- Revenues of $579.1 million, up 25%
versus prior year
- Reported net loss of $146.3 million,
which includes $226.7 million of pre-tax expenses for stock-based
compensation (non-cash), loss on extinguishment of debt, and other
fees related to the initial public offering
- Adjusted EBITDA of $132.1 million, up
53% versus the prior year, with adjusted EBITDA margin of 22.8%, an
improvement of 410 basis points versus prior year
- Adjusted earnings per share of $0.24 up
41% versus prior year
- Introducing 2017 guidance of adjusted
EBITDA between $510 million and $530 million, reflecting our strong
first half performance, our confidence in commercial and
operational execution and the continued improvement in end market
demand
Gardner Denver Holdings, Inc. (NYSE: GDI) announced today second
quarter revenues of $579.1 million, up 25% versus prior year and a
27% increase excluding the impact of foreign exchange (“FX”).
Net loss in the quarter of $146.3 million resulted in an
earnings per share loss (“EPS”) of $0.83, based on share count of
176.9 million. Adjusted net income of $43.7 million, up 69% versus
prior year, resulted in adjusted diluted EPS of $0.24, based on
share count of 182.2 million. Adjusted EBITDA was $132.1 million,
up 53% versus prior year. Adjusted EBITDA as a percentage of
revenues expanded 410 basis points to 22.8% as compared to 18.7% in
the prior year.
In the second quarter, Gardner Denver generated $22.6 million of
cash flow from operating activities and invested $10.4 million in
capital expenditures, resulting in free cash flow of $12.2 million.
Second quarter net debt to adjusted EBITDA leverage improved to
3.8x from 7.3x as compared to the same period in the prior year,
and improved from 6.3x as compared to the first quarter of 2017.
The leverage improvement was primarily driven by the use of
proceeds from the initial public offering and improved adjusted
EBITDA performance over the past year.
Gardner Denver’s Chief Executive Officer, Vicente Reynal, said,
“I am very pleased with our performance in our first quarter as a
public company, and the execution of our value creation strategy.
We are focused on deploying and building talent across the
organization, expanding margins across each of our segments, and
accelerating profitable growth, all driven by effectively
allocating capital.”
Reynal further stated, “We demonstrated strong operating
leverage in the quarter as adjusted EBITDA margins expanded over
400 basis points to 22.8% with all three segments showing
meaningful expansion versus the prior year. Our strong cash flow
enabled us to continue to reinvest in the business through
strategic capital expenditures and acquire the LeROI Compressors
business. Looking ahead, we see solid demand momentum for
industrial air compression technology in the Americas and Europe
coupled with strength in upstream and downstream energy.”
Industrials
Second quarter 2017 performance:
- Revenues of $282.8 million, up 1%
versus prior year, and up 2% excluding the impact of FX
- Segment adjusted EBITDA of $63.4
million, up 16% from $54.6 million in the prior year
- Segment adjusted EBITDA margin of
22.4%, up 300 basis points from 19.4% in the prior year
Energy
Second quarter 2017 performance:
- Revenues of $239.5 million, up 94%
versus prior year, and up 95% excluding the impact of FX
- Segment adjusted EBITDA of $62.2
million, up 154% from $24.5 million in the prior year
- Segment adjusted EBITDA margin of
26.0%, up 620 basis points from 19.8% in the prior year
Medical
Second quarter 2017 performance:
- Revenues of $56.8 million, down 2%
versus prior year, and roughly flat excluding the impact of FX
- Segment adjusted EBITDA of $15.4
million, up 11% from $13.9 million in the prior year
- Segment adjusted EBITDA margin of
27.1%, up 300 basis points from 24.1% in the prior year
Outlook and Guidance
We expect full year 2017 adjusted EBITDA between $510 and $530
million. This reflects our strong first half performance, our
confidence in commercial and operational execution and the
continued improvement in end market demand.
Conference Call
Gardner Denver will broadcast a conference call to discuss
results for the second quarter of 2017 on Thursday, August 3, 2017
at 8:00 a.m. Eastern time (7:00 a.m. Central time) through a live
webcast. This free webcast will be available in listen-only mode
and can be accessed, for up to ninety days following the call,
through the Investors section on the Gardner Denver website.
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934. These statements include, but are not limited
to, statements related to our expectations regarding the
performance of our business, our financial results, our liquidity
and capital resources and other non-historical statements,
including the statements in the "Outlook and Guidance" section of
this press release. You can identify these forward-looking
statements by the use of words such as "outlook," "believes,"
"expects," "potential," "continues," "may," "will," "should,"
"could," "seeks," "projects," "predicts," "intends," "plans,"
"estimates," "anticipates" or the negative version of these words
or other comparable words. Such forward-looking statements are
subject to various risks and uncertainties, including macroeconomic
factors beyond the Company’s control, risks of doing business
outside the United States, the Company’s dependence on the level of
activity in the energy industry, potential governmental regulations
restricting the use of hydraulic fracturing, raw material costs and
availability, the risk of a loss or reduction of business with key
customers or consolidation or the vertical integration of the
Company’s customer base, loss of or disruption in the Company’s
distribution network, the risk that ongoing and expected
restructuring plans may not be as effective as the Company
anticipates, and the Company’s substantial indebtedness. Additional
factors that could cause Gardner Denver’s results to differ
materially from those described in the forward-looking statements
can be found under the section entitled "Risk Factors" in our
prospectus dated May 11, 2017, filed with the Securities and
Exchange Commission ("SEC") pursuant to Rule 424(b) of the
Securities Act on May 15, 2017, as such factors may be updated from
time to time in our periodic filings with the SEC, which are
accessible on the SEC's website at www.sec.gov. Accordingly, there
are or will be important factors that could cause actual outcomes
or results to differ materially from those indicated in these
statements. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this release and in our filings with the SEC.
We undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
About Gardner Denver
Gardner Denver (NYSE: GDI) is a leading global provider of
mission-critical flow control and compression equipment and
associated aftermarket parts, consumables and services, which it
sells across multiple attractive end-markets within the industrial,
energy and medical industries. Its broad and complete range of
compressor, pump, vacuum and blower products and services, along
with its application expertise and over 155 years of engineering
heritage, allows Gardner Denver to provide differentiated product
and service offerings for its customers' specific uses. Gardner
Denver supports its customers through its global geographic
footprint of 37 key manufacturing facilities, more than 30
complementary service and repair centers across six continents, and
approximately 6,100 employees world-wide.
Gardner Denver uses its website www.gardnerdenver.com as a
channel of distribution of Company information. Financial and other
important information regarding the Company is routinely accessible
through and posted on its website. Accordingly, investors should
monitor Gardner Denver’s website, in addition to following the
Company’s press releases, SEC filings and public conference calls
and webcasts. In addition, you may automatically receive e-mail
alerts and other information about Gardner Denver when you enroll
your e-mail address by visiting the “Email Alerts” section of
Gardner Denver’s website at http://investors.gardnerdenver.com.
Non-U.S. GAAP Measures of Financial Performance
In addition to consolidated GAAP financial measures, Gardner
Denver reviews various non-GAAP financial measures, including
“Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Diluted EPS”
and “Free Cash Flow.”
Gardner Denver believes Adjusted EBITDA, Adjusted Net Income and
Adjusted Diluted EPS are helpful supplemental measures to assist
management and investors in evaluating the Company’s operating
results as they exclude certain items whose fluctuation from period
to period do not necessarily correspond to changes in the
operations of Gardner Denver’s business. Adjusted EBITDA represents
net loss before interest, taxes, depreciation, amortization and
certain non-cash, non-recurring and other adjustment items.
Adjusted Net Income is defined as net loss including interest,
depreciation and amortization of non-acquisition related intangible
assets and excluding other items used to calculate Adjusted EBITDA
and further adjusted for the tax effect of these exclusions.
Gardner Denver believes that the adjustments applied in presenting
Adjusted EBITDA and Adjusted Net Income are appropriate to provide
additional information to investors about certain material non-cash
items and about non-recurring items that the Company does not
expect to continue at the same level in the future. Adjusted
Diluted EPS is defined as Adjusted Net Income divided by Adjusted
Diluted Average Shares Outstanding.
Gardner Denver uses Free Cash Flow to review the liquidity of
its operations. Gardner Denver measures Free Cash Flow as cash
flows from operating activities less capital expenditures. Gardner
Denver believes Free Cash Flow is a useful supplemental financial
measure for management and investors in assessing the Company’s
ability to pursue business opportunities and investments and to
service its debt. Free Cash Flow is not a measure of our liquidity
under GAAP and should not be considered as an alternative to cash
flows from operating activities.
Management and Gardner Denver’s board of directors regularly use
these measures as tools in evaluating the Company’s operating and
financial performance and in establishing discretionary annual
compensation. Such measures are provided in addition to, and should
not be considered to be a substitute for, or superior to, the
comparable measures under GAAP. In addition, Gardner Denver
believes that Adjusted EBITDA, Adjusted Net Income, Adjusted
Diluted EPS and Free Cash Flow are frequently used by investors and
other interested parties in the evaluation of issuers, many of
which also present Adjusted EBITDA, Adjusted Net Income, Adjusted
Diluted EPS and Free Cash Flow when reporting their results in an
effort to facilitate an understanding of their operating and
financial results and liquidity.
Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and
Free Cash Flow should not be considered as alternatives to net
loss, diluted earnings per share or any other performance measure
derived in accordance with GAAP, or as alternatives to cash flow
from operating activities as a measure of our liquidity. Adjusted
EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Free Cash
Flow have limitations as analytical tools, and you should not
consider such measures either in isolation or as substitutes for
analyzing Gardner Denver’s results as reported under GAAP.
Reconciliations of Adjusted EBITDA, Adjusted Net Income,
Adjusted Diluted EPS and Free Cash Flow to their most comparable
U.S. GAAP financial metrics for historical periods are presented in
the tables below.
Reconciliations of non-GAAP measures related to full year 2017
guidance have not been provided due to the unreasonable efforts it
would take to provide such reconciliations.
GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS AND LOSS PER SHARE TO ADJUSTED NET
INCOME AND ADJUSTED EARNINGS PER SHARE (Dollars in
millions, except per share amounts) (Unaudited)
For the Three For the
Six Month Period Ended Month Period Ended June
30, June 30, 2017
2016 2017 2016
Net Loss $ (146.3 ) $ (4.1 ) $ (153.2 ) $ (14.0 )
Basic and Diluted Loss Per Share (As Reported)1 $
(0.83 ) $ (0.03 ) $ (0.94 ) $ (0.09 ) Plus: Benefit for income
taxes (43.9 ) (10.9 ) (45.6 ) (24.1 ) Amortization of acquisition
related intangible assets 27.2 27.8 53.0 55.6 Impairment of
goodwill and other intangible assets - 1.5 - 1.5 Sponsor fees and
expenses 16.2 1.0 17.3 2.0 Restructuring and related business
transformation costs 5.6 18.7 14.2 28.0 Acquisition related
expenses and non-cash charges 1.2 0.8 1.9 1.6 Environmental
remediation loss reserve (0.1 ) - 0.9 - Expenses related to initial
public offering 3.9 - 6.5 - Stock-based compensation 156.2 - 156.2
- Loss on extinguishment of debt 50.4 - 50.4 - Other adjustments
5.6 (5.8 ) 6.8 (1.4 ) Minus: Income tax provision, as adjusted
32.3 3.1 44.5 5.3
Adjusted Net Income $ 43.7 $ 25.9 $
63.9 $ 43.9
Adjusted Basic Earnings Per Share
$ 0.25 $ 0.17 $ 0.39 $ 0.29
Adjusted
Diluted Earnings Per Share2 $ 0.24 $ 0.17
$ 0.38 $ 0.29 Average shares outstanding:
Basic and diluted, as reported 176.9 150.5 162.8 149.6 Incremental
diluted shares (treasury stock method)2 5.3
2.3 3.7 2.3 Adjusted diluted2
182.2 152.8 166.5
151.9 1 Due to net losses for all periods shown, basic and
diluted loss per share are the same. 2 Adjusted diluted share count
and adjusted diluted earnings per share include incremental
dilutive shares, using the treasury stock method, which are added
to average shares outstanding.
GARDNER DENVER HOLDINGS,
INC. AND SUBSIDIARIES RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA AND ADJUSTED NET INCOME AND CASH FLOWS - OPERATING
ACTIVITIES TO FREE CASH FLOW (Dollars in millions) (Unaudited)
For the
Three For the Six Month Period Ended Month
Period Ended June 30, June 30, 2017
2016 2017
2016 Net Loss $ (146.3 ) $ (4.1 ) $ (153.2 ) $
(14.0 ) Plus: Interest expense 39.5 42.7 85.3 85.8 Benefit for
income taxes (43.9 ) (10.9 ) (45.6 ) (24.1 ) Depreciation expense
13.3 12.2 25.4 23.9 Amortization expense 30.5 30.5 58.1 60.1
Impairment of goodwill and other intangible assets - 1.5 - 1.5
Sponsor fees and expenses 16.2 1.0 17.3 2.0 Restructuring and
related business transformation costs 5.6 18.7 14.2 28.0
Acquisition related expenses and non-cash charges 1.2 0.8 1.9 1.6
Environmental remediation loss reserve (0.1 ) - 0.9 - Expenses
related to initial public offering 3.9 - 6.5 - Stock-based
compensation 156.2 - 156.2 - Loss on extinguishment of debt 50.4 -
50.4 - Other adjustments 5.6 (5.8 ) 6.8
(1.4 )
Adjusted EBITDA $ 132.1 $ 86.6
$ 224.2 $ 163.4 Minus: Interest expense 39.5
42.7 85.3 85.8 Income tax provision, as adjusted 32.3 3.1 44.5 5.3
Depreciation expense 13.3 12.2 25.4 23.9 Amortization of
non-acquisition related intangible assets 3.3
2.7 5.1 4.5
Adjusted Net
Income $ 43.7 $ 25.9 $ 63.9 $ 43.9
Free Cash Flow Cash flows - operating activities 22.6 38.3
20.0 69.0 Minus: Capital expenditures 10.4
15.4 26.8 26.0
Free Cash
Flow $ 12.2 $ 22.9 $ (6.8 ) $ 43.0
GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO LOSS BEFORE INCOME
TAXES (Dollars in millions) (Unaudited)
For the Three For the
Six Month Period Ended Month Period Ended June
30, June 30, 2017
2016 2017 2016
Revenue Industrials $ 282.8 $ 280.8 $ 530.8 $
537.9 Energy 239.5 123.5 417.7 248.0 Medical 56.8
57.7 112.3 113.1
Total
Revenue $ 579.1 $ 462.0 $ 1,060.8 $ 899.0
Segment Adjusted EBITDA Industrials $ 63.4 $ 54.6 $
110.6 $ 100.6 Energy 62.2 24.5 100.6 48.2 Medical 15.4
13.9 30.1 28.2
Total Segment Adjusted EBITDA $ 141.0 $ 93.0 $ 241.3 $ 177.0
Less items to reconcile Segment Adjusted EBITDA to Loss Before
Income Taxes: Corporate expenses not allocated to segments $ 8.9 $
6.4 $ 17.1 $ 13.6 Interest expense 39.5 42.7 85.3 85.8 Depreciation
and amortization expense 43.8 42.7 83.5 84.0 Impairment of goodwill
and other intangible assets - 1.5 - 1.5 Sponsor fees and expenses
16.2 1.0 17.3 2.0 Restructuring and related business transformation
costs 5.6 18.7 14.2 28.0 Acquisition related expenses and non-cash
charges 1.2 0.8 1.9 1.6 Environmental remediation loss reserve (0.1
) - 0.9 - Expenses related to initial public offering 3.9 - 6.5 -
Stock-based compensation 156.2 - 156.2 - Loss on extinguishment of
debt 50.4 - 50.4 - Other adjustments 5.6 (5.8
) 6.8 (1.4 )
Loss Before Income Taxes $
(190.2 ) $ (15.0 ) $ (198.8 ) $ (38.1 )
GARDNER DENVER
HOLDINGS, INC. AND SUBSIDIARIES OVERVIEW OF BASIC AND
DILUTED SHARE COUNT (Dollars in millions, except per share
amounts) (Unaudited)
For the
Three For the Six Month Period Ended Month
Period Ended Total Year 2017 June 30, 2017
June 30, 2017 Estimate2 Average shares
outstanding: Basic and diluted, as reported 176.9 162.8 182.2
Incremental diluted shares (treasury stock method) 5.3 3.7 5.7
Adjusted diluted1 182.2 166.5 187.9 1 Adjusted diluted share count
assumes dilution of existing awards as of 6/30/2017 as if the
company was in a positive net income position 2 Total year 2017
share counts represent the full year weighted average shares
outstanding using H1’17 actuals and H2’17 forecast based on shares
outstanding and share price as of 6/30/2017
GARDNER
DENVER HOLDINGS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in millions,
except per share amounts) (Unaudited)
For the Three Month For the
Six Month Period Ended Period Ended June
30, June 30, 2017
2016 2017 2016
Revenues $ 579.1 $ 462.0 $ 1,060.8 $ 899.0
Cost of sales 363.2 290.5 670.3
568.7
Gross Profit 215.9 171.5 390.5
330.3 Selling and administrative expenses 125.6 106.4 228.1 209.4
Amortization of intangible assets 30.5 30.5 58.1 60.1 Impairment of
other intangible assets - 1.5 - 1.5 Other operating expense, net
161.4 7.1 169.3
13.7
Operating (Loss) Income (101.6 ) 26.0 (65.0 )
45.6 Interest expense 39.5 42.7 85.3 85.8 Loss on extinguishment of
debt 50.4 - 50.4 - Other income, net (1.3 ) (1.7 )
(1.9 ) (2.1 )
Loss Before Income Taxes (190.2
) (15.0 ) (198.8 ) (38.1 ) Benefit for income taxes (43.9 )
(10.9 ) (45.6 ) (24.1 )
Net Loss (146.3
) (4.1 ) (153.2 ) (14.0 ) Less: Net (loss) income attributable to
noncontrolling interests - (0.2 ) 0.1
(0.5 )
Net Loss Attributable to Gardner Denver Holdings,
Inc. $ (146.3 ) $ (3.9 ) $ (153.3 ) $ (13.5 ) Basic and diluted
loss per share $ (0.83 ) $ (0.03 ) $ (0.94 ) $ (0.09 )
GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Dollars in millions, except share
and per share amounts) (Unaudited)
June 30, December 31, 2017
2016 Assets Current assets: Cash
and cash equivalents $ 245.7 $ 255.8 Accounts receivable, net of
allowance for doubtful accounts of $19.7 and $18.7, respectively
475.2 441.6 Inventories 485.8 443.9 Other current assets
59.8 47.2 Total current assets 1,266.5
1,188.5 Property, plant and equipment, net of
accumulated depreciation of $172.9 and $146.1, respectively 356.2
358.4 Goodwill 1,200.1 1,154.7 Other intangible assets, net 1,459.8
1,469.9 Deferred tax assets 0.9 1.4 Other assets 139.4
143.1 Total assets $ 4,422.9 $ 4,316.0
Liabilities and Stockholders' Equity Current
liabilities: Short-term borrowings and current maturities of
long-term debt $ 5.9 $ 24.5 Accounts payable 246.4 214.9 Accrued
liabilities 248.4 258.5 Total current
liabilities 500.7 497.9 Long-term debt,
less current maturities 1,976.6 2,753.8 Pensions and other
postretirement benefits 129.5 122.7 Deferred income taxes 420.2
487.6 Other liabilities 186.9 182.2
Total liabilities 3,213.9 4,044.2
Commitments and contingencies (Note 14) Stockholders' equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized;
198,074,360 and 150,552,360 shares issued at June 30, 2017 and
December 31, 2016, respectively 2.0 1.5 Capital in excess of par
value 2,260.2 1,222.4 Accumulated deficit (749.5 ) (596.2 )
Accumulated other comprehensive loss (281.7 ) (342.4 ) Treasury
stock at cost; 2,120,112 and 1,897,454 shares at June 30, 2017 and
December 31, 2016, respectively (22.0 ) (19.4 ) Total
Gardner Denver Holdings, Inc. stockholders' equity 1,209.0
265.9 Noncontrolling interests -
5.9 Total stockholders' equity 1,209.0
271.8 Total liabilities and stockholders' equity $
4,422.9 $ 4,316.0
GARDNER DENVER HOLDINGS,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Dollars in millions) (Unaudited)
For the For the
Six Month Six Month Period Ended Period
Ended June 30, June 30, 2017
2016 Cash Flows From Operating
Activities: Net loss $ (153.2 ) $ (14.0 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Amortization of intangible assets 58.1 60.1 Depreciation in cost of
sales 21.3 20.2 Depreciation in selling and administrative expenses
4.1 3.7 Impairment of other intangible assets - 1.5 Stock-based
compensation expense 156.2 - Foreign currency transaction losses
(gains), net 4.7 (3.0 ) Net loss (gain) on asset dispositions 2.5
(0.1 ) Loss on extinguishment of debt 50.4 - Deferred income taxes
(60.1 ) (12.0 ) Changes in assets and liabilities: Receivables
(16.0 ) 16.6 Inventories (21.4 ) (17.0 ) Accounts payable 21.8 4.3
Accrued liabilities (37.6 ) 12.1 Other assets and liabilities, net
(10.8 ) (3.4 ) Net cash provided by operating
activities 20.0 69.0
Cash Flows From
Investing Activities: Capital expenditures (26.8 ) (26.0 ) Net
cash paid in business combinations (18.8 ) - Disposals of property,
plant and equipment 5.0 0.2 Net cash
used in investing activities (40.6 ) (25.8 )
Cash
Flows From Financing Activities: Principal payments on
long-term debt (859.4 ) (13.9 ) Premium paid on extinguishment of
senior notes (29.7 ) - Proceeds from long-term debt - 1.0 Proceeds
from the issuance of common stock, net of share issuance costs
897.3 2.9 Purchase of treasury stock (2.6 ) (10.6 ) Purchase of
shares from noncontrolling interests (4.7 ) - Payments of debt
issuance costs (0.3 ) (1.1 ) Other 0.2 (0.8 )
Net cash provided by (used in) financing activities 0.8
(22.5 ) Effect of exchange rate changes on cash and
cash equivalents 9.7 (2.6 ) Net (decrease)
increase in cash and cash equivalents (10.1 ) 18.1 Cash and cash
equivalents, beginning of period 255.8 228.3
Cash and cash equivalents, end of period $ 245.7 $
246.4
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version on businesswire.com: http://www.businesswire.com/news/home/20170802006474/en/
Gardner Denver Holdings, Inc.Investor Relations ContactVikram
Kini(414) 212-4753vikram.kini@gardnerdenver.com
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