% Interest expense, net Loss on Disposition Adjusted EBIT - Segment Adjusted EBIT % Adjusted depreciation and amortization expense (1) Q3 2020 ($ in millions) Revenue Net earnings Add back: Adjusted EBITDA - Segment Adjusted EBITDA % Income tax expense Segment earnings (EBIT) EBIT % Adjustments: Rightsizing and other costs Corporate expense (1) Adjusted depreciation and amortization expense excludes depreciation and amortization included within rightsizing and other costs Note: Numbers may not add due to rounding
17 Reconciliation of Adjusted Net Earnings to Net Earnings and Adjusted Diluted EPS to Diluted EPS Note: Numbers may not add due to rounding ($ in millions, except per share data) Q3 2021 Q3 2020 FY 2020 FY 2019 FY 2018 Net earnings from continuing operations ($) 264 200 683 678 591 Acquisition-related amortization, pre tax 36 35 139 138 146 Acquisition-related amortization, tax impact (9) (9) (34) (35) (37) Rightsizing and other costs (benefits), pre tax (3) 6 51 32 73 Rightsizing and other costs (benefits), tax impact 1 (1) (11) (7) (15) (Loss) / Gain on disposition, pre tax - 1 (5) - - (Loss) / Gain on disposition, tax impact - (0) 1 - - Loss on extinguishment of debt, pre-tax - - - 24 - Loss on extinguishment of debt, tax impact - - - (5) - Loss on assets held for sale - - - 47 - Tax Cuts and Jobs Act - - - - (3) Adjusted net earnings from continuing operations ($) 288 232 824 872 756 Adjusted net earnings margin 14.3% 13.3% 12.3% 12.2% 10.8% Weighted average shares outstanding – diluted 145 145 145 147 152 Diluted EPS from continuing operations ($) 1.81 1.38 4.70 4.61 3.89 Acquisition-related amortization, pre tax 0.24 0.24 0.95 0.94 0.96 Acquisition-related amortization, tax impact (0.06) (0.06) (0.24) (0.24) (0.24) Rightsizing and other costs (benefits), pre tax (0.02) 0.04 0.35 0.22 0.48 Rightsizing and other costs (benefits), tax impact 0.01 (0.01) (0.07) (0.06) (0.10) (Loss) / Gain on disposition, pre tax - 0.00 (0.03) - - (Loss) / Gain on disposition, tax impact - (0.00) 0.01 - - Loss on extinguishment of debt, pre-tax - - - 0.16 - Loss on extinguishment of debt, tax impact - - - (0.04) - Loss on assets held for sale - - - 0.32 - Tax Cuts and Jobs Act - - - - (0.02) Adjusted diluted EPS from continuing operations ($) 1.98 1.60 5.67 5.93 4.97
18 Reconciliation of FY 2020, FY 2019, and FY 2018 Earnings from Continuing Operations to Adj. Segment EBIT and Calculation of Adj. EBIT Margin FY 2020 FY 2019 FY 2018 6,684 7,136 6,992 683 678 591 127 124 130 108 121 122 158 165 134 Loss on extinguishment of debt - 24 - 1,077 1,112 977 16.1% 15.6% 14.0% 44 27 59 (5) - - - 47 - 1,116 1,186 1,036 16.7% 16.6% 14.8% Loss on sale of Finder Adjusted EBIT - Segment Adjusted EBIT % Income tax expense Segment earnings (EBIT) EBIT % Adjustments: Rightsizing and other costs Gain on AMS Chino Interest expense, net ($ in millions) Revenue Earnings from continuing operations Add back: Corporate expense
19 Reconciliation of Free Cash Flow, EPS to Adjusted EPS, and Adjusted EBIT Conversion Margin Range 2021 Guidance for Earnings per Share (GAAP) $6.64 $6.69 Acquisition-related amortization, net $0.74 Rightsizing and other costs, net $0.07 2021 Guidance for Adjusted Earnings per Share (Non-GAAP) $7.45 $7.50 Note: Numbers may not add due to rounding ($ millions) YTD 2021 YTD 2020 Net Cash Provided by Operating Activities 789 687 Capital Expenditures (121) (124) Free Cash Flow 667 563 Free Cash Flow as a % of Net Earnings 87.7% 112.4% Free Cash Flow as a % of Adjusted Net Earnings 78.5% 94.0%185.4% Free Cash Flow as a % of Revenue 11.3% 11.5%8 .4% Free Cash Flow ($ in millions) Q3 2021 Q3 2020 ∆ Revenue 2,018 1,748 270 Adjusted EBIT - Segment 383 319 64 Adjusted EBIT Conversion Margin 24% Adj. EBIT Conversion Margin
20 Non-GAAP Definitions Definitions of Non-GAAP Measures: Adjusted Net Earnings: is defined as net earnings adjusted for the effect of acquisition-related amortization, rightsizing and other costs/benefits, gain/loss on dispositions, loss on extinguishment of debt, loss on assets held for sale, and the Tax Cuts and Jobs Act. Adjusted Net Earnings Margin: is defined as adjusted net earnings divided by revenue. Adjusted Diluted Net Earnings Per Share: is defined as adjusted net earnings divided by average diluted shares. Total Segment Earnings (EBIT): is defined as net earnings before income taxes, net interest expense and corporate expenses. Total Segment Earnings (EBIT) Margin: is defined as total segment earnings (EBIT) divided by revenue. Adjusted EBIT by Segment: is defined as net earnings before income taxes, net interest expense, corporate expenses, rightsizing and other costs/benefits, and gain on dispositions Adjusted EBIT Margin by Segment: is defined as adjusted EBIT by segment divided by segment revenue. The bps change Y-o-Y is calculated as the difference between adjusted EBIT margin for the current period and the prior period. Adjusted EBITDA by Segment: is defined as adjusted EBIT by segment plus depreciation and amortization, excluding depreciation and amortization included within rightsizing and other costs. Adjusted EBITDA Margin by Segment: is defined as adjusted EBITDA by segment divided by segment revenue. Adjusted EBIT Conversion Margin: is defined as the change in total adjusted segment earnings (EBIT) divided by the change in revenue. Free Cash Flow: is defined as net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of net earnings equals free cash flow divided by net earnings. Free cash flow as a percentage of adjusted net earnings equals free cash flow divided by adjusted net earnings. Organic Revenue Growth: is defined as revenue growth excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. The tables included in this presentation provide reconciliations of the non-GAAP measures used in this presentation to the most directly comparable U.S. GAAP measures. Further information regarding management’s use of these non-GAAP measures is included in Dover’s earnings release and investor supplement for the third quarter.
21 Performance Measure Definitions Definitions of Performance Measures: Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends. Organic Bookings represent total orders received from customers in the current reporting period excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of revenue order trends. Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet been satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future. Book-to-Bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand. We use the above operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments.
