QUINCY, Ill., Oct. 20 /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
for the three months ended September 30, 1999 were $77.1 million and diluted
earnings per share for the same period were $0.26.
Consistent with previous quarters of 1999, revenues were lower in the
three and nine month periods, as compared to the same periods in 1998, due to
lower orders for petroleum products and standard industrial compressors and
replacement parts. Revenues for the three months declined approximately
$19.5 million, or 20%, compared to the same period of 1998. Petroleum
revenues for the three month period declined approximately $15.0 million, or
70%, compared to the same period of 1998. Excluding incremental revenues from
acquisitions, compressor products revenues declined $9.9 million, or 13%, for
the three months of 1999 compared to 1998. For the nine month period,
revenues declined approximately $57.2 million, or 20%, compared to 1998.
Revenues for petroleum products declined $47.1 million, or 71%, for the nine
month period of 1999, compared to the same period of 1998, while compressor
products revenues, excluding acquisitions, declined $27.1 million, or 12%,
compared to the previous year. Net income was $4.0 million, or $0.26 diluted
earnings per share, for the third quarter, compared to $8.7 million, or $0.52
diluted earnings per share, for the same period of 1998. For the nine month
period of 1999, net income was $13.2 million, or $0.86 diluted earnings per
share, compared to $26.0 million, or $1.56 diluted earnings per share, in
1998.
Revenues Correlate to Economic Indicators
Because compressed air is often used as a fourth utility in the
manufacturing process, demand for compressors and replacement parts is
correlated to two key economic indicators -- industrial production and
manufacturing capacity utilization. The rate of growth in industrial
production in the U.S. began declining in the fourth quarter of 1997 and, in
spite of recent improvements in output, manufacturing capacity utilization has
fallen every quarter since December 1997, contributing to the reduction in
revenues.
Ross J. Centanni, Chairman, President and CEO, said, "As the industrial
economy improves in the U.S., benefiting from higher exports to Asia and
Europe and continued growth domestically, we believe orders for compressor
products will recover. In fact, some recent improvement in industrial
production may indicate an increase in capacity utilization in the near
future. Until a stronger improvement occurs, we will continue exploring niche
markets for our products and leverage the benefit of our acquisitions through
cross-selling products. We have also further reduced costs and should be able
to improve the compressor segment's operating margin as we leverage
incremental revenue volume over our fixed cost base.
"The level of order inquiries for our products is still good. However,
increased demand for compressors typically lags other industrial goods, and it
appears that order and revenue growth will be delayed until 2000," Centanni
added. "Our outlook for compressor revenues in the fourth quarter of 1999 is
essentially flat, rather than showing some recovery, as anticipated earlier
this year."
Within the petroleum segment, the significant decline in the price of oil
in 1998 caused a reduction in demand for drilling and well stimulation pumps.
As a result, the comparison of petroleum revenues to the previous year, when
revenues were generated through backlog reductions, is still quite
unfavorable. However, orders for petroleum parts improved in the third
quarter, which is typically a precursor to increased demand for pumps.
Operating margins for this business improved dramatically in the third quarter
compared to the second, due to an increased proportion of revenues coming from
replacement parts, which generate higher margins.
"We are now seeing some improvement in orders for well servicing pumps,
which we believe may result in a modest increase in petroleum revenues in the
fourth quarter and a more significant improvement in 2000, if oil and natural
gas prices remain at current levels and the rig count continues to increase,"
Centanni said.
Cash Flow Supports Continued Strategic Growth; Acquisition Announced
"Our leadership in the compressor industry and cash generated from
operations support our strategies for growth, which remain on track," Centanni
said. "The acquisition we announced today, combined with two others completed
earlier this year, is consistent with ongoing plans to invest our strong cash
flow in acquisitions and other initiatives."
Gardner Denver announced the addition of Air Relief, an independent
provider of replacement parts and service for centrifugal compressors. This
acquisition is expected to speed Gardner Denver's penetration of the
centrifugal compressor market, initiated this year through the company's
strategic alliance with Samsung Aerospace Industrial Co. of South Korea.
"During the first nine months of 1999, we generated almost $13 million in
cash flow from operating activities and spent approximately $9 million for
capital to reduce costs, improve efficiency and expand machining capacity. We
have identified additional projects which will 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 additional improvements in operating
margins in the year 2000," Centanni concluded.
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;
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 nine month periods
ended September 30, 1999 and 1998 follow.
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 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 Nine Months Ended
September 30, September 30,
% %
1999 1998 Change 1999 1998 Change
Revenues $77,103 $96,605 (20) $232,737 $289,906 (20)
Costs and Expenses:
Cost of sales 52,672 64,024 (18) 157,758 193,553 (18)
Depreciation and
amortization 3,439 3,458 (1) 10,349 9,574 8
Selling and
administrative 12,897 13,407 (4) 38,662 40,099 (4)
Interest expense 1,465 1,287 14 4,141 3,852 8
Other expense 118 188 (37) 344 466 (26)
Income before income
taxes 6,512 14,241 (54) 21,483 42,362 (49)
Provision for income
taxes 2,513 5,493 (54) 8,292 16,333 (49)
Net income $3,999 $8,748 (54) $13,191 $26,029 (49)
Basic earnings per
share $0.27 $0.54 (50) $0.88 $1.62 (46)
Diluted earnings per
share $0.26 $0.52 (50) $0.86 $1.56 (45)
Basic weighted average
number of shares
outstanding 14,922 16,184 (8) 15,021 16,080 (7)
Diluted weighted
average number of
shares outstanding 15,292 16,676 (8) 15,385 16,673 (8)
Shares outstanding
as of 9/30 14,942 16,205 (8) -- -- --
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
% %
1999 1998 Change 1999 1998 Change
Compressed Air
Products
Revenues $70,781 $75,321 (6) $213,331 $223,437 (5)
Operating earnings 7,402 11,090 (33) 25,663 32,452 (21)
% of Revenues 10.5% 14.7% -- 12.0% 14.5% --
Petroleum Products
Revenues 6,322 21,284 (70) 19,406 66,469 (71)
Operating earnings 1,136 5,088 (78) 1,736 15,747 (89)
% of Revenues 18.0% 23.9% -- 8.9% 23.7% --
CONDENSED BALANCE SHEET ITEMS
(Unaudited) % (Audited)
09/30/99 06/30/99 Change 12/31/98
Cash and equivalents $21,127 $19,932 6 $24,474
Receivables, net 69,410 71,425 (3) 69,617
Inventories, net 60,588 58,559 3 53,115
Current assets 157,312 154,869 2 151,805
Total assets 350,697 351,661 (0) 342,130
Short-term debt and cur.
maturities 5,329 282 1,790 2,452
Current liabilities 56,750 53,595 6 63,258
Long-term debt, excl. cur.
maturities 94,621 103,733 (9) 81,058
Total liabilities 204,361 210,159 (3) 199,444
Total stockholders' equity 146,336 141,502 3 142,686
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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