Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Gardner Denver Reports Fourth Quarter and Full Year 2019 Results


Gardner Denver Holdings, Inc. (NYSE: GDI) announced today fourth quarter and full year 2019 results.

Fourth quarter revenues of $606 million were down 15% compared to the prior year and down 14% excluding the impact of FX. Net income in the quarter was $26 million, or $0.12 per share based on share count of 209 million, compared to prior year net income of $95 million, or $0.45 per share based on share count of 208 million. Adjusted net income decreased 35% to $77 million, or $0.37 per share, compared to $119 million, or $0.57 per share, in the prior year. Adjusted EBITDA was $135 million, down 29% compared to the prior year, and Adjusted EBITDA as a percentage of revenues finished at 22.3%.

In the fourth quarter, Gardner Denver generated $99 million of cash flow from operating activities and invested $9 million in capital expenditures, resulting in free cash flow of $90 million, compared to $126 million in the prior year. Fourth quarter net debt to Adjusted EBITDA leverage improved to 2.0x, from 2.1x in the prior year.

Total revenues for 2019 were $2.5 billion, down 9% compared to the prior year and down 6% excluding the impact of FX. Net income for the year was $159 million, or $0.76 per share based on share count of 209 million compared to prior year of $269 million, or $1.29 per share based on share count of 209 million. Adjusted net income decreased 16% to $332 million, or $1.59 per share, compared to $395 million, or $1.89 per share, in the prior year. Adjusted EBITDA was $565 million, down 17% compared to the prior year. Adjusted EBITDA as a percentage of revenues decreased 230 basis points to 23.0% as compared to 25.3% in the prior year. Gardner Denver generated $343 million of cash flow from operating activities in the year and invested $43 million in capital expenditures, resulting in free cash flow of $300 million, or 189% of reported net income.

Business Trends

"2019 was a solid year for Gardner Denver as we remained focused on our strategy in the midst of challenging market conditions," said Vicente Reynal, Chief Executive Officer. "Through the use of the Gardner Denver Execution Excellence process ("GDX"), the team was able to execute both commercially and operationally and proactively managed our cost base as market conditions remained challenged across the majority of our businesses. The results are evident in our financials, as the Industrials, mid and downstream Energy and Medical businesses collectively grew 3% excluding FX and expanded Adjusted EBITDA margins by 80 basis points, with each business showing positive year over year margin expansion. I am particularly pleased with the progress we have seen in the Industrials and Medical segments as both businesses finished the year at record Adjusted EBITDA margin. In the upstream Energy business, the team took decisive action to right-size the cost structure of the business given known headwinds in the oil and gas markets, resulting in healthy Adjusted EBITDA margins that remain above the overall Energy segment average. The mentality of focusing on those areas within our control was also visible in our cash generation as the teams continued to drive strong working capital performance, resulting in $300 million of free cash flow for the year and free cash flow conversion well in excess of 100%."

"In the fourth quarter, our Industrials segment delivered flat revenue growth and saw orders decline by 3%, both FX-adjusted, against strong prior year comps. From a regional perspective, both the Americas and Europe saw low single digit FX-adjusted revenue declines and APAC saw strong double digit growth driven primarily by growth in niche products and solid execution on custom projects. Margins were a particular highlight as the segment delivered 23.7% Adjusted EBITDA margin, an improvement of 50 basis points from prior year and 150 basis points sequentially from the third quarter, driven by the benefits from the Innovate to Value initiative ("i2V"), the previously announced restructuring actions and ongoing productivity initiatives," continued Reynal.

"Within our Energy segment, the upstream business performed above expectations, due to increased penetration of our newly introduced products and solutions, to limit sequential revenue declines to 21%. The mid and downstream businesses experienced low double digit FX-adjusted revenue declines against strong prior year comps as market conditions were similar to what we saw in our Industrials segment. In the Medical segment, solid performance across both gas and liquid pump markets led to flat FX-adjusted revenue growth, and 60 basis points of Adjusted EBITDA margin expansion against strong prior year comps of 19% revenue growth and 360 basis points of margin expansion," stated Reynal.

Fourth quarter 2019 performance:

Industrials

- Orders of $308 million, down 5% compared to the prior year, and down 3% excluding the impact of FX; on top of 4% growth in the prior year excluding the impact of FX

- Revenues of $333 million, down 1% compared to the prior year, and flat excluding the impact of FX; on top of 11% growth in the prior year excluding the impact of FX

- Segment Adjusted EBITDA of $79 million, up 1% from $78 million in the prior year

- Segment Adjusted EBITDA margin of 23.7%, up 50 basis points from 23.2% in the prior year, driven by operational efficiencies, including i2V and targeted cost reductions

Energy

- Orders of $172 million, down 36% compared to the prior year, and down 35% excluding the impact of FX

- Upstream Energy orders of $79 million, down 52% compared to the prior year

- Revenues of $206 million, down 33% compared to the prior year, and down 32% excluding the impact of FX

- Upstream Energy revenues of $79 million, down 50% compared to the prior year

- Segment Adjusted EBITDA of $53 million, down 44% from $95 million in the prior year

- Segment Adjusted EBITDA margin of 26.0%, down 500 basis points from 31.0% in the prior year, driven by the expected declines in the upstream business

Medical

- Orders of $64 million, down 3% compared to the prior year, and down 2% excluding the impact of FX

- Revenues of $67 million, down 2% compared to the prior year, and flat excluding the impact of FX; on top of 19% growth in the prior year excluding the impact of FX

- Segment Adjusted EBITDA of $21 million, flat to the prior year

- Segment Adjusted EBITDA margin of 30.8%, up 60 basis points from 30.2% in the prior year, driven by operational efficiencies and targeted cost reductions

2020 Guidance and Outlook

"Looking ahead to 2020, we expect market conditions to remain largely in line with what we saw at the end of 2019," stated Reynal. "Given current forecasts for Industrial Production and other macro-economic factors, we expect our Industrial segment growth to be flat to down low single digits. In addition, we expect upstream Energy to be down approximately 20% due to lower forecasted capital spending from our customers and decreased well completion activity. The mid and downstream Energy and Medical businesses are expected to perform comparatively better. As a result, we are expecting low single digit revenue declines across the total company with FX expected to be relatively flat to prior year levels. We are introducing full year 2020 guidance for Adjusted EBITDA of $540 million to $570 million. In addition, we expect free cash flow to be within a range of $280 million to $300 million and free cash flow to reported net income conversion in excess of 100%. It is worth noting that this guidance for 2020 does not include any anticipated total year impact from the Coronavirus outbreak. China is a relatively small percentage of our overall revenue base and while we do expect to see shipment deferrals in the first quarter, we currently expect that revenue to shift to the remainder of the year. Most importantly, the safety and well-being of our employees remains our utmost concern and we will continue to monitor the situation in terms of any impact to our people, customers and supply chain."

Conference Call

Gardner Denver will broadcast a conference call to discuss results for the fourth quarter of 2019 on Tuesday, February 18, 2020 at 8:00 a.m. Eastern time (7:00 a.m. Central time) through a live webcast. This 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 at http://investors.gardnerdenver.com.

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 "Business Trends" and "2020 Guidance and Outlook" sections of this press release. You can identify these forward-looking statements by the use of words such as "outlook," "guidance," "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 relating to the pending merger between Ingersoll-Rand plc's ("Ingersoll-Rand") Industrial segment ("Ingersoll Rand Industrial") and Gardner Denver, including that conditions to such merger may not be satisfied, that such pending merger may require significant time and attention of Gardner Denver's management, and that such pending merger may have a material adverse effect on Gardner Denver whether or not it is completed, 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 most recent annual report on form 10-K filed with the Securities and Exchange Commission ("SEC"), 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.

IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the pending merger transaction between Gardner Denver and Ingersoll Rand Industrial U.S. Holdco, Inc. ("Ingersoll Rand Industrial"), Gardner Denver and Ingersoll Rand Industrial have filed registration statements with the SEC registering shares of Gardner Denver common stock and Ingersoll Rand Industrial common stock in connection with the proposed transaction. Gardner Denver has also filed a proxy statement, which has been sent to the Gardner Denver shareholders in connection with their vote required in connection with the proposed transaction. Ingersoll-Rand shareholders are urged to read the prospectus and/or information statement that will be included in the registration statements and any other relevant documents when they become available, and Gardner Denver stockholders are urged to read the proxy statement and any other relevant documents when they become available, because they contain important information about Gardner Denver, Ingersoll Rand Industrial and the proposed transaction. The proxy statement, prospectus and/or information statement, and other documents relating to the proposed transactions (when they become available) can be obtained free of charge from the SEC's website at www.sec.gov. The proxy statement, prospectus and/or information statement and other documents (when they are available) are also available free of charge on Ingersoll-Rand's website at http://ir.ingersollrand.com or on Gardner Denver's website at https://investors.gardnerdenver.com. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the stockholders of Gardner Denver in connection with the proposed transaction is set forth in the proxy statement/prospectus filed with the SEC.

NO OFFER OR SOLICITATION

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

This press release is not a solicitation of a proxy from any security holder of Gardner Denver. However, Ingersoll-Rand, Gardner Denver and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from shareholders of Gardner Denver in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of Ingersoll-Rand may be found in its Annual Report on Form 10-K filed with the SEC on February 12, 2019 and its definitive proxy statement relating to its 2019 Annual Meeting of Shareholders filed with the SEC on April 23, 2019. Information about the directors and executive officers of Gardner Denver may be found in its Annual Report on Form 10-K filed with the SEC on February 27, 2019, and its definitive proxy statement relating to its 2019 Annual Meeting of Stockholders filed with the SEC on March 26, 2019.

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 38 key manufacturing facilities, more than 30 complementary service and repair centers across six continents, and approximately 6,600 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," "Free Cash Flow" and "Free Cash Flow conversion."

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 that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of Gardner Denver's business. Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income 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 and Free Cash Flow conversion to review the liquidity of its operations. Gardner Denver measures Free Cash Flow as cash flows from operating activities less capital expenditures and Free Cash Flow conversion as Free Cash Flow divided by net income. Gardner Denver believes Free Cash Flow and Free Cash Flow conversion are useful supplemental financial measures for management and investors in assessing the Company's ability to pursue business opportunities and investments and to service its debt. Free Cash Flow and Free Cash Flow conversion are not measures of our liquidity under GAAP and should not be considered as alternatives 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, Free Cash Flow and Free Cash Flow conversion 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, Free Cash Flow and Free Cash Flow conversion 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, Free Cash Flow and Free Cash Flow conversion should not be considered as alternatives to net income, 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, Free Cash Flow and Free Cash Flow conversion 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 2020 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for acquisitions related expenses, restructuring and other business transformation costs, gains or losses on foreign currency exchange and the timing and magnitude of other amounts in the reconciliation of historic numbers. For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per share amounts)

(Unaudited)

 

For the Three Month period ended

 

For the Year Ended

December 31,

 

December 31,

2019

 

2018

 

2019

 

2018

 
Revenues

$

605.8

 

$

712.7

 

$

2,451.9

 

$

2,689.8

 

Cost of sales

 

380.5

 

 

443.8

 

 

1,540.2

 

 

1,677.3

 

Gross Profit

 

225.3

 

 

268.9

 

 

911.7

 

 

1,012.5

 

Selling and administrative expenses

 

113.4

 

 

104.2

 

 

436.4

 

 

434.6

 

Amortization of intangible assets

 

31.6

 

 

32.4

 

 

124.3

 

 

125.8

 

Other operating expense (income), net

 

32.7

 

 

(1.8

)

 

75.7

 

 

9.1

 

Operating Income

 

47.6

 

 

134.1

 

 

275.3

 

 

443.0

 

Interest expense

 

20.9

 

 

23.1

 

 

88.9

 

 

99.6

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

0.2

 

 

1.1

 

Other income, net

 

(1.6

)

 

(0.4

)

 

(4.7

)

 

(7.2

)

Income Before Income Taxes

 

28.3

 

 

111.4

 

 

190.9

 

 

349.5

 

Provision for income taxes

 

2.5

 

 

16.9

 

 

31.8

 

 

80.1

 

Net Income

$

25.8

 

$

94.5

 

$

159.1

 

$

269.4

 

Basic earnings per share

$

0.13

 

$

0.47

 

$

0.78

 

$

1.34

 

Diluted earnings per share

$

0.12

 

$

0.45

 

$

0.76

 

$

1.29

 

GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

 

 

 

 

2019

 

2018

 

Assets
Current assets:
Cash and cash equivalents

$

505.5

 

$

221.2

 

Accounts receivable, net of allowance for doubtful accounts
of $18.4 and $17.4, respectively

 

459.1

 

 

525.4

 

Inventories

 

502.5

 

 

523.9

 

Other current assets

 

76.8

 

 

60.7

 

Total current assets

 

1,543.9

 

 

1,331.2

 

Property, plant and equipment, net of accumulated depreciation
of $298.4 and $250.0, respectively

 

326.6

 

 

356.6

 

Goodwill

 

1,287.7

 

 

1,289.5

 

Other intangible assets, net

 

1,255.0

 

 

1,368.4

 

Deferred tax assets

 

3.0

 

 

1.3

 

Other assets

 

212.2

 

 

140.1

 

Total assets

$

4,628.4

 

$

4,487.1

 

Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt

$

7.6

 

$

7.9

 

Accounts payable

 

322.9

 

 

340.0

 

Accrued liabilities

 

244.1

 

 

248.5

 

Total current liabilities

 

574.6

 

 

596.4

 

Long-term debt, less current maturities

 

1,603.8

 

 

1,664.2

 

Pensions and other postretirement benefits

 

99.7

 

 

94.8

 

Deferred income taxes

 

251.0

 

 

265.5

 

Other liabilities

 

229.4

 

 

190.2

 

Total liabilities

 

2,758.5

 

 

2,811.1

 

Stockholders' equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized;
206,767,529 and 201,051,291 shares issued at December 31, 2019
and December 31, 2018, respectively

 

2.1

 

 

2.0

 

Capital in excess of par value

 

2,302.0

 

 

2,282.7

 

Accumulated deficit

 

(141.4

)

 

(308.7

)

Accumulated other comprehensive loss

 

(256.0

)

 

(247.0

)

Treasury stock at cost; 1,701,785 and 2,881,436 shares at
December 31, 2019 and 2018, respectively

 

(36.8

)

 

(53.0

)

Total stockholders' equity

 

1,869.9

 

 

1,676.0

 

Total liabilities and stockholders' equity

$

4,628.4

 

$

4,487.1

 

GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

For the

 

For the

Year Ended

 

Year Ended

December 31,

 

December 31,

2019

 

2018

 
Cash Flows From Operating Activities:
Net income

$

159.1

 

$

269.4

 

Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of intangible assets

 

124.3

 

 

125.8

 

Depreciation in cost of sales

 

44.3

 

 

44.8

 

Depreciation in selling and administrative expenses

 

9.5

 

 

9.8

 

Non-cash restructuring charges

 

3.3

 

 

-

 

Stock-based compensation expense

 

19.2

 

 

2.8

 

Foreign currency transaction losses (gains), net

 

8.1

 

 

(1.9

)

Net loss (gain) on asset disposition

 

0.8

 

 

(1.1

)

Loss on extinguishment of debt

 

0.2

 

 

1.1

 

Non-cash change in LIFO reserve

 

0.2

 

 

0.2

 

Deferred income taxes

 

(21.3

)

 

4.0

 

Changes in assets and liabilities
Receivables

 

54.7

 

 

13.2

 

Inventories

 

18.7

 

 

(13.0

)

Accounts payable

 

(9.2

)

 

69.6

 

Accrued liabilities

 

(26.1

)

 

(38.9

)

Other assets and liabilities, net

 

(42.5

)

 

(41.3

)

Net cash provided by operating activities

 

343.3

 

 

444.5

 

Cash Flows From Investing Activities:
Capital expenditures

 

(43.2

)

 

(52.2

)

Net cash paid in business combinations

 

(12.0

)

 

(186.3

)

Disposals of property, plant and equipment

 

0.9

 

 

3.5

 

Net cash used in investing activities

 

(54.3

)

 

(235.0

)

Cash Flows From Financing Activities:
Principal payments on long-term debt

 

(32.8

)

 

(337.6

)

Purchases of treasury stock

 

(18.6

)

 

(40.7

)

Proceeds from stock option exercises

 

42.7

 

 

6.8

 

Payments of contingent consideration

 

(2.3

)

 

(1.4

)

Payments of debt issuance costs

 

(0.5

)

 

-

 

Other

 

-

 

 

(0.1

)

Net cash used in financing activities

 

(11.5

)

 

(373.0

)

Effect of exchange rate changes on cash and cash equivalents

 

6.8

 

 

(8.6

)

Increase (decrease) in cash and cash equivalents

 

284.3

 

 

(172.1

)

Cash and cash equivalents, beginning of year

 

221.2

 

 

393.3

 

Cash and cash equivalents, end of year

$

505.5

 

$

221.2

 

GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE TO ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

(Dollars in millions, except per share amounts)

(Unaudited)

 

For the Three

 

For the

Month Period Ended

 

Year Ended

December 31,

 

December 31,

2019

 

2018

 

2019

 

2018

Net Income

$

25.8

 

$

94.5

 

$

159.1

 

$

269.4

 

Basic Earnings Per Share (As Reported)

$

0.13

 

$

0.47

 

$

0.78

 

$

1.34

 

Diluted Earnings Per Share (As Reported)

$

0.12

 

$

0.45

 

$

0.76

 

$

1.29

 

Plus:
Provision for income taxes

 

2.5

 

 

16.9

 

 

31.8

 

 

80.1

 

Amortization of acquisition related intangible assets

 

28.0

 

 

29.1

 

 

112.5

 

 

111.9

 

Restructuring and related business transformation costs

 

9.6

 

 

13.6

 

 

25.6

 

 

38.8

 

Acquisition related expenses and non-cash charges

 

20.0

 

 

3.6

 

 

54.6

 

 

16.7

 

Environmental remediation loss reserve

 

-

 

 

-

 

 

0.1

 

 

-

 

Expenses related to public stock offerings

 

-

 

 

0.7

 

 

-

 

 

2.9

 

Establish public company financial reporting compliance

 

-

 

 

1.1

 

 

0.6

 

 

4.3

 

Stock-based compensation

 

6.2

 

 

(5.3

)

 

23.1

 

 

(2.3

)

Loss on extinguishment of debt

 

-

 

 

-

 

 

0.2

 

 

1.1

 

Foreign currency transaction losses (gains), net

 

5.0

 

 

(1.3

)

 

8.1

 

 

(1.9

)

Shareholder litigation settlement recoveries

 

-

 

 

(5.0

)

 

(6.0

)

 

(9.5

)

Other adjustments

 

(0.2

)

 

2.2

 

 

0.6

 

 

2.2

 

Minus:
Income tax provision, as adjusted

 

20.1

 

 

31.2

 

 

77.9

 

 

119.0

 

Adjusted Net Income

$

76.8

 

$

118.9

 

$

332.4

 

$

394.7

 

Adjusted Basic Earnings Per Share

$

0.38

 

$

0.59

 

$

1.63

 

$

1.96

 

Adjusted Diluted Earnings Per Share1

$

0.37

 

$

0.57

 

$

1.59

 

$

1.89

 

 
Average shares outstanding:
Basic, as reported

 

204.8

 

 

201.1

 

 

203.5

 

 

201.6

 

Diluted, as reported

 

209.4

 

 

207.7

 

 

208.9

 

 

209.1

 

Adjusted diluted1

 

209.4

 

 

207.7

 

 

208.9

 

 

209.1

 

 
 
1 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 INCOME 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

Month Period Ended

 

Year Ended

December 31,

 

December 31,

2019

 

2018

 

2019

 

2018

Net Income

$

25.8

 

$

94.5

 

$

159.1

 

$

269.4

 

Plus:
Interest expense

 

20.9

 

 

23.1

 

 

88.9

 

 

99.6

 

Provision for income taxes

 

2.5

 

 

16.9

 

 

31.8

 

 

80.1

 

Depreciation expense

 

13.5

 

 

13.3

 

 

53.8

 

 

54.6

 

Amortization expense

 

31.6

 

 

32.4

 

 

124.3

 

 

125.8

 

Restructuring and related business transformation costs

 

9.6

 

 

13.6

 

 

25.6

 

 

38.8

 

Acquisition related expenses and non-cash charges

 

20.0

 

 

3.6

 

 

54.6

 

 

16.7

 

Environmental remediation loss reserve

 

-

 

 

-

 

 

0.1

 

 

-

 

Expenses related to public stock offerings

 

-

 

 

0.7

 

 

-

 

 

2.9

 

Establish public company financial reporting compliance

 

-

 

 

1.1

 

 

0.6

 

 

4.3

 

Stock-based compensation

 

6.2

 

 

(5.3

)

 

23.1

 

 

(2.3

)

Loss on extinguishment of debt

 

-

 

 

-

 

 

0.2

 

 

1.1

 

Foreign currency transaction losses (gains), net

 

5.0

 

 

(1.3

)

 

8.1

 

 

(1.9

)

Shareholder litigation settlement recoveries

 

-

 

 

(5.0

)

 

(6.0

)

 

(9.5

)

Other adjustments

 

(0.2

)

 

2.2

 

 

0.6

 

 

2.2

 

Adjusted EBITDA

$

134.9

 

$

189.8

 

$

564.8

 

$

681.8

 

Minus:
Interest expense

 

20.9

 

 

23.1

 

 

88.9

 

 

99.6

 

Income tax provision, as adjusted

 

20.1

 

 

31.2

 

 

77.9

 

 

119.0

 

Depreciation expense

 

13.5

 

 

13.3

 

 

53.8

 

 

54.6

 

Amortization of non-acquisition related intangible assets

 

3.6

 

 

3.3

 

 

11.8

 

 

13.9

 

Adjusted Net Income

$

76.8

 

$

118.9

 

$

332.4

 

$

394.7

 

Free Cash Flow
Cash flows - operating activities

 

99.0

 

 

146.2

 

 

343.3

 

 

444.5

 

Minus:
Capital expenditures

 

9.4

 

 

20.1

 

 

43.2

 

 

52.2

 

Free Cash Flow

$

89.6

 

$

126.1

 

$

300.1

 

$

392.3

 

GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO INCOME BEFORE INCOME TAXES

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three

 

For the

 

 

 

 

 

 

 

Month Period Ended

 

Year Ended

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

 

 

 

2019

 

2018

 

2019

 

2018

 
Revenue
Industrials

$

333.1

 

$

337.6

 

$

1,301.3

 

$

1,303.3

 

Energy

 

205.8

 

 

307.0

 

 

870.2

 

 

1,121.1

 

Medical

 

66.9

 

 

68.1

 

 

280.4

 

 

265.4

 

Total Revenue

$

605.8

 

$

712.7

 

$

2,451.9

 

$

2,689.8

 

Segment Adjusted EBITDA
Industrials

$

78.8

 

$

78.2

 

$

296.6

 

$

288.2

 

Energy

 

53.5

 

 

95.3

 

 

225.1

 

 

337.8

 

Medical

 

20.6

 

 

20.6

 

 

84.4

 

 

75.0

 

Total Segment Adjusted EBITDA

$

152.9

 

$

194.1

 

$

606.1

 

$

701.0

 

Less items to reconcile Segment Adjusted EBITDA to
Income Before Income Taxes:
Corporate expenses not allocated to segments

$

18.0

 

$

4.3

 

$

41.3

 

$

19.2

 

Interest expense

 

20.9

 

 

23.1

 

 

88.9

 

 

99.6

 

Depreciation and amortization expense

 

45.1

 

 

45.7

 

 

178.1

 

 

180.4

 

Restructuring and related business transformation costs

 

9.6

 

 

13.6

 

 

25.6

 

 

38.8

 

Acquisition related expenses and non-cash charges

 

20.0

 

 

3.6

 

 

54.6

 

 

16.7

 

Environmental remediation loss reserve

 

-

 

 

-

 

 

0.1

 

 

-

 

Expenses related to public stock offerings

 

-

 

 

0.7

 

 

-

 

 

2.9

 

Establish public company financial reporting compliance

 

-

 

 

1.1

 

 

0.6

 

 

4.3

 

Stock-based compensation

 

6.2

 

 

(5.3

)

 

23.1

 

 

(2.3

)

Loss on extinguishment of debt

 

-

 

 

-

 

 

0.2

 

 

1.1

 

Foreign currency transaction losses (gains), net

 

5.0

 

 

(1.3

)

 

8.1

 

 

(1.9

)

Shareholder litigation settlement recoveries

 

-

 

 

(5.0

)

 

(6.0

)

 

(9.5

)

Other adjustments

 

(0.2

)

 

2.2

 

 

0.6

 

 

2.2

 

Income Before Income Taxes

$

28.3

 

$

111.4

 

$

190.9

 

$

349.5

 

 


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