The Manitowoc Company, Inc. (NYSE: MTW) today reported sales of
$955.7 million for the third quarter of 2012, an increase of 2.2
percent compared to sales of $935.4 million in the third quarter of
2011. The sales increase was primarily driven by a 4.9 percent
increase in Crane segment sales (10.4 percent at consistent foreign
currency translation rates).
On a GAAP basis, the company reported net earnings of $22.2
million, or $0.17 per diluted share, in the third quarter versus
earnings of $23.7 million, or $0.18 per diluted share, in the third
quarter of 2011. Both periods included special items. A
reconciliation of GAAP net earnings to net earnings before special
items for the quarter and year-to-date periods is provided later in
this press release.
“While third-quarter results fell short of our expectations in
some key areas, we also had several notable positives despite
lingering uncertainty and continued pressure in the global
macroeconomic environment. We are focused on positioning the
company for long-term improvement in profitability, even in the
face of modest growth. This includes enhancing our global
manufacturing network, improving operational efficiency across the
organization, and driving continuous product innovation,” commented
Glen E. Tellock, Manitowoc’s chairman and chief executive officer.
“Looking to the fourth quarter, we expect to see a sequential
improvement over our third-quarter results and remain committed to
achieving our full-year 2012 objectives.”
Crane Segment Results
Third-quarter 2012 net sales in the Crane segment were $555.1
million, up from $529.4 million in the third quarter of 2011,
driven primarily by continued growth in the Americas region, which
was offset by lower demand in Europe and Asia. The 4.9 percent
sales growth was achieved in spite of a negative $29.4 million
impact from currency exchange, coupled with supply chain
disruptions. Correction of the latter issue is expected in the
fourth quarter.
Crane segment operating earnings for the third quarter of 2012
were $26.5 million, compared to $26.1 million in the same period
last year. This resulted in an operating margin of 4.8 percent for
the third quarter of 2012, down from 4.9 percent in the same period
in 2011. Third-quarter 2012 earnings were affected by lower sales
in EMEA and China, customer financing reserves in Asia, plus
ongoing investments in new product engineering, Brazil ramp-up
efforts, and ERP implementation.
Crane segment backlog totaled $976 million as of September 30,
2012, a 25.9 percent increase from $775 million in the prior-year
quarter. Third-quarter 2012 orders of $582 million were 22.3
percent higher than the third quarter of 2011. “The Crane order
increase was particularly noteworthy, given that the third quarter
is typically seasonally soft. Orders were driven by demand across
multiple product categories, including rough-terrain cranes and
all-terrain cranes, as well as strengthening demand in
smaller-capacity crawler cranes. However, the unfavorable
macroeconomic environment continues to impact many of our European
and Asian markets, as well as our tower crane and large crawler
crane product lines,” Tellock explained.
Foodservice Segment Results
Third-quarter 2012 net sales in the Foodservice segment were
$400.6 million, down slightly from $406.0 million in the third
quarter of 2011. The decrease was driven by pressure in Europe and
a negative $4.9 million impact from currency exchange, which was
partially offset by continued penetration in certain emerging
markets.
Foodservice operating earnings for the third quarter of 2012
were $72.2 million, up 7.0 percent versus $67.5 million for the
third quarter of 2011. This resulted in a Foodservice segment
operating margin of 18.0 percent for the third quarter of 2012,
compared to an operating margin of 16.6 percent for the prior-year
period. The year-over-year increase in margin was due to a
favorable product sales mix, particularly in our Manitowoc and
Frymaster brands, coupled with improved operating efficiencies
across the segment.
“While we experienced positive growth in several Foodservice
categories as well as select emerging markets during the third
quarter, we did see ongoing softness in Europe given the economic
pressures prevalent in that region. However, our continued margin
expansion within Foodservice is a testament to our ability to
improve operational efficiencies and diligently manage our cost
structure. While a challenging environment persists across the
globe, we are well positioned for the long-term as we leverage
growth opportunities from new and existing products in
Foodservice,” Tellock concluded.
Cash Flow
Cash flow from operating activities in the third quarter of 2012
was $50.9 million, compared to $5.0 million in the third quarter of
2011. The increase was primarily generated by cash from
profitability and reduced working capital needs. The company
decreased total debt in the third quarter of 2012 by $39.2
million.
2012 Guidance
Based on year-to-date results and its outlook for the fourth
quarter, the company is narrowing its Crane and Foodservice revenue
guidance and is tightening its debt reduction expectations, while
reaffirming earnings guidance and all other key full-year financial
metrics. As a result, Manitowoc now expects:
■ Crane revenue – 10 to 12% year-over-year percentage growth
■ Crane operating earnings – 30 to 40% year-over-year percentage
increase
■ Foodservice revenue – low single-digit percentage growth
■ Foodservice operating earnings – 10 to 15% year-over-year
percentage increase
■ Capital expenditures – approximately $80 million
■ Depreciation & amortization – approximately $120
million
■ Interest expense – Range of $125 to $130 million
■ Amortization of deferred financing fees – approximately $10
million
■ Debt reduction – target at least $150 million, which is
expected to reduce total leverage by more than one turn
Investor Conference Call
On November 5 at 10:00 a.m. ET (9:00 a.m. CT), Manitowoc's
senior management will discuss its third-quarter results during an
investor conference call. All interested parties may listen to the
live conference call via the Internet by going to the Investor
Relations area of Manitowoc's Web site at http://www.manitowoc.com.
A replay of the conference call will also be available at the same
location on the Web site.
About The Manitowoc Company, Inc.
Founded in 1902, The Manitowoc Company, Inc. is a
multi-industry, capital goods manufacturer with over 115
manufacturing, distribution, and service facilities in 25
countries. The company is recognized globally as one of the premier
innovators and providers of crawler cranes, tower cranes, and
mobile cranes for the heavy construction industry, which are
complemented by a slate of industry-leading product support
services. In addition, Manitowoc is one of the world's leading
innovators and manufacturers of commercial foodservice equipment,
which includes 25 market-leading brands of hot- and cold-focused
equipment. In 2011, Manitowoc’s revenues totaled $3.7 billion, with
more than half of these revenues generated outside of the United
States.
Forward-looking Statements
This press release includes "forward-looking statements"
intended to qualify for the safe harbor from liability under the
Private Securities Litigation Reform Act of 1995. Any statements
contained in this press release that are not historical facts are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on the current expectations of the management of the company
and are subject to uncertainty and changes in circumstances.
Forward-looking statements include, without limitation, statements
typically containing words such as "intends," "expects,"
"anticipates," "targets," "estimates," and words of similar import.
By their nature, forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements. Factors
that could cause actual results and developments to differ
materially include, among others:
- unanticipated changes in revenues,
margins, costs, and capital expenditures;
- uncertainties associated with new
product introductions, the successful development and market
acceptance of new and innovative products that drive growth;
- the ability to increase operational
efficiencies across each of Manitowoc’s business segments and to
capitalize on those efficiencies;
- the ability to capitalize on key
strategic opportunities;
- the ability to generate cash and manage
working capital consistent with Manitowoc’s stated goals;
- pressure of financing leverage;
- matters impacting the successful and
timely implementation of ERP systems;
- foreign currency fluctuations and their
impact on reported results and hedges in place with Manitowoc;
- changes in raw material and commodity
prices;
- unexpected issues associated with the
quality of materials and components sourced from third parties and
the resolution of those issues;
- unexpected issues associated with the
availability and viability of suppliers;
- the risks associated with growth;
- geographic factors and political and
economic risks;
- actions of competitors;
- changes in economic or industry
conditions generally or in the markets served by Manitowoc;
- unanticipated changes in customer
demand, including changes in global demand for high-capacity
lifting equipment; changes in demand for lifting equipment and
foodservice equipment in emerging economies, and changes in demand
for used lifting equipment and foodservice equipment;
- global expansion of customers;
- the replacement cycle of
technologically obsolete cranes;
- the ability of Manitowoc's customers to
receive financing;
- foodservice equipment replacement
cycles in national accounts and global chains, including
unanticipated issues associated with refresh/renovation plans by
national restaurant accounts and global chains;
- efficiencies and capacity utilization
of facilities;
- issues related to new plant
start-ups;
- issues related to plant closings and/or
consolidation of existing facilities;
- issues related to workforce reductions
and subsequent rehiring;
- work stoppages, labor negotiations,
labor rates, and temporary labor costs;
- government approval and funding of
projects;
- the ability to complete and
appropriately integrate restructurings, consolidations,
acquisitions, divestitures, strategic alliances, and joint
ventures;
- realization of anticipated earnings
enhancements, cost savings, strategic options and other synergies,
and the anticipated timing to realize those savings, synergies, and
options;
- unanticipated issues affecting the
effective tax rate for the year;
- unanticipated issues associated with
the resolution or settlement of uncertain tax positions, including
unfavorable settlement of a tax matter with the IRS related to the
2008 and 2009 calendar years;
- changes in laws throughout the
world;
- natural disasters disrupting commerce
in one or more regions of the world; and
- risks and other factors cited in
Manitowoc's filings with the United States Securities and Exchange
Commission.
Manitowoc undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise. Forward-looking statements only speak
as of the date on which they are made. Information on the potential
factors that could affect the company's actual results of
operations is included in its filings with the Securities and
Exchange Commission, including but not limited to its Annual Report
on Form 10-K for the fiscal year ended December 31, 2011.
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information For the Three
and Nine Months Ended September 30, 2012 and 2011 (In millions,
except share data)
INCOME STATEMENT
Three Months Ended Nine
Months Ended September 30, September 30, 2012 2011* 2012 2011*
Net sales $ 955.7 $ 935.4 $ 2,821.7 $ 2,617.4 Cost of sales
719.7 712.3 2,126.9
1,990.3 Gross profit 236.0 223.1 694.8 627.1
Engineering, selling and administrative expenses 154.0 143.2 453.5
428.8 Restructuring expense 0.7 0.9 1.6 3.8 Amortization expense
9.5 9.9 28.6 29.2 Other 1.9 0.3
2.0 0.4 Operating earnings (loss) 69.9 68.8
209.1 164.9 Amortization of deferred financing fees (2.0 ) (2.2 )
(6.1 ) (8.2 ) Interest expense (34.4 ) (34.0 ) (101.2 ) (111.7 )
Loss on debt extinguishment - - - (27.8 ) Other income - net
(0.2 ) 2.0 0.1 3.1
Earnings (loss) from continuing operations before taxes on income
33.3 34.6 101.9 20.3 Provision (benefit) for taxes on income
13.7 12.9 41.0 13.8
Earnings (loss) from continuing operations 19.6 21.7
60.9 6.5 Discontinued operations: Earnings (loss) from
discontinued operations, net of income taxes 0.1 (0.1 ) (0.4 ) (3.1
) Loss on sale of discontinued operations, net of income taxes
- - - (33.6 ) Net
earnings (loss) 19.7 21.6 60.5 (30.2 ) Less net loss attributable
to noncontrolling interests (2.5 ) (2.1 ) (6.7
) (4.1 ) Net earnings (loss) attributable to Manitowoc
22.2 23.7 67.2
(26.1 ) Amounts attributable to the Manitowoc common
shareholders: Earnings (loss) from continuing operations 22.1 23.8
67.6 10.6 Earnings (loss) from discontinued operations, net of
income taxes 0.1 (0.1 ) (0.4 ) (3.1 ) Loss on sale of discontinued
operations, net of income taxes - -
- (33.6 ) Net earnings (loss) attributable to
Manitowoc 22.2 23.7 67.2 (26.1 ) BASIC EARNINGS (LOSS) PER
SHARE: Earnings (loss) from continuing operations attributable to
the Manitowoc $ 0.17 $ 0.18 $ 0.52 $ 0.08 common shareholders, net
of income taxes Earnings (loss) from discontinued operations
attributable to the Manitowoc 0.00 (0.00 ) (0.00 ) (0.02 ) common
shareholders, net of income taxes Loss on sale of discontinued
operations attributable to the Manitowoc - - - (0.26 ) common
shareholders, net of income taxes BASIC
EARNINGS (LOSS) PER SHARE: $ 0.17 $ 0.18 $ 0.51
$ (0.20 ) DILUTED EARNINGS (LOSS) PER SHARE: Earnings
(loss) from continuing operations attributable to the Manitowoc $
0.17 $ 0.18 $ 0.51 $ 0.08 common shareholders, net of income taxes
Earnings (loss) from discontinued operations attributable to the
Manitowoc 0.00 (0.00 ) (0.00 ) (0.02 ) common shareholders, net of
income taxes Loss on sale of discontinued operations attributable
to the Manitowoc - - - (0.25 ) common shareholders, net of income
taxes DILUTED EARNINGS (LOSS) PER SHARE
$ 0.17 $ 0.18 $ 0.51 $ (0.20 ) AVERAGE
SHARES OUTSTANDING: Average Shares Outstanding - Basic 130,704,895
130,510,828 130,610,592 130,464,015 Average Shares Outstanding -
Diluted 132,602,292 133,036,277 132,576,695 133,584,302
SEGMENT SUMMARY
Three Months Ended Nine Months Ended September
30, September 30, 2012 2011* 2012 2011* Net sales from continuing
operations: Cranes and related products $ 555.1 $ 529.4 $ 1,673.6 $
1,477.0 Foodservice equipment 400.6 406.0
1,148.1 1,140.4 Total $ 955.7
$ 935.4 $ 2,821.7 $ 2,617.4
Operating earnings (loss) from continuing operations: Cranes and
related products $ 26.5 $ 26.1 $ 99.7 $ 69.5 Foodservice equipment
72.2 67.5 190.7 171.4 General corporate expense (16.7 ) (13.7 )
(49.1 ) (42.6 ) Restructuring expense (0.7 ) (0.9 ) (1.6 ) (3.8 )
Amortization (9.5 ) (9.9 ) (28.6 ) (29.2 ) Other (1.9 )
(0.3 ) (2.0 ) (0.4 ) Total $ 69.9 $
68.8 $ 209.1 $ 164.9 * Prior period
results have been revised to reflect the correction of errors
identified in the third quarter of 2012, which were immaterial to
the prior periods.
THE MANITOWOC
COMPANY, INC. Unaudited Consolidated Financial
Information For the Three and Nine Months Ended September 30,
2012 and 2011 (In millions)
BALANCE SHEET
September 30, December 31,
ASSETS 2012 2011* Current assets:
Cash and temporary investments $ 71.0 $ 71.3 Restricted cash 10.1
7.2 Accounts receivable - net 339.3 297.0 Inventories - net 866.4
665.8 Deferred income taxes 115.7 117.8 Other current assets
98.0 77.8 Total current assets 1,500.5 1,236.9
Property, plant and equipment - net 561.6 568.2 Intangible
assets - net 2,053.4 2,081.5 Other long-term assets 139.7
144.6 TOTAL ASSETS $ 4,255.2 $ 4,031.2
LIABILITIES & STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued expenses $ 890.4 $ 868.7
Short-term borrowings 114.0 79.1 Customer advances 27.9 35.1
Product warranties 92.6 93.8 Product liabilities 28.5
26.8 Total current liabilities 1,153.4 1,103.5
Long-term debt 1,915.6 1,810.9 Other non-current liabilities 616.5
627.1 Stockholders' equity 569.7 489.7
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 4,255.2 $
4,031.2
CASH FLOW SUMMARY
Three Months Ended
Nine Months Ended September 30, September 30, 2012 2011* 2012 2011*
Net earnings (loss) attributable to Manitowoc $ 22.2 $ 23.7 $ 67.2
$ (26.1 ) Non-cash adjustments 31.9 35.5 95.8 170.2 Changes in
operating assets and liabilities (3.3 ) (54.0 )
(233.5 ) (307.7 ) Net cash provided from (used for)
operating activities of continuing operations 50.8 5.2 (70.5 )
(163.6 ) Net cash provided from (used for) operating activities of
discontinued operations 0.1 (0.2 ) (0.4
) (18.7 ) Net cash provided from (used for) operating
activities 50.9 5.0 (70.9 ) (182.3 ) Capital expenditures (15.5 )
(13.7 ) (50.3 ) (32.3 ) Restricted cash 0.1 0.3 (2.9 ) 0.2 Proceeds
from sale of business - - - 143.6 Proceeds from sale of fixed
assets 0.5 2.9 0.7 5.8 Proceeds from swap monetization 14.8 21.5
14.8 21.5 Proceeds from (payments on) borrowings - net (39.2 ) 2.5
126.2 72.0 Payments on receivable financing - net (2.8 ) (5.9 )
(21.5 ) (7.3 ) Stock options exercised 1.0 0.1 2.6 1.6 Debt
issuance costs (0.3 ) (0.7 ) (0.3 ) (14.3 ) Effect of exchange rate
changes on cash 2.0 (3.0 ) 1.3
(2.1 ) Net increase (decrease) in cash & temporary
investments $ 11.5 $ 9.0 $ (0.3 ) $ 6.4
* Prior period results have been revised
to reflect the correction of errors identified in the third quarter
of 2012, which were immaterial to the prior periods.
Adjusted EBITDA
The company defines Adjusted EBITDA as earnings before interest,
taxes, depreciation, and amortization, plus certain items such as
pro-forma acquisition results and the addback of certain
restructuring charges, that are adjustments per the credit
agreement definition. The company's trailing twelve-month Adjusted
EBITDA for covenant compliance purposes as of September 30, 2012
was $379.5 million. The reconciliation of net income attributable
to Manitowoc to Adjusted EBITDA is as follows (in millions):
Net income attributable to Manitowoc $ 82.1 Loss from
discontinued operations 1.2 Loss on sale of discontinued operations
1.0 Depreciation and amortization 109.2 Interest expense and
amortization of deferred financing fees 144.6 Costs due to early
extinguishment of debt 1.9 Restructuring charges 3.3 Income taxes
40.9 Other (4.7 ) Adjusted EBITDA $ 379.5
GAAP Reconciliation
In this release, the company refers to various non-GAAP
measures. We believe that these measures are helpful to investors
in assessing the company's ongoing performance of its underlying
businesses before the impact of special items. In addition, these
non-GAAP measures provide a comparison to commonly used financial
metrics within the professional investing community which do not
include special items. Earnings and earnings per share before
special items reconcile to earnings presented according to GAAP as
follows (in millions, except per share data):
Three Months Ended Nine Months Ended
September 30, September 30, 2012 2011 2012 2011*
Net earnings (loss) attributable to Manitowoc $ 22.2 $ 23.7
$ 67.2 $ (26.1 ) Special items, net of tax: (Earnings) loss from
discontinued operations (0.1 ) 0.1 0.4 3.1 (Gain) loss on sale of
discontinued operations - - - 33.6 Early extinguishment of debt - -
- 18.1 Restructuring expense 0.5 0.6
1.0 2.5 Net earnings before special items $ 22.6
$ 24.4 $ 68.6 $ 31.2 Diluted earnings (loss)
per share $ 0.17 $ 0.18 $ 0.51 $ (0.20 ) Special items, net of tax:
(Earnings) loss from discontinued operations (0.00 ) 0.00 0.00 0.02
(Gain) loss on sale of discontinued operations - - - 0.25 Early
extinguishment of debt - - - 0.14 Restructuring expense 0.00
0.00 0.01 0.02 Diluted earnings
per share before special items $ 0.17 $ 0.18 $ 0.52 $ 0.23
* Prior period results have been revised to reflect
the correction of errors identified in the third quarter of 2012,
which were immaterial to the prior periods.
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