Manitowoc Company (MTW)

[eastunder]

The Manitowoc Company Reports Third-quarter Financial Results

Monday , November 05, 2012 06:52ET

Crane order intake posts 22% gain; Foodservice margins jump to 18%

MANITOWOC, Wis.--(BUSINESS WIRE)-- 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


Continued at: http://www.knobias.com/story.htm?eid=3.1.48c6d4ff1d888ea9792814e7d461a739182db2f61d532b79686d679f8d4af73d