Exhibit 99.1
Q3 2004 Press Release
The Manitowoc Company Reports Solid Growth
in Third-Quarter Sales and Earnings
• Third-quarter sales up 21 percent and net earnings up 77 percent.
• Strong sales and earnings growth in the Crane segment, driven by international demand.
• Continued growth in revenue and market share for the company’s ice machine business.
• Solid growth in the Marine segment, and delivery of the first Staten Island Ferry.
• Prepaid remaining portion of senior bank term debt.
• Achieved $17 million of total net-debt reduction in the quarter.
• 61 percent net debt-to-capital ratio approaching near-term goal of 55 percent.
MANITOWOC, WI — October 27, 2004 — The Manitowoc Company (NYSE:MTW) today reported strong increases in sales and earnings for the quarter ended September 30, 2004. Net sales increased 21 percent to $491 million, from $407 million during the same period last year. Net earnings for the third quarter were $12.7 million, or $0.47 per diluted share, up 77 percent from earnings of $7.2 million, or $0.27 per diluted share in the third quarter of 2003.
Earnings from continuing operations in the third quarter increased 62 percent to $13.1 million, or $0.48 per diluted share, from $8.1 million, or $0.30 per diluted share, in the same period last year. Excluding special items primarily related to early retirement of debt and restructuring and plant consolidations in the Crane segment from the third quarters of 2004 and 2003, earnings from continuing operations in the third quarter were $13.5 million, or $0.50 per diluted share, compared with $9.7 million, or $0.36 per diluted share, in the third quarter of last year. A reconciliation of GAAP earnings from continuing operations to earnings from continuing operations excluding special items is included later in this release.
“This was a solid quarter, with good growth in revenues, earnings, and operating margin despite some ongoing issues, including continuing increases in raw material prices and productivity challenges resulting from inconsistent material availability,” said Terry D. Growcock, Manitowoc’s chairman and chief executive officer. “In particular, our Crane and Marine segments continued to report substantial improvements in sales, operating income, and operating margin.
“Our ability to remain on track to achieve the financial objectives we set at the beginning of the year is a reflection of the benefits of our industry diversification and global footprint coupled with the ability of our management team to perform through difficult times,” Growcock said. “Looking forward, we remain focused on executing our growth strategies in new-product development, global expansion, and strategic acquisitions. We will also continue our emphasis on offsetting increases in raw material prices through a combination of product pricing, material substitutions, design changes, and sourcing initiatives.”
1
For the nine months ended September 30, 2004, net sales increased 21 percent to $1.4 billion, from $1.2 billion during the same period last year. Net earnings were $33.7 million, or $1.24 per diluted share, up from earnings of $9.0 million, or $0.34 per diluted share for the first nine months of 2003. Earnings from continuing operations more than doubled to $34.6 million, or $1.27 per diluted share for the first nine months of 2004 compared to $14.9 million, or $0.56 per diluted share for the same period in 2003. Excluding special items, earnings from continuing operations were $34.8 million, or $1.28 per diluted share, compared with $20.4 million, or $0.76 per diluted share, in the nine months ending September 30, 2003.
Business Segment Results
Crane segment net sales increased 24 percent to $306 million for the quarter, from $248 million in the third quarter of 2003. Operating earnings increased 34 percent to $13.5 million, from $10.1 million in the third quarter of last year, despite continued increases in steel and commodity prices which had a net negative impact on operating earnings of $1.0 million. This strong earnings performance continued to reflect global penetration and strength in tower and mobile telescopic crane sales. As of September 30, total crane backlog was $289 million, up from about $150 million a year ago.
“The performance of our Crane segment clearly demonstrates the benefits of global reach and penetration, as strong demand in international markets offset continuing weakness in the U.S. crawler crane market,” Growcock explained. “While we felt the effects of higher material prices, the benefits of our restructuring and consolidation efforts, allowed us to achieve an increase in the segment’s operating margin.”
Foodservice net sales were flat at $123 million for the quarter, compared with the third quarter of last year. Including a net $1.0 million earnings impact in the quarter from price increases for steel and other commodities, operating earnings were $20.3 million, which is equal to the prior year.
“The combination of sluggish demand, reflecting a cool summer, and rising material prices held Foodservice revenues and earnings virtually flat,” Growcock added. “Bright spots included our ice machine business, which continued to grow more than twice as fast as the industry, continuing its gains in market share, and a favorable product and customer mix that benefited our beverage business despite softer overall demand. We are very pleased with the market penetration we have seen in our new S-Series line of ice machines.
“Generally the market has accepted price actions to offset material cost increases, but contractual terms and long lead times on some of our refrigeration products dampened their impact.”
Net sales in the Marine segment increased 70 percent to $63 million for the quarter, from $37 million in the same period last year. Operating earnings of $3.2 million were up more than fivefold from $0.5 million in the third quarter of last year; and operating margins increased to 5.0 percent, from 1.4 percent in the third quarter of 2003, despite a net negative earnings impact of $1.3 million from steel price increases.
“This was a solid quarter for our Marine segment on a year-over-year basis,” Growcock said. “While the margin was not up to our historical standards, it reflects our evolving mix of business, which contains more commercial, single-unit contracts and fewer more-profitable multi-unit contracts. Bidding activity remains high, and we continue to invest to take advantage of market opportunities in the government and commercial sectors. In addition, our winter repair season is shaping up to be one of the best in recent years.”
2
Strategic Priorities
Manitowoc remains committed to its strategic priorities and has achieved additional progress against each:
• Increase crane sales and market penetration globally. As the result of our acquisition and restructuring initiatives, our Crane group is now positioned to offer a full line of products and services globally and to source these products in a strategically advantageous fashion, which improves the ability of this group to deliver improved earnings in a variety of economic environments. The group remains on pace to successfully launch a record 16 new products by the end of the year.
• Strengthen foodservice business and market share. Customer and market acceptance of the new S-Series ice machine product line has resulted in our ice machine market share reaching a historic high. Manitowoc remains on pace to introduce 50 new products in 2004, which will strengthen the company’s ability to continue to grow market share.
• Leverage the strengths and capabilities of multiple shipyards to serve commercial and government customers. Manitowoc Marine Group (MMG) has a more diverse mix of government contract work and commercial construction, enhanced by higher capacity utilization in all of the company’s yards. Bidding activity remains brisk across all key markets. During the quarter, MMG delivered the first Staten Island Ferry and launched an ocean-class tug for Penn Maritime.
• Strengthen the company’s financial structure by focusing on cash flow and net-debt reduction. Manitowoc achieved net-debt reduction of $17 million in the third quarter, enabling the company to retire the remaining portion of its senior bank term debt. End-of-quarter net debt-to-capital ratio was 61 percent, down from 65 percent a year ago, moving closer to our near-term target of 55 percent.
Earnings Guidance
“We’re pleased with our ability to continue on track to achieve our financial objectives, including net-debt reduction of $60 million, despite the headwind of increased material prices,” said Growcock. “Looking forward, we will continue to focus on executing pricing and sourcing strategies to moderate the impact of increasing raw material costs. At the same time, continued strength in sales, together with our company-wide focus on profitability, should allow us to extend our pattern of significant year-over-year improvement in sales and earnings through the fourth quarter. Consequently, we are revising our guidance for full-year earnings per share from $1.30 to $1.50 to a tightened range of $1.40 to $1.50.
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. The company is also focusing on results from continuing operations due to its withdrawal from the aerial work platform business. 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 (in thousands, except per share data):
3
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||||
|
|
|
|
|
|
|
|
|
| ||||||
Earnings from continuing operations |
| $ | 13,079 |
| $ | 8,075 |
| $ | 34,592 |
| $ | 14,875 |
| ||
Special items, net of tax (at statutory rate) |
|
|
|
|
|
|
|
|
| ||||||
Restructuring and plant consolidation |
| 114 |
| 873 |
| 634 |
| 4,373 |
| ||||||
Early extinguishment of debt |
| 313 |
| 363 |
| 673 |
| 363 |
| ||||||
Sales and use tax settlement |
| — |
| — |
| 359 |
| — |
| ||||||
Rationalization in the crane segment |
| — |
| — |
| — |
| 386 |
| ||||||
Lawsuit settlement, net of costs |
| — |
| — |
| (1,463 | ) | — |
| ||||||
Other |
| — |
| 370 |
| — |
| 370 |
| ||||||
Earnings from continuing operations before special items |
| $ | 13,506 |
| $ | 9,681 |
| $ | 34,795 |
| $ | 20,367 |
| ||
|
|
|
|
|
|
|
|
|
| ||||||
Diluted earnings per share from continuing operations |
| $ | 0.48 |
| $ | 0.30 |
| $ | 1.27 |
| $ | 0.56 |
| ||
Special items |
|
|
|
|
|
|
|
|
| ||||||
Restructuring and plant consolidation |
| 0.01 |
| 0.03 |
| 0.02 |
| 0.16 |
| ||||||
Early extinguishment of debt |
| 0.01 |
| 0.01 |
| 0.02 |
| 0.01 |
| ||||||
Sales and use tax settlement |
| — |
| — |
| 0.01 |
| — |
| ||||||
Rationalization in the crane segment |
| — |
| 0.01 |
| — |
| 0.01 |
| ||||||
Lawsuit settlement, net of costs |
| — |
| — |
| (0.05 | ) | — |
| ||||||
Other |
| — |
| — |
| — |
| 0.01 |
| ||||||
Diluted earnings per share from continuing operations before special items |
| $ | 0.50 |
| $ | 0.36 |
| $ | 1.28 |
| $ | 0.76 |
| ||
Conference Call
The Manitowoc Company will host a conference call tomorrow, October 28, at 10:00 a.m. Eastern Time. The call will also be broadcast live via the Internet at Manitowoc’s Web site: www.manitowoc.com.
About The Manitowoc Company
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,
- successful and timely completion of facility expansions,
- foreign currency fluctuations,
- increased raw material prices, including steel prices,
- steel industry conditions,
- the risks associated with growth,
- geographic factors and political and economic risks,
- added financial leverage resulting from acquisitions,
4
- actions of company competitors,
- changes in economic or industry conditions generally or in the markets served by our companies,
- Great Lakes water levels,
- 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, 2003.
Company contact:
Carl J. Laurino
Senior Vice President
& Chief Financial Officer
920-652-1720
5
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three and Nine Months Ended September 30, 2004 and 2003
(In thousands, except per-share data)
INCOME STATEMENT
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||||||
Net sales |
| $ | 491,149 |
| $ | 407,156 |
| $ | 1,429,187 |
| $ | 1,181,890 |
| ||||
Cost of sales |
| 395,386 |
| 321,746 |
| 1,137,033 |
| 925,401 |
| ||||||||
Gross profit |
| 95,763 |
| 85,410 |
| 292,154 |
| 256,489 |
| ||||||||
Engineering, selling & administrative |
| 63,483 |
| 58,756 |
| 200,619 |
| 184,337 |
| ||||||||
Amortization |
| 777 |
| 726 |
| 2,333 |
| 2,153 |
| ||||||||
Plant consolidation and restructuring costs |
| 175 |
| 1,180 |
| 975 |
| 5,910 |
| ||||||||
Operating earnings |
| 31,328 |
| 24,748 |
| 88,227 |
| 64,089 |
| ||||||||
Interest expense |
| (14,283 | ) | (13,663 | ) | (41,748 | ) | (43,680 | ) | ||||||||
Other income (expense) - net |
| 28 |
| (338 | ) | 266 |
| (306 | ) | ||||||||
Earnings from continuing operations before taxes on income |
| 17,073 |
| 10,747 |
| 46,745 |
| 20,103 |
| ||||||||
Provision for taxes on income |
| 3,994 |
| 2,672 |
| 12,153 |
| 5,228 |
| ||||||||
Earnings from continuing operations |
| 13,079 |
| 8,075 |
| 34,592 |
| 14,875 |
| ||||||||
Discontinued operations: |
|
|
|
|
|
|
|
|
| ||||||||
Loss from discontinued operations, net of income taxes |
| (375 | ) | (877 | ) | (1,575 | ) | (2,088 | ) | ||||||||
Gain (loss) on sale or closure of discontinued operations, net of income taxes |
| - |
| - |
| 709 |
| (3,741 | ) | ||||||||
NET EARNINGS |
| $ | 12,704 |
| $ | 7,198 |
| $ | 33,726 |
| $ | 9,046 |
| ||||
BASIC EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
| ||||||||
Earnings from continuing operations |
| $ | 0.49 |
| $ | 0.30 |
| $ | 1.29 |
| $ | 0.56 |
| ||||
Loss from discontinued operations, net of income taxes |
| (0.01 | ) | (0.03 | ) | (0.06 | ) | (0.08 | ) | ||||||||
Gain (loss) on sale or closure of discontinued operations, net of income taxes |
| - |
| - |
| 0.03 |
| (0.14 | ) | ||||||||
BASIC EARNINGS PER SHARE |
| $ | 0.47 |
| $ | 0.27 |
| $ | 1.26 |
| $ | 0.34 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
DILUTED EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
| ||||||||
Earnings from continuing operations |
| $ | 0.48 |
| $ | 0.30 |
| $ | 1.27 |
| $ | 0.56 |
| ||||
Loss from discontinued operations, net of income taxes |
| (0.01 | ) | (0.03 | ) | (0.06 | ) | (0.08 | ) | ||||||||
Gain (loss) on sale or closure of discontinued operations, net of income taxes |
| - |
| - |
| 0.03 |
| (0.14 | ) | ||||||||
DILUTED EARNINGS PER SHARE |
| $ | 0.47 |
| $ | 0.27 |
| $ | 1.24 |
| $ | 0.34 |
| ||||
AVERAGE SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
| ||||||||
Average shares outstanding - basic |
| 26,775 |
| 26,549 |
| 26,719 |
| 26,544 |
| ||||||||
Average shares outstanding - diluted |
| 27,283 |
| 26,719 |
| 27,161 |
| 26,643 |
| ||||||||
SEGMENT SUMMARY
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||||||||
Net sales from continuing operations: |
|
|
|
|
|
|
|
|
| ||||||||||
Cranes and related products |
| $ | 305,716 |
| $ | 247,572 |
| $ | 890,108 |
| $ | 715,071 |
| ||||||
Foodservice products |
| 122,592 |
| 122,700 |
| 361,563 |
| 354,704 |
| ||||||||||
Marine |
| 62,841 |
| 36,884 |
| 177,516 |
| 112,115 |
| ||||||||||
Total |
| $ | 491,149 |
| $ | 407,156 |
| $ | 1,429,187 |
| $ | 1,181,890 |
| ||||||
Operating earnings (loss) from continuing operations: |
|
|
|
|
|
|
|
|
| ||||||||||
Cranes and related products |
| $ | 13,512 |
| $ | 10,107 |
| $ | 41,919 |
| $ | 28,076 |
| ||||||
Foodservice products |
| 20,278 |
| 20,318 |
| 55,132 |
| 53,770 |
| ||||||||||
Marine |
| 3,163 |
| 526 |
| 9,998 |
| 4,052 |
| ||||||||||
General corporate expense |
| (4,673 | ) | (4,297 | ) | (15,514 | ) | (13,746 | ) | ||||||||||
Amortization |
| (777 | ) | (726 | ) | (2,333 | ) | (2,153 | ) | ||||||||||
Plant consolidation and restructuring costs |
| (175 | ) | (1,180 | ) | (975 | ) | (5,910 | ) | ||||||||||
Total |
| $ | 31,328 |
| $ | 24,748 |
| $ | 88,227 |
| $ | 64,089 |
| ||||||
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three and Nine Months Ended September 30, 2004 and 2003
(In thousands)
BALANCE SHEET
|
| September 30, |
| December 31 |
| ||||
|
| 2004 |
| 2003 |
| ||||
ASSETS |
|
|
|
|
| ||||
Current assets: |
|
|
|
|
| ||||
Cash & temporary investments |
| $ | 54,879 |
| $ | 47,188 |
| ||
Accounts receivable |
| 220,017 |
| 245,010 |
| ||||
Inventories |
| 330,214 |
| 232,877 |
| ||||
Other current assets |
| 121,386 |
| 121,014 |
| ||||
Total current assets |
| 726,496 |
| 646,089 |
| ||||
|
|
|
|
|
| ||||
Intangible assets |
| 528,633 |
| 530,613 |
| ||||
Other assets |
| 121,561 |
| 91,261 |
| ||||
Property, plant & equipment - net |
| 331,608 |
| 334,618 |
| ||||
TOTAL ASSETS |
| $ | 1,708,298 |
| $ | 1,602,581 |
| ||
|
|
|
|
|
| ||||
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||||
Current liabilities: |
|
|
|
|
| ||||
Accounts payable & accrued expenses |
| $ | 503,148 |
| $ | 454,394 |
| ||
Current portion of long-term debt |
| 3,229 |
| 3,205 |
| ||||
Short-term borrowings |
| 17,859 |
| 22,011 |
| ||||
Product warranties |
| 32,721 |
| 33,823 |
| ||||
Product liabilities |
| 29,039 |
| 31,791 |
| ||||
Total current liabilities |
| 585,996 |
| 545,224 |
| ||||
|
|
|
|
|
| ||||
Long-term debt |
| 562,820 |
| 567,084 |
| ||||
Other non-current liabilities |
| 223,560 |
| 191,849 |
| ||||
Stockholders’ equity |
| 335,922 |
| 298,424 |
| ||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY |
| $ | 1,708,298 |
| $ | 1,602,581 |
| ||
CASH FLOW SUMMARY
|
| Three Months Ended |
| Nine Months Ended |
| |||||||||
|
| September 30, |
| September 30, |
| |||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| |||||
Net earnings |
| $ | 12,704 |
| $ | 7,198 |
| $ | 33,726 |
| $ | 9,046 |
| |
Non-cash adjustments |
| 12,833 |
| 16,990 |
| 39,030 |
| 49,372 |
| |||||
Changes in operating assets and liabilities |
| (17,578 | ) | 46,602 |
| (71,094 | ) | 35,621 |
| |||||
Net cash provided by operating activities of continuing operations |
| 7,959 |
| 70,790 |
| 1,662 |
| 94,039 |
| |||||
Net cash used for operating activities of discontinued operations |
| (550 | ) | (1,099 | ) | (2,574 | ) | (312 | ) | |||||
Net cash provided by (used for) operating activities |
| 7,409 |
| 69,691 |
| (912 | ) | 93,727 |
| |||||
Capital expenditures |
| (8,953 | ) | (11,104 | ) | (27,446 | ) | (22,249 | ) | |||||
Proceeds from sale of fixed assets |
| 2,914 |
| 5,735 |
| 6,502 |
| 10,709 |
| |||||
Net cash provided by (used for) investing activities of discontinued operations |
| — |
| (4,700 | ) | 9,000 |
| 2,289 |
| |||||
Payments on long-term borrowings - net |
| (11,490 | ) | (28,920 | ) | (9,593 | ) | (57,194 | ) | |||||
Proceeds from notes financing |
| 15,840 |
| — |
| 27,116 |
| — |
| |||||
Debt issuance costs |
| — |
| (1,235 | ) | — |
| (1,977 | ) | |||||
Stock options exercised |
| 2,288 |
| 17 |
| 5,656 |
| 95 |
| |||||
Effect of exchange rate changes on cash |
| (2,306 | ) | 1,673 |
| (2,632 | ) | 1,925 |
| |||||
Net increase in cash & temporary investments |
| $ | 5,702 |
| $ | 31,157 |
| $ | 7,691 |
| $ | 27,325 |
| |