Gardner Denver Third Quarter 2017 Earnings Presentation. October 26, 2017

Transcription

1 Gardner Denver Third Quarter 2017 Earnings Presentation October 26, 2017

2 Replay Information Dial toll-free: International: Conference ID: # Log on to: 2

3 Disclaimer Forward-Looking Statements During the course of this presentation, we may make forward-looking statements within the meaning of the US federal securities laws. In fact, all statements made during this presentation other than statements of historical fact are forward-looking statements. Words such as expects, anticipates, believes, estimates, plans, intends, projects and indicates and variations of such words or similar expressions are intended to identify forwardlooking statements. Although they reflect our current expectations, these statements are not guarantees of future performance, and actual results may differ materially from what is expressed in or indicated by these forwardlooking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in such forward-looking statements, including those risks and uncertainties described under the section titled Risk Factors in our prospectus dated May 11, 2017, filed with Securities and Exchange Commission ( SEC ) on May 15, 2017, which risks and uncertainties may be updated from time to time in our periodic filings with the SEC (accessible on the SEC s website at Forwardlooking statements speak only as of the date the statements are made. The Company does not undertake to update any forward-looking statements as a result of future developments or new information, except as required by law. Non-GAAP Financial Measures Included in this presentation are certain non-gaap financial measures designed to supplement, and not substitute, the financial information presented in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. The reconciliation of those measures to the most comparable GAAP measures is detailed in Gardner Denver s press release for the third quarter of 2017, which is available at together with this presentation. 3

4 Agenda Highlights Financial Performance Segment Highlights Full Year 2017 Guidance & Summary Q&A 4

5 Q3 Highlights Solid performance across all three segments and continued execution of our value-creation strategy Revenue of $650M, up 40% versus prior year Strong Execution Improving Leverage Profile Adjusted EBITDA of $165M, up 85% versus the prior year Adjusted EBITDA margin of 25.4%, an improvement of 620 basis points versus prior year Free cash flow generation of $54MM, up 210% versus prior year Net debt to adjusted EBITDA leverage improved from 3.8x to 3.2x versus the prior quarter & 1.0x turn since the time of the IPO Favorable Outlook Increasing 2017 guidance for adjusted EBITDA by 7% to $550M to $560M Targeting year-end net debt to adjusted EBITDA leverage of ~3.0x A premier industrial company with leading brands, mission-critical technologies, and diverse end market exposure 5

6 Q3 Highlights Executing Our Strategy Strong Foundation, Clear Strategy, Committed Leadership Deploy Talent Creating a performance driven culture with highly engaged employees: Creating a great place to work launched multi-year engagement initiative Acting like owners awarded ~$100M in equity across ~6,000 employees Continue to enhance expertise and talent in critical functions Expand Margins Driving Lean Manufacturing across multitude of sites (still early) Leveraging spend across organization (e.g., freight, sourcing) to generate further savings Maturing Value Engineering process to drive further product cost reductions Accelerate Growth Commercializing new products with new sophisticated Demand Generation process Embedding smart technologies (e.g., iconn) into products Leveraging investments in emerging markets - innovation in the region for the region Allocate Capital Effectively Invest in core: new products, new technologies and emerging markets Reduce leverage: Net Debt-to-Adjusted LTM EBITDA target Execute disciplined M&A based on clear strategic and financial criteria 6

7 Q3 Financial Performance (Dollars in millions, excl. EPS) Revenue Adjusted EBITDA Adjusted EPS 1 $650 $165 $0.41 $463 $ % Margin 25.4% Margin $ Up 40% Up 85% Margin Up 620 bps Up 173% ¹ Adjusted EPS is defined as adjusted net income divided by adjusted diluted average shares outstanding 7

8 Q3 Financial Performance (continued) (Dollars in millions) Working Capital (Op. Working Capital as % of LTM Sales) Free Cash Flow 1 Leverage (Net Debt / LTM Adjusted EBITDA) 31.9% $54 4.2x 3.8x 3.2x 30.8% $ Q1'17 Q2'17 Q3'17 Pro-forma IPO Improved 110 bps Up 210% Improved 0.6x sequentially ¹ Free Cash Flow is defined as cash flows from operations less capital expenditures 8

9 Q3 Segment Performance 9

10 Industrials Segment Q3 Highlights (Dollars in millions) As Reported Prior Year YOY Change Ex-FX YOY Change Revenue $288.2 $ % 5.9% Adjusted EBITDA $63.1 $ % 10.1% Adjusted EBITDA Margin 21.9% 20.9% 100 bps Innovation in Action Highlights: Orders up 14% as reported; up 11% ex-fx Revenue up 6% ex-fx Solid broad-based orders growth with all regions showing positive momentum versus prior year Adjusted EBITDA margin up 100 bps benefiting from increased volume and continued progress on productivity initiatives (VAVE, lean, restructuring) Ultima Oil Free Screw Compressor Entering $3B+ oil free market with state-of-theart compressor providing > 13% more energy efficiency, > 40% footprint reduction and lower noise levels than comparable machines. 10

11 Energy Segment Q3 Highlights (Dollars in millions) As Reported Prior Year YOY Change Ex-FX YOY Change Revenue $301.6 $ % 115.9% Adjusted EBITDA $98.6 $ % 342.7% Adjusted EBITDA Margin 32.7% 16.0% 1670 bps Innovation in Action Highlights: Orders up 48% as reported; up 46% ex-fx Revenue up 116% ex-fx Upstream revenue up > 250%; mid-downstream up double digits Aftermarket revenue up 107%; 55% of LTM sales Adjusted EBITDA margin up 1670 bps benefiting from increased volume and operational efficiencies Vacuum System for Chemical Manufacturing Engineered system for manufacture of specialty chemicals utilizing both Nash vacuum liquid ring pumps and Industrial blower technology. First system of its kind manufactured in Gardner Denver s India facility. 11

12 Medical Segment Q3 Highlights (Dollars in millions) As Reported Prior Year YOY Change Ex-FX YOY Change Revenue $59.8 $ % (0.9%) Adjusted EBITDA $16.8 $ % (1.4%) Adjusted EBITDA Margin 28.1% 28.1% 0 bps Innovation in Action Highlights: Orders up 19% as reported; up 17% ex-fx Revenue up 7% excluding impacts of FX and dual sourcing customer transition Seeing an increase in quotations and design specifications for liquid pumps and liquid handling solutions solid momentum heading into Adjusted EBITDA margin flat Gardner Denver MC6000 Syringe Pump Entering genomics end market with multichannel syringe pump designed for optimum liquid handling performance and longer life and reliability. 12

13 Full Year Guidance and Summary 13

14 2017 Guidance Adjusted EBITDA $550M to $560M Capital Expenditures $50M to $60M Year End Net Debt Leverage 1 ~3.0x Average Shares Outstanding M ¹ Excluding the impact of any potential future acquisitions 2 Represents the full year computation of weighted average shares outstanding and share price as of 9/30/

15 Summary Across the board strength in Q3 40% revenue growth with double-digit orders growth across all three segments 25.4% adjusted EBITDA margin with margin expansion of 620 bps Leverage reduction to 3.2X 4Q 2017 building on current momentum Raising full year 2017 Adjusted EBITDA guidance Strong cash flow generation and further reducing leverage position 1 Continued execution of our value-creation strategy Deploy Talent, Expand Margins, Accelerate Growth and Allocate Capital Effectively ¹ Excluding the impact of any potential future acquisitions 15

16 Q&A 16

17 Appendix 17

18 Reconciliation of Net Income/(Loss) and Earnings/(Loss) per Share to Adjusted Net Income and Adjusted Earnings per Share 18

19 Reconciliation of Net Income/(Loss) to Adjusted EBITDA and Adjusted Net Income and CFOA to Free Cash Flow 19

20 Reconciliation of Segment Adjusted EBITDA to Income/(Loss) Before Income Taxes 20