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

Gardner Denver Second Quarter 2017 Earnings Presentation August 3, 2017

Replay Information ▪ Dial toll-free: +1.877.344.7529 ▪ International: +1.412.317.0088 ▪ Conference ID: #10110669 ▪ Log on to: http://investors.gardnerdenver.com 2

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 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 the appendix of this presentation. 3

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

Q2 Highlights Solid performance across all three segments and continued execution of our value-creation strategy  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 operational execution and the continued improvement in end market demand A premier industrial company with leading brands, mission-critical technologies, and diverse end market exposure 5

Q2 Highlights – Executing Our Strategy Strong Foundation, Clear Strategy, Committed Leadership  Creating a performance driven culture with highly engaged employees: Deploy Creating a great place to work – launched multi-year engagement initiative – Talent Acting like owners – awarded ~$100M in equity across ~6,000 employees –  Continuing to enhance expertise and talent in critical functions  Driving Lean Manufacturing across multiple sites (still early) Expand  Leveraging spend across organization (e.g., freight, sourcing) to generate further savings Margins  Maturing Value Engineering process to drive further product cost reductions  Commercializing new products with new sophisticated Demand Generation process Accelerate  Embedding smart technologies (e.g., iConn) into products Growth  Leveraging investments in emerging markets - “innovation in the region for the region” Allocate  Investing in core : new products, new technologies and emerging markets Capital  Reducing leverage : Net Debt-to-Adjusted LTM EBITDA target Effectively  Executing disciplined M&A based on clear strategic and financial criteria 6

Q2 Financial Performance (Dollars in millions, excl. EPS) Adjusted EPS 1 Revenues Adjusted EBITDA $132 $579 $0.24 $462 $87 $0.17 22.8% Margin 18.7% Margin 2016 2017 2016 2017 2016 2017 Up 25% Up 53% Up 41% Margin Up 410 bps 7 ¹ Adjusted EPS is defined as adjusted net income divided by adjusted diluted average shares outstanding

Q2 Financial Performance (continued) (Dollars in millions) Working Capital Free Cash Flow 2 Leverage (Op. Working Capital 1 as % of LTM Revenue) (Net Debt / LTM Adjusted EBITDA) 7.3x 32.6% $39 6.3x $10 3 4.2x $23 3.8x 30.4% $16 4 $12 2016 2017 2016 2017 Q2'16 Q1'17 Q1'17 Q2'17 Pro-forma IPO 5 Improved 220 bps Up 69% Improved 3.5 turns YOY 1 Operating Working Capital is defined as accounts receivable, plus inventories (excluding LIFO), less accounts payable and less advance payments on sale contracts 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 8 5 Q1 2017 reported leverage with Net Debt reduced by net IPO proceeds

Q2 Segment Performance 9

Industrials Segment – Q2 Highlights (Dollars in millions) As Prior YOY Ex-FX YOY Reported Year Change 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 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 Robox Energy Screw Blower volume and continued progress on productivity initiatives State-of-the-Art screw blower for wastewater applications, providing up to 50% cost reduction (VAVE, lean, restructuring) through energy savings and 30% reduction in space requirements 10

Energy Segment – Q2 Highlights (Dollars in millions) As Prior YOY Ex-FX YOY Reported Year Change 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 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 Thunder Pump volume and operational efficiencies 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 11

Medical Segment – Q2 Highlights (Dollars in millions) As Prior YOY Ex-FX YOY Reported Year Change 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 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 CRVpro Direct Drive Pump continued progress on productivity initiatives (VAVE, sourcing, Rotary vane vacuum pump providing increased life and service intervals for lab and life science restructuring) applications by running cooler and diluting aggressive chemicals 12

Full Year Guidance and Summary 13

2017 Guidance ▪ Adjusted EBITDA $510M to $530M ▪ Capital Expenditures $65M to $70M ▪ Year End Net Debt Leverage 1 Below 3.3x ▪ Average Shares Outstanding 2 187.9M ¹ Excluding the impact of any potential future acquisitions 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 14

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 position 1  Continuing execution of our value-creation strategy … Deploy Talent, Expand Margins, Accelerate Growth and Allocate Capital Effectively 15 ¹ Excluding the impact of any potential future acquisitions

Q&A 16

Appendix 17

Reconciliation of Net Loss and Loss Per Share to Adjusted Net Income and Adjusted Earnings per Share 18

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

Reconciliation of Segment Adjusted EBITDA to Loss Before Income Taxes 20