QUINCY, Ill., Feb. 10 /PRNewswire/ -- Gardner Denver, Inc. (NYSE: GDI), a
leading manufacturer of compressors and blowers for industrial applications
and pumps for the petroleum industry, announced that 1998 revenues and net
income each grew in excess of 30% and diluted earnings per share grew 28%,
compared to the previous year. In 1998, the Company achieved its fourth
consecutive year of double-digit growth since becoming an independent company
in 1994.
Revenue growth in 1998 was primarily achieved through acquisitions and
incremental shipments of petroleum products from backlog. Revenues were
$385.0 million for the year, which was $93.4 million or 32% higher than in
1997 and included $78.9 million from acquisitions. Incremental revenues
from acquisitions benefited both segments in 1998: $10.2 million in Petroleum
Products and $68.7 million in Compressed Air. Excluding acquisitions,
revenues increased $14.5 million (5%), primarily through shipments of
petroleum products from the December 31, 1997 order backlog.
Net income was $36.8 million for 1998, a 33% improvement over
$27.7 million for the previous year. Diluted earnings per share was $2.22 for
the twelve month period, a 28% increase compared to $1.74 for 1997.
Acquisitions contributed $2.2 million to the increased net income ($0.13 per
share). The financial results for 1998 included $4.5 million in income from
liquidation of LIFO inventory ($2.8 million after tax) which was recognized in
the fourth quarter, compared to $1.2 million ($0.7 million after tax) in 1997.
In the fourth quarter of 1998, the Company also incurred approximately
$1.1 million in severance and relocation expenses ($0.6 million after tax),
related primarily to re-sizing the Petroleum Products segment in response to
decreased demand and integrating acquisitions.
Operating earnings generated by the Compressed Air Products segment
increased $6.9 million (18%) to $45.5 million in 1998, compared to the
previous year. As a percentage of revenues, operating earnings for this
segment declined to 15.2% in 1998, compared to 16.9% for 1997, in spite of
incremental LIFO income generated in 1998. The deterioration in operating
earnings (as a percentage of revenues), compared to the previous year, is
primarily due to newly acquired operations which currently generate a lower
operating margin percentage (after amortization of goodwill associated with
the acquisition) than Gardner Denver's existing operations and because the
Company incurred expenses related to a plant relocation, which was completed
in the fourth quarter of 1998. However, operating margin for this segment,
excluding LIFO income, improved in every quarter since the completion of the
acquisitions as cost reduction projects were completed.
Operating earnings in the Petroleum Products segment grew $8.7 million
(66%) to $21.9 million in 1998, compared to the previous year. As a
percentage of revenues, operating earnings improved significantly in 1998 in
the Petroleum Products segment since the Company was able to leverage its
manufacturing operations and administrative expenses as a result of increased
revenues and due to incremental LIFO income compared to the previous year.
Operating earnings, as a percentage of petroleum products revenues, increased
to 25.3% for 1998, from 20.9% for 1997.
The Company generated more than $50 million in cash flow from operations
in 1998. The Company achieved significant reductions in receivables
(approximately $3 million) and inventory (approximately $12 million),
contributing to this cash flow. This cash flow was used for capital
expenditures (approximately $20 million), to repurchase 755,100 shares of the
Company's Common Stock under a repurchase program authorized in October 1998,
and to repay some of the debt incurred for three acquisitions completed in
1998.
For the three months ended December 31, 1998, revenues were $95.1 million,
compared to $79.6 million in the same period of 1997. All of this increase is
attributable to incremental revenues from acquisitions completed in 1998.
Compressor products revenues from acquisitions were $15.3 million in the three
month period, while incremental petroleum products revenues from acquisitions
were $2.6 million. Excluding acquisitions, revenues decreased approximately
$2.4 million (3%) for the quarter, compared to the same period of 1997, due to
slowing demand for compressors as overall manufacturing output decreased in
the U.S. in the second half of 1998.
Net income increased $2.3 million (26%) for the quarter ended December 31,
1998, to $10.8 million ($0.66 diluted earnings per share), compared to
$8.5 million ($0.53 diluted earnings per share) in the previous year. In the
three months ended December 31, 1998, net income included $0.6 million
($0.04 per share) in incremental income from acquisitions and $2.1 million
from LIFO income ($0.13 per share), offset by $0.6 million ($0.04 per share)
in after-tax expenses incurred primarily to re-size the Petroleum Products
segment and integrate acquisitions.
In the fourth quarter of 1998, orders for compressed air products were
$73.3 million, including $15.1 million from acquisitions, compared to
$68.7 million in the comparable period of 1997. Backlog for compressed air
products was $43.7 million as of December 31, 1998, including $4.1 million
from acquisitions, compared to $58.5 million as of December 31, 1997 and
$45.1 million as of September 30, 1998.
Orders for petroleum products were $13.7 million in the fourth quarter of
1998, including $1.9 million from acquisitions, compared to $36.2 million in
the same period of 1997. Backlog for this business segment declined to
$6.5 million on December 31, 1998 from $12.8 million on September 30, 1998.
The current level of backlog for petroleum products, which includes
$1.1 million from acquisitions, is approximately $26.1 million less than
backlog as of December 31, 1997.
Ross J. Centanni, President and CEO, said, "I am very pleased with the
tremendously profitable growth the Company realized in 1998 and the successful
relocation of our centrifugal blower manufacturing plant to Georgia. I look
forward to further operational improvements in 1999 through the successful
integration of recent acquisitions, cost reductions from capital projects and
development of our European distribution. Gardner Denver will also continue
to actively seek growth opportunities through strategic acquisitions."
"However, we are no longer optimistic that demand for the Company's
petroleum products will recover in 1999. Even if the price of oil and natural
gas increase, we believe that such a recovery would occur too late in the year
to significantly improve financial results. Additionally, the Company's key
customers in the well stimulation industry have recently reduced their
projected demand for the Company's products in 1999, which further dampens
revenue expectations in this segment. Still, even with significantly lower
revenue projections for petroleum products, the Company believes that this
segment will continue to generate operating earnings in 1999."
"In addition to the anticipated decline in petroleum revenues, the Company
has recently experienced softer orders in our industrial segment, which we
expect to limit the rate of growth for compressor products during the first
and second quarter of 1999. We continue to expect additional cost reductions
and synergies for compressor products as acquisitions are integrated and the
Company realizes the benefit of relocating centrifugal blower production to a
new facility," said Centanni.
"Therefore, cost reduction efforts and financial benefits of completing
acquisition integration projects should enhance the Company's profitability in
1999. However, the decreased revenues as a result of depressed demand for
petroleum products and softer orders for compressor products will result in
unfavorable earnings comparisons in 1999, compared to 1998. Based upon our
reassessment of the economic outlook for our business segments, we presently
feel that, excluding the effect of any new acquisitions, the Company's diluted
earnings per share will decrease approximately 20% - 25% in 1999 compared to
1998," Centanni stated.
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 the Company'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 of the Company to differ materially from those matters expressed in or
implied by such forward-looking statements. The following factors, among
others, could affect its future performance and cause actual results of the
Company to differ materially from those expressed in or implied by forward-
looking statements: the successful integration of recent acquisitions; the
level of 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; the successful implementation
of cost reduction efforts; and the extent to which the Company is able to
operate without disruption due to Year 2000 Issues.
Comparisons of the financial results for the three and twelve month
periods ended December 31, 1998 and December 31, 1997 appear on the following
pages.
Gardner Denver, with 1998 revenues of $385 million, is a leading
manufacturer of reciprocating, rotary and vane compressors and blowers for
various industrial applications and pumps used in the petroleum industry.
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,
% %
1998 1997 Change 1998 1997 Change
Revenues $95,086 $79,574 19 $384,992 $291,547 32
Costs and Expenses:
Cost of sales 59,289 50,712 17 252,842 191,617 32
Depreciation and
amortization 3,404 2,598 31 12,978 9,662 34
Selling and
administrative 13,694 11,186 22 53,793 39,938 35
Interest expense 997 790 26 4,849 3,937 23
Other expense 170 112 52 636 242 163
Income before income taxes 17,532 14,176 24 59,894 46,151 30
Provision for income taxes 6,756 5,627 20 23,089 18,500 25
Net income $10,776 $8,549 26 $36,805 $27,651 33
Basic earnings per share $0.67 $0.56 20 $2.29 $1.84 24
Diluted earnings per share $0.66 $0.53 25 $2.22 $1.74 28
Basic weighted average
number of shares
outstanding 16,027 15,289 16,067 15,060
Diluted weighted average
number of shares
outstanding 16,405 16,082 16,610 15,872
Shares outstanding as of 12/3115,497 15,436
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
% %
1998 1997 Change 1998 1997 Change
Compressed Air Products
Revenues $75,003 $62,362 20 $298,440 $228,214 31
Operating earnings 13,044 11,606 12 45,496 38,554 18
% of Revenues 17.4% 18.6% 15.2% 16.9%
Petroleum Products
Revenues 20,083 17,212 17 86,552 63,333 37
Operating earnings 6,164 3,864 60 21,911 13,211 66
% of Revenues 30.7% 22.4% 25.3% 20.9%
CONDENSED BALANCE SHEET ITEMS
12/31/98 09/30/98 12/31/97
Cash and equivalents $24,474 $19,274 $8,831
Receivables, net 69,617 77,740 62,307
Inventories, net 53,115 60,247 48,324
Total assets 343,647 349,889 269,138
Current liabilities 64,752 69,509 58,930
Long-term debt
(excluding current
maturities) 81,058 83,053 51,227
Total stockholders'
equity 142,686 142,070 103,611
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, 217-228-8209
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