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Gardner Denver Reports First Quarter 2013 Results


April 26, 2013 - Wayne, PA

Gardner Denver, Inc. (NYSE: GDI)

  • Reports quarterly revenue of $514 million, a decrease of 15% versus the prior year
  • Delivers Diluted Earnings Per Share ("DEPS") of $0.93 and Adjusted DEPS of $1.06, a decrease of 24% versus the prior year (1)
  • Reaffirms previously announced full-year 2013 guidance (1)

Gardner Denver, Inc. (NYSE: GDI) today reported first quarter 2013 results and reaffirmed previous guidance for fiscal year 2013.

Revenues for the first quarter ended March 31, 2013 were $513.5 million, down 15% compared with the prior year first quarter. Operating income for the first quarter of 2013 was $63.4 million, compared with $79.8 million in the first quarter of the prior year, resulting in an operating margin decline of 90 basis points to 12.3%. Net income attributable to Gardner Denver for the first quarter of 2013 was $45.7 million, or $0.93 DEPS, compared with $54.8 million, or $1.08 DEPS, in the same period of 2012. Results for the first quarter of 2013 included after-tax charges of $0.13 per diluted share primarily related to costs incurred in connection with the exploration of strategic alternatives and the Company's ongoing restructuring activities. Excluding these charges, Adjusted DEPS for the first quarter of 2013 was $1.06, compared with $1.40 in the same period of 2012. (1)

"We were pleased with our first quarter results in a challenging environment," said Michael M. Larsen, Gardner Denver's President and Chief Executive Officer. "I am encouraged by our sequential order growth in the first quarter as orders grew 7% over the fourth quarter of 2012 and resulted in a book-to-bill ratio of 1.07."

Factors affecting first quarter results for the Company's business segments included: (2)

Engineered Products Group (EPG)

In the first quarter of 2013, EPG revenues decreased 24% to $211.7 million compared with the same period of 2012, principally as a result of the expected lower shipments in our Petroleum & Industrial Pumps business. Operating income in the first quarter of 2013 decreased 48% to $33.5 million and as a result Adjusted Operating Margins decreased to 17.5%, down 650 basis points from last year's first quarter. (1)

Industrial Products Group (IPG)

IPG revenues decreased 7% to $301.9 million for the first quarter of 2013 compared to the same period of 2012. Operating income in the first quarter of 2013 increased 92% to $29.8 million and Adjusted Operating Margins increased to 11.7%, up 70 basis points from the same period of 2012. (1)

Outlook

"Looking ahead, our full-year view of 2013 is essentially unchanged from our previous guidance, both in terms of global economic growth as well as the fundamentals for our Petroleum and Industrial Pumps business. As expected, the first half of 2013 is our toughest comparison. Despite the continued slow global growth environment, Gardner Denver is well-positioned for stronger performance for the remainder of the year as we continue to execute on our strategic priorities and invest in future growth opportunities. We are taking the steps necessary to position Gardner Denver to capitalize on favorable long-term industry trends, including recovery in the global markets, particularly energy. Accordingly, we are reaffirming our full-year Adjusted DEPS will be in the range of $5.00 to $5.20." (1)

Earnings for the full year of 2013 are expected to be in the range of $4.18 to $4.38 per diluted share. Second quarter 2013 DEPS are expected to range between $1.05 and $1.15. These projections include profit improvement costs and other items totaling $0.05 per diluted share for the second quarter and $0.82 per diluted share for the full year 2013. Excluding these items, second quarter 2013 Adjusted DEPS are expected to range between $1.10 and $1.20 and full year 2013 Adjusted DEPS are expected to range between $5.00 and $5.20. (1)

Corporate Profile

Gardner Denver, Inc., with 2012 revenues of approximately $2.4 billion, is a leading worldwide manufacturer of highly engineered products, including compressors, liquid ring pumps and blowers for various industrial, medical, environmental, transportation and process applications, pumps used in the petroleum and industrial market segments and other fluid transfer equipment, such as loading arms and dry break couplers, serving chemical, petroleum and food industries. Gardner Denver's news releases are available by visiting the Investors section on the Company's website (www.GardnerDenver.com).

Forward-Looking Information

This press release contains forward-looking statements that involve risks and uncertainties. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "could," "should," "anticipate," "expect," "believe," "will," "project," "lead," or the negative thereof or variations thereon or similar terminology. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: risks relating to the proposed merger of the Company, execution of restructuring plans, senior management turnover, changing economic conditions; pricing of the Company's products and other competitive market pressures; the costs and availability of raw materials; fluctuations in foreign currency exchange rates and energy prices; risks associated with the Company's current and future litigation; and the other risks detailed from time to time in the Company's SEC filings, including but not limited to, its Annual Report on Form 10-K for the fiscal year ended December 31, 2012,as amended by Amendment No. 1 on Form 10-K/A, and its subsequent quarterly reports on Form 10-Q for the 2013 fiscal year. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, although its situation and circumstances may change in the future.

(1) Adjusted Operating Income and Adjusted Operating Margin, on a consolidated and segment basis, and Adjusted DEPS are financial measures that are not in accordance with GAAP. For reconciliation to the comparable GAAP number for reported historical periods please see "Reconciliation of Operating Income and DEPS to Adjusted Operating Income and Adjusted DEPS" at the end of this press release. Gardner Denver believes the non-GAAP financial measures of Adjusted Operating Income, Adjusted Operating Margin and Adjusted DEPS provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. Gardner Denver believes excluding the specified items from operating income and DEPS provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, assists investors in performing analysis that is consistent with financial models developed by investors and research analysts, provides management with a more relevant measurement of operating performance and is more useful in assessing management performance.

(2) Segment operating income (defined as income before interest expense, other income, net, and income taxes) and segment operating margin (defined as segment operating income divided by segment revenues) are indicative of short-term operational performance and ongoing profitability. For a reconciliation of segment operating income to consolidated operating income and consolidated income before income taxes, see "Business Segment Results" at the end of this press release.



GARDNER DENVER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts and percentages)
(Unaudited)

Three Months Ended
March 31,
----------------------
%
2013 2012 Change
---------- ---------- -------

Revenues $ 513,541 $ 604,356 (15)
Cost of sales 339,595 401,789 (15)
---------- ----------
Gross profit 173,946 202,567 (14)
Selling and administrative expenses 102,462 105,913 (3)
Other operating expense, net 8,107 16,862 (52)
---------- ----------
Operating income 63,377 79,792 (21)
Interest expense 2,677 3,834 (30)
Other income, net (1,308) (1,223) 7
---------- ----------
Income before income taxes 62,008 77,181 (20)
Provision for income taxes 16,122 22,066 (27)
---------- ----------
Net income 45,886 55,115 (17)
Less: Net income attributable to
noncontrolling interests 203 283 (28)
---------- ----------
Net income attributable to Gardner Denver $ 45,683 $ 54,832 (17)
========== ==========

Earnings per share attributable to Gardner
Denver common stockholders:
Basic earnings per share $ 0.93 $ 1.08 (14)
========== ==========
Diluted earnings per share $ 0.93 $ 1.08 (14)
========== ==========

Cash dividends declared per common share $ 0.05 $ 0.05 -
========== ==========


Basic weighted average number of shares
outstanding 49,161 50,638
========== ==========
Diluted weighted average number of shares
outstanding 49,357 50,937
========== ==========

Shares outstanding as of March 31 49,207 50,609
========== ==========



GARDNER DENVER, INC.
CONDENSED BALANCE SHEET ITEMS
(in thousands, except percentages)
(Unaudited)
%
3/31/2013 12/31/2012 Change
----------- ----------- -------


Cash and cash equivalents $ 225,401 $ 254,000 (11)
Accounts receivable, net 428,654 444,815 (4)
Inventories, net 372,218 343,197 8
Total current assets 1,098,594 1,116,989 (2)

Total assets 2,455,402 2,501,804 (2)

Short-term borrowings and current
maturities of long-term debt 305,946 359,433 (15)
Accounts payable and accrued liabilities 406,274 409,060 (1)
Total current liabilities 712,220 768,493 (7)
Long-term debt, less current maturities 17,829 9,727 83

Total liabilities 987,343 1,047,641 (6)

Total stockholders' equity $ 1,468,059 $ 1,454,163 1



 GARDNER DENVER, INC. BUSINESS SEGMENT RESULTS (in thousands, except percentages) (Unaudited) Three Months Ended March 31, ---------------------- % 2013 2012 Change ---------- ---------- -------Industrial Products Group Revenues $ 301,852 $ 325,827 (7) Operating income 29,843 15,539 92 % of revenues 9.9% 4.8% Orders 318,842 357,509 (11) Backlog 239,754 291,437 (18) Engineered Products Group Revenues 211,690 278,529 (24) Operating income 33,534 64,253 (48) % of revenues 15.8% 23.1% Orders 230,123 322,785 (29) Backlog 312,038 463,899 (33) Reconciliation of Segment Resultsto Consolidated Results Industrial Products Group operating income $ 29,843 $ 15,539Engineered Products Group operating income 33,534 64,253 ---------- ----------Consolidated operating income 63,377 79,792 % of revenues 12.3% 13.2%Interest expense 2,677 3,834Other income, net (1,308) (1,223) ---------- ----------Income before income taxes $ 62,008 $ 77,181 ========== ========== % of revenues 12.1% 12.8% ========== ========== The Company evaluates the performance of its reportable segments based onoperating income, which is defined as income before interest expense, otherincome, net, and income taxes. Reportable segment operating income andsegment operating margin (defined as segment operating income divided bysegment revenues) are indicative of short-term operating performance andongoing profitability. Management closely monitors the operating income andoperating margin of each business segment to evaluate past performance andidentify actions required to improve profitability. GARDNER DENVER, INC. SELECTED FINANCIAL DATA SCHEDULE (in millions, except percentages) (Unaudited) Three Months Ended March 31, ---------------------- % $ Millions Change ---------- ----------Industrial Products Group2012 Revenues 325.8Effect of currency exchange rates (1.5) -Organic growth (22.4) (7) ---------- ----------2013 Revenues 301.9 (7) 2012 Orders 357.5Effect of currency exchange rates (1.4) -Organic growth (37.3) (11) ---------- ----------2013 Orders 318.8 (11) Backlog as of 3/31/12 291.4Effect of currency exchange rates (6.5) (2)Organic growth (45.1) (16) ---------- ----------Backlog as of 3/31/13 239.8 (18) Engineered Products Group2012 Revenues 278.5Effect of currency exchange rates (0.4) -Organic growth (66.4) (24) ---------- ----------2013 Revenues 211.7 (24) 2012 Orders 322.8Effect of currency exchange rates (0.3) -Organic growth (92.4) (29) ---------- ----------2013 Orders 230.1 (29) Backlog as of 3/31/12 463.9Effect of currency exchange rates (4.3) (1)Organic growth (147.6) (32) ---------- ----------Backlog as of 3/31/13 312.0 (33) Consolidated2012 Revenues 604.4Effect of currency exchange rates (1.9) -Organic growth (89.0) (15) ---------- ----------2013 Revenues 513.5 (15) 2012 Orders 680.3Effect of currency exchange rates (1.7) -Organic growth (129.7) (19) ---------- ----------2013 Orders 548.9 (19) Backlog as of 3/31/12 755.3Effect of currency exchange rates (10.8) (1)Organic growth (192.7) (26) ---------- ----------Backlog as of 3/31/13 551.8 (27) GARDNER DENVER, INC. RECONCILIATION OF OPERATING INCOME AND DEPS TO ADJUSTED OPERATING INCOME AND ADJUSTED DEPS (in thousands, except per share amounts and percentages) (Unaudited) While Gardner Denver, Inc. reports financial results in accordance withaccounting principles generally accepted in the U.S. ("GAAP"), this pressrelease includes non-GAAP measures. These non-GAAP measures are not inaccordance with, nor are they a substitute for, GAAP measures. GardnerDenver, Inc. believes the non-GAAP financial measures of Adjusted OperatingIncome and Adjusted DEPS provide important supplemental information to bothmanagement and investors regarding financial and business trends used inassessing its results of operations. Gardner Denver believes excluding thespecified items from operating income and DEPS provides management a moremeaningful comparison to the corresponding reported periods and internalbudgets and forecasts, assists investors in performing analysis that isconsistent with financial models developed by investors and researchanalysts, provides management with a more relevant measurement of operatingperformance, and is more useful in assessing management performance. Three Months Ended March 31, 2013 -------------------------------------- Industrial Engineered Products Products Group Group Consolidated ----------- ----------- ------------ Operating income $ 29,843 $ 33,534 $ 63,377 % of revenues 9.9% 15.8% 12.3% Adjustments to operating income: Profit improvement initiatives (3) 1,440 625 2,065 Other, net (5) 3,901 2,825 6,726 ----------- ----------- ------------Total adjustments to operating income 5,341 3,450 8,791 Adjusted operating income $ 35,184 $ 36,984 $ 72,168 % of revenues, as adjusted 11.7% 17.5% 14.1% Three Months Ended March 31, 2012 -------------------------------------- Industrial Engineered Products Products Group Group Consolidated ----------- ----------- ------------ Operating income $ 15,539 $ 64,253 $ 79,792 % of revenues 4.8% 23.1% 13.2% Adjustments to operating income: Profit improvement initiatives (3) 12,002 2,218 14,220 Robuschi backlog and inventory amortization (4) 7,391 - 7,391 Other, net (5) 1,010 279 1,289 ----------- ----------- ------------Total adjustments to operating income 20,403 2,497 22,900 Adjusted operating income $ 35,942 $ 66,750 $ 102,692 % of revenues, as adjusted 11.0% 24.0% 17.0% Three Months Ended March 31, -------------------------------------- % 2013 2012 Change ----------- ----------- ------------ Diluted earnings per share $ 0.93 $ 1.08 (14) Adjustments to diluted earnings per share: Profit improvement initiatives (3) 0.03 0.20 Robuschi backlog and inventory amortization (4) - 0.10 Other, net (5) 0.10 0.02 ----------- -----------Total adjustments to diluted earnings per share 0.13 0.32 Adjusted diluted earnings per share $ 1.06 $ 1.40 (24) (3) Charges in both years reflect costs, including employee terminationbenefits, to streamline operations and reduce overhead costs. (4) Relates to amortization of the fair market value adjustments to backlogand inventory acquired as part of the acquisition of Robuschi SpA. (5) Charges in 2013 consist primarily of costs incurred in conjunction withthe exploration of strategic alternatives to enhance shareholder value.Charges in 2012 consist primarily of fair value adjustments related to theexit of a business, certain severance payments and acquisition duediligence costs. 

Contact:
Vikram U. Kini
VP, Investor Relations
Tel. (610) 249-2009

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