Cascade Corporation Announces Financial Results for the Third Quarter Ended October 31, 2012

Wed Nov 28, 2012 4:00pm EST

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Cascade Corporation Announces Financial Results for the Third Quarter Ended October 31, 2012

Cascade Corporation (NYSE: CASC) today reported its financial results for the third quarter ended October 31, 2012.

Third Quarter Fiscal 2013 Summary

  • Summary financial results are outlined below (in thousands, except earnings per share):
Three Months Ended October 31     2012       2011     % Change  
Net sales   $ 137,193   $ 138,024   (1 %)
Gross profit 42,088 45,183 (7 %)
Gross profit % 31 % 33 %
SG&A 23,678 21,784 9 %
Operating income 18,410 23,399 (21 %)
Operating income % 13 % 17 %
Interest expense (income), net (56 ) 20 -
Foreign currency loss 22 378 (94 %)
Income before taxes 18,444 23,001 (20 %)
Provision for income taxes 5,153 3,426 50 %
Effective tax rate 28 % 15 %
Net income $ 13,291 $ 19,575 (32 %)
Diluted earnings per share $ 1.16 $ 1.74 (33 %)
  • Consolidated net sales during the third quarter of fiscal 2013 increased slightly over the third quarter of fiscal 2012, excluding the impact of foreign currency changes, due to higher sales of products related to the construction industry in the Americas region. Details of the change in net sales compared to the prior year are as follows (in thousands):
  Amount     Change %
Net sales change $ 1,105 1 %
Foreign currency change   (1,936 ) (2 %)
Total $ (831 ) (1 %)
  • Our consolidated gross profit percentage decreased to 31% during the third quarter of fiscal 2013 primarily due to proportionately higher sales of lower margin products.
  • Selling and administrative expense increased primarily due to $1.9 million of costs related to the pending acquisition by Toyota Industries Corporation.
  • The effective tax rate of 28% in the third quarter of fiscal 2013 was higher than the effective tax rate of 15% in the third quarter of fiscal 2012 primarily due to the release of a $3.6 million tax valuation allowance in The Netherlands in the prior period.

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   Orders
Q3 Fiscal 2013 vs 2012 Q3 Fiscal 2013 vs 2012
Americas (1%) 5%
Europe (4%) 1%
Asia Pacific - (1%)
China (15%) (8%)
Global (5%) (1%)
  • Volatility in the global lift truck market is continuing. The Americas, Europe and Asia Pacific markets experienced flat to lower shipment levels. China’s shipments were well below prior year shipments, which were at record levels.

Americas Summary

  • Summary financial results are outlined below (in thousands):
Three Months Ended October 31     2012         2011     % Change  
Net sales   $ 78,857     $ 73,309   8 %
Transfers between areas   5,299     6,946   (24 %)
Net sales and transfers 84,156 80,255 5 %
Gross profit 24,976 26,500 (6 %)
Gross profit % 30 % 33 %
SG&A   14,837     12,373   20 %
Operating income $ 10,139   $ 14,127   (28 %)
Operating income % 12 % 18 %
  • Net sales increased 8%, excluding the impact of currency changes. Details of the change in net sales over the prior year quarter follow (in thousands):
  Amount     Change %
Net sales change $ 5,499 8 %
Foreign currency change   49 -  
Total $ 5,548 8 %
  • Our gross profit percentage was lower compared to the prior year due to proportionately higher sales of lower margin products, including to the construction industry.
  • Selling and administrative expense increased primarily due to $1.9 million of costs related to the pending acquisition by Toyota Industries Corporation (TICO).

Europe Summary

  • Summary financial results are outlined below (in thousands):
Three Months Ended October 31     2012       2011     % Change  
Net sales   $ 22,495   $ 27,184   (17 %)
Transfers between areas   222     107   107 %
Net sales and transfers 22,717 27,291 (17 %)
Gross profit 4,079 5,767 (29 %)
Gross profit % 18 % 21 %
SG&A   4,014     4,658   (14 %)
Operating income $ 65   $ 1,109   (94 %)
Operating income % - 4 %
  • Net sales decreased 10%, excluding the impact of currency changes, primarily as a result of a weakening lift truck market reflective of economic conditions in Europe. Details of the change in net sales over the prior year quarter follow (in thousands):
  Amount   Change %
Net sales change $ (2,813 ) (10 %)
Foreign currency change   (1,876 ) (7 %)
Total $ (4,689 ) (17 %)
  • The decrease in our gross profit percentage is a result of lower cost absorption due to decreased sales volumes and higher product costs.

Asia Pacific Summary

  • Summary financial results are outlined below (in thousands):
Three Months Ended October 31     2012       2011     % Change  
Net sales   $ 19,741   $ 20,158   (2 %)
Transfers between areas   15     15   -
Net sales and transfers 19,756 20,173 (2 %)
Gross profit 5,752 5,912 (3 %)
Gross profit % 29 % 29 %
SG&A   3,111     3,007   3 %
Operating income $ 2,641   $ 2,905   (9 %)
Operating income % 13 % 14 %
  • Net sales in the region remained flat, excluding the impact of foreign currencies, as an increase in sales in Australia was offset by sales decreases in Japan and Korea. Details of the change in net sales over the prior year quarter follow (in thousands):
  Amount   Change %
Net sales change $ (104 ) -
Foreign currency change   (313 ) (2 %)
Total $ (417 ) (2 %)
  • In general, operating results during the third quarter of fiscal 2012 were relatively consistent with the prior year as economic conditions in this region remained stable.

China Summary

  • Summary financial results are outlined below (in thousands):
Three Months Ended October 31     2012       2011     % Change  
Net sales   $ 16,100   $ 17,373   (7 %)
Transfers between areas   7,590     9,016   (16 %)
Net sales and transfers 23,690 26,389 (10 %)
Gross profit 7,281 7,004 4 %
Gross profit % 31 % 27 %
SG&A   1,716     1,746   (2 %)
Operating income $ 5,565   $ 5,258   6 %
Operating income % 23 % 20 %
  • Net sales decreased 8%, excluding currency changes, primarily due to a slowdown in the Chinese economy and lift truck industry. Details of the change in net sales over the prior year quarter follow (in thousands):
  Amount   Change %
Net sales change $ (1,477 ) (8 %)
Foreign currency change   204   1 %
Total $ (1,273 ) (7 %)
  • Our gross profit percentage increased due to an increased percentage of higher margin product sales and to a lesser extent a reduction in the cost of steel.

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 which include, among others, statements relating to our expectations with respect to global lift truck demand, future levels of business activity, and the proposed acquisition by TICO. Readers are cautioned that a number of factors could cause our actual results to differ materially from any results indicated in this release or suggested by any other forward-looking statements made by us. These include among others, factors related to our pending acquisition by TICO (including the potential for diversion of management attention and disruption of our operations and customer relationships, as well as the possibility that conditions to completion of the acquisition may not be satisfied or waived, which could delay or prevent the acquisition), general economic conditions, interest rates, the impact of the European debt crisis on our European market and the global economy, 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.

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.

 
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited -- in thousands, except per share amounts)
       
 
Three Months Ended Nine Months Ended
October 31 October 31
  2012     2011   2012   2011
Net sales $ 137,193 $ 138,024 $ 414,838 $ 409,843
Cost of goods sold   95,105     92,841   287,396   276,976
Gross profit 42,088 45,183 127,442 132,867
 
Selling and administrative expenses   23,678     21,784   68,282   63,984
 
Operating income 18,410 23,399 59,160 68,883
Interest expense (income), net (56 ) 20 155 477
Foreign currency loss   22     378   257   1,037
 
Income before provision for income taxes 18,444 23,001 58,748 67,369
Provision for income taxes   5,153     3,426   17,610   17,519
 
Net income $ 13,291   $ 19,575 $ 41,138 $ 49,850
 
Basic earnings per share $ 1.19   $ 1.78 $ 3.71 $ 4.54
Diluted earnings per share $ 1.16   $ 1.74 $ 3.61 $ 4.42
 
Basic weighted average shares outstanding 11,124 11,016 11,090 10,979
Diluted weighted average shares outstanding 11,423 11,256 11,392 11,280
Cash dividends per share $ 0.35   $ 0.25 $ 1.05 $ 0.65
 
 
CASCADE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except per share amounts)
   
 
October 31 January 31
  2012   2012
 
ASSETS
Current assets:
Cash and cash equivalents $ 35,248 $ 24,928
Accounts receivable, less allowance for doubtful accounts of $1,149 and $1,211 84,048 77,752
Inventories 89,461 86,660
Deferred income taxes 4,470 3,822
Assets available for sale - 7,572
Prepaid expenses and other   13,635   11,353
Total current assets 226,862 212,087
Property, plant and equipment, net 80,510 71,439
Goodwill 88,324 88,174
Deferred income taxes 22,231 18,964
Other assets   5,601   3,895
Total assets $ 423,528 $ 394,559
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ - $ 99
Current portion of long-term debt - 590
Accounts payable 27,174 28,280
Accrued payroll and payroll taxes 10,042 9,473
Accrued incentive pay 2,119 2,496
Other accrued expenses   12,821   15,580
Total current liabilities 52,156 56,518
Long-term debt, net of current portion 3,200 4,950
Accrued environmental expenses 1,275 2,279
Deferred income taxes and other tax liabilities 11,608 8,626
Employee benefit obligations 8,384 8,228
Other liabilities   2,831   3,231
Total liabilities   79,454   83,832
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, $.50 par value, 40,000 authorized shares;
11,199 and 11,088 shares issued and outstanding 5,600 5,544
Additional paid-in capital 17,753 13,252
Retained earnings 280,700 251,280
Accumulated other comprehensive income 40,021 40,651
   
Total shareholders' equity   344,074   310,727
Total liabilities and shareholders' equity $ 423,528 $ 394,559
 
 
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
       
Three Months Ended Nine Months Ended
October 31 October 31
  2012     2011     2012     2011  
Cash flows from operating activities:
Net income $ 13,291 $ 19,575 $ 41,138 $ 49,850

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 2,673 2,622 7,879 7,508
Share-based compensation 785 571 2,141 1,916
Deferred income taxes (693 ) (1,635 ) (3,983 ) (1,445 )
Tax effect on share-based compensation - 439 (1,574 ) (261 )
Gain on disposition of assets, net (6 ) (10 ) (36 ) (146 )

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable (884 ) (555 ) (8,396 ) (17,794 )
Inventories 845 (4,622 ) (2,174 ) (16,903 )
Prepaid expenses and other (692 ) (2,148 ) (1,780 ) (6,719 )
Accounts payable and accrued expenses 1,929 906 (934 ) 8,679
Income taxes payable and receivable (1,200 ) 3,761 (1,299 ) 2,088
Other assets and liabilities   (366 )   804     1,854     2,172  
Net cash provided by operating activities   15,682     19,708     32,836     28,945  
 
Cash flows from investing activities:
Capital expenditures (3,604 ) (3,482 ) (9,361 ) (9,190 )
Proceeds from disposition of assets 45 122 156 1,174
Business acquisition   (68 )   -     (1,266 )   -  
Net cash used in investing activities   (3,627 )   (3,360 )   (10,471 )   (8,016 )
 
Cash flows from financing activities:
Cash dividends paid (3,919 ) (2,769 ) (11,718 ) (7,190 )
Payments on long-term debt (20,821 ) (37,146 ) (116,894 ) (77,423 )
Proceeds from long-term debt 9,000 10,500 114,700 57,000
Notes payable to banks, net - 635 (98 ) 635
Common stock issued under share-based compensation plans 34 - 842 809
Tax effect on share-based compensation   -     (439 )   1,574     261  

Net cash used in financing activities

  (15,706 )   (29,219 )   (11,594 )   (25,908 )
 
Effect of exchange rate changes   (450 )   523     (451 )   (263 )
 
Change in cash and cash equivalents (4,101 ) (12,348 ) 10,320 (5,242 )
Cash and cash equivalents at beginning of period   39,349     32,143     24,928     25,037  
Cash and cash equivalents at end of period $ 35,248   $ 19,795   $ 35,248   $ 19,795  
 

Cascade Corporation
Joseph G. Pointer
Chief Financial Officer
Phone: 503-669-6300
Email: investorrelations@cascorp.com

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