QUINCY, Ill., July 28 /PRNewswire-FirstCall/ -- Gardner Denver, Inc.
(NYSE: GDI) announced that revenues for the three months ended June 30, 2004
were $161.3 million, a 47% increase compared to the second quarter of the
previous year. Net income for the three-month period of 2004 was $8.3 million,
a 55% increase compared to the same period last year and a 26% increase
compared to the three months ended March 31, 2004. Diluted earnings per share
(DEPS) in the three-month period of 2004 were $0.41, up 24% from the same
quarter a year ago.
CEO's Comments Regarding Results
"I am very pleased with the second quarter results and the substantial
increases in revenues and flow through earnings for our two segments both
sequentially and compared to the prior year. In addition to the Syltone
acquisition, a significant contributor to our success in the first half stems
from increased demand for well stimulation pumps and related aftermarket parts
and service in our fluid transfer segment. This increase in demand is directly
correlated to rising U.S. land rig counts, which continue to increase," stated
Ross Centanni, Chairman, President and CEO.
"We also benefited from increased shipments of compressors and blowers due
to improving demand in the U.S. and European industrial sectors combined with
increased market penetration in South Africa and China, which continue to be
primary targets for future sales growth. In addition to the top line growth,
the Compressed Air Products segment also began to realize some benefits from
the profitability programs initiated in the fourth quarter of 2003. These
cost cutting and product rationalization measures helped improve this
segment's operating earnings as a percentage of revenues to 8.4%, despite a
lower operating margin percentage from the portion of Syltone's business
included in the segment."
"I am also pleased with the progress made to date on the integration of
Syltone's operations. During the second quarter, we began relocating
production from the Syltone facility in Louisville, Kentucky to existing
operations. Manufacturing of certain blower products were transferred from
Louisville to our facility in Sedalia, Missouri and fluid transfer operations
were moved to an existing Syltone facility in Houston, Texas. These actions
reduced DEPS by approximately $0.01 in the second quarter and are expected to
negatively impact DEPS by $0.01 to $0.02 in the second half of the year. We
currently anticipate that this project will enhance DEPS on a recurring basis
by $0.02 to $0.03 beginning in 2005."
"Construction of the assembly and packaging facility in China is on
schedule and will be operational by the end of the third quarter. We also
recently invested significant capital and resources to integrate our
businesses in Princeton, Illinois and Tampere, Finland on our common
enterprise resource planning system. These projects and many others aimed at
introducing new products, penetrating new markets and improving our
operations, resulted in capital expenditures of nearly $9 million during the
first half of 2004. We currently expect total capital expenditures for the
year to be approximately $20 million."
"I expect accelerated improvements to be achieved in the second half with
our inventory reduction initiatives and cash flow generation. Managing our
operating working capital will continue to be a primary challenge and focus
for us if activity levels rise as we anticipate during the remainder of 2004."
Outlook
Looking forward, Mr. Centanni stated, "I remain optimistic that the demand
outlook for industrial products will continue to improve during the second
half of 2004 as industrial production and capacity utilization in North
America and Europe improve. We expect this to result in increased orders,
revenues and profitability in our Compressed Air Products segment in the
second half of the year. Current economic signs also point toward a sustained
high level of oil and natural gas prices, which should allow us to maintain
the current activity levels within our Fluid Transfer Products segment. We
will continue to strategically position petroleum pump inventory to help
secure orders requiring shorter lead times and increase our responsiveness to
incremental demand. This approach proved beneficial in the first half of 2004
and will be critical to our success when demand for our drilling pumps trends
upward."
"Based on the current economic environment, our existing backlog and
recent order trends, we expect DEPS to be approximately $0.38 to $0.42 for the
third quarter of 2004 and $1.60 to $1.70 for the year. This guidance does not
consider the potential mildly dilutive impact from the pending acquisition of
nash_elmo Holdings, LLC, which was announced earlier today. We currently
believe that Syltone will contribute approximately $0.13 to $0.18 to DEPS in
2004."
Second Quarter Results
Revenues for the three-month period increased $51.9 million (47%) to
$161.3 million compared to the same period of 2003. This increase is due to
the acquisition of Syltone, ($37.5 million) as well as increased shipments of
well stimulation pumps, pump parts, rotary screw compressors and positive
displacement blowers. Compared to the same period of 2003, Compressed Air
Products segment revenues increased $33.6 million (36%) to $126.0 million.
This increase is due to the acquisition of Syltone ($25.8 million) combined
with increased volumes of compressor and blower shipments in the U.S., Europe,
South Africa and China. Changes in currency exchange rates also contributed to
the increase. Fluid Transfer Products segment revenues for the three-month
period increased $18.3 million (108%) to $35.3 million, compared to the same
period of 2003, as a result of the acquisition of Syltone ($11.7 million) and
increased sales of well stimulation pumps and pump parts.
Gross margin (defined as revenues less cost of sales) as a percentage of
sales increased to 32.6% in the three-month period of 2004 from 30.4% in the
prior year period. This increase was principally attributable to the increased
revenues in both segments and the related positive impact of increased
leverage of fixed and semi-fixed costs over a higher revenue base. The
addition of Syltone also positively impacted gross margin percentage as
Syltone's gross margin percentage was higher than the Company's previously
existing businesses. Finally, favorable sales mix also contributed to the
increase as the second quarter of 2004 included a higher percentage of
aftermarket sales compared to the prior year.
Selling and administrative expenses increased $13.0 million (63%) in the
three-month period of 2004 to $33.7 million from $20.7 million in the same
period of 2003 primarily due to the acquisition of Syltone ($10.5 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 8.4% for the three-month period of 2004, compared to
8.3% in the same period of 2003. This increase was primarily attributable to
the positive impact of increased leverage of the segment's fixed and semi-
fixed costs over a higher revenue base. Cost savings and product
rationalization efforts initiated in the fourth quarter of 2003 and favorable
sales mix also contributed to this increase. These positive factors were
partially offset by higher compensation and fringe benefit costs in 2004 and
the incremental impact of Syltone, which had a lower operating margin
percentage than the segment's previously existing businesses. Fluid Transfer
Products operating earnings as a percentage of revenues increased to 9.5% for
the three-month period ended June 30, 2004, compared to 6.4% in the prior year
period. 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. Operating
earnings from businesses that existed prior to the Syltone acquisition
increased $4.5 million in the second quarter of 2004 compared to the prior
year period which represents 32% of the increase in revenues for these
businesses.
Interest expense for the three-month period increased $0.3 million
compared to the same period of 2003, due to higher average borrowings stemming
from the Syltone acquisition and higher average rates.
Net income was $8.3 million ($0.41 DEPS) for the three-month period ended
June 30, 2004, compared to $5.3 million ($0.33 DEPS) in the same period of
2003. This increase is primarily attributable to the same factors that
resulted in higher operating earnings in each segment. These positive factors
were partially offset by higher compensation and fringe benefit costs and a
higher effective tax rate. The 2004 results reflect an effective tax rate of
34.0%, compared to 32.0% in the second quarter of 2003, primarily due to
Syltone. The contribution of Syltone to net income during the second quarter
of 2004 was not significant. Without the stock offering completed near the end
of the first quarter of 2004, DEPS for the second quarter would have been
$0.06 higher.
Six Months Results
Revenues for the first half of 2004 increased $104.8 million (50%) to
$315.7 million compared to the same period of 2003. This increase is due to
the acquisition of Syltone ($79.8 million) and increased shipments of well
stimulation pumps, pump parts, rotary screw compressors and positive
displacement blowers. Compressed Air Products segment revenues increased
$69.4 million (39%) to $249.0 million, compared to the same period of 2003.
This increase is primarily attributable to Syltone ($55.0 million) and
increased shipments of compressors and blowers in the U.S., Europe, South
Africa and China. Changes in currency exchange rates also contributed to this
increase. Fluid Transfer Products segment revenues for the six-month period
increased $35.5 million (113%) to $66.7 million compared to the prior year
period. This increase is due to the acquisition of Syltone ($24.8 million) and
increased volume of well stimulation pumps and pump parts shipments, partially
offset by a decline in drilling pump shipments.
Net income was $14.8 million ($0.80 DEPS) for the six-month period ended
June 30, 2004, compared to $8.9 million ($0.55 DEPS) in the same period of
2003. This increase is primarily attributable to higher revenues from each
segment. Syltone and a foreign currency transaction gain recorded in the first
quarter of 2004 also contributed approximately $1.0 million and $0.8 million,
respectively. The foreign currency gain was specifically related to a portion
of the proceeds from U.S. dollar borrowings, which were converted to British
pounds and appreciated in U.S. dollars in 2004 prior to being used to
consummate the Syltone acquisition in January. Changes in currency exchange
rates also contributed approximately $0.4 million to net income during the
first half of 2004. These positive factors were partially offset by higher
compensation and fringe benefit costs and a higher effective tax rate. Without
the stock offering completed near the end of the first quarter of 2004, DEPS
for the first half would have been $0.06 higher.
During the first half of 2004, the Company generated cash from operations
totaling $5.4 million, compared to $8.8 million in the prior year period. This
change is primarily due to a less favorable change in operating working
capital (excluding the impact of the Syltone acquisition) due to increased
activity levels in both segments, partially offset by higher net income.
Strategic positioning of certain petroleum pump inventory to minimize lead
times and capture incremental demand also contributed to the increase in
operating working capital.
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 complete the nash_elmo
acquisition and identify, negotiate and complete possible future acquisitions;
(2) the speed with which the Company is able to integrate acquisitions and
realize the related financial benefits; (3) the ability to maintain and to
enter into key purchasing, supply and outsourcing relationships; (4) the
ability to effectively manage the transition of iron casting supply to
alternate sources and the skill, commitment and availability of such alternate
sources; (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 and six-month periods
ended June 30, 2004 and 2003 follow.
Gardner Denver will broadcast, through a live webcast, its conference call
to discuss second quarter earnings on Thursday, July 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 ($578 million on a pro
forma basis including Syltone), is a leading manufacturer of reciprocating,
rotary and vane compressors and blowers for various industrial and
transportation applications, pumps used in the petroleum and industrial
markets and other fluid transfer equipment serving chemical, petroleum and
food industries. 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 Six Months Ended
June 30, June 30,
% %
2004 2003 Change 2004 2003 Change
Revenues $161,297 $109,388 47 $315,725 $210,879 50
Costs and Expenses:
Cost of sales 108,650 76,151 43 213,161 146,925 45
Depreciation and
amortization 5,016 3,767 33 10,149 7,313 39
Selling and
administrative 33,667 20,681 63 68,570 41,358 66
Interest expense 1,436 1,136 26 3,458 2,341 48
Other income, net (12) (210) (94) (2,088) (97) N/M
Income before
income taxes 12,540 7,863 59 22,475 13,039 72
Provision for
income taxes 4,264 2,517 69 7,642 4,173 83
Net income $8,276 $5,346 55 $14,833 $8,866 67
Basic earnings per
share $0.42 $0.33 27 $0.82 $0.55 49
Diluted earnings
per share $0.41 $0.33 24 $0.80 $0.55 45
Basic weighted
average number
of shares
outstanding 19,763 16,052 18,058 16,031
Diluted weighted
average number
of shares
outstanding 20,141 16,260 18,447 16,214
Shares outstanding
as of 6/30 19,784 16,067
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
% %
2004 2003 Change 2004 2003 Change
Compressed Air
Products
Revenues $126,026 $92,443 36 $249,022 $179,629 39
Operating
earnings 10,629 7,699 38 18,903 14,275 32
% of Revenues 8.4% 8.3% 7.6% 7.9%
Orders 129,617 81,726 59 269,290 174,861 54
Backlog 81,514 56,875 43 81,514 56,875 43
Fluid Transfer
Products
Revenues 35,271 16,945 108 66,703 31,250 113
Operating
earnings 3,335 1,090 206 4,942 1,008 390
% of Revenues 9.5% 6.4% 7.4% 3.2%
Orders 41,438 13,713 202 77,802 34,442 126
Backlog 36,655 10,099 263 36,655 10,099 263
CONDENSED BALANCE SHEET ITEMS
(in thousands, except percentages)
(Unaudited)
%
6/30/04 3/31/04 Change 12/31/03
Cash and equivalents $26,252 $31,519 (17) $132,803
Receivables, net 119,471 111,977 7 81,345
Inventories, net 95,708 90,991 5 64,327
Current assets 252,560 245,481 3 287,809
Total assets 677,007 669,600 1 589,733
Short-term debt and
cur. maturities 47,131 44,673 6 16,875
Current liabilities 171,873 168,420 2 100,956
Long-term debt, ex.
cur. maturities 61,737 66,015 (6) 165,756
Total liabilities 313,983 314,676 -- 323,828
Total stockholders'
equity 363,024 354,924 2 265,905
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:
Philip R. Roth, Vice President, Finance and
CFO of Gardner Denver, Inc., +1-217-228-8205
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