Manitowoc Announces Strong Third-Quarter Revenue, Earnings Growth, and Cash Flow

4 November 2005

Diluted earnings from continuing operations excluding specia tems of $0.74 per share increased 68 percent from 2004 -- Crane segment's global footprint and broad product line continue o drive company performance -- Revenue increased 23 percent to $565 million -- Operating earnings up 27 percent to $37.2 million -- Reported GAAP diluted earnings per share of $0.55 MANITOWOC, Wis., Nov. 2 /PRNewswire-FirstCall/ -- The Manitowoc Company (NYSE: MTW) today reported strong increases in net sales and earnings for the third quarter ended September 30, 2005. Net sales increased 23 percent to $564.9 million, from $460.8 million during the third quarter of 2004. Reflecting the increased share count from the company's common stock offering in December 2004, reported earnings per diluted share were $0.55 for the 2005 quarter compared to $0.47 for the 2004 quarter. Excluding costs associated with restructuring and plant consolidation in the 2005 quarter and a charge related to debt extinguishment in the 2004 quarter, earnings per diluted share from continuing operations increased 68 percent to $0.74 for the 2005 period from $0.44 for the comparable 2004 period. In addition, the company generated solid cash from operations in the quarter of $61.3 million. As of September 30, 2005, the company had decided to sell its Diversified Refrigeration (DRI) unit and close its Toledo, OH, shipyard. As a result of these decisions, DRI and Toledo have been classified as discontinued operations in the quarter. "Manitowoc has continued its track record of providing outstanding results for its shareholders. These results stem not only from our strong product portfolio but also our focus on strategy execution," said Terry D. Growcock, Manitowoc's chairman and chief executive officer. "During the third quarter, we took advantage of R&D tax credits in our Marine segment to create an effective tax rate of 14 percent for the quarter and 20 percent on a year-to- date basis. We will continue to explore all opportunities such as this to maximize shareholder value." For the nine months ended September 30, 2005, net sales increased 24 percent to $1.7 billion from $1.3 billion during the 2004 period. Net earnings for the first nine months of 2005 were $47.6 million, or $1.55 per diluted share, an increase of 41 percent from the $33.7 million, or $1.24 per diluted share, achieved during the first nine months of 2004. Excluding special items, earnings from continuing operations for the first nine months of 2005 were $59.2 million, or $1.93 per diluted share, compared with $28.9 million, or $1.06 per diluted share last year. A reconciliation of GAAP earnings from continuing operations to earnings from continuing operations excluding special items for the third quarter and first nine months is included later in this release. Business Segment Results Third-quarter 2005 net sales in the Crane segment increased 32 percent to $404.9 million, from $305.7 million in the 2004 period. Operating earnings increased 119 percent to $29.6 million, from $13.5 million last year. The segment's strong operating environment is also reflected in its backlog, which totaled $633 million, more than double the $289 million on order at September 30, 2004. "We are realizing the enormous potential that the execution of our global Crane acquisition strategy offers," Growcock said. "Demand for lifting solutions is increasing in our key industry markets and in most of our served geographies. Federal programs to improve and expand transportation and energy infrastructure in the United States are increasing domestic demand for construction equipment, and international demand is being driven by industrial expansion in both established and emerging markets. We meet that demand through our global family of products and brands - Manitowoc, Grove, Potain, and National. These brands are all supported by Crane CARE, our world-class aftermarket support organization. During the fourth quarter, we will begin moving into our new Chinese crane facility, from which we will better serve the domestic Chinese market and growing Asian economies in 2006. Adding to our strong performance, it appears the long-anticipated revival of the North American crawler crane market is now taking shape. "The growth in the Crane segment's backlog during the quarter is an indication that our customers recognize the growing end market demand for modern and efficient lifting solutions," Growcock said. In the Foodservice segment, third-quarter 2005 net sales increased 9 percent to $108.9 million from $100.2 million last year. Operating earnings for the 2005 quarter were $18.5 million, a 3 percent increase from $18.0 million in the third quarter of 2004. The increases reflect strong growth in ice machine sales that were driven by hotter-than-normal weather throughout much of the United States during the third quarter of 2005. This strong performance was partially offset by lower sales volumes of refrigeration equipment, which reflects a decline in the rate of new restaurant construction in the United States. "During the quarter, Foodservice took significant action to sharpen its focus on its core markets and operating efficiency," Growcock said. "The sale of DRI would eliminate both a product line and a production facility that currently generate little synergy within Foodservice. A DRI sale, when it is completed, along with the transfer of production and closure of our River Falls, WI, facility to our more modern site in Parsons, TN, will enable Foodservice to improve its profitability. "Another focus for Foodservice is product innovation. During the third quarter, Foodservice expanded its served customer base with ice products that are designed specifically for the medical and residential markets. Our Foodservice segment will also introduce several new beverage products later this month during the National Association of Convenience Stores trade show," Growcock said. Sales at both Cranes and Foodservice were somewhat affected during the quarter by Hurricanes Katrina and Rita. The damage along the Gulf Coast has resulted in higher industry demand for replacement of cranes and related repair parts. Conversely, foodservice equipment sales were dampened by the cancellation of orders and overall contraction of the market due to the destruction of thousands of food-related businesses. Revenues for the Marine segment during the third quarter of 2005 were $51.2 million, a decrease of 7 percent from $54.9 million during the 2004 quarter. The Marine segment was essentially breakeven during the quarter, after having an operating loss of $0.6 million during the second quarter of 2005 and operating earnings of $3.5 million during the third quarter of 2004, all adjusted for the closure of Toledo. "The Marine segment continued to underperform our expectations, although we maintain a positive outlook for this segment," Growcock said. "Marine's management team has made great progress in addressing underlying operating inefficiencies, and our two primary shipyards are dedicated to customer classes that will maximize their effectiveness. We have also exited our Toledo, OH, shipyard and will focus our Great Lakes repair business at our Sturgeon Bay and Cleveland yards. Finally, we have completed the three projects that were a key cause of our recent substandard performance, and Marine's current and developing backlog is anticipated to generate the results that both management and shareholders expect." Strategic Priorities "We continue to drive our business to meet Manitowoc's four strategic priorities," Growcock said. -- Increase crane sales and market penetration globally. The Cran egment is well positioned to take advantage of growing global deman or construction equipment. Our multi-product approach addresses al f our customers' needs, and our new Chinese production facility wil oster better penetration of the important Asian construction markets.In addition, as the North American crawler crane market rebounds we ca xpect sales growth there to create even greater earnings leverage t ur continued top-line expansion. -- Strengthen foodservice business and market share. During the quarter,Foodservice continued its solid product innovation performance b ntroducing a line of flake ice dispensers that are designe pecifically for patients in medical settings and an under-the-counte ce machine that brings Manitowoc's commercial quality into the home.Foodservice is also benefiting from its history of product developmen xpertise as energy efficiency is becoming a key decision driver fo quipment choices. Our entire line of ice and refrigeration product urrently meets all 2006 national energy efficiency standards. We ar lso the industry leader in meeting California's more stringent energ tandards, with more than double the number of compliant products tha ur nearest competitor. -- Leverage the strengths and capabilities of our multiple shipyards t erve commercial and government customers. We have structured ou arine shipyards to best serve the unique requirements of commercia nd government customers. Our Sturgeon Bay shipyard will focu xclusively on commercial work such as OPA-90 compliant tank barges,and the Marinette facility will be devoted to government programs suc s the Littoral Combat Ship. This will enable yard management t evelop and execute the unique processes and procedures that thei espective customers and products demand. -- Strengthen our financial structure by focusing on cash flow and net-debt reduction. We remain on track to meet our objective of reducin et debt by $50 million during 2005. The debt reduction will be drive y solid cash generation from operations, which totaled $61.3 millio or the quarter. We are also managing working capital effectively i he face of increasing production volumes and higher commodity costs.We believe that the best measure of our use of the company's capital i hrough EVA(R), or Economic Value-Added, which we first employed in1993. For the first nine months of 2005, our EVA contributio ncreased more than nine-fold from the same period in 2004. Earnings Guidance "We are increasing our full-year EPS guidance from $2.15 - $2.30 to $2.25 - $2.35," Growcock said. "Although the North American crawler crane market is showing signs of growth, the benefits of this key market segment are unlikely to be meaningful in 2005. In addition, continuing commodity price pressures and shortages of key components have the potential to affect profitability. This guidance assumes a full-year tax rate in the low 20 percent range," Growcock said. 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 prior withdrawal from the aerial work platform business. 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 Ended Nine Months Ende eptember 30 September 30 2005 2004 2005 2004 Earnings from continuing Operations $20,879 $11,663 $51,241 $28,674 Special items, net of tax (at statutory rate): Early extinguishment of debt - 313 5,897 673 Restructuring and plant consolidation 2,107 114 2,107 634 Sales and use tax settlement - - - 359 Lawsuit settlement, net of costs - - - (1,463) Earnings from continuing operations before special items $22,986 $12,090 $59,245 $28,877 Diluted earnings per share from continuing operations$0.67$0.43 $1.67$1.06 Special items, net of tax (at statutory rate): Early extinguishment of debt - 0.01 0.19 0.02 Restructuring and plant consolidation 0.07 0.00 0.07 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 $0.74$0.44 $1.93$1.06 The Manitowoc Company will host a conference call tomorrow, November 3, 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 th arkets served by our companies, -- Great Lakes water levels, -- 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. THE MANITOWOC COMPANY, INC. Unaudited Consolidated Financial Information For the Three and Nine Months Ended September 30, 2005 and 2004 (In thousands, except per-share data) INCOME STATEMEN hree Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Net sales $564,913 $460,818 $1,664,792 $1,337,453 Cost of sales 454,538 367,834 1,343,249 1,056,490 Gross profit110,375 92,984321,543280,963 Engineering, selling and administrative expenses 69,168 62,695205,524198,106 Amortization expense 732 777 2,335 2,333 Restructuring and plant consolidation costs 3,242 175 3,242 975 Operating earnings37,233 29,337110,442 79,549 Interest expense (13,547) (14,071) (40,440) (41,103) Loss on debt extinguishment - (481)(9,072)(1,036) Other income - net673 500 2,952 1,338 Earnings from continuing operations before taxes on income24,359 15,285 63,882 38,748 Provision for taxes on income 3,4803,622 12,641 10,074 Earnings from continuing operations 20,879 11,663 51,241 28,674 Discontinued operations: Earnings (losses) fro iscontinued operations,net of income taxes(405) 1,041 (257) 4,343 Gain (loss) on sale o losure of discontinue perations, net of incom axes (3,373) - (3,373) 709 NET EARNINGS $ 17,101 $ 12,704 $ 47,611 $ 33,726 BASIC EARNINGS PER SHARE: Earnings from continuing operations $ 0.69 $ 0.44 $1.70 $1.07 Earnings (losses) from discontinued operations, net of income taxes (0.01)0.04 (0.01) 0.16 Gain (loss) on sale or closure of discontinued operations, net of income taxes (0.11) - (0.11) 0.03 BASIC EARNINGS PER SHARE $ 0.57 $ 0.47 $1.58 $1.26 DILUTED EARNINGS PER SHARE: Earnings from continuing operations $ 0.67 $ 0.43 $1.67 $1.06 Earnings (losses) from discontinued operations, net of income taxes (0.01)0.04 (0.01) 0.16 Gain (loss) on sale or closure of discontinued operations, net of income taxes (0.11) - (0.11) 0.03 DILUTED EARNINGS PER SHARE $ 0.55 $ 0.47 $1.55 $1.24 AVERAGE SHARES OUTSTANDING: Average Shares Outstanding - Basic 30,220 26,775 30,099 26,719 Average Shares Outstanding - Diluted31,008 27,283 30,763 27,161 SEGMENT SUMMAR hree Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Net sales from continuing operations: Cranes and relate roducts $404,854 $305,717 $1,189,849 $ 890,108 Foodservice equipment 108,902 100,216308,799292,733 Marine 51,157 54,885166,144154,612 Total $564,913 $460,818 $1,664,792 $1,337,453 Operating earnings (loss) from continuing operations: Cranes and relate roducts $ 29,585 $ 13,512 $ 85,452 $ 41,920 Foodservice equipment 18,539 17,997 47,205 46,530 Marine(92) 3,453 949 9,921 General corporate expense (6,825) (4,673) (17,587) (15,514) Amortization (732)(777)(2,335)(2,333) Restructuring and plan onsolidation costs (3,242)(175)(3,242) (975) Total $ 37,233 $ 29,337 $ 110,442 $ 79,549 THE MANITOWOC COMPANY, INC. Unaudited Consolidated Financial Information For the Three and Nine Months Ended September 30, 2005 and 2004 (In thousands) BALANCE SHEET ASSETS September 30, December 31, 2005 2004 Current assets: Cash and temporary investments $ 122,644$ 178,663 Accounts receivable - net 262,223 244,335 Inventories - net 339,161 287,036 Other current assets 148,421 135,927 Total current assets 872,449 845,961 Property, plant and equipment - net 344,741 357,568 Intangible assets - net575,699 606,210 Other long-term assets 118,555 118,397 TOTAL ASSETS $1,911,444$1,928,136 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 561,718$ 513,504 Current portion of long-term debt - 61,250 Short-term borrowings 11,939 10,355 Product warranties 39,925 37,870 Product liabilities 29,619 29,701 Total current liabilities 643,201 652,680 Long-term debt 482,500 512,236 Other non-current liabilities 252,931 244,291 Stockholders' equity 532,812 518,929 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,911,444$1,928,136 CASH FLOW SUMMARY Three Months Ended Nine Months Ende eptember 30 September 302005200420052004 Net earnings $17,101 $12,704 $47,611 $33,726 Non-cash adjustments 23,153 13,249 60,058 32,566 Changes in operating assets and liabilities 19,333 (22,309) (65,616) (69,516) Net cash provided by (used for)operating activities o ontinuing operations 59,587 3,644 42,053 (3,224) Net cash provided by (used for)operating activities o iscontinued operations 1,702 3,766 (9,187) 2,312 Net cash provided by (used for)operating activities 61,289 7,410 32,866(912) Capital expenditures (13,694) (8,828) (34,964) (26,419) Proceeds from sale of fixed assets 2,132 2,914 7,464 6,493 Net cash provided by (used for) investing activities of discontinued operations 32(125)(14) 7,982 Payments on borrowings - net (1,119) (11,490) (58,717) (9,593) Proceeds (payments) from receivable financing - net 1,789 15,840 (12) 27,116 Debt issuance costs (66) - (1,769) - Dividends paid (2,117) - (6,325) - Stock options exercised2,868 2,288 9,032 5,656 Effect of exchange rate changes on cash (331) (2,307) (3,580) (2,632) Net increase (decrease) in cash & temporary investments $50,783 $ 5,702 $(56,019) $ 7,691

Source: PR Newswire

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