Dover Divests Aftermarket Refrigeration Solutions Business
Zacks Investment Research | Mar 10, 2020 10:44PM ET
Dover Corporation (NYSE:DOV) recently sold the Chino branch of The AMS Group, a leading aftermarket refrigeration solutions and services provider business, to a private equity firm, PMC Capital Partners, LLC.
California-based AMS group is a division of Hill PHOENIX, Inc. Hill PHOENIX is a part of the Dover Food Retail business and a leading provider of commercial and industrial retail refrigeration solutions. It will continue to provide aftermarket services and solutions from its Phoenix, AZ, facility. However, terms of the deal have been kept under wraps.
Dover reported fourth-quarter 2019 adjusted earnings per share from continuing operations of $1.54. The figure improved 7.7% from the prior-year quarter’s $1.43 per share. Earnings also beat the Zacks Consensus Estimate of $1.46.
Dover’s first-quarter 2020 results are likely to reflect its robust order backlog as well as the execution of margin targets. In addition, the Engineered Products segment is expected to grow on continued strength in waste handling, vehicle services, and the aerospace and defense business. Imaging & Identification is likely to grow on the improved outlook in Asia for both marking and coding, and textile printing. Refrigeration & Food Equipment is also anticipated to grow modestly this year.
The company projects current-year adjusted EPS at $6.20-$6.40 compared with the prior estimate of $5.75-$5.85. The guidance reflects a robust order backlog across all business segments, productivity and cost-containment initiatives, and execution of margin targets.
Dover has a long tradition of making successful acquisitions in diverse end markets. In 2019, the company acquired three businesses for a total consideration of $216.4 million. The company made these acquisitions to complement and expand its existing operations within the Fueling Solutions and Pumps & Process Solutions segments. This January, Dover completed the acquisition of Systech International. The buyout supports Dover’s marking and coding portfolio and enhances software and service revenues within Markem-Imaje. The deal is expected to be accretive to the first-year adjusted EPS.
In addition, the company is likely to gain from product digitization, e-commerce, new product development and inorganic investment in core business platforms. The company has initiated several growth and productivity capital projects and aims to invest in can-forming and heat-exchanger businesses to capture growing volumes and upgrade competitive capabilities.
Moreover, Dover’s cost-reduction initiatives are likely to boost its margins. The company has executed restructuring programs to better align costs and operations with the current market conditions through targeted facility consolidations, headcount reduction and other measures.
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