Apergy Corporation (“Apergy”) (NYSE: APY) today reported full
year 2019 revenue of $1.1 billion and net income attributable to
Apergy of $52.2 million. Adjusted net income attributable to
Apergy was $77.1 million. Full year 2019 adjusted EBITDA was $251.2
million. Income before income taxes margin was 5.2%, and adjusted
EBITDA margin was 22.2%. Net cash provided by operating activities
was $155.9 million and free cash flow was $116.1 million for the
full year. i
For the fourth quarter revenue was $247.7 million, net loss
attributable to Apergy of $1.8 million, and adjusted net income
attributable to Apergy of $10.3 million. Adjusted EBITDA was $44.6
million. Loss before income taxes margin was 4.3%, and adjusted
EBITDA margin was 18.0%. Fourth quarter adjusted EBITDA included
$7.7 million of isolated charges, including a customer bankruptcy,
fixed asset adjustments, and customer concessions within our U.S.
artificial lift business. Cash from operating activities in the
fourth quarter of 2019 was $32.5 million, and free cash flow was
$24.3 million.
“The past year has been an eventful and transformative year for
Apergy. We executed well during a period of changing market
conditions, continued to invest in delivering superior products and
services to our customers, plus announced a strategically important
merger with ChampionX which will help propel our growth into the
next decade,” said Sivasankaran “Soma” Somasundaram, President and
Chief Executive Officer. “For full year 2019, we generated adjusted
EBITDA of $251 million and free cash flow of $116 million,
continuing to demonstrate the profitability and cash generating
capabilities of our portfolio. Consistent with our capital
allocation priorities, we repaid $105 million of term loan debt in
2019, including $30 million in the fourth quarter. Our disciplined
capital management and focus on cash generation has enabled us to
repay $150 million of debt since our spin-off.
“During the fourth quarter, our teams executed well against a
challenging market backdrop, including the effects of E&P
budget exhaustion in North America. The quarter had a number of
unusual items affecting results including additional third-party
expenses related to our third quarter Form 10-Q filing and charges
related to isolated customer collection challenges with a small
number of customers in our U.S. artificial lift business, including
one bankruptcy, dispute settlements, and customer concessions. I am
pleased that on an operational basis our results showed continued
margin resiliency and strong free cash flow generation. In
addition, we introduced several new products in the fourth
quarter.
“Since the beginning of the new year, we have seen business
activity levels sequentially improve, driven by reloaded North
American E&P capital budgets, continued international growth,
as well as increased orders by our drill bit customers.
Consolidated January 2020 revenue was 11% greater than December
2019 revenue with particular strength in Drilling Technologies,
which increased 29%. Additionally, we remain focused on managing
our costs, including building on our restructuring savings
implemented to date, as well as driving free cash flow generation.
Consistent with historical performance, for Apergy, we expect to
deliver a free cash flow to revenue ratio of approximately 10% for
full year 2020. While the near-term market remains volatile due to
global events, we remain focused on the factors under our
control.
“Looking ahead, our merger with ChampionX is expected to close
by the end of the second quarter. We are pleased that ChampionX
performed as we expected in 2019. Our integration planning is well
underway, and as we make progress on our integration planning we
are even more excited about our future as a combined company, and
we have increased confidence in achieving our target of $75 million
in annual cost synergies. We expect our planned merger with
ChampionX to solidify our position as a focused, scale leader in
the production segment by delivering our customers a full suite of
production-optimization solutions. The combined company will have a
strong balance sheet, greater scale, a larger geographic footprint,
enhanced customer touchpoints, and reduced leverage supported by
strong cash flow generation through the oil and gas cycle. Given
the strengths of the combined portfolio, and the benefits of cost
synergies, together with ChampionX, we expect to achieve another
year of differentiated performance in 2020.” ii
Full Year 2019 Results Summary
|
|
Twelve Months Ended |
|
|
|
(dollars in thousands, except per share
amounts) |
|
Dec. 31,2019 |
|
|
Dec. 31, 2018 |
|
|
Variance |
Revenue |
$ |
1,131,251 |
|
$ |
1,218,156 |
|
|
(7)% |
|
|
|
|
|
|
|
|
|
Net income attributable to
Apergy |
$ |
52,164 |
|
$ |
92,737 |
* |
|
(44)% |
Diluted earnings per share
attributable to Apergy |
$ |
0.67 |
|
$ |
1.19 |
|
|
(44)% |
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to Apergy |
$ |
77,130 |
|
$ |
110,702 |
|
|
(30)% |
Adjusted diluted earnings per
share attributable to Apergy |
$ |
0.99 |
|
$ |
1.42 |
|
|
(30)% |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
$ |
59,186 |
|
$ |
121,353 |
|
|
(51)% |
Income before income taxes
margin |
|
5.2% |
|
|
10.0% |
|
|
480 bps |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
251,168 |
|
$ |
294,735 |
|
|
(15)% |
Adjusted EBITDA margin |
|
22.2% |
|
|
24.2% |
|
|
(200) bps |
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
$ |
155,899 |
|
$ |
163,900 |
|
$ |
(8,001) |
Capital expenditures |
$ |
39,780 |
|
$ |
57,918 |
|
$ |
(18,138) |
|
|
|
|
*Twelve months
ended Dec. 31, 2018 includes lower interest expense prior to
Apergy’s spin-off into a separate public company. |
|
|
|
Twelve Months Ended |
|
|
(dollars in thousands) |
|
Dec. 31,2019 |
|
Dec. 31,2018 |
|
Variance |
Production & Automation
Technologies |
|
|
|
|
|
|
Revenue |
$ |
884,364 |
$ |
932,591 |
|
(5)% |
Operating profit |
$ |
54,024 |
$ |
74,187 |
|
(27)% |
Operating profit
margin |
|
6.1% |
|
8.0% |
|
(190) bps |
Adjusted segment
EBITDA |
$ |
179,820 |
$ |
193,766 |
|
(7)% |
Adjusted segment EBITDA
margin |
|
20.3% |
|
20.8% |
|
(50) bps |
|
|
|
|
|
|
|
Drilling Technologies |
|
|
|
|
|
|
Revenue |
$ |
246,887 |
$ |
285,565 |
|
(14)% |
Operating profit |
$ |
73,497 |
$ |
98,620 |
|
(25)% |
Operating profit
margin |
|
29.8% |
|
34.5% |
|
(470) bps |
Adjusted segment
EBITDA |
$ |
83,870 |
$ |
109,657 |
|
(24)% |
Adjusted segment EBITDA
margin |
|
34.0% |
|
38.4% |
|
(440) bps |
Production & Automation Technologies - Full Year
2019
For full year 2019, Production & Automation Technologies
revenue decreased $48.2 million, or 5%, driven by lower customer
spending in North America, including the effects of E&P capital
discipline in the second half of the year, partially offset by
increasing international activity. North American revenue declined
by $59.8 million, or 8%, and international revenue increased by
$11.5 million, or 8%.
Revenue from digital products was $134.7 million for full year
2019, an increase of $15.4 million, or 13%, compared to the
full-year 2018.
Segment operating profit decreased $20.2 million, and adjusted
segment EBITDA decreased $13.9 million, or 7%, due to the lower
North American volume and the $7.7 million of isolated charges,
which includes a customer bankruptcy, fixed asset adjustments, and
customer concessions within the U.S. artificial lift business,
partially offset by the benefits of cost reduction actions and
productivity initiatives.
Drilling Technologies - Full Year 2019
For full year 2019, Drilling Technologies revenue decreased by
$38.7 million, or 14%, driven by the significant decline in U.S.
drilling activity in the second half of 2019 and the related
customer destocking of polycrystalline diamond cutter inventories,
as well as the push-out of diamond bearings deliveries due to
capital discipline by our oilfield services customers.
Segment operating profit decreased $25.1 million and adjusted
segment EBITDA decreased by $25.8 million, or 24%, due to the lower
volumes, partially offset by aggressive cost reduction actions,
including headcount reductions taken in the third and fourth
quarters, as well as the benefits of productivity initiatives.
Fourth Quarter 2019 Results Summary
|
Three Months Ended |
|
|
Variance |
(dollars in thousands, except per share
amounts) |
|
Dec. 31,2019 |
|
|
Sept. 30,2019 |
|
|
Dec. 31,2018 |
|
|
Sequential |
|
Year-over-year |
Revenue |
$ |
247,748 |
|
$ |
276,839 |
|
$ |
313,133 |
|
|
(11)% |
|
(21)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to Apergy |
$ |
(1,823) |
|
$ |
11,394 |
|
$ |
23,187 |
|
|
N/M |
|
N/M |
Diluted earnings per share
attributable to Apergy |
$ |
(0.02) |
|
$ |
0.15 |
|
$ |
0.30 |
|
|
N/M |
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to Apergy |
$ |
10,287 |
|
$ |
18,620 |
|
$ |
28,512 |
|
|
(45)% |
|
(64)% |
Adjusted diluted earnings per
share attributable to Apergy |
$ |
0.13 |
|
$ |
0.24 |
|
$ |
0.37 |
|
|
(46)% |
|
(65)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
$ |
(10,622) |
|
$ |
15,013 |
|
$ |
27,951 |
|
|
N/M |
|
N/M |
Income (loss) before income
taxes margin |
|
(4.3)% |
|
|
5.4% |
|
|
8.9% |
|
|
N/M |
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
44,643 |
|
$ |
63,647 |
|
$ |
78,395 |
|
|
(30)% |
|
(43)% |
Adjusted EBITDA margin |
|
18.0% |
|
|
23.0% |
|
|
25.0% |
|
|
(500) bps |
|
(700) bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
$ |
32,509 |
|
$ |
64,089 |
|
$ |
70,869 |
|
$ |
(31,580) |
$ |
(38,360) |
Capital expenditures |
$ |
8,191 |
|
$ |
8,901 |
|
$ |
15,035 |
|
$ |
(710) |
$ |
(6,844) |
|
|
|
|
|
|
N/M – not
meaningful |
|
|
|
|
|
|
Three Months Ended |
|
Variance |
(dollars in thousands) |
|
Dec. 31,2019 |
|
|
Sept. 30,2019 |
|
|
Dec. 31,2018 |
|
Sequential |
|
Year-over-year |
Production & Automation
Technologies |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
203,625 |
|
$ |
221,961 |
|
$ |
237,295 |
|
(8)% |
|
(14)% |
Operating profit |
$ |
2,175 |
|
$ |
18,971 |
|
$ |
19,280 |
|
(89)% |
|
(89)% |
Operating profit margin |
|
1.1% |
|
|
8.5% |
|
|
8.1% |
|
(740) bps |
|
(700) bps |
Adjusted segment EBITDA |
$ |
35,668 |
|
$ |
50,462 |
|
$ |
51,103 |
|
(29)% |
|
(30)% |
Adjusted segment EBITDA margin |
|
17.5% |
|
|
22.7% |
|
|
21.5% |
|
(520) bps |
|
(400) bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling Technologies |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
44,123 |
|
$ |
54,878 |
|
$ |
75,838 |
|
(20)% |
|
(42)% |
Operating profit |
$ |
8,644 |
|
$ |
13,796 |
|
$ |
26,882 |
|
(37)% |
|
(68)% |
Operating profit margin |
|
19.6% |
|
|
25.1% |
|
|
35.4% |
|
(550) bps |
|
(1,580) bps |
Adjusted segment EBITDA |
$ |
11,412 |
|
$ |
16,566 |
|
$ |
29,540 |
|
(31)% |
|
(61)% |
Adjusted segment EBITDA margin |
|
25.9% |
|
|
30.2% |
|
|
39.0% |
|
(430) bps |
|
(1,310) bps |
Production & Automation Technologies –
Q4-19
In the fourth quarter of 2019, Production & Automation
Technologies revenue decreased $18.3 million, or 8%, sequentially,
driven by lower customer spending in North America, including the
effects of E&P budget exhaustion and capital discipline,
particularly in December, as our U.S. customers restrained their
spending to manage cash flow during 2019.
On a year-over-year basis, Production & Automation
Technologies revenue decreased $33.7 million, or 14%, due to lower
artificial lift and other production equipment revenue in North
America, partially offset by higher international and digital
revenue.
International markets continue to remain positive, and our
Production & Automation Technologies fourth quarter revenue
outside of North America was up 3% sequentially and 11% on a
year-over-year basis.
Revenue from digital products was $34.6 million in the fourth
quarter of 2019, an increase of less than 1% on a sequential basis
and 6% compared to the fourth quarter of 2018.
Segment operating profit decreased $16.8 million, and adjusted
segment EBITDA decreased $14.8 million, or 29%, sequentially, due
to the reduced volume and an unfavorable product margin mix,
combined with the $7.7 million of isolated charges, which includes
a customer bankruptcy, fixed asset adjustments, and customer
concessions within the U.S. artificial lift business, which were
partially offset by cost reduction actions.
On a year-over-year basis, segment operating profit decreased
$17.1 million and adjusted segment EBITDA decreased $15.4 million,
or 30%, due to the lower volume and the $7.7 million isolated
charge, which were partially offset by cost reduction actions.
Drilling Technologies – Q4-19
In the fourth quarter of 2019, Drilling Technologies revenue
decreased by $10.8 million, or 20%, sequentially, driven by the
decline in U.S. drilling activity and customer destocking of
polycrystalline diamond cutter inventories, as well as the push-out
of orders for diamond bearings due to capital discipline by our
oilfield services customers.
From an operational perspective, within our Drilling
Technologies segment, order rates for polycrystalline diamond
cutters stabilized and subsequently improved in the later stages of
the fourth quarter of 2019 as customers completed their inventory
destocking activities, and we have seen improved order rates
entering 2020. The estimated impact of destocking by our drill bit
customers on our fourth quarter 2019 Drilling Technologies revenue
was an incremental $4 million from the third quarter of 2019.
Sequentially, the average worldwide and U.S. rig counts declined
5% and 11%, respectively. On a year-over-year basis, the average
worldwide and U.S. rig counts declined 11% and 24%,
respectively.
Segment operating profit decreased $5.2 million and adjusted
segment EBITDA decreased by $5.2 million, or 31%, sequentially, due
to the lower volumes, partially offset by cost reduction actions
executed at the end of the third quarter, and the benefits of
productivity initiatives.
Year-over-year, segment operating profit decreased $18.2
million, and adjusted segment EBITDA decreased by $18.1 million, or
61%, as a result of the lower volume, partially offset by cost
reduction actions and productivity initiatives.
Q1-20 Guidance
Based on order rates across both segments, Apergy anticipates
sequential improvement across its business in Q1-20 and is
providing guidance for the quarter as follows:
|
|
Three Months EndedMarch 31,
2020 |
Consolidated revenue |
|
$255 to $265 million |
|
|
|
Adjusted EBITDA |
|
$50 to $56 million |
|
|
|
Depreciation & amortization expense |
|
~$30 million |
|
|
|
Interest expense |
|
~$9 million |
|
|
|
Effective tax rate |
|
22% to 24% |
|
|
|
For full year 2020, we expect our capital expenditures to
be:
- Infrastructure related capital expenditures equal to 2.5% of
revenue; plus
- Capital expenditure portion for leased ESP investment between
$5 and $10 million
For full year 2020, we expect the investment in leased assets in
the net cash from operating activities section of our consolidated
statement of cash flows to be between $20 and $25 million.
Adjusted EBITDA and free cash flow to revenue ratio are non-GAAP
financial measures. Management cannot reliably or reasonably
predict certain of the necessary components of the most directly
comparable forward-looking GAAP measures, such as net income and
cash from operating activities. Accordingly, we are unable to
present a quantitative reconciliation of the forward looking
non-GAAP financial measures to their most directly comparable
forward-looking GAAP financial measures. Amounts excluded from the
non-GAAP measures in future periods could be significant. However,
we use adjusted EBITDA and free cash flow to revenue ratio as
internal measures of the company’s operational results and believe
they are good tools for the investment community to evaluate
Apergy’s overall financial performance across periods.
Other Business Highlights
- For the second year in a row, Apergy was recognized as the
leader in total customer satisfaction in oilfield products for
2020, as well as first in 8 additional categories, in a survey
conducted by EnergyPoint Research, an independent customer
satisfaction research firm.
- Expect to capture Electric Submersible Pump (“ESP”) field trial
with one additional major International Oil Company (IOC) in the
Permian basin.
- Launched XSPOC 3.0 production optimization software providing a
number of powerful updates including optimization, artificial
intelligence, and physics-based diagnostics enabling customers to
reduce their production costs and increase flow.
- Designed and launched the Affirmed™ PowerFit motor for
slim hole ESP applications, providing customers with increased
productivity in small diameter unconventional wells.
- Seventy-eight patents were issued to Drilling Technologies in
2019, twenty-one were issued in the fourth quarter of 2019.
- Developed improved application-specific designs for
polycrystalline diamond cutters across multiple basins to enhance
performance in both abrasion and impact applications.
Conference Call Details
Apergy Corporation will host a conference call on Tuesday,
February 25, 2020, to discuss its fourth quarter and full year 2019
financial results. The call will begin at 10:00 a.m. Eastern Time.
Presentation materials that supplement the conference call are
available on Apergy’s website at www.investors.apergy.com.
To listen to the call via a live webcast, please visit Apergy’s
website at www.apergy.com. The call will also be available by
dialing 1-888-517-2464 in the United States and Canada or
1-630-827-6816 for international calls. Please call approximately
15 minutes prior to the scheduled start time and reference Apergy
conference call number 7198 051.
A replay of the conference call will be available on Apergy’s
website. Also, a replay may be accessed by dialing 1-888-843-7419
in the United States and Canada, or 1-630-652-3042 for
international calls. The access code is 7198 051#.
Basis of Presentation
For periods prior to May 9, 2018 (the “Separation”), our results
of operations, financial position and cash flows are derived from
the consolidated financial statements and accounting records of
Dover Corporation (“Dover”) and reflect the combined historical
results of operations, financial position and cash flows of certain
Dover entities conducting its upstream oil and gas energy business
within Dover’s Energy segment, including an allocated portion of
Dover’s corporate costs. Our financial statements have been
presented as if such businesses had been combined for all periods
prior to the Separation. These pre-Separation combined financial
statements may not include all of the actual expenses that would
have been incurred had we been a stand-alone public company during
the periods presented prior to the Separation, and consequently may
not reflect our results of operations, financial position and cash
flows had we been a stand-alone public company during the periods
presented prior to the Separation. All financial information
presented after the Separation represents the consolidated results
of operations, financial position and cash flows of Apergy.
About Non-GAAP Measures
In addition to financial results determined in accordance with
generally accepted accounting principles in the United States
(“GAAP”), this news release presents non-GAAP financial measures.
Management believes that adjusted EBITDA, adjusted EBITDA margin,
adjusted segment EBITDA, adjusted segment EBITDA margin, adjusted
net income attributable to Apergy, adjusted diluted earnings per
share attributable to Apergy, reflect the core operating results of
our businesses and help facilitate comparisons of operating
performance across periods. In addition, free cash flow and free
cash flow to revenue ratio are used by management to measure our
ability to generate positive cash flow for debt reduction and to
support our strategic objectives, while adjusted working capital
provides a meaningful measure of operational results by showing
changes caused by revenue or our operational initiatives. The
foregoing non-GAAP financial measures should be considered in
addition to, not as a substitute for or superior to, other measures
of financial performance prepared in accordance with GAAP. A
reconciliation of these non-GAAP measures to the comparable GAAP
measures is included in the accompanying financial tables.
About Apergy Apergy is a leading provider of
highly engineered equipment and technologies that help companies
drill for and produce oil and gas safely and efficiently around the
world. Apergy's products provide efficient functioning throughout
the lifecycle of a well - from drilling to completion to
production. Apergy’s Production & Automation Technologies
offerings consist of artificial lift equipment and solutions,
including rod pumping systems, electric submersible pump systems,
progressive cavity pumps and drive systems and plunger lifts, as
well as a full automation and digital offering consisting of
equipment and software for Industrial Internet of Things (“IIoT”)
solutions for downhole monitoring, wellsite productivity
enhancement, and asset integrity management. Apergy’s
Drilling Technologies offering provides market leading
polycrystalline diamond cutters and bearings that result in cost
effective and efficient drilling. To learn more about Apergy, visit
our website at http://www.apergy.com.
Forward-Looking Statements
This news release contains statements relating to future actions
and results, which are "forward-looking statements" within the
meaning of the Securities Exchange Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995. Such statements
relate to, among other things, Apergy's market position and
growth opportunities. Forward-looking statements include, but
are not limited to, statements related to Apergy’s planned merger
with ChampionX, statements related to Apergy’s expectations
regarding the performance of the business, financial results,
liquidity and capital resources of Apergy, the effects of
competition, and the effects of future legislation or regulations
and other non-historical statements. Forward-looking statements are
subject to inherent risks and uncertainties that could cause actual
results to differ materially from current expectations, including,
but not limited to, tax and regulatory matters; and changes in
economic, competitive, strategic, technological, regulatory or
other factors that affect the operation
of Apergy's businesses. You are encouraged to refer to
the documents that Apergy files from time to time with
the Securities and Exchange Commission (the “SEC”), including
the “Risk Factors” in Apergy’s Annual Report on Form 10-K for the
year ended December 31, 2018, and in Apergy’s other filings with
the SEC, for a discussion of these and other risks and
uncertainties. Readers are cautioned not to place undue reliance on
Apergy’s forward-looking statements. Forward-looking statements
speak only as of the day they are made and Apergy undertakes
no obligation to update any forward-looking statement, except as
required by applicable law.
Important Information About the ChampionX Transaction
and Where to Find It
In connection with the proposed transaction, Apergy has filed a
preliminary proxy statement on Schedule 14A and a registration
statement on Form S-4 containing a prospectus with the Securities
and Exchange Commission (the “SEC”) and ChampionX Holding Inc. has
filed a registration statement on Form S-4 and Form S-1 containing
a prospectus. Both Apergy and ChampionX expect to file
amendments to these filings before they become effective.
INVESTORS AND SECURITYHOLDERS ARE ADVISED TO READ THE REGISTRATION
STATEMENTS/PROSPECTUSES AND PRELIMINARY PROXY STATEMENT AND ANY
FURTHER AMENDMENTS WHEN THEY BECOME AVAILABLE AS WELL AS ANY OTHER
RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT APERGY, ECOLAB, CHAMPIONX AND
THE PROPOSED TRANSACTION. Investors and securityholders may obtain
a free copy of the registration statements/prospectuses and
preliminary proxy statement and any further amendments (when
available) and other documents filed by Apergy, Ecolab and
ChampionX with the SEC at the SEC’s website at
http://www.sec.gov. The registration statements/prospectuses
and preliminary proxy statement and other documents (when they are
available) can also be obtained free of charge from Ecolab upon
written request to Ecolab Inc., Attn: Investor Relations, 1 Ecolab
Place, St. Paul, MN 55102, or by e-mailing
investor.info@ecolab.com, or upon written request to Apergy,
Investor Relations, 2445 Technology Forest Boulevard, The
Woodlands, Texas 77381, or by e-mailing
david.skipper@apergy.com.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any
security holder of Apergy. However, Apergy, Ecolab and certain of
their respective directors and executive officers may be deemed to
be participants in the solicitation of proxies from shareholders of
Apergy in connection with the proposed transaction under the rules
of the SEC. Information regarding the persons who are, under the
rules of the SEC, participants in the solicitation of the
stockholders of Apergy in connection with the proposed
transactions, including a description of their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the proxy statement/prospectus when it is filed with the SEC.
Information about the directors and executive officers of Ecolab
may be found in its Annual Report on Form 10-K filed with the SEC
on March 1, 2019, and its definitive proxy statement relating to
its 2019 Annual Meeting of Shareholders filed with the SEC on March
15, 2019. Information about the directors and executive officers of
Apergy may be found in its Annual Report on Form 10-K filed with
the SEC on February 27, 2019, and its definitive proxy statement
relating to its 2019 Annual Meeting of Stockholders filed with the
SEC on March 25, 2019.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote of approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Investor Contact: David Skipperdavid.skipper@apergy.com
713-230-8031
Media Contact: John Breedjohn.breed@apergy.com281-403-5751
____________i Adjusted net income attributable to Apergy,
adjusted EBITDA, adjusted EBITDA margin, adjusted segment EBITDA,
adjusted segment EBITDA margin, free cash flow, and free cash flow
to revenue are non-GAAP measures. See section titled “About
Non-GAAP Measures” below for details on the non-GAAP measures used
in this release.ii The transaction with ChampionX is subject to
customary closing conditions, including the effectiveness of Apergy
and Ecolab Inc. (“Ecolab”) filings with the Securities and Exchange
Commission, Apergy shareholder approval, consummation of the
ChampionX separation from Ecolab, and regulatory approvals.
APERGY CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF
INCOME(UNAUDITED)
|
Three Months Ended |
|
Year Ended |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
December 31, |
(in thousands, except
per share amounts) |
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue |
$ |
247,748 |
|
|
$ |
276,839 |
|
|
$ |
313,133 |
|
|
$ |
1,131,251 |
|
|
$ |
1,218,156 |
|
Cost of goods and
services |
175,114 |
|
|
184,140 |
|
|
206,538 |
|
|
754,147 |
|
|
801,152 |
|
Gross
profit |
72,634 |
|
|
92,699 |
|
|
106,595 |
|
|
377,104 |
|
|
417,004 |
|
Selling, general and
administrative expense (1) |
75,047 |
|
|
68,405 |
|
|
69,311 |
|
|
276,014 |
|
|
264,947 |
|
Interest expense, net |
9,075 |
|
|
9,590 |
|
|
10,677 |
|
|
39,301 |
|
|
27,648 |
|
Other (income) expense,
net |
(866 |
) |
|
(309 |
) |
|
(1,344 |
) |
|
2,603 |
|
|
3,056 |
|
Income (loss) before
income taxes |
(10,622 |
) |
|
15,013 |
|
|
27,951 |
|
|
59,186 |
|
|
121,353 |
|
Provision for (benefit from)
income taxes |
(9,048 |
) |
|
3,425 |
|
|
4,604 |
|
|
6,226 |
|
|
28,162 |
|
Net income
(loss) |
(1,574 |
) |
|
11,588 |
|
|
23,347 |
|
|
52,960 |
|
|
93,191 |
|
Net income attributable to
noncontrolling interest |
249 |
|
|
194 |
|
|
160 |
|
|
796 |
|
|
454 |
|
Net income (loss)
attributable to Apergy |
$ |
(1,823 |
) |
|
$ |
11,394 |
|
|
$ |
23,187 |
|
|
$ |
52,164 |
|
|
$ |
92,737 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
attributable to Apergy: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
|
$ |
0.15 |
|
|
$ |
0.30 |
|
|
$ |
0.67 |
|
|
$ |
1.20 |
|
Diluted |
$ |
(0.02 |
) |
|
$ |
0.15 |
|
|
$ |
0.30 |
|
|
$ |
0.67 |
|
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
77,460 |
|
|
77,460 |
|
|
77,347 |
|
|
77,427 |
|
|
77,342 |
|
Diluted |
77,460 |
|
|
77,573 |
|
|
77,546 |
|
|
77,624 |
|
|
77,692 |
|
_______________________(1) Includes $9.8 million in
acquisition transaction costs, $2.8 million in extended filing
costs, and $0.4 million in intellectual property defense costs for
the three months ended December 31, 2019.
APERGY CORPORATIONBUSINESS SEGMENT
DATA(UNAUDITED)
|
Three Months Ended |
|
Year Ended |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
December 31, |
(in
thousands) |
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Segment
revenue: |
|
|
|
|
|
|
|
|
|
Production & Automation Technologies |
$ |
203,625 |
|
|
$ |
221,961 |
|
|
$ |
237,295 |
|
|
$ |
884,364 |
|
|
$ |
932,591 |
|
Drilling Technologies |
44,123 |
|
|
54,878 |
|
|
75,838 |
|
|
246,887 |
|
|
285,565 |
|
Total revenue |
$ |
247,748 |
|
|
$ |
276,839 |
|
|
$ |
313,133 |
|
|
$ |
1,131,251 |
|
|
$ |
1,218,156 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
Segment operating
profit: |
|
|
|
|
|
|
|
|
|
Production & Automation
Technologies |
$ |
2,175 |
|
|
$ |
18,917 |
|
|
$ |
19,280 |
|
|
$ |
54,024 |
|
|
$ |
74,187 |
|
Drilling Technologies |
8,644 |
|
|
13,796 |
|
|
26,882 |
|
|
73,497 |
|
|
98,620 |
|
Total segment operating profit |
10,819 |
|
|
32,713 |
|
|
46,162 |
|
|
127,521 |
|
|
172,807 |
|
Corporate expense and other
(1) |
12,366 |
|
|
8,110 |
|
|
7,534 |
|
|
29,034 |
|
|
23,806 |
|
Interest expense, net |
9,075 |
|
|
9,590 |
|
|
10,677 |
|
|
39,301 |
|
|
27,648 |
|
Income (loss) before income taxes |
$ |
(10,622 |
) |
|
$ |
15,013 |
|
|
$ |
27,951 |
|
|
$ |
59,186 |
|
|
$ |
121,353 |
|
|
|
|
|
|
|
|
|
|
|
Bookings: |
|
|
|
|
|
|
|
|
|
Production & Automation
Technologies |
$ |
205,604 |
|
|
$ |
228,632 |
|
|
$ |
233,178 |
|
|
$ |
881,106 |
|
|
$ |
941,302 |
|
Book-to-bill ratio (2) |
1.01 |
|
|
1.03 |
|
|
0.98 |
|
|
1.00 |
|
|
1.01 |
|
Drilling Technologies |
$ |
43,958 |
|
|
$ |
49,337 |
|
|
$ |
78,005 |
|
|
$ |
236,282 |
|
|
$ |
293,473 |
|
Book-to-bill ratio (2) |
1.00 |
|
|
0.90 |
|
|
1.03 |
|
|
0.96 |
|
|
1.03 |
|
_______________________(1) Corporate expense and other
includes costs not directly attributable to our reporting segments
such as corporate executive management and other administrative
functions, costs related to our separation from Dover Corporation
and the results attributable to our noncontrolling
interest.(2) The book-to-bill ratio compares the dollar value
of orders received (bookings) relative to revenue realized during
the period.
APERGY CORPORATIONCONDENSED
CONSOLIDATED BALANCE
SHEETS(UNAUDITED)
(in
thousands) |
December 31, 2019 |
|
December 31, 2018 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
35,290 |
|
|
$ |
41,832 |
|
Receivables, net |
219,874 |
|
|
251,436 |
|
Inventories, net |
211,342 |
|
|
219,421 |
|
Prepaid expenses and other
current assets |
26,934 |
|
|
18,534 |
|
Total current assets |
493,440 |
|
|
531,223 |
|
|
|
|
|
Property, plant and equipment,
net |
248,181 |
|
|
244,328 |
|
Goodwill |
911,113 |
|
|
904,985 |
|
Intangible assets, net |
238,707 |
|
|
283,688 |
|
Other non-current assets |
31,384 |
|
|
8,892 |
|
Total
assets |
1,922,825 |
|
|
1,973,116 |
|
|
|
|
|
Liabilities |
|
|
|
Accounts payable |
120,291 |
|
|
140,125 |
|
Other current liabilities |
79,390 |
|
|
73,627 |
|
Total current liabilities |
199,681 |
|
|
213,752 |
|
|
|
|
|
Long-term debt |
559,821 |
|
|
663,207 |
|
Other long-term
liabilities |
127,109 |
|
|
120,174 |
|
Equity |
|
|
|
Apergy Corporation
stockholders’ equity |
1,032,960 |
|
|
973,525 |
|
Noncontrolling interest |
3,254 |
|
|
2,458 |
|
Total liabilities and
equity |
$ |
1,922,825 |
|
|
$ |
1,973,116 |
|
|
|
|
|
|
|
|
|
APERGY CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED)
|
Year Ended December 31, |
(in
thousands) |
2019 |
|
2018 |
Cash provided
(required) by operating activities: |
|
|
|
Net income |
$ |
52,960 |
|
|
$ |
93,191 |
|
Depreciation |
68,557 |
|
|
72,569 |
|
Amortization |
51,381 |
|
|
51,892 |
|
Receivables |
25,948 |
|
|
(55,378 |
) |
Inventories |
19,065 |
|
|
(40,018 |
) |
Accounts payable |
(20,526 |
) |
|
40,393 |
|
Leased assets |
(40,700 |
) |
|
(25,867 |
) |
Other |
(786 |
) |
|
27,118 |
|
Net cash provided by
operating activities |
155,899 |
|
|
163,900 |
|
|
|
|
|
Cash provided
(required) by investing activities: |
|
|
|
Capital expenditures |
(39,780 |
) |
|
(57,918 |
) |
Acquisition |
(12,500 |
) |
|
— |
|
Proceeds from sale of fixed assets |
4,598 |
|
|
1,187 |
|
Proceeds from (payments on) sale of business |
(2,194 |
) |
|
2,473 |
|
Purchase price adjustments on acquisition |
— |
|
|
53 |
|
Net cash required by
investing activities |
(49,876 |
) |
|
(54,205 |
) |
|
|
|
|
Cash provided
(required) by financing activities: |
|
|
|
Issuances of debt, net of discounts |
36,500 |
|
|
713,963 |
|
Payment of debt issue costs |
— |
|
|
(16,006 |
) |
Repayment of long-term debt |
(141,500 |
) |
|
(45,000 |
) |
Distributions to Dover Corporation, net |
— |
|
|
(736,557 |
) |
Other |
(7,403 |
) |
|
(7,238 |
) |
Net cash required by
financing activities |
(112,403 |
) |
|
(90,838 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
(162 |
) |
|
(737 |
) |
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
(6,542 |
) |
|
18,120 |
|
Cash and cash equivalents at
beginning of period |
41,832 |
|
|
23,712 |
|
Cash and cash
equivalents at end of period |
$ |
35,290 |
|
|
$ |
41,832 |
|
|
|
|
|
|
|
|
|
APERGY CORPORATIONRECONCILIATIONS OF
GAAP TO NON-GAAP FINANCIAL
MEASURES(UNAUDITED)
|
Three Months Ended |
|
Year Ended |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
December 31, |
(in
thousands) |
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income (loss) attributable to Apergy |
$ |
(1,823 |
) |
|
$ |
11,394 |
|
|
$ |
23,187 |
|
|
$ |
52,164 |
|
|
$ |
92,737 |
|
Pre-tax adjustments: |
|
|
|
|
|
|
|
|
|
Separation and supplemental benefit
costs (1) |
331 |
|
|
4,439 |
|
|
5,109 |
|
|
6,377 |
|
|
14,649 |
|
Royalty expense (2) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,277 |
|
Restructuring and other related charges (3) |
2,556 |
|
|
2,720 |
|
|
1,874 |
|
|
11,053 |
|
|
4,347 |
|
Environmental costs |
— |
|
|
1,988 |
|
|
— |
|
|
1,988 |
|
|
— |
|
Acquisition transaction costs (4) |
9,815 |
|
|
330 |
|
|
— |
|
|
10,145 |
|
|
— |
|
Intellectual property defense |
400 |
|
|
— |
|
|
— |
|
|
400 |
|
|
— |
|
Extended filing costs (5) |
2,780 |
|
|
— |
|
|
— |
|
|
2,780 |
|
|
— |
|
Tax impact of adjustments
(6) |
(3,772 |
) |
|
(2,251 |
) |
|
(1,658 |
) |
|
(7,777 |
) |
|
(3,308 |
) |
Adjusted net income
attributable to Apergy |
10,287 |
|
|
18,620 |
|
|
28,512 |
|
|
77,130 |
|
|
110,702 |
|
Tax impact of adjustments
(6) |
3,772 |
|
|
2,251 |
|
|
1,658 |
|
|
7,777 |
|
|
3,308 |
|
Net income attributable to
noncontrolling interest |
249 |
|
|
194 |
|
|
160 |
|
|
796 |
|
|
454 |
|
Depreciation and
amortization |
30,308 |
|
|
29,567 |
|
|
32,784 |
|
|
119,938 |
|
|
124,461 |
|
Provision for (benefit from)
income taxes |
(9,048 |
) |
|
3,425 |
|
|
4,604 |
|
|
6,226 |
|
|
28,162 |
|
Interest expense, net |
9,075 |
|
|
9,590 |
|
|
10,677 |
|
|
39,301 |
|
|
27,648 |
|
Adjusted
EBITDA |
$ |
44,643 |
|
|
$ |
63,647 |
|
|
$ |
78,395 |
|
|
$ |
251,168 |
|
|
$ |
294,735 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to Apergy: |
|
|
|
|
|
|
|
|
|
Reported |
$ |
(0.02 |
) |
|
$ |
0.15 |
|
|
$ |
0.30 |
|
|
$ |
0.67 |
|
|
$ |
1.19 |
|
Adjusted |
$ |
0.13 |
|
|
$ |
0.24 |
|
|
$ |
0.37 |
|
|
$ |
0.99 |
|
|
$ |
1.42 |
|
_______________________(1) Separation and supplemental
benefit costs primarily relates to separation costs, and to a
lesser extent, enhanced or supplemental benefits provided to
employees no longer participating in Dover Corporation benefit and
compensation plans. Supplemental benefit costs are expected to be
incurred through the end of 2020. Includes $3.4 million of tax
indemnification expense during the three months ended September 30,
2019 and year ended December 31, 2019 pursuant to the provisions of
the tax matters agreement with Dover Corporation.(2) Patents
and other intangible assets related to our business were conveyed
by Dover Corporation to Apergy on April 1, 2018. No royalty charges
were incurred after March 31, 2018.(3) Includes losses of
$0.2 million and $2.7 million loss during the three months ended
and year ended December 31, 2019, respectively, related to the
disposal of our pressure vessel manufacturing business in our
Production & Automation Technologies segment. Includes a $1.7
million impairment charge during the year ended December 31, 2019
related to our pressure vessel manufacturing business.(4)
Acquisition transaction costs include $9.3 million related to the
planned merger with ChampionX incurred during the three months
ended and year ended December 31, 2019. Additionally, includes
compensation for post business combination services, related to an
acquisition that closed during the third quarter of 2019, which are
expected to be incurred through the end of January 2021.(5)
Includes professional fees of $2.8 million incurred during the
three months ended and year ended December 31, 2019 related to the
extended filing of our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2019.(6) We generally tax effect
adjustments using a combined federal and state statutory income tax
rate of approximately 24 percent. Includes tax expense of $1.7
million during the year ended December 31, 2018, associated with
capital gains related to certain reorganizations of our
subsidiaries as part of the Separation from Dover Corporation.
|
|
|
Three months ended December 31, 2019 |
(in thousands, except
percentages) |
Production
&AutomationTechnologies |
|
DrillingTechnologies |
|
Corporateexpense andother |
|
Total |
Revenue |
$ |
203,625 |
|
|
$ |
44,123 |
|
|
$ |
— |
|
|
$ |
247,748 |
|
|
|
|
|
|
|
|
|
Operating profit (loss) / loss
before income taxes, as reported |
$ |
2,175 |
|
|
$ |
8,644 |
|
|
$ |
(21,441 |
) |
|
$ |
(10,622 |
) |
Depreciation and amortization |
27,954 |
|
|
2,184 |
|
|
170 |
|
|
30,308 |
|
Separation and supplemental benefit costs (1) |
— |
|
|
— |
|
|
331 |
|
|
331 |
|
Restructuring and other related charges |
2,337 |
|
|
184 |
|
|
35 |
|
|
2,556 |
|
Acquisition transaction costs (2) |
422 |
|
|
— |
|
|
9,393 |
|
|
9,815 |
|
Intellectual property defense |
— |
|
|
400 |
|
|
— |
|
|
400 |
|
Extended filing costs (3) |
2,780 |
|
|
— |
|
|
— |
|
|
2,780 |
|
Interest expense, net |
— |
|
|
— |
|
|
9,075 |
|
|
9,075 |
|
Adjusted EBITDA |
$ |
35,668 |
|
|
$ |
11,412 |
|
|
$ |
(2,437 |
) |
|
$ |
44,643 |
|
|
|
|
|
|
|
|
|
Operating profit margin / loss
before income taxes margin, as reported |
1.1 |
% |
|
19.6 |
% |
|
|
|
(4.3 |
)% |
Adjusted EBITDA margin |
17.5 |
% |
|
25.9 |
% |
|
|
|
18.0 |
% |
_______________________(1) Separation and supplemental
benefit costs primarily relates to separation costs, and to a
lesser extent, enhanced or supplemental benefits provided to
employees no longer participating in Dover Corporation benefit and
compensation plans. Supplemental benefit costs are expected to be
incurred through the end of 2020.(2) Acquisition transaction
costs include $9.3 million related to the planned merger with
ChampionX incurred during the three months ended December 31, 2019.
Additionally, includes compensation for post business combination
services, related to an acquisition that closed during the third
quarter of 2019, which are expected to be incurred through the end
of January 2021.(3) Includes professional fees of $2.8
million incurred during the three months ended December 31, 2019
related to the extended filing of our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2019.
|
|
|
Three months ended September 30, 2019 |
(in thousands, except
percentages) |
Production
&AutomationTechnologies |
|
DrillingTechnologies |
|
Corporateexpense andother |
|
Total |
Revenue |
$ |
221,961 |
|
|
$ |
54,878 |
|
|
$ |
— |
|
|
$ |
276,839 |
|
|
|
|
|
|
|
|
|
Operating profit (loss) /
income before income taxes, as reported |
$ |
18,917 |
|
|
$ |
13,796 |
|
|
$ |
(17,700 |
) |
|
$ |
15,013 |
|
Depreciation and amortization |
27,196 |
|
|
2,244 |
|
|
127 |
|
|
29,567 |
|
Separation and supplemental benefit costs (1) |
— |
|
|
— |
|
|
4,439 |
|
|
4,439 |
|
Restructuring and other related charges |
2,194 |
|
|
526 |
|
|
— |
|
|
2,720 |
|
Environmental costs |
1,988 |
|
|
— |
|
|
— |
|
|
1,988 |
|
Acquisition transaction costs (2) |
167 |
|
|
— |
|
|
163 |
|
|
330 |
|
Interest expense, net |
— |
|
|
— |
|
|
9,590 |
|
|
9,590 |
|
Adjusted EBITDA |
$ |
50,462 |
|
|
$ |
16,566 |
|
|
$ |
(3,381 |
) |
|
$ |
63,647 |
|
|
|
|
|
|
|
|
|
Operating profit margin /
income before income taxes margin, as reported |
8.5 |
% |
|
25.1 |
% |
|
|
|
5.4 |
% |
Adjusted EBITDA margin |
22.7 |
% |
|
30.2 |
% |
|
|
|
23.0 |
% |
_______________________(1) Separation and supplemental
benefit costs primarily relates to separation costs, and to a
lesser extent, enhanced or supplemental benefits provided to
employees no longer participating in Dover Corporation benefit and
compensation plans. Supplemental benefit costs are expected to be
incurred through the end of 2020. Includes $3.4 million of tax
indemnification expense pursuant to the provisions of the tax
matters agreement with Dover Corporation.(2) Acquisition
transaction costs include compensation for post business
combination services, related to an acquisition that closed during
the third quarter of 2019, which are expected to be incurred
through the end of January 2021.
|
|
|
Three months ended December 31, 2018 |
(in thousands, except
percentages) |
Production
&AutomationTechnologies |
|
DrillingTechnologies |
|
Corporateexpense andother |
|
Total |
Revenue |
$ |
237,295 |
|
|
$ |
75,838 |
|
|
$ |
— |
|
|
$ |
313,133 |
|
|
|
|
|
|
|
|
|
Operating profit (loss) /
income before income taxes, as reported |
$ |
19,280 |
|
|
$ |
26,882 |
|
|
$ |
(18,211 |
) |
|
$ |
27,951 |
|
Depreciation and amortization |
29,949 |
|
|
2,658 |
|
|
177 |
|
|
32,784 |
|
Separation and supplemental benefit costs (1) |
— |
|
|
— |
|
|
5,109 |
|
|
5,109 |
|
Restructuring and other related charges |
1,874 |
|
|
— |
|
|
— |
|
|
1,874 |
|
Interest expense, net |
— |
|
|
— |
|
|
10,677 |
|
|
10,677 |
|
Adjusted EBITDA |
$ |
51,103 |
|
|
$ |
29,540 |
|
|
$ |
(2,248 |
) |
|
$ |
78,395 |
|
|
|
|
|
|
|
|
|
Operating profit margin /
income before income taxes margin, as reported |
8.1 |
% |
|
35.4 |
% |
|
|
|
8.9 |
% |
Adjusted EBITDA margin |
21.5 |
% |
|
39.0 |
% |
|
|
|
25.0 |
% |
_______________________(1) Separation and supplemental
benefit costs primarily relates to separation costs, and to a
lesser extent, enhanced or supplemental benefits provided to
employees no longer participating in Dover Corporation benefit and
compensation plans. Supplemental benefit costs are expected to be
incurred through the end of 2020.
|
|
|
Year Ended December 31, 2019 |
(in thousands, except
percentages) |
Production & Automation Technologies |
|
DrillingTechnologies |
|
Corporateexpense andother |
|
Total |
Revenue |
$ |
884,364 |
|
|
$ |
246,887 |
|
|
$ |
— |
|
|
$ |
1,131,251 |
|
|
|
|
|
|
|
|
|
Operating profit (loss) /
income before income taxes, as reported |
$ |
54,024 |
|
|
$ |
73,497 |
|
|
$ |
(68,335 |
) |
|
$ |
59,186 |
|
Depreciation and amortization |
110,131 |
|
|
9,263 |
|
|
544 |
|
|
119,938 |
|
Separation and supplemental benefit costs (1) |
— |
|
|
— |
|
|
6,377 |
|
|
6,377 |
|
Restructuring and other related charges (2) |
10,308 |
|
|
710 |
|
|
35 |
|
|
11,053 |
|
Environmental costs |
1,988 |
|
|
— |
|
|
— |
|
|
1,988 |
|
Acquisition transaction costs (3) |
589 |
|
|
— |
|
|
9,556 |
|
|
10,145 |
|
Intellectual property defense |
— |
|
|
400 |
|
|
— |
|
|
400 |
|
Extended filing costs (4) |
2,780 |
|
|
— |
|
|
— |
|
|
2,780 |
|
Interest expense, net |
— |
|
|
— |
|
|
39,301 |
|
|
39,301 |
|
Adjusted EBITDA |
$ |
179,820 |
|
|
$ |
83,870 |
|
|
$ |
(12,522 |
) |
|
$ |
251,168 |
|
|
|
|
|
|
|
|
|
Operating profit margin /
income before income taxes margin, as reported |
6.1 |
% |
|
29.8 |
% |
|
|
|
5.2 |
% |
Adjusted EBITDA margin |
20.3 |
% |
|
34.0 |
% |
|
|
|
22.2 |
% |
_______________________(1) Separation and supplemental
benefit costs primarily relates to separation costs, and to a
lesser extent, enhanced or supplemental benefits provided to
employees no longer participating in Dover Corporation benefit and
compensation plans. Supplemental benefit costs are expected to be
incurred through the end of 2020. Includes $3.4 million of tax
indemnification expense pursuant to the provisions of the tax
matters agreement with Dover Corporation.(2) Includes a $2.7
million loss on disposal and $1.7 million impairment charge of our
pressure vessel manufacturing business in our Production &
Automation Technologies segment.(3) Acquisition transaction
costs include $9.3 million related to the planned merger with
ChampionX incurred during the year ended December 31, 2019.
Additionally, includes compensation for post business combination
services, related to an acquisition that closed during the third
quarter of 2019, which are expected to be incurred through the end
of January 2021.(4) Includes professional fees of $2.8
million incurred during the year ended December 31, 2019 related to
the extended filing of our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2019.
|
|
|
Year Ended December 31, 2018 |
(in thousands, except
percentages) |
Production & Automation Technologies |
|
DrillingTechnologies |
|
Corporateexpense andother |
|
Total |
Revenue |
$ |
932,591 |
|
|
$ |
285,565 |
|
|
$ |
— |
|
|
$ |
1,218,156 |
|
|
|
|
|
|
|
|
|
Operating profit (loss) /
income before income taxes, as reported |
$ |
74,187 |
|
|
$ |
98,620 |
|
|
$ |
(51,454 |
) |
|
$ |
121,353 |
|
Depreciation and amortization |
112,955 |
|
|
11,037 |
|
|
469 |
|
|
124,461 |
|
Separation and supplemental benefit costs (1) |
— |
|
|
— |
|
|
14,649 |
|
|
14,649 |
|
Royalty expense (2) |
2,277 |
|
|
— |
|
|
— |
|
|
2,277 |
|
Restructuring and other related charges |
4,347 |
|
|
— |
|
|
— |
|
|
4,347 |
|
Interest expense, net |
— |
|
|
— |
|
|
27,648 |
|
|
27,648 |
|
Adjusted EBITDA |
$ |
193,766 |
|
|
$ |
109,657 |
|
|
$ |
(8,688 |
) |
|
$ |
294,735 |
|
|
|
|
|
|
|
|
|
Operating profit margin /
income before income taxes margin, as reported |
8.0 |
% |
|
34.5 |
% |
|
|
|
10.0 |
% |
Adjusted EBITDA margin |
20.8 |
% |
|
38.4 |
% |
|
|
|
24.2 |
% |
_______________________(1) Separation and supplemental
benefit costs primarily relates to separation costs, and to a
lesser extent, enhanced or supplemental benefits provided to
employees no longer participating in Dover Corporation benefit and
compensation plans. Supplemental benefit costs are expected to be
incurred through the end of 2020.(2) Royalty expense
represents charges for the right to use of Dover Corporation
patents and other intangible assets.
Adjusted Working Capital
(in
thousands) |
December 31, 2019 |
|
December 31, 2018 |
Receivables, net |
$ |
219,874 |
|
|
$ |
251,436 |
|
Inventories, net |
211,342 |
|
|
219,421 |
|
Accounts payable |
(120,291 |
) |
|
(140,125 |
) |
Adjusted working capital |
$ |
310,925 |
|
|
$ |
330,732 |
|
Free Cash Flow
|
Three Months Ended |
|
Year Ended |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
December 31, |
(in
thousands) |
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Free Cash
Flow |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
$ |
32,509 |
|
|
$ |
64,089 |
|
|
$ |
70,869 |
|
|
$ |
155,899 |
|
|
$ |
163,900 |
|
Less: Capital
expenditures |
(8,191 |
) |
|
(8,901 |
) |
|
(15,035 |
) |
|
(39,780 |
) |
|
(57,918 |
) |
Free cash flow |
$ |
24,318 |
|
|
$ |
55,188 |
|
|
$ |
55,834 |
|
|
$ |
116,119 |
|
|
$ |
105,982 |
|
|
|
|
|
|
|
|
|
|
|
Cash From Operating Activities to Revenue
Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating
activities |
$ |
32,509 |
|
|
$ |
64,089 |
|
|
$ |
70,869 |
|
|
$ |
155,899 |
|
|
$ |
163,900 |
|
Revenue |
$ |
247,748 |
|
|
$ |
276,839 |
|
|
$ |
313,133 |
|
|
$ |
1,131,251 |
|
|
$ |
1,218,156 |
|
|
|
|
|
|
|
|
|
|
|
Cash from operating activities
to revenue ratio |
13 |
% |
|
23 |
% |
|
23 |
% |
|
14 |
% |
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
Free Cash Flow to Revenue Ratio |
|
|
|
|
|
|
|
|
|
|
|
Free cash flow |
$ |
24,318 |
|
|
$ |
55,188 |
|
|
$ |
55,834 |
|
|
$ |
116,119 |
|
|
$ |
105,982 |
|
Revenue |
$ |
247,748 |
|
|
$ |
276,839 |
|
|
$ |
313,133 |
|
|
$ |
1,131,251 |
|
|
$ |
1,218,156 |
|
|
|
|
|
|
|
|
|
|
|
Free cash flow to revenue
ratio |
10 |
% |
|
20 |
% |
|
18 |
% |
|
10 |
% |
|
9 |
% |
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