QUINCY, Ill., Oct. 23 /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 September 30, 2002
were $102.8 million, a slight decrease compared with the results of the third
quarter of 2001. Diluted earnings per share (DEPS) in the third quarter of
2002 were $0.30, 14% less than the third quarter of 2001.
CEO's Comments Regarding Results
"We continue to operate in a very difficult sales environment. The
industrial economy is very soft and the recovery generally expected for the
second half of this year has given no sign of materializing to date. In
addition, demand for the Company's petroleum-related products is off
dramatically from a year ago," stated Ross J. Centanni, Chairman, President
and CEO.
"Despite the difficult sales environment, the Company is making
significant progress on many of its objectives for the year. The successful
integration of the Belliss & Morcom and Hoffman acquisitions, made in the
third quarter last year, enabled us to report higher sales and operating
earnings for the Compressed Air segment, despite the difficult economy for
these products. Our cost reduction efforts are continuing on plan and I would
expect to see additional benefits from these efforts when U.S. industrial
demand improves and our revenues increase accordingly. We are investing
capital to reduce our costs, implementing lean manufacturing techniques to
improve our leadtime and throughput, expanding our quality systems to improve
customer satisfaction and streamlining our operations. The benefit of these
efforts is demonstrated in the operating margin for the Compressed Air
segment, as a percentage of revenues, which is higher for the nine months of
2002 than the comparable period of 2001. The Company is well-positioned for
profitability improvements when the sales environment strengthens."
"We continue to tightly control spending. Excluding acquisitions and the
effect of changes in foreign exchange rates, selling and administrative
expenses were less in the nine months of 2002 than in the comparable period of
2001, despite increased post retirement and medical expenses in the current
year."
"I am pleased with the strong cash flow our operations continue to
generate. In the third quarter, we were able to use this cash to repay almost
$14 million of debt, nearly $37 million in the nine-month period. The ability
of our business to generate such strong cash flows positions us to actively
pursue our strategies for growth, including seeking value-added acquisitions,
even in a period of weak economic demand. We are also able to use this cash
to improve our existing businesses through capital investments. In the first
nine months of this year, we invested $7.5 million in capital to improve our
operations, primarily through cost reduction projects and new product
development."
Outlook
Looking forward, Mr. Centanni stated, "It appears that the U.S. industrial
market and demand for our compressor products have reached a trough and should
not further decline. Although significant improvements in near term demand
for compressed air products in the U.S. are not anticipated, significant
reductions in our future order rate are not expected to occur either. We
continue to gain additional market share in Europe and are pleased with the
improvements and cost reductions we are achieving in our business processes.
Key economic indicators, such as manufacturing capacity utilization and
industrial production, are being monitored for signs of improvement in the
U.S. industrial market. Typically, demand for our compressed air products
improves approximately six months after these indicators of industrial
activity increase. Increased demand for compressed air products is
anticipated in the second half of 2003 as a result of an improving industrial
market in the U.S. Given our improved cost structure and the fixed cost
leverage associated with our business, we anticipate enhanced flow-through
profitability to result from a rebound in revenues. "
"As rig counts increase further, eventual improvement in demand for pumps
and replacement parts is expected. Although rig count increased from April
through July 2002, it remains approximately 20% below the average level in
2000 and 2001. Therefore, we anticipate that revenues for pump products will
be driven by backlog consumption with some modest order conversion, at least
through the second quarter of 2003. If natural gas prices increase, supported
by an economic recovery, demand for well servicing and drilling could return
to higher levels, stimulating demand for petroleum pumps by mid 2003."
"I am pleased with the progress made to date in re-sourcing our supply of
iron castings, necessitated by the downsizing of a key supplier. This
logistical effort is being effectively managed to minimize production
disruptions and we are achieving purchased material cost reductions in the
process. As previously announced, the disruption in supply and incremental
costs associated with expediting new castings is expected to negatively impact
financial results through the first quarter of 2003. We believe that the
magnitude of this impact will be approximately $0.03 to $0.06 per share in the
fourth quarter of 2002 and $0.02 to $0.04 in the first quarter of 2003. The
most significant aspects of this change should be completed by the first
quarter of 2003 and the Company should then continue to benefit from lower
material costs through the remainder of the year."
"Based on these observations, the Company's updated expectations are that
DEPS will be approximately $0.25 to $0.30 for the fourth quarter of 2002 and
$1.18 to $1.23 for the year.
"Similar to most companies in the U.S. today, rising medical and post
retirement benefit expenses continue to pressure the Company's earnings. We
do not expect a change in this in the near future and, in fact, anticipate
that increases in these expenses will reduce DEPS approximately $0.15-$0.18 in
2003, as compared to the level incurred in 2002. Despite this increase, we
expect DEPS for 2003 to be approximately $1.10 to $1.30, assuming that a
modest market recovery in the industrial economy occurs in the second half of
2003. Given the fixed cost nature of our business, if revenues improve more
substantially, financial results next year could exceed this outlook. Future
acquisitions could also add to earnings."
Third Quarter Results
Revenues for the three-month period decreased slightly to $102.8 million,
compared to the same period of 2001, and included incremental revenue of $12.4
million from acquisitions. Excluding acquisitions, revenues declined $13.1
million (13%) compared to the third quarter of 2001. Compressed Air Products
revenues, including incremental revenues from acquisitions, increased $10.5
million (14%). Revenues for this business segment, excluding the benefit of
acquisitions, declined 3% compared to the third quarter of 2001 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 $11.1 million (39%) less than the same period of 2001. This revenue
decrease reflects reduced demand for petroleum pumps related to lower natural
gas prices and rig counts, which began negatively impacting this business
segment's order rate in the second half of 2001.
Net income was $4.8 million for the three-month period of 2002, compared
to $5.6 million in same period of 2001. Diluted earnings per share decreased
14% to $0.30 for the third quarter of 2002, compared to $0.35 for the same
period of 2001, primarily as a result of the decline in revenues (excluding
acquisitions), the associated reduction in fixed cost leverage and additional
medical and post retirement benefit expenses.
Nine Month Results
Revenues for the first nine months of 2002 increased $5.4 million (2%) to
$314.3 million compared to the comparable period of 2001 due to acquisitions,
which added $54.1 million. Compressed Air Products revenues, including the
benefit of acquisitions, increased $40.0 million (18%). Weak economic
conditions in the U.S. and European industrial markets led to lower demand for
compressors and blowers, resulting in a 6% decline in Compressed Air Products
revenues (excluding acquisitions) compared to the nine-month period of 2001.
Pump Products revenues for the nine-month period decreased $34.6 million
(40%), compared to the same period of 2001, as a result of reduced demand for
petroleum pumps.
Net income was $14.9 million for the first nine months of 2002, compared
to $16.8 million in 2001. Diluted earnings per share decreased 13% to $0.93
for the nine months of 2002, compared to $1.07 for the same period of 2001,
due to the lower revenue volume, the related de-leverage of operations and
higher medical and post retirement benefit expenses.
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, including the statements
under the "Outlook" section. 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. 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 nine-month periods
ended September 30, 2002 and 2001 follow.
Gardner Denver will broadcast, through a live webcast, its conference call
to discuss third quarter earnings on Thursday, October 24, 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 Nine Months Ended
September 30, September 30,
% %
2002 2001 Change 2002 2001 Change
Revenues $102,791 $103,426 (1) $314,254 $308,876 2
Costs and Expenses:
Cost of sales 70,261 72,544 (3) 216,152 217,305 (1)
Depreciation and
amortization 3,718 4,252 (13) 10,859 12,724 (15)
Selling and
administrative 19,897 17,007 17 60,177 50,281 20
Interest expense 1,566 1,548 1 4,978 4,937 1
Other expense
(income), net 32 (739) (104) (535) (3,030) (82)
Income before
income taxes 7,317 8,814 (17) 22,623 26,659 (15)
Provision for
income taxes 2,488 3,262 (24) 7,692 9,864 (22)
Net income $4,829 $5,552 (13) $14,931 $16,795 (11)
Basic earnings
per share $0.30 $0.36 (17) $0.94 $1.08 (13)
Diluted earnings
per share $0.30 $0.35 (14) $0.93 $1.07 (13)
Basic weighted
average number
of shares
outstanding 15,887 15,581 15,833 15,526
Diluted weighted
average number
of shares
outstanding 16,038 15,862 16,058 15,749
Shares outstanding
as of 9/30 15,903 15,596
GARDNER DENVER, INC.
BUSINESS SEGMENT RESULTS
(in thousands, except percentages)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2002 2001 Change 2002 2001 Change
Compressed Air
Products
Revenues $85,496 $74,986 14 $263,247 $223,237 18
Operating earnings 7,375 5,424 (A) 36 23,515 16,312 (A) 44
% of Revenues 8.6% 7.2% 8.9% 7.3%
Orders 80,743 71,319 13 259,926 219,081 19
Backlog 56,943 66,035 (14) 56,943 66,035 (14)
Pump Products
Revenues 17,295 28,440 (39) 51,007 85,639 (40)
Operating earnings 1,540 4,199 (A) (63) 3,551 12,254 (A) (71)
% of Revenues 8.9% 14.8% 7.0% 14.3%
Orders 14,482 24,380 (41) 40,722 99,646 (59)
Backlog 10,328 28,735 (64) 10,328 28,735 (64)
(A) As a result of adopting SFAS 142, periodic goodwill amortization
ceased effective January 1, 2002. Operating earnings for the
quarter-ended September 30, 2001, excluding goodwill amortization
expense, would have been $6,329 (8.4% of revenues) and $4,389 (15.4%
of revenues) for the Compressed Air Products and Pump Products
segments, respectively. Operating earnings for the nine months ended
September 30, 2001, excluding goodwill amortization expense, would
have been $19,027 (8.5% of revenues) and $12,824 (15.0% of revenues)
for the Compressed Air Products and Pump Products segments,
respectively.
CONDENSED BALANCE SHEET ITEMS
(in thousands, except percentages)
(Unaudited)
%
09/30/02 06/30/02 Change 12/31/01
Cash and equivalents $16,185 $16,766 (3) $29,980
Receivables, net 78,362 83,291 (6) 85,538
Inventories, net 73,607 75,779 (3) 76,650
Current assets 178,672 186,698 (4) 201,135
Total assets 464,532 474,125 (2) 488,688
Short-term debt and
cur. maturities 7,500 7,500 -- 7,375
Current liabilities 73,151 74,583 (2) 84,577
Long-term debt, ex.
cur. maturities 123,297 136,943 (10) 160,230
Total liabilities 241,965 256,862 (6) 289,960
Total stockholders'
equity 222,567 217,263 2 198,728
SOURCE Gardner Denver, Inc.
 back to top
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,
+1-217-228-8209
|
