The Manitowoc Company Inc. Reports Operating Results (10-K)
Manitowoc Inc has a market cap of $2.13 billion; its shares were traded at around $15.86 with a P/E ratio of 42.5 and P/S ratio of 0.6. The dividend yield of Manitowoc Inc stocks is 2%. Manitowoc Inc had an annual average earning growth of 11.3% over the past 10 years.
Highlight of Business Operations:Consolidated net sales increased 19.4% in 2011 to $3.7 billion from $3.1 billion in 2010. The increase was the result of year-over-year increases in both the Crane and Foodservice segments. Crane segment sales increased in all regions and in all product lines from the prior year due to modest economic recoveries in the Americas region and in emerging markets. Crane segment sales increased 23.8% for the year ended December 31, 2011 compared to 2010. Foodservice sales increased in all regions from the prior year due to continued penetration of global chains with whom we partner and modest economic improvements. Foodservice sales increased 6.8% for the year ended December 31, 2011 compared to 2010. Weaker foreign currencies as compared to the U.S. Dollar had a favorable impact on consolidated net sales of $55.1 million or 1.8% for the year ended December 31, 2011 compared with the year ended December 31, 2010. Further analysis of the changes in sales by segment is presented in the Sales and Operating Earnings by Segment section below.
For the year ended December 31, 2011, the Crane segment reported operating earnings of $106.8 million compared to $89.8 million for the year ended December 31, 2010. Operating earnings for the Crane segment were favorably affected by higher sales volumes and higher factory absorption, but were offset by increases in material costs, labor costs and additional provisions for warranty and excess and obsolete inventory. In addition, ES&A expense was affected by increased employee compensation and benefit costs, marketing expenses and increased levels of research and development. Operating margin for the year ended December 31, 2011 was 4.9% versus 5.1% for the year ended December 31, 2010. Cranes operating margin decreased primarily due to the increased costs noted above offsetting the benefit of sales growth on a percentage basis. The prior year also benefited from the collection of a previously reserved receivable of $4.2 million and a favorable adjustment to the inventory excess and obsolete inventory reserve of $5.0 million.
For the year ended December 31, 2010, the Crane segment reported operating earnings of $89.8 million compared to $145.0 million for the year ended December 31, 2009. Operating earnings of the Crane segment were unfavorably affected by lower sales volumes, lower factory absorption and an unfavorable translation effect of foreign currency exchange rate changes partially offset by favorable reductions in ES&A expenses and factory cost reductions. In addition, the Crane segment benefited from the receipt of a previously reserved receivable of $4.2 million and a net reduction of the year-end inventory excess and obsolete reserve of $5.0 million. Operating margin for the year ended December 31, 2010 was 5.1% versus 6.3% for the year ended December 31, 2009. The drop in sales volumes compared to the prior year was the primary contributor to the decline in operating margin in 2010 versus 2009. This decline was partially offset by lower ES&A expenses of $213.5 million for the year ended December 31, 2010 which was $15.9 million lower than the $229.4 million of ES&A expenses for the year ended December 31, 2009.
Looking ahead to 2012, we expect Foodservice segment revenues to improve modestly in the high single digit range and operating margins to increase ten to fifteen percent in 2012, versus 2011. We also expect Crane segment revenues to increase ten to fifteen percent in 2012 versus 2011. Additionally, we anticipate that operating margins in our Crane segment will improve thirty to forty percent as compared to 2011. Other financial expectations include capital expenditures of approximately $80 million, depreciation and amortization of approximately $120 million, a debt reduction target of between $150 million and $200 million, and between $25 million and $30 million reduction in interest expense.
During the years ended December 31, 2011 and 2010, the company sold $11.9 million and $0.6 million, respectively, of its long term notes receivable to third party financing companies. The company guarantees some percentage, up to 100%, of collection of the notes to the financing companies. The company has accounted for the sales of the notes as a financing of receivables. The receivables remain on the companys Consolidated Balance Sheets, net of payments made, in other current and non-current assets and the company has recognized an obligation equal to the net outstanding balance of the notes in other current and non-current liabilities in the Consolidated Balance Sheets. The cash flow benefit of these transactions is reflected as financing activities in the Consolidated Statements of Cash Flows. During the years ended December 31, 2011 and 2010 customers have paid $2.7 million and $4.6 million, respectively, of the notes to the third party financing companies. As of December 31, 2011 and 2010, the outstanding balance of the notes receivables guaranteed by the company was $14.1 million and $4.8 million, respectively.
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