Net Income of Garnder Denver Increases 55%

CEO's Comments Regarding Results

"I am very pleased with the second quarter results and the substantial increases in revenues and flow through earnings for our two segments both sequentially and compared to the prior year. In addition to the Syltone acquisition, a significant contributor to our success in the first half stems from increased demand for well stimulation pumps and related aftermarket parts and service in our fluid transfer segment. This increase in demand is directly correlated to rising U.S. land rig counts, which continue to increase," stated Ross Centanni, Chairman, President and CEO.

"We also benefited from increased shipments of compressors and blowers due to improving demand in the U.S. and European industrial sectors combined with increased market penetration in South Africa and China, which continue to be primary targets for future sales growth. In addition to the top line growth, the Compressed Air Products segment also began to realize some benefits from the profitability programs initiated in the fourth quarter of 2003. These cost cutting and product rationalization measures helped improve this segment's operating earnings as a percentage of revenues to 8.4%, despite a lower operating margin percentage from the portion of Syltone's business included in the segment."

"I am also pleased with the progress made to date on the integration of Syltone's operations. During the second quarter, we began relocating production from the Syltone facility in Louisville, Kentucky to existing operations. Manufacturing of certain blower products were transferred from Louisville to our facility in Sedalia, Missouri and fluid transfer operations were moved to an existing Syltone facility in Houston, Texas. These actions reduced DEPS by approximately $0.01 in the second quarter and are expected to negatively impact DEPS by $0.01 to $0.02 in the second half of the year. We currently anticipate that this project will enhance DEPS on a recurring basis by $0.02 to $0.03 beginning in 2005."

"Construction of the assembly and packaging facility in China is on schedule and will be operational by the end of the third quarter. We also recently invested significant capital and resources to integrate our businesses in Princeton, Illinois and Tampere, Finland on our common enterprise resource planning system. These projects and many others aimed at introducing new products, penetrating new markets and improving our operations, resulted in capital expenditures of nearly $9 million during the first half of 2004. We currently expect total capital expenditures for the year to be approximately $20 million."

"I expect accelerated improvements to be achieved in the second half with our inventory reduction initiatives and cash flow generation. Managing our operating working capital will continue to be a primary challenge and focus for us if activity levels rise as we anticipate during the remainder of 2004."

Outlook

Looking forward, Mr. Centanni stated, "I remain optimistic that the demand outlook for industrial products will continue to improve during the second half of 2004 as industrial production and capacity utilization in North America and Europe improve. We expect this to result in increased orders, revenues and profitability in our Compressed Air Products segment in the second half of the year. Current economic signs also point toward a sustained high level of oil and natural gas prices, which should allow us to maintain the current activity levels within our Fluid Transfer Products segment. We will continue to strategically position petroleum pump inventory to help secure orders requiring shorter lead times and increase our responsiveness to incremental demand. This approach proved beneficial in the first half of 2004 and will be critical to our success when demand for our drilling pumps trends upward."

"Based on the current economic environment, our existing backlog and recent order trends, we expect DEPS to be approximately $0.38 to $0.42 for the third quarter of 2004 and $1.60 to $1.70 for the year. This guidance does not consider the potential mildly dilutive impact from the pending acquisition of nash_elmo Holdings, LLC, which was announced earlier today. We currently believe that Syltone will contribute approximately $0.13 to $0.18 to DEPS in 2004."

Second Quarter Results

Revenues for the three-month period increased $51.9 million (47%) to $161.3 million compared to the same period of 2003. This increase is due to the acquisition of Syltone, ($37.5 million) as well as increased shipments of well stimulation pumps, pump parts, rotary screw compressors and positive displacement blowers. Compared to the same period of 2003, Compressed Air Products segment revenues increased $33.6 million (36%) to $126.0 million. This increase is due to the acquisition of Syltone ($25.8 million) combined with increased volumes of compressor and blower shipments in the U.S., Europe, South Africa and China. Changes in currency exchange rates also contributed to the increase. Fluid Transfer Products segment revenues for the three-month period increased $18.3 million (108%) to $35.3 million, compared to the same period of 2003, as a result of the acquisition of Syltone ($11.7 million) and increased sales of well stimulation pumps and pump parts.

Gross margin (defined as revenues less cost of sales) as a percentage of sales increased to 32.6% in the three-month period of 2004 from 30.4% in the prior year period. This increase was principally attributable to the increased revenues in both segments and the related positive impact of increased leverage of fixed and semi-fixed costs over a higher revenue base. The addition of Syltone also positively impacted gross margin percentage as Syltone's gross margin percentage was higher than the Company's previously existing businesses. Finally, favorable sales mix also contributed to the increase as the second quarter of 2004 included a higher percentage of aftermarket sales compared to the prior year.

Selling and administrative expenses increased $13.0 million (63%) in the three-month period of 2004 to $33.7 million from $20.7 million in the same period of 2003 primarily due to the acquisition of Syltone ($10.5 million). Changes in currency exchange rates and higher compensation and fringe benefit costs also contributed to this increase.

Operating earnings as a percentage of revenues for the Compressed Air Products segment were 8.4% for the three-month period of 2004, compared to 8.3% in the same period of 2003. This increase was primarily attributable to the positive impact of increased leverage of the segment's fixed and semi-fixed costs over a higher revenue base. Cost savings and product rationalization efforts initiated in the fourth quarter of 2003 and favorable sales mix also contributed to this increase. These positive factors were partially offset by higher compensation and fringe benefit costs in 2004 and the incremental impact of Syltone, which had a lower operating margin percentage than the segment's previously existing businesses. Fluid Transfer Products operating earnings as a percentage of revenues increased to 9.5% for the three-month period ended June 30, 2004, compared to 6.4% in the prior year period. This improvement in profitability was primarily attributable to the positive impact of increased leverage of the segment's fixed and semi-fixed costs over a higher revenue base and operational improvements. Operating earnings from businesses that existed prior to the Syltone acquisition increased $4.5 million in the second quarter of 2004 compared to the prior year period which represents 32% of the increase in revenues for these businesses.

Interest expense for the three-month period increased $0.3 million compared to the same period of 2003, due to higher average borrowings stemming from the Syltone acquisition and higher average rates.

Net income was $8.3 million ($0.41 DEPS) for the three-month period ended June 30, 2004, compared to $5.3 million ($0.33 DEPS) in the same period of 2003. This increase is primarily attributable to the same factors that resulted in higher operating earnings in each segment. These positive factors were partially offset by higher compensation and fringe benefit costs and a higher effective tax rate. The 2004 results reflect an effective tax rate of 34.0%, compared to 32.0% in the second quarter of 2003, primarily due to Syltone. The contribution of Syltone to net income during the second quarter of 2004 was not significant. Without the stock offering completed near the end of the first quarter of 2004, DEPS for the second quarter would have been $0.06 higher.

Six Months Results

Revenues for the first half of 2004 increased $104.8 million (50%) to $315.7 million compared to the same period of 2003. This increase is due to the acquisition of Syltone ($79.8 million) and increased shipments of well stimulation pumps, pump parts, rotary screw compressors and positive displacement blowers. Compressed Air Products segment revenues increased $69.4 million (39%) to $249.0 million, compared to the same period of 2003. This increase is primarily attributable to Syltone ($55.0 million) and increased shipments of compressors and blowers in the U.S., Europe, South Africa and China. Changes in currency exchange rates also contributed to this increase. Fluid Transfer Products segment revenues for the six-month period increased $35.5 million (113%) to $66.7 million compared to the prior year period. This increase is due to the acquisition of Syltone ($24.8 million) and increased volume of well stimulation pumps and pump parts shipments, partially offset by a decline in drilling pump shipments.

Net income was $14.8 million ($0.80 DEPS) for the six-month period ended June 30, 2004, compared to $8.9 million ($0.55 DEPS) in the same period of 2003. This increase is primarily attributable to higher revenues from each segment. Syltone and a foreign currency transaction gain recorded in the first quarter of 2004 also contributed approximately $1.0 million and $0.8 million, respectively. The foreign currency gain was specifically related to a portion of the proceeds from U.S. dollar borrowings, which were converted to British pounds and appreciated in U.S. dollars in 2004 prior to being used to consummate the Syltone acquisition in January. Changes in currency exchange rates also contributed approximately $0.4 million to net income during the first half of 2004. These positive factors were partially offset by higher compensation and fringe benefit costs and a higher effective tax rate. Without the stock offering completed near the end of the first quarter of 2004, DEPS for the first half would have been $0.06 higher.

During the first half of 2004, the Company generated cash from operations totaling $5.4 million, compared to $8.8 million in the prior year period. This change is primarily due to a less favorable change in operating working capital (excluding the impact of the Syltone acquisition) due to increased activity levels in both segments, partially offset by higher net income. Strategic positioning of certain petroleum pump inventory to minimize lead times and capture incremental demand also contributed to the increase in operating working capital.