MANITOWOC, Wis., Feb. 1 /PRNewswire-FirstCall/ -- The Manitowoc Company today reported continued strong increases in net sales and earnings for the fourth quarter ended December 31, 2005. Net sales increased 16 percent to $589.3 million from $507.4 million during the fourth quarter of 2004. Reported earnings per diluted share were $0.59 for the 2005 quarter compared to $0.19 for the 2004 quarter.
Excluding a gain on the asset sale of the company's Diversified Refrigeration, LLC (DRI) subsidiary, the effects of discontinued operations during the quarter, and the establishment of a reserve in conjunction with a contract claim dispute, fourth-quarter earnings per diluted share from continuing operations increased 34 percent to $0.47 in 2005, up from $0.35 for the comparable 2004 period. The 2004 fourth-quarter earnings excluded costs associated with restructuring and plant consolidation, as well as the results of the discontinued operations. In addition to strong earnings per share growth, the company generated solid cash from continuing operations in the quarter of $77.7 million.
"Manitowoc exceeded its own expectations for financial performance in 2005, and we have set even higher goals for 2006," said Terry D. Growcock, Manitowoc's chairman and chief executive officer. "Global demand for our broad line of lifting solutions has driven performance in our Crane segment to record levels, and our Foodservice segment continues to grow its industry-leading market share through innovation and quality. The Marine segment made great strides during 2005 to improve its performance and appears to be on track for a solid contribution in 2006."
For the full year ended December 31, 2005, net sales increased 22 percent to $2.3 billion from $1.8 billion in 2004. Net earnings for fiscal 2005 were $65.8 million, or $2.14 per diluted share, an increase of 50 percent on a per share basis from the $39.1 million, or $1.43 per diluted share, achieved during fiscal 2004. Excluding special items, earnings from continuing operations for 2005 were $73.7 million, or $2.40 per share, compared with $38.7 million, or $1.41 per diluted share in 2004. A reconciliation of GAAP earnings to earnings excluding special items for the three and twelve months ended December 31, 2005 and 2004 is included later in this release.
Business Segment Results
Fourth-quarter 2005 net sales in the Crane segment increased 22 percent to $438.9 million, from $358.4 million in the fourth quarter of 2004. Operating earnings increased 89 percent to $30.0 million, from $15.9 million last year. The strength of the Crane segment's end markets is reflected in its backlog, which totaled $866 million, an increase of 37 percent from September 30, 2005, and more than double the $340 million on order at December 31, 2004.
"Our Crane segment's strong performance reflects steadily improving global market dynamics as well as the benefits of a broad product line," Growcock said. "Demand for premium lifting solutions continues to strengthen in our key industry markets. Market indicators for crawler cranes, such as rising rental rates and improved fleet utilization, continue to improve in North America, while our efforts at cross-leveraging our tower crane product line into North America are also showing success. Demand for mobile cranes is robust as global construction activity continues to ramp up in the energy, transportation, and industrial infrastructure segments. We meet this global demand with a global offering for our customers that meets their diverse needs anywhere in the world.
"The increase in Crane segment backlog was evident in all of our geographic markets. We believe this is solid validation of Manitowoc Crane Group's value proposition of technologically advanced products for every lifting application anywhere in the world," Growcock said.
In the Foodservice segment, fourth-quarter 2005 net sales increased 7 percent to $90.8 million from $84.4 million last year. Operating earnings for the fourth quarter of 2005 were $10.9 million, a 12 percent increase from $9.7 million in the fourth quarter of 2004. The increase in operating margin reflects strong volumes in the ice and beverage divisions and the benefits of restructuring and plant consolidations that the company undertook in the refrigeration segment during the third quarter of 2005.
"The completion of the DRI sale and immediate benefits of consolidations in refrigeration are positioning Foodservice for a solid year in 2006," Growcock said. "We expect to realize additional efficiencies and leverage benefits from these strategic actions. These improved results are being achieved even as we continue to implement our ERP system. When fully implemented, we expect to realize even better efficiencies through improved cost and customer data.
"Another key business driver for Foodservice will be continued product innovation. Our recent introductions of ice machines for residential and health care applications have been very well received and we will leverage this success in 2006. We also showcased several new beverage products at the National Association of Convenience Stores trade show in the fourth quarter, and we expect to bring those into full production in 2006," Growcock said. "Our new China manufacturing facility is a central element in our growth strategy. This modern plant will enable us to provide cost-efficient Foodservice cooling solutions on a global basis by joining Asian manufacturing content with our deep knowledge of North American and European market demands. We believe this will be a winning combination in 2006 and beyond."
Revenues for the Marine segment during the fourth quarter of 2005 were $59.6 million, a decrease of 8 percent from $64.6 million during the fourth quarter of 2004. Excluding the establishment of a $10 million reserve for a contract claim dispute, the Marine segment achieved breakeven results for the fourth quarter of 2005 and posted a modest operating profit for the full year.
"The Marine segment is making steady progress toward sustained profitability," Growcock said. "New processes and policies are in place to bolster productivity, and the backlog is growing with attractive contracts for both government and commercial customers. During the fourth quarter, Marine signed two contracts with options for the construction of OPA90 tank barges and tug/barge combinations. In addition, work on the Navy's prototype Littoral Combat Ship continues to achieve significant milestones," Growcock said.
Strategic Priorities
"During 2005, we achieved outstanding results by driving our business to meet Manitowoc's four strategic priorities," Growcock said.
-- Increase crane sales and market penetration globally. The Crane
segment's record backlog of $866 million is evidence of our success in
meeting this priority. We provide our global customer base with a
single source for the most advanced lifting technologies in the world.
We expect the appeal of this offering will have long-term benefits to
our shareholders.
-- Strengthen foodservice business and market share. In a market with
low-to-mid single-digit growth rates, Manitowoc's Foodservice segment
delivers outstanding results by listening to its customers. A strong
innovation pipeline has brought more than 75 new products to the
market over the past two years, with more to come in 2006. Operators'
needs for lower operating costs has led to the Foodservice segment
developing the most energy-efficient product line in the industry.
The outlook for Foodservice is further enhanced by the opportunities
resulting from its new world-class manufacturing facility in China.
This new facility will allow Manitowoc to better serve its diverse
markets on a global scale.
-- Leverage the strengths and capabilities of our multiple shipyards to
serve commercial and government customers. We structured our Marine
shipyards to best serve the unique requirements of commercial and
government customers. With the challenges of the past two years
behind us, Marine is now well positioned to execute commercial and
government programs that match the capabilities of our two shipyards.
-- Strengthen our financial structure by focusing on cash flow and
net-debt reduction. We significantly exceeded our net-debt reduction
target in 2005, achieving a reduction of more than $100 million. This
outstanding performance was driven by the cash generation provided by
the Crane segment's operating leverage as well as solid working
capital management across the company. We believe that the best
measure of our use of the company's capital is through Economic
Value-Added, or EVA, which we have employed since 1993. For 2005, our
EVA contribution improved by $24 million.
Earnings Guidance
"We are very pleased to have exceeded our guidance projections for 2005, and we have set even higher targets for 2006," Growcock said. "The company anticipates 2006 earnings per share will be in a range of $3.45 to $3.75 per share excluding the change in accounting for stock option expense which is estimated to be $0.15, net of tax. This results in a 2006 GAAP earnings per share of $3.30 to $3.60," Growcock said. "We also project to be near our long-term debt-to-cap target of 40 percent. Additionally, 2006 depreciation and amortization will approximate $60 million, and interest expense should track in the low $40 million range due to lower anticipated outstanding average debt balances. At this time, we also anticipate our global effective tax rate to be between 25 and 30 percent for 2006."
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 sale of DRI and closure of its Toledo shipyard in 2005, and the withdrawal from the aerial work platform business in 2004. 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):
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2004 2005 2004
Net earnings $18,191 $5,414 $65,800 $39,138
Special items, net of tax (at statutory
rate):
(Gain) loss from discontinued
operations (712) 4,570 (905) 162
Gain on sale or closure of
discontinued operation (9,632) (563) (5,809) (1,205)
Restructuring and plant consolidation - 206 2,107 840
Marine claim reserve 6,630 - 6,630 -
Early extinguishment of debt - - 5,897 673
Sales and use tax settlement - - - 359
Lawsuit settlement, net of costs - - - (1,300)
Earnings from continuing operations
before special items $14,477 $9,627 $73,720 $38,667
Diluted earnings per share $0.59 $0.19 $2.14 $1.43
Special items, net of tax (at statutory
rate):
(Gain) loss from discontinued
operations (0.02) 0.16 (0.03) 0.01
Gain on sale or closure of
discontinued operation (0.31) (0.02) (0.19) (0.04)
Restructuring and plant consolidation - 0.01 0.07 0.03
Marine claim reserve 0.21 - 0.22 -
Early extinguishment of debt - - 0.19 0.02
Sales and use tax settlement - - - 0.01
Lawsuit settlement, net of costs - - - (0.05)
Diluted earnings per share from
continuing operations before special
items $0.47 $0.35 $2.40 $1.41
The Manitowoc Company will host a conference call tomorrow, February 2, at 10:00 a.m., Eastern Time. The call will also be broadcast live via the Internet at Manitowoc's Web site: http://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,
-- actions of company competitors,
-- changes in economic or industry conditions generally or in the markets
served by our companies,
-- 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, 2004, and its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005.
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three and Twelve Months Ended December 31, 2005 and 2004
(In thousands, except per-share data)
INCOME STATEMENT
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Net sales $589,306 $507,415 $2,254,097 $1,844,868
Cost of sales 488,981 412,712 1,832,229 1,469,201
Gross profit 100,325 94,703 421,868 375,667
Engineering, selling and
administrative expenses 76,747 68,258 282,271 266,366
Amortization expense 729 811 3,065 3,141
Restructuring and plant
consolidation costs - 317 3,242 1,293
Operating earnings 22,849 25,317 133,290 104,867
Interest expense (13,326) (14,897) (53,766) (55,999)
Loss on debt extinguishment - - (9,072) (1,036)
Other income (expense) - net 454 (2,138) 3,406 (801)
Earnings from continuing
operations before taxes
on income 9,977 8,282 73,858 47,031
Provision (benefit) for
taxes on income 2,130 (1,139) 14,772 8,936
Earnings from continuing
operations 7,847 9,421 59,086 38,095
Discontinued operations:
Gain (loss) from
discontinued operations,
net of income taxes 712 (4,570) 905 (162)
Gain on sale or closure of
discontinued operations,
net of income taxes 9,632 563 5,809 1,205
NET EARNINGS $ 18,191 $ 5,414 $ 65,800 $ 39,138
BASIC EARNINGS PER SHARE:
Earnings from continuing
operations $ 0.26 $ 0.35 $ 1.96 $ 1.42
Gain (loss) from
discontinued operations,
net of income taxes 0.02 (0.17) 0.03 (0.01)
Gain on sale or closure of
discontinued operations,
net of income taxes 0.32 0.02 0.19 0.04
BASIC EARNINGS PER SHARE $ 0.60 $ 0.20 $ 2.18 $ 1.45
DILUTED EARNINGS PER SHARE:
Earnings from continuing
operations $ 0.25 $ 0.34 $ 1.92 $ 1.39
Gain (loss) from
discontinued operations,
net of income taxes 0.02 (0.16) 0.03 (0.01)
Gain on sale or closure of
discontinued operations,
net of income taxes 0.31 0.02 0.19 0.04
DILUTED EARNINGS PER SHARE $ 0.59 $ 0.19 $ 2.14 $ 1.43
AVERAGE SHARES OUTSTANDING:
Average Shares
Outstanding - Basic 30,285 27,277 30,147 26,901
Average Shares
Outstanding - Diluted 31,048 27,895 30,763 27,377
SEGMENT SUMMARY
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Net sales from
continuing operations:
Cranes and related
products $438,911 $358,369 $1,628,760 $1,248,476
Foodservice equipment 90,758 84,435 399,557 377,169
Marine 59,637 64,611 225,780 219,223
Total $589,306 $507,415 $2,254,097 $1,844,868
Operating earnings (loss)
from continuing operations:
Cranes and related
products $ 30,035 $ 15,909 $ 115,487 $ 57,827
Foodservice equipment 10,885 9,690 58,090 56,221
Marine (10,133) 6,576 (9,184) 16,496
General corporate expense (7,209) (5,730) (24,796) (21,243)
Amortization (729) (811) (3,065) (3,141)
Restructuring and plant
consolidation costs - (317) (3,242) (1,293)
Total $ 22,849 $ 25,317 $ 133,290 $ 104,867
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three and Twelve Months Ended December 31, 2005 and 2004
(In thousands)
BALANCE SHEET
ASSETS
December 31, December 31,
2005 2004
Current assets:
Cash and temporary
investments $ 231,821 $ 178,663
Accounts receivable - net 243,193 244,335
Inventories - net 331,453 287,036
Other current assets 146,916 135,927
Total current assets 953,383 845,961
Property, plant and
equipment - net 353,917 357,568
Intangible assets - net 569,455 606,210
Other long-term assets 85,022 118,397
TOTAL ASSETS $1,961,777 $1,928,136
LIABILITIES &
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
and accrued expenses $ 591,771 $ 513,504
Current portion of
long-term debt - 61,250
Short-term borrowings 19,374 10,355
Product warranties 47,285 37,870
Product liabilities 31,824 29,701
Total current
liabilities 690,254 652,680
Long-term debt 474,000 512,236
Other non-current
liabilities 254,195 244,291
Stockholders' equity 543,328 518,929
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $1,961,777 $1,928,136
CASH FLOW SUMMARY
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Net earnings $ 18,191 $ 5,414 $ 65,800 $ 39,138
Non-cash adjustments 23,882 12,696 83,944 47,269
Changes in operating
assets and liabilities 35,611 39,504 (30,007) (32,016)
Net cash provided
by operating
activities of
continuing operations 77,684 57,614 119,737 54,391
Net cash provided
by (used for)
operating activities
of discontinued
operations (4,608) 259 (13,795) 2,572
Net cash provided
by operating
activities 73,076 57,873 105,942 56,963
Capital expenditures (19,958) (16,738) (54,922) (43,157)
Proceeds from sale
of fixed assets 7,640 8,955 15,104 15,448
Net cash provided by
(used for) discontinued
operations 28,304 (201) 28,290 7,781
Proceeds (payments)
on borrowings - net 5,793 (25,126) (52,924) (34,720)
Proceeds (payments)
from receivable
financing - net 14,252 (3,872) 14,240 23,244
Debt issuance costs (51) - (1,820) -
Dividends paid (2,122) (7,532) (8,447) (7,532)
Net proceeds of
equity offering - 104,948 - 104,948
Stock options exercised 2,595 1,031 11,628 6,687
Effect of exchange
rate changes on cash (352) 4,446 (3,933) 1,813
Net increase in
cash & temporary
investments $109,177 $123,784 $ 53,158 $131,475
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