425 1 form425.htm 425

Filed by Gardner Denver Holdings, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Gardner Denver Holdings, Inc.
SEC File No.: 001-38095
Date: August 1, 2019

 Gardner DenverQ2 2019 Earnings Presentation  August 1, 2019 
 

 Replay Information  2  Dial toll-free:  +1.877.344.7529  International:  +1.412.317.0088  Conference ID:  #10133603  Log on to:  https://investors.gardnerdenver.com 
 

 Disclaimer  3  Non-GAAP Financial MeasuresIncluded 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 second quarter of 2019, which is available at https://investors.gardnerdenver.com, together with this presentation. 
 

 Agenda  2  Company HighlightsGardner Denver/Ingersoll Rand Industrials Integration UpdateStrategy UpdateSegment HighlightsGuidanceQ&A 
 

 Q2 2019 Highlights1  Revenue of $629M, down 3% excluding FXAdjusted EPS of $0.43 and Adjusted EBITDA of $148M with margin of 23.5%2GDP-exposed businesses (represents ~80% of revenue)3Revenue up 4% excluding FXTriple digit Adjusted EBITDA margin expansion in Industrials and Medical segmentsUpstream Energy (represents ~20% of revenue)Downturn in upstream Energy due to supply/demand imbalances and limited market visibility… expecting similar market conditions for remainder of 2019Free cash flow (FCF) of $51M, FCF conversion of 113%, and net debt leverage of 2.0x4,5,6Due to revised expectations for upstream Energy, updating full year 2019 Adjusted EBITDA guidance to a range of $610M to $630M  5  6 Leverage defined as net debt divided by LTM Adjusted EBITDA  1 All comparisons are versus the applicable prior year period unless otherwise noted2 Adjusted EPS is defined as adjusted net income divided by adjusted diluted average shares outstanding3 GDP-exposed businesses defined as Industrials, Medical and mid/downstream Energy businesses  4 Free Cash Flow is defined as cash flows from operations less capital expenditures5 Free Cash Flow conversion is defined as free cash flow divided by reported net income 
 

 Gardner Denver/IR Industrials Transaction Update  6                        Provides Greater Scale and Reach through Leading Brands and Market PositionEnhances End Market Balance and Diversity(Upstream energy reduced from ~25% to ~10% of revenue)  Broadens Portfolio of Technologies and Solutions  Strong Recurring Service and Aftermarket Platform of ~$2.5B(~40% of combined revenue)  World-Class Operating Platform Fueled by a Talented Global Workforce  Compelling Value Creation through $250M of Expected Cost Synergies with Incremental Revenue Growth Opportunities                    Gardner Denver CEO Vicente Reynal at Town Hall Meeting at Ingersoll Rand HQ    Creating a Premier Diversified Leader in Mission-Critical Flow Creation and Industrial Products  US antitrust (HSR) waiting period expired on June 29; international antitrust process underway  Joint integration planning progressing well… continued confidence in achieving $250M cost synergies  Town hall hosted at Ingersoll Rand HQ… laying foundation for strong culture of engagement    ~$1.6B Pro Forma Adjusted EBITDA1 On Track to Close Deal by early 20201 Presented on a 2019E basis. EBITDA is pro forma for anticipated synergies that we expect to realize by the end of year 3 after closing. 
 

   Integration: 4-Step Plan Governed by GDX        Step 1: Charter  Critical day 1 priorities by function and sub-functionPrecise scope definition      Step 2: Blue Print  Current state processes (value stream mapping) and capabilitiesDesired future state value stream map      Step 3: Work Plan  New IR future operating modelFuture state org design      Step 4: Synergy Capture  Bottoms-up functional plans for synergy delivery based on work plansReady for Day 1 execution on synergies  Team Definition + 4-Step Plan Driven by GDX….Ensuring We “Stay in Control”      Focused Team  10  150+ employees engaged across GDI/IR23 functional workstreams 
 

 Our Strategy                                                          Deploy TalentExpand Margins Accelerate Growth Allocate Capital Effectively          10 
 

 Industrials Segment – Q2 Highlights  (Dollars in millions)  Highlights:  Orders flat ex-FXRevenue up 5% ex-FXPositive orders performance in Americas & Europe ex-FX; negative performance in Asia due to Runtech order placed in previous yearSolid performance in core oil lubricated compressors and blowers which were both up mid to high single digitsAdjusted EBITDA margin up 130 bps benefiting from continued progress on gross margin expansion initiatives (i2V, etc.)                                                  As Reported      Prior Year      YOYChange          Ex-FX YOYChange  Revenue  $334.3  $328.7  1.7%  5.5%  Adjusted EBITDA  $76.6  $71.1  7.7%  11.5%  Adjusted EBITDA Margin  22.9%  21.6%  130 bps  Oil-Free Claw Vacuum PumpNew vacuum technology providing oil-free air with higher energy efficiency, lower footprint and reduced noise levels for applications such as food packaging and processing, plastics and woodworking.  Innovation in Action                10 
 

 Energy Segment – Q2 Highlights  (Dollars in millions)  Highlights:Orders down 30% ex-FXUpstream orders down 35% due to minimal original equipment activity and overall market activity impacting aftermarket  Revenue down 17% ex-FXUpstream revenue down 26%Mid/downstream down 3% ex-FX  Adjusted EBITDA margin down 390 bps due to revenue decline in upstream with partial offset due to targeted cost actions; stable margin performance in mid/downstream businesses                                                  As Reported      Prior Year      YOYChange          Ex-FX YOYChange  Revenue  $222.8  $273.1  (18.4)%  (16.8)%  Adjusted EBITDA  $56.3  $79.7  (29.4)%  (28.5)%  Adjusted EBITDA Margin  25.3%  29.2%  (390) bps  Thunder E-Max Hydraulic Frac Pump Newly introduced 11-inch stroke length quintuplex hydraulic fracturing pump capable of delivering up to 5,000 horsepower and longer lasting fluid end and consumable life; pump is designed for compatibility and enhanced performance with emerging technology ofelectric fracturing (“e-frac”).  Innovation in Action      10 
 

 Medical Segment – Q2 Highlights  (Dollars in millions)  Highlights:  Orders up 9% ex-FXRevenue up 12% ex-FXStrong broad-based performance across all product technologies and geographiesAdjusted EBITDA margin up 260 bps driven by volume  growth and operational efficiencies                                                  As Reported      Prior Year      YOYChange          Ex-FX YOYChange  Revenue  $72.0  $66.4  8.4%  12.0%  Adjusted EBITDA  $21.4  $18.0  18.9%  23.3%  Adjusted EBITDA Margin  29.7%  27.1%  260 bps  Acquisition of OinaAcquired July 2019        Oina Peristaltic PumpsHighly engineered peristaltic pump offerings developed for use in high precision liquid handling applications such as pharmaceutical filtration processes; pump reduces pulsation and provides        more reliable liquid flow.  11 
 

 Revised 2019 Guidance  12  1 All revenue outlook commentary expressed in percentages2 Excluding the impact of any potential M&A activity or share repurchases3 Represents the expectation of weighted average diluted shares outstanding for the balance of the year based on ending share count and share price as of June 30, 2019    2019Guidance(April 2019)  Revised 2019 Guidance(July 2019)  Revenue1IndustrialsMedical Mid & Downstream EnergyUpstream EnergyTotal Gardner DenverFX ImpactTotal Gardner Denver (incl. FX)  Growth (ex-FX)up MSDup MSD up MSDdown LDD to HSDup LSD to MSD down LSDup LSD  Growth (ex-FX)up MSDup MSD up MSD      down ~30%down LSD      down LSD      down LSD to MSD  Adjusted EBITDA  $680M – $710M  $610M – $630M  Capital Expenditures  ~$50M – $60M  ~$50M – $60M  Tax Rate  24% – 26%  22% – 24%  Year-end Net Debt Leverage2  1.5x – 1.7x  1.8x – 2.0x  FCF Conversion  ~100%  ~100%  Average Shares Outstanding3  ~208M  ~209M 
 

 Appendix 
 

 Q2 2019 Financial Performance  14  1 Adjusted EPS is defined as adjusted net income divided by adjusted diluted average shares outstanding        $629  Q2 2018 Q2 2019    $162  $148  Q2 2018 Q2 2019  Adjusted EPS1        $0.44  $0.43  Q2 2018  Q2 2019     Revenue Down 6%Down 3% ex-FX$668   Adjusted EBITDA Down 9%Margin Down 70 bps  Down 1 Cent  23.5%Margin  24.2%Margin  (Dollars in millions, excl. EPS)  Industrials +130 bpsMedical +260 bpsEnergy -390 bps  Industrials +5% ex-FXMedical +12% ex-FXEnergy -17% ex-FX 
 

               2.4x  2.0x  2.0x  Q2'18  Q1'19 Q2'19  Q2 2019 Financial Performance  15  Free Cash Flow 1     Working Capital (Op. Working Capital as % of LTM Sales)   Leverage (Net Debt / LTM Adjusted EBITDA)        205%  113%  Q2 2018  Q2 2019  Increased 40 bps  Improved 0.4x Y/Y  ¹ Free Cash Flow is defined as cash flows from operations less capital expenditures; Free Cash Flow conversion is defined as free cash flow divided by reported net income        25.1%  25.5%  Q2 2018 Q2 2019  (Dollars in millions)  Industrials decreased 170 bps Medical decreased 320 bps Energy increased 430 bps      $51M  $124M  (FCF Conversion in % and FCF in $) 
 

 Reconciliation of Net Income and Earnings per Share to Adjusted Net Income and Adjusted Earnings per Share  1 Adjusted diluted share count and adjusted diluted earnings per share include incremental dilutive shares, using the treasury stock method, which are added to average shares outstanding.  GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE TO ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE(Dollars in millions, except per share amounts) (Unaudited)                                                                                                                        For the Three MonthPeriod Ended        For the Six MonthPeriod Ended         June 30,          June 30,          2019 2018          2019 2018       Net Income   $ 44.9 $ 60.3        $ 92.1 $ 102.7      Basic Earnings Per Share (As Reported)   $ 0.22 $ 0.30        $ 0.45 $ 0.51      Diluted Earnings Per Share (As Reported)   $ 0.21 $ 0.29        $ 0.44 $ 0.49      Plus:                Provision for income taxes  8.3 17.2        20.3 40.7      Amortization of acquisition related intangible assets  28.2 27.6        56.6 55.6      Restructuring and related business transformation costs  2.0 8.4        6.1 12.9      Acquisition related expenses and non-cash charges  17.1 5.7        18.7 10.3      Expenses related to public stock offerings  - 0.5        - 1.9      Establish public company financial reporting compliance  - 1.1        0.6 1.9      Stock-based compensation  7.1 (0.8)        16.4 1.9      Foreign currency transaction losses (gains), net  0.6 (2.4)        3.7 0.2      Loss on extinguishment of debt  0.2 0.2        0.2 0.2      Shareholder litigation settlement recoveries  - -        (6.0) (4.5)      Other adjustments  0.6 -        0.9 (0.7)      Minus:                Income tax provision, as adjusted   19.2      25.4      40.5      49.9   Adjusted Net Income   $ 89.8     $ 92.4    $ 169.1    $ 173.2  Adjusted Basic Earnings Per Share   $ 0.44     $ 0.46    $ 0.84    $ 0.86  Adjusted Diluted Earnings Per Share1   $ 0.43     $ 0.44    $ 0.81    $ 0.83  Average shares outstanding:                Basic, as reported   203.4     201.8    202.5    201.7  Diluted, as reported   208.9     209.6    208.4    209.8  Adjusted diluted1   208.9     209.6    208.4    209.8  16 
 

 Reconciliation of Net Income to Adjusted EBITDA and Adjusted Net Income and CFOA to Free Cash Flow  GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTEDNET INCOME AND CASH FLOWS - OPERATING ACTIVITIES TO FREE CASH FLOW(Dollars in millions) (Unaudited)                        For the Three MonthPeriod Ended      For the Six MonthPeriod Ended       June 30, 2019 2018        June 30, 2019 2018     Net IncomePlus:Interest expense  $ 44.9 $ 60.322.4 26.1      $ 92.1 $ 102.744.8 52.1    Provision for income taxes  8.3 17.2      20.3 40.7    Depreciation expense  13.5 13.8      27.6 27.8    Amortization expense  30.9 31.5      62.3 62.4    Restructuring and related business transformation costs  2.0 8.4      6.1 12.9    Acquisition related expenses and non-cash charges  17.1 5.7      18.7 10.3    Expenses related to public stock offerings  - 0.5      - 1.9    Establish public company financial reporting compliance  - 1.1      0.6 1.9    Stock-based compensation  7.1 (0.8)      16.4 1.9    Foreign currency transaction losses (gains), net  0.6 (2.4)      3.7 0.2    Loss on extinguishment of debt  0.2 0.2      0.2 0.2    Shareholder litigation settlement recoveries  - -      (6.0) (4.5)    Other adjustments   0.6 -        0.9 (0.7)     Adjusted EBITDAMinus:Interest expense   $ 147.6 $ 161.6 22.4 26.1       $ 287.7 $ 309.8 44.8 52.1    Income tax provision, as adjusted  19.2 25.4      40.5 49.9    Depreciation expense  13.5 13.8      27.6 27.8    Amortization of non-acquisition related intangible assets   2.7 3.9        5.7 6.8     Adjusted Net Income   $ 89.8 $ 92.4      $ 169.1 $ 173.2    Free Cash FlowCash flows - operating activities  $ 61.4 $ 134.3      $ 130.1 $ 194.5    Minus:            Capital expenditures   10.6    10.8    24.7      20.9   Free Cash Flow   $ 50.8   $ 123.5  $ 105.4    $ 173.6                              17 
 

 Reconciliation of Segment Adjusted EBITDA to Income Before Income Taxes  GARDNER DENVER HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO INCOME BEFORE INCOME TAXES(Dollars in millions) (Unaudited)                                    For the Three MonthPeriod Ended    For the Six MonthPeriod Ended    June 30,    June 30,    2019 2018    2019 2018  Revenue        Industrials  $ 334.3 $ 328.7    $ 652.4 $ 645.6  Energy  222.8 273.1    455.9 515.3  Medical  72.0 66.4    141.1 126.8  Total Revenue  $ 629.1 $ 668.2    $ 1,249.4 $ 1,287.7  Segment Adjusted EBITDA        Industrials  $ 76.6 $ 71.1    $ 147.7 $ 137.9  Energy  56.3 79.7    116.3 147.6  Medical  21.4 18.0    41.4 33.9  Total Segment Adjusted EBITDA  $ 154.3 $ 168.8    $ 305.4 $ 319.4  Less items to reconcile Segment Adjusted EBITDA to        Income Before Income Taxes:        Corporate expenses not allocated to segments  $ 6.7 $ 7.2    $ 17.7 $ 9.6  Interest expense  22.4 26.1    44.8 52.1  Depreciation and amortization expense  44.4 45.3    89.9 90.2  Restructuring and related business transformation costs  2.0 8.4    6.1 12.9  Acquisition related expenses and non-cash charges  17.1 5.7    18.7 10.3  Expenses related to public stock offerings  - 0.5    - 1.9  Establish public company financial reporting compliance  - 1.1    0.6 1.9  Stock-based compensation  7.1 (0.8)    16.4 1.9  Foreign currency transaction losses (gains), net  0.6 (2.4)    3.7 0.2  Loss on extinguishment of debt  0.2 0.2    0.2 0.2  Shareholder litigation settlement recoveries  - -    (6.0) (4.5)  Other adjustments  0.6 -    0.9 (0.7)                                  Income Before Income Taxes  $  53.2  $  77.5  $ 112.4  $ 143.4  18 

 Forward-Looking Statements  1  FORWARD-LOOKING STATEMENTSThis communication contains “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between Ingersoll-Rand plc (“Ingersoll-Rand”) and Gardner Denver Holdings, Inc. (“Gardner Denver”). These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected timing and structure of the proposed transaction, the ability of the parties to complete the proposed transaction, the expected benefits of the proposed transaction, including future financial and operating results and strategic benefits, the tax consequences of the proposed transaction, and the combined company’s plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward looking statements.These forward-looking statements are based on Gardner Denver’s and Ingersoll Rand’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from the Gardner Denver’s and Ingersoll Rand’s current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) that one or more closing conditions to the transaction, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transaction, may require conditions, limitations or restrictions in connection with such approvals or that the required approval by the stockholders of Gardner Denver may not be obtained; (2) the risk that the proposed transaction may not be completed on the terms or in the time frame expected by Ingersoll-Rand or Gardner Denver, or at all, (3) unexpected costs, charges or expenses resulting from the proposed transaction, (4) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction; (5) failure to realize the anticipated benefits of the proposed transaction, including as a result of delay in completing the proposed transaction or integrating the businesses of Gardner Denver and Ingersoll-Rand U.S. Holdco Inc. (“Ingersoll Rand Industrial”), or at all, (6) the ability of the combined company to implement its business strategy; (7) difficulties and delays in the combined company and Ingersoll Rand achieving revenue and cost synergies; (8) inability of the combined company and Ingersoll-Rand to retain and hire key personnel; (9) the occurrence of any event that could give rise to termination of the proposed transaction; (10) the risk that stockholder litigation in connection with the proposed transaction or other settlements or investigations may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability, (11) evolving legal, regulatory and tax regimes; (12) changes in general economic and/or industry specific conditions; (13) actions by third parties, including government agencies; (14) Ingersoll Rand obtaining approval of its shareholders to change its name and (15) other risk factors detailed from time to time in Ingersoll-Rand’s and Gardner Denver’s reports filed with the SEC, including Ingersoll-Rand’s and Gardner Denver’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive.Any forward-looking statements speak only as of the date of this communication. Neither Ingersoll-Rand nor Gardner Denver undertakes any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements. 
 

 Important Additional Information and Where to Find it  2  IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND ITIn connection with the proposed transaction, Gardner Denver and Ingersoll Rand Industrial will file registration statements with the SEC registering shares of Gardner Denver common stock and Ingersoll Rand Industrial common stock in connection with the proposed transaction. Gardner Denver will also file a proxy statement, which will be sent to the Gardner Denver shareholders in connection with their vote required in connection with the proposed transaction. If the transaction is effected in whole or in part via an exchange offer, Ingersoll-Rand will also file with the SEC a Schedule TO with respect thereto. Ingersoll-Rand shareholders are urged to read the prospectus and/or information statement that will be included in the registration statements and any other relevant documents when they become available, and Gardner Denver stockholders are urged to read the proxy statement and any other relevant documents when they become available, because they will contain important information about Gardner Denver, Ingersoll Rand Industrial and the proposed transaction. The proxy statement, prospectus and/or information statement, and other documents relating to the proposed transactions (when they become available) can be obtained free of charge from the SEC’s website at www.sec.gov. The proxy statement, prospectus and/or information statement and other documents (when they are available) will also be available free of charge on Ingersoll Rand’s website at http://ir.ingersollrand.com or on Gardner Denver’s website at https://investors.gardnerdenver.com. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the stockholders of Gardner Denver in connection with the proposed transaction will be set forth in the proxy statement/prospectus when it is filed with the SEC.NO OFFER OR SOLICITATIONThis communication 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, 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.This slide deck is not a solicitation of a proxy from any security holder of Gardner Denver. However, Ingersoll-Rand, Gardner Denver and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from shareholders of Gardner Denver in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of Ingersoll-Rand may be found in its Annual Report on Form 10-K filed with the SEC on February 12, 2019 and its definitive proxy statement relating to its 2019 Annual Meeting of Shareholders filed with the SEC on April 23, 2019. Information about the directors and executive officers of Gardner Denver 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 26, 2019.