QUINCY, Ill., July 24 /PRNewswire-FirstCall/ --
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 for the three months ended June 30, 2002 were
$104.9 million, a slight increase compared with the results of the second
quarter of 2001. Diluted earnings per share (DEPS) in the second quarter of
2002 were $0.34, 17% less than the second quarter of 2001, but 17% better than
the results of the first quarter of 2002.
CEO's Comments Regarding Results
"I am very pleased with the progress we have made in improving our
operations, despite the delayed recovery in the U.S. industrial market. We
continue to realize the benefit of our cost reduction and acquisition
integration efforts in the form of operating margin improvements. These
efforts, which include quality initiatives, lean manufacturing techniques and
material cost reductions, should position the Company for additional
performance improvements when revenue volume increases more substantially. We
have relocated the manufacture of our Hoffman centrifugal blower product line,
acquired in September 2001, to our plant in Georgia and have begun realizing
cost reductions associated with this acquisition integration program. We
completed the rationalization of the Belliss & Morcom sales and administrative
staffs in both the U.S. and the U.K., which also reduced costs. As a result
of all of these efforts, operating margin for the Compressed Air segment and
consolidated net income increased significantly compared to the first quarter
of 2002. This represents the second consecutive quarter that margin has
improved in the Compressed Air Products segment, even after adjusting for
goodwill amortization expense in the fourth quarter of 2001," stated Ross J.
Centanni, Chairman, President and CEO.
"Revenues fell slightly compared to the previous quarter due to continued
reductions in demand for petroleum pumps, which more than offset the modest
improvement in Compressed Air revenues. But we continue to maintain tight
controls on discretionary spending and pursue cost reduction projects to
offset the impact of lower revenues. In fact, excluding acquisitions, selling
and administrative expenses were less in the second quarter of 2002 than in
the comparable period of the previous year."
"We continue to generate strong operating cash flow, which was
approximately $7.9 million for the quarter and $12.4 million year-to-date.
These favorable cash flows, supplemented by existing cash reserves, were used
to pay down $15.6 million in debt in the second quarter of 2002, $23.2 million
year-to-date, enabling us to continue actively pursuing our strategies for
growth, including acquisitions. We also invested $2.9 million in capital
expenditures in the second quarter of 2002, $4.8 million year-to-date,
primarily for further cost reduction efforts and new product development."
Outlook
Looking forward, Mr. Centanni stated, "We continue to see modest
improvements in demand for compressed air products in the U.S. and are pleased
with the share gains we continue to achieve in Europe. We had previously
hoped to see substantial improvement in the U.S. industrial market by the end
of the second quarter, which would have implied more significant increases in
demand for our compressed air products in the second half of 2002. Typically,
demand for these products improves approximately six months after
manufacturing capacity utilization and other leading indicators of industrial
activity increase. Although these indicators are improving, we believe it
could be late in the fourth quarter of this year before the growth in the U.S.
industrial market stimulates increased demand for our compressed air
products."
"As rig counts increase, we expect eventual improvement in demand for pump
replacement parts and, if sustained, drilling pumps. Although rig count
increased in both May and June, it remains at its lowest level since mid 2000.
Therefore, we currently anticipate that revenues for pump products will be
driven by backlog consumption, at least through the third quarter of this
year. If higher natural gas and oil prices are sustained, supported by an
economic recovery, demand for oil well servicing and drilling could return to
higher levels, stimulating demand for petroleum pumps in late 2002 or early
2003."
"Based on these observations, the Company's updated expectations are that
DEPS will be approximately $0.33 to $0.39 for the third quarter of 2002. Our
expectations for DEPS for the year have also changed. We now expect DEPS for
2002 to be approximately $1.35 to $1.50."
Second Quarter Results
Revenues for the three-month period increased slightly to $104.9 million,
compared to the same period of 2001, as a result of acquisitions. Excluding
acquisitions, revenues declined $16.7 million (16%) compared to the second
quarter of 2001. Compressed Air Products revenues, including $17.0 million
from acquisitions, increased $15.3 million (21%). Revenues from Compressed
Air Products, excluding the benefit of acquisitions, declined due to weakness
in the U.S. and European industrial markets, which reduced demand for
compressors and blowers. Pump Products revenues for the three-month period of
2002 were $15.0 million (49%) less than the same period of 2001. This
decrease reflects the reduced demand for petroleum pumps due to lower natural
gas prices and rig counts, which began negatively impacting the Company in the
second half of 2001. Given the relatively high fixed-cost nature of this
business, the operating margin for Pump Products declined compared to the
previous quarter due to decreased leverage on lower revenues.
Net income was $5.5 million for the three-month period of 2002, compared
to $6.4 million in same period of 2001. Diluted earnings per share decreased
17% to $0.34 for the second quarter of 2002, compared to $0.41 for the same
period of 2001, as a result of the decline in revenues (excluding
acquisitions) and the associated reduction in fixed cost leverage.
Six Month Results
Revenues for the first half of 2002 increased $6.0 million (3%) compared
to the six-month period of 2001 due to acquisitions. Excluding acquisitions,
revenues for the six-month period of 2002 were $35.0 million (17%) less than
the previous year. Compressed Air Products revenues, including $41.0 million
from acquisitions, increased $29.5 million (20%). Weak economic conditions in
the U.S. and European industrial markets led to lower demand for compressors
and blowers, which was the primary cause for an 8% decline in Compressed Air
Products revenues (excluding acquisitions) compared to the six-month period of
2001. Pump Products revenues for the six-month period decreased $23.5 million
(41%), compared to the same period of 2001, primarily as a result of reduced
demand for petroleum pumps.
Net income was $10.1 million for the first six months of 2002, compared to
$11.2 million in 2001. Diluted earnings per share decreased 13% to $0.63 for
the six months of 2002, compared to $0.72 for the same period of 2001, due to
the lower revenue volume and the related de-leverage of operations.
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. 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 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. 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: the ability
to identify, negotiate and complete future acquisitions; the speed with which
the Company is able to integrate its recent acquisitions and realize the
related financial benefit; 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; changes in domestic and/or
worldwide industrial production and industrial capacity utilization rates,
which affect demand for the Company's compressed air products; pricing of
Gardner Denver products; the degree to which the Company is able to penetrate
niche markets; the ability to maintain and to enter into key purchasing and
supply relationships; the ability to attract and retain quality management
personnel; and the continued successful implementation of cost reduction
efforts.
Comparisons of the financial results for the three and six-month periods
ended June 30, 2002 and 2001 follow.
Gardner Denver will broadcast, through a live webcast, its conference call
to discuss second quarter earnings on Thursday, July 25, 2002 at 9:30 a.m.
Eastern. This free webcast will be available in listen-only mode and can be
accessed, for up to thirty 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.companyboardroom.com ).
Gardner Denver, with 2001 revenues of $420 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 facsimile
(800-758-5804, extension 303875) or by visiting 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 Six Months Ended
June 30, June 30,
% %
2002 2001 Change 2002 2001 Change
Revenues $104,854 $104,554 -- $211,463 $205,450 3
Costs and Expenses:
Cost of sales 71,289 73,307 (3) 145,891 144,761 1
Depreciation and
amortization 3,593 4,197 (14) 7,141 8,472 (16)
Selling and
administrative 20,308 16,625 22 40,280 33,274 21
Interest expense 1,730 1,547 12 3,412 3,389 --
Other income,
net (435) (1,350) (68) (567) (2,291) (75)
Income before
income taxes 8,369 10,228 (18) 15,306 17,845 (14)
Provision for
income taxes 2,845 3,784 (25) 5,204 6,602 (21)
Net income $5,524 $6,444 (14) $10,102 $11,243 (10)
Basic earnings
per share $0.35 $0.41 (15) $0.64 $0.73 (12)
Diluted earnings
per share $0.34 $0.41 (17) $0.63 $0.72 (13)
Basic weighted
average number
of shares
outstanding 15,856 15,545 15,806 15,499
Diluted weighted
average number
of shares
outstanding 16,139 15,741 16,069 15,695
Shares outstanding
as of 6/30 15,876 15,567
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
% %
2002 2001 Change 2002 2001 Change
Compressed Air
Products
Revenues $89,240 $73,972 21 $177,751 $148,251 20
Operating
earnings 8,800 5,481 (A) 61 16,140 10,888 (A) 48
% of Revenues 9.9% 7.4% 9.1% 7.3%
Orders 93,631 70,740 32 179,183 147,762 21
Backlog 61,156 46,323 32 61,156 46,323 32
Pump Products
Revenues 15,614 30,582 (49) 33,712 57,199 (41)
Operating
earnings 864 4,944 (A) (83) 2,011 8,055 (A) (75)
% of Revenues 5.5% 16.2% 6.0% 14.1%
Orders 12,854 42,364 (70) 26,240 75,266 (65)
Backlog 13,102 32,717 (60) 13,102 32,717 (60)
(A) As a result of adopting SFAS 142, periodic goodwill amortization
ceased effective January 1, 2002.Operating earnings for the quarter-
ended June 30, 2001, excluding goodwill amortization expense, would
have been $6,386 and $5,134 for the Compressed Air Products and Pump
Products segments, respectively.Operating earnings for the six months
ended June 30, 2001, excluding goodwill amortization expense, would
have been $12,698 and $8,435 for the Compressed Air Products and Pump
Products segments, respectively.
CONDENSED BALANCE SHEET ITEMS
(in thousands, except percentages)
(Unaudited)
%
06/30/02 03/31/02 Change 12/31/01
Cash and equivalents $16,766 $24,771 (32) $29,980
Receivables, net 83,291 80,733 3 85,538
Inventories, net 75,779 74,575 2 76,650
Current assets 186,698 191,284 (2) 201,135
Total assets 475,522 476,242 -- 488,688
Short-term debt and cur.
maturities 7,500 7,500 -- 7,375
Current liabilities 74,583 74,940 -- 84,577
Long-term debt, ex. cur.
maturities 136,943 152,587 (10) 160,230
Total liabilities 256,862 272,951 (6) 289,960
Total stockholders' equity 218,390 203,651 7 198,728
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:
Helen W. Cornell, Vice President, Strategic
Planning and Operations Support of Gardner Denver, Inc.,
+1-217-228-8209
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