QUINCY, Ill., April 28 /PRNewswire-FirstCall/ -- Gardner Denver, Inc.
(NYSE: GDI) announced that revenues for the three months ended March 31, 2004
were $154.4 million, a 52% increase compared to the first quarter of 2003. Net
income for the three-month period of 2004 was $6.6 million, an 86% increase
compared to the same period last year. Diluted earnings per share (DEPS) in
the three-month period of 2004 were $0.39, 77% higher than $0.22 in the
previous year.
CEO's Comments Regarding Results
"I am very pleased with the first quarter results overall and the $0.17
improvement in DEPS from the same period last year. Our acquisition strategy
to expand our global presence and broaden our product lines was a key
contributor to this earnings growth. The performance of Syltone, acquired in
January 2004, significantly exceeded our expectations during the quarter,
contributing approximately $0.07 to DEPS. Sales within both the transportation
and fluid transfer businesses were stronger than anticipated and operating
earnings as a percentage of revenues were better than expected. We also saw
improved demand for our other compressed air products, consistent with our
expectations and the continued improvement in the U.S. industrial economy.
Well stimulation and small production pump volume increased significantly
year-over-year as demand for oil and natural gas products continued to
improve. Although orders for drilling pumps have still not increased
appreciably from prior year, we did see a sequential improvement from the
fourth quarter of 2003," stated Ross J. Centanni, Chairman, President and CEO.
"On March 29, we successfully completed the sale of 3.45 million shares of
common stock at an offering price of $24.50 per share. Net proceeds of
$80 million were used to repay loans outstanding under our revolving line of
credit. Adding this incremental equity to our capital structure, when combined
with our ability to generate strong operating cash flow, will provide more
capacity and flexibility to finance future acquisitions. At the end of the
first quarter, our total debt to total capitalization was 24%."
"We continued our focus on programs to improve profitability.
Manufacturing process and system improvements to reduce inventory were
implemented at two key facilities. Although the benefit of these efforts has
not yet been fully realized, we have significantly increased the effectiveness
of our existing systems and processes to better align our purchasing and
inventory strategies with product demand. Construction of the assembly and
packaging facility in China is progressing as planned, and we now have staff
located in China to assist with product design for the Asian market and our
global purchasing initiatives. We invested $3.8 million in capital
expenditures to improve operations and bring new products to market during the
first quarter of 2004, and expect capital expenditures for the year to be
between $18 and $20 million."
"I am pleased with the progress being made on the integration of Syltone's
operations. Syltone's transportation-related activities have been combined
with our existing Blower operating division and a fourth division for
Syltone's fluid transfer-related activities was established. Helen Cornell was
appointed Vice President and General Manager, Fluid Transfer Division and
Operations Support to oversee this new division, while continuing some of her
corporate roles, including oversight of purchasing. The Compressor and Blower
divisions continue to be aggregated into one reportable segment, Compressed
Air Products, and the Pump and Fluid Transfer divisions are now aggregated
into one reportable segment, Fluid Transfer Products."
"To further leverage our existing manufacturing facilities, we have
announced the closure of the Syltone facility in Louisville, Kentucky.
Manufacturing of blower products will be relocated from Louisville to our
facility in Sedalia, Missouri and fluid transfer operations performed in
Louisville will be transferred to another existing Syltone facility in
Houston, Texas. These changes are expected to be fully implemented by year-end
and are anticipated to reduce DEPS by as much as $0.03 for 2004, the majority
of which will occur in the second quarter. We currently expect this project to
enhance DEPS on a recurring annual basis by $0.02 to $0.03 starting in 2005."
Outlook
Looking forward, Mr. Centanni stated, "I am optimistic that the demand
outlook for industrial products will continue to improve during the remainder
of 2004 as a result of a slowly recovering industrial economy in North America
and Europe. This should result in a gradual improvement in revenue volume
throughout the year. Our assembly and packaging facility in China is expected
to be operational by the end of the third quarter of 2004. This facility will
not only serve the Chinese market, but will also be a platform to expand
revenues throughout the Asia Pacific region."
"We believe that the market for oil and natural gas products will also
continue to improve in 2004, bolstering demand for our petroleum pumps and
replacement parts. We will continue to strategically position petroleum pump
inventory to help secure orders requiring shorter lead times and expedite our
responsiveness to incremental demand. This approach proved beneficial in the
first quarter of 2004."
"We expect DEPS to be approximately $0.32 to $0.38 for the second quarter
of 2004. This estimate includes the effect of the stock offering, which is
expected to reduce DEPS by approximately $0.05 and $0.15 for the second
quarter and the full year, respectively. We currently believe that Syltone
will contribute approximately $0.16 to $0.22 to DEPS in 2004. Based on the
current economic environment, our existing backlog and recent order trends,
DEPS is expected to be approximately $1.45 to $1.65 for the year."
First Quarter Results
Revenues for the three-month period increased $52.9 million (52%) to
$154.4 million compared to the same period of 2003, primarily due to the
acquisition of Syltone, which contributed $42.3 million in revenues for the
first quarter of 2004. Changes in currency exchange rates and increased sales
of well stimulation pumps and pump parts also contributed to this increase.
Compared to the same period of 2003, Compressed Air Products revenues
increased $35.8 million (41%) to $123.0 million, primarily due to the
acquisition of Syltone ($29.2 million) and changes in currency exchange rates
($4.3 million). Fluid Transfer Products revenues for the three-month period
increased $17.1 million (120%) compared to the same period of 2003, primarily
as a result of the acquisition of Syltone ($13.1 million) and increased sales
of well stimulation pumps and pump parts ($4.9 million).
Selling and administrative expenses increased 69% in the three-month
period of 2004 to $34.9 million from $20.7 million in the same period of 2003
primarily due to the acquisition of Syltone ($10.1 million). Changes in
currency exchange rates and higher compensation and fringe benefit costs also
contributed to this increase.
Operating earnings as a percentage of revenues for the Compressed Air
Products segment were 6.7% for the three-month period of 2004, compared to
7.5% in the same period of 2003. This decrease was primarily attributable to
higher compensation and fringe benefit costs. Fluid Transfer Products
operating earnings as a percentage of revenues increased to 5.1% for the
three-month period ended March 31, 2004, compared to a loss of 0.6% in the
comparable period of 2003. This improvement in profitability was primarily
attributable to the positive impact of increased leverage of the segment's
fixed and semi-fixed costs over a higher revenue base and operational
improvements.
Interest expense for the three-month period increased $0.8 million (68%)
compared to the same period of 2003, due to higher average borrowings and
interest rates, both resulting from the Syltone acquisition. Other income, net
in the first quarter of 2004 of $2.1 million was primarily the result of
foreign currency transaction gains. This included a pre-tax gain of
$1.2 million related to a portion of the proceeds from U.S. dollar borrowings
in the fourth quarter of 2003, which were converted to British pounds and
appreciated in U.S. dollars prior to being used to consummate the Syltone
acquisition in January 2004.
Net income was $6.6 million for the three-month period ended March 31,
2004, compared to $3.5 million in the same period of 2003 primarily due to the
Syltone acquisition ($1.2 million), the foreign currency transaction gain
($0.8 million) and the increase in sales of well stimulation pumps and pump
parts mentioned above. Changes in currency exchange rates also contributed
$0.2 million to the increase over the prior year. These positive factors were
partially offset by higher compensation and fringe benefit costs. The 2004
results reflect an effective tax rate of 34.0%, compared to 32.0% in the first
quarter of 2003. This increase was primarily attributable to Syltone, which
has a higher effective tax rate than the Company's previously existing
business. DEPS was $0.39 for the first quarter of 2004, compared to $0.22 for
the same period of 2003. The 77% improvement in DEPS compared to the previous
year is primarily attributable to the same factors that resulted in the higher
net income as noted above.
Cautionary Statement Regarding Forward-Looking Statements
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, including, without
limitation, the statements made under the "CEO's Comments Regarding Results"
and "Outlook" sections. As a general matter, forward-looking statements are
those focused upon anticipated events or trends and expectations and beliefs
relating to matters that are not historical in nature. 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. These uncertainties and
factors could cause actual results to differ materially from those matters
expressed in or implied by such forward-looking statements. The following
uncertainties and factors, among others, could affect future performance and
cause actual results to differ materially from those expressed in or implied
by forward-looking statements: (1) the ability to maintain and to enter into
key purchasing, supply and outsourcing relationships; (2) the ability to
effectively manage the transition of iron casting supply to alternate sources
and the skill, commitment and availability of such alternate sources; (3) the
ability to identify, negotiate and complete future acquisitions; (4) the speed
with which the Company is able to integrate acquisitions and realize the
related financial benefits; (5) the successful implementation of other
strategic initiatives, including, without limitation, restructuring plans,
inventory reduction programs and other cost reduction efforts; (6) the
domestic and/or worldwide level of oil and natural gas prices and oil and gas
drilling and production, which affect demand for the Company's petroleum
products; (7) changes in domestic and/or worldwide industrial production and
industrial capacity utilization rates, which affect demand for the Company's
compressed air products; (8) pricing of the Company's products; (9) the degree
to which the Company is able to penetrate niche and international markets;
(10) changes in currency exchange rates (primarily between the U.S. dollar,
the euro and the British pound); (11) changes in interest rates; (12) the
ability to attract and retain quality management personnel; (13) market
performance of pension plan assets and changes in discount rates used for
actuarial assumptions in pension and other postretirement obligation and
expense calculations; (14) the continued ability to effectively manage and
defend litigation matters pending, or asserted in the future, against the
Company; (15) the development and acceptance of the Company's new product
offerings; and (16) the continued successful implementation and utilization of
the Company's electronic services. The Company does not undertake, and hereby
disclaims, any duty to update these forward-looking statements, even though
its situation and circumstances may change in the future.
Comparisons of the financial results for the three-month period ended
March 31, 2004 and 2003 follow.
Gardner Denver will broadcast, through a live webcast, its conference call
to discuss first quarter earnings on Thursday, April 29, 2004 at 9:30 a.m.
Eastern. This free webcast will be available in listen-only mode and can be
accessed, for up to ninety days following the call, through the Investor
Relations page on the Gardner Denver website ( http://www.gardnerdenver.com ) or on
CCBN's website ( http://www.fulldisclosure.com ).
Gardner Denver, with 2003 revenues of $440 million (prior to the
acquisition of Syltone), is a leading manufacturer of reciprocating, rotary
and vane compressors and blowers for various industrial and transportation
applications and pumps and other fluid transfer equipment used in petroleum
and industrial markets. Gardner Denver's news releases are available by
visiting the Investor Relations page on the Company's website
( http://www.gardnerdenver.com ).
GARDNER DENVER, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts and percentages)
(Unaudited)
Three Months Ended
March 31,
%
2004 2003 Change
Revenues $ 154,428 $ 101,491 52
Costs and Expenses:
Cost of sales 104,511 70,774 48
Depreciation and amortization 5,133 3,546 45
Selling and administrative 34,903 20,677 69
Interest expense 2,022 1,205 68
Other (income) expense, net (2,076) 113 N/M
Income before income taxes 9,935 5,176 92
Provision for income taxes 3,378 1,656 104
Net income $6,557 $3,520 86
Basic earnings per share $0.40 $0.22 82
Diluted earnings per share $0.39 $0.22 77
Basic weighted average
number of shares outstanding 16,352 16,010
Diluted weighted average
number of shares outstanding 16,753 16,171
Shares outstanding as of 3/31 19,739 16,040
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended
March 31,
%
2004 2003 Change
Compressed Air Products
Revenues $122,996 $87,186 41
Operating earnings 8,274 6,576 26
% of Revenues 6.7% 7.5%
Orders 139,673 93,135 50
Backlog 77,932 65,449 19
Fluid Transfer Products
Revenues 31,432 14,305 120
Operating earnings (loss) 1,607 (82) N/M
% of Revenues 5.1% (0.6%)
Orders 36,364 20,729 75
Backlog 30,456 13,141 132
CONDENSED BALANCE SHEET ITEMS
(in thousands, except percentages)
(Unaudited)
%
3/31/04 12/31/03 Change
Cash and equivalents $31,519 $132,803 (76)
Receivables, net 111,977 81,345 38
Inventories, net 90,991 64,327 41
Current assets 245,841 287,809 (15)
Total assets 667,335 589,733 13
Short-term debt and cur.
maturities 44,673 16,875 165
Current liabilities 165,620 100,956 64
Long-term debt, ex. cur.
maturities 66,015 165,756 (60)
Total liabilities 312,411 323,828 (4)
Total stockholders' equity 354,924 265,905 33
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
CONTACT:
Randall E. Schwedes, Treasurer of Gardner
Denver, Inc., +1-217-228-8224
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