- Email: [email protected]
Crane Co, USA
July 1999
Pump Industry Analyst
Gardner Denver Inc, USA
Crane Co, USA
Key Figures (US$ million) Three months ended 31.3
Key Figures (US$ million) Three months ended 31.3
1999
1998
Revenues Of Which: Petroleum Products
70.2
89.8
6.6
19.8
Cost of Sales
48.4
59.4
Income before Income Taxes
5.2
13.2
Net Income
3.2
8.1
140.0
151.8
55.8
63.3
Current Assets Current liabilities
1999
1998
574.8
526.8
105.3
118.0
Operating Profit/Net Income Of Which: Fluid Handling
56.8
52.4
3.8
9.0
Income before Taxes
52.2
46.9
Net Income
33.7
29.9
Current Assets
710.2
671.8
Current Liabilities
357.9
308.5
8.8
11.0
Net Sales Of Which: Fluid Handling
Capital Expenditures
Having acknowledged last October that it would face a difficult first half in 1999, this significant revenue reduction should come as no surprise to Gardner Denver. The manufacturer of compressors and blowers for industrial applications and pumps for the petroleum and industrial markets, saw revenues for the three months ended 31 March 1999 fall US$19.6 million to US$70.2 million. This reflects depressed demand for petroleum products resulting from lower oil prices in 1998, as well as slowing industrial production, which began in the second half of 1998, and negatively impacted orders for compressor products. Acquisitions provided US$6.8 million of incremental revenues in the three month period of 1999. Despite the unfavorable comparison in revenues and earnings per share, Ross Centanni, chairman, president and CEO, was pleased with the first quarter results.
He believes that if prices remain at their current elevated levels for three to six more months, Gardner Denver may begin to see a recovery in demand for petroleum products. Nevertheless, current demand is consistent with the company's expectations and backlog continued to decline during the first quarter. Meanwhile, Gardner Denver is pursuing its growth strategy through cost reductions and acquisitions. In early April 1999, Gardner Denver acquired the AllenStuart Equipment Company, with approximately US$14 million in annual revenues, and Butterworth Jetting Systems Inc, with approximately US$12 million in annual revenues. Butterworth adds to Gardner Denver's presence in the rapidly growing water jet market, serving the industrial cleaning and maintenance market, making the company less dependent on the petroleum industry. •
Crane's improved performance was led by Engineered Materials, where sales increased 49 per cent, or US$29.8 million, to US$91.1 million and operating profit increased a dramatic 94 per cent to US$14.7 million. Aerospace sales grew 3 per cent to US$97.1 million in the quarter, while Aerospace operating profit increased 8 per cent to US$27.2 million, benefiting from higher general aviation, after-market and repair/overhaul sales. Merchandising Systems sales and operating profit were both up 9 per cent, to US$50.3 million and US$9.5 million, respectively. Wholesale Distribution sales increased 16 per cent, or US$27.6 million, to US$200.1 million and operating profit increased 30 per cent, or US$1.3 million, to US$5.7 million. In contrast, Fluid Handling sales declined 11 per cent, or US$12.7 million, to US$105.3 million. Operating profit decreased 57 per cent, or US$5.1 million, to US$3.8 million. These declines were
due to a 31 per cent decline in Commercial Bronze and Iron Valve shipments and a 26 per cent decline in Cast Steel valve shipments. Commercial Valve's results were caused by a lack of shippable bronze valve product in the US and market weakness in the UK. Cast Steel was hit by weak demand from the oil and gas industry. Partially offsetting this, the Quarter Turn and Wafer Check businesses achieved higher first quarter earnings and improved their operating margins. The Nuclear business was strong, as the Liberty Technologies acquisition was integrated with Crane's existing service organisation. Operating profit margins were 3.7 per cent versus 7.6 per cent in 1998. Overall Fluid Handing order backlog totalled US$79.0 million at 31 March 1999, compared with US$115.5 million in 1998. Crane Controls sales decreased 14 per cent to US$30.2 million and operating profit declined 80 per cent, or US$2.4 million, to US$0.6 million. •
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Pump Industry Analyst
Gardner Denver Inc, USA
Crane Co, USA
Key Figures (US$ million) Three months ended 31.3
Key Figures (US$ million) Three months ended 31.3
1999
1998
Revenues Of Which: Petroleum Products
70.2
89.8
6.6
19.8
Cost of Sales
48.4
59.4
Income before Income Taxes
5.2
13.2
Net Income
3.2
8.1
140.0
151.8
55.8
63.3
Current Assets Current liabilities
1999
1998
574.8
526.8
105.3
118.0
Operating Profit/Net Income Of Which: Fluid Handling
56.8
52.4
3.8
9.0
Income before Taxes
52.2
46.9
Net Income
33.7
29.9
Current Assets
710.2
671.8
Current Liabilities
357.9
308.5
8.8
11.0
Net Sales Of Which: Fluid Handling
Capital Expenditures
Having acknowledged last October that it would face a difficult first half in 1999, this significant revenue reduction should come as no surprise to Gardner Denver. The manufacturer of compressors and blowers for industrial applications and pumps for the petroleum and industrial markets, saw revenues for the three months ended 31 March 1999 fall US$19.6 million to US$70.2 million. This reflects depressed demand for petroleum products resulting from lower oil prices in 1998, as well as slowing industrial production, which began in the second half of 1998, and negatively impacted orders for compressor products. Acquisitions provided US$6.8 million of incremental revenues in the three month period of 1999. Despite the unfavorable comparison in revenues and earnings per share, Ross Centanni, chairman, president and CEO, was pleased with the first quarter results.
He believes that if prices remain at their current elevated levels for three to six more months, Gardner Denver may begin to see a recovery in demand for petroleum products. Nevertheless, current demand is consistent with the company's expectations and backlog continued to decline during the first quarter. Meanwhile, Gardner Denver is pursuing its growth strategy through cost reductions and acquisitions. In early April 1999, Gardner Denver acquired the AllenStuart Equipment Company, with approximately US$14 million in annual revenues, and Butterworth Jetting Systems Inc, with approximately US$12 million in annual revenues. Butterworth adds to Gardner Denver's presence in the rapidly growing water jet market, serving the industrial cleaning and maintenance market, making the company less dependent on the petroleum industry. •
Crane's improved performance was led by Engineered Materials, where sales increased 49 per cent, or US$29.8 million, to US$91.1 million and operating profit increased a dramatic 94 per cent to US$14.7 million. Aerospace sales grew 3 per cent to US$97.1 million in the quarter, while Aerospace operating profit increased 8 per cent to US$27.2 million, benefiting from higher general aviation, after-market and repair/overhaul sales. Merchandising Systems sales and operating profit were both up 9 per cent, to US$50.3 million and US$9.5 million, respectively. Wholesale Distribution sales increased 16 per cent, or US$27.6 million, to US$200.1 million and operating profit increased 30 per cent, or US$1.3 million, to US$5.7 million. In contrast, Fluid Handling sales declined 11 per cent, or US$12.7 million, to US$105.3 million. Operating profit decreased 57 per cent, or US$5.1 million, to US$3.8 million. These declines were
due to a 31 per cent decline in Commercial Bronze and Iron Valve shipments and a 26 per cent decline in Cast Steel valve shipments. Commercial Valve's results were caused by a lack of shippable bronze valve product in the US and market weakness in the UK. Cast Steel was hit by weak demand from the oil and gas industry. Partially offsetting this, the Quarter Turn and Wafer Check businesses achieved higher first quarter earnings and improved their operating margins. The Nuclear business was strong, as the Liberty Technologies acquisition was integrated with Crane's existing service organisation. Operating profit margins were 3.7 per cent versus 7.6 per cent in 1998. Overall Fluid Handing order backlog totalled US$79.0 million at 31 March 1999, compared with US$115.5 million in 1998. Crane Controls sales decreased 14 per cent to US$30.2 million and operating profit declined 80 per cent, or US$2.4 million, to US$0.6 million. •
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