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CASCADE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED OCTOBER 31, 2009
Cascade Corporation (NYSE: CASC) today reported its financial results for the third quarter ended October 31, 2009.
Overview
·
Net sales of $80.8 million for the third quarter of fiscal 2010 were 5% higher than net sales of $76.6 million for the second quarter of fiscal 2010. Third quarter fiscal 2010 net sales were 42% lower than net sales of $139.1 million for the prior year third quarter.
·
Our net income for the third quarter of fiscal 2010 was $157,000 ($0.01 per diluted share) compared to a net loss of $12.3 million ($1.14 loss per diluted share) for the second quarter of fiscal 2010 and net income of $10.4 million ($0.94 per diluted share) for the third quarter of fiscal 2009.
·
Fiscal 2010 third quarter results included $1.5 million of restructuring costs, primarily as a result of shutting down production activities at our attachment facility in The Netherlands. Second quarter restructuring costs totaled $11.6 million.
·
Using cash flows from operations we were able to pay down outstanding debt by $2.3 million during the quarter ended October 31, 2009 and $40 million during the nine months ended October 31, 2009.
·
The provision for income taxes in the third quarter of fiscal 2010 is primarily a result of taxes due in countries where we are generating income and taxes on foreign dividends related to the repatriation of cash to the U.S. We are currently unable to realize a tax benefit in several European countries where we have incurred losses.
Q3 vs Q2 Comparison (Fiscal 2010)
·
Net sales increased 5% during the third quarter of fiscal 2010 compared to the second quarter of fiscal 2010 due to higher sales volumes in North America, China and Asia Pacific, which offset lower volumes in Europe.
·
The consolidated gross profit percentage remained consistent at 24% during the third quarter of fiscal 2010 compared to the previous quarter. Increased margins in North America, China and Asia Pacific were offset by a decreased margin in Europe.
·
Selling and administrative costs decreased during the third quarter of fiscal 2010 compared to the second quarter of fiscal 2010, primarily due to lower costs in North America.
·
Operating income, excluding the impact of restructuring costs in Europe, was $1.6 million higher during the third quarter of fiscal 2010 compared to the previous quarter.
Third Quarter Fiscal 2010 Summary
·
Summary financial results are outlined below (in thousands, except earnings per share):
·
Consolidated net sales decreased 42% during the third quarter of fiscal 2010, excluding the impact of foreign currency changes, as a result of the decline in global economic conditions and a weak global lift truck market. Global lift truck shipments were down 44% compared to the prior year. Details of the change in net sales compared to the prior year third quarter follow (in thousands):
·
The consolidated gross profit percentage decreased largely as a result of unabsorbed fixed and variable costs due to lower sales volumes primarily in Europe.
·
During the third quarter of fiscal 2010, we incurred restructuring costs of $1.5 million, primarily as a result of shutting down production activities at our facility in The Netherlands.
·
Selling and administrative expenses decreased 20%, excluding foreign currency changes, due to a reduction in personnel, marketing and other general costs.
Market Conditions
·
Percentage changes in lift truck industry shipments, by region, as compared to the prior year and prior quarter are outlined below. Although lift truck unit shipments are an indicator of the general health of the industry, they do not necessarily correlate directly with the demand for our products.
Shipments
Q3 FY10 vs Q3 FY09
Shipments
Q3 FY10 vs Q2 FY10
North America
(50%)
(18%)
Europe
(64%)
(12%)
Asia Pacific
(44%)
21%
China
(10%)
19%
Global
(44%)
4%
·
Percentage changes in third quarter fiscal 2010 lift truck industry orders, by region, as compared to the previous quarter, are outlined below:
Orders
Q3 FY10 vs Q2 FY10
North America
(4%)
Europe
(6%)
Asia Pacific
1%
China
21%
Global
6%
·
Global lift truck shipments are at their lowest levels since the early 1980's. The uncertain depth and duration of this recession makes it very difficult to estimate when the global lift truck market will begin to recover. However we are planning that global demand for lift trucks will continue to be at low levels through the remainder of fiscal 2010 and into fiscal 2011.
North America Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 42%, excluding the impact of currency changes, primarily due to lower sales volumes as a result of the general economic downturn and a weak lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
The gross profit percentage remained consistent at 31% due to a favorable product and customer mix which offset significantly lower sales volumes. Some of our facilities in North America operated at reduced work schedules during the third quarter of fiscal 2010.
·
The decrease in selling and administrative costs was due to a reduction in personnel, advertising and other general costs.
Europe Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 56%, excluding the impact of currency changes, due to lower sales volumes as a result of general economic conditions and a weak lift truck market. Even though sales have significantly decreased, we believe we have maintained market share. Details of the change in net sales over the prior year quarter follow (in thousands):
·
Our gross profit percentage decreased due to significantly lower sales volumes, which resulted in unabsorbed fixed and variable costs, higher product costs from transportation and import duties on goods shipped from North America and inventory write-offs due to restructuring. Most facilities in Europe operated under reduced work schedules during the third quarter of fiscal 2010. In addition, we recorded inventory write-downs of approximately $800,000 to reflect losses we expect to incur on certain customer orders which will be shipped in the future.
·
Excluding the impact of currency changes, selling and administrative expenses decreased 25% in Europe due to lower personnel costs as result of headcount reductions made during our European restructuring activities and lower marketing, selling and travel costs.
·
Restructuring costs incurred during the third quarter of fiscal 2010 were primarily a result of shutting down production activities at our facility in The Netherlands. These costs included severance expense of $531,000, costs for movement of equipment and facility shutdowns of $968,000 and other costs of $15,000. We estimate future restructuring costs for The Netherlands will be minimal.
·
In October 2009 we initiated discussions with the local works council at our facility in Hagen, Germany regarding our intention to cease production operations there. Our current plans are to continue to maintain sales and certain administrative functions in Germany and shift production to other Cascade facilities. Using these facilities, we will be able to continue providing a full-range of products to our European customers. We estimate the costs for the Hagen restructuring to be approximately $10 million and will be incurred in the fourth quarter of fiscal 2010.
Asia Pacific Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 35%, excluding the impact of currency changes, due to lower sales volumes as a result of the general economic downturn and a weak lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
The gross profit percentage in Asia Pacific was higher than the prior year due to changes in product mix and fluctuations in foreign currency rates.
·
Selling and administrative costs decreased 15% in the current year, excluding the impact of currency changes, due to lower personnel, sales and other general costs.
China Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales increased 2%, excluding currency changes, primarily due to a slight increase in sales volumes as a result of the partial recovery of the Chinese economy and lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
Gross margin percentages in China increased due to changes in product mix, price increases implemented in the prior year and lower intercompany transfers, which carry lower gross margins.
·
Selling and administrative costs decreased 8%, excluding currency changes, due to lower personnel and other general costs.
Other Matters:
·
On December 1, 2009, our Board of Directors declared a quarterly dividend of $0.01 per share, payable on January 28, 2010 to shareholders of record as of January 5, 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, 2009 and 2008.
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 Wednesday, December 2, 2009 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 (866) 225-8754, International callers can access the call by dialing (480) 629-9692. 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 4166329, or internationally, by dialing (303) 590-3030 and entering passcode 4166329.
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
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