The Manitowoc Company Inc. (MTW) filed Quarterly Report for the period ended 2009-03-31.
Manitowoc Company Inc. is a diversified capital goods manufacturer. They are principally engaged in: a) the design and manufacture of commercial ice machines ice/beverage dispensers and refrigeration products for the foodservice lodging convenience store healthcare and the soft-drink bottling and dispensing industries; (b) the design and manufacture of cranes and related products which are used by the energy construction mining and other industries; and (c) ship-repair conversion and new construction services for the maritime industry. The Manitowoc Company Inc. has a market cap of $896.9 million; its shares were traded at around $6.87 with a P/E ratio of 2.8 and P/S ratio of 0.2. The dividend yield of The Manitowoc Company Inc. stocks is 1.2%. The Manitowoc Company Inc. had an annual average earning growth of 11.1% over the past 10 years. GuruFocus rated The Manitowoc Company Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations:
Net sales from the Foodservice segment increased 240.9% or $250.6 million to $354.7 million for the three months ended March 31, 2009 versus $104.1 million for the three months ended March 31, 2008. The sales increase during the quarter was driven by the $285.3 million in net sales from the Enodis business. Excluding the sales from Enodis, sales would have decreased $21.8 million or 26.6%. The lower sales are due to a decrease sales in the ice, beverage and refrigeration product lines as the weak global economy continues to negatively impact the growth of new restaurant and commercial foodservice facilities worldwide. Partially offsetting the overall sales increase was an unfavorable impact of foreign currency exchange rate changes of $19.5 million.
Consolidated gross profit for the three months ended March 31, 2009 was $205.1 million, a decrease of $37.7 million as compared to the $242.8 million of consolidated gross profit for the same period in 2008. This decrease was a result of significantly lower gross profit in the Crane segment primarily due to lower sales volumes, increased manufacturing unabsorbed overhead costs and an unfavorable translation effect of foreign currency exchange rate changes. For the three months ended March 31, 2009 versus the same period in 2008, the Crane segment gross profit declined by $101.1 million. The weaker Euro currency compared to the U.S. Dollar had an unfavorable impact on gross profit of approximately $13.7 million. The gross profit decrease from the three months ended March 31, 2009, as compared to last year, was partially offset by favorable product price increases and factory cost reductions.
Engineering, selling and administrative (ES&A) expenses for the first quarter of 2009 increased approximately $25.6 million to $134.0 million versus $108.4 million for the first quarter of 2008. This increase was driven by the Foodservice segment due to the inclusion of the Enodis ES&A expenses of $51.4 million in the first quarter of 2009. Partially offsetting the overall increase in ES&A expenses was the lower Crane segment ES&A expenses of $23.1 million as a result of lower headcount, travel and professional fees. In addition, the stronger U.S. Dollar currency versus the Euro currency had a favorable impact of a $5.2 million reduction in ES&A expenses.
Cash and cash equivalents balance as of March 31, 2009 totaled $154.0 million, which was a decrease of $19.0 million from the December 31, 2008 balance of $173.0 million. Cash flow provided by operating activities of continuing operations for the first three months of 2009 was a use of cash of $16.0 million compared to cash provided of $9.8 million for the first three months of 2008. During the first three months of 2009, the cash flow from operating activities of continuing operations was primarily impacted by the overall slowdown of business activity for both segments which favorably reduced the accounts receivable but also unfavorably decreased accounts payable balances. In addition, cash flow was positively impacted by a decrease in other assets as a U.S. income tax refund of $75.9 million was received during the quarter and was negatively impacted by the reduction of other liabilities as a payment of $56.0 million was made for the 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.
Cash and cash equivalents balance as of March 31, 2008 was $350.2 million, which was a reduction of $16.2 million from the December 31, 2007 balance of $366.4 million. Cash flow from operations for the first three months of 2008 was $12.6 million. Cash flow for the first three months of 2008 was driven by $102.7 million of net earnings. Cash flow from operations was negatively impacted by an increase in inventory of $156.1 million and an increase in accounts receivable of $34.5 million. The increase in inventory was due to higher order backlog and an increase in sales volumes, both in the Crane segment. The increase in accounts receivable was driven primarily by an increase in sales volumes. Accounts payable, accrued expenses, other assets and liabilities, and non-cash items positively impacted cash flow from operations by $99.7 million. This increase was driven primarily by an increase in accounts payable related to the increase in inventory in the Crane segment.
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 has the option to increase the borrowing capacity of the revolving facility or Term Loan A, if agreed upon by the lender, up to an aggregate amount of $300.0 million. 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.
John Keeley of Keeley Fund Management, Ronald Muhlenkamp of Muhlenkamp Fund.