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The Manitowoc Company Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:

10qk

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The Manitowoc Company Inc. (MTW) filed Quarterly Report for the period ended 2010-06-30.

The Manitowoc Company Inc. has a market cap of $1.41 billion; its shares were traded at around $10.77 with and P/S ratio of 0.37. The dividend yield of The Manitowoc Company Inc. stocks is 0.37%. The Manitowoc Company Inc. had an annual average earning growth of 13.1% over the past 10 years.MTW is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., John Keeley of Keeley Fund Management, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Engineering, selling and administrative (ES&A) expenses for the second quarter of 2010 decreased approximately $23.9 million to $129.4 million versus $153.3 million for the second quarter of 2009. For the six months ended June 30, 2009, ES&A expenses were $258.8 million, which was a $28.5 million decrease over ES&A expenses for the six months ended June 30, 2009. These decreases were driven by the Crane segment which reduced ES&A versus the prior year three and six month periods by $15.3 million and $17.8 million, respectively. The lower Crane segment expenses were due to cost reduction initiatives in both periods and for the three month period, collection of a previously reserved receivable, and the weakening of the Euro. The Foodservice segment reduced ES&A versus the prior three and six month periods by $7.5 million and $6.1 million, respectively, primarily due to intergration synergies.

Interest expense for the first six months of 2010 was $83.8 million versus $81.4 million for the first six months of 2009. Interest expense was $43.2 million and $41.0 million for the three months ended June 30, 2010 and June 30, 2009, respectively. Increases in each comparable period are due to higher interest rates. Amortization expenses for deferred financing fees were $12.1 million for the six months ended June 30, 2010 compared to $14.7 million in the first six months of 2009. The lower expense in 2010 is related to the lower balance of deferred financing fees as a result of the accelerated pay downs of Term Loans in 2009 and 2010.

Other expense, net for the first three and six months of 2010 was $5.6 million and $11.8 million, respectively, versus other income of $4.1 million and $6.2 million for the same periods ended June 30, 2009. The expense in 2010 is primarily the result of $6.3 million in currency losses as the company was negatively impacted by currency volatility. In addition, we finalized the liquidation of a dormant company in Europe within the Foodservice segment which resulted in reclassifying currency losses of $2.5 million from Accumulated other comprehensive income into other expense, net. The balance of the 2010 expense is primarily related to bank fees. The 2009 periods were positively impacted by currency gains.

For the six months ended June 30, 2010, the company recorded an income tax benefit of $8.9 million, compared to an income tax benefit of $67.2 million for the six months ended June 30, 2009. The decrease in the tax benefit for the six months ended June 30, 2010 relative to the prior year is primarily due to the tax impact of $52.0 million for an impairment charge, the reversal of unrecognized tax benefits totaling $30.0 million, the impairment of certain tax operating losses of $(8.1) million, as well as other general items totaling $(15.6) million that were recorded during the six months ended June 30, 2009. The income tax benefit for the six months ended June 30, 2010 was calculated under the discrete method. The mix of income (loss) between foreign and domestic operations causes an unusual relationship between income (loss) and income tax expense (benefit) with small changes in the annual pre-tax book income resulting in a significant impact on the rate and

The cash and cash equivalents balance as of June 30, 2009 totaled $120.0 million, which was a decrease of $53.0 million from the December 31, 2008 balance of $173.0 million. Cash flow from operations for the first six months of 2009 was a use of cash of $17.9 million compared to cash provided of $151.8 million for the first half of 2008. During the first half of 2009 the use of cash was primarily driven by the overall slowdown of business activity for both segments, which favorably reduced the accounts receivable and inventory balances but also unfavorably decreased the accounts payable balance. Lower earnings for the six months ended June 30, 2009 also contributed to the decrease in cash from operations. In addition, cash flow was negatively impacted by the reduction of other liabilities primarily due to a $70.0 million settlement payment made in connection with a settlement of a legacy Enodis long-standing, non-operational legal matter. See further detail related to the legal settlement at Note 15, Contingencies and Significant Estimates.

In April 2008, the company entered into a $2.4 billion credit agreement which was amended and restated as of August 25, 2008, to ultimately increase the size of the total facility to $2.925 billion (New Credit Agreement). The New Credit Agreement became effective November 6, 2008. The New Credit Agreement includes four loan facilities a revolving facility of $400.0 million with a five-year term, a Term Loan A of $1,025.0 million with a five-year term, a Term Loan B of $1,200.0 million with a six-year term, and a Term Loan X of $300.0 million with an eighteen-month term. The company is obligated to prepay the three term loan facilities from the net proceeds of asset sales, casualty losses, equity offerings, and new indebtedness for borrowed money, and from a portion of its excess cash flow, subject to certain exceptions. Term Loan X was repaid in full as of June 30, 2010. At June 30, 2010 the interest rates for Term Loan A and Term Loan B were 5.31% and 8.00%, respectively. Including interest rate swaps, Term Loan A and Term Loan B interest rates were 6.41% and 8.44% respectively, at June 30, 2010.

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