Gardner Denver Second Quarter 2017 Earnings Presentation August 3, - - PowerPoint PPT Presentation

Gardner Denver Second Quarter 2017 Earnings Presentation

August 3, 2017

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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 forward- looking 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 forward- looking 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 www.sec.gov). Forward- looking 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

• f America because management believes such measures are useful to investors. The reconciliation of those

measures to the most comparable GAAP measures is detailed in the appendix of this presentation.

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Agenda

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

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Q2 Highlights

• Revenues of $579M, up 25% versus prior year
• Adjusted EBITDA of $132M, up 53% versus the prior year, with adjusted EBITDA

margin of 22.8%, an improvement of 410 basis points versus prior year

• Full year 2017 guidance of adjusted EBITDA between $510M and $530M,

reflecting our strong first half performance, our confidence in commercial and

• perational execution and the continued improvement in end market demand

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Solid performance across all three segments and continued execution of our value-creation strategy A premier industrial company with leading brands, mission-critical technologies, and diverse end market exposure

Q2 Highlights – Executing Our Strategy

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

• Continuing to enhance expertise and talent in critical functions

Expand Margins

• Driving Lean Manufacturing across multiple 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

• Investing in core: new products, new technologies and emerging markets
• Reducing leverage: Net Debt-to-Adjusted LTM EBITDA target
• Executing disciplined M&A based on clear strategic and financial criteria

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Strong Foundation, Clear Strategy, Committed Leadership

Q2 Financial Performance

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¹ Adjusted EPS is defined as adjusted net income divided by adjusted diluted average shares outstanding

(Dollars in millions, excl. EPS)

Revenues

$462 $579 2016 2017

Adjusted EBITDA

$87 $132 2016 2017

Adjusted EPS1

$0.17 $0.24 2016 2017

Up 25% Up 53%

Margin Up 410 bps

Up 41%

22.8% Margin 18.7% Margin

Pro-forma IPO5

7.3x 6.3x 4.2x 3.8x Q2'16 Q1'17 Q1'17 Q2'17

Q2 Financial Performance (continued)

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(Dollars in millions)

Leverage Free Cash Flow2 Working Capital

(Op. Working Capital1 as % of LTM Revenue) (Net Debt / LTM Adjusted EBITDA)

$23 $12 $164 $103 2016 2017 $39 32.6% 30.4% 2016 2017

Improved 220 bps Up 69% Improved 3.5 turns YOY

2 Free Cash Flow is defined as cash flows from operations less capital expenditures 3 Interest pre-payment on Senior Subordinated Notes due to initial public offering 4 Cancellation fee of monitoring agreement due to initial public offering 5 Q1 2017 reported leverage with Net Debt reduced by net IPO proceeds 1 Operating Working Capital is defined as accounts receivable, plus inventories (excluding LIFO), less accounts payable and less advance payments on sale contracts

Q2 Segment Performance

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Industrials Segment – Q2 Highlights

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(Dollars in millions) Highlights:

• Orders up 6% ex-FX
• Revenues up 2% ex-FX; sequentially up 14% vs Q1
• Solid growth in the Americas and Europe
• Aftermarket revenues up 4% ex-FX; 35% of LTM revenue
• Adjusted EBITDA margin up 300 bps benefiting from increased

volume and continued progress on productivity initiatives (VAVE, lean, restructuring)

Robox Energy Screw Blower

State-of-the-Art screw blower for wastewater applications, providing up to 50% cost reduction through energy savings and 30% reduction in space requirements

As Reported Prior Year YOY Change Ex-FX YOY Change

Revenues $282.8 $280.8 0.7% 2.2% Adjusted EBITDA $63.4 $54.6 16.1% 17.9% Adjusted EBITDA Margin 22.4% 19.4% 300 bps

Energy Segment – Q2 Highlights

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(Dollars in millions) Highlights:

• Orders up 110% ex-FX; upstream up > 600%
• Revenues up 95% ex-FX; sequentially up 34% vs Q1
• Upstream revenues up > 375%; mid-downstream up mid-single digits
• Aftermarket revenues up 135% ex-FX; 56% of LTM revenue
• Adjusted EBITDA margin up 620 bps benefiting from increased

volume and operational efficiencies

As Reported Prior Year YOY Change Ex-FX YOY Change

Revenues $239.5 $123.5 93.9% 95.4% Adjusted EBITDA $62.2 $24.5 153.9% 155.6% Adjusted EBITDA Margin 26.0% 19.8% 620 bps

Thunder Pump

First-to-market 11-inch stroke length quintuplex hydraulic fracturing pump delivering 3,000 brake horsepower, 2-3X longer lasting fluid end technology, stainless steel construction, and enabled with Smart Pump technology

Medical Segment – Q2 Highlights

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(Dollars in millions) Highlights:

• Orders flat ex-FX
• Revenues flat ex-FX; sequentially up 3% vs Q1
• Continued strategic focus and expansion in Liquid Pumps &

Liquid Handling

• Adjusted EBITDA margin up 300 bps benefiting from

continued progress on productivity initiatives (VAVE, sourcing, restructuring)

As Reported Prior Year YOY Change Ex-FX YOY Change

Revenues $56.8 $57.7 (1.6%) (0.2%) Adjusted EBITDA $15.4 $13.9 10.8% 12.5% Adjusted EBITDA Margin 27.1% 24.1% 300 bps

CRVpro Direct Drive Pump

Rotary vane vacuum pump providing increased life and service intervals for lab and life science applications by running cooler and diluting aggressive chemicals

Full Year Guidance and Summary

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2017 Guidance

▪ Adjusted EBITDA

$510M to $530M

▪ Capital Expenditures

$65M to $70M

▪ Year End Net Debt Leverage1

Below 3.3x

▪ Average Shares Outstanding2

187.9M

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2 Represents the full year weighted average shares outstanding using H1’17 actuals and H2’17 forecast based on shares outstanding and share price as of 6/30/2017

¹ Excluding the impact of any potential future acquisitions

Summary

• Strong Q2 performance
• 25% revenue growth
• 22.8% adjusted EBITDA margin with margin expansion of 410 bps
• Solid incremental flow-through
• H2 2017
• Confident in delivering full year 2017 adjusted EBITDA guidance
• Reducing leverage position1
• Continuing execution of our value-creation strategy … Deploy Talent,

Expand Margins, Accelerate Growth and Allocate Capital Effectively

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¹ Excluding the impact of any potential future acquisitions

Q&A

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Appendix

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Reconciliation of Net Loss and Loss Per Share to Adjusted Net Income and Adjusted Earnings per Share

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Reconciliation of Net Loss to Adjusted EBITDA and Adjusted Net Income and CFOA to Free Cash Flow

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Reconciliation of Segment Adjusted EBITDA to Loss Before Income Taxes

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