Delaware | 001-38095 | 46-2393770 |
(State or other jurisdiction
of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
⃞ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
⃞ |
Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)
|
⃞ |
Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))
|
⃞ |
Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e− 4(c))
|
Emerging growth company
|
☐
|
ITEM 2.02
|
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
ITEM 9.01
|
FINANCIAL STATEMENTS AND EXHIBITS
|
Gardner Denver Holdings, Inc.
|
||
Date: February 19, 2019
|
By:
|
/s/ Andrew Schiesl
|
Name:
|
Andrew Schiesl
|
|
Title:
|
Vice President, General Counsel, Chief Compliance Officer and Secretary
|
· |
Revenues of $713 million up 7% over prior year and up 10% excluding the impact of foreign exchange (“FX”).
|
· |
Reported net income of $95 million compared to prior year of $144 million, which included a $95 million benefit due to the effects of tax reform changes
|
· |
Adjusted EBITDA of $190 million up 10% over prior year with a margin of 26.6%, up 60 basis points
|
· |
Free cash flow of $126 million up 31% over prior year
|
· |
Net operating working capital as a percentage of revenues of 24.0%, an improvement of 570 basis points from prior year
|
· |
Debt repayment of $75 million from cash on hand
|
· |
Record revenues of $2.7 billion, up 13% over prior year
|
· |
Reported net income of $269 million compared to prior year of $18 million
|
· |
Adjusted EBITDA of $682 million up 21% over prior year, reflecting a margin of 25.3%, up 170 basis points
|
· |
Free cash flow of $392 million up 173% over prior year
|
· |
Debt repayment of $338 million and closed four strategic acquisitions for $186 million from cash on hand
|
· |
Net debt to Adjusted EBITDA leverage ratio of 2.1x, an improvement of 0.8x from prior year
|
- |
Orders of $323 million, up 1% over prior year, and up 4% excluding the impact of FX; on top of 25% growth in the fourth quarter of prior year
|
- |
Revenues of $338 million, up 8% over prior year, and up 11% excluding the impact of FX
|
- |
Segment Adjusted EBITDA of $78 million, up 13% from $69 million in the prior year
|
- |
Segment Adjusted EBITDA margin of 23.2%, up 110 basis points from 22.1% in the prior year, driven by volume growth, operational efficiencies, i2V and targeted cost
reductions
|
- |
Orders of $269 million, down 4% from prior year, and down 3% excluding the impact of FX
|
- |
Upstream Energy orders of $165 million, up 2% over prior year excluding the impact of FX; on top of 154% growth in the fourth quarter of prior year
|
- |
Revenues of $307 million, up 4% over prior year, and up 6% excluding the impact of FX
|
- |
Upstream Energy revenues of $159 million, up 1% over prior year excluding the impact of FX; on top of 99% growth in the fourth quarter of prior year
|
- |
Segment Adjusted EBITDA of $95 million, down 2% from $97 million in the prior year
|
- |
Segment Adjusted EBITDA margin of 31.0%, down 180 basis points from 32.8% in the prior year, driven primarily by mix, including large midstream project shipments
and higher upstream frac pump shipments
|
- |
Orders of $66 million, down 1% from prior year, and up 1% excluding the impact of FX; on top of 29% growth in the fourth quarter of prior year
|
- |
Revenues of $68 million, up 17% over prior year, and up 19% excluding the impact of FX
|
- |
Segment Adjusted EBITDA of $21 million, up 33% from $16 million in the prior year
|
- |
Segment Adjusted EBITDA margin of 30.2%, up 360 basis points from 26.6% in the prior year, driven by strong volume growth, operational efficiencies and targeted
cost reductions
|
For the Three Month period ended
December 31,
|
For the Year Ended
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenues
|
$
|
712.7
|
$
|
665.0
|
$
|
2,689.8
|
$
|
2,375.4
|
||||||||
Cost of sales
|
443.8
|
411.5
|
1,677.3
|
1,477.5
|
||||||||||||
Gross Profit
|
268.9
|
253.5
|
1,012.5
|
897.9
|
||||||||||||
Selling and administrative expenses
|
104.2
|
107.3
|
434.6
|
446.2
|
||||||||||||
Amortization of intangible assets
|
32.4
|
31.3
|
125.8
|
118.9
|
||||||||||||
Impairment of other intangible assets
|
-
|
1.6
|
-
|
1.6
|
||||||||||||
Other operating (income) expense, net
|
(1.8
|
)
|
35.4
|
9.1
|
222.1
|
|||||||||||
Operating Income
|
134.1
|
77.9
|
443.0
|
109.1
|
||||||||||||
Interest expense
|
23.1
|
25.2
|
99.6
|
140.7
|
||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
1.1
|
84.5
|
||||||||||||
Other income, net
|
(0.4
|
)
|
(1.0
|
)
|
(7.2
|
)
|
(3.4
|
)
|
||||||||
Income (Loss) Before Income Taxes
|
111.4
|
53.7
|
349.5
|
(112.7
|
)
|
|||||||||||
Provision (benefit) for income taxes
|
16.9
|
(90.1
|
)
|
80.1
|
(131.2
|
)
|
||||||||||
Net Income
|
94.5
|
143.8
|
269.4
|
18.5
|
||||||||||||
Less: Net income attributable to noncontrolling interests
|
-
|
-
|
-
|
0.1
|
||||||||||||
Net Income Attributable to Gardner Denver Holdings, Inc.
|
$
|
94.5
|
$
|
143.8
|
$
|
269.4
|
$
|
18.4
|
||||||||
Basic earnings per share
|
$
|
0.47
|
$
|
0.71
|
$
|
1.34
|
$
|
0.10
|
||||||||
Diluted earnings per share
|
$
|
0.45
|
$
|
0.69
|
$
|
1.29
|
$
|
0.10
|
December 31,
2018
|
December 31,
2017
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
221.2
|
$
|
393.3
|
||||
Accounts receivable, net of allowance for doubtful accounts of $17.4 and $18.7, respectively
|
525.4
|
536.3
|
||||||
Inventories
|
523.9
|
494.5
|
||||||
Other current assets
|
60.7
|
39.5
|
||||||
Total current assets
|
1,331.2
|
1,463.6
|
||||||
Property, plant and equipment, net of accumulated depreciation of $250.0 and $203.8, respectively
|
356.6
|
363.2
|
||||||
Goodwill
|
1,289.5
|
1,227.6
|
||||||
Other intangible assets, net
|
1,368.4
|
1,431.2
|
||||||
Deferred tax assets
|
1.3
|
1.0
|
||||||
Other assets
|
140.1
|
134.6
|
||||||
Total assets
|
$
|
4,487.1
|
$
|
4,621.2
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Short-term borrowings and current maturities of long-term debt
|
$
|
7.9
|
$
|
20.9
|
||||
Accounts payable
|
340.0
|
269.7
|
||||||
Accrued liabilities
|
248.5
|
271.2
|
||||||
Total current liabilities
|
596.4
|
561.8
|
||||||
Long-term debt, less current maturities
|
1,664.2
|
2,019.3
|
||||||
Pensions and other postretirement benefits
|
94.8
|
99.8
|
||||||
Deferred income taxes
|
265.5
|
237.5
|
||||||
Other liabilities
|
190.2
|
226.0
|
||||||
Total liabilities
|
2,811.1
|
3,144.4
|
||||||
Stockholders' equity:
|
||||||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 201,051,291 and 198,377,237 shares issued at December 31, 2018 and December 31, 2017, respectively
|
2.0
|
2.0
|
||||||
Capital in excess of par value
|
2,282.7
|
2,275.4
|
||||||
Accumulated deficit
|
(308.7
|
)
|
(577.8
|
)
|
||||
Accumulated other comprehensive loss
|
(247.0
|
)
|
(199.8
|
)
|
||||
Treasury stock at cost; 2,881,436 and 2,159,266 shares at December 31, 2018 and 2017, respectively
|
(53.0
|
)
|
(23.0
|
)
|
||||
Total stockholders' equity
|
1,676.0
|
1,476.8
|
||||||
Total liabilities and stockholders' equity
|
$
|
4,487.1
|
$
|
4,621.2
|
For the
Year Ended
December 31, |
For the
Year Ended
December 31,
2017
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$
|
269.4
|
$
|
18.5
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of intangible assets
|
125.8
|
118.9
|
||||||
Depreciation in cost of sales
|
44.8
|
46.6
|
||||||
Depreciation in selling and administrative expenses
|
9.8
|
8.3
|
||||||
Impairment of other intangible assets
|
-
|
1.6
|
||||||
Stock-based compensation expense
|
2.8
|
175.0
|
||||||
Foreign currency transaction (gains) losses, net
|
(1.9
|
)
|
9.3
|
|||||
Net (gain) loss on asset dispositions
|
(1.1
|
)
|
0.8
|
|||||
Loss on extinguishment of debt
|
1.1
|
84.5
|
||||||
Non-cash change in LIFO reserve
|
0.2
|
2.6
|
||||||
Deferred income taxes
|
4.0
|
(249.0
|
)
|
|||||
Changes in assets and liabilities:
|
||||||||
Receivables
|
13.2
|
(65.7
|
)
|
|||||
Inventories
|
(13.0
|
)
|
(22.7
|
)
|
||||
Accounts payable
|
69.6
|
39.9
|
||||||
Accrued liabilities
|
(38.9
|
)
|
(24.8
|
)
|
||||
Other assets and liabilities, net
|
(41.3
|
)
|
56.7
|
|||||
Net cash provided by operating activities
|
444.5
|
200.5
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Capital expenditures
|
(52.2
|
)
|
(56.8
|
)
|
||||
Net cash paid in business combinations
|
(186.3
|
)
|
(18.8
|
)
|
||||
Proceeds from the termination of derivatives
|
-
|
6.2
|
||||||
Disposals of property, plant and equipment
|
3.5
|
8.6
|
||||||
Net cash used in investing activities
|
(235.0
|
)
|
(60.8
|
)
|
||||
Cash Flows From Financing Activities:
|
||||||||
Principal payments on long-term debt
|
(337.6
|
)
|
(2,879.3
|
)
|
||||
Premium paid on extinguishment of senior notes
|
-
|
(29.7
|
)
|
|||||
Proceeds from long-term debt
|
-
|
2,010.7
|
||||||
Proceeds from the issuance of common stock, net of share issuance costs
|
-
|
893.6
|
||||||
Purchases of treasury stock
|
(40.7
|
)
|
(3.6
|
)
|
||||
Proceeds from stock option exercises
|
6.8
|
-
|
||||||
Payments of contingent consideration
|
(1.4
|
)
|
-
|
|||||
Payments of debt issuance costs
|
-
|
(4.1
|
)
|
|||||
Purchase of shares from noncontrolling interests
|
-
|
(5.2
|
)
|
|||||
Other
|
(0.1
|
)
|
0.2
|
|||||
Net cash used in financing activities
|
(373.0
|
)
|
(17.4
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(8.6
|
)
|
15.2
|
|||||
(Decrease) increase in cash and cash equivalents
|
(172.1
|
)
|
137.5
|
|||||
Cash and cash equivalents, beginning of year
|
393.3
|
255.8
|
||||||
Cash and cash equivalents, end of year
|
$
|
221.2
|
$
|
393.3
|
For the Three
Month Period Ended |
For the
Year Ended |
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net Income
|
$
|
94.5
|
$
|
143.8
|
$
|
269.4
|
$
|
18.5
|
||||||||
Basic Earnings Per Share (As Reported)1
|
$
|
0.47
|
$
|
0.71
|
$
|
1.34
|
$
|
0.10
|
||||||||
Diluted Earnings Per Share (As Reported)1
|
$
|
0.45
|
$
|
0.69
|
$
|
1.29
|
$
|
0.10
|
||||||||
Plus:
|
||||||||||||||||
Provision (benefit) for income taxes
|
16.9
|
(90.1
|
)
|
80.1
|
(131.2
|
)
|
||||||||||
Amortization of acquisition related intangible assets
|
29.1
|
27.3
|
111.9
|
107.7
|
||||||||||||
Impairment of other intangible assets
|
-
|
1.6
|
-
|
1.6
|
||||||||||||
Sponsor fees and expenses
|
-
|
-
|
-
|
17.3
|
||||||||||||
Restructuring and related business transformation costs
|
13.6
|
4.2
|
38.8
|
24.7
|
||||||||||||
Acquisition related expenses and non-cash charges
|
3.6
|
1.0
|
16.7
|
4.1
|
||||||||||||
Environmental remediation loss reserve
|
-
|
-
|
-
|
0.9
|
||||||||||||
Expenses related to public stock offerings
|
0.7
|
0.5
|
2.9
|
4.1
|
||||||||||||
Establish public company financial reporting compliance
|
1.1
|
0.9
|
4.3
|
8.1
|
||||||||||||
Stock-based compensation
|
(5.3
|
)
|
28.2
|
(2.3
|
)
|
194.2
|
||||||||||
Loss on extinguishment of debt
|
-
|
3.0
|
1.1
|
84.5
|
||||||||||||
Foreign currency transaction (gains) losses, net
|
(1.3
|
)
|
-
|
(1.9
|
)
|
9.3
|
||||||||||
Shareholder litigation settlement recoveries
|
(5.0
|
)
|
-
|
(9.5
|
)
|
-
|
||||||||||
Other adjustments
|
2.2
|
7.5
|
2.2
|
10.9
|
||||||||||||
Minus:
|
||||||||||||||||
Income tax provision, as adjusted
|
31.2
|
27.8
|
119.0
|
105.4
|
||||||||||||
Adjusted Net Income
|
$
|
118.9
|
$
|
100.1
|
$
|
394.7
|
$
|
249.3
|
||||||||
Adjusted Basic Earnings Per Share
|
$
|
0.59
|
$
|
0.50
|
$
|
1.96
|
$
|
1.37
|
||||||||
Adjusted Diluted Earnings Per Share2
|
$
|
0.57
|
$
|
0.48
|
$
|
1.89
|
$
|
1.32
|
||||||||
Average shares outstanding:
|
||||||||||||||||
Basic, as reported
|
201.1
|
201.4
|
201.6
|
182.2
|
||||||||||||
Diluted, as reported
|
207.7
|
209.3
|
209.1
|
188.4
|
||||||||||||
Adjusted diluted2
|
207.7
|
209.3
|
209.1
|
188.4
|
1
|
Basic and diluted earnings per share (as reported) are calculated by dividing net income (loss) attributable to Gardner Denver Holdings,
Inc. by the basic and diluted average shares outstanding for the respective periods.
|
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.
|
For the Three
Month Period Ended |
For the
Year Ended |
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net Income
|
$
|
94.5
|
$
|
143.8
|
$
|
269.4
|
$
|
18.5
|
||||||||
Plus:
|
||||||||||||||||
Interest expense
|
23.1
|
25.2
|
99.6
|
140.7
|
||||||||||||
Provision (benefit) for income taxes
|
16.9
|
(90.1
|
)
|
80.1
|
(131.2
|
)
|
||||||||||
Depreciation expense
|
13.3
|
15.5
|
54.6
|
54.9
|
||||||||||||
Amortization expense
|
32.4
|
31.3
|
125.8
|
118.9
|
||||||||||||
Impairment of other intangible assets
|
-
|
1.6
|
-
|
1.6
|
||||||||||||
Sponsor fees and expenses
|
-
|
-
|
-
|
17.3
|
||||||||||||
Restructuring and related business transformation costs
|
13.6
|
4.2
|
38.8
|
24.7
|
||||||||||||
Acquisition related expenses and non-cash charges
|
3.6
|
1.0
|
16.7
|
4.1
|
||||||||||||
Environmental remediation loss reserve
|
-
|
-
|
-
|
0.9
|
||||||||||||
Expenses related to public stock offerings
|
0.7
|
0.5
|
2.9
|
4.1
|
||||||||||||
Establish public company financial reporting compliance
|
1.1
|
0.9
|
4.3
|
8.1
|
||||||||||||
Stock-based compensation
|
(5.3
|
)
|
28.2
|
(2.3
|
)
|
194.2
|
||||||||||
Loss on extinguishment of debt
|
-
|
-
|
1.1
|
84.5
|
||||||||||||
Foreign currency transaction (gains) losses, net
|
(1.3
|
)
|
3.0
|
(1.9
|
)
|
9.3
|
||||||||||
Shareholder litigation settlement recoveries
|
(5.0
|
)
|
-
|
(9.5
|
)
|
-
|
||||||||||
Other adjustments
|
2.2
|
7.5
|
2.2
|
10.9
|
||||||||||||
Adjusted EBITDA
|
$
|
189.8
|
$
|
172.6
|
$
|
681.8
|
$
|
561.5
|
||||||||
Minus:
|
||||||||||||||||
Interest expense
|
23.1
|
25.2
|
99.6
|
140.7
|
||||||||||||
Income tax provision, as adjusted
|
31.2
|
27.8
|
119.0
|
105.4
|
||||||||||||
Depreciation expense
|
13.3
|
15.5
|
54.6
|
54.9
|
||||||||||||
Amortization of non-acquisition related intangible assets
|
3.3
|
4.0
|
13.9
|
11.2
|
||||||||||||
Adjusted Net Income
|
$
|
118.9
|
$
|
100.1
|
$
|
394.7
|
$
|
249.3
|
||||||||
Free Cash Flow
|
||||||||||||||||
Cash flows - operating activities
|
146.2
|
116.6
|
444.5
|
200.5
|
||||||||||||
Minus:
|
||||||||||||||||
Capital expenditures
|
20.1
|
20.4
|
52.2
|
56.8
|
||||||||||||
Free Cash Flow
|
$
|
126.1
|
$
|
96.2
|
$
|
392.3
|
$
|
143.7
|
For the Three
Month Period Ended |
For the
Year Ended |
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenue
|
||||||||||||||||
Industrials
|
$
|
337.6
|
$
|
311.7
|
$
|
1,303.3
|
$
|
1,130.7
|
||||||||
Energy
|
307.0
|
295.1
|
1,121.1
|
1,014.5
|
||||||||||||
Medical
|
68.1
|
58.2
|
265.4
|
230.2
|
||||||||||||
Total Revenue
|
$
|
712.7
|
$
|
665.0
|
$
|
2,689.8
|
$
|
2,375.4
|
||||||||
Segment Adjusted EBITDA
|
||||||||||||||||
Industrials
|
$
|
78.2
|
$
|
69.0
|
$
|
288.2
|
$
|
242.7
|
||||||||
Energy
|
95.3
|
96.9
|
337.8
|
296.1
|
||||||||||||
Medical
|
20.6
|
15.5
|
75.0
|
62.4
|
||||||||||||
Total Segment Adjusted EBITDA
|
$
|
194.1
|
$
|
181.4
|
$
|
701.0
|
$
|
601.2
|
||||||||
Less items to reconcile Segment Adjusted EBITDA to
|
||||||||||||||||
Income (Loss) Before Income Taxes:
|
||||||||||||||||
Corporate expenses not allocated to segments
|
$
|
4.3
|
$
|
8.8
|
$
|
19.2
|
$
|
39.7
|
||||||||
Interest expense
|
23.1
|
25.2
|
99.6
|
140.7
|
||||||||||||
Depreciation and amortization expense
|
45.7
|
46.8
|
180.4
|
173.8
|
||||||||||||
Impairment of other intangible assets
|
-
|
1.6
|
-
|
1.6
|
||||||||||||
Sponsor fees and expenses
|
-
|
-
|
-
|
17.3
|
||||||||||||
Restructuring and related business transformation costs
|
13.6
|
4.2
|
38.8
|
24.7
|
||||||||||||
Acquisition related expenses and non-cash charges
|
3.6
|
1.0
|
16.7
|
4.1
|
||||||||||||
Environmental remediation loss reserve
|
-
|
-
|
-
|
0.9
|
||||||||||||
Expenses related to public stock offerings
|
0.7
|
0.5
|
2.9
|
4.1
|
||||||||||||
Establish public company financial reporting compliance
|
1.1
|
0.9
|
4.3
|
8.1
|
||||||||||||
Stock-based compensation
|
(5.3
|
)
|
28.2
|
(2.3
|
)
|
194.2
|
||||||||||
Loss on extinguishment of debt
|
-
|
-
|
1.1
|
84.5
|
||||||||||||
Foreign currency transaction (gains) losses, net
|
(1.3
|
)
|
3.0
|
(1.9
|
)
|
9.3
|
||||||||||
Shareholder litigation settlement recoveries
|
(5.0
|
)
|
-
|
(9.5
|
)
|
-
|
||||||||||
Other adjustments
|
2.2
|
7.5
|
2.2
|
10.9
|
||||||||||||
Income (Loss) Before Income Taxes
|
$
|
111.4
|
$
|
53.7
|
$
|
349.5
|
$
|
(112.7
|
)
|