August 26, 2004 - 5:00 PM Eastern
Second Quarter Fiscal 2005 Earnings Conference Call
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Cascade Corporation Announces Earnings of $0.51 Per Share for the Quarter Ended July 31, 2004
Thursday August 26, 4:00 pm ET
PORTLAND, Ore. --Aug. 26, 2004--Cascade
Corporation (NYSE: CAE) today reported its financial results for the
second quarter ended July 31, 2004.
Second Quarter Fiscal 2005 Summary Summary financial results for the second quarter and results
for the comparable quarter of the previous year are outlined
below (in thousands, except earnings per share):
-0-
Quarter ended July 31, 2004 2003 % Change
----------------------------------------------------------------------
Net sales $92,376 $75,633 22.1%
Gross profit 29,351 24,987 17.5%
Gross profit % 31.8% 33.0% -
SG&A 17,726 15,184 16.7%
Amortization 507 132 -
Interest expense, net 802 894 (10.3%)
Other expenses 153 333 (54.1%)
Income before tax 10,163 8,444 20.4%
Provision for income taxes 3,661 2,702 35.5%
Effective tax rate 36% 32% -
Net income $6,502 $5,742 13.2%
Earnings per share $0.51 $0.47 8.5%
Increased business from existing product lines, sales from an
acquired company and strengthening of foreign currencies
against the US dollar, all made significant contributions to
the increase in total revenues. Details of the revenue
increase for the quarter over the prior year quarter follow
(in millions):
-0-
Revenue growth $ 10.7 14.1%
Acquisitions 3.6 4.8%
Foreign currency changes 2.4 3.2%
------ -----
Total $ 16.7 22.1%
Excluding the effect of currency changes, revenue growth in North
America and Asia Pacific was 8% and 16%, respectively, over the prior
year's second quarter. Europe's revenue growth, excluding the effect
of currency changes and acquisitions, was 28%.
- Consolidated gross profit percentage decreased to 32% as
compared to 33% in the comparable quarter of the prior year.
This decrease was due primarily to higher materials costs.
- The majority of the increase in SG&A was attributable to
implementation of Sarbanes-Oxley requirements, increased R&D
expenses and SG&A attributable to Roncari Srl, acquired during
the third quarter of fiscal 2004.
- The increase in amortization expense was primarily due to
compensation expense related to stock appreciation rights.
- The increase in the effective tax rate from 32% to 36% was due
primarily to decreased benefits from international financing
activities and an increase in valuation allowances on deferred
tax assets in Europe.
Market Conditions
- FY05 second quarter shipments in the North American lift truck
market were up 14% over the second quarter of FY04 and up 10%
for the first six months of FY 05 as compared to the same
period in FY04. Shipments and orders are now in approximate
equilibrium. With the current industry backlog, lift truck
shipments should remain strong at least through the next
quarter. Although lift truck shipments are an indicator of the
general health of the industry, they do not necessarily
correlate with the demand for Cascade's products.
- FY05 second quarter shipments in the European lift truck
market were up 22% over the second quarter of FY04 and up 13%
for the first six months of FY05 as compared to the first six
months of FY04. Orders were up 18% year-to-date over the prior
year. We are cautiously optimistic about the European lift
truck market for the balance of the year.
- FY05 second quarter shipments in the Asia-Pacific lift truck
market were up 22% as compared to the second quarter of FY04
and up 23% for the first six months of FY05 as compared to the
same period in FY04. For the first six months of FY05 order
rates were up 26% over the prior year. We continue to see
strength in the Asia-Pacific region as a whole and in the
Chinese market in particular.
- Steel costs have increased more rapidly than expected for many
of the steel grades used in our products. We are aggressively
working to mitigate these increases through a variety of
means. We will continue these efforts in the coming months,
although there is no assurance we will be able to mitigate the
full impact of all steel cost increases.
North America Summary
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Quarter ended July 31, 2004 2003 % Change
----------------------------------------------------------------------
Net sales $49,028 $45,298 8.2%
Gross profit 18,936 17,060 11.0%
Gross profit % 38.6% 37.7% -
SG&A 10,184 9,219 10.5%
Amortization 375 58 -
-------------------------
Operating income $8,377 $7,783 7.6%
Revenue growth reflected the strong North American lift truck
market in the second quarter, which resulted in increased
second quarter shipments. Revenues were also favorably
impacted by the current US$/Euro exchange rate, which has
served to reduce European imports into the North American
market. Details of the revenue increase for the quarter over
the prior year quarter follow (in thousands):
-0-
Revenue growth $ 3,533 7.8%
Foreign currency changes 197 0.4%
------- ----
Total $ 3,730 8.2%
- The increase in gross profit percentage was a result of higher
volumes in all North American factories resulting in better
fixed cost absorption. North America has not yet experienced
steel price increases as dramatic as those in Europe and we
believe early pricing adjustments have largely covered our
materials cost increases to date.
- Increased SG&A expense was primarily attributable to
implementation of Sarbanes-Oxley requirements and increased
R&D expense.
- The increase in amortization expense was primarily due to
compensation expense related to stock appreciation rights.
Europe Summary
-0-
Quarter ended July 31, 2004 2003 % Change
----------------------------------------------------------------------
Net sales $29,485 $18,921 55.8%
Gross profit 5,829 4,164 40.0%
Gross profit % 19.8% 22.0% -
SG&A 5,484 4,252 29.0%
Amortization 126 69 82.6%
-------------------------
Operating income (loss) $219 $(157) -
Details of the revenue increase for the quarter over the prior
year quarter follow (in thousands):
-0-
Revenue growth $ 5,340 28.2%
Acquisitions 3,628 19.2%
Foreign currency changes 1,596 8.4%
-------- -----
Total $ 10,564 55.8%
- Gross margins declined primarily due to higher steel costs and
increased sales of lower margin OEM products.
- The increase in SG&A was due to the effects of both foreign
exchange and additional SG&A attributable to Roncari Srl, an
acquisition made in the third quarter of FY04.
Asia Pacific Summary
-0-
Quarter ended July 31, 2004 2003 % Change
----------------------------------------------------------------------
Net sales $13,863 $11,414 21.5%
Gross profit 4,586 3,763 21.9%
Gross profit % 33.1% 33.0% -
SG&A 2,058 1,713 20.1%
Amortization 6 5 20.0%
-------------------------
Operating income $2,522 $2,045 23.3%
All markets in the Asia-Pacific region made a significant
contribution to the increase in total revenues. Details of the
revenue increase for the quarter over the prior year quarter
follow (in thousands):
-0-
Revenue growth $ 1,792 15.7%
Foreign currency changes 657 5.8%
------- -----
Total $ 2,449 21.5%
The increase in SG&A was due to the effect of strengthening
foreign currencies and continued expansion of our sales and
service support capabilities in the Chinese market.
Dividend On August 24, 2004, the Company's Board of Directors declared
a quarterly dividend of $.11 per share, payable on October 7,
2004 to shareholders of record as of September 22, 2004.
President & CEO Comments
Robert C. Warren, Jr., President and Chief Executive Officer,
remarked "We are pleased with our results in the second quarter,
particularly in light of rapidly increasing steel prices which were
greater than expected, particularly in Europe. Although we believe we
have been able to mitigate these increases in most cases, timing price
increases to coincide with actual cost increases has been, and will
continue to be somewhat difficult."
Mr. Warren further commented that "We remain cautiously optimistic
about the next quarter due to the substantial backlog in the North
American lift truck market and the continuing strength in Asia.
However, our outlook beyond the third quarter is uncertain. A
measurable economic slowdown in any of our major world markets would
undoubtedly have an adverse impact on our business. Our results in
Europe also continue to reflect the highly competitive environment in
our industry and we do not foresee any significant change in this
situation in the near future. I would like to note that we are
continuing to negotiate the purchase of Falkenroth Foerdertechnik, a
significant European competitor currently in receivership."
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, performance of our manufacturing
facilities and the cyclical nature of the materials handling industry.
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,
August 26th at 2:00 pm PST. Robert C. Warren, President and Chief
Executive Officer, and Richard "Andy" Anderson, Senior Vice President
and Chief Financial Officer will host the call. The conference call
can be accessed in the U.S. and Canada by dialing (800) 218-0530,
International callers can access the call by dialing (303) 262-2130.
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) 405-2236 and
entering pass-code 11006412#, or internationally, by dialing (303)
590-3000.
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.
-0-
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited--in thousands, except per share data)
Three Months Six Months
Ended July 31 Ended July 31
----------------- -------------------
2004 2003 2004 2003
-------- -------- --------- ---------
Net sales $92,376 $75,633 $185,905 $144,567
Cost of goods sold 63,025 50,646 125,178 96,870
-------- -------- --------- ---------
Gross profit 29,351 24,987 60,727 47,697
Selling and administrative
expenses 17,726 15,184 35,644 29,768
Amortization expense 507 132 648 196
-------- -------- --------- ---------
Operating income 11,118 9,671 24,435 17,733
Interest expense (925) (1,172) (1,823) (2,332)
Interest income 123 278 220 546
Other income (expense), net (153) (333) (58) 399
-------- -------- --------- ---------
Income before provision for
income taxes 10,163 8,444 22,774 16,346
Provision for income taxes 3,661 2,702 8,062 5,231
-------- -------- --------- ---------
Net income 6,502 5,742 14,712 11,115
Dividends paid on preferred
shares of subsidiary - - - (30)
-------- -------- --------- ---------
Net income applicable to common
shareholders $6,502 $5,742 $14,712 $11,085
======== ======== ========= =========
Basic earnings per share $0.54 $0.48 $1.21 $0.94
Diluted earnings per share $0.51 $0.47 $1.15 $0.91
Basic weighted average shares
outstanding 12,146 11,995 12,125 11,795
Diluted weighted average shares
outstanding 12,741 12,288 12,648 12,225
CASCADE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
July 31, Jan. 31,
2004 2004
----------- ---------
(unaudited)
ASSETS
Current assets:
Cash $25,603 $25,584
Marketable securities 13,962 6,002
Accounts receivable, less allowance for
doubtful accounts of $1,924 and $2,023 64,476 57,871
Inventories 38,835 36,353
Deferred income taxes 2,994 2,542
Income taxes receivable - 142
Prepaid expenses and other 5,778 4,626
----------- ---------
Total current assets 151,648 133,120
Property, plant and equipment, net 73,877 75,244
Goodwill 68,772 68,915
Deferred income taxes 9,540 9,703
Other assets 5,189 5,837
----------- ---------
Total assets $309,026 $292,819
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $1,905 $2,805
Current portion of long-term debt 12,883 13,018
Accounts payable 21,790 17,904
Accrued payroll and payroll taxes 6,071 6,815
Accrued environmental expenses 837 847
Other accrued expenses 13,129 10,011
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Total current liabilities 56,615 51,400
Long-term debt 37,915 38,111
Accrued environmental expenses 8,023 8,551
Deferred income taxes 1,432 1,441
Other liabilities 10,085 9,628
----------- ---------
Total liabilities 114,070 109,131
Shareholders' equity:
Common stock, $.50 par value, 20,000
authorized shares; 12,189 and 12,102
shares issued and outstanding 6,094 6,051
Additional paid-in capital 15,895 11,111
Deferred compensation (3,338) -
Retained earnings 177,537 165,495
Accumulated other comprehensive income (loss) (1,232) 1,031
----------- ---------
Total shareholders' equity 194,956 183,688
----------- ---------
Total liabilities and shareholders' equity $309,026 $292,819
=========== =========
CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Six Months Ended
July 31
-----------------
2004 2003
-------- --------
Cash flows from operating activities:
Net income $14,712 $11,115
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,426 6,212
Deferred income taxes (298) (13)
Gain on disposition of assets (48) 207
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable (6,605) (4,445)
Inventories (2,482) 896
Prepaid expenses and other (1,153) (846)
Accounts payable and accrued expenses 3,142 (1,607)
Current income taxes payable and receivable 2,251 2,561
Other liabilities 926 628
-------- --------
Net cash provided by operating activities 17,871 14,708
-------- --------
Cash flows from investing activities:
Capital expenditures (6,598) (5,180)
Marketable securities, net (7,340) (4,828)
Proceeds from sale of assets 216 406
Business acquisition - (3,585)
Other assets 340 103
Proceeds from notes receivable - 268
-------- --------
Net cash used in investing activities (13,382) (12,816)
-------- --------
Cash flows from financing activities:
Payments on long-term debt and capital leases (331) (128)
Notes payable to banks, net (900) (211)
Cash dividends paid (2,670) (2,399)
Common stock issued 1,149 -
-------- --------
Net cash used in financing activities (2,752) (2,738)
-------- --------
Effect of exchange rate changes (1,718) (667)
-------- --------
Change in cash and cash equivalents 19 (1,513)
Cash and cash equivalents at beginning of year 25,584 29,501
-------- --------
Cash and cash equivalents at end of period $25,603 $27,988
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