The Manitowoc Company, Inc. (NYSE: MTW) today reported sales of
$1.1 billion for the fourth quarter of 2012, an increase of 10.0
percent compared to sales of $1.0 billion in the fourth quarter of
2011. The sales increase was driven by an 11.6 percent increase in
Crane segment sales, coupled with a 6.7 percent increase in
Foodservice segment sales.
On a GAAP basis, the company reported net earnings of $34.5
million, or $0.26 per diluted share, in the fourth quarter versus
earnings of $14.9 million, or $0.11 per diluted share, in the
fourth quarter of 2011. Both periods included special items.
Excluding special items, the adjusted earnings from continuing
operations were $35.4 million, or $0.27 per diluted share, in the
fourth quarter of 2012, versus adjusted earnings of $18.9 million,
or $0.14 per diluted share, in the fourth quarter of 2011. GAAP
earnings per share in the quarter benefited from the release of an
$11.6-million reserve as a result of a favorable tax audit outcome,
which contributed to a full-year effective tax rate of 29 percent.
A reconciliation of GAAP net earnings to net earnings before
special items for the quarter and full-year periods is provided
later in this press release.
For the full-year 2012, sales were $3.9 billion, an 8.5 percent
increase from $3.6 billion in 2011. GAAP net income in 2012 was
$101.7 million, or $0.76 per share, versus a GAAP net loss of $11.2
million, or $0.08 per share, in the prior year. Excluding the
special items described in the reconciliation below, net earnings
from continuing operations in 2012 were $103.7 million, or $0.78
per share, versus earnings of $49.8 million, or $0.37 per share, in
2011.
“We finished 2012 on a strong note. The steadfast execution
against our strategic initiatives drove another quarter of positive
sales growth and margin improvement, while our full-year results
matched our revenue and earnings expectations. These results also
demonstrated our ability to effectively manage our global
businesses despite macroeconomic challenges,” commented Glen E.
Tellock, Manitowoc’s chairman and chief executive officer. “Despite
this prolonged and often volatile operating environment, we
continue to believe we have the right strategy to continue
expanding profitability across the entire Manitowoc enterprise as
we look to 2013. In addition, we will continue to invest prudently
in our strategies to leverage and enhance our market leadership
positions.”
Crane Segment Results
Fourth-quarter 2012 net sales in the Crane segment were $767.2
million, up 11.6 percent from $687.6 million in the fourth quarter
of 2011, driven primarily by continued strong activity in the
Americas region, as well as higher demand in emerging markets. The
11.6 percent sales growth includes a negative $11.6 million impact
from currency exchange.
Crane segment operating earnings for the fourth quarter of 2012
were $56.3 million, compared to $38.8 million in the same period
last year. This resulted in an operating margin of 7.3 percent for
the fourth quarter of 2012, up from 5.6 percent in the same period
in 2011. Fourth-quarter 2012 earnings were spurred by higher sales
volume and operational efficiencies. Crane segment backlog totaled
$756 million as of December 31, 2012, a slight decrease from $761
million in the prior-year quarter. Fourth-quarter 2012 orders of
$544 million were 19 percent lower than the fourth quarter of 2011.
However, second-half 2012 orders were essentially flat in
comparison with second-half 2011.
“During the quarter we saw continued strength in the Americas
region, coupled with positive performance in several emerging
markets, including Brazil, Greater Asia/Pacific, and Africa. Our
initiatives to drive meaningful margin expansion and take advantage
of expected growth trends globally continue to take shape. We
expect operational excellence to be a primary driver for Cranes in
2013 as our sustained focus on efficiency will not only enhance our
competitive position, but also drive long-term profitability,”
Tellock continued.
Foodservice Segment Results
Fourth-quarter 2012 net sales in the Foodservice segment were
$363.2 million, up 6.7 percent from $340.3 million in the fourth
quarter of 2011. The year-over-year increase was driven by balanced
growth across all geographies, continued traction with new
products, and engaged channel partners.
Foodservice operating earnings for the fourth quarter of 2012
were $50.3 million, up 12.0 percent from $44.9 million for the
fourth quarter of 2011. This resulted in a Foodservice segment
operating margin of 13.9 percent for the fourth quarter of 2012,
compared to an operating margin of 13.2 percent for the prior-year
period. The year-over-year increase in margin was highlighted by
product cost reductions and lean manufacturing initiatives that
generated improved operating efficiencies across the segment.
“We expect a modest growth environment in 2013, which should
produce continuing mid-teens margins given our ongoing investments
in new technologies, operational improvements, and Lean
initiatives. We remain true to the multiple strategies we have
identified for Manitowoc Foodservice, and will continue to drive
future performance through market share gains, greater innovation
around our core brands, and improving operational efficiencies
across our global footprint,” Tellock explained.
Cash Flow & Credit Statistics
Cash flow from operating activities in the fourth quarter of
2012 was $233.2 million, compared to $197.9 million in the fourth
quarter of 2011. The increase was primarily generated by cash from
profitability and reduced working capital levels. Debt reduction
during the fourth quarter was $204 million, resulting in full-year
debt reduction of approximately $80 million. Full-year 2012
earnings before interest, taxes, depreciation, and amortization
(EBITDA) were $408.1 million, an increase of 16.9 percent over
$349.2 million for full-year 2011. The combination of 2012 debt
reduction and improving EBITDA resulted in a greater than one turn
reduction in total leverage to 4.8 times at year-end. “I am pleased
that we met our objective for more than one turn of leverage
reduction in 2012. While our 2012 total debt reduction fell short
of our full-year target, this metric was negatively impacted by a
high volume of crane shipments occurring very late in the fourth
quarter. As a result, our cash collections during the quarter were
lower than anticipated, but are reflected in our accounts
receivable. The realization of that cash will have a positive
impact on our cash flow during the first quarter of 2013,” Tellock
explained.
2013 Guidance
For the full-year 2013, Manitowoc expects:
■ Crane revenue – high single-digit percentage growth
■ Crane operating margins – high single-digit percentage
■ Foodservice revenue – mid single-digit percentage growth
■ Foodservice operating margins – continuing mid-teens
percentage
■ Capital expenditures – approximately $100 million
■ Depreciation & amortization – approximately $115
million
■ Interest expense – approximately $125 million
■ Amortization of deferred financing fees – approximately $10
million
■ Debt reduction – to exceed $200 million
■ Full-year effective tax rate in mid 30-percent range
Investor Conference Call
On February 1 at 10:00 a.m. ET (9:00 a.m. CT), Manitowoc's
senior management will discuss its fourth-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 26
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 24 market-leading brands of hot- and cold-focused
equipment. In 2012, Manitowoc’s revenues totaled $3.9 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 or transition restructurings,
consolidations, acquisitions, divestitures, strategic alliances,
and joint ventures; and the finalization of the price and other
terms of the foregoing;
- 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 Twelve Months Ended December 31, 2012 and 2011 (In millions,
except share data)
INCOME STATEMENT
Three
Months Ended Twelve Months Ended December 31,
December 31,
2012*
2011*
2012*
2011* Net sales $ 1,130.4 $ 1,027.9 $ 3,927.0 $
3,619.2 Cost of sales 883.9 821.3
2,990.6 2,790.6 Gross profit 246.5
206.6 936.4 828.6 Engineering, selling and administrative
expenses 154.5 141.6 603.5 565.4 Restructuring expense 7.9 1.8 9.5
5.5 Amortization expense 9.2 9.4 37.1 37.9 Other 0.5
(0.9 ) 2.5 (0.5 ) Operating earnings
74.4 54.7 283.8 220.3 Amortization of deferred financing fees (2.1
) (2.2 ) (8.2 ) (10.4 ) Interest expense (35.9 ) (35.0 ) (137.1 )
(146.7 ) Loss on debt extinguishment (6.3 ) (1.9 ) (6.3 ) (29.7 )
Other (expense) income - net 0.1 (0.8 )
0.1 2.3 Earnings from continuing operations
before taxes on income 30.2 14.8 132.3 35.8 Provision (benefit) for
taxes on income (2.8 ) - 38.7
14.7 Earnings from continuing operations 33.0
14.8 93.6 21.1 Discontinued operations: Loss from
discontinued operations, net of income taxes (0.9 ) (1.3 ) (1.0 )
(4.2 ) Loss on sale of discontinued operations, net of income taxes
- (1.0 ) - (34.6 ) Net
earnings (loss) 32.1 12.5 92.6 (17.7 ) Less net loss attributable
to noncontrolling interests (2.4 ) (2.4 ) (9.1
) (6.5 ) Net earnings (loss) attributable to Manitowoc
34.5 14.9 101.7
(11.2 ) Amounts attributable to the Manitowoc common
shareholders: Earnings from continuing operations 35.4 17.2 102.7
27.6 Loss from discontinued operations, net of income taxes (0.9 )
(1.3 ) (1.0 ) (4.2 ) Loss on sale of discontinued operations, net
of income taxes - (1.0 ) -
(34.6 ) Net earnings (loss) attributable to Manitowoc 34.5
14.9 101.7 (11.2 ) BASIC EARNINGS (LOSS) PER SHARE: Earnings
(loss) from continuing operations attributable to the Manitowoc $
0.27 $ 0.13 $ 0.78 $ 0.21 common shareholders, net of income taxes
Earnings (loss) from discontinued operations attributable to the
Manitowoc (0.01 ) (0.01 ) (0.01 ) (0.03 ) common shareholders, net
of income taxes Loss on sale of discontinued operations
attributable to the Manitowoc - (0.01 ) - (0.27 ) common
shareholders, net of income taxes BASIC
EARNINGS (LOSS) PER SHARE: $ 0.26 $ 0.11 $ 0.77
$ (0.09 ) DILUTED EARNINGS (LOSS) PER SHARE: Earnings
(loss) from continuing operations attributable to the Manitowoc $
0.26 $ 0.13 $ 0.77 $ 0.21 common shareholders, net of income taxes
Earnings (loss) from discontinued operations attributable to the
Manitowoc (0.01 ) (0.01 ) (0.01 ) (0.03 ) common shareholders, net
of income taxes Loss on sale of discontinued operations
attributable to the Manitowoc - (0.01 ) - (0.26 ) common
shareholders, net of income taxes
DILUTED EARNINGS (LOSS) PER SHARE $ 0.26 $ 0.11 $
0.76 $ (0.08 ) AVERAGE SHARES OUTSTANDING: Average
Shares Outstanding - Basic 131,782,183 130,535,697 131,447,895
130,481,436 Average Shares Outstanding - Diluted 133,730,595
132,740,196 133,317,050 133,377,109
SEGMENT SUMMARY
Three
Months Ended Twelve Months Ended December 31,
December 31,
2012*
2011*
2012*
2011* Net sales from continuing operations: Cranes and
related products $ 767.2 $ 687.6 $ 2,440.8 $ 2,164.6 Foodservice
equipment 363.2 340.3 1,486.2
1,454.6 Total $ 1,130.4 $ 1,027.9
$ 3,927.0 $ 3,619.2 Operating earnings
(loss) from continuing operations: Cranes and related products $
56.3 $ 38.8 $ 156.0 $ 108.2 Foodservice equipment 50.3 44.9 240.6
216.3 General corporate expense (14.6 ) (18.7 ) (63.7 ) (61.3 )
Restructuring expense (7.9 ) (1.8 ) (9.5 ) (5.5 ) Amortization (9.2
) (9.4 ) (37.1 ) (37.9 ) Other (0.5 ) 0.9 (2.5 ) 0.5
Total $ 74.4 $ 54.7 $ 283.8 $
220.3
THE MANITOWOC COMPANY,
INC. Unaudited Consolidated Financial Information For
the Three and Twelve Months Ended December 31, 2012 and 2011 (In
millions)
BALANCE SHEET
December 31, December 31,
ASSETS
2012*
2011*
Current assets: Cash and temporary investments $ 76.1 $ 71.3
Restricted cash 10.6 7.2 Accounts receivable - net 332.7 294.5
Inventories - net 707.6 662.3 Deferred income taxes 89.0 116.7
Other current assets 105.2 77.8
Current assets of discontinued
operations
6.8 7.1 Total current assets 1,328.0
1,236.9 Property, plant and equipment - net 556.1 564.5
Intangible assets - net 2,007.1
2,039.6
Other long-term assets 130.3 144.5
Long-term assets of discontinued
operations
35.8
37.1
TOTAL ASSETS $ 4,057.3 $ 4,022.6
LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued expenses $ 912.9 $ 864.2 Short-term
borrowings 92.8 79.1 Customer advances 24.2 35.1 Product warranties
82.1 93.1 Product liabilities 27.9 26.8
Current liabilities of discontinued
operations
6.0 5.2 Total current liabilities
1,145.9 1,103.5 Long-term debt 1,732.0 1,810.9 Other
non-current liabilities 590.7 619.6
Long-term liabilities of discontinued
operations
7.4 7.5 Stockholders' equity 581.3 481.1
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 4,057.3
$ 4,022.6
CASH FLOW SUMMARY
Three
Months Ended Twelve Months Ended December 31,
December 31,
2012*
2011*
2012*
2011* Net earnings (loss) attributable to Manitowoc $ 34.5 $
14.9 $ 101.7 $ (11.2 ) Non-cash adjustments 38.8 65.3 133.3 233.3
Changes in operating assets and liabilities 160.3
118.2 (74.7 ) (188.8 ) Net cash
provided from operating activities of continuing operations 233.6
198.4 160.3 33.3 Net cash provided from (used for) operating
activities of discontinued operations (0.4 ) (0.5 )
2.0 (17.7 ) Net cash provided from operating
activities 233.2 197.9 162.3 15.6 Capital expenditures (22.7 )
(32.6 ) (72.9 ) (64.8 ) Restricted cash (0.4 ) 2.0 (3.3 ) 2.2
Proceeds from sale of business - - - 143.6 Proceeds from sale of
fixed assets 0.2 11.7 0.9 17.5 Net cash used for investing
activities of discontinued operations (0.1 ) - (0.2 ) (0.1 )
Proceeds from swap monetization - - 14.8 21.5 Payments on
borrowings - net (203.9 ) (211.7 ) (77.7 ) (139.5 ) Proceeds from
(payments on) receivable financing - net 11.1 22.2 (10.4 ) 14.8
Dividends paid (10.6 ) (10.6 ) (10.6 ) (10.6 ) Stock options
exercised 3.8 1.0 6.4 2.6 Debt issuance costs (5.4 ) (0.4 ) (5.7 )
(14.7 ) Effect of exchange rate changes on cash (0.1 )
(1.2 ) 1.2 (3.2 ) Net increase
(decrease) in cash & temporary investments $ 5.1 $ (21.7
) $ 4.8 $ (15.1 )
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 December 31, 2012 was
$408.1 million. The reconciliation of net income attributable to
Manitowoc to Adjusted EBITDA is as follows (in millions):
Net income attributable to Manitowoc $ 101.7 Loss
from discontinued operations 1.0 Depreciation and Amortization
106.6 Interest expense and amortization of deferred financing fees
145.3 Costs due to early extinguishment of debt 6.3 Restructuring
charges 9.5 Income taxes 38.7 Other (1.0 ) Adjusted EBITDA $
408.1
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 Twelve
Months Ended December 31, December 31,
2012*
2011*
2012*
2011* Net earnings (loss) attributable to
Manitowoc $ 34.5 $ 14.9 $ 101.7 $ (11.2 ) Special items, net of
tax: Loss from discontinued operations 0.9 1.3 1.0 4.2 Loss on sale
of discontinued operations - 1.0 - 34.6 Early extinguishment of
debt 4.1 1.2 4.1 19.3 Restructuring expense 7.5 1.2 8.5 3.6
Reversal of tax accrual (11.6 ) - (11.6 ) - Other -
(0.7 ) - (0.7 ) Net earnings before
special items $ 35.4 $ 18.9 $ 103.7 $ 49.8
Diluted earnings (loss) per share $ 0.26 $ 0.11 $
0.76 $ (0.08 ) Special items, net of tax: Loss from discontinued
operations 0.01 0.01 0.01 0.03 Loss on sale of discontinued
operations - 0.01 - 0.26 Early extinguishment of debt 0.03 0.01
0.03 0.14 Restructuring expense 0.06 0.01 0.06 0.03 Reversal of tax
accrual (0.09 ) - (0.09 ) - Other - (0.01 )
- (0.01 ) Diluted earnings per share before
special items $ 0.27 $ 0.14 $ 0.78 $ 0.37
* Results have been prepared with the
recently announced divested Jackson warewashing business treated as
a discontinued operation. 2011 results have been revised to reflect
the correction of errors identified in the third and fourth
quarters of 2012, which were immaterial to the prior periods.
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