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Gardner Denver Inc, USA
COMPANY WATCH
The Gorman-Rupp Co, USA
Gardner Denver Inc, USA Key Figures (US$ million) Three months ended 30.9 2012
Key Figures (US$ million) Three months ended 30.9 2012
2011
Net Sales
91.6
90.2
Cost of Products Sold
69.8
67.7
Gross Profit
21.8
22.5
2011
Revenues Of Which: Industrial Products Group Engineered Products Group
548.5
614.7
311.8 236.7
320.2 294.5
Cost of Sales
360.6
409.2
Selling, General and Admin Expenses
11.7
10.9
Gross Profit
187.9
205.5
Operating Income
10.1
11.5
Operating Income Of Which: Industrial Products Group Engineered Products Group
89.1
106.6
Net Income
6.7
7.7
39.4 49.7
38.6 68.0
Nine months ended 30.9 2012
2011
Net Income
64.4
74.3
Net Sales
287.0
266.4
Cost of Products Sold
215.8
198.3
Gross Profit
71.2
68.1
Selling, General and Admin Expenses
34.4
32.4
Operating Income
36.8
35.7
Net Income
24.5
23.7
Nine months ended 30.9 2012
2011
Revenues Of Which: Industrial Products Group Engineered Products Group
1765.9
1757.2
967.3 798.5
934.2 823.0
Cost of Sales
1163.5
1157.0
Gross Profit
602.4
600.2
Operating Income Of Which: Industrial Products Group Engineered Products Group
276.9
292.6
95.8 181.1
103.7 188.8
Net Income
195.1
201.9
COMMENT Gardner Denver Inc’s Engineered Products Group (EPG) saw third quarter 2012 revenues decrease 20% to US$237 million compared with the same period in 2011, while operating income fell 27% to US$49.7 million as operating margins decreased to 21.0%, down 210 basis points from last year’s third quarter. Industrial Products Group (IPG) third quarter revenues slipped 3% to US$312 million while operating income was up 2% to US$39.4 million. “IPG executed well on margin expansion initiatives in a challenging global environment,” said Michael Larsen, Gardner Denver’s interim CEO and chief financial officer. “As expected, EPG revenues and operating
8
Pump Industry Analyst
margins declined versus the prior year driven primarily by lower demand for pressure pumps and loading arms. As we manage through macro conditions, we are implementing decisive actions, such as our previously announced European restructuring plan, and will continue to right-size and restructure our operations as needed. We believe these actions position Gardner Denver to achieve continued margin expansion and profitable growth.” The Gardner Denver board of directors, working together with the company’s management team and its financial advisor, is currently exploring strategic alternatives to enhance shareholder value (see In Brief, page 13). ■ www.GardnerDenver.com
COMMENT The Gorman-Rupp Co’s net sales increased 1.6% during the third quarter, improving 10.3% in the company’s larger water markets group and declining 12.0% in the nonwater markets. Water market sales benefitted from shipments of pumps for domestic flood control, and for water supply and sewage systems domestically and internationally. The quarter’s non-water market decreases were mainly in the OEM market due to the scaledown of US military operations overseas, and reduced power generation demand. Net sales for the nine months ended 30 September 2012 increased 7.7% to a record US$287.0 million compared with US$266.4 million during the same period in 2011. Both years benefited from increases in seasonal agriculture market
business contributed by the 2010 acquisition of National Pump Co. Net income increased 3.4% to a record US$24.5 million. The decrease in earnings for the quarter was mainly driven by a less favourable product mix among the market groups, combined with selling, general and administrative expense increases. The company’s backlog of orders was US$146.7 million at 30 September 2012 compared with US$157.9 million a year ago and US$155.5 million at the end of December 2011. The planned decrease in backlog from 30 September 2011 and 31 December 2011 was primarily due to record shipments during the 12 months ended 30 September 2012 combined with lower incoming orders for the construction market. ■ www.gormanrupp.com
October 2012
The Gorman-Rupp Co, USA
Gardner Denver Inc, USA Key Figures (US$ million) Three months ended 30.9 2012
Key Figures (US$ million) Three months ended 30.9 2012
2011
Net Sales
91.6
90.2
Cost of Products Sold
69.8
67.7
Gross Profit
21.8
22.5
2011
Revenues Of Which: Industrial Products Group Engineered Products Group
548.5
614.7
311.8 236.7
320.2 294.5
Cost of Sales
360.6
409.2
Selling, General and Admin Expenses
11.7
10.9
Gross Profit
187.9
205.5
Operating Income
10.1
11.5
Operating Income Of Which: Industrial Products Group Engineered Products Group
89.1
106.6
Net Income
6.7
7.7
39.4 49.7
38.6 68.0
Nine months ended 30.9 2012
2011
Net Income
64.4
74.3
Net Sales
287.0
266.4
Cost of Products Sold
215.8
198.3
Gross Profit
71.2
68.1
Selling, General and Admin Expenses
34.4
32.4
Operating Income
36.8
35.7
Net Income
24.5
23.7
Nine months ended 30.9 2012
2011
Revenues Of Which: Industrial Products Group Engineered Products Group
1765.9
1757.2
967.3 798.5
934.2 823.0
Cost of Sales
1163.5
1157.0
Gross Profit
602.4
600.2
Operating Income Of Which: Industrial Products Group Engineered Products Group
276.9
292.6
95.8 181.1
103.7 188.8
Net Income
195.1
201.9
COMMENT Gardner Denver Inc’s Engineered Products Group (EPG) saw third quarter 2012 revenues decrease 20% to US$237 million compared with the same period in 2011, while operating income fell 27% to US$49.7 million as operating margins decreased to 21.0%, down 210 basis points from last year’s third quarter. Industrial Products Group (IPG) third quarter revenues slipped 3% to US$312 million while operating income was up 2% to US$39.4 million. “IPG executed well on margin expansion initiatives in a challenging global environment,” said Michael Larsen, Gardner Denver’s interim CEO and chief financial officer. “As expected, EPG revenues and operating
8
Pump Industry Analyst
margins declined versus the prior year driven primarily by lower demand for pressure pumps and loading arms. As we manage through macro conditions, we are implementing decisive actions, such as our previously announced European restructuring plan, and will continue to right-size and restructure our operations as needed. We believe these actions position Gardner Denver to achieve continued margin expansion and profitable growth.” The Gardner Denver board of directors, working together with the company’s management team and its financial advisor, is currently exploring strategic alternatives to enhance shareholder value (see In Brief, page 13). ■ www.GardnerDenver.com
COMMENT The Gorman-Rupp Co’s net sales increased 1.6% during the third quarter, improving 10.3% in the company’s larger water markets group and declining 12.0% in the nonwater markets. Water market sales benefitted from shipments of pumps for domestic flood control, and for water supply and sewage systems domestically and internationally. The quarter’s non-water market decreases were mainly in the OEM market due to the scaledown of US military operations overseas, and reduced power generation demand. Net sales for the nine months ended 30 September 2012 increased 7.7% to a record US$287.0 million compared with US$266.4 million during the same period in 2011. Both years benefited from increases in seasonal agriculture market
business contributed by the 2010 acquisition of National Pump Co. Net income increased 3.4% to a record US$24.5 million. The decrease in earnings for the quarter was mainly driven by a less favourable product mix among the market groups, combined with selling, general and administrative expense increases. The company’s backlog of orders was US$146.7 million at 30 September 2012 compared with US$157.9 million a year ago and US$155.5 million at the end of December 2011. The planned decrease in backlog from 30 September 2011 and 31 December 2011 was primarily due to record shipments during the 12 months ended 30 September 2012 combined with lower incoming orders for the construction market. ■ www.gormanrupp.com
October 2012