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EX-99.2 - TRANSCRIPT OF CONFERENCE CALL HELD ON SEPTEMBER 1, 2011. - CASCADE CORP | dex992.htm |
8-K - FORM 8-K - CASCADE CORP | d8k.htm |
Exhibit 99.1
Portland, Oregon
September 1, 2011
FOR IMMEDIATE RELEASE
CASCADE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED JULY 31, 2011
Cascade Corporation (NYSE: CASC) today reported its financial results for the second quarter ended July 31, 2011.
Second Quarter Overview
| Net sales of $135.6 million for the second quarter of fiscal 2012 were 31% higher than net sales of $97.7 million for the second quarter of fiscal 2011, excluding the impact of changes in foreign currency exchange rates. |
| Our net income for the second quarter of fiscal 2012 was $13.9 million ($1.23 per diluted share) compared to $3.2 million ($.29 per diluted share) for the second quarter of fiscal 2011. |
| During January 2011, our operations in Australia were significantly damaged due to flooding. During the second quarter of fiscal 2012, we received insurance proceeds and incurred additional flood related costs, which had a net after-tax impact of increasing net income by $0.7 million ($.06 per diluted share). |
Second Quarter Fiscal 2012 Summary
| Summary financial results are outlined below (in thousands, except earnings per share): |
Three Months Ended July 31 |
2011 | 2010 | % Change | |||||||||
Net sales |
$ | 135,642 | $ | 97,741 | 39 | % | ||||||
Gross profit |
43,311 | 29,520 | 47 | % | ||||||||
Gross profit % |
32 | % | 30 | % | ||||||||
SG&A |
22,334 | 19,107 | 17 | % | ||||||||
Operating income |
20,977 | 10,413 | 101 | % | ||||||||
Interest expense, net |
206 | 536 | (62 | %) | ||||||||
Foreign currency loss, net |
463 | 215 | 115 | % | ||||||||
Income before taxes |
20,308 | 9,662 | 110 | % | ||||||||
Provision for income taxes |
6,457 | 6,430 | | |||||||||
Effective tax rate |
32 | % | 67 | % | ||||||||
Net income |
$ | 13,851 | $ | 3,232 | 329 | % | ||||||
Diluted earnings per share |
$ | 1.23 | $ | 0.29 | 324 | % |
Cascade Corporation
September 1, 2011
Page 2
| Consolidated net sales during the second quarter of fiscal 2012 increased 31% over the second quarter of fiscal 2011, excluding the impact of foreign currency changes. The increase in net sales was due to higher sales volumes as a result of improved economic conditions and a strong global lift truck market. Details of the change in net sales compared to the prior year second quarter follow (in thousands): |
Amount | Change % | |||||||
Net sales change |
$ | 30,073 | 31 | % | ||||
Foreign currency change |
7,828 | 8 | % | |||||
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Total |
$ | 37,901 | 39 | % | ||||
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| The consolidated gross profit percentage during the second quarter of fiscal 2012 increased to 32% from 30% in the prior period, primarily as a result of improved cost absorption due to increased sales volumes and net insurance proceeds related to the flood in Australia. Our consolidated gross profit percentage was 33% during the first quarter of fiscal 2012. |
| The effective tax rate for the second quarter of fiscal 2012 was 32% compared to 67% for the second quarter of fiscal 2011. The decrease in the effective tax rate is primarily a result of second quarter 2012 income in Europe, which was offset by historical losses, compared to second quarter 2011 losses in Europe for which a tax benefit could not be recorded. Additionally, the fiscal 2011 income tax rate included a $3.4 million charge as a result of recording valuation allowances against deferred tax assets in Italy and the United Kingdom. |
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, it does not necessarily correlate directly with the demand for our products on a quarterly basis. |
Shipments Q2 Fiscal 2012 vs 2011 |
Orders Q2 Fiscal 2012 vs 2011 | |||
Americas |
53% | 26% | ||
Europe |
35% | 31% | ||
Asia Pacific |
21% | 24% | ||
China |
26% | 27% | ||
Global |
32% | 27% |
| We expect lift truck demand to remain at the existing level through the end of the fiscal year. However, we do expect fourth quarter business levels to be impacted by regular holiday shutdowns. |
Cascade Corporation
September 1, 2011
Page 3
Americas Summary
| Summary financial results are outlined below (in thousands): |
Three Months Ended July 31 |
2011 | 2010 | % Change | |||||||||
Net sales |
$ | 67,025 | $ | 48,177 | 39 | % | ||||||
Transfers between areas |
7,952 | 6,227 | 28 | % | ||||||||
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Net sales and transfers |
74,977 | 54,404 | 38 | % | ||||||||
Gross profit |
21,783 | 16,119 | 35 | % | ||||||||
Gross profit % |
29 | % | 30 | % | ||||||||
SG&A |
12,686 | 11,324 | 12 | % | ||||||||
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Operating income |
$ | 9,097 | $ | 4,795 | 90 | % | ||||||
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| Net sales increased 38%, excluding the impact of currency changes, primarily due to higher sales volumes as a result of a strong lift truck market in the Americas. Details of the change in net sales over the prior year quarter follow (in thousands): |
Amount | Change % | |||||||
Net sales change |
$ | 18,302 | 38 | % | ||||
Foreign currency change |
546 | 1 | % | |||||
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Total |
$ | 18,848 | 39 | % | ||||
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| Transfers to other Cascade locations increased due to higher customer demand in China and fulfillment of orders in Europe. |
| Our gross profit percentage decreased as the benefit of additional fixed costs absorption due to higher sales volumes was offset by increases in material and other costs. We anticipate recovering these costs through increases in selling prices and cost reductions by the end of fiscal 2012. Our gross profit percentage was 31% during the first quarter of fiscal 2012. |
| Selling and administrative costs increased primarily due to marketing and warranty costs. |
Europe Summary
| Summary financial results are outlined below (in thousands): |
Three Months Ended July 31 |
2011 | 2010 | % Change | |||||||||
Net sales |
$ | 29,344 | $ | 21,887 | 34 | % | ||||||
Transfers between areas |
187 | 96 | 95 | % | ||||||||
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Net sales and transfers |
29,531 | 21,983 | 34 | % | ||||||||
Gross profit |
6,671 | 2,953 | 126 | % | ||||||||
Gross profit % |
23 | % | 13 | % | ||||||||
SG&A |
4,864 | 4,267 | 14 | % | ||||||||
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Operating income (loss) |
$ | 1,807 | $ | (1,314 | ) | | ||||||
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Cascade Corporation
September 1, 2011
Page 4
| Net sales increased 18%, excluding the impact of currency changes, due to higher sales volumes as a result of a stronger lift truck market and price increases. Details of the change in net sales over the prior year quarter follow (in thousands): |
Amount | Change % | |||||||
Net sales change |
$ | 3,974 | 18 | % | ||||
Foreign currency change |
3,483 | 16 | % | |||||
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Total |
$ | 7,457 | 34 | % | ||||
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| The improvement in our gross profit percentage is the result of our restructuring efforts in recent years to reduce our overall cost structure, increased cost absorption as a result of higher sales volumes, a shift in sourcing more products from China and sales price increases for certain products. Our gross profit percentage was 21% during the first quarter of fiscal 2012. |
| Selling and administrative costs increased due to changes in foreign currency rates. |
Asia Pacific Summary
| Summary financial results are outlined below (in thousands): |
Three Months Ended July 31 |
2011 | 2010 | % Change | |||||||||
Net sales |
$ | 21,167 | $ | 14,243 | 49 | % | ||||||
Transfers between areas |
8 | 61 | (87 | %) | ||||||||
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Net sales and transfers |
21,175 | 14,304 | 48 | % | ||||||||
Gross profit |
7,272 | 3,746 | 94 | % | ||||||||
Gross profit % |
34 | % | 26 | % | ||||||||
SG&A |
3,293 | 2,337 | 41 | % | ||||||||
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Operating income |
$ | 3,979 | $ | 1,409 | 182 | % | ||||||
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| Net sales increased 28%, excluding the impact of currency changes, due to higher sales volumes as a result of a strong lift truck market throughout the region. Details of the change in net sales over the prior year quarter follow (in thousands): |
Amount | Change % | |||||||
Net sales change |
$ | 4,012 | 28 | % | ||||
Foreign currency change |
2,912 | 21 | % | |||||
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Total |
$ | 6,924 | 49 | % | ||||
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| Our gross profit percentage increased compared to the prior year primarily due to insurance proceeds related to the Australia flood and fluctuations in foreign currency rates. |
| Selling and administrative costs increased primarily due to flood related costs incurred and changes in foreign currency rates. |
Cascade Corporation
September 1, 2011
Page 5
| During the second quarter of fiscal 2012, operating income increased $0.9 million from flood insurance proceeds we received less additional costs we incurred related to the Australia flood. We may receive up to an additional $6 million of flood insurance proceeds, of which $4 million would be used to purchase replacement fixed assets. |
China Summary
| Summary financial results are outlined below (in thousands): |
Three Months Ended July 31 |
2011 | 2010 | % Change | |||||||||
Net sales |
$ | 18,106 | $ | 13,434 | 35 | % | ||||||
Transfers between areas |
8,771 | 6,598 | 33 | % | ||||||||
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Net sales and transfers |
26,877 | 20,032 | 34 | % | ||||||||
Gross profit |
7,585 | 6,702 | 13 | % | ||||||||
Gross profit % |
28 | % | 33 | % | ||||||||
SG&A |
1,491 | 1,179 | 26 | % | ||||||||
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Operating income |
$ | 6,094 | $ | 5,523 | 10 | % | ||||||
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| Net sales increased 28%, excluding currency changes, primarily due to higher sales volumes as a result of the growth 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 |
$ | 3,785 | 28 | % | ||||
Foreign currency change |
887 | 7 | % | |||||
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Total |
$ | 4,672 | 35 | % | ||||
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| Transfers to other Cascade locations increased due to higher customer demand in North America, Europe and Asia Pacific. |
| The gross profit percentage decreased due to changes in product mix and strategic pricing adjustments. Our gross profit percentage was 30% during the first quarter of fiscal 2012. |
| Selling and administrative costs increased 20%, excluding currency changes, primarily due to higher personnel and marketing costs. |
Other Matters:
| On August 29, 2011, our Board of Directors declared a quarterly dividend of $0.25 per share, payable on October 12, 2011 to shareholders of record as of September 27, 2011. |
Cascade Corporation
September 1, 2011
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 September 1 at 2:00 pm PDT. 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 (800) 762-8779, International callers can access the call by dialing (480) 629-9818. 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 4464932, or internationally, by dialing (303) 590-3030 and entering passcode 4464932.
The call will be simultaneously webcast and can be accessed on the Investor Relations page of the companys 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
September 1, 2011
Page 7
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share amounts)
Three Months Ended July 31 |
Six Months Ended July 31 |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 135,642 | $ | 97,741 | $ | 271,819 | $ | 192,133 | ||||||||
Cost of goods sold |
92,331 | 68,221 | 184,135 | 134,899 | ||||||||||||
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Gross profit |
43,311 | 29,520 | 87,684 | 57,234 | ||||||||||||
Selling and administrative expenses |
22,334 | 19,107 | 42,200 | 37,331 | ||||||||||||
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Operating income |
20,977 | 10,413 | 45,484 | 19,903 | ||||||||||||
Interest expense, net |
206 | 536 | 457 | 1,069 | ||||||||||||
Foreign currency loss, net |
463 | 215 | 659 | 520 | ||||||||||||
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Income before provision for income taxes |
20,308 | 9,662 | 44,368 | 18,314 | ||||||||||||
Provision for income taxes |
6,457 | 6,430 | 14,093 | 9,416 | ||||||||||||
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Net income |
$ | 13,851 | $ | 3,232 | $ | 30,275 | $ | 8,898 | ||||||||
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Basic earnings per share |
$ | 1.26 | $ | 0.30 | $ | 2.76 | $ | 0.82 | ||||||||
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Diluted earnings per share |
$ | 1.23 | $ | 0.29 | $ | 2.68 | $ | 0.80 | ||||||||
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Basic weighted average shares outstanding |
10,994 | 10,889 | 10,960 | 10,860 | ||||||||||||
Diluted weighted average shares outstanding |
11,302 | 11,089 | 11,288 | 11,059 | ||||||||||||
Cash dividends per share |
$ | 0.20 | $ | 0.05 | $ | 0.40 | $ | 0.07 | ||||||||
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Cascade Corporation
September 1, 2011
Page 8
CASCADE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except per share amounts)
July 31 2011 |
January 31 2011 |
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ASSETS | ||||||||
Current assets: |
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Cash and cash equivalents |
$ | 32,143 | $ | 25,037 | ||||
Accounts receivable, less allowance for doubtful accounts of $1,486 and $1,196 |
86,482 | 66,497 | ||||||
Inventories |
82,100 | 67,041 | ||||||
Deferred income taxes |
4,185 | 5,001 | ||||||
Assets available for sale |
8,334 | 8,610 | ||||||
Prepaid expenses and other |
18,368 | 11,170 | ||||||
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Total current assets |
231,612 | 183,356 | ||||||
Property, plant and equipment, net |
69,567 | 66,978 | ||||||
Goodwill |
92,778 | 88,708 | ||||||
Deferred income taxes |
17,461 | 16,606 | ||||||
Other assets |
3,655 | 3,531 | ||||||
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Total assets |
$ | 415,073 | $ | 359,179 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
Current liabilities: |
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Current portion of long-term debt |
$ | 586 | $ | 548 | ||||
Accounts payable |
31,855 | 23,905 | ||||||
Accrued payroll and payroll taxes |
9,314 | 9,299 | ||||||
Accrued incentive pay |
1,897 | 2,868 | ||||||
Other accrued expenses |
13,639 | 11,612 | ||||||
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Total current liabilities |
57,291 | 48,232 | ||||||
Long-term debt, net of current portion |
48,224 | 41,789 | ||||||
Accrued environmental expenses |
2,838 | 3,198 | ||||||
Deferred income taxes |
4,665 | 4,452 | ||||||
Employee benefit obligations |
8,101 | 7,864 | ||||||
Other liabilities |
6,971 | 5,088 | ||||||
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Total liabilities |
128,090 | 110,623 | ||||||
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Commitments and contingencies |
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Shareholders equity: |
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Common stock, $.50 par value, 40,000 authorized shares; 11,078 and 10,972 shares issued and outstanding |
5,539 | 5,486 | ||||||
Additional paid-in capital |
12,055 | 9,254 | ||||||
Retained earnings |
224,048 | 198,194 | ||||||
Accumulated other comprehensive income |
45,341 | 35,622 | ||||||
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Total shareholders equity |
286,983 | 248,556 | ||||||
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Total liabilities and shareholders equity |
$ | 415,073 | $ | 359,179 | ||||
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Cascade Corporation
September 1, 2011
Page 9
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Three Months Ended July 31 |
Six Months Ended July 31 |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flows from operating activities: |
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Net income |
$ | 13,851 | $ | 3,232 | $ | 30,275 | $ | 8,898 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
2,493 | 2,476 | 4,886 | 5,057 | ||||||||||||
Share-based compensation |
746 | 945 | 1,345 | 1,639 | ||||||||||||
Deferred income taxes |
349 | 626 | 190 | 918 | ||||||||||||
Loss (gain) on disposition of assets, net |
(119 | ) | 15 | (136 | ) | 6 | ||||||||||
Changes in operating assets and liabilities: |
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Accounts receivable |
2,403 | (4,125 | ) | (17,239 | ) | (13,600 | ) | |||||||||
Inventories |
(8,194 | ) | (2,196 | ) | (12,281 | ) | (277 | ) | ||||||||
Prepaid expenses and other |
(2,872 | ) | (1,663 | ) | (4,571 | ) | (3,731 | ) | ||||||||
Accounts payable and accrued expenses |
5,305 | 2,645 | 7,773 | 2,337 | ||||||||||||
Income taxes payable and receivable |
(3,135 | ) | 1,595 | (2,373 | ) | 2,494 | ||||||||||
Other assets and liabilities |
50 | (411 | ) | 1,368 | (370 | ) | ||||||||||
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Net cash provided by operating activities |
10,877 | 3,139 | 9,237 | 3,371 | ||||||||||||
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Cash flows from investing activities: |
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Capital expenditures |
(3,406 | ) | (1,150 | ) | (5,708 | ) | (1,905 | ) | ||||||||
Proceeds from disposition of assets |
1,001 | 97 | 1,052 | 117 | ||||||||||||
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Net cash used in investing activities |
(2,405 | ) | (1,053 | ) | (4,656 | ) | (1,788 | ) | ||||||||
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Cash flows from financing activities: |
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Cash dividends paid |
(4,421 | ) | (766 | ) | (4,421 | ) | (766 | ) | ||||||||
Tax effect on share-based compensation |
700 | | 700 | | ||||||||||||
Payments on long-term debt |
(27,040 | ) | (22,876 | ) | (40,277 | ) | (32,999 | ) | ||||||||
Proceeds from long-term debt |
28,500 | 21,000 | 46,500 | 31,500 | ||||||||||||
Notes payable to banks, net |
(2,966 | ) | (590 | ) | | (906 | ) | |||||||||
Common stock issued under share-based compensation plans |
210 | | 809 | 14 | ||||||||||||
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Net cash provided by (used in) financing activities |
(5,017 | ) | (3,232 | ) | 3,311 | (3,157 | ) | |||||||||
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Effect of exchange rate changes |
1,827 | 2,188 | (786 | ) | 3,736 | |||||||||||
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Change in cash and cash equivalents |
5,282 | 1,042 | 7,106 | 2,162 | ||||||||||||
Cash and cash equivalents at beginning of period |
26,861 | 21,321 | 25,037 | 20,201 | ||||||||||||
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Cash and cash equivalents at end of period |
$ | 32,143 | $ | 22,363 | $ | 32,143 | $ | 22,363 | ||||||||
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