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8-K - FORM 8-K - ROBBINS & MYERS, INC.l42294e8vk.htm
Exhibit 99.1
Investor Relations
+1 (937) 458-6600
ROBBINS & MYERS ANNOUNCES SECOND QUARTER 2011 RESULTS
AND AGREEMENT TO SELL ITS ROMACO BUSINESSES
DAYTON, OHIO, March 31, 2011...Robbins & Myers, Inc. (NYSE: RBN) today reported diluted net earnings per share (DEPS) of $0.32 for its fiscal second quarter ended February 28, 2011, compared with $0.13 in the prior year second quarter. Adjusting for one-time charges relating to the acquisition of T-3 Energy Services, Inc. (T-3) on January 10, 2011, the Company earned $0.62 per share, which included approximately $0.06 of certain income tax and operating benefits which are not expected to recur.
Consolidated sales were $215 million in the second quarter of 2011 as compared with $130 million in the second quarter of 2010. Excluding T-3, sales grew 38%. Each of Robbins & Myers’ business platforms achieved strong year-over-year growth. The Company reported second quarter 2011 orders of $230 million, or $184 million excluding T-3, 18% higher than the comparable prior year period.
Second quarter 2011 earnings before interest and taxes (EBIT) were $18 million, significantly higher than the $7 million reported in the second quarter of 2010. Excluding one-time charges relating to the acquisition of T-3, the Company had adjusted EBIT of $36 million. Adjusted EBIT margins were 16.6%, more than triple the prior year margins, as a result of improved profitability in all business platforms, especially within the Fluid Management Group. The Company reported adjusted EBITDA of $42 million in the second quarter of 2011, compared with $11 million in the second quarter of fiscal 2010.
“We are rapidly integrating T-3 into our Fluid Management Group and have secured most of the expected $9 million of annualized synergies,” said Peter C. Wallace, President and Chief Executive Officer of Robbins & Myers, Inc. “Other potential benefits from the acquisition have surfaced, such as new sales opportunities with key account relationships, opportunities to leverage regional strengths and capabilities, and savings through low-cost sourcing. All of this is occurring against a backdrop of strong order levels at T-3, which continues to benefit from increased North American oil & gas maintenance and repair activity as well as higher spending related to shale projects. Our legacy energy business is also benefitting from high levels of customer demand, tempered somewhat by capacity constraints for one product line, for which we expect additional capacity to begin coming on line at the end of the third quarter.”
Robbins & Myers reported that it used $10 million of cash for operating activities in the second quarter of fiscal 2011 as compared with generating $18 million in the prior year same quarter. The decrease is attributable to payments related to the T-3 acquisition, higher pension payments, and working capital increases to support enterprise growth. The Company ended the recent quarter with $51 million of cash and $2 million of debt.

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Agreement to Sell Romaco Businesses
Robbins & Myers also reported it has entered into an agreement to sell its Romaco businesses to a group of funds led by Deutsche Beteiligungs AG (DBAG), a Frankfurt, Germany-based private equity investment firm. Total consideration of €65 million (approximately $92 million) includes €61 million of cash and €4 million of assumed liabilities and is subject to post-closing adjustments. The transaction is expected to close in the third fiscal quarter following German regulatory approval.
“The sale of the Romaco businesses represents another milestone in our strategic transformation”, said Mr. Wallace. “This transaction and the January acquisition of T-3 are significant strides in focusing the Company on core competencies and application know-how to better serve customers in niche markets. We have a solid foundation for future growth and further investment.”
After the close of the sale of the Romaco businesses to DBAG, the Company expects to record a net gain of approximately €29 million (approximately $41 million) and reflect Romaco as a discontinued operation in its third quarter consolidated financial statements.
Mr. Wallace commented, “Over the past few years, Romaco simplified its business model, expanded its capabilities, grew sales in developing regions and improved its profit profile. It is well-positioned for continued success and should benefit from DBAG’s experience working with European engineering companies.”
Updated Guidance
Based on recent financial performance, and anticipating the sale of the Romaco businesses, Robbins & Myers revised its fiscal 2011 adjusted DEPS forecast from $1.85-$2.05 to $1.95-$2.15 and expects to earn $0.45-$0.55 in its third quarter of 2011. The Company’s forecasts exclude restructuring costs, one-time costs associated with the T-3 acquisition, gains resulting from the sale of the Romaco businesses, and income from discontinued operations.
Second Quarter Results by Segment
All comparisons are made against the comparable year-ago quarterly period unless otherwise stated.
The Company’s Fluid Management segment reported orders of $143 million or $97 million excluding T-3, up 21%, due primarily to strength in energy markets. Sales were $135 million in the second quarter or $99 million excluding T-3, an increase of 48%. Adjusted EBIT was $38 million or 28.4% of sales, an increase of 800 basis points. Ending backlog of $131 million includes $65 million from T-3 and compares with $47 million at the end of the prior year for the legacy Fluid Management Group.
The Process Solutions segment reported orders of $52 million, an increase of 16% due to improving demand for capital goods in certain regional chemical markets. Sales of $49 million were 23% higher, and the business reported $0.5 million of EBIT in the second quarter of 2011 as compared with a $2.5 million loss. Backlog expanded for the sixth consecutive quarter, ending the quarter at $90 million.

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The Romaco segment had orders of $35 million, an increase of 14%. Backlog was $57 million at the end of second quarter of 2011, up $13 million. Sales increased 35% to $31 million, and EBIT improved $1.8 million to $2.1 million.
Conference Call to Be Held Today, March 31 at 10:00 AM (Eastern)
A conference call to discuss second quarter 2011 financial results is scheduled for 10:00 AM Eastern on Thursday, March 31, 2011. The call can be accessed at www.robn.com or by dialing 800-510-9661 (US/Canada) or +1-617-614-3452, using conference ID #51808049. Replays of the call can be accessed by dialing 888-286-8010 (US/Canada) or +1-617-801-6888, both using replay ID #10969887.
About Robbins & Myers
Robbins & Myers, Inc. is a leading supplier of engineered equipment and systems for critical applications in global energy, industrial, chemical and pharmaceutical markets.
In this release the Company refers to EBIT, adjusted EBIT, adjusted EBITDA and adjusted DEPS, all non-GAAP measures. The Company uses these measures to evaluate its performance and believes these measures are helpful to investors in assessing its performance. A reconciliation of EBIT to net income is included in our Condensed Consolidated Income Statement, and other reconciliations are included in this press release. EBIT, adjusted EBIT, adjusted EBITDA and adjusted DEPS are not a measure of cash available for use by the Company.
Forward-Looking Statements
Statements set forth in this press release that are not historical facts, including statements regarding future financial performance, future market demand, future benefits to shareholders, future economic and industry conditions, and the proposed sale of the Romaco businesses (including its benefits, effects and timing), are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond the Company’s control, which could cause actual benefits, results, effects and timing to differ materially from the results predicted or implied by the statements. These risks and uncertainties include, but are not limited to: whether or when the sale of the Romaco businesses will occur (including receipt of regulatory approval); costs and difficulties related to integration of T-3; the inability to or delay in obtaining cost savings and synergies from the T-3 merger; inability to retain key personnel; changes in the demand for or price of oil and/or natural gas; a significant decline in capital expenditures within the markets served by the Company; the ability to realize the benefits of restructuring programs; increases in competition; changes in the availability and cost of raw materials; foreign exchange rate fluctuations as well as economic or political instability in international markets and performance in hyperinflationary environments, such as Venezuela; work stoppages related to union negotiations; customer order cancellations; the possibility of product liability lawsuits that could harm our businesses; events or circumstances which result in an impairment of, or valuation against, assets; the potential impact of U.S. and foreign legislation, government regulations, and other governmental action, including those relating to export and import of products and materials, and changes in the interpretation and application of such laws and regulations; the outcome of audit, compliance, administrative or investigatory reviews; proposed changes in U.S. tax law which could impact our future tax expense and cash flow; decline in the market value of our pension plan investment portfolios; and other important risk factors discussed more fully in

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the Company’s reports on Form 10-K for the year ended August 31, 2010; its recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K; and other reports filed from time to time with the SEC. Robbins & Myers does not undertake any obligation to revise or update publicly any forward-looking statements for any reason.

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

     (Unaudited)
                 
(in thousands)   February 28, 2011     August 31, 2010  
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 50,781     $ 149,213  
Accounts receivable
    174,919       115,387  
Inventories
    176,898       97,939  
Other current assets
    14,469       7,589  
Deferred taxes
    17,388       14,164  
 
           
Total Current Assets
    434,455       384,292  
 
   
Goodwill & Other Intangible Assets
    812,368       264,106  
Deferred Taxes
    34,095       33,932  
Other Assets
    15,422       10,091  
Property, Plant & Equipment
    184,061       124,600  
 
           
 
  $ 1,480,401     $ 817,021  
 
           
LIABILITIES AND EQUITY
               
Current Liabilities:
               
Accounts payable
  $ 84,299     $ 66,562  
Accrued expenses
    100,883       90,345  
Current portion of long-term debt
    1,900       192  
 
           
Total Current Liabilities
    187,082       157,099  
 
   
Long-Term Debt — Less Current Portion
    23       93  
Deferred Taxes
    110,416       42,568  
Other Long-Term Liabilities
    124,790       126,237  
Total Equity
    1,058,090       491,024  
 
           
 
  $ 1,480,401     $ 817,021  
 
           

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT

     (Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    February 28,     February 28,     February 28,     February 28,  
(in thousands, except per share data)   2011     2010     2011     2010  
Sales
  $ 214,918     $ 129,919     $ 378,867     $ 259,332  
Cost of sales
    138,566       87,989       240,344       174,368  
 
                       
Gross profit
    76,352       41,930       138,523       84,964  
SG&A expenses
    44,781       35,384       82,756       68,682  
Other expense
    13,312             13,312        
 
                       
Income before interest and income taxes (EBIT)
    18,259       6,546       42,455       16,282  
Interest expense (income), net
    8       161       (17 )     304  
 
                       
Income before income taxes
    18,251       6,385       42,472       15,978  
Income tax expense
    5,189       1,932       14,318       5,299  
 
                       
Net income including noncontrolling interest
    13,062       4,453       28,154       10,679  
Less: Net income attributable to noncontrolling interest
    125       260       521       456  
 
                       
Net income attributable to Robbins & Myers, Inc.
  $ 12,937     $ 4,193     $ 27,633     $ 10,223  
 
                       
 
                               
Net income per share:
                               
Basic
  $ 0.33     $ 0.13     $ 0.76     $ 0.31  
Diluted
  $ 0.32     $ 0.13     $ 0.75     $ 0.31  
 
                               
Weighted average common shares outstanding:
                               
Basic
    39,695       32,927       36,315       32,899  
Diluted
    40,095       32,966       36,668       32,949  

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONDENSED BUSINESS SEGMENT INFORMATION

     (Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    February 28,     February 28,     February 28,     February 28,  
(in thousands)   2011     2010     2011     2010  
Customer Sales
                               
Fluid Management
  $ 134,786     $ 66,970     $ 226,122     $ 135,158  
Process Solutions
    49,028       39,867       98,462       83,400  
Romaco
    31,104       23,082       54,283       40,774  
 
                       
Total
  $ 214,918     $ 129,919     $ 378,867     $ 259,332  
 
                       
 
                               
Income Before Interest and Income Taxes (EBIT) (3)
                               
Fluid Management
  $ 26,796 (1)   $ 13,633     $ 54,961 (1)   $ 30,367  
Process Solutions
    506       (2,538 )     1,625       (4,189 )
Romaco
    2,109       340       2,201       (418 )
Corporate and Eliminations
    (11,152) (2)     (4,889 )     (16,332) (2)     (9,478 )
 
                       
Total
  $ 18,259     $ 6,546     $ 42,455     $ 16,282  
 
                       
 
                               
Depreciation and Amortization
                               
Fluid Management
  $ 8,872     $ 1,969     $ 10,850     $ 4,016  
Process Solutions
    1,290       1,419       2,472       2,902  
Romaco
    608       572       1,267       1,150  
Corporate and Eliminations
    74       71       146       157  
 
                       
Total
  $ 10,844     $ 4,031     $ 14,735     $ 8,225  
 
                       
 
                               
Customer Orders
                               
Fluid Management
  $ 143,425     $ 79,860     $ 245,651     $ 147,967  
Process Solutions
    51,890       44,800       105,935       86,714  
Romaco
    35,112       30,843       68,629       57,977  
 
                       
Total
  $ 230,427     $ 155,503     $ 420,215     $ 292,658  
 
                       
 
                               
Backlog
                               
Fluid Management
  $ 131,308     $ 46,937     $ 131,308     $ 46,937  
Process Solutions
    89,663       63,013       89,663       63,013  
Romaco
    56,689       43,879       56,689       43,879  
 
                       
Total
  $ 277,660     $ 153,829     $ 277,660     $ 153,829  
 
                       
 
(1)   Includes merger related costs of $7.4 million associated with employee termination benefits, backlog amortization and $4.1 million of expense due to inventory write-up values recorded in cost of sales.
 
(2)   Includes costs of $5.9 million due to merger related professional fees and accelerated equity compensation expense.
 
(3)   EBIT is a non-GAAP measure. The Company uses this measure to evaluate its performance and believes this measure is helpful to investors in assessing its performance. A reconciliation of this measure to net income is included in our Condensed Consolidated Income Statement. EBIT is not a measure of cash available for use by the Company.

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

     (Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    February 28,     February 28,     February 28,     February 28,  
(in thousands)   2011     2010     2011     2010  
Operating activities:
                               
Net income including noncontrolling interest
  $ 13,062     $ 4,453     $ 28,154     $ 10,679  
Depreciation and amortization
    10,844       4,031       14,735       8,225  
Working capital
    (31,378 )     12,862       (55,863 )     8,736  
Other changes, net
    (2,850 )     (3,133 )     142       1,863  
 
                       
Cash (used) provided by operating activities
    (10,322 )     18,213       (12,832 )     29,503  
 
                               
Investing activities:
                               
Business acquisition, net of cash acquired
    (90,410 )           (90,410 )      
Capital expenditures, net of nominal disposals
    (4,097 )     (1,265 )     (7,197 )     (3,447 )
Proceeds from asset sales
          1,094             1,094  
 
                       
Cash used by investing activities
    (94,507 )     (171 )     (97,607 )     (2,353 )
 
                               
Financing activities:
                               
(Payments) proceeds of debt, net
    (2,322 )     (716 )     (2,369 )     570  
Dividends paid
    (2,035 )     (1,399 )     (3,440 )     (2,713 )
Proceeds from issuance of common stock and other, net
    15,263       255       15,586       366  
 
                       
Cash provided (used) by financing activities
    10,906       (1,860 )     9,777       (1,777 )
Exchange rate impact on cash
    495       (2,872 )     2,230       (1,122 )
 
                       
(Decrease) increase in cash
    (93,428 )     13,310       (98,432 )     24,251  
Cash at beginning of period
    144,209       119,110       149,213       108,169  
 
                       
Cash at end of period
  $ 50,781     $ 132,420     $ 50,781     $ 132,420  
 
                       

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBIT, ADJUSTED EBIT AND ADJUSTED EBITDA
RECONCILIATION OF DILUTED EARNINGS PER SHARE (DEPS) TO ADJUSTED DILUTED EARNINGS PER SHARE
                                         
    Three Months Ended     Six Months Ended  
    February 28,     February 28,     February 28,     February 28,  
(in thousands, except per share data)   2011     2010     2011     2010  
            Per Share                          
CONSOLIDATED:
                                       
Net income attributable to Robbins & Myers, Inc. / Diluted EPS
  $ 12,937     $ 0.32     $ 4,193     $ 27,633     $ 10,223  
Net income attributable to noncontrolling interest
    125               260       521       456  
Income tax expense
    5,189               1,932       14,318       5,299  
Interest expense (income), net
    8               161       (17 )     304  
 
                               
 
                                       
EBIT
    18,259               6,546       42,455       16,282  
 
                                       
Merger related costs:
                                       
Fluid Management Segment:
                                       
Employee termination benefits and backlog amortization
    7,428                     7,428        
Inventory write-up expensed in cost of sales
    4,103                     4,103        
Corporate:
                                       
Professional fees and accelerated equity compensation expense
    5,884                     5,884        
 
                               
 
    17,415       0.30               17,415          
                           
 
                                       
Adjusted EBIT
    35,674               6,546       59,870       16,282  
Adjusted EBIT margin
    16.6 %             5.0 %     15.8 %     6.3 %
 
                                       
Depreciation and amortization, excluding backlog amortization
    6,438               4,031       10,329       8,225  
 
                               
 
                                       
Adjusted EBITDA
  $ 42,112             $ 10,577     $ 70,199     $ 24,507  
 
                               
 
                                       
Adjusted Diluted EPS
          $ 0.62                          
 
                                     
 
                                       
FLUID MANAGEMENT SEGMENT:
                                       
EBIT
  $ 26,796             $ 13,633     $ 54,961     $ 30,367  
Employee termination benefits and backlog amortization
    7,428                     7,428        
Inventory write-up expensed in cost of sales
    4,103                     4,103        
 
                               
 
                                       
Adjusted EBIT
  $ 38,327             $ 13,633     $ 66,492     $ 30,367  
 
                               
Adjusted EBIT margin
    28.4 %             20.4 %     29.4 %     22.5 %
EBIT, adjusted EBIT, adjusted EBIT margin %, adjusted EBITDA and adjusted diluted EPS are non-GAAP financial measures. The Company uses these measures to evaluate its businesses, and allocates resources to its businesses based on EBIT. EBIT is not, however, a measure of performance calculated in accordance with accounting principles generally accepted in the United States and should not be considered as an alternative to net income as a measure of our operating results. Neither EBIT nor EBITDA are measures of cash available for use by management. Adjusted diluted EPS should not be considered as an alternative to reported net income as an indicator of performance.

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