MANITOWOC, Wis., Oct. 24 /PRNewswire-FirstCall/ — The Manitowoc Company (NYSE:MTW) today reported that financial results for the quarter ended September 30, 2006 represented the company’s third consecutive quarter of record net sales and earnings. Net sales increased 38 percent to $779.0 million from $564.9 million during the third quarter of 2005. Reported earnings per diluted share were $0.80 for the third quarter of 2006 compared to $0.28 for the third quarter of 2005.
Excluding costs related to the company’s terminated bid for Enodis plc during the latest quarter and the effect of restructuring activities and losses associated with discontinued operations during the third quarter of 2005, third-quarter 2006 earnings per diluted share from continuing operations increased 116 percent to $0.82, up from $0.38 for the third quarter of 2005. A reconciliation of GAAP earnings to earnings before special items for the three and nine months ended September 30, 2006 and 2005 is included later in this release.
“Because of The Manitowoc Company’s global leadership in the lifting industry, the company again delivered strong financial performance to its shareholders,” said Terry D. Growcock, Manitowoc’s chairman and chief executive officer. “Third-quarter operating earnings from Manitowoc’s Crane segment increased more than 150 percent compared to the third quarter of 2005 as we benefited from robust demand, high capacity utilization, and excellent factory productivity.”
“While we felt it was in the best interests of our shareholders not to move forward with the bid for Enodis plc, we will continue to explore strategic growth opportunities for our Foodservice and Crane segments, which both make solid contributions to our profitability,” Growcock said. “The Marine segment reached a historic milestone during the quarter with the successful launch of FREEDOM, the Navy’s first Littoral Combat Ship. This important Navy program and a solid backlog of commercial work have enabled the Marine segment to increase both revenue and operating profit this year.”
Business Segment Results
Third-quarter 2006 net sales in the Crane segment increased 44 percent to $583.3 million, from $404.9 million in the third quarter of 2005. Operating earnings for the third quarter of 2006 increased 157 percent to a record $76.1 million, from $29.6 million in the same period last year. The strength of the Crane segment’s end markets is reflected in its backlog, which totaled $1.4 billion, an increase of 25 percent from June 30, 2006, and up 120 percent from September 30, 2005.
“Our Crane segment’s global positioning and strong, customer-focused product lines continue to drive outstanding financial performance,” Growcock said. “Our operating margin of 13 percent for the quarter was driven by high capacity utilization and efficient manufacturing techniques that have enabled us to increase productivity and leverage our increased volume as a result of strong global market conditions. Our broad product line is engaged with essentially all aspects of commercial and industrial construction as demand remains strong in all geographic regions and across all product categories.”
In the Foodservice segment, third-quarter 2006 net sales increased 5 percent to $114.5 million from $108.9 million in the third quarter of last year. Operating earnings for the third quarter of 2006 were $18.6 million, essentially flat from the same period in 2005. The sales and operating profit performance reflects an environment in which commodity cost increases, beverage sales reductions, and absorption issues in refrigeration offset gains in pricing and market share. In addition, U.S. weather conditions were cooler than during the third quarter of 2005, which influenced replacement sales comparisons for the company’s mainstay North American ice machine business.
“Foodservice continues to be our highest-margin business, and we believe it has opportunities for improvement,” Growcock said. “Our ice machine business recently achieved its highest ever U.S. market share position as our investments in energy saving product design and new product innovation continue to make our family of ice machines the first choice in the foodservice industry. As with our Crane and Marine segments, Foodservice has been challenged to offset sharp increases in commodity costs. Prices during the quarter rose most sharply on commodities used primarily in Foodservice products, resulting in more acute cost pressures for this segment.”
Revenues for the Marine segment during the third quarter of 2006 rose 59 percent to $81.2 million from $51.1 million in the third quarter of 2005. Operating earnings for Marine were $2.4 million in the third quarter of 2006 compared to an operating loss of $0.1 million in the third quarter of 2005.
“The Marine segment continues to build on its foundation for growth and profitability,” Growcock said. “We recently launched FREEDOM, the Navy’s first Littoral Combat Ship. Everyone associated with this important shipbuilding program has praised the workmanship of the Marinette Marine team and their ability to bring the best disciplines of commercial shipbuilding to a complex, first-in-class military program. The outlook for the LCS program is encouraging. Marine is also expanding its reputation as one of the nation’s leading commercial shipbuilders with its solid execution on a large backlog of OPA-90 barges and tugs,” Growcock said.
Strategic Priorities
“We utilize six broad strategic priorities to ensure that all management decisions are aligned on value creation,” Growcock said. “Each priority has its unique strategies and tactics, yet all six have the common goal of creating shareholder value by making our efforts more efficient, more effective, and more valuable to our customers. Some of our recent activities are outlined below.”
Growth: The Crane segment’s current performance is an excellent example of a growth strategy that has been well executed. By creating the broadest product line and delivering it on a global basis, we multiply the industry’s growth trends by leveraging cross-selling opportunities within our customer base. We will continue to seek appropriate acquisition targets that expand the growth profile of both the Crane and Foodservice segments.
Innovate: The Foodservice segment continues to partner with its customers in developing innovative products that address new needs in the marketplace. The new Flex-Tower beverage dispenser gives quick-service restaurant and convenience store operators the equipment to capture growing customer interest for non-carbonated beverages such as juices and sports drinks. We are also teaming with a third-party manufacturer to bring a cost-effective line of Visi-coolers for sales of cold-packaged beverages in high-traffic areas of convenience stores, supermarkets, and other retail outlets.
Customer Focus: Our Crane customers rely on Manitowoc Crane Group product and service quality to provide maximum up-time on their jobs. We deliver on that quality promise through Crane CARE, the lifting industry’s most complete after-market support network. During the quarter we continued to expand our call centers with initiatives in EMEA and the Asia/Pacific regions. These new call centers will be fully operational in the first half of 2007. Having trained technicians on call 24/7 around the world is proof to our customers that Manitowoc Crane Group is focused and committed to their success.
Excellence in Operations: The solid growth of our Crane backlog is balanced with our need to deliver those orders on a timely basis. Meeting that customer expectation requires excellent operations, especially in a market with tight supplies of key commodities and components. We built a global sourcing team with the objective of not only negotiating competitive contracts with suppliers, but identifying and qualifying new suppliers ahead of the demand curve. The fact that our Crane revenue increased during a historically slower quarter is evidence of the effectiveness of this operations strategy.
People and Organizational Development: Safe workers are productive workers, and Manitowoc places a high importance on safety. During a year of record man-hours, we were able to decrease the total number of reportable incidents through comprehensive safety training programs in all segments. Our employees participate in safety training programs on a regular basis, and that training is beneficial both on the job and at home.
Create Value: Our strategic priorities have delivered exceptional value to Manitowoc shareholders. In addition to record earnings, our Economic Value-Added (EVA(R)) through the first nine months of 2006 totaled $84.9 million, an increase of 445 percent from the same period in 2005. The tremendous operating leverage of our Crane business combined with a steady contribution from the Foodservice segment and improved performance in the Marine segment have created a year-to-date EVA level that already exceeds any single fiscal year in our history.
Earnings Guidance
“Based on the strong performance during the third quarter, we are raising our 2006 earnings guidance to a range of $2.70 to $2.75 per share, excluding special items,” said Growcock. As a result of the $0.15 second-quarter charge for early extinguishment of debt and a $0.02 third-quarter charge for acquisition activity, GAAP earnings guidance for the full year is in the range of $2.53 to $2.58 per share. In addition, cash flow from operations is expected to exceed $200 million for the full year, expanding on the strong year-to-date performance of $129 million.
In this release, the company refers to various non-GAAP measures. The company believes 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 from continuing operations before special items reconcile to earnings from continuing operations presented according to GAAP as follows for the three and nine months ended September 30, 2006 and 2005 (in millions, except per share data):
Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005Net earnings $50.4 $17.1 $122.3 $47.6
Special items, net of tax
(at statutory rate):
Loss from discontinued operations – 0.4 0.3 0.3
Loss on closure of discontinued
operations – 3.4 – 3.4
Post acquisition claim settlement – – (0.8) –
Early extinguishment of debt – – 9.4 5.9
Costs related to Enodis
acquisition activity 1.4 – 1.4 –
Restructuring and plant
consolidation – 2.1 – 2.1
Earnings from continuing operations
before special items $51.8 $23.0 $132.6 $59.3Diluted earnings per share $0.80 $0.28 $ 1.95 $0.77
Special items, net of tax
(at statutory rate):
Loss from discontinued operations – 0.01 0.01 0.01
Loss on closure of discontinued
operations – 0.05 – 0.05
Post acquisition claim settlement – – (0.01) –
Early extinguishment of debt – – 0.15 0.10
Costs related to Enodis
acquisition activity 0.02 – 0.02 –
Restructuring and plant
consolidation – 0.04 – 0.04
Diluted earnings per share from
continuing operations before
special items $0.82 $0.38 $2.12 $0.97Upcoming Investor Events
On October 25 at 10:00 a.m. EDT (9:00 a.m. CDT), Manitowoc senior management will discuss its quarterly 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 section of Manitowoc’s Web site at http://www.manitowoc.com/ and completing a brief registration form. A replay of the conference call will be available at the same location on the Web site.
On November 28, Manitowoc senior management will host an investment community update meeting in New York. The presentations will begin at Noon EST and conclude at approximately 4 p.m. EST. All interested parties may listen to the webcast via the Internet by going to the Investor Relations section of Manitowoc’s Web site at http://www.manitowoc.com/ and completing a brief registration form. A replay of the webcast will be available at the same location on the Web site.
About The Manitowoc Company, Inc.
The Manitowoc Company, Inc. is one of the world’s largest providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the U.S. maritime industry.
Forward-looking Statements
Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. Potential factors could cause actual results to differ materially from those expressed or implied by such statements. These statements and potential factors include, but are not limited to, those relating to:
— anticipated changes in revenue, margins, and costs,
— new crane and foodservice product introductions,
— foreign currency fluctuations,
— increases in raw material prices,
— the risks associated with growth,
— weather conditions,
— geographic factors and political and economic risks,
— actions of company competitors,
— changes in economic or industry conditions generally or in the markets
served by our companies,
— anticipated refresh/renovation plans by national restaurant accounts,
— efficiencies and capacity utilization at our facilities,
— successful implementation of systems, including ERP,
— work stoppages and labor negotiations,
— government approval and funding of projects,
— the ability of our customers to receive financing, and
— the ability to complete and appropriately integrate restructurings,
consolidations, acquisitions, divestitures, strategic alliances, and
joint ventures.
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, 2005 and its quarterly report on Form 10-Q for the period ended June 30, 2006.
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three and Nine Months Ended September 30, 2006 and 2005
(In millions, except share and per share data)INCOME STATEMENT
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005Net sales $779.0 $564.9 $2,158.1 $1,664.8
Cost of sales 609.7 454.5 1,681.7 1,343.3
Gross profit 169.3 110.4 476.4 321.5Engineering, selling and
administrative expenses 84.2 69.2 249.9 205.6
Amortization expense 1.0 0.8 2.4 2.3
Restructuring and plant
consolidation costs – 3.2 – 3.2
Operating earnings 84.1 37.2 224.1 110.4
Interest expense (10.2) (13.5) (36.0) (40.4)
Loss on debt
extinguishment – – (14.4) (9.1)
Other income – net 0.7 0.7 4.1 3.0
Earnings from
continuing operations
before taxes on income 74.6 24.4 177.8 63.9
Provision for taxes
on income 24.2 3.5 55.2 12.6Earnings from
continuing operations 50.4 20.9 122.6 51.3
Discontinued operations:
Losses from
discontinued
operations, net of
income taxes – (0.4) (0.3) (0.3)
Loss on closure of
discontinued
operations, net of
income taxes – (3.4) – (3.4)NET EARNINGS $50.4 $17.1 $122.3 $47.6
BASIC EARNINGS PER
SHARE:
Earnings from
continuing operations $0.82 $0.35 $2.01 $0.85
Losses from
discontinued
operations, net of
income taxes – (0.01) (0.01) (0.01)
Loss on closure of
discontinued
operations, net of
income taxes – (0.06) – (0.06)
BASIC EARNINGS PER
SHARE $0.82 $0.28 $2.00 $0.79DILUTED EARNINGS PER
SHARE:
Earnings from
continuing operations $0.80 $0.34 $1.95 $0.83
Losses from
discontinued
operations, net of
income taxes – (0.01) (0.01) (0.01)
Loss on closure of
discontinued
operations, net of
income taxes – (0.05) – (0.05)
DILUTED EARNINGS PER
SHARE $0.80 $0.28 $1.95 $0.77AVERAGE SHARES
OUTSTANDING:
Average Shares
Outstanding – Basic 61,577,613 60,440,670 61,146,070 60,198,270
Average Shares
Outstanding – Diluted 63,038,600 62,015,044 62,785,957 61,525,848SEGMENT SUMMARY
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Net sales from
continuing operations:
Cranes and related
products $583.3 $404.9 $1,630.7 $1,189.9
Foodservice equipment 114.5 108.9 321.4 308.8
Marine 81.2 51.1 206.0 166.1
Total $779.0 $564.9 $2,158.1 $1,664.8Operating earnings (loss)
from continuing
operations:
Cranes and related
products $76.1 $29.6 $202.9 $85.3
Foodservice equipment 18.6 18.5 47.0 47.2
Marine 2.4 (0.1) 8.0 1.0
General corporate expense (12.0) (6.8) (31.4) (17.6)
Amortization (1.0) (0.8) (2.4) (2.3)
Restructuring and plant
consolidation costs – (3.2) – (3.2)
Operating earnings $84.1 $37.2 $224.1 $110.4THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three and Nine Months Ended September 30, 2006 and 2005
(In millions)BALANCE SHEET
ASSETS
September 30, December 31,
2006 2005
Current assets:
Cash and temporary investments $113.5 $231.8
Accounts receivable – net 351.2 243.2
Inventories – net 436.9 331.5
Other current assets 159.0 146.9
Total current assets 1,060.6 953.4Property, plant and equipment – net 375.1 353.9
Intangible assets – net 616.0 569.5
Other long-term assets 71.8 85.0
TOTAL ASSETS $2,123.5 $1,961.8LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses $739.5 $591.8
Short-term borrowings 6.1 19.4
Product warranties 55.3 47.3
Product liabilities 34.9 31.8
Total current liabilities 835.8 690.3Long-term debt 335.3 474.0
Other non-current liabilities 256.9 254.2
Stockholders’ equity 695.5 543.3
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY $2,123.5 $1,961.8CASH FLOW SUMMARY
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Net earnings $50.4 $17.1 $122.3 $47.6
Non-cash adjustments 22.2 23.2 67.6 59.8
Changes in operating assets
and liabilities 17.0 19.3 (60.7) (65.3)
Net cash provided by
operating activities of
continuing operations 89.6 59.6 129.2 42.1
Net cash provided by
(used for) operating
activities of discontinued
operations – 1.7 (0.3) (9.2)
Net cash provided by
operating activities 89.6 61.3 128.9 32.9
Capital expenditures (15.3) (13.7) (38.5) (35.0)
Proceeds from sale of
fixed assets 1.0 2.1 5.0 7.5
Business acquisitions – – (48.4) –
Payments on borrowings – net (40.1) (1.1) (167.0) (58.7)
Proceeds (payments) from
receivable financing – net (10.3) 1.8 (4.3) –
Debt issuance costs – (0.1) – (1.8)
Dividends paid (2.2) (2.1) (6.5) (6.3)
Stock options exercised 0.3 2.9 8.4 9.0
Effect of exchange rate
changes on cash 0.7 (0.3) 4.0 (3.7)
Net increase (decrease) in
cash & temporary
investments $23.7 $50.8 $(118.4) $(56.1)
First Call Analyst:
FCMN Contact:
Source: The Manitowoc Company
