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 $903.3 million; its shares were traded at around $6.93 with a P/E ratio of 4.1 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 200.5% to $382.5 million for the three months ended June 30, 2009 versus $127.3 million for the three months ended June 30, 2008. For the six months ended June 30, 2009, Foodservice segment sales of $737.1 million increased 218.5% over the same period in 2008. The sales increases during the both periods were the result of $285.8 million and $559.9 million of sales from the Enodis businesses in the three and six months ended June 30, 2009, respectively. Excluding the sales from the Enodis businesses, sales would have decreased $30.6 million and $54.2 million during the three and six month periods ended June 30, 2009 versus the same periods last year, respectively. The lower sales are due to the extended contraction of capital spending by the restaurant industry. In addition, sales for both periods were negatively impacted by the strength of the U.S. Dollar relative to the Euro, British Pound and Chinese currencies and as a result lowered sales for the three and six months ended 2009 versus 2008 by $17.1 million and $35.5 million, respectively.
Consolidated gross profit for the three months ended June 30, 2009 was $236.8 million, a decrease of $50.3 million as compared to the $287.1 million of consolidated gross profit for the same period in 2008. Consolidated gross profit for the six months ended June 30, 2009 was $441.8 million, a decrease of $88.1 million as compared to the $529.9 million of consolidated gross profit for the same period in 2008. These decreases were driven by significantly lower gross profit in the Crane segment primarily due to decreased sales volumes, increased manufacturing unabsorbed overhead costs and an unfavorable translation effect of foreign currency exchange rate changes. For the three and six month periods ended June 30, 2009 versus the same periods in 2008, the Crane segment gross profit declined $136.8 million and $238.0 million, respectively. The weaker Euro currency compared to the U.S. Dollar had an unfavorable impact on gross profit of approximately $19.8 million and $33.5 million, respectively. The gross profit decreases for both periods as compared to last year were partially offset by favorable product price increases and factory cost reductions.
Engineering, selling and administrative (ES&A) expenses for the second quarter of 2009 increased approximately $43.1 million to $153.3 million versus $110.2 million for the second quarter of 2008. For the six months ended June 30, 2009, ES&A expenses were $287.3 million, which was a $68.7 million increase over ES&A expenses for the six months ended June 30, 2008. For both periods these increases were driven by the Foodservice segment as a result of including the Enodis ES&A expenses of $69.8 million and $121.2 million for the three and six months ended June 30, 2009. Partially offsetting the overall increases in ES&A expenses were the lower Crane segment ES&A expenses of $19.3 million and $42.4 million for both periods, respectively, due to lower employee related costs, travel and professional fees. In addition, the stronger U.S. Dollar versus other foreign currencies had a favorable impact of $5.2 million and $10.4 million in Crane ES&A expenses for both periods.
For the three months ended June 30, 2009, the Foodservice segment reported operating earnings of $39.6 million compared to $22.8 million for the three months ended June 30, 2008. For the six months ended June 30, 2009, the Foodservice segment reported operating earnings of $60.2 million compared to $34.9 million for the six months ended June 30, 2008. The primary driver for the increases in operating earnings for both periods is the inclusion of the Enodis operating earnings of $22.0 million and $34.5 million for the three and six months ended June 30, 2009. However, excluding the impact of the Enodis results, operating earnings for the Foodservice segment decreased $5.2 million and $9.2 million in the second quarter and first half of 2009 versus the same periods in 2008 due to lower sales volumes across all regions and product lines as a result of the lower capital spending by the restaurant industry.
flow generation from operations was driven by $236.5 million of net earnings, an increase in accounts payable of $81.9 million, and an increase in customer advances of $61.8 million. The increase in accounts payable is related to the increase in inventory for the Crane and Foodservice segments and the increase in customer advances is in connection with deposits required for our larger crane orders. Cash flow was negatively impacted by an increase in inventory of $193.0 million and an increase in accounts receivable of $37.9 million. The increase in inventory was due to the increase in production to support higher sales volumes and higher backlog levels in the Crane segment as well as traditional seasonal increases in the Foodservice segment. In addition, supplier constraints have negatively impacted production throughput resulting in higher Crane segment inventories. The increase in accounts receivable was driven primarily by an increase in the Crane segment sales volumes. During the first half of 2008 the company made tax payments of approximately $58.5 million versus $35.0 million during the first half of 2007.
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. As of June 30, 2009, the company had outstanding $94.7 million of borrowings under the revolving facility with an interest rate of 5.2%. 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.
Read the The complete ReportMTW is in the portfolios of John Keeley of Keeley Fund Management, Ronald Muhlenkamp of Muhlenkamp Fund.