Gardner Denver, Inc. (GDI) Tops Q4 EPS by 4c, Revenues Miss

Gardner Denver, Inc. (NYSE: GDI) reported Q4 EPS of $0.57, $0.04 better than the analyst estimate of $0.53. Revenue for the quarter came in at $713 million versus the consensus estimate of $725.81 million.

“2018 was an outstanding year for Gardner Denver as we delivered record revenue and Adjusted EBITDA performance through the execution of our simple and focused strategy,” said Vicente Reynal, Chief Executive Officer. “Our success is visible in our financial results with balanced execution across growth, profitability, margin expansion and efficient capital allocation. We increased revenues by 13% with each segment delivering double digit revenue growth and strong orders performance. Adjusted EBITDA grew 21% with margin expansion across each of the segments as we continue to see benefits from strong organic volume growth as well as operational efficiencies from programs like Innovate 2 Value (i2V). The performance across the business coupled with our engagement-driven focus on working capital management drove strong cash generation. As a result, we were able to deploy over $600 million of cash throughout the year in a balanced and efficient manner with $338 million deployed toward debt reduction, $186 million on four strategic and accretive acquisitions, $52 million to support high return internal capital expenditures projects and $29 million on share repurchases.”

“Specifically in the fourth quarter, our teams continued to deliver on strong commercial and operational execution, with Adjusted EBITDA growth of 10% and margin expansion of 60 basis points versus prior year, despite some of the known headwinds around FX, tariffs, the China economic landscape, and choppiness in upstream energy markets,” said Reynal. “In the Industrials segment, end market activity remained consistent with what we saw in the third quarter with solid performance across each of the underlying product technologies. In the Energy segment, our upstream business continued to execute well with 2% orders growth driven by strength in demand for consumables and aftermarket parts and services in spite of the known Permian take-away capacity constraints and noise regarding the operating environment. In the mid and downstream portions of the business, we saw the expected increase in project shipments that was anticipated entering the quarter, leading to 8% revenue growth. In the Medical segment, the healthy backlog entering the quarter led to strong double digit revenue growth and margin expansion.”

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

2019 Guidance and Outlook

“Looking ahead to 2019, we will continue to execute on our balanced strategy of growth, margin expansion and strong cash generation,” stated Reynal. “Despite ongoing trade tensions and uncertainty in the macro-environment, we are committed to above-market growth through the deployment of our commercial strategy of demand generation, differentiated innovation and accelerated aftermarket growth. As a result, we are expecting low to mid single digit revenue growth across total company, excluding the impact of FX, and low single digit growth including FX. We are introducing full year 2019 guidance for Adjusted EBITDA of $680 million to $710 million. In addition, we expect Free Cash Flow to Adjusted Net Income conversion to be approximately one hundred percent.”

For earnings history and earnings-related data on Gardner Denver, Inc. (GDI) click here.

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