July 18 Dover Corp, which makes garbage truck compactors, car washes, drill bits for oil rigs and scores of other industrial products, boosted its 2013 forecast on Thursday, citing a gain from a U.S. tax audit and improving sales across units.
The conglomerate said it received a "favorable resolution to a domestic tax audit" and paid an effective second-quarter tax rate of 7.3 percent, aiding second-quarter profit by 36 cents per share. The news sent Dover's shares up more than 4 percent.
Dover now expects to earn $5.56 to $5.71 per share this year, up from a previously forecast $5.05 to $5.35. The company received another small tax gain in the first quarter and will spend money as it prepares to spin off its Knowles communications unit early next year.
The new estimate well exceeds the average analyst estimate of $5.24 per share.
Growth later this year will not just come from the tax gain, Chief Executive Bob Livingston said on a conference call with investors.
"Third and fourth quarter, we do expect some significant growth, sequentially, second half over the first half," Livingston said. "The driver of this growth is going to be new product releases."
Through its myriad brand names, including Norris, Anthony and DEK, Dover has dominated many of its markets in North America. Livingston and other executives are now trying to recreate that success in Asia, Latin America, the Middle East and other emerging markets.
So far the strategy is paying off: all four of Dover's reporting units saw double-digit jumps in second-quarter sales in China, the company said.
"We still see plenty of opportunities for this business in emerging economies," Livingston said.
Offering customers many products and services as possible in each area will be key, a practice Dover executives say they are keen to continually refine. For instance: Dover hopes oil giants will turn to it for not only diamond-tip drill bits, but servicing on rigs and replacement parts, a lucrative business opportunity.
For the second quarter, Dover posted a better-than-expected profit, helped largely by a gain in sales of refrigeration display cases in emerging markets. Wal-Mart's grocery division, for instance, is Dover's top customer in Brazil.
Second-quarter net earnings rose to $330 million, or $1.91 per share, from $214.1 million, or $1.15 per share, in the year-ago period.
Excluding the tax gain and other one-time items, the company earned $1.36 per share.
By that measure, analysts expected earnings of $1.29 per share, according to Thomson Reuters I/B/E/S.
Revenue was up 9 percent to $2.23 billion. Analysts expected revenue of $2.19 billion.
Shares of Illinois-based Dover rose 4.1 percent to $83.68 in Thursday afternoon trading. The stock has gained 27 percent so far this year.