QUINCY, Ill., Feb. 9 /PRNewswire/ -- Gardner Denver, Inc. (NYSE: GDI), a
leading manufacturer of compressors and blowers for industrial applications
and pumps for the petroleum and industrial markets, announced that revenues
were $323.8 million for the year ended December 31, 1999. Diluted earnings
per share were $1.18 for the year and $0.32 for the fourth quarter of 1999.
Full Year Results
Revenue growth due to acquisitions, penetration of new markets and
expanded manufacturing capacity was offset by weakness in both the Petroleum,
and to a lesser extent, Compressed Air segments. For the year, total revenues
declined approximately $61.2 million, or 16%, compared to 1998. The
significant decline in the price of oil in 1998 and early 1999 caused a
reduction in demand for drilling and well stimulation pumps. As a result,
petroleum revenues declined $57.2 million, or 66%, in 1999, compared to the
previous year when revenues were generated through backlog reductions.
Decreasing production of industrial equipment in the United States and a
softer European economy reduced demand for standard industrial compressors and
engineered packages. Excluding incremental revenues from acquisitions, which
added $27.6 million to the compressor volume in 1999, compressor products
revenues declined $31.5 million, or 11%, compared to the previous year.
"We've successfully weathered the most significant down cycle since our
spin off in 1994," stated Ross J. Centanni, Chairman, President and CEO. "As
we enter 2000, increasing demand for well servicing pumps gives us reason to
expect sequential growth in petroleum revenues, if oil and natural gas prices
remain near current levels. We also expect the recent increase in demand for
industrial goods in general to result in compressed air products revenue
growth, but later in 2000 since our products lag industrial demand.
"Our solid cash flow continues to support our acquisition program and
internal investment, which provide operating and marketing synergy, expand our
presence in new markets and contribute to revenue growth."
Net income was $18.0 million for 1999, or $1.18 diluted earnings per
share, compared to $36.8 million, or $2.22 diluted earnings per share, in
1998. The earnings impact of the revenue decline was compounded by a loss of
manufacturing leverage since the Company has a relatively high level of fixed
costs. The decreased revenues also resulted in a significantly lower benefit
from the liquidation of LIFO inventory than in 1998, since smaller reductions
in LIFO inventory levels were realized in 1999. The financial results for the
three and twelve month periods of 1999 included approximately $0.4 million in
LIFO income ($0.3 million after tax or $0.02 per share), compared to
$4.5 million ($2.8 million after tax or $0.17 per share) in the comparable
periods of the previous year.
Fourth Quarter Results
Revenues for the three month period declined $4.0 million, or 4%, compared
to the same period of 1998. Petroleum revenues for the three month period
declined approximately $10.2 million, or 51%, compared to the same period of
1998 when revenues were generated through backlog reductions. Compressor
products revenues increased $6.2 million, or 8%, for the three months of 1999,
compared to 1998, as a result of the incremental revenues from acquisitions.
Excluding these acquisitions, compressor revenues declined approximately
$4.4 million, or 6%, compared to the same period of 1998 due to weaker demand
for industrial goods in the United States and Europe in 1999.
Lower revenues and LIFO benefits, and decreased manufacturing leverage
resulted in less net income for the three month period of 1999 than for the
same period of the previous year. Net income was $4.9 million, or $0.32
diluted earnings per share, for the fourth quarter of 1999, compared to
$10.8 million, or $0.66 diluted earnings per share, for the same period of
1998. Sequentially, revenues increased $14.0 million, or 18%, and net income
increased $0.9 million, or 21%, in the fourth quarter compared to that of the
third, as demand for both petroleum and compressor products improved.
Demand Outlook
Mr. Centanni said, "As anticipated, orders for well servicing pumps began
to improve in the fourth quarter, leading to increased revenues in the
Petroleum segment compared to the three months ended September 30, 1999. We
believe demand for these units may continue to improve in 2000, complemented
by increased drilling pump revenues in the second half of the year, if oil and
natural gas prices remain near current levels, and day rates and the rig count
continue to increase.
"Demand for compressor products also improved in the fourth quarter, as
compared to the third, which resulted in a sequential increase in revenues for
this business segment as well. Because compressed air is often used as a
fourth utility in the manufacturing process, demand for compressors is
correlated to industrial production and manufacturing capacity utilization.
These indicators demonstrated some improvement in the fourth quarter of 1999
compared to their relative weakness in 1998 and early 1999. As the industrial
economic environment continues to improve in the U.S. and Europe, we believe
orders for compressor products may continue to recover slowly. However, since
our products tend to lag the cycle of industrial demand in general, we would
not expect significant changes in orders for compressor products until the
second half of this year. Additionally, the first quarter has fewer shipping
days than the fourth, dampening opportunities for sequential revenue growth in
the short term.
"Therefore, our outlook for compressor revenues in the first quarter of
2000 is essentially flat compared to the fourth quarter of 1999, with some
earnings growth in the second quarter as further integration of our recent
acquisitions occurs. While awaiting a stronger industrial economy to emerge,
we will continue exploring niche markets for our products, reducing costs and
leveraging the benefits of our acquisitions," Centanni said.
Continued Strategic Growth Through Acquisitions
In early January, Gardner Denver announced the acquisition of the
Invincible AirFlow product lines: single and fabricated multi-stage
centrifugal blowers for industrial portable and central vacuums, process
applications, and welding flux recovery and air knife systems. This
acquisition extends our product offering for the industrial cleaning market,
provides new products for air knife applications and introduces Gardner Denver
centrifugal blowers to new markets.
"Our leadership positions in the compressor and petroleum industries and
our strong cash flow support our strategies for growth, which we continue to
aggressively pursue," Centanni said. "The product line we added in January
and three operations acquired last year demonstrate our commitment to grow the
business by investing in synergistic acquisitions and expanding our presence
in new markets. We have identified additional projects which will be
completed in 2000 to generate incremental manufacturing cost reductions and
enhance our productivity. The benefit of this capital investment, when
combined with further integration of recently acquired companies, should
result in sequential operating margin improvements as the year progresses,"
Centanni concluded.
Financial Position and Cash Flow
During 1999, the Company borrowed approximately $62 million under its
credit facilities and generated almost $27 million in cash through operating
activities. These funds were used to complete acquisitions valued at
$41 million, repay almost $25 million in debt and repurchase about $11 million
in stock. The Company also spent approximately $12 million for capital to
reduce costs, improve efficiency and expand machining capacity.
Safe Harbor
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the safe harbor of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to uncertainties and factors relating to Gardner
Denver's operations and business environment, all of which are difficult to
predict and many of which are beyond the control of the Company, that could
cause actual results to differ materially from those matters expressed in or
implied by such forward-looking statements. The following factors, among
others, could affect future performance and cause actual results to differ
materially from those expressed in or implied by forward-looking statements:
the successful integration of recent acquisitions; the level of oil and
natural gas prices and oil and gas drilling and production, which affects
demand for the Company's petroleum products; pricing of Gardner Denver
products; changes in the industrial production and industrial capacity
utilization rates, which affect demand for the Company's compressed air
products; the degree to which the Company is able to penetrate niche markets;
and the continued successful implementation of cost reduction efforts.
Comparisons of the financial results for the three and twelve month
periods ended December 31, 1999 and 1998 follow.
Gardner Denver, with 1999 revenues of $324 million, is a leading
manufacturer of reciprocating, rotary and vane compressors and blowers for
various industrial applications and pumps used in the petroleum and industrial
markets. Gardner Denver's news releases are available by fax by calling
800-758-5804, extension 303875, or by visiting the Company's home page on the
Internet ( http://www.gardnerdenver.com ).
GARDNER DENVER, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts and percentages)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
% %
1999 1998 Change 1999 1998 Change
Revenues $91,086 $95,086 (4) $323,823 $384,992 (16)
Costs and Expenses:
Cost of sales 63,160 59,289 7 220,918 252,842 (13)
Depreciation and
amortization 3,873 3,404 14 14,222 12,978 10
Selling and
administrative 14,418 13,694 5 53,080 53,793 (1)
Interest expense 1,793 997 80 5,934 4,849 22
Other expense 168 170 (1) 512 636 (20)
Income before
income taxes 7,674 17,532 (56) 29,157 59,894 (51)
Provision for
income taxes 2,817 6,756 (58) 11,109 23,089 (52)
Net income $4,857 $10,776 (55) $18,048 $36,805 (51)
Basic earnings
per share $0.32 $0.67 (52) $1.20 $2.29 (48)
Diluted earnings
per share $0.32 $0.66 (52) $1.18 $2.22 (47)
Basic weighted
average number
of shares
outstanding 15,010 16,027 15,018 16,067
Diluted weighted
average number of
shares outstanding 15,279 16,405 15,358 16,610
Shares outstanding
as of 12/31 15,079 15,497
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
% %
1999 1998 Change 1999 1998 Change
Compressed Air Products
Revenues $81,162 $75,003 8 $294,493 $298,440 (1)
Operating
earnings 8,879 13,044 (32) 34,542 45,496 (24)
% of Revenues 10.9% 17.4% 11.7% 15.2%
Petroleum Products
Revenues 9,924 20,083 (51) 29,330 86,552 (66)
Operating earnings 1,262 6,164 (80) 2,998 21,911 (86)
% of Revenues 12.7% 30.7% 10.2% 25.3%
CONDENSED BALANCE SHEET ITEMS
(Unaudited) % (Audited)
12/31/99 09/30/99 Change 12/31/98
Cash and equivalents $27,317 $21,127 29 $24,474
Receivables, net 72,272 69,410 4 69,617
Inventories, net 60,356 60,588 -- 53,115
Current assets 166,379 157,312 6 151,805
Total assets 379,419 351,764 8 342,130
Short-term debt and cur.
maturities 5,289 5,329 (1) 2,452
Current liabilities 59,609 57,817 3 63,258
Long-term debt, ex. cur.
maturities 114,200 94,621 21 81,058
Total liabilities 226,810 205,428 10 199,444
Total stockholders' equity 152,609 146,336 4 142,686
SOURCE Gardner Denver, Inc.
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Related links:
http://www.gardnerdenver.com
Company News On-Call:
http://www.prnewswire.com/comp/303875.html or fax,
800-758-5804, ext. 303875
CONTACT:
Helen W. Cornell, Vice President, Corporate
Secretary and Treasurer of Gardner Denver, Inc., 217-228-8209
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