Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CASCADE CORP | d8k.htm |
| EX-99.2 - TRANSCRIPT OF CONFERENCE CALL HELD ON DECEMBER 2, 2010 - CASCADE CORP | dex992.htm |
Exhibit 99.1
Portland, Oregon
December 2, 2010
FOR IMMEDIATE RELEASE
CASCADE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED OCTOBER 31, 2010
Cascade Corporation (NYSE: CASC) today reported its financial results for the third quarter ended October 31, 2010.
Third Quarter Overview
| • | Net sales of $107.4 million for the third quarter of fiscal 2011 were 33% higher than net sales of $80.8 million for the third quarter of fiscal 2010, excluding the impact of changes in foreign currency exchange rates. |
| • | Pre-tax income was $14.8 million for the quarter as compared to $0.4 million in the prior year. |
| • | Our net income for the third quarter of fiscal 2011 was $8.8 million ($0.79 per diluted share) compared to $0.2 million ($0.01 per diluted share) for the third quarter of fiscal 2010. |
Third Quarter Fiscal 2011 Summary
| • | Summary financial results are outlined below (in thousands, except earnings per share): |
| Three Months Ended October 31 |
2010 | 2009 | % Change | |||||||||
| Net sales |
$ | 107,377 | $ | 80,822 | 33 | % | ||||||
| Gross profit |
33,792 | 19,675 | 72 | % | ||||||||
| Gross profit % |
31 | % | 24 | % | ||||||||
| SG&A |
18,390 | 17,144 | 7 | % | ||||||||
| European restructuring costs |
(54 | ) | 1,514 | — | ||||||||
| Operating income |
15,456 | 1,017 | — | |||||||||
| Interest expense, net |
445 | 513 | (13 | %) | ||||||||
| Foreign currency loss, net |
232 | 133 | ||||||||||
| Income before taxes |
14,779 | 371 | — | |||||||||
| Provision for income taxes |
5,995 | 214 | — | |||||||||
| Effective tax rate |
41 | % | 58 | % | ||||||||
| Net income |
$ | 8,784 | $ | 157 | — | |||||||
| Diluted earnings per share |
$ | 0.79 | $ | 0.01 | — | |||||||
Cascade Corporation
December 2, 2010
Page 2
| • | Consolidated net sales increased 33% during the third quarter of fiscal 2011, excluding the impact of foreign currency changes, due to higher sales volumes as a result of improving economic conditions and global lift truck market. Details of the change in net sales compared to the prior year third quarter follow (in thousands): |
| Amount | Change % | |||||||
| Net sales change |
$ | 26,763 | 33 | % | ||||
| Foreign currency change |
(208 | ) | 0 | % | ||||
| Total |
$ | 26,555 | 33 | % | ||||
| • | The consolidated gross profit percentage increased during the third quarter of fiscal 2011 from 24% to 31%, primarily as a result of improved cost absorption due to increased sales volumes and the benefit of cost cutting measures implemented during fiscal 2010. |
| • | Selling and administrative expenses increased 8%, excluding foreign currency changes, due to increased personnel, selling and research and development costs. |
| • | The effective tax rate of 41% reflects additional valuation allowances related to losses in Europe for which we were unable to realize tax benefits. |
| • | The provision for income taxes in the third quarter of fiscal 2010 was primarily a result of taxes due in countries where we generated income. We were unable to realize a tax benefit in several European countries where we incurred losses due to valuation allowances. |
Market Conditions
| • | Percentage changes in lift truck industry shipments and orders, by region, as compared to the prior year are outlined below. Although lift truck unit data provides an indicator of the general health of the industry and our business over a six to twelve month period, they do not necessarily correlate directly with the demand for our products on a quarterly basis. |
| Shipments | Orders | |||||||
| Q3 FY11 vs Q3 FY10 | Q3 FY11 vs Q3 FY10 | |||||||
| North America |
25 | % | 49 | % | ||||
| Europe |
40 | % | 50 | % | ||||
| Asia |
33 | % | 31 | % | ||||
| China |
53 | % | 43 | % | ||||
| Global |
44 | % | 45 | % | ||||
| • | Generally global lift truck markets are recovering based on order and shipment rates. However, it is difficult to predict with certainty the pace and extent of the recovery. We believe lift truck shipment levels will continue at current levels for the remainder of the year. |
Cascade Corporation
December 2, 2010
Page 3
North America Summary
| • | Summary financial results are outlined below (in thousands): |
| Three Months Ended October 31 |
2010 | 2009 | % Change | |||||||||
| Net sales |
$ | 53,615 | $ | 40,215 | 33 | % | ||||||
| Transfers between areas |
6,433 | 4,097 | 57 | % | ||||||||
| Net sales and transfers |
60,048 | 44,312 | 36 | % | ||||||||
| Gross profit |
18,933 | 13,772 | 37 | % | ||||||||
| Gross profit % |
32 | % | 31 | % | ||||||||
| SG&A |
10,365 | 9,377 | 11 | % | ||||||||
| Operating income |
$ | 8,568 | $ | 4,395 | 95 | % | ||||||
| • | Net sales increased 33%, excluding the impact of currency changes, primarily due to higher sales volumes as a result of improving economic conditions. Details of the change in net sales over the prior year quarter follow (in thousands): |
| Amount | Change % | |||||||
| Net sales change |
$ | 13,167 | 33 | % | ||||
| Foreign currency change |
233 | 0 | % | |||||
| Total |
$ | 13,400 | 33 | % | ||||
| • | Our gross profit percentage increased due to improved absorption of costs as a result of higher sales volumes during the current year. |
| • | Selling and administrative costs increased due to higher executive incentive ($0.6 million) and other personnel costs ($0.7 million) in the current year as a result of improved financial performance in the current year and the reinstatement of previously frozen salary increases. These increases were partially offset by other cost reductions. |
Europe Summary
| • | Summary financial results are outlined below (in thousands): |
| Three Months Ended October 31 |
2010 | 2009 | % Change | |||||||||
| Net sales |
$ | 22,653 | $ | 18,555 | 22 | % | ||||||
| Transfers between areas |
180 | 567 | (68 | %) | ||||||||
| Net sales and transfers |
22,833 | 19,122 | 19 | % | ||||||||
| Gross profit (loss) |
3,409 | (2,113 | ) | — | ||||||||
| Gross profit (loss) % |
15 | % | (11 | %) | ||||||||
| SG&A |
4,273 | 4,657 | (8 | %) | ||||||||
| European restructuring costs |
(54 | ) | 1,514 | — | ||||||||
| Operating loss |
$ | (810 | ) | $ | (8,284 | ) | — | |||||
Cascade Corporation
December 2, 2010
Page 4
| • | Net sales increased 32%, excluding the impact of currency changes, due to higher sales volumes as a result of a stronger lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands): |
| Amount | Change % | |||||||
| Net sales change |
$ | 5,927 | 32 | % | ||||
| Foreign currency change |
(1,829 | ) | (10 | %) | ||||
| Total |
$ | 4,098 | 22 | % | ||||
| • | During the third quarter of fiscal 2011, our gross profit margin moved from (11%) to 15% due to higher sales volumes and efficiencies from restructuring our production and distribution activities. The 15% gross profit margin, the highest we have achieved in Europe since the quarter ended October 31, 2008, is primarily a result of our restructuring efforts over the past two years. |
| • | Restructuring costs in the prior year were primarily a result of terminating production at our facility in the Netherlands. These costs included severance costs of $0.5 million and facility closure costs of $1.0 million. |
Asia Pacific Summary
| • | Summary financial results are outlined below (in thousands): |
| Three Months Ended October 31 |
2010 | 2009 | % Change | |||||||||
| Net sales |
$ | 16,353 | $ | 11,886 | 38 | % | ||||||
| Transfers between areas |
9 | 112 | (92 | %) | ||||||||
| Net sales and transfers |
16,362 | 11,998 | 36 | % | ||||||||
| Gross profit |
4,601 | 3,283 | 40 | % | ||||||||
| Gross profit % |
28 | % | 27 | % | ||||||||
| SG&A |
2,500 | 2,029 | 23 | % | ||||||||
| Operating income |
$ | 2,101 | $ | 1,254 | 68 | % | ||||||
| • | Net sales increased 28%, excluding the impact of currency changes, due to higher sales volumes as a result of an improvement in economic conditions and a strong lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands): |
| Amount | Change % | |||||||
| Net sales change |
$ | 3,278 | 28 | % | ||||
| Foreign currency change |
1,189 | 10 | % | |||||
| Total |
$ | 4,467 | 38 | % | ||||
| • | Our gross profit percentage increased slightly compared to the prior year due primarily to fluctuations in foreign currency rates. |
| • | Selling and administrative costs, excluding the impact of currency changes, were 14% higher due to selling and personnel costs. |
Cascade Corporation
December 2, 2010
Page 5
China Summary
| • | Summary financial results are outlined below (in thousands): |
| Three Months Ended October 31 |
2010 | 2009 | % Change | |||||||||
| Net sales |
$ | 14,756 | $ | 10,166 | 45 | % | ||||||
| Transfers between areas |
6,012 | 2,576 | 133 | % | ||||||||
| Net sales and transfers |
20,768 | 12,742 | 63 | % | ||||||||
| Gross profit |
6,849 | 4,733 | 45 | % | ||||||||
| Gross profit % |
33 | % | 37 | % | ||||||||
| SG&A |
1,252 | 1,081 | 16 | % | ||||||||
| Operating income |
$ | 5,597 | $ | 3,652 | 53 | % | ||||||
| • | Net sales increased 43%, excluding currency changes, primarily due to the recovery of the Chinese economy and a strong lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands): |
| Amount | Change % | |||||||
| Net sales change |
$ | 4,391 | 43 | % | ||||
| Foreign currency change |
199 | 2 | % | |||||
| Total |
$ | 4,590 | 45 | % | ||||
| • | The gross profit percentage in China decreased due to changes in product mix and higher intercompany transfers, which carry lower gross margins. |
| • | Selling and administrative costs increased 14%, excluding currency changes, primarily due to higher research and development costs. |
Other Matters:
| • | On November 29, 2010, our Board of Directors declared a quarterly dividend of $0.10 per share, payable on January 12, 2011 to shareholders of record as of December 29, 2010. |
| • | Free cash flow, a non-GAAP measure, is defined as cash flow from operating activities less capital expenditures. The following table presents a summary of our free cash flow for the three and nine months ended October 31, 2010 and 2009. |
| Three Months Ended October 31 | Nine Months Ended October 31 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||
| Cash flow from operating activities |
$ | 8,624 | $ | 3,767 | $ | 11,995 | $ | 35,216 | ||||||||
| Capital expenditures |
(1,810 | ) | (1,426 | ) | (3,715 | ) | (3,257 | ) | ||||||||
| Free cash flow |
$ | 6,814 | $ | 2,341 | $ | 8,280 | $ | 31,959 | ||||||||
The decrease in free cash flow during fiscal 2011 is primarily a result of higher levels of accounts receivable due to increased sales volumes. Free cash flow levels in fiscal 2010 were primarily the result of lower accounts receivable balances and inventory reductions.
Cascade Corporation
December 2, 2010
Page 6
Forward Looking Statements:
This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that a number of factors could cause our actual results to differ materially from any results indicated in this release or in any other forward-looking statements made by us, or on our behalf. These include among others, factors related to general economic conditions, interest rates, demand for materials handling products and construction equipment, performance of our manufacturing facilities and the cyclical nature of the materials handling and construction equipment industries. Further, historical information should not be considered an indicator of future performance. Additional considerations and important risk factors are described in our reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission.
Earnings Call Information:
We will discuss our results in a conference call on Thursday, December 2, 2010 at 2:00 pm PST. Robert C. Warren, Jr., President and Chief Executive Officer will host the call. The conference call can be accessed in the U.S. and Canada by dialing (877) 941-2333, International callers can access the call by dialing (480) 629-9723. Participants are encouraged to dial-in 15 minutes prior to the beginning of the call. A replay will be available for 48 hours after the live broadcast and can be accessed by dialing (800) 406-7325 and entering passcode 4383317, or internationally, by dialing (303) 590-3030 and entering passcode 4383317.
The call will be simultaneously webcast and can be accessed on the Investor Relations page of the company’s website, www.cascorp.com. Listeners should go to the website at least 15 minutes early to register, download and install any necessary audio software.
About Cascade Corporation:
Cascade Corporation, headquartered in Fairview, Oregon, is a leading international manufacturer of materials handling products used primarily on lift trucks. Additional information on Cascade is available on its website, www.cascorp.com.
Contact
Joseph G. Pointer
Chief Financial Officer
Cascade Corporation
Phone (503) 669-6300
Email: investorrelations@cascorp.com
Cascade Corporation
December 2, 2010
Page 7
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited — in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | October 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net sales |
$ | 107,377 | $ | 80,822 | $ | 299,510 | $ | 233,781 | ||||||||
| Cost of goods sold |
73,585 | 61,147 | 208,484 | 181,104 | ||||||||||||
| Gross profit |
33,792 | 19,675 | 91,026 | 52,677 | ||||||||||||
| Selling and administrative expenses |
18,390 | 17,144 | 55,652 | 53,417 | ||||||||||||
| European restructuring costs |
(54 | ) | 1,514 | 15 | 17,880 | |||||||||||
| Operating income (loss) |
15,456 | 1,017 | 35,359 | (18,620 | ) | |||||||||||
| Interest expense |
502 | 586 | 1,656 | 1,383 | ||||||||||||
| Interest income |
(57 | ) | (73 | ) | (142 | ) | (243 | ) | ||||||||
| Foreign currency loss, net |
232 | 133 | 752 | 284 | ||||||||||||
| Income (loss) before provision for income taxes |
14,779 | 371 | 33,093 | (20,044 | ) | |||||||||||
| Provision for income taxes |
5,995 | 214 | 15,411 | 4,175 | ||||||||||||
| Net income (loss) |
$ | 8,784 | $ | 157 | $ | 17,682 | $ | (24,219 | ) | |||||||
| Basic earnings (loss) per share |
$ | 0.81 | $ | 0.01 | $ | 1.63 | $ | (2.24 | ) | |||||||
| Diluted earnings (loss) per share |
$ | 0.79 | $ | 0.01 | $ | 1.60 | $ | (2.24 | ) | |||||||
| Basic weighted average shares outstanding |
10,906 | 10,824 | 10,876 | 10,813 | ||||||||||||
| Diluted weighted average shares outstanding |
11,092 | 11,004 | 11,083 | 10,813 | ||||||||||||
Cascade Corporation
December 2, 2010
Page 8
CASCADE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except per share amounts)
| October 31, | January 31, | |||||||
| 2010 | 2010 | |||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 26,197 | $ | 20,201 | ||||
| Accounts receivable, less allowance for doubtful accounts of $1,444 and $1,328 |
74,072 | 50,910 | ||||||
| Inventories |
66,516 | 63,466 | ||||||
| Deferred income taxes |
4,350 | 4,230 | ||||||
| Assets available for sale |
9,379 | 9,125 | ||||||
| Prepaid expenses and other |
9,882 | 12,334 | ||||||
| Total current assets |
190,396 | 160,266 | ||||||
| Property, plant and equipment, net |
69,637 | 73,408 | ||||||
| Goodwill |
87,511 | 84,122 | ||||||
| Deferred income taxes |
18,450 | 21,022 | ||||||
| Intangible assets, net |
644 | 763 | ||||||
| Other assets |
2,950 | 2,350 | ||||||
| Total assets |
$ | 369,588 | $ | 341,931 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Notes payable to banks |
$ | 743 | $ | 2,927 | ||||
| Current portion of long-term debt |
559 | 499 | ||||||
| Accounts payable |
23,807 | 20,542 | ||||||
| Accrued payroll and payroll taxes |
7,972 | 7,683 | ||||||
| Accrued restructuring costs |
807 | 5,260 | ||||||
| Other accrued expenses |
15,478 | 10,977 | ||||||
| Total current liabilities |
49,366 | 47,888 | ||||||
| Long-term debt, net of current portion |
55,495 | 55,990 | ||||||
| Accrued environmental expenses |
3,410 | 4,161 | ||||||
| Deferred income taxes |
4,218 | 4,839 | ||||||
| Employee benefit obligations |
9,561 | 9,120 | ||||||
| Other liabilities |
4,955 | 4,171 | ||||||
| Total liabilities |
127,005 | 126,169 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Common stock, $.50 par value, 40,000 authorized shares; 10,961 and 10,885 shares issued and outstanding |
5,481 | 5,443 | ||||||
| Additional paid-in capital |
8,840 | 7,119 | ||||||
| Retained earnings |
195,566 | 179,747 | ||||||
| Accumulated other comprehensive income |
32,696 | 23,453 | ||||||
| Total shareholders’ equity |
242,583 | 215,762 | ||||||
| Total liabilities and shareholders’ equity |
$ | 369,588 | $ | 341,931 | ||||
Cascade Corporation
December 2, 2010
Page 9
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | October 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Cash flows from operating activities: |
||||||||||||||||
| Net income (loss) |
$ | 8,784 | $ | 157 | $ | 17,682 | $ | (24,219 | ) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||||||||||
| Fixed asset write off due to restructuring |
202 | (56 | ) | 215 | 4,829 | |||||||||||
| Depreciation |
2,535 | 2,973 | 7,508 | 9,064 | ||||||||||||
| Amortization |
35 | 123 | 119 | 356 | ||||||||||||
| Share-based compensation |
499 | 709 | 2,138 | 2,852 | ||||||||||||
| Deferred income taxes |
856 | 3,424 | 1,774 | 1,736 | ||||||||||||
| Loss (gain) on disposition of assets, net |
(26 | ) | 56 | (20 | ) | 90 | ||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Accounts receivable |
(7,395 | ) | (2,478 | ) | (20,995 | ) | 15,477 | |||||||||
| Inventories |
(1,300 | ) | 4,761 | (1,577 | ) | 27,281 | ||||||||||
| Prepaid expenses and other |
996 | (1,471 | ) | (2,735 | ) | 862 | ||||||||||
| Accounts payable and accrued expenses |
(450 | ) | 152 | 1,887 | (73 | ) | ||||||||||
| Income taxes payable and receivable |
3,671 | (4,677 | ) | 6,165 | (2,138 | ) | ||||||||||
| Other assets and liabilities |
217 | 94 | (166 | ) | (901 | ) | ||||||||||
| Net cash provided by operating activities |
8,624 | 3,767 | 11,995 | 35,216 | ||||||||||||
| Cash flows from investing activities: |
||||||||||||||||
| Capital expenditures |
(1,810 | ) | (1,426 | ) | (3,715 | ) | (3,257 | ) | ||||||||
| Proceeds from disposition of assets |
1,065 | 36 | 1,182 | 166 | ||||||||||||
| Net cash used in investing activities |
(745 | ) | (1,390 | ) | (2,533 | ) | (3,091 | ) | ||||||||
| Cash flows from financing activities: |
||||||||||||||||
| Cash dividends paid |
(1,097 | ) | — | (1,863 | ) | (1,087 | ) | |||||||||
| Common stock issued under share-based compensation plans |
— | — | 14 | — | ||||||||||||
| Tax effect on share-based compensation |
(393 | ) | — | (393 | ) | — | ||||||||||
| Payments on long-term debt |
(21,635 | ) | (21,124 | ) | (54,634 | ) | (76,859 | ) | ||||||||
| Proceeds from long-term debt |
22,250 | 16,500 | 53,750 | 36,000 | ||||||||||||
| Notes payable to banks, net |
(1,360 | ) | 2,010 | (2,266 | ) | 838 | ||||||||||
| Net cash used in financing activities |
(2,235 | ) | (2,614 | ) | (5,392 | ) | (41,108 | ) | ||||||||
| Effect of exchange rate changes |
(1,810 | ) | (2,050 | ) | 1,926 | (6,662 | ) | |||||||||
| Change in cash and cash equivalents |
3,834 | (2,287 | ) | 5,996 | (15,645 | ) | ||||||||||
| Cash and cash equivalents at beginning of period |
22,363 | 17,827 | 20,201 | 31,185 | ||||||||||||
| Cash and cash equivalents at end of period |
$ | 26,197 | $ | 15,540 | $ | 26,197 | $ | 15,540 | ||||||||