Apergy Reports Third Quarter 2018 Results

10/30/2018

Revenue of $316 million in Q3-18, up 22% year-over-year
Net income of $25 million and adjusted net income of $29 million in Q3-18
Diluted EPS of $0.33 and adjusted diluted EPS of $0.37 in Q3-18
Adjusted EBITDA of $78 million in Q3-18, up 35% year-over-year with margins improving 230 basis points to 25%
Repaid $20 million of term loan debt in Q3-18
Increasing full year 2018 adjusted EBITDA guidance to $289 to $294 million from $280 million

THE WOODLANDS, Texas, Oct. 30, 2018 (GLOBE NEWSWIRE) -- Apergy Corporation (“Apergy”) (NYSE: APY) today reported net income in the third quarter of 2018 of $25.3 million, compared to net income of $18.4 million in the third quarter of 2017. Diluted earnings per share in the third quarter of 2018 was $0.33 and includes total after-tax charges of $3.3 million, or $0.04 per diluted share, related to spin-off activities. Adjusted diluted earnings per share in the third quarter of 2018 was $0.37.

Revenue was $316.5 million in the third quarter of 2018, an increase of $57.8 million, or 22%, compared to $258.7 million in the third quarter of 2017, and an increase of $10.5 million, or 3%, compared to $305.9 million in the second quarter of 2018.

Adjusted EBITDA was $78.4 million in the third quarter of 2018, an increase of $20.2 million, or 35%, compared to $58.2 million in the third quarter of 2017, and an increase of $1.8 million, or 2%, compared to $76.5 million in the second quarter of 2018. Adjusted EBITDA margin was 24.8% in the third quarter of 2018, an increase of 230 basis points year-over-year.

Cash from operating activities was $33.9 million in the third quarter of 2018, compared to $15.6 million in the third quarter of 2017, and $51.6 million in the second quarter of 2018. In the third quarter of 2018, Apergy used available cash to fund a payment of $11.6 million to Dover Corporation associated with tax liabilities incurred as part of the spin-off transaction, as well as repaid $20 million of term loan debt.


	Three Months Ended						Variance
(dollars in thousands, except per share amounts)	Sept. 30, 2018		June 30, 2018		Sept. 30, 2017		Sequential		Year- over- year
Revenue	$316,468		$305,928		$258,654		3	%	22	%

Net income attributable to Apergy	$25,263		$22,183		$18,421		14	%	37	%
Diluted earnings per share attributable to Apergy	$0.33		$0.29		$0.24		14	%	38	%

Adjusted net income attributable to Apergy	$28,591		$29,392		$20,153		(3	)%	42	%
Adjusted diluted earnings per share attributable to Apergy	$0.37		$0.38		$0.26		(3	)%	42	%

Adjusted EBITDA	$78,384		$76,584		$58,177		2	%	35	%
Adjusted EBITDA margin		24.8%		25.0%		22.5%	(20)	bps	230	bps

Net cash provided by operating activities	$33,906		$51,553		$15,593		$(17,647	)	$18,313
Capital expenditures	$14,631		$17,518		$13,500		$(2,887	)	$1,131

“We posted solid results in the third quarter driven by strong execution on our growth initiatives. Robust revenue growth, combined with productivity efforts and cost discipline, resulted in solid year-over-year incremental revenue to adjusted EBITDA conversion in the quarter,” said Sivasankaran “Soma” Somasundaram, President and Chief Executive Officer. “Specifically, on a year-over-year basis, our Drilling Technologies segment revenue increased 27% driven by higher average rig count, share gains, and continued bearings momentum. Our Drilling Technologies segment revenue growth significantly outpaced the year-over-year growth in the global rig count of approximately 8%. In the third quarter, our Production & Automation Technologies segment revenue increased 21% compared to the prior year period, driven by strong growth in both our artificial lift and digital product offerings. We continue to gain traction on our share gain and digital adoption initiatives.

“Compared to the prior year period, our strong performance resulted in adjusted EBITDA margin expansion of 230 basis points in the third quarter. Additionally, consistent with our commitment to our capital allocation priorities, we repaid $20 million of term-loan debt during the quarter.

“Due to our strong year-to-date performance, we are increasing our full year 2018 adjusted EBITDA guidance to $289 to $294 million from $280 million. Our adjusted EBITDA guidance reflects our current view of the market, including the potential impact of input cost inflation driven by tariffs, the risk of E&P capital budget exhaustion, and fewer working days in the fourth quarter. We remain focused on the factors under our control and delivering solid performance relative to the market.”


	Three Months Ended						Variance
(dollars in thousands)	Sept. 30, 2018		June 30, 2018		Sept. 30, 2017		Sequential		Year- over- year
Production & Automation Technologies
Segment revenue	$241,214		$240,686		$199,454		0	%	21	%
Segment operating profit	$24,257		$23,349		$8,403		4	%	189	%
Segment operating profit margin		10.1%		9.7%		4.2%	40	bps	590	bps
Adjusted segment EBITDA	$51,523		$54,322		$36,574		(5	)%	41	%
Adjusted segment EBITDA margin		21.4%		22.6%		18.3%	(120)	bps	310	bps

Drilling Technologies
Segment revenue	$75,254		$65,242		$59,200		15	%	27	%
Segment operating profit	$26,209		$21,340		$20,420		23	%	28	%
Segment operating profit margin		34.8%		32.7%		34.5%	210	bps	30	bps
Adjusted segment EBITDA	$28,926		$24,135		$23,421		20	%	24	%
Adjusted segment EBITDA margin		38.4%		37.0%		39.6%	140	bps	(120)	bps

Production & Automation Technologies

Production & Automation Technologies revenue increased $41.8 million, or 21%, year-over-year driven by strong growth across our artificial lift and digital products. We continued to experience robust growth in our ESP product line driven by further penetration in U.S. onshore Electrical Submersible Pump (“ESP”) markets. Revenue from digital products was $31.1 million in the third quarter of 2018, an increase of $9.8 million, or 46%, compared to $21.3 million in the third quarter of 2017. Segment operating profit increased $15.9 million, or 189%, year-over-year as a result of leveraging revenue growth combined with continued cost discipline. Adjusted segment EBITDA increased $14.9 million, or 41%, year-over-year primarily driven by revenue growth and related operating leverage, with adjusted segment EBITDA margin expanding to 21.4% from 18.3% in the prior year period.

On a sequential basis, revenue increased $0.5 million. Segment operating profit increased $0.9 million, or 4%. Adjusted segment EBITDA decreased $2.8 million, or 5%, sequentially due to expected input cost inflation, anticipated higher allocated corporate expenses, investments in ESP & digital products to support our growth initiatives, and other non-recurring expenses.

Drilling Technologies

Drilling Technologies revenue increased $16.1 million, or 27%, year-over-year as a result of increased worldwide rig count, share gains, and continued bearings growth. Segment operating profit increased $5.8 million, or 28%. Adjusted Segment EBITDA increased by $5.5 million, or 24%, year-over-year driven by the increased volume.

On a sequential basis, revenue increased by $10.0 million, or 15%, due to higher average rig count, including the expected seasonal recovery in the Canadian rig count, share gains, and bearings growth. Segment operating profit increased $4.9 million, or 23%, sequentially. Adjusted segment EBITDA increased by $4.8 million, or 20%, due to higher sequential revenue, which more than fully offset anticipated higher allocated corporate expenses.

Other Business Updates

Frost & Sullivan, a global consulting & market research firm, awarded its 2018 Global Customer Value Leadership Award to Apergy based on their independent market research
Continue to see rod lift conversion orders from customers using ESP & gas lift in the U.S.
Over $9 million of new orders for rod lift systems in the third quarter from international operators
Commercially released next generation rod lift control package with Smarten^TMEdge controller and variable frequency drive solution with advanced control and analytics
Launched Windrock Spotlight for engines, extending Apergy’s cloud based remote monitoring and predicative analysis platform beyond compressors
Forty-two patents have been issued to Drilling Technologies year-to-date in 2018, thirteen were issued in the third quarter of 2018
Drilling Technologies continues to advance diamond shaping capability for drill bit inserts, bearings, and other applications
On track to exit transition services agreement with Dover Corporation in Q4-18

Conference Call Details

Apergy Corporation will host a conference call on Wednesday, October 31, 2018, to discuss its third quarter 2018 financial results. The call will begin at 9:30 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 6190 441.

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 6190 441#.

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, 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 and adjusted diluted earnings per share are defined as net income and earnings per share, 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 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 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 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, the risk that the anticipated benefits from our separation from Dover Corporation may not be fully realized or may take longer to realize than expected; 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							Nine Months Ended
	Sept. 30,		June 30,			Sept. 30,		September 30,
(in thousands, except per share amounts)	2018		2018			2017		2018		2017
Revenue	$	316,468	$	305,928		$	258,654	$	906,318	$	745,093
Cost of goods and services	202,734		202,210			173,880		594,605		500,329
Gross profit	113,734		103,718			84,774		311,713		244,764
Selling, general and administrative expense	69,022		65,807			54,828		194,568		162,359
Interest expense, net	10,584		6,062			79		16,813		199
Other expense, net	910		364			2,941		3,724		7,929
Income before income taxes	33,218		31,485			26,926		96,608		74,277
Provision for income taxes	7,723		9,381			8,241		24,324		22,973
Net income	25,495		22,104			18,685		72,284		51,304
Net income (loss) attributable to noncontrolling interest	232		(79		)	264		295		860
Net income attributable to Apergy	$	25,263	$	22,183		$	18,421	$	71,989	$	50,444

Earnings per share attributable to Apergy:
Basic	$	0.33	$	0.29		$	0.24	$	0.93	$	0.65
Diluted	$	0.33	$	0.29		$	0.24	$	0.93	$	0.65

Weighted-average shares outstanding:
Basic	77,340		77,340			77,340		77,340		77,340
Diluted	77,569		77,770			77,890		77,742		77,890


APERGY CORPORATION
BUSINESS SEGMENT DATA
(UNAUDITED)

	Three Months Ended						Nine Months Ended
	Sept. 30,		June 30,		Sept. 30,		September 30,
(in thousands)	2018		2018		2017		2018		2017
Segment revenue:
Production & Automation Technologies	$	241,214	$	240,686	$	199,454	$	696,591	$	578,429
Drilling Technologies	75,254		65,242		59,200		209,727		166,664
Total revenue	$	316,468	$	305,928	$	258,654	$	906,318	$	745,093

Income before income taxes:
Segment operating profit:
Production & Automation Technologies	$	24,257	$	23,349	$	8,403	$	57,957	$	26,247
Drilling Technologies	26,209		21,340		20,420		71,738		55,067
Total segment operating profit	50,466		44,689		28,823		129,695		81,314
Corporate expense and other ⁽¹⁾	6,664		7,142		1,818		16,274		6,838
Interest expense, net	10,584		6,062		79		16,813		199
Income before income taxes	$	33,218	$	31,485	$	26,926	$	96,608	$	74,277

Bookings:
Production & Automation Technologies	$	241,729	$	249,461	$	209,615	$	708,124	$	596,296
Book-to-bill ratio ⁽²⁾	1.00		1.04		1.05		1.02		1.03
Drilling Technologies	$	75,834	$	70,450	$	56,142	$	215,468	$	170,786
Book-to-bill ratio ⁽²⁾	1.01		1.08		0.95		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 revenues realized during the period.


APERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(in thousands)	September 30, 2018		December 31, 2017
Assets
Cash and cash equivalents	$	18,014	$	23,712
Receivables, net	277,926		202,024
Inventories, net	219,133		201,591
Prepaid expenses and other current assets	20,824		14,038
Total current assets	535,897		441,365

Property, plant and equipment, net	236,067		211,832
Goodwill	906,766		910,088
Intangible assets, net	297,397		338,510
Other non-current assets	7,229		2,980
Total assets	1,983,356		1,904,775

Liabilities
Accounts payable	127,103		98,826
Other current liabilities	90,042		52,239
Total current liabilities	217,145		151,065

Long-term debt	687,543		3,742
Other long-term liabilities	113,908		109,934
Equity
Apergy Corporation stockholders’ equity	962,547		—
Net parent equity in Apergy	—		1,635,285
Noncontrolling interest	2,213		4,749
Total liabilities and equity	$	1,983,356	$	1,904,775


APERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Nine Months Ended September 30,
(in thousands)	2018			2017
Cash provided (required) by operating activities:
Net income	$	72,284		$	51,304
Depreciation	52,814			42,233
Amortization	38,863			40,190
Receivables	(79,533		)	(62,203		)
Inventories	(20,960		)	(28,245		)
Accounts payable	27,776			37,950
Other	1,562			(40,024		)
Net cash provided by operating activities	92,806			41,205

Cash provided (required) by investing activities:
Capital expenditures	(45,832		)	(29,445		)
Other	1,023			2,616
Net cash required by investing activities	(44,809		)	(26,829		)

Cash provided (required) by financing activities:
Issuances of debt, net of debt issuance costs	697,957			—
Repayment of long-term debt	(20,000		)	—
Distributions to Dover Corporation, net	(728,857		)	(19,220		)
Distribution to noncontrolling interest	(2,720		)	(1,212		)
Net cash required by financing activities	(53,620		)	(20,432		)

Effect of exchange rate changes on cash and cash equivalents	(75		)	3,476

Net decrease in cash and cash equivalents	(5,698		)	(2,580		)
Cash and cash equivalents at beginning of period	23,712			26,026
Cash and cash equivalents at end of period	$	18,014		$	23,446


APERGY CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

	Three Months Ended									Nine Months Ended
	Sept. 30,			June 30,			Sept. 30,			September 30,
(in thousands)	2018			2018			2017			2018			2017
Net income attributable to Apergy	$	25,263		$	22,183		$	18,421		$	71,989		$	50,444
Pre-tax adjustments:
Separation and supplemental benefit costs ⁽¹⁾	4,403			5,137			—			9,540			—
Royalty expense ⁽²⁾	—			—			2,473			2,277			7,406
Restructuring and other related charges	(39		)	2,030			8			2,473			21
Tax impact of adjustments ⁽³⁾	(1,036		)	42			(749		)	(1,650		)	(2,271		)
Adjusted net income attributable to Apergy	$	28,591		$	29,392		$	20,153		$	84,629		$	55,600
Tax impact of adjustments ⁽³⁾	1,036			(42		)	749			1,650			2,271
Net income (loss) attributable to noncontrolling interest	232			(79		)	264			295			860
Depreciation and amortization	30,218			31,834			28,691			91,677			82,423
Provision for income taxes	7,723			9,381			8,241			24,324			22,973
Interest expense, net	10,584			6,062			79			16,813			199
Adjusted EBITDA	$	78,384		$	76,548		$	58,177		$	219,388		$	164,326

Diluted earnings per share attributable to Apergy:
Reported	$	0.33		$	0.29		$	0.24		$	0.93		$	0.65
Adjusted	$	0.37		$	0.38		$	0.26		$	1.09		$	0.71

_______________________________

⁽¹⁾	Supplemental benefit costs relate to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These 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 three months ended June 30, 2018 and nine months ended September 30, 2018, associated with capital gains related to certain reorganizations of our subsidiaries as part of the Separation from Dover Corporation.


	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 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⁾	Supplemental benefit costs relate to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These costs are expected to be incurred through the end of 2020.


	Three months ended
	June 30, 2018
(in thousands, except percentages)	Production & Automation Technologies			Drilling Technologies			Corporate expense and other			Total
Revenue	$	240,686		$	65,242		$	—		$	305,928

Operating profit (loss) / income before income taxes, as reported	$	23,349		$	21,340		$	(13,204	)	$	31,485
Depreciation and amortization	28,943			2,795			96			31,834
Separation and supplemental benefit costs ⁽¹⁾	—			—			5,137			5,137
Restructuring and other charges	2,030			—			—			2,030
Interest expense, net	—			—			6,062			6,062
Adjusted EBITDA	$	54,322		$	24,135		$	(1,909	)	$	76,548

Operating profit margin, as reported	9.7		%	32.7		%				10.3		%
Adjusted EBITDA margin	22.6		%	37.0		%				25.0		%

_______________________________

⁽¹⁾	Supplemental benefit costs relate to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These costs are expected to be incurred through the end of 2020.


	Three months ended
	September 30, 2017
(in thousands, except percentages)	Production & Automation Technologies			Drilling Technologies			Corporate expense and other			Total
Revenue	$	199,454		$	59,200		$	—		$	258,654

Operating profit (loss) / income before income taxes, as reported	$	8,403		$	20,420		$	(1,897	)	$	26,926
Depreciation and amortization	25,690			3,001			—			28,691
Royalty expense ⁽¹⁾	2,473			—			—			2,473
Restructuring and other charges	8			—			—			8
Interest expense, net	—			—			79			79
Adjusted EBITDA	$	36,574		$	23,421		$	(1,818	)	$	58,177

Operating profit margin, as reported	4.2		%	34.5		%				10.4		%
Adjusted EBITDA margin	18.3		%	39.6		%				22.5		%

_______________________________

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


	Nine months ended
	September 30, 2018
(in thousands, except percentages)	Production & Automation Technologies			Drilling Technologies			Corporate expense and other			Total
Revenue	$	696,591		$	209,727		$	—		$	906,318

Operating profit (loss) / income before income taxes, as reported	$	57,957		$	71,738		$	(33,087	)	$	96,608
Depreciation and amortization	83,006			8,379			292			91,677
Separation and supplemental benefit costs ⁽¹⁾	—			—			9,540			9,540
Royalty expense ⁽²⁾	2,277			—			—			2,277
Restructuring and other charges	2,473			—			—			2,473
Interest expense, net	—			—			16,813			16,813
Adjusted EBITDA	$	145,713		$	80,117		$	(6,442	)	$	219,388

Operating profit margin, as reported	8.3		%	34.2		%				10.7		%
Adjusted EBITDA margin	20.9		%	38.2		%				24.2		%

_______________________________

⁽¹⁾	Supplemental benefit costs related to enhanced or supplemental benefits provided to employees no longer participating in Dover Corporation benefit and compensation plans. These 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.


	Nine months ended
	September 30, 2017
(in thousands, except percentages)	Production & Automation Technologies			Drilling Technologies			Corporate expense and other			Total
Revenue	$	578,429		$	166,664		$	—		$	745,093

Operating profit (loss) / income before income taxes, as reported	$	26,247		$	55,067		$	(7,037	)	$	74,277
Depreciation and amortization	73,475			8,948			—			82,423
Royalty expense ⁽¹⁾	7,406			—			—			7,406
Restructuring and other charges	21			—			—			21
Interest expense, net	—			—			199			199
Adjusted EBITDA	$	107,149		$	64,015		$	(6,838	)	$	164,326

Operating profit margin, as reported	4.5		%	33.0		%				10.0		%
Adjusted EBITDA margin	18.5		%	38.4		%				22.1		%

_______________________________

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

Source: Apergy Corporation

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Apergy Reports Third Quarter 2018 Results

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