SOURCE: Gardner Denver, Inc.

Gardner Denver, Inc.

April 26, 2013 08:30 ET

Gardner Denver Reports First Quarter 2013 Results

WAYNE, PA--(Marketwired - Apr 26, 2013) -  Gardner Denver, Inc. (NYSE: GDI

  • Reports quarterly revenue of $514 million, a decrease of 15% versus the prior year
  • Delivers Diluted Earnings Per Share ("DEPS") of $0.93 and Adjusted DEPS of $1.06, a decrease of 24% versus the prior year (1)  
  • Reaffirms previously announced full-year 2013 guidance (1)  

Gardner Denver, Inc. (NYSE: GDI) today reported first quarter 2013 results and reaffirmed previous guidance for fiscal year 2013.

Revenues for the first quarter ended March 31, 2013 were $513.5 million, down 15% compared with the prior year first quarter. Operating income for the first quarter of 2013 was $63.4 million, compared with $79.8 million in the first quarter of the prior year, resulting in an operating margin decline of 90 basis points to 12.3%. Net income attributable to Gardner Denver for the first quarter of 2013 was $45.7 million, or $0.93 DEPS, compared with $54.8 million, or $1.08 DEPS, in the same period of 2012. Results for the first quarter of 2013 included after-tax charges of $0.13 per diluted share primarily related to costs incurred in connection with the exploration of strategic alternatives and the Company's ongoing restructuring activities. Excluding these charges, Adjusted DEPS for the first quarter of 2013 was $1.06, compared with $1.40 in the same period of 2012. (1) 

"We were pleased with our first quarter results in a challenging environment," said Michael M. Larsen, Gardner Denver's President and Chief Executive Officer. "I am encouraged by our sequential order growth in the first quarter as orders grew 7% over the fourth quarter of 2012 and resulted in a book-to-bill ratio of 1.07."

Factors affecting first quarter results for the Company's business segments included: (2)

Engineered Products Group (EPG)

In the first quarter of 2013, EPG revenues decreased 24% to $211.7 million compared with the same period of 2012, principally as a result of the expected lower shipments in our Petroleum & Industrial Pumps business. Operating income in the first quarter of 2013 decreased 48% to $33.5 million and as a result Adjusted Operating Margins decreased to 17.5%, down 650 basis points from last year's first quarter. (1)

Industrial Products Group (IPG)

IPG revenues decreased 7% to $301.9 million for the first quarter of 2013 compared to the same period of 2012. Operating income in the first quarter of 2013 increased 92% to $29.8 million and Adjusted Operating Margins increased to 11.7%, up 70 basis points from the same period of 2012. (1)

Outlook

"Looking ahead, our full-year view of 2013 is essentially unchanged from our previous guidance, both in terms of global economic growth as well as the fundamentals for our Petroleum and Industrial Pumps business. As expected, the first half of 2013 is our toughest comparison. Despite the continued slow global growth environment, Gardner Denver is well-positioned for stronger performance for the remainder of the year as we continue to execute on our strategic priorities and invest in future growth opportunities. We are taking the steps necessary to position Gardner Denver to capitalize on favorable long-term industry trends, including recovery in the global markets, particularly energy. Accordingly, we are reaffirming our full-year Adjusted DEPS will be in the range of $5.00 to $5.20." (1)

Earnings for the full year of 2013 are expected to be in the range of $4.18 to $4.38 per diluted share. Second quarter 2013 DEPS are expected to range between $1.05 and $1.15. These projections include profit improvement costs and other items totaling $0.05 per diluted share for the second quarter and $0.82 per diluted share for the full year 2013. Excluding these items, second quarter 2013 Adjusted DEPS are expected to range between $1.10 and $1.20 and full year 2013 Adjusted DEPS are expected to range between $5.00 and $5.20. (1)

Corporate Profile

Gardner Denver, Inc., with 2012 revenues of approximately $2.4 billion, is a leading worldwide manufacturer of highly engineered products, including compressors, liquid ring pumps and blowers for various industrial, medical, environmental, transportation and process applications, pumps used in the petroleum and industrial market segments and other fluid transfer equipment, such as loading arms and dry break couplers, serving chemical, petroleum and food industries. Gardner Denver's news releases are available by visiting the Investors section on the Company's website (www.GardnerDenver.com).

Forward-Looking Information

This press release contains forward-looking statements that involve risks and uncertainties. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "could," "should," "anticipate," "expect," "believe," "will," "project," "lead," or the negative thereof or variations thereon or similar terminology. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: risks relating to the proposed merger of the Company, execution of restructuring plans, senior management turnover, changing economic conditions; pricing of the Company's products and other competitive market pressures; the costs and availability of raw materials; fluctuations in foreign currency exchange rates and energy prices; risks associated with the Company's current and future litigation; and the other risks detailed from time to time in the Company's SEC filings, including but not limited to, its Annual Report on Form 10-K for the fiscal year ended December 31, 2012,as amended by Amendment No. 1 on Form 10-K/A, and its subsequent quarterly reports on Form 10-Q for the 2013 fiscal year. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, although its situation and circumstances may change in the future.

(1) Adjusted Operating Income and Adjusted Operating Margin, on a consolidated and segment basis, and Adjusted DEPS are financial measures that are not in accordance with GAAP. For reconciliation to the comparable GAAP number for reported historical periods please see "Reconciliation of Operating Income and DEPS to Adjusted Operating Income and Adjusted DEPS" at the end of this press release. Gardner Denver believes the non-GAAP financial measures of Adjusted Operating Income, Adjusted Operating Margin and Adjusted DEPS provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. Gardner Denver believes excluding the specified items from operating income and DEPS provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, assists investors in performing analysis that is consistent with financial models developed by investors and research analysts, provides management with a more relevant measurement of operating performance and is more useful in assessing management performance.

(2) Segment operating income (defined as income before interest expense, other income, net, and income taxes) and segment operating margin (defined as segment operating income divided by segment revenues) are indicative of short-term operational performance and ongoing profitability. For a reconciliation of segment operating income to consolidated operating income and consolidated income before income taxes, see "Business Segment Results" at the end of this press release.

   
GARDNER DENVER, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share amounts and percentages)  
(Unaudited)  
             
    Three Months Ended        
    March 31,        
                %  
    2013     2012     Change  
                       
Revenues   $ 513,541     $ 604,356     (15 )
  Cost of sales     339,595       401,789     (15 )
Gross profit     173,946       202,567     (14 )
  Selling and administrative expenses     102,462       105,913     (3 )
  Other operating expense, net     8,107       16,862     (52 )
Operating income     63,377       79,792     (21 )
  Interest expense     2,677       3,834     (30 )
  Other income, net     (1,308 )     (1,223 )   7  
Income before income taxes     62,008       77,181     (20 )
  Provision for income taxes     16,122       22,066     (27 )
Net income     45,886       55,115     (17 )
Less: Net income attributable to noncontrolling interests     203       283     (28 )
Net income attributable to Gardner Denver   $ 45,683     $ 54,832     (17 )
                       
Earnings per share attributable to Gardner Denver common stockholders:                      
  Basic earnings per share   $ 0.93     $ 1.08     (14 )
  Diluted earnings per share   $ 0.93     $ 1.08     (14 )
                       
Cash dividends declared per common share   $ 0.05     $ 0.05     -  
                       
                       
Basic weighted average number of shares outstanding     49,161       50,638        
Diluted weighted average number of shares outstanding     49,357       50,937        
                       
Shares outstanding as of March 31     49,207       50,609        
                       
                       
                       
GARDNER DENVER, INC.  
CONDENSED BALANCE SHEET ITEMS  
(in thousands, except percentages)  
(Unaudited)  
            %  
    3/31/2013   12/31/2012   Change  
                   
                   
Cash and cash equivalents   $ 225,401   $ 254,000   (11 )
Accounts receivable, net     428,654     444,815   (4 )
Inventories, net     372,218     343,197   8  
Total current assets     1,098,594     1,116,989   (2 )
                   
Total assets     2,455,402     2,501,804   (2 )
                   
Short-term borrowings and current maturities of long-term debt     305,946     359,433   (15 )
Accounts payable and accrued liabilities     406,274     409,060   (1 )
Total current liabilities     712,220     768,493   (7 )
Long-term debt, less current maturities     17,829     9,727   83  
                   
Total liabilities     987,343     1,047,641   (6 )
                   
Total stockholders' equity   $ 1,468,059   $ 1,454,163   1  
                   
                   
                   
GARDNER DENVER, INC.  
BUSINESS SEGMENT RESULTS  
(in thousands, except percentages)  
(Unaudited)  
                   
    Three Months Ended        
    March 31,        
                %  
    2013     2012     Change  
Industrial Products Group                      
  Revenues   $ 301,852     $ 325,827     (7 )
  Operating income     29,843       15,539     92  
  % of revenues     9.9 %     4.8 %      
    Orders     318,842       357,509     (11 )
    Backlog     239,754       291,437     (18 )
                       
Engineered Products Group                      
  Revenues     211,690       278,529     (24 )
  Operating income     33,534       64,253     (48 )
  % of revenues     15.8 %     23.1 %      
    Orders     230,123       322,785     (29 )
    Backlog     312,038       463,899     (33 )
                       
Reconciliation of Segment Results                      
to Consolidated Results                      
                       
Industrial Products Group operating income   $ 29,843     $ 15,539        
Engineered Products Group operating income     33,534       64,253        
Consolidated operating income     63,377       79,792        
  % of revenues     12.3 %     13.2 %      
Interest expense     2,677       3,834        
Other income, net     (1,308 )     (1,223 )      
Income before income taxes   $ 62,008     $ 77,181        
  % of revenues     12.1 %     12.8 %      
                       
The Company evaluates the performance of its reportable segments based on operating income, which is defined as income before interest expense, other income, net, and income taxes. Reportable segment operating income and segment operating margin (defined as segment operating income divided by segment revenues) are indicative of short-term operating performance and ongoing profitability. Management closely monitors the operating income and operating margin of each business segment to evaluate past performance and identify actions required to improve profitability.  
   
   
   
GARDNER DENVER, INC.  
SELECTED FINANCIAL DATA SCHEDULE  
(in millions, except percentages)  
(Unaudited)  
             
    Three Months Ended  
    March 31,  
          %  
    $ Millions     Change  
Industrial Products Group            
2012 Revenues   325.8        
Effect of currency exchange rates   (1.5 )   -  
Organic growth   (22.4 )   (7 )
2013 Revenues   301.9     (7 )
             
2012 Orders   357.5        
Effect of currency exchange rates   (1.4 )   -  
Organic growth   (37.3 )   (11 )
2013 Orders   318.8     (11 )
             
Backlog as of 3/31/12   291.4        
Effect of currency exchange rates   (6.5 )   (2 )
Organic growth   (45.1 )   (16 )
Backlog as of 3/31/13   239.8     (18 )
             
Engineered Products Group            
2012 Revenues   278.5        
Effect of currency exchange rates   (0.4 )   -  
Organic growth   (66.4 )   (24 )
2013 Revenues   211.7     (24 )
             
2012 Orders   322.8        
Effect of currency exchange rates   (0.3 )   -  
Organic growth   (92.4 )   (29 )
2013 Orders   230.1     (29 )
             
Backlog as of 3/31/12   463.9        
Effect of currency exchange rates   (4.3 )   (1 )
Organic growth   (147.6 )   (32 )
Backlog as of 3/31/13   312.0     (33 )
             
Consolidated            
2012 Revenues   604.4        
Effect of currency exchange rates   (1.9 )   -  
Organic growth   (89.0 )   (15 )
2013 Revenues   513.5     (15 )
             
2012 Orders   680.3        
Effect of currency exchange rates   (1.7 )   -  
Organic growth   (129.7 )   (19 )
2013 Orders   548.9     (19 )
             
Backlog as of 3/31/12   755.3        
Effect of currency exchange rates   (10.8 )   (1 )
Organic growth   (192.7 )   (26 )
Backlog as of 3/31/13   551.8     (27 )
             
             
             
GARDNER DENVER, INC.  
RECONCILIATION OF OPERATING INCOME AND DEPS TO  
ADJUSTED OPERATING INCOME AND ADJUSTED DEPS  
(in thousands, except per share amounts and percentages)  
(Unaudited)  
                   
While Gardner Denver, Inc. reports financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"), this press release includes non-GAAP measures. These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Gardner Denver, Inc. believes the non-GAAP financial measures of Adjusted Operating Income and Adjusted DEPS provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. Gardner Denver believes excluding the specified items from operating income and DEPS provides management a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, assists investors in performing analysis that is consistent with financial models developed by investors and research analysts, provides management with a more relevant measurement of operating performance, and is more useful in assessing management performance.  
       
    Three Months Ended  
    March 31, 2013  
    Industrial Products Group     Engineered Products Group     Consolidated  
                         
Operating income   $ 29,843     $ 33,534     $ 63,377  
  % of revenues     9.9 %     15.8 %     12.3 %
                         
Adjustments to operating income:                        
  Profit improvement initiatives (3)     1,440       625       2,065  
  Other, net (5)     3,901       2,825       6,726  
Total adjustments to operating income     5,341       3,450       8,791  
                         
Adjusted operating income   $ 35,184     $ 36,984     $ 72,168  
  % of revenues, as adjusted     11.7 %     17.5 %     14.1 %
                         
    Three Months Ended  
    March 31, 2012  
    Industrial Products Group     Engineered Products Group     Consolidated  
                         
Operating income   $ 15,539     $ 64,253     $ 79,792  
  % of revenues     4.8 %     23.1 %     13.2 %
                         
Adjustments to operating income:                        
  Profit improvement initiatives (3)     12,002       2,218       14,220  
  Robuschi backlog and inventory amortization (4)     7,391       -       7,391  
  Other, net (5)     1,010       279       1,289  
Total adjustments to operating income     20,403       2,497       22,900  
                         
Adjusted operating income   $ 35,942     $ 66,750     $ 102,692  
  % of revenues, as adjusted     11.0 %     24.0 %     17.0 %
                         
    Three Months Ended  
    March 31,  
                %  
    2013     2012     Change  
                         
Diluted earnings per share   $ 0.93     $ 1.08       (14 )
                         
Adjustments to diluted earnings per share:                        
  Profit improvement initiatives (3)     0.03       0.20          
  Robuschi backlog and inventory amortization (4)     -       0.10          
  Other, net (5)     0.10       0.02          
Total adjustments to diluted earnings per share     0.13       0.32          
                         
Adjusted diluted earnings per share   $ 1.06     $ 1.40       (24 )
                         
(3) Charges in both years reflect costs, including employee termination benefits, to streamline operations and reduce overhead costs.  
                         
(4) Relates to amortization of the fair market value adjustments to backlog and inventory acquired as part of the acquisition of Robuschi SpA.  
   
(5) Charges in 2013 consist primarily of costs incurred in conjunction with the exploration of strategic alternatives to enhance shareholder value. Charges in 2012 consist primarily of fair value adjustments related to the exit of a business, certain severance payments and acquisition due diligence costs.  
   

Contact Information

  • Contact:
    Vikram U. Kini
    VP, Investor Relations
    Tel. (610) 249-2009