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The Manitowoc Company Reports Third-quarter Financial Results

Stocks in this article: MTW

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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