WAYNE, PA -- (Marketwire) -- 02/22/13 -- Gardner Denver, Inc. (NYSE: GDI)
- Fourth Quarter Diluted Earnings Per Share ("DEPS") of $1.40 and Adjusted DEPS of $1.49 (1)
- Full Year 2012 DEPS of $5.28 and Record Adjusted DEPS of $5.74 (1)
- 2013 Guidance Established
Gardner Denver, Inc. (NYSE: GDI) today reported fourth quarter and full year 2012 results that included record Adjusted DEPS. (1)
Revenues for the fourth quarter ended December 31, 2012 were $589.7 million, down 4% compared with the prior year fourth quarter. Operating income for the fourth quarter of 2012 was $95.9 million, compared with $108.1 million in the fourth quarter of the prior year, resulting in an operating margin decline of 130 basis points to 16.3%. Net income attributable to Gardner Denver for the fourth quarter of 2012 was $69.1 million, or $1.40 DEPS, compared with $77.4 million, or $1.52 DEPS, in the same period of 2011. Results for the fourth quarter of 2012 included after-tax charges of $0.09 per diluted share primarily related to the Company's ongoing restructuring activities, severance related costs and costs incurred in connection with the exploration of strategic alternatives. Excluding these charges, Adjusted DEPS for the fourth quarter of 2012 was $1.49, compared with $1.54 in the same period of 2011. (1)
For the full year ended December 31, 2012, revenues were $2.356 billion compared with $2.371 billion in the same period of 2011. Adjusted Operating Income declined slightly to $404.3 million, compared with $414.3 million earned in the same period of 2011. (1) DEPS was $5.28 for 2012 and Adjusted DEPS reached a record high of $5.74, up from $5.51 per diluted share in 2011. (1)
"During 2012, we successfully executed our strategy in the midst of a challenging economic environment and as a result we achieved record Adjusted DEPS for 2012 as well as strong cash flow from operations of $289 million," said Michael M. Larsen, Gardner Denver's President and Chief Executive Officer. "We took decisive actions to improve productivity and reduce structural costs and we were pleased with our strong finish for 2012 that positions us well for 2013 performance."
Factors affecting fourth quarter results for the Company's business segments included: (2)
Engineered Products Group (EPG)
In the fourth quarter of 2012, EPG revenues decreased 10% to $263.3 million compared with the same period of 2011. On a sequential basis, Gardner Denver grew revenues by 11% in the fourth quarter of 2012 compared with $236.7 million in the third quarter of 2012. Operating income in the fourth quarter of 2012 decreased 20% to $57.2 million and as a result operating margins decreased to 21.7%, down 280 basis points from last year's fourth quarter.
For the full year 2012, EPG revenues decreased 5% to $1.062 billion from $1.115 billion in the same period of 2011. Adjusted Operating Income for the full year 2012 was $244.6 million, a decrease of 8% versus prior year, and Adjusted Operating Margins decreased 70 basis points to 23.0%. (1) As expected, EPG Adjusted Operating Income in the fourth quarter decreased and Adjusted Operating Margins fell due to lower revenues in our Petroleum and Industrial Pump business.
Industrial Products Group (IPG)
IPG revenues increased 1% to $326.4 million for the fourth quarter of 2012 compared to the same period of 2011. Operating income in the fourth quarter of 2012 increased 5% to $38.7 million and Adjusted Operating Margins increased to 12.9%, up 130 basis points from the same period of 2011. (1)
For the full year 2012, IPG revenues increased 3% to $1.294 billion from $1.256 billion for the full year of 2011, driven largely by the Robuschi acquisition. Adjusted Operating Income for the full year 2012 was $159.7 million, an increase of 7% versus prior year, and Adjusted Operating Margins increased to 12.3%, up 40 basis points from the same period of 2011. (1)
"Our IPG group executed well on our margin expansion initiatives supported by the principles of the Gardner Denver Way," said Mr. Larsen. "We are implementing decisive cost control actions, such as our previously announced European restructuring plan, and will continue to opportunistically right-size and restructure our operations as needed. We will also continue to execute our strategy with a distinct focus on expanding our sales presence and capturing the aftermarket opportunity, which we believe will help us to mitigate the challenging environment for Petroleum and Industrial Pumps. We believe these actions position Gardner Denver to achieve continued margin expansion and long-term profitable growth," said Mr. Larsen.
Outlook
"We remain focused on executing our proven strategy that has allowed Gardner Denver to achieve sustainable, profitable growth over the past 4 years," said Mr. Larsen. "Our dynamic plan reflects the current macroeconomic challenges as well as our commitment to driving growth and value for our shareholders. We are confident that Gardner Denver is taking the steps necessary to position the Company to capitalize on favorable long-term industry trends, including recovery in the global markets, particularly energy. In the near-term, we are encouraged by recent improvements in economic indicators and order rates, and we believe the Company is poised to benefit from improving trends should they occur faster than expected. At the same time, we believe we are being appropriately cautious in our 2013 outlook."
Earnings for the full year of 2013 are expected to be in the range of $4.25 to $4.50 per diluted share. First quarter 2013 DEPS are expected to range between $0.90 and $1.00. These projections include profit improvement costs and other items totaling $0.04 per diluted share for the first quarter and $0.75 per diluted share for the full year 2013. Based upon this, first quarter 2013 Adjusted DEPS are expected to range between $0.94 and $1.04 and full year 2013 Adjusted DEPS are expected to range between $5.00 and $5.25. (1)
Conference Call Today
As previously announced, Gardner Denver will host a conference call to discuss results for the fourth quarter of 2012 today, Friday, February 22, 2013 at 8:30 a.m. EDT through a live webcast. This webcast will be available in listen-only mode and can be accessed, for up to ninety days following the call, through the Investors section on the Gardner Denver website at www.GardnerDenver.com or through Thomson Reuters StreetEvents at www.earnings.com.
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: the exploration of strategic alternatives to enhance shareholder value, 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, 2011, and its subsequent quarterly reports on Form 10-Q for the 2012 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 Twelve Months Ended
December 31, December 31,
------------------ ----------------------
% %
2012 2011 Change 2012 2011 Change
-------- -------- ------ ---------- ---------- ------
Revenues $589,671 $613,675 (4) $2,355,525 $2,370,903 (1)
Cost of sales 387,643 406,030 (5) 1,551,138 1,563,049 (1)
-------- -------- ---------- ----------
Gross profit 202,028 207,645 (3) 804,387 807,854 -
Selling and
administrative
expenses 98,424 99,560 (1) 402,745 394,769 2
Other operating
expense
(income), net 7,739 (51) N/A 28,898 12,374 134
-------- -------- ---------- ----------
Operating income 95,865 108,136 (11) 372,744 400,711 (7)
Interest expense 3,166 3,218 (2) 14,706 15,397 (4)
Other income,
net (692) (846) (18) (3,524) (1,667) 111
-------- -------- ---------- ----------
Income before
income taxes 93,391 105,764 (12) 361,562 386,981 (7)
Provision for
income taxes 23,987 28,094 (15) 97,069 107,439 (10)
-------- -------- ---------- ----------
Net income 69,404 77,670 (11) 264,493 279,542 (5)
Less: Net income
attributable to
noncontrolling
interests 340 289 18 1,227 1,979 (38)
-------- -------- ---------- ----------
Net income
attributable to
Gardner Denver $ 69,064 $ 77,381 (11) $ 263,266 $ 277,563 (5)
======== ======== ========== ==========
Earnings per share
attributable to
Gardner Denver
common
stockholders:
Basic earnings
per share $ 1.41 $ 1.53 (8) $ 5.31 $ 5.37 (1)
======== ======== ========== ==========
Diluted earnings
per share $ 1.40 $ 1.52 (8) $ 5.28 $ 5.33 (1)
======== ======== ========== ==========
Cash dividends
declared per
common share $ 0.05 $ 0.05 - $ 0.20 $ 0.20 -
======== ======== ========== ==========
Basic weighted
average number of
shares
outstanding 49,125 50,612 49,591 51,669
======== ======== ========== ==========
Diluted weighted
average number of
shares
outstanding 49,316 50,953 49,816 52,054
======== ======== ========== ==========
Shares outstanding
as of December 31 49,144 50,651
-------- --------
GARDNER DENVER, INC.
CONDENSED BALANCE SHEET ITEMS
(in thousands, except percentages)
(Unaudited)
%
12/31/2012 9/30/2012 Change 12/31/2011
----------- ---------- ------ -----------
Cash and cash equivalents $ 254,000 $ 248,933 2 $ 155,259
Accounts receivable, net 444,815 451,132 (1) 477,505
Inventories, net 343,197 353,371 (3) 311,679
Total current assets 1,105,377 1,117,095 (1) 1,015,734
Total assets 2,490,192 2,457,229 1 2,365,568
Short-term borrowings and current
maturities of long-term debt 359,433 108,255 232 77,692
Accounts payable and accrued
liabilities 391,461 406,835 (4) 428,062
Total current liabilities 762,481 515,090 48 505,754
Long-term debt, less current
maturities 9,727 331,764 (97) 326,133
Total liabilities 1,036,029 1,089,413 (5) 1,085,937
Total stockholders' equity $ 1,454,163 $1,367,816 6 $ 1,279,631
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ----------------------
% %
2012 2011 Change 2012 2011 Change
-------- -------- ------ ---------- ---------- ------
Industrial
Products Group
Revenues $326,369 $321,783 1 $1,293,685 $1,256,010 3
Operating income 38,666 36,723 5 134,431 140,457 (4)
% of revenues 11.8% 11.4% 10.4% 11.2%
Orders 308,913 308,974 - 1,281,549 1,283,398 -
Backlog 246,466 254,406 (3) 246,466 254,406 (3)
Engineered
Products Group
Revenues 263,302 291,892 (10) 1,061,840 1,114,893 (5)
Operating income 57,199 71,413 (20) 238,313 260,254 (8)
% of revenues 21.7% 24.5% 22.4% 23.3%
Orders 206,503 288,666 (28) 922,964 1,190,894 (22)
Backlog 279,274 415,623 (33) 279,274 415,623 (33)
Reconciliation of
Segment Results
to Consolidated
Results
Industrial
Products Group
operating income $ 38,666 $ 36,723 $ 134,431 $ 140,457
Engineered
Products Group
operating income 57,199 71,413 238,313 260,254
-------- -------- ---------- ----------
Consolidated
operating income 95,865 108,136 372,744 400,711
% of revenues 16.3% 17.6% 15.8% 16.9%
Interest expense 3,166 3,218 14,706 15,397
Other income, net (692) (846) (3,524) (1,667)
-------- -------- ---------- ----------
Income before
income taxes $ 93,391 $105,764 $ 361,562 $ 386,981
======== ======== ========== ==========
% of revenues 15.8% 17.2% 15.3% 16.3%
======== ======== ========== ==========
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 Twelve Months Ended
December 31, December 31,
------------------- -------------------
% %
$ Millions Change $ Millions Change
---------- ------- ---------- -------
Industrial Products Group
2011 Revenues 321.8 1,256.0
Incremental effect of acquisitions 19.8 6 89.2 7
Effect of currency exchange rates (2.4) (1) (40.9) (3)
Organic growth (12.8) (4) (10.6) (1)
---------- ------- ---------- -------
2012 Revenues 326.4 1 1,293.7 3
2011 Orders 309.0 1,283.4
Incremental effect of acquisitions 17.0 6 88.0 7
Effect of currency exchange rates (2.9) (1) (40.4) (3)
Organic growth (14.2) (5) (49.5) (4)
---------- ------- ---------- -------
2012 Orders 308.9 - 1,281.5 -
Backlog as of 12/31/11 254.4
Effect of currency exchange rates 4.0 2
Organic growth (11.9) (5)
---------- -------
Backlog as of 12/31/12 246.5 (3)
Engineered Products Group
2011 Revenues 291.9 1,114.9
Effect of currency exchange rates (1.9) (1) (18.3) (2)
Organic growth (26.7) (9) (34.8) (3)
---------- ------- ---------- -------
2012 Revenues 263.3 (10) 1,061.8 (5)
2011 Orders 288.7 1,190.9
Effect of currency exchange rates (1.1) - (16.8) (1)
Organic growth (81.1) (28) (251.1) (21)
---------- ------- ---------- -------
2012 Orders 206.5 (28) 923.0 (22)
Backlog as of 12/31/11 415.6
Effect of currency exchange rates 2.9 1
Organic growth (139.2) (34)
---------- -------
Backlog as of 12/31/12 279.3 (33)
Consolidated
2011 Revenues 613.7 2,370.9
Incremental effect of acquisitions 19.8 3 89.2 4
Effect of currency exchange rates (4.3) (1) (59.2) (2)
Organic growth (39.5) (6) (45.4) (3)
---------- ------- ---------- -------
2012 Revenues 589.7 (4) 2,355.5 (1)
2011 Orders 597.7 2,474.3
Incremental effect of acquisitions 17.0 3 88.0 4
Effect of currency exchange rates (4.0) (1) (57.2) (2)
Organic growth (95.3) (16) (300.6) (13)
---------- ------- ---------- -------
2012 Orders 515.4 (14) 2,204.5 (11)
Backlog as of 12/31/11 670.0
Effect of currency exchange rates 6.9 1
Organic growth (151.1) (23)
---------- -------
Backlog as of 12/31/12 525.8 (22)
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 Twelve Months Ended
December 31, 2012 December 31, 2012
------------------------------ ------------------------------
Industrial Engineered Industrial Engineered
Products Products Consoli- Products Products Consoli-
Group Group dated Group Group dated
---------- ---------- -------- ---------- ---------- --------
Operating
income $ 38,666 $ 57,199 $ 95,865 $ 134,431 $ 238,313 $372,744
% of revenues 11.8% 21.7% 16.3% 10.4% 22.4% 15.8%
Adjustments to
operating
income:
Profit
improvement
initiatives
(3) 2,168 696 2,864 14,659 3,815 18,474
Robuschi
backlog and
inventory
amortization
(5) - - - 7,391 - 7,391
Other, net
(6) 1,145 1,709 2,854 3,245 2,439 5,684
---------- ---------- -------- ---------- ---------- --------
Total
adjustments
to operating
income 3,313 2,405 5,718 25,295 6,254 31,549
Adjusted
operating
income $ 41,979 $ 59,604 $101,583 $ 159,726 $ 244,567 $404,293
% of
revenues, as
adjusted 12.9% 22.6% 17.2% 12.3% 23.0% 17.2%
Three Months Ended Twelve Months Ended
December 31, 2011 December 31, 2011
------------------------------ ------------------------------
Industrial Engineered Industrial Engineered
Products Products Consoli- Products Products Consoli-
Group Group dated Group Group dated
---------- ---------- -------- ---------- ---------- --------
Operating
income $ 36,723 $ 71,413 $108,136 $ 140,457 $ 260,254 $400,711
% of revenues 11.4% 24.5% 17.6% 11.2% 23.3% 16.9%
Adjustments to
operating
income:
Profit
improvement
initiatives
(3) 1,360 637 1,997 6,621 1,963 8,584
Mark to
market
currency
adjustments
(4) (3,439) - (3,439) (3,439) - (3,439)
Robuschi
backlog and
inventory
amortization
(5) 1,651 - 1,651 1,651 - 1,651
Other, net
(6) 925 678 1,603 4,440 2,335 6,775
---------- ---------- -------- ---------- ---------- --------
Total
adjustments
to operating
income 497 1,315 1,812 9,273 4,298 13,571
Adjusted
operating
income $ 37,220 $ 72,728 $109,948 $ 149,730 $ 264,552 $414,282
% of
revenues, as
adjusted 11.6% 24.9% 17.9% 11.9% 23.7% 17.5%
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------------ ------------------------------
% %
2012 2011 Change 2012 2011 Change
---------- ---------- -------- ---------- ---------- --------
Diluted
earnings per
share $ 1.40 $ 1.52 (8)$ 5.28 $ 5.33 (1)
Adjustments to
diluted
earnings per
share:
Profit
improvement
initiatives
(3) 0.05 0.03 0.27 0.12
Mark to
market
currency
adjustments
(4) - (0.07) - (0.07)
Robuschi
backlog and
inventory
amortization
(5) - 0.02 0.11 0.02
Other, net
(6) 0.04 0.03 0.08 0.10
---------- ---------- ---------- ----------
Total
adjustments
to diluted
earnings per
share 0.09 0.02 0.46 0.18
Adjusted
diluted
earnings per
share $ 1.49 $ 1.54 (3)$ 5.74 $ 5.51 4
(3) Charges in both years reflect costs, including employee termination
benefits, to streamline operations and reduce overhead costs.
(4) Benefit in 2011 reflects a net foreign currency gain associated with
the financing of the acquisition of Robuschi SpA.
(5) Relates to amortization of the fair market value adjustments to backlog
and inventory acquired as part of the acquisition of Robuschi SpA.
(6) Net charges in 2012 consist primarily of fair value adjustments related
to the exit of a business, costs associated with the closure of certain
manufacturing facilities, certain severance payments, acquisition due
diligence and other costs incurred in conjunction with the exploration of
strategic alternatives to enhance shareholder value, and the reversal of
liabilities under long-term incentive plans and share-based awards which
will not eventually vest due to the resignation of the Company's former
President and Chief Executive Officer, Barry L. Pennypacker. Charges in
2011 include costs associated with certain severance payments, the closure
of a manufacturing facility, acquisition due diligence, and corporate
relocation.
