The Manitowoc Company, Inc. (NYSE: MTW) (the “Company” or “Manitowoc”) today reported second-quarter net income of $1.6 million, or $0.04 per diluted share. Second-quarter adjusted net income(1) was $8.8 million, or $0.25 per diluted share.
Net sales in the second quarter decreased 6.8% year-over-year to $562.1million and were unfavorably impacted by $2.7 million from changes in foreign currency exchange rates. Second quarter adjusted EBITDA(1) was $36.0 million, a decrease of $24.4 million or 40.4% from the prior year.
Orders in the second quarter were $428.4 million, a 22.2% decrease from the prior year, resulting in backlog at the end of the second quarter of $836.3 million. Orders were unfavorably impacted by $2.0 million from changes in foreign currency exchange rates.
“During the second quarter, we faced a variety of operational issues which led to lower-than-anticipated results. In addition, the Tower Crane business in Europe remained a headwind to our results. Order intake was sluggish for mobile cranes in Europe and North America. Mobile customers have been slow to commit to new cranes in the face of the uncertainties associated with the upcoming U.S. election and the continued higher interest rate environment. Looking at the balance of the year, we expect weaker demand to continue. As a result, and with a focus on inventory reductions to generate free cash flow, we took actions to adjust our build schedules in the second half. We have updated our full year guidance accordingly,” commented Aaron H. Ravenscroft, President and Chief Executive Officer of The Manitowoc Company, Inc.
“CRANES+50 is the driving force in our transformation as a stand-alone crane company. Since its launch, our non-new machine sales have grown 34%, expanding our higher margin, recurring revenue streams. We remain focused on continuous improvement through The Manitowoc Way and growing our aftermarket through CRANES+50 to drive long-term shareholder value,” added Ravenscroft.
Updated Full-Year 2024 Guidance
Manitowoc is updating its full-year 2024 guidance as follows:
Net sales – $2.175 billion to $2.225 billion (previously $2.275 billion to $2.375 billion)
Adjusted EBITDA – $125 million to $140 million (previously $150 million to $180 million)
Depreciation and amortization - $60 million to $63 million (previously $63 million to $67 million)
Interest expense - $36 million to $38 million (previously $32 million to $34 million)
Provision for income taxes - $9 million to $13 million (previously $18 million to $22 million)
Adjusted diluted earnings per share - $0.45 to $0.90 (previously $0.95 to $1.55)
Capital expenditures - $60 million of which approximately $25 million is for the rental fleet
Free cash flows - $30 million to $50 million (previously $30 million to $60 million)
Investor Conference Call
The Manitowoc Company will host a conference call for security analysts and institutional investors to discuss its second-quarter 2024 earnings results on Thursday, August 8, 2024, at 10:00 a.m. ET (9:00 a.m. CT). A live audio webcast of the call, along with the related presentation, will be available via webcast on the Manitowoc website at http://ir.manitowoc.com in the "Events & Presentations" section. A replay of the conference call will also be available at the same location on the website.
About The Manitowoc Company, Inc.
The Manitowoc Company was founded in 1902 and has over a 120-year tradition of providing high-quality, customer-focused products and support services to its markets. Headquartered in Milwaukee, Wisconsin, United States, Manitowoc is one of the world's leading providers of engineered lifting solutions. Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, distributes, and supports comprehensive product lines of mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes under the Aspen Equipment, Grove, Manitowoc, MGX Equipment Services, National Crane, Potain, and Shuttlelift brand names.
Footnote
(1)Adjusted net income, adjusted diluted net income per share (“Adjusted DEPS”), EBITDA, adjusted EBITDA, adjusted operating income, adjusted return on invested capital ("Adjusted ROIC"), and free cash flows are financial measures that are not in accordance with U.S. GAAP. For definitions and a reconciliation to the most comparable U.S. GAAP numbers, please see the schedule of “Non-GAAP Financial Measures” at the end of this press release.
Forward-looking Statements
This press release includes “forward-looking statements” intended to qualify for the safe harbor from liability under the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations of the management of the Company and are subject to uncertainty and changes in circumstances. Forward-looking statements include, without limitation, statements typically containing words such as “intends,” “expects,” “anticipates,” “targets,” “estimates,” and words of similar import. By their nature, forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results and developments to differ materially include, among others:
- Macroeconomic conditions, including inflation, high interest rates and recessionary concerns, as well as continuing global supply chain constraints, labor constraints, logistics constraints and cost pressures such as changes in raw material and commodity costs, have had, and may continue to have, a negative impact on Manitowoc’s ability to convert backlog into revenue which could, and has, impacted its financial condition, cash flows, and results of operations (including future uncertain impacts);
- actions of competitors;
- changes in economic or industry conditions generally or in the markets served by Manitowoc;
- geopolitical events, including the ongoing conflicts in Ukraine and in the Middle East, other political and economic conditions and risks and other geographic factors, has had and may continue to lead to market disruptions, including volatility in commodity prices (including oil and gas), raw material and component costs, energy prices, inflation, consumer behavior, supply chain, and credit and capital markets, and could result in the impairment of assets;
- changes in customer demand, including changes in global demand for high-capacity lifting equipment, changes in demand for lifting equipment in emerging economies and changes in demand for used lifting equipment including changes in government approval and funding of projects;
- the ability to convert backlog, orders and order activity into sales and the timing of those sales;
- failure to comply with regulatory requirements related to the products and aftermarket services the Company sells;
- the ability to capitalize on key strategic opportunities and the ability to implement Manitowoc’s long-term initiatives;
- impairment of goodwill and/or intangible assets;
- changes in revenues, margins and costs;
- the ability to increase operational efficiencies across Manitowoc and to capitalize on those efficiencies;
- the ability to generate cash and manage working capital consistent with Manitowoc’s stated goals;
- work stoppages, labor negotiations, labor rates and labor costs;
- the Company’s ability to attract and retain qualified personnel;
- changes in the capital and financial markets;
- the ability to complete and appropriately integrate acquisitions, strategic alliances, joint ventures or other significant transactions;
- issues associated with the availability and viability of suppliers;
- the ability to significantly improve profitability;
- realization of anticipated earnings enhancements, cost savings, strategic options and other synergies, and the anticipated timing to realize those savings, synergies and options;
- the ability to focus on customers, new technologies and innovation;
- uncertainties associated with new product introductions, the successful development and market acceptance of new and innovative products that drive growth;
- the replacement cycle of technologically obsolete products;
- risks associated with high debt leverage;
- foreign currency fluctuation and its impact on reported results;
- the ability of Manitowoc's customers to receive financing;
- risks associated with data security and technological systems and protections;
- the ability to direct resources to those areas that will deliver the highest returns;
- risks associated with manufacturing or design defects;
- natural disasters, other weather events, pandemics and other public health crises disrupting commerce in one or more regions of the world;
- issues relating to the ability to timely and effectively execute on manufacturing strategies, general efficiencies and capacity utilization of the Company’s facilities;
- the ability to focus and capitalize on product and service quality and reliability;
- issues associated with the quality of materials, components and products sourced from third parties and the ability to successfully resolve those issues;
- issues related to workforce reductions and potential subsequent rehiring;
- changes in laws throughout the world, including governmental regulations on climate change;
- the inability to defend against potential infringement claims on intellectual property rights;
- the ability to sell products and services through distributors and other third parties;
- issues affecting the effective tax rate for the year;
- acts of terrorism; and
- other risks and factors detailed in Manitowoc's 2023 Annual Report on Form 10-K and its other filings with the United States Securities and Exchange Commission.
Manitowoc undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements only speak as of the date on which they are made. 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, 2023.
THE MANITOWOC COMPANY, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In millions, except per share and share amounts) | ||||||||||||||||
Three Months Ended
| Six Months Ended
| |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net sales | $ | 562.1 | $ | 602.8 | $ | 1,057.2 | $ | 1,111.1 | ||||||||
Cost of sales | 462.4 | 479.8 | 865.0 | 881.8 | ||||||||||||
Gross profit | 99.7 | 123.0 | 192.2 | 229.3 | ||||||||||||
Operating costs and expenses: | ||||||||||||||||
Engineering, selling and administrative expenses | 83.7 | 87.6 | 159.7 | 162.7 | ||||||||||||
Amortization of intangible assets | 0.8 | 0.7 | 1.5 | 1.7 | ||||||||||||
Restructuring expense | 2.3 | 0.3 | 2.9 | 0.3 | ||||||||||||
Total operating costs and expenses | 86.8 | 88.6 | 164.1 | 164.7 | ||||||||||||
Operating income | 12.9 | 34.4 | 28.1 | 64.6 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (9.6 | ) | (9.0 | ) | (18.8 | ) | (17.1 | ) | ||||||||
Amortization of deferred financing fees | (0.4 | ) | (0.4 | ) | (0.7 | ) | (0.7 | ) | ||||||||
Other income (expense) - net | 0.3 | (10.0 | ) | 1.0 | (11.1 | ) | ||||||||||
Total other expense | (9.7 | ) | (19.4 | ) | (18.5 | ) | (28.9 | ) | ||||||||
Income before income taxes | 3.2 | 15.0 | 9.6 | 35.7 | ||||||||||||
Provision (benefit) for income taxes | 1.6 | (5.2 | ) | 3.5 | (1.0 | ) | ||||||||||
Net income | $ | 1.6 | $ | 20.2 | $ | 6.1 | $ | 36.7 | ||||||||
Per Share Data and Share Amounts: | ||||||||||||||||
Basic net income per common share | $ | 0.05 | $ | 0.58 | $ | 0.17 | $ | 1.05 | ||||||||
Diluted net income per common share | $ | 0.04 | $ | 0.57 | $ | 0.17 | $ | 1.03 | ||||||||
Weighted average shares outstanding - basic | 35,368,492 | 35,084,580 | 35,316,971 | 35,102,924 | ||||||||||||
Weighted average shares outstanding - diluted | 35,738,322 | 35,650,143 | 35,899,481 | 35,766,952 | ||||||||||||
THE MANITOWOC COMPANY, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In millions, except par value and share amounts) | ||||||||
June 30, 2024 | December 31, 2023 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 38.1 | $ | 34.4 | ||||
Accounts receivable, less allowances of $5.6 and $6.1, respectively | 257.3 | 278.8 | ||||||
Inventories — net | 759.4 | 666.5 | ||||||
Notes receivable — net | 4.7 | 6.7 | ||||||
Other current assets | 33.0 | 46.6 | ||||||
Total current assets | 1,092.5 | 1,033.0 | ||||||
Property, plant and equipment — net | 355.5 | 366.1 | ||||||
Operating lease right-of-use assets | 56.1 | 59.7 | ||||||
Goodwill | 78.9 | 79.6 | ||||||
Other intangible assets — net | 122.1 | 125.6 | ||||||
Other non-current assets | 42.8 | 42.7 | ||||||
Total assets | $ | 1,747.9 | $ | 1,706.7 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 481.8 | $ | 457.4 | ||||
Customer advances | 17.8 | 19.2 | ||||||
Short-term borrowings and current portion of long-term debt | 21.4 | 13.4 | ||||||
Product warranties | 38.5 | 47.1 | ||||||
Other liabilities | 19.1 | 26.2 | ||||||
Total current liabilities | 578.6 | 563.3 | ||||||
Non-Current Liabilities: | ||||||||
Long-term debt | 406.3 | 358.7 | ||||||
Operating lease liabilities | 44.0 | 47.2 | ||||||
Deferred income taxes | 7.4 | 7.5 | ||||||
Pension obligations | 51.2 | 55.8 | ||||||
Postretirement health and other benefit obligations | 5.3 | 5.6 | ||||||
Long-term deferred revenue | 19.6 | 24.1 | ||||||
Other non-current liabilities | 43.2 | 41.2 | ||||||
Total non-current liabilities | 577.0 | 540.1 | ||||||
Stockholders' Equity: | ||||||||
Preferred stock (authorized 3,500,000 shares of $.01 par value; none outstanding) | — | — | ||||||
Common stock (75,000,000 shares authorized, 40,793,983 shares issued, 35,116,857
| 0.4 | 0.4 | ||||||
Additional paid-in capital | 610.1 | 613.1 | ||||||
Accumulated other comprehensive loss | (100.5 | ) | (86.4 | ) | ||||
Retained earnings | 149.6 | 143.5 | ||||||
Treasury stock, at cost (5,677,126 and 5,698,990 shares, respectively) | (67.3 | ) | (67.3 | ) | ||||
Total stockholders' equity | 592.3 | 603.3 | ||||||
Total liabilities and stockholders' equity | $ | 1,747.9 | $ | 1,706.7 | ||||
THE MANITOWOC COMPANY, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(In millions) | ||||||||||||||||
Three Months Ended
| Six Months Ended
| |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income | $ | 1.6 | $ | 20.2 | $ | 6.1 | $ | 36.7 | ||||||||
Adjustments to reconcile net income to cash provided by (used for) operating activities: | ||||||||||||||||
Depreciation expense | 14.6 | 14.2 | 29.3 | 28.1 | ||||||||||||
Amortization of intangible assets | 0.8 | 0.7 | 1.5 | 1.7 | ||||||||||||
Stock-based compensation expense | 1.9 | 2.3 | 5.6 | 5.4 | ||||||||||||
Amortization of deferred financing fees | 0.4 | 0.4 | 0.7 | 0.7 | ||||||||||||
Loss (gain) on sale of property, plant and equipment | 0.1 | (0.2 | ) | 0.3 | (0.2 | ) | ||||||||||
Deferred income tax benefit | — | (14.0 | ) | — | (14.0 | ) | ||||||||||
Loss on foreign currency translation adjustments | — | 9.3 | — | 9.3 | ||||||||||||
Changes in operating assets and liabilities | ||||||||||||||||
Accounts receivable | 32.2 | (24.2 | ) | 16.9 | (7.1 | ) | ||||||||||
Inventories | (15.1 | ) | (5.5 | ) | (104.2 | ) | (107.4 | ) | ||||||||
Notes receivable | 0.6 | 2.2 | 2.1 | 3.9 | ||||||||||||
Other assets | 8.9 | 6.3 | 10.0 | 7.9 | ||||||||||||
Accounts payable | (24.3 | ) | (36.7 | ) | 32.3 | 19.5 | ||||||||||
Accrued expenses and other liabilities | (10.7 | ) | 7.8 | (20.2 | ) | 12.4 | ||||||||||
Net cash provided by (used for) operating activities | 11.0 | (17.2 | ) | (19.6 | ) | (3.1 | ) | |||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Capital expenditures | (12.9 | ) | (27.0 | ) | (25.1 | ) | (36.3 | ) | ||||||||
Proceeds from sale of fixed assets | 3.3 | 3.1 | 3.5 | 5.1 | ||||||||||||
Net cash used for investing activities | (9.6 | ) | (23.9 | ) | (21.6 | ) | (31.2 | ) | ||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Proceeds from revolving credit facility - net | 23.5 | 12.0 | 37.5 | 12.0 | ||||||||||||
Payments on revolving credit facility | — | — | — | (10.0 | ) | |||||||||||
Proceeds from revolving credit facility | 10.0 | — | 10.0 | — | ||||||||||||
Proceeds from (payments on) other debt - net | (19.0 | ) | 0.7 | 10.1 | (1.2 | ) | ||||||||||
Exercise of stock options | — | — | — | 0.3 | ||||||||||||
Common stock repurchases | (5.7 | ) | (2.0 | ) | (5.7 | ) | (5.5 | ) | ||||||||
Other financing activities | (3.3 | ) | — | (6.2 | ) | — | ||||||||||
Net cash provided by (used for) financing activities | 5.5 | 10.7 | 45.7 | (4.4 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (0.3 | ) | (0.2 | ) | (0.8 | ) | 0.2 | |||||||||
Net increase (decrease) in cash and cash equivalents | 6.6 | (30.6 | ) | 3.7 | (38.5 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 31.5 | 56.5 | 34.4 | 64.4 | ||||||||||||
Cash and cash equivalents at end of period | $ | 38.1 | $ | 25.9 | $ | 38.1 | $ | 25.9 | ||||||||
Non-GAAP Financial Measures
Adjusted net income, Adjusted DEPS, EBITDA, adjusted EBITDA, adjusted operating income, Adjusted ROIC, and free cash flows are financial measures that are not in accordance with U.S. GAAP. Manitowoc believes these non-GAAP financial measures provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. Manitowoc believes excluding specified items provides a more meaningful comparison to the corresponding reporting periods and internal budgets and forecasts, assists investors in performing analysis that is consistent with financial models developed by investors and research analysts, provides management with a more relevant measure of operating performance, and is more useful in assessing management performance.
Adjusted Net Income and Adjusted DEPS
The Company defines adjusted net income as net income plus the addback or subtraction of restructuring and other non-recurring items. Adjusted DEPS is defined as adjusted net income divided by diluted weighted average shares outstanding. Diluted weighted average common shares outstanding are adjusted for the effect of dilutive stock awards when there is net income on an adjusted basis, as applicable. The reconciliation of net income and diluted net income per share to adjusted net income and Adjusted DEPS for the three and six months ended June 30, 2024 and 2023 are summarized as follows. All dollar amounts are in millions, except per share data and share amounts.
Three Months Ended
| ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
As reported | Adjustments | Adjusted | As reported | Adjustments | Adjusted | |||||||||||||||||||
Gross profit | $ | 99.7 | $ | — | $ | 99.7 | $ | 123.0 | $ | — | $ | 123.0 | ||||||||||||
Engineering, selling and administrative expenses (1) | (83.7 | ) | 5.4 | (78.3 | ) | (87.6 | ) | 10.8 | (76.8 | ) | ||||||||||||||
Amortization of intangible assets | (0.8 | ) | — | (0.8 | ) | (0.7 | ) | — | (0.7 | ) | ||||||||||||||
Restructuring expense (2) | (2.3 | ) | 2.3 | — | (0.3 | ) | 0.3 | — | ||||||||||||||||
Operating income | 12.9 | 7.7 | 20.6 | 34.4 | 11.1 | 45.5 | ||||||||||||||||||
Interest expense | (9.6 | ) | — | (9.6 | ) | (9.0 | ) | — | (9.0 | ) | ||||||||||||||
Amortization of deferred financing fees | (0.4 | ) | — | (0.4 | ) | (0.4 | ) | — | (0.4 | ) | ||||||||||||||
Other income (expense) - net (3) | 0.3 | — | 0.3 | (10.0 | ) | 9.3 | (0.7 | ) | ||||||||||||||||
Income before income taxes | 3.2 | 7.7 | 10.9 | 15.0 | 20.4 | 35.4 | ||||||||||||||||||
(Provision) benefit for income taxes (4) | (1.6 | ) | (0.5 | ) | (2.1 | ) | 5.2 | (14.0 | ) | (8.8 | ) | |||||||||||||
Net income | $ | 1.6 | $ | 7.2 | $ | 8.8 | $ | 20.2 | $ | 6.4 | $ | 26.6 | ||||||||||||
Diluted weighted average common shares outstanding | 35,738,322 | 35,738,322 | 35,650,143 | 35,650,143 | ||||||||||||||||||||
Diluted net income per share | $ | 0.04 | $ | 0.25 | $ | 0.57 | $ | 0.75 | ||||||||||||||||
| (1) | The adjustment in 2024 represents $5.3 million of costs associated with a legal matter with the U.S. EPA and $0.1 million of one-time costs. The adjustment in 2023 represents $10.8 million of costs associated with a legal matter with the U.S. EPA. | |
| (2) | The adjustment in 2024 and 2023 represents the addback of restructuring expense. | |
| (3) | The adjustment in 2023 represents the write-off of $9.3 million of non-cash foreign currency translation adjustments from the curtailment of operations in Russia. | |
| (4) | The adjustment in 2024 represents the net income tax impacts of items (1) and (2). The adjustment in 2023 represents the net income tax impact of items (1), (2), and (3), and the removal of a $13.9 million benefit from the release of a valuation allowance. |
Six Months Ended
| ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
As reported | Adjustments | Adjusted | As reported | Adjustments | Adjusted | |||||||||||||||||||
Gross profit | $ | 192.2 | $ | — | $ | 192.2 | $ | 229.3 | $ | — | $ | 229.3 | ||||||||||||
Engineering, selling and administrative expenses (1) | (159.7 | ) | 5.5 | (154.2 | ) | (162.7 | ) | 10.8 | (151.9 | ) | ||||||||||||||
Amortization of intangible assets | (1.5 | ) | — | (1.5 | ) | (1.7 | ) | — | (1.7 | ) | ||||||||||||||
Restructuring expense (2) | (2.9 | ) | 2.9 | — | (0.3 | ) | 0.3 | — | ||||||||||||||||
Operating income | 28.1 | 8.4 | 36.5 | 64.6 | 11.1 | 75.7 | ||||||||||||||||||
Interest expense | (18.8 | ) | — | (18.8 | ) | (17.1 | ) | — | (17.1 | ) | ||||||||||||||
Amortization of deferred financing fees | (0.7 | ) | — | (0.7 | ) | (0.7 | ) | — | (0.7 | ) | ||||||||||||||
Other income (expense) - net (3) | 1.0 | — | 1.0 | (11.1 | ) | 9.3 | (1.8 | ) | ||||||||||||||||
Income before income taxes | 9.6 | 8.4 | 18.0 | 35.7 | 20.4 | 56.1 | ||||||||||||||||||
(Provision) benefit for income taxes (4) | (3.5 | ) | (0.6 | ) | (4.1 | ) | 1.0 | (14.0 | ) | (13.0 | ) | |||||||||||||
Net income | $ | 6.1 | $ | 7.8 | $ | 13.9 | $ | 36.7 | $ | 6.4 | $ | 43.1 | ||||||||||||
Diluted weighted average common shares outstanding | 35,899,481 | 35,899,481 | 35,766,952 | 35,766,952 | ||||||||||||||||||||
Diluted net income per share | $ | 0.17 | $ | 0.39 | $ | 1.03 | $ | 1.21 | ||||||||||||||||
| (1) | The adjustment in 2024 represents $5.3 million of costs associated with a legal matter with the U.S. EPA and $0.2 million of one-time costs. The adjustment in 2023 represents $10.8 million of costs associated with a legal matter with the U.S. EPA. | |
| (2) | The adjustment in 2024 and 2023 represents the addback of restructuring expense. | |
| (3) | The adjustment in 2023 represents the write-off of $9.3 million of non-cash foreign currency translation adjustments from the curtailment of operations in Russia. | |
| (4) | The adjustment in 2024 represents the net income tax impacts of items (1) and (2). The adjustment in 2023 represents the net income tax impact of items (1), (2), and (3), and the removal of a $13.9 million benefit from the release of a valuation allowance. |
Adjusted ROIC
The Company defines Adjusted ROIC as adjusted net operating profit after tax (“Adjusted NOPAT”) for the trailing twelve-months ended divided by the five-quarter average of invested capital. Adjusted NOPAT is calculated for each quarter by taking operating income plus the addback of amortization of intangible assets and the addback or subtraction of restructuring expenses, other non-recurring items - net, and provision for income taxes, which is determined using a 15% tax rate. Invested capital is defined as net total assets less cash and cash equivalents and income tax assets - net plus short-term and long-term debt. Income taxes are defined as income tax payables/receivables, net deferred tax assets/liabilities, and uncertain tax positions.
The Company’s Adjusted ROIC as of June 30, 2024 was 7.1%. Below is the calculation of Adjusted ROIC as of June 30, 2024.
Three Months Ended | |||||||||||||||||||
June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | Trailing Twelve Months | |||||||||||||||
Operating income | $ | 12.9 | $ | 15.2 | $ | 9.8 | $ | 18.0 | $ | 55.9 | |||||||||
Amortization of intangible assets | 0.8 | 0.7 | 0.8 | 0.7 | 3.0 | ||||||||||||||
Restructuring expense | 2.3 | 0.6 | 0.3 | 0.7 | 3.9 | ||||||||||||||
Other non-recurring items - net1 | 5.4 | 0.1 | 10.8 | 0.2 | 16.5 | ||||||||||||||
Adjusted operating income | 21.4 | 16.6 | 21.7 | 19.6 | 79.3 | ||||||||||||||
Provision for income taxes | (3.2 | ) | (2.5 | ) | (3.3 | ) | (2.9 | ) | (11.9 | ) | |||||||||
Adjusted NOPAT | $ | 18.2 | $ | 14.1 | $ | 18.4 | $ | 16.7 | $ | 67.4 | |||||||||
June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | 5-Quarter Average | ||||||||||||||||||
Total assets | $ | 1,747.9 | $ | 1,780.6 | $ | 1,706.7 | $ | 1,692.2 | $ | 1,701.1 | $ | 1,725.7 | |||||||||||
Total liabilities | (1,155.6 | ) | (1,184.6 | ) | (1,103.4 | ) | (1,119.2 | ) | (1,121.7 | ) | (1,136.9 | ) | |||||||||||
Net total assets | 592.3 | 596.0 | 603.3 | 573.0 | 579.4 | 588.8 | |||||||||||||||||
Cash and cash equivalents | (38.1 | ) | (31.5 | ) | (34.4 | ) | (40.0 | ) | (25.9 | ) | (34.0 | ) | |||||||||||
Short-term borrowings and current portion of long-term debt | 21.4 | 42.5 | 13.4 | 30.3 | 6.7 | 22.9 | |||||||||||||||||
Long-term debt | 406.3 | 372.7 | 358.7 | 368.5 | 380.7 | 377.4 | |||||||||||||||||
Income tax assets - net | (4.4 | ) | (3.4 | ) | (2.6 | ) | (4.3 | ) | (2.1 | ) | (3.3 | ) | |||||||||||
Invested capital | $ | 977.5 | $ | 976.3 | $ | 938.4 | $ | 927.5 | $ | 938.8 | $ | 951.7 | |||||||||||
Adjusted ROIC | 7.1 | % | |||||||||||||||||||||
(1) | Other non-recurring items - net for the three months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S. EPA and $0.1 million of one-time costs. Other non-recurring items – net for the trailing twelve months relate to $15.7 million of costs associated with a legal matter with the U.S. EPA and $0.8 million of one-time costs. Refer to the Company’s previously filed Form 10-K and Form 10-Qs for a description of other non-recurring items - net for the three months ended March 31, 2024, December 31, 2023, and September 30, 2023. |
Free Cash Flows
The Company defines free cash flows as net cash provided by (used for) operating activities less cash outflow from investment in capital expenditures. The reconciliation of net cash provided by (used for) operating activities to free cash flows for the three and six months ended June 30, 2024 and 2023 are summarized as follows. All dollar amounts are in millions.
Three Months Ended
| Six Months Ended
| |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net cash provided by (used for) operating activities | $ | 11.0 | $ | (17.2 | ) | $ | (19.6 | ) | $ | (3.1 | ) | |||||
Capital expenditures | (12.9 | ) | (27.0 | ) | (25.1 | ) | (36.3 | ) | ||||||||
Free cash flows | $ | (1.9 | ) | $ | (44.2 | ) | $ | (44.7 | ) | $ | (39.4 | ) | ||||
EBITDA and Adjusted EBITDA
The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization. The Company defines adjusted EBITDA as EBITDA plus the addback or subtraction of restructuring expense, other (income) expense - net, and other non-recurring items - net. The reconciliation of net income to EBITDA, and further to adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 and trailing twelve months are summarized as follows. All dollar amounts are in millions.
Three Months Ended
| Six Months Ended
| Trailing Twelve | |||||||||||||||||
2024 | 2023 | 2024 | 2023 | Months | |||||||||||||||
Net income | $ | 1.6 | $ | 20.2 | $ | 6.1 | $ | 36.7 | $ | 8.6 | |||||||||
Interest expense and amortization of deferred financing fees | 10.0 | 9.4 | 19.5 | 17.8 | 36.9 | ||||||||||||||
Provision (benefit) for income taxes | 1.6 | (5.2 | ) | 3.5 | (1.0 | ) | 9.5 | ||||||||||||
Depreciation expense | 14.6 | 14.2 | 29.3 | 28.1 | 57.8 | ||||||||||||||
Amortization of intangible assets | 0.8 | 0.7 | 1.5 | 1.7 | 3.0 | ||||||||||||||
EBITDA | 28.6 | 39.3 | 59.9 | 83.3 | 115.8 | ||||||||||||||
Restructuring expense | 2.3 | 0.3 | 2.9 | 0.3 | 3.9 | ||||||||||||||
Other non-recurring items - net (1) | 5.4 | 10.8 | 5.5 | 10.8 | 16.5 | ||||||||||||||
Other (income) expense - net (2) | (0.3 | ) | 10.0 | (1.0 | ) | 11.1 | 0.9 | ||||||||||||
Adjusted EBITDA | $ | 36.0 | $ | 60.4 | $ | 67.3 | $ | 105.5 | $ | 137.1 | |||||||||
Adjusted EBITDA margin percentage | 6.4 | % | 10.0 | % | 6.4 | % | 9.5 | % | 6.3 | % | |||||||||
(1) | Other non-recurring items - net for the three months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S. EPA and $0.1 million of one-time costs. Other non-recurring items - net for the six months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S. EPA and $0.2 million of one-time costs. Other non-recurring items - net for the three and six months ended June 30, 2023 relate to $10.8 million of costs associated with a legal matter with the U.S. EPA. Other non-recurring items – net for the trailing twelve months relate to $15.7 million of costs associated with a legal matter with the U.S. EPA and $0.8 million of one-time costs. | |
(2) | Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three and trailing twelve months ended June 30, 2024 and the three months ended June 30, 2023. Other expense – net for the three and six months ended June 30, 2023 includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia. |
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