Gardner Denver, Inc. (GDI) Tops Q1 EPS by 4c, Revenues Beat; Affirms FY19 Adj. EBITDA Outlook
Gardner Denver, Inc. (NYSE: GDI) reported Q1 EPS of $0.38, $0.04 better than the analyst estimate of $0.34. Revenue for the quarter came in at $620 million versus the consensus estimate of $603.24 million.
- Revenues of $620 million, flat to prior year, and up 4% excluding the impact of foreign exchange (“FX”)
- Reported net income of $47 million increased 11% over the prior year
- Adjusted EBITDA of $140 million decreased 5% over the prior year, and down 2% excluding the impact of FX, with a margin of 22.6%
- Free cash flow of $55 million increased 9% over the prior year
- Completed debt repayment of $27 million from available cash on hand
- Reaffirming full year 2019 Adjusted EBITDA guidance range of $680 million to $710 million
Business Trends
“The first quarter was a solid quarter of balanced commercial and operational execution as the teams continued to utilize the principles of the Gardner Denver Execution Excellence process (“GDX”) to drive strong results,” said Vicente Reynal, Chief Executive Officer. “We continue to build a more resilient portfolio and delivered solid performance in spite of the known headwinds of FX, tariffs, European market concerns and expected declines in the upstream Energy business. In addition, Innovate–to-Value (“i2V”) and other operational efficiency efforts helped drive strong triple digit basis point margin expansion in our Industrials and Medical segments and offset some of the expected margin declines in the Energy segment.”
“Our Industrials segment continues to see resilient performance across all major geographies and delivered positive FX-adjusted orders and revenue growth. In particular, many of our niche products we have previously highlighted saw strong end market growth in food and beverage, pharmaceuticals and marine applications,” continued Reynal. “Within our Energy segment, the upstream business was consistent with expectations with the first quarter being the low point for the year. As expected, original equipment revenues were down due to minimal new build pump demand, but partially offset by double digit growth in consumables. I am particularly pleased with upstream margin performance as Adjusted EBITDA margins remained well above total Energy segment average. The mid and downstream businesses saw strong double digit revenue growth due in large part to solid execution on project backlog and stable end market order activity. Our Medical segment continued to execute on innovation and prior design wins driving double digit revenue growth and 260 basis points of Adjusted EBITDA margin expansion.”
“From a balance sheet perspective, I continue to be pleased with our working capital management and overall cash generation progress,” added Reynal. “Working capital improved over 400 basis points from prior year levels and our solid cash generation in the quarter allowed us to pay down another $27 million of debt.”
2019 Guidance and Outlook
“Given the solid first quarter performance and the expectation of continued commercial and operational execution, we are reaffirming our full year 2019 Adjusted EBITDA guidance range of $680 million to $710 million,” stated Reynal. “In addition, due to our prudent capital allocation process and continued, disciplined working capital management, we expect free cash flow to Adjusted Net Income conversion to be approximately 100%.”
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