February 22, 2013 at 07:00 AM EST
Gardner Denver Reports Fourth Quarter and Full Year 2012 Results

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.

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

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