Tags: Dover | acquisitions | outlook | DOV

Dover: Cheery On Acquisitions, Profit Outlook

Friday, 18 Nov 2011 12:57 PM

Conglomerate Dover Corporation (DOV) is divesting here, acquiring firms there, and building up a base of oil, gas, manufacturing and other subsidiaries it feels will steer the company to continued healthy profit down the road. Acquisitions seem to be working. Dover says revenues are rising and will continue to do so going forward.

The company manufactures equipment used not only in the oil and gas sectors but in the chemical industry as well. For the third quarter ended Sept. 30, 2011, sales hit $2.2 billion, an increase of 22 percent over the prior-year period.

Net income fell 23 percent to $172.3 million, mainly due to a $56.3 million loss stemming from discontinued operations, although income from continuing operations rose by 4 percent on year to $228.6 million.

Company officials say they're pleased with the latest results, the product of acquisitions as well as demand, especially from the energy sector.

"I am pleased Dover delivered strong third-quarter performance, driven by solid organic growth supported by acquisitions," CEO Robert A. Livingston says in an earnings statement.

"Quarterly revenue, earnings, bookings and backlog all increased over the prior year. Revenue growth of 22 percent was largely driven by continued strength in our energy-related markets, our strong position in the handset market and improved results in the refrigeration equipment and Product ID markets."

The company recently completed the sale of Crenlo, a maker of cab equipment enclosures, and Paladin, a manufacturer of attachment tools, to KPS Capital Partners.

Dover acquired Sound Solutions from NXP Semiconductors as well as Advansor, which makes refrigeration and heat pump systems for supermarkets and light industrial applications.

Looking ahead

Company executives say the recent reshuffling of its subsidiary portfolio will create value for shareholders.

"Our third quarter results were strong, and we expect most of our businesses to continue to perform well. As a result, we are maintaining our full-year 2011 revenue growth forecast of approximately 20 percent, which is largely unchanged from last quarter," Livingston says.

"This forecast represents full-year organic revenue growth of around 13 percent with 7 percent growth from acquisitions," Livingston adds.

Ratings agencies approve of the company's decisions to divest and buy assets.

Moody's, for example, applauds Dover's consistent profitability, strong cash flow generation, debt levels and liquidity.

"Dover's financial performance is expected to improve from the impact of recent acquisitions and in parallel with macro-economic prospects," Moody's analysts write in a statement on the company.

Wall Street banks are optimistic as well. In April, Deutsche Bank reiterated a buy recommendation on the stock while in July Barclays Capital reiterated an overweight recommendation. In November, however, Stifel Nicolaus initiated coverage at hold.

The company will report earnings next on Jan. 29.





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Conglomerate Dover Corporation (DOV) is divesting here, acquiring firms there, and building up a base of oil, gas, manufacturing and other subsidiaries it feels will steer the company to continued healthy profit down the road. Acquisitions seem to be working. Dover says...
Dover,acquisitions,outlook,DOV
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2011-57-18
Friday, 18 Nov 2011 12:57 PM
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