News
Cascade Corporation Announces Financial Results for the Second Quarter Ended July 31, 2008
PORTLAND, Ore.-(Business Wire)-September 4, 2008 - Cascade Corporation (NYSE:CAE) today reported its financial results for the second quarter ended July 31, 2008.
Overview
- Net sales of $150.1 million for the second quarter of fiscal 2009 were 5% higher than net sales of $143.2 million for the prior year second quarter.
- Net income of $10.5 million ($0.94 per diluted share) for the second quarter of fiscal 2009 was 31% lower than net income of $15.1 million ($1.21 per diluted share) for the second quarter of fiscal 2008.
Second Quarter Fiscal 2009 Summary
- Summary financial results are outlined below (in thousands, except earnings per share):
| Quarter ended July 31, | Â | Â | 2008 | Â | Â | Â | 2007 | Â | Â | % Change | |
| Net sales | Â | $ | 150,103 | Â | $ | 143,183 | 5 | % | |||
| Gross profit | 42,701 | 45,286 | (6 | %) | |||||||
| Gross profit % | 28 | % | 32 | % | |||||||
| SG&A | 23,490 | 22,054 | 7 | % | |||||||
| Operating income | 18,514 | 23,525 | (21 | %) | |||||||
| Interest expense, net | 950 | 697 | 36 | % | |||||||
| Other expense, net | 506 | 224 | |||||||||
| Income before taxes | 17,058 | 22,604 | (25 | %) | |||||||
| Provision for income taxes | 6,563 | 7,460 | (12 | %) | |||||||
| Effective tax rate | 38 | % | 33 | % | |||||||
| Net income | $ | 10,495 | $ | 15,144 | (31 | %) | |||||
| Diluted earnings per share | $ | 0.94 | $ | 1.21 | (22 | %) | |||||
- Consolidated net sales decreased 1% during the second quarter of fiscal 2009, excluding the impact of foreign currency changes. This decrease was primarily the result of lower sales volumes in North America and Europe. Details of the change in net sales compared to the prior year second quarter follow (in millions):
| Net sales decline | Â | $ | (1.3 | ) | Â | (1 | %) |
| Foreign currency changes | Â | 8.2 | Â | 6 | % | ||
| Total | $ | 6.9 | 5 | % |
- The consolidated gross profit percentage decreased 4% due primarily to material price increases in all geographic segments and lower sales volumes.
- Selling and administrative expenses increased 1%, excluding foreign currency changes, due to costs to support our expanded Chinese operations and higher marketing costs in Europe.
- The effective tax rate increased to 38% for the second quarter of fiscal 2009 from 33% for fiscal 2008. This increase was primarily related to an increase in valuation allowances for losses in Europe.
Market Conditions
- Percentage changes in lift truck industry shipments, by region, as compared to the prior year 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.
| Â | Second Quarter | |
| North America | (13%) | |
| Europe | 14% | |
| Asia Pacific | 10% | |
| China | 19% |
- The market in North America is expected to be down 10-15% compared to the prior year, which is consistent with the second quarter’s shipments.
- Europe's shipment levels for the remainder of the year are expected to be similar or down slightly in comparison with the second quarter.
- We expect the growth rate in the Asia Pacific market will be consistent with the second quarter.
- The market in China is expected to grow at a rate similar to that experienced in the second quarter of fiscal 2009.
North America Summary
- Summary financial results are outlined below (in thousands):
| Quarter ended July 31, | Â | Â | 2008 | Â | Â | Â | 2007 | Â | Â | % Change | |
| Net sales | Â | $ | 69,841 | Â | $ | 74,569 | Â | (6 | %) | ||
| Transfers between areas | Â | 9,467 | Â | Â | 8,594 | Â | 10 | % | |||
| Net sales and transfers | 79,308 | 83,163 | (5 | %) | |||||||
| Gross profit | 24,542 | 29,041 | (15 | %) | |||||||
| Gross profit % | 31 | % | 35 | % | |||||||
| SG&A | 11,646 | 12,556 | (7 | %) | |||||||
| Loss (gain) on disposition of assets, net | 19 | (1,120 | ) | ||||||||
| Amortization | Â | 587 | Â | Â | 639 | Â | (8 | %) | |||
| Operating income | $ | 12,290 | $ | 16,966 | (28 | %) | |||||
- Net sales decreased 7%, excluding the impact of currency changes, primarily due to the downturn in the construction market. Details of the change in net sales over the prior year quarter follow (in millions):
| Net sales decline | Â | $ | (5.2 | ) | Â | (7 | %) |
| Foreign currency changes | Â | 0.5 | Â | 1 | % | ||
| Total | $ | (4.7 | ) | (6 | %) |
- The gross profit percentage was 4% lower than the prior year second quarter due to higher material costs, lower sales volumes and changes in product mix.
- The decrease in selling and administrative costs was due to a reduction in personnel, consulting and other general costs.
- During the second quarter of fiscal 2008, we realized a $1.1 million pre-tax gain on the sale of land in Fairview, Oregon.
Europe Summary
- Summary financial results are outlined below (in thousands):
| Quarter ended July 31, | Â | Â | 2008 | Â | Â | Â | 2007 | Â | Â | % Change | |
| Net sales | Â | $ | 48,424 | Â | $ | 43,418 | Â | 12 | % | ||
| Transfers between areas | Â | 443 | Â | Â | 373 | Â | 19 | % | |||
| Net sales and transfers | 48,867 | 43,791 | 12 | % | |||||||
| Gross profit | 7,614 | 7,924 | (4 | %) | |||||||
| Gross profit % | 16 | % | 18 | % | |||||||
| SG&A | 7,994 | 6,428 | 24 | % | |||||||
| Gain on disposition of assets, net | (14 | ) | - | ||||||||
| Amortization | Â | 80 | Â | Â | 209 | Â | (62 | %) | |||
| Operating income (loss) | $ | (446 | ) | $ | 1,287 | (135 | %) | ||||
- Net sales decreased 1% excluding the impact of currency changes. Given the current industry statistics, we may have lost some market share in Europe. Delivery delays also factored into our lower sales. Details of the change in net sales over the prior year quarter follow (in millions):
| Net sales decline | Â | $ | (0.7 | ) | Â | (1 | %) |
| Foreign currency changes | Â | 5.7 | Â | 13 | % | ||
| Total | $ | 5.0 | 12 | % |
- The gross profit percentage was 2% lower than the prior year second quarter. The decrease is primarily due to material price increases, higher personnel costs and other general costs.
- Excluding the impact of currency changes, selling and administrative expenses increased 10% in Europe due to higher marketing and reorganization costs.
Asia Pacific Summary
- Summary financial results are outlined below (in thousands):
| Quarter ended July 31, | Â | Â | 2008 | Â | Â | Â | 2007 | Â | Â | % Change | |
| Net sales | Â | $ | 18,860 | Â | $ | 15,091 | Â | 25 | % | ||
| Transfers between areas | Â | 63 | Â | Â | 28 | Â | 125 | % | |||
| Net sales and transfers | 18,923 | 15,119 | 25 | % | |||||||
| Gross profit | 4,491 | 3,582 | 25 | % | |||||||
| Gross profit % | 24 | % | 24 | % | |||||||
| SG&A | 2,459 | 2,100 | 17 | % | |||||||
| Gain on disposition of assets, net | Â | (11 | ) | Â | (17 | ) | |||||
| Operating income | $ | 2,043 | $ | 1,499 | 36 | % | |||||
