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| 8-K - FORM 8-K - GARDNER DENVER INC | d253333d8k.htm |
 Gardner Denver
Investor Presentation
November, 2011
Exhibit 99.1 |
| SF PowerPoint Template 03-27-08/2
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Safe Harbor Disclosure
All of the statements made by Gardner Denver in this presentation or made orally in connection with
it, other than historical facts, are forward-looking statements. As a general matter,
forward-looking statements are those focused upon anticipated events or trends,
expectations, and beliefs relating to matters that are not historical in nature. The
Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these
forward-looking statements. In order to comply with the terms of the safe harbor, the
Company notes that forward-looking statements are subject to known and unknown risks,
uncertainties, and other factors relating to the Company’s operations and business environment,
all of which are difficult to predict and many of which are beyond the control of the
Company. These known and unknown risks, uncertainties, and other factors could cause
actual results to differ materially from those matters expressed in, anticipated by or implied
by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: 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 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 ending December 31, 2010,
and its quarterly reports on Form 10-Q.
These statements reflect the current views and assumptions of management with respect to future
events. 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. The inclusion of any statement in this presentation does not constitute admission
by the Company or any other person that the events or circumstances described in such statement
are material. |
 Gardner
Denver
Overview |
 4
Gardner Denver Overview
Early stages of transformation to a high
quality,
high margin Industrial Company with Energy exposure
Leading
brands
and
technologies
…
strong
distribution
New, operationally focused team driving “The Gardner Denver Way”
~$2.4B
(1)
global Company with diverse and attractive end markets
Growing, profitable aftermarket opportunity
Focused on superior cash and earnings growth
Strong track record on analyzing and integrating acquisitions
(1)
Company estimates (see note on p. 31) |
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A
global
leader
in
compressed
air
and
gas,
vacuum
and
fluid
transfer
technologies
We serve a wide range of industries with efficient & reliable products
Energy
Medical
Mining
Transportation
Food &
Beverage |
 6
Two business segments aligned to effectively
serve our customers
Engineered Products
Group
Industrial Products
Group
2011 Sales by segment
~$1.2B
~$1.1B
(1)
Company estimates (see note on p. 31)
(1)
Petroleum pumps
Liquid ring pumps
Loading arms
OEM compressors
Compressors (>50psi)
Blowers (<50psi)
Great portfolio of brands and businesses |
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Well established sales channels
Distribution
10%
Direct
57%
OEM
33%
Engineered Products
Group
Industrial Products
Group
Distribution
48%
Direct
33%
OEM
19%
Products designed for customer
specific applications
Primarily standard configuration
products |
 8
Highly diversified and global
End Markets
(1)
Geographic
Industrial
Manufacturing
(28%)
Upstream
Energy
(12%)
Downstream
Energy
(10%)
Medical/
Laboratory
(9%)
Transportation
(9%)
Food
&
Beverage
(6%)
Mining
&
Construction
(5%)
Chemical (5%)
Environment (3%)
Printing (2)%
Auto Svcs (2%)
Paper (2)%)
Other
(7%)
2010 Revenue by End User
Canada 4%
United States 35%
Latin America 3%
Europe 35%
Other 7%
Asia 16%
2010 Revenue by Geography
Visibility to a large cross section of global economy
(1)
Company estimates (see note on p. 31) |
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Exposed to multiple phases of the
economic cycle
Early Cycle
(1-18 months)
Late Cycle
(36+ months)
Mid Cycle
(18-36 months)
Engineered packages
Infrastructure projects
Industrial air compressors
OEM
Aftermarket |
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10
Current end market dynamics
Comment
Status
Strong growth in Americas
Well servicing and drilling
pump demand very strong
China softening, APAC strong
Stable
U.S. Industrial Production
-
Capacity utilization
E.U. Industrial Production
Oil & Gas
-
Rig
count,
crude
/
nat
gas pricing
China/Asia Pacific
OEM applications
End market / Indicator
Stable …
cautionary tone
Generally,
favorable
end
markets
in
an
uncertain
environment |
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11
Prepared
for
economic
volatility
Cautiously optimistic on macro economy …
contingency plans in the works since April 2011
Strong track record on cost reductions since 2008
Headcount
(23)%
reduction
/
2,700
employees
Footprint
Closed
8
plants
One ERP
71%
+
450
bps
Operating
Margins |
 Growth
Strategy |
 13
•
Strengthen presence in attractive
end markets & emerging markets
4.
Selective acquisitions
•
Access to faster growing end
markets and generate synergies
Strategy
Focus
2.
Aftermarket growth
•
Higher margin, less cyclical
5.
Margin expansion
•
Cost reductions and operational excellence
3.
Innovative products
•
Expand share with differentiated
technologies
Simple, focused 5-point strategy
Execution
supported
by
the
principles
of
the
Gardner
Denver
Way
1.
Organic growth |
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14
’11E
(1)
~$600
Organic growth
Keys to organic growth
•
Leading brands & technologies
Orders
~10%
•
Diverse end markets …
strong
distribution channels
‘10
$554
Backlog
’11E
(1)
~$2.5B
~20%
‘10
$2,060
‘09
$1,570
‘09
$395
•
Growing emerging markets presence
•
Higher growth end markets …
energy
•
Aftermarket
($’s in millions)
(1)
Company estimates (see note on p. 31)
Good momentum going into 2012 |
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15
Build out the aftermarket
Key growth drivers
•
Large installed base
Aftermarket as % of sales
•
Big opportunity in pressure pumping
repair and fluid ends
‘10
31%
‘09
29%
‘08
26%
•
Remote monitoring capabilities
•
Design in proprietary features
Goal
40-45%
•
Extended warranty and service
agreements
Higher
margin,
less
cyclical
growth |
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16
A more innovative Company
Voice of customer differentiates products from competition
Value proposition based on customer needs
2011 product launches across multiple divisions demonstrate progress
PZ-2400 Drilling Pump
Hoffman Revolution
Quantima Compressor
Goal: ~10% of annual revenues from new products |
 17
24 acquisitions over 15 years
1996
2011
Engineered Products
Group
Industrial Products
Group
TCM
Twentieth Century Mfg
.
Water Jetting
•
Butterworth
•
CRS Power Flow
•
Jetting Systems
Strong
track
record
on
analyzing
&
integrating
acquisitions |
 18
IPG Margin Expansion
1Q09
1Q10
2.0%
2Q09
3Q09
4Q09
10
Quarters
of
Sequential
Margin
Expansion
(2)
2Q10
2Q11
3Q10
4Q10
1Q11
3Q11
2.5%
6.8%
7.5%
8.3%
8.6%
9.4%
10.1%
11.3%
11.7%
13.1%
Goal
14%
+150 bps of margin expansion annually w/no volume growth:
Restructuring …
27% reduction in employment since Oct ’08, ~$70 million program
Productivity investments …
8 fewer facilities, Lean, Capex / machine tools, SAP
Low Cost Country Sourcing …
“just getting started”
1
2
3
“14 x 14”
(2)
Adjusted Operating Margin (see note on p. 31)
Committed
to
continued
margin
expansion |
 19
EPG Margin Expansion
1Q09
1Q10
19.5%
2Q09
3Q09
4Q09
EPG Margin Expansion
(2)
2Q10
2Q11
3Q10
4Q10
1Q11
3Q11
19.7%
17.8%
20.9%
16.0%
19.5%
19.7%
24.0%
22.9%
23.3%
23.6%
Last
Peak
24.5%
+50 bps of margin expansion annually w/ no volume growth:
Restructuring …
reduced employment by 15% since ’08 with 15% increase in revenue
Productivity investments …
Lean, Capex / capacity, enhanced project mgmt
Low Cost Country Sourcing …
some progress made, but more opportunities
1
2
3
+50 bps
“New”
Peak
~28.5%
(2)
Adjusted Operating Margin (see note on p. 31)
Expanding
already
attractive
operating
margins |
 Financial Results |
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21
2000
$379
$1,215
2005
$1,895
2010
Revenue
$3.28
2010
2005
$1.37
$0.60
2000
DEPS
2000
$31
2005
$115
2010
$202
Cash Flow from
Operations
A decade of financial performance
17%
CAGR
Strong track record
19%
CAGR
21%
CAGR
($’s in millions) |
 22
$1.9B
2010
~$2.4B
2011
Revenue
$5.44 -
$5.49
2011
2010
$3.39
Adjusted
DEPS
(2)
2010
$202
2011
~$300
2011 financial outlook
~25%
~60%
1.2
x
Net
Income
A record year on key financial metrics
(1)
Company estimates (see note on p. 31)
(1)
Cash Flow from
Operations
(2)
Adjusted DEPS (see note on p. 31)
(in line with guidance) |
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23
Strong cash generation
2008
$237
$169
2009
$169
2010
Cash Flow
Disciplined capital deployment
FCF
CFOA
2011E
$278
$211
$202
~$300
~$250
FCF
Conv.
143%
N/M
98%
~90%
(1)
($’s in millions)
(1)
Company estimates (see note on p. 31)
Capital
expenditures…
organic
growth
and productivity
1
2
3
4
Capital Deployment Strategy
Financial
objectives…
reduce
debt,
strong balance sheet
Selective
acquisitions…
inorganic
investment to create value
Return
to
shareholders...
dividend,
opportunistic buyback |
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24
Internal long term operating goals
progress
•
Grow 2 x GDP
Operating goals
Good progress YTD …
more to do
3Q YTD Comment
•
Margin expansion
•
FCF Conversion
•
Increase ROIC
•
Lean cost structure
+
+
+
/
+
+
•
Revenue up 29%
•
DEPS up 74%
•
86%
•
ROIC ~19%
•
16.8% SG&A to sales
-
2011 |
 25
2012 earnings growth framework
Tailwinds:
+
Margin expansion “The Gardner Denver Way”
+
Orders momentum / EPG backlog
+
Strength in Energy end markets
+
Aftermarket momentum
+
Accretive M&A …
Robuschi
+
Reduced share count
Headwinds:
–
Macro uncertainty incl. China, Europe
–
Late cycle infrastructure projects
–
Tougher comparisons to record 2011
’11 Adj DEPS
(2)
~$5.44-5.49
’12 Adj DEPS
+
(2)
Adjusted DEPS (see note on p. 31)
Positioned
to
deliver
in
an
uncertain
environment |
 The
Gardner
Denver
Way |
 27
Aftermarket
growth
Innovative
products
Selective
acquisitions
Margin
expansion
Organic
growth
CUSTOMERS
Innovation
High Velocity
RESOURCES
Strategy supported by The Gardner
Denver Way
Execution
requires
superior
human
resources
SHAREHOLDERS
EMPLOYEES |
 28
Building a high performance culture
New,
operationally
focused
management
team driving transformation
Operationally
focused team
Policy
deployment
Operating
rhythms
Clear
accountability
Continuous
improvement |
 29
Gardner Denver Summary
Early stages of transformation to a high
quality,
high margin Industrial Company with Energy exposure
Leading
brands
and
technologies
…
strong
distribution
New, operationally focused team driving “The Gardner Denver Way”
~$2.4B
(1)
global Company with diverse and attractive end markets
Growing, profitable aftermarket opportunity
Focused on superior cash and earnings growth
Strong track record on analyzing & integrating acquisitions
(1)
Company estimates (see note on p. 31) |
 Gardner Denver
Investor Presentation
November, 2011 |
| SF PowerPoint Template 03-27-08/31
31
Presentation notes
•
Note 1:
Company estimates
•
Note
2:
Adjusted
Operating
Income,
Adjusted
Operating
Margins,
Adjusted
Net
Income
and
Adjusted
DEPS are financial measures that are not in accordance with US GAAP. Adjusted
Operating Income, Adjusted Operating Margins and Adjusted DEPS exclude the
impact of expenses incurred for profit improvement initiatives,
non-recurring items and impairment charges. Adjusted net income is net
income excluding non-cash impairment charges, net of related changes in
deferred tax assets and liabilities.
Gardner Denver believes the non-GAAP financial measure of Adjusted Operating
Income, Adjusted Operating
Margins,
Adjusted
Net
Income
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 the aforementioned financial measures provides a more
meaningful comparison to the corresponding prior year periods and internal
budgets and forecasts, assists investors in performing analysis that is
consistent with financial models developed by investors in performing and research
analysts, provides management with a more relevant measurement of operating
performance, and is more useful in assessing management
performance. |