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Apergy Reports Fourth Quarter and Full Year 2018 Results

  • Revenue of $311 million in Q4-18, up 17% year-over-year
  • Net income of $23 million and adjusted net income of $28 million in Q4-18
  • Diluted EPS of $0.29 and adjusted diluted EPS of $0.36 in Q4-18
  • Adjusted EBITDA of $78 million in Q4-18, up 37% year-over-year with adjusted EBITDA margins improving 370 basis points to 25%
  • Full year 2018 net income of $94 million, and adjusted EBITDA of $296 million
  • Cash from operating activities of $71 million in Q4-18
  • $25 million of term loan debt repayment in Q4-18, $45 million repaid in the last two quarters of 2018           

THE WOODLANDS, Texas, Feb. 18, 2019 (GLOBE NEWSWIRE) -- Apergy Corporation (“Apergy”) (APY) today reported net income of $22.6 million in the fourth quarter of 2018, compared to net income of $61.2 million in the fourth quarter of 2017. The fourth quarter of 2017 included a net tax benefit of $49.3 million related to U.S. tax reform.

Diluted earnings per share in the fourth quarter of 2018 was $0.29 and includes after-tax charges of $5.3 million, or $0.07 per diluted share, related to spin-off and restructuring activities. Adjusted diluted earnings per share in the fourth quarter of 2018 was $0.36, an increase of 50% from $0.24 in the fourth quarter of 2017.

Revenue was $311.2 million in the fourth quarter of 2018, an increase of $46.0 million, or 17%, compared to $265.2 million in the fourth quarter of 2017, and a decrease of $5.3 million, or 2%, compared to $316.5 million in the third quarter of 2018.

Adjusted EBITDA was $77.8 million in the fourth quarter of 2018, an increase of $21.2 million, or 37%, compared to $56.6 million in the fourth quarter of 2017, and a decrease of $0.6 million, or 1%, compared to $78.4 million in the third quarter of 2018. Adjusted EBITDA margin was 25.0% in the fourth quarter of 2018, an increase of 370 basis points year-over-year and 20 basis points sequentially.

Cash from operating activities was $70.9 million in the fourth quarter of 2018, compared to $34.8 million in the fourth quarter of 2017, and $34.3 million in the third quarter of 2018. In the fourth quarter of 2018, Apergy used available cash to repay $25 million of term loan debt, as well as fund a payment of $7.7 million associated with tax liabilities incurred as part of the spin-off transaction. Apergy expects no further material payments associated with tax liabilities incurred as part of the spin-off transaction.

                   
        Three Months Ended       Variance  
(dollars in thousands, except per share amounts)   Dec. 31, 2018     Sept. 30, 2018     Dec. 31, 2017     Sequential   Year-over-year  
Revenue $ 311,202   $ 316,468   $ 265,195     (2)%   17%  
                             
Net income attributable to Apergy $ 22,571   $ 25,263   $ 61,155 *   (11)%   (63)%  
Diluted earnings per share attributable to Apergy $ 0.29   $ 0.33   $ 0.79     (12)%   (63)%  
                             
Adjusted net income attributable to Apergy $ 27,896   $ 28,591   $ 18,311     (2)%   52%  
Adjusted diluted earnings per share attributable to Apergy $ 0.36   $ 0.37   $ 0.24     (3)%   50%  
                             
Adjusted EBITDA $ 77,759   $ 78,384   $ 56,585     (1)%   37%  
Adjusted EBITDA margin   25.0%     24.8%     21.3%     20 bps   370 bps  
                             
Net cash provided by operating activities $ 70,868   $ 34,318   $ 34,845   $ 36,550 $ 36,023  
Capital expenditures $ 15,035   $ 13,945   $ 7,209   $ 1,090 $ 7,826  
             
*Three months ended Dec. 31, 2017 includes a $49.3 million net tax benefit related to U.S. tax reform, and lower interest prior to Apergy’s spin-off into a separate public company.  
   

“In spite of declining oil prices and increasing macroeconomic uncertainty, we executed well in the fourth quarter,” said Sivasankaran “Soma” Somasundaram, President and Chief Executive Officer. “Our strong execution, combined with our differentiated product offering, allowed us to exceed the top-end of our fourth quarter adjusted EBITDA guidance range by approximately $3 million.

“On a year-over-year basis, our Production & Automation Technologies segment fourth quarter revenue increased 15%, powered by our high quality artificial lift portfolio and the ongoing adoption of our digital technologies. Compared to the year ago period, our Drilling Technologies segment revenue increased 24%, or approximately two and half times the increase in the worldwide rig count. Growth in this segment was driven by continued customer demand for our technologically advanced polycrystalline diamond cutters and steadily increasing bearings adoption.

“During the fourth quarter, we generated strong cash from operating activities of $71 million, and repaid $25 million of term loan debt. Our continued focus on cash flow generation, combined with our disciplined capital management, allowed us to repay $45 million of debt during the last two quarters of 2018.

“This past year was a transformational year for Apergy. We established Apergy as a strong stand-alone publicly traded company and delivered solid financial results. In addition, we positioned Apergy for continued success through solid progress on our growth initiatives and further expanding our competitive moats.  

“As we look into 2019, we believe that traction on our growth initiatives and solid cash generation will help us to achieve differentiated performance in the market. We expect our growth will moderate in the first quarter of 2019 driven by slower market activity in the beginning of the quarter. Accordingly, our outlook for the first quarter of 2019 is consolidated adjusted EBITDA between $69 and $73 million, which at the mid-point is an increase of 11% from the first quarter of 2018. The first quarter of 2018 did not include incremental stand-alone corporate costs. We expect market activity to progressively improve through 2019 resulting in another year of strong results.”

         
  Three Months Ended   Variance  
(dollars in thousands)   Dec. 31, 2018     Sept. 30, 2018     Dec. 31, 2017   Sequential   Year-over-year  
Production & Automation Technologies                          
  Revenue $ 235,364   $ 241,214   $ 204,206   (2)%   15%  
  Operating profit $ 18,646   $ 24,257   $ 466   (23)%   N/M  
  Operating profit margin   7.9%     10.1%     0.2%   (220) bps   770 bps  
  Adjusted segment EBITDA $ 50,469   $ 51,523   $ 37,162   (2)%   36%  
  Adjusted segment EBITDA margin   21.4%     21.4%     18.2%   0 bps   320 bps  
                           
Drilling Technologies                          
  Revenue $ 75,838   $ 75,254   $ 60,989   1%   24%  
  Operating profit $ 26,882   $ 26,209   $ 19,250   3%   40%  
  Operating profit margin   35.4%     34.8%     31.6%   60 bps   380 bps  
  Adjusted segment EBITDA $ 29,540   $ 28,926   $ 22,252   2%   33%  
  Adjusted segment EBITDA margin   39.0%     38.4%     36.5%   60 bps   250 bps  
N/M – not meaningful.                          
                           

Production & Automation Technologies

In the fourth quarter of 2018, Production & Automation Technologies revenue increased $31.2 million, or 15%, year-over-year driven by volume and growth initiatives in our artificial lift products and strong adoption of our digital products. Revenue from digital products was $32.5 million in the fourth quarter of 2018, an increase of $11.6 million, or 56%, compared to $20.9 million in the fourth quarter of 2017. Segment operating profit increased $18.2 million year-over-year. Adjusted segment EBITDA increased $13.3 million, or 36%, year-over-year primarily driven by revenue growth and cost discipline, with adjusted segment EBITDA margin expanding to 21.4% from 18.2% in the prior year period.

On a sequential basis, revenue decreased $5.9 million, or 2%, primarily due to expected seasonally lower artificial lift volume and lower spending by customers in the quarter. Segment operating profit decreased $5.6 million, or 23%, due to lower revenue and $1.9 million of higher restructuring costs. Adjusted segment EBITDA decreased $1.1 million, or 2%, sequentially due to the seasonably lower revenue.

Drilling Technologies

In the fourth quarter of 2018, Drilling Technologies revenue increased $14.8 million, or 24%, year-over-year as a result of increased worldwide rig count and continued diamond bearings growth. Year-over-year, segment operating profit increased $7.6 million, or 40%, and adjusted segment EBITDA increased by $7.3 million, or 33%, as a result of increased volume combined with focused cost discipline.

On a sequential basis, revenue increased by $0.6 million, or 1%. Segment operating profit increased $0.7 million, or 3%, sequentially. Adjusted segment EBITDA increased by $0.6 million, or 2%, due to productivity initiatives during the quarter.

Full Year 2018 Results Summary

    Twelve Months Ended        
(dollars in thousands, except per share amounts)   Dec 31, 2018     Dec. 31, 2017     Variance  
Revenue $ 1,216,646   $ 1,010,466     20%  
                   
Net income attributable to Apergy $ 94,041   $ 111,734 *   (16)%  
Diluted earnings per share attributable to Apergy $ 1.21   $ 1.43     (15)%  
                   
Adjusted net income attributable to Apergy $ 112,006   $ 74,046     51%  
Adjusted diluted earnings per share attributable to Apergy $ 1.44   $ 0.95     52%  
                   
Adjusted EBITDA $ 296,465   $ 221,089     34%  
Adjusted EBITDA margin   24.4%     21.9%     250 bps  
                   
Net cash provided by operating activities $ 163,900   $ 76,050   $ 87,850  
Capital expenditures $ 57,918   $ 36,654   $ 21,264  
         
*Twelve months ended Dec. 31, 2017 includes a $49.3 million net tax benefit related to U.S. tax reform, and lower interest expense prior to
Apergy’s spin-off into a separate public company.
 
 


    Twelve Months Ended
       
(dollars in thousands)   Dec. 31, 2018     Dec. 31, 2017     Variance  
Production & Automation Technologies                  
  Revenue $ 931,081   $ 782,813     19%  
  Operating profit $ 75,918   $ 26,890     182%  
  Operating profit margin   8.2%     3.4%     480 bps  
  Adjusted segment EBITDA $ 195,497   $ 144,488     35%  
  Adjusted segment EBITDA margin   21.0%     18.5%     250 bps  
                   
Drilling Technologies                  
  Revenue $ 285,565   $ 227,653     25%  
  Operating profit $ 98,620   $ 74,317     33%  
  Operating profit margin   34.5%     32.6%     190 bps  
  Adjusted segment EBITDA $ 109,657   $ 86,267     27%  
  Adjusted segment EBITDA margin   38.4%     37.9%     50 bps  
                   

Other Business Highlights

  • Apergy was recognized as the leader in total customer satisfaction in oilfield products for 2018-19 in a survey conducted by EnergyPoint Research, an independent customer satisfaction research firm
  • Awarded a large multi-year tender for progressive cavity pump solutions in Latin America
  • Fifty-five patents were issued to Drilling Technologies in 2018, thirteen were issued in the fourth quarter of 2018
  • Currently expanding diamond bearings manufacturing capacity to meet robust demand
  • Launched SmartenTM rod lift controller retrofit kit targeting an upgrade opportunity for over 10,000 existing well controllers
  • Released Spotlight for high speed engines, expanding our compressor monitoring footprint to the adjacent engine monitoring market
  • Completed spin-off transition and exited all services agreements with Dover Corporation

Conference Call Details

Apergy Corporation will host a conference call on Tuesday, February 19, 2019, to discuss its fourth quarter and full year 2018 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 1-888-424-8151 in the United States and Canada or 1-847-585-4422 for international calls. Please call approximately 15 minutes prior to the scheduled start time and reference Apergy conference call number 8776 832.

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 8776 832#.

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

This release presents information about Apergy’s adjusted EBITDA, adjusted EBITDA margin, adjusted segment EBITDA, adjusted segment EBITDA margin, adjusted net income attributable to Apergy, and adjusted diluted earnings per share attributable to Apergy, which are non-GAAP financial measures made available as a supplement, and not an alternative, to the results provided in accordance with generally accepted accounting principles in the United States of America (“GAAP”). See Reconciliations of GAAP to Non-GAAP Financial Measures included in the accompanying financial tables for the reconciliation of each non-GAAP financial measure to its most directly comparable financial measure in accordance with GAAP.

Adjusted EBITDA and adjusted segment EBITDA are defined as, or as a result of, net income excluding income taxes, interest income and expense, depreciation and amortization expense, separation and supplemental benefit costs associated with the spinoff from Dover Corporation, royalty expense incurred only prior to the spinoff, and restructuring and other related charges. Adjusted EBITDA margin and adjusted segment EBITDA margin are defined as adjusted EBITDA and adjusted segment EBITDA, respectively, divided by revenue.

Adjusted net income attributable to Apergy and adjusted diluted earnings per share attributable to Apergy are defined as net income attributable to Apergy and earnings per share attributable to Apergy, respectively, excluding separation and supplemental benefit costs associated with the spinoff from Dover Corporation, royalty expense incurred only prior to the spinoff, and restructuring and other related charges.

References to net income, diluted earnings per share, adjusted net income and adjusted diluted earnings per share are exclusive of our non-controlling interests.

These non-GAAP financial measures are included to help facilitate comparisons of Apergy’s operating performance across periods by excluding items that do not reflect the core operating results of our businesses. As such, Apergy’s management believes making available non-GAAP financial measures as a supplemental measurement to investors is useful because it allows investors to evaluate Apergy's performance using the same methodology and information used by Apergy management.

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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 expectations regarding the performance of the business, financial results, liquidity and capital resources of Apergy, the benefits resulting from Apergy’s separation from Dover Corporation, 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, risks associated with our spin-off into a separate public company; 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” section of Amendment No. 1 to Apergy’s Form 10, filed with the SEC on April 12, 2018, as amended and supplemented, 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.

Investor Contact: David Skipper
david.skipper@apergy.com
713-230-8031

Media Contact: John Breed
john.breed@apergy.com
281-403-5751



 
APERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
       
  Three Months Ended   Year Ended
  Dec. 31,   Sept. 30,   Dec. 31,   December 31,
(in thousands, except per share amounts) 2018   2018   2017*   2018*   2017*
Revenue $ 311,202     $ 316,468     $ 265,195     $ 1,216,646     $ 1,010,466  
Cost of goods and services 205,931     202,734     189,661     800,347     689,990  
Gross profit 105,271     113,734     75,534     416,299     320,476  
Selling, general and administrative expense 68,057     69,022     56,198     262,625     218,558  
Interest expense, net 10,625     10,584     554     27,440     753  
Other expense (income), net (778 )   910     2,449     2,943     10,377  
Income before income taxes 27,367     33,218     16,333     123,291     90,788  
Provision for (benefit from) income taxes 4,637     7,723     (44,892 )   28,796     (21,876 )
Net income 22,730     25,495     61,225     94,495     112,664  
Net income attributable to
noncontrolling interest
159     232     70     454     930  
Net income attributable to Apergy $ 22,571     $ 25,263     $ 61,155     $ 94,041     $ 111,734  
                   
Earnings per share attributable to Apergy:                  
Basic $ 0.29     $ 0.33     $ 0.79     $ 1.22     $ 1.44  
Diluted $ 0.29     $ 0.33     $ 0.79     $ 1.21     $ 1.43  
                   
Weighted-average shares outstanding:                  
Basic 77,347     77,340     77,340     77,342     77,340  
Diluted 77,546     77,569     77,890     77,692     77,890  

* Previously reported results in 2017 and 2018 include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.


 
 
APERGY CORPORATION
BUSINESS SEGMENT DATA
(UNAUDITED)
       
  Three Months Ended   Year Ended
  Dec. 31,   Sept. 30,   Dec. 31,   December 31,
(in thousands) 2018   2018   2017*   2018*   2017*
Segment revenue:                  
Production & Automation Technologies $ 235,364     $ 241,214     $ 204,206     $ 931,081     $ 782,813  
Drilling Technologies 75,838     75,254     60,989     285,565     227,653  
Total revenue $ 311,202     $ 316,468     $ 265,195     $ 1,216,646     $ 1,010,466  
                   
Income before income taxes:                
Segment operating profit:                  
Production & Automation Technologies $ 18,646     $ 24,257     $ 466     $ 75,918     $ 26,890  
Drilling Technologies 26,882     26,209     19,250     98,620     74,317  
Total segment operating profit 45,528     50,466     19,716     174,538     101,207  
Corporate expense and other (1) 7,536     6,664     2,829     23,807     9,666  
Interest expense, net 10,625     10,584     554     27,440     753  
Income before income taxes $ 27,367     $ 33,218     $ 16,333     $ 123,291     $ 90,788  
                   
Bookings:                  
Production & Automation Technologies $ 233,178     $ 241,729     $ 196,502     $ 941,302     $ 792,798  
Book-to-bill ratio (2) 0.99     1.00     0.96     1.01     1.01  
Drilling Technologies $ 78,005     $ 75,834     $ 62,010     $ 293,473     $ 232,796  
Book-to-bill ratio (2) 1.03     1.01     1.02     1.03     1.02  

_______________________

(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.

* Previously reported results in 2017 and 2018 include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.


 
 
APERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
       
(in thousands) December 31, 2018   December 31, 2017*
Assets      
Cash and cash equivalents $ 41,832     $ 23,712  
Receivables, net 249,948     201,449  
Inventories, net 218,319     201,402  
Prepaid expenses and other current assets 20,211     14,912  
Total current assets 530,310     441,475  
       
Property, plant and equipment, net 244,328     213,562  
Goodwill 904,985     910,088  
Intangible assets, net 283,688     338,510  
Other non-current assets 8,445     2,980  
Total assets 1,971,756     1,906,615  
       
Liabilities      
Accounts payable 131,058     98,826  
Other current liabilities 70,937     51,664  
Total current liabilities 201,995     150,490  
       
Long-term debt 666,108     5,806  
Other long-term liabilities 122,126     109,934  
Equity      
Apergy Corporation stockholders’ equity 979,069      
Net parent equity in Apergy     1,635,636  
Noncontrolling interest 2,458     4,749  
Total liabilities and equity $ 1,971,756     $ 1,906,615  

* Previously reported results in 2017 include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.


 
 
APERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
   
  Year Ended
December 31,
(in thousands) 2018*   2017*
Cash provided (required) by operating activities:      
Net income $ 94,495     $ 112,664  
Depreciation 72,569     59,161  
Amortization 51,892     53,701  
Receivables (53,890 )   (61,573 )
Inventories (38,708 )   (14,015 )
Accounts payable 35,185     29,802  
Other (1) 2,357     (103,690 )
Net cash provided by operating activities 163,900     76,050  
       
Cash provided (required) by investing activities:      
Capital expenditures (57,918 )   (36,654 )
Other 3,713     (5,295 )
Net cash required by investing activities (54,205 )   (41,949 )
       
Cash provided (required) by financing activities:      
Issuances of debt, net of debt issuance costs 697,957      
Repayment of long-term debt (45,000 )   (599 )
Distributions to Dover Corporation, net (736,557 )   (31,192 )
Other (7,238 )   (4,902 )
Net cash required by financing activities (90,838 )   (36,693 )
       
Effect of exchange rate changes on cash and cash equivalents (737 )   277  
       
Net increase (decrease) in cash and cash equivalents 18,120     (2,315 )
Cash and cash equivalents at beginning of period 23,712     26,027  
Cash and cash equivalents at end of period $ 41,832     $ 23,712  

_______________________

(1)  Includes $(73.3) million of deferred income taxes for the year ended December 31, 2017, primarily related to U.S. tax reform.

* Previously reported results in 2017 and 2018 include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.


APERGY CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
       
  Three Months Ended   Year Ended
  Dec. 31,   Sept. 30,   Dec. 31,   December 31,
(in thousands) 2018   2018   2017*   2018*   2017*
Net income attributable to Apergy $ 22,571     $ 25,263     $ 61,155     $ 94,041     $ 111,734  
Pre-tax adjustments:                  
Separation and supplemental benefit costs (1) 5,109     4,403         14,649      
Royalty expense (2)         2,359     2,277     9,765  
Restructuring and other related charges 1,874     (39 )   6,900     4,347     6,921  
Tax impact of adjustments (3) (1,658 )   (1,036 )   (2,796 )   (3,308 )   (5,067 )
Tax impact of U.S. tax reform         (49,307 )       (49,307 )
Adjusted net income attributable to Apergy 27,896     28,591     18,311     112,006     74,046  
Tax impact of adjustments and U.S. tax reform (3) 1,658     1,036     52,103     3,308     54,374  
Net income attributable to
noncontrolling interest
159     232     70     454     930  
Depreciation and amortization 32,784     30,218     30,439     124,461     112,862  
Provision for (benefit from) income taxes 4,637     7,723     (44,892 )   28,796     (21,876 )
Interest expense, net 10,625     10,584     554     27,440     753  
Adjusted EBITDA $ 77,759     $ 78,384     $ 56,585     $ 296,465     $ 221,089  
                   
Diluted earnings per share attributable to Apergy:                  
Reported $ 0.29     $ 0.33     $ 0.79     $ 1.21     $ 1.43  
Adjusted $ 0.36     $ 0.37     $ 0.24     $ 1.44     $ 0.95  

_______________________

(1)  Separation and supplemental benefit costs primarily relate to separation costs, which will substantially decrease in 2019, and to a lesser extent, supplemental benefits costs related to 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)  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)  We generally tax effect adjustments using a combined federal and state statutory income tax rate of approximately 24 percent in 2018, and approximately 30 percent for periods prior to 2018. 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.

* Previously reported results in 2017 and 2018 include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.

   
   
  Three months ended
  December 31, 2018
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling Technologies   Corporate expense and other   Total
Revenue $ 235,364     $ 75,838     $     $ 311,202  
               
Operating profit (loss) / income before income taxes, as reported $ 18,646     $ 26,882     $ (18,161 )   $ 27,367  
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         10,625     10,625  
Adjusted EBITDA $ 50,469     $ 29,540     $ (2,250 )   $ 77,759  
               
Operating profit margin, as reported 7.9 %   35.4 %       8.8 %
Adjusted EBITDA margin 21.4 %   39.0 %       25.0 %

_______________________

(1)  Separation and supplemental benefit costs primarily relate to separation costs, which will substantially decrease in 2019, and to a lesser extent, supplemental benefits costs related to 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.
 

   
   
  Three months ended
  September 30, 2018
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling Technologies   Corporate expense and other   Total
Revenue $ 241,214     $ 75,254     $     $ 316,468  
               
Operating profit (loss) / income before income taxes, as reported $ 24,257     $ 26,209     $ (17,248 )   $ 33,218  
Depreciation and amortization 27,305     2,717     196     30,218  
Separation and supplemental benefit costs (1)         4,403     4,403  
Restructuring and other related charges (39 )           (39 )
Interest expense, net         10,584     10,584  
Adjusted EBITDA $ 51,523     $ 28,926     $ (2,065 )   $ 78,384  
               
Operating profit margin, as reported 10.1 %   34.8 %       10.5 %
Adjusted EBITDA margin 21.4 %   38.4 %       24.8 %

_______________________

(1)  Separation and supplemental benefit costs primarily relate to separation costs, which will substantially decrease in 2019, and to a lesser extent, supplemental benefits costs related to 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.

   
   
  Three months ended
  December 31, 2017*
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling Technologies   Corporate expense and other   Total
Revenue $ 204,206     $ 60,989     $     $ 265,195  
               
Operating profit (loss) / income before income taxes, as reported $ 466     $ 19,250     $ (3,383 )   $ 16,333  
Depreciation and amortization 27,437     3,002         30,439  
Royalty expense (1) 2,359             2,359  
Restructuring and other related charges 6,900             6,900  
Interest expense, net         554     554  
Adjusted EBITDA $ 37,162     $ 22,252     $ (2,829 )   $ 56,585  
               
Operating profit margin, as reported 0.2 %   31.6 %       6.2 %
Adjusted EBITDA margin 18.2 %   36.5 %       21.3 %

_______________________

(1)  Royalty expense represents charges for the right to use of Dover Corporation patents and other intangible assets.

* Previously reported results include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.

   
   
  Year Ended
  December 31, 2018*
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling Technologies   Corporate expense and other   Total
Revenue $ 931,081     $ 285,565     $     $ 1,216,646  
               
Operating profit (loss) / income before income taxes, as reported $ 75,918     $ 98,620     $ (51,247 )   $ 123,291  
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         27,440     27,440  
Adjusted EBITDA $ 195,497     $ 109,657     $ (8,689 )   $ 296,465  
               
Operating profit margin, as reported 8.2 %   34.5 %       10.1 %
Adjusted EBITDA margin 21.0 %   38.4 %       24.4 %

_______________________

(1)  Separation and supplemental benefit costs primarily relate to separation costs, which will substantially decrease in 2019, and to a lesser extent, supplemental benefits costs related to 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.

   
   
  Year Ended
  December 31, 2017*
(in thousands, except percentages) Production &
Automation
Technologies
  Drilling Technologies   Corporate expense and other   Total
Revenue $ 782,813     $ 227,653     $     $ 1,010,466  
               
Operating profit (loss) / income before income taxes, as reported $ 26,890     $ 74,317     $ (10,419 )   $ 90,788  
Depreciation and amortization 100,912     11,950         112,862  
Royalty expense (1) 9,765             9,765  
Restructuring and other related charges 6,921             6,921  
Interest expense, net         753     753  
Adjusted EBITDA $ 144,488     $ 86,267     $ (9,666 )   $ 221,089  
               
Operating profit margin, as reported 3.4 %   32.6 %       9.0 %
Adjusted EBITDA margin 18.5 %   37.9 %       21.9 %

_______________________

(1)  Royalty expense represents charges for the right to use of Dover Corporation patents and other intangible assets.
 
 

* Previously reported results include the impact of certain adjustments primarily related to capital leases and other adjustments which were not material.