Filed by The Manitowoc Company, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-6
Under the Securities Exchange Act of 1934
Subject Company: Grove Worldwide, Inc.
Commission File No.: 333-57609
This filing relates to a planned merger (the "Merger") between
The Manitowoc Company, Inc. ("MTW") and Grove Worldwide, Inc.
("Grove") pursuant to the terms of an Agreement and Plan of
Merger, dated as of March 18, 2002 (the "Merger Agreement"), by
and among MTW, Giraffe Acquisition, Inc. and Grove. The Merger
Agreement is on file with the Securities and Exchange Commission
as an exhibit to the Current Report on Form 8-K, to be filed by
MTW on March 21, 2002, and is incorporated by reference into this
filing.
On March 18, 2002, MTW issued the following press release.
NEWS FOR IMMEDIATE RELEASE
THE MANITOWOC COMPANY TO ACQUIRE GROVE WORLDWIDE,
EXPANDING ITS CRANE INDUSTRY LEADERSHIP
Acquisition valued at approximately $270 million;
Expands Manitowoc leadership position in crane industry
MANITOWOC, WI - March 18, 2002 - The Manitowoc Company, Inc.
(NYSE: MTW), the leading worldwide manufacturer of high-capacity,
lattice-boom crawler cranes and tower cranes, announced today
that it has executed a definitive agreement to acquire Grove
Worldwide, a leading manufacturer of mobile hydraulic cranes and
truck-mounted cranes. The acquisition, valued at approximately
$270 million, will be funded by a combination of cash and
approximately two million shares of Manitowoc common stock based
on current market prices.
"Grove enhances our market-leading positions, represents a strong
growth opportunity for our crane segment, and fills a product
void by adding mobile cranes to our product offering. Equally
important, we now can provide equipment and lifting solutions for
virtually any construction application." said Terry D. Growcock,
Manitowoc's president and chief executive officer. "The addition
of Grove confirms Manitowoc as the leading producer of lifting
equipment world-wide."
Founded in 1947, Grove has an extensive product line including 30
crane models and 8 aerial work platforms, with lifting capacity
from 8 tons to 550 tons. Grove is considered a technology leader
with a long history of product innovations and patents and has
sold more than 55,000 cranes worldwide. The company employs
approximately 2,500 people, operates four manufacturing
facilities in North America and Europe, and sells into more than
50 countries through distribution subsidiaries or agents. In
fiscal 2001, Grove reported revenues of more than $700 million.
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THE MANITOWOC COMPANY TO ACQUIRE GROVE WORLDWIDE / 2
"In addition to its strategic value, this acquisition is well
within our financial requirements in terms of earnings and EVA,"
said Glen E. Tellock, Manitowoc's senior vice president and chief
financial officer. "We expect Grove to be neutral to earnings in
2002. However, based on modest revenue increases, along with the
many synergies we have identified between Manitowoc and Grove, we
expect the acquisition to be accretive to earnings in 2003 of
$0.20 to $0.30 per diluted share. Equally important, we expect
the transaction to be EVA positive within the next 18 to 24
months."
"The Grove acquisition, combined with last year's acquisition of
Potain, the worldwide leader in tower cranes, gives Manitowoc the
broadest product line in the business," said Rob Giebel,
president of Manitowoc's Crane Group. "We now have access to a
mobile telescopic crane market worth an estimated $3 billion
worldwide, and we're pleased to offer our customers a complete
line of crane products from three world-class brands."
In the transaction, Manitowoc will issue shares of common stock
to Grove shareholders and will assume or retire all of Grove's
existing debt. Deutsche Banc Alex. Brown, who advised Manitowoc
in the transaction, has provided a financing commitment to
Manitowoc. The transaction is subject to a number of conditions,
including Grove shareholder approval and regulatory approvals.
Grove emerged from Chapter 11 reorganization in September 2001.
Former creditors of Grove received substantially all of the stock
ownership of the new Grove. Salomon Smith Barney advised Grove
in the negotiations with Manitowoc.
CONFERENCE CALL INFORMATION
The Manitowoc Company will host a conference call today, March
18, at 6:00 p.m., Eastern Time. The call will also be broadcast
live, via the Internet, at Manitowoc's Web site:
http://www.manitowoc.com.
ABOUT GROVE WORLDWIDE
Grove Worldwide is a leading provider of mobile hydraulic cranes,
truck mounted cranes and aerial work platforms for the global
market. The company's products are used in a wide variety of
applications by commercial and residential building contractors
as well as by industrial, municipal, and military end users.
Grove's products are marketed to independent equipment rental
companies and directly to end users under the brand names Grove
Crane, Grove Manlift, and National Crane. Grove products are
sold in more than 50 countries.
ABOUT THE MANITOWOC COMPANY
The Manitowoc Company, Inc. is a leading producer of lattice-boom
cranes, tower cranes, boom trucks, and related products for the
construction industry. It is also a leading manufacturer of ice-
cube machines, ice/beverage dispensers, and commercial
refrigeration equipment for the foodservice industry, and is the
leading provider of ship repair, conversion, and new-construction
services for the Great Lakes maritime industry.
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THE MANITOWOC COMPANY TO ACQUIRE GROVE WORLDWIDE / 3
FORWARD-LOOKING STATEMENTS
Any statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and involve risks and
uncertainties. Potential factors could cause actual results to
differ materially from those expressed or implied by such
statements. These statements and potential factors include, but
are not limited to, those relating to:
* Manitowoc's anticipated revenue gains, margin improvements, and
cost savings,
* new crane product introductions,
* foreign currency fluctuations,
* the risks associated with growth,
* geographic factors and political and economic risks,
* added financial leverage resulting from the Grove acquisition,
* actions of Manitowoc and Grove competitors,
* changes in economic or industry conditions generally or in the
markets served by Manitowoc and Grove companies, and
* the ability to complete and appropriately integrate the Grove
acquisition as well as other acquisitions, strategic alliances,
and joint ventures.
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, 2000.
ADDITIONAL INFORMATION
Shareholders of Grove and other prospective investors are urged
to read the prospectus which will be filed by The Manitowoc
Company, Inc. in the future with the Securities and Exchange
Commission. After the prospectus is filed, interested persons
will be able to obtain it free at the Securities and Exchange
Commission's website, which is located at www.sec.gov. When the
prospectus is finalized, it will be mailed, together with a proxy
statement, to Grove shareholders, and copies will be available
free from The Manitowoc Company.
COMPANY CONTACT:
Glen E. Tellock
Senior Vice President
& Chief Financial Officer
920-683-8122
The following is the text of a message sent by MTW to MTW
shareholders on March 19, 2002.
March 19, 2002
Dear Stakeholder;
Attached is a press release that has some very exciting news for
all of us. The Manitowoc Company has begun discussions regarding
the potential acquisition of Grove Worldwide.
Grove is a US-based company with approximately 2,500 employees
and is headquartered in Shady Grove, Pennsylvania. Grove
operates four manufacturing facilities in North America and
Europe. They are a leading manufacturer of mobile hydraulic
cranes and truck-mounted cranes. Grove's products are marketed
under the brand names Grove Crane, Grove Manlift, and National
Crane; and are sold in more than 50 countries. This acquisition
would combine three of the leading brands (Manitowoc, Potain and
Grove) and give us the broadest product line in the industry.
Over the next few months, we hope to complete the necessary
approval and regulatory reviews that can make this transaction a
reality. I will try to keep you informed of the progress of this
effort.
When great companies come together, great things can happen.
Thanks for your continued support. For the latest information
you can get updates from the Manitowoc Cranes website at
http://manitowoccranes.com.
Sincerely,
THE MANITOWOC CRANE GROUP
Rob Giebel
President
Interested parties are urged to read the prospectus which will be
filed by The Manitowoc Company, Inc. in the future with the
Securities and Exchange Commission. After the prospectus is
filed, interested persons will be able to obtain it free at the
Securities and Exchange Commission's website, which is located at
www.sec.gov. When the prospectus is finalized, it will be
mailed, together with a proxy statement, to Grove shareholders,
and copies will be available free from The Manitowoc Company.
The following is a transcription of an investor telephone
conference held on March 18, 2002 by Terry Growcock, President
and Chief Executive Officer, Glen Tellock, Senior Vice President
and Chief Financial Officer, and Rob Giebel, President of the
Crane Group concerning the Merger:
Interested parties are urged to read the prospectus which will be
filed by The Manitowoc Company, Inc. in the future with the
Securities and Exchange Commission. After the prospectus is
filed, interested persons will be able to obtain it free at the
Securities and Exchange Commission's website, which is located at
www.sec.gov. When the prospectus is finalized, it will be
mailed, together with a proxy statement, to Grove shareholders,
and copies will be available free from The Manitowoc Company.
MANITOWOC COMPANY, INC.
MODERATOR: STEVE KHAIL
MARCH 18, 2002
5:00 PM CT
Operator: Good day everyone and welcome to this Manitowoc
Company Conference Call. Today's call is being recorded.
At this time for opening remarks and introductions I would
like to turn the call over to Mr. Steve Khail. Please go
ahead sir.
Steve Khail: Good afternoon everyone and thank you for joining
us on such short notice. As you read in our press release
Manitowoc has signed a definitive agreement to acquire Grove
Worldwide. This is a very strategic move to round out the
product line in our crane segment. With me today is Terry
Growcock, our President and Chief Executive Officer and Glen
Tellock, Senior Vice President and Chief Financial Officer.
Rob Giebel, President of our Crane Group is also here to
help answer your questions later in the call.
Terry and Glen will give you an overview of this exciting
opportunity and will provide more detail on Grove's products
and operations. Following that we'll open the call to your
questions.
If any of you are not able to stay on the line for the
entire conference call you can access a replay of the call
beginning at 9 pm Eastern time this evening until 1 am
Eastern time March 26. The number to dial for the replay is
area code 719-457-0820. Please use 505702 as your pass
code. You can also hear a replay of the call by visiting
our Web site at www.manitowoc.com.
Before I turn the call over to Terry I would like to review
our Safe Harbor Statement. During the course of today's
call forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995 may be made during
the speakers' remarks and during our question and answer
session.
Such comments are based on the company's assessment of its
market and other factors that affect our business. Actual
results could differ materially from any implied projections
due to one or more of the factors as explained in
Manitowoc's filings with the Securities and Exchange
Commission including but not limited to the company's annual
report in Form 10K for the year ended December 31, 2000.
With that, I'd now like to turn the call over to Terry
Growcock.
Terry Growcock: Thank you, Steve, and good afternoon
everyone. This is an exciting time for the Manitowoc
Company. The opportunity to acquire one of the leading
mobile crane manufacturers is of great strategic importance
to our business.
The combination of Grove Worldwide and the Manitowoc Company
is good for our customers, our shareholders and the industry
as a whole. As you may know, Manitowoc follows a very
specific set of criteria when evaluating acquisitions.
Companies that we acquire must have the following
characteristics:
They must be market leaders or enhance our current market
positions. Their products must bolt on to our current
operations and/or must fill voids in our product lines or
geographic markets. And they must be accretive to earnings
within two years and EBA positive within three years.
Grove meets each of these criteria. First, Grove Worldwide
is the global leader in the hydraulic crane industry,
specifically all terrain and rough terrain mobile cranes.
Manitowoc does not offer these types of cranes so Grove
fills an obvious product void for us.
Importantly, Grove enhances our position as a worldwide
market leader in cranes. We're now number one in the three
major crane categories -- crawler cranes, tower cranes and
now mobile cranes. As a result of this acquisition we can
offer our customers equipment and lifting solutions for
virtually any construction application.
In addition, as we stated in our release, we expect Grove to
be accretive to earnings by 2003 and EBA positive within the
next 18 to 24 months. I'll let Glen give more detail on
that in a moment.
Finally, I'd like to point out that Grove has strong
functional operational and marketing synergies with the
Manitowoc crane segment. Combining the two companies under
the Manitowoc umbrella allows us to capitalize on the
systems, technology and manufacturing expertise of the two
organizations and it creates a natural synergy between each
company's distribution and service network around the world.
You may be wondering how this acquisition will change the
balance of our three businesses. With the acquisition of
Grove a greater majority of our revenues will come from our
crane business followed by food service and marine.
We'd like to emphasize as we've said before that we cannot
time acquisitions or predict when strategic opportunities
will arise. Instead we continually evaluate companies that
fit our discipline criteria and when we find such
opportunities at the right price we act on them.
We are committed to our three businesses and the strength of
our diversified business model.
In summary, we are excited about what Grove will mean for
our company, particularly the crane business and we look
forward to welcoming Grove's employees into the Manitowoc
family in the near future.
Now Glen will give you more details on this acquisition.
Glen.
Glen Tellock: Thank you, Terry. Good afternoon. I'd like to
reiterate that this potential acquisition makes strategic
sense for Manitowoc operationally as well as financially.
It strongly positions us within a portion of the crane
market where Manitowoc has not had a presence and it expands
our manufacturing base overseas.
Grove is the leader in the hydraulic mobile crane industry.
The company manufacturers a complete line of mobile
hydraulic cranes and truck mounted cranes under the brand
named Grove Crane, Grove Manlift and National Crane.
For the company's 2001 fiscal year, which ended September
30, 2001, Grove Worldwide generated revenues of more than
$700 million and adjusted EBITDA of $41 million. Grove
Crane represented 78% of total revenue and Grove Manlift and
National Crane each represented approximately 11%.
More than 53% of Grove's fiscal 2001 revenues came from
North America and 40% came from Europe. The company also
has a small presence in Latin America and Asia. Grove's
facilities are located in Shady Grove, Pennsylvania;
Waverly, Nebraska; Tonneins and Cergy, France;
Wilhelmshaven, Germany; and Sunderland, UK.
As you may know, Grove recently emerged from Chapter 11.
The company entered Chapter 11 last year to reduce debt
associated with the leveraged buyout transaction with its
prior owners. Grove emerged from bankruptcy with a capital
structure designed to ensure sufficient cash availability to
fund future operations and new growth initiatives.
Today Grove is a stronger company and is better able to
compete in the worldwide market.
Grove has also streamlined its manufacturing processes,
rationalized its product lines, accelerated new product
introductions, reduced headcount and SG&A expenses and
invested in new enterprise business systems. The result is
a market leader that is efficient, competitive and
profitable.
As mentioned in our press release about synergies, we expect
this proposed acquisition to be neutral to our 2002
earnings. We also expect growth to be EBA positive within
the next 18 to 24 months. Importantly, we have identified
certain synergies between Manitowoc and Grove including
administration, marketing and distribution, product support
and service, manufacturing, engineering development and
purchasing leverage.
In 2003 the value of these synergies along with the normal
earnings contribution should make the transaction accretive
to 2003s earnings per share in a range of 20 to 30 cents.
This transaction is valued at approximately $270 million and
will be funded by a combination of cash and stock. We will
issue Manitowoc stock with a value of approximately $71
million at the close of the transaction with the balance
paid in cash to retire existing Grove debt.
The cash portion of the transaction will be funded by new or
existing bank credit facilities or high yield bonds. Our
pro forma debt to EBITDA ratio will be 3.7 times and our
debt to total capitalization ratio will be 68% comparable to
the Potain transaction.
We expect the transaction to close around June 30 after
receiving regulatory approvals and the required vote of
Grove's shareholders. We expect to commence our integration
planning immediately so the full benefits of the combination
can be achieved without delay.
To conclude, the Grove acquisition would make Manitowoc
among the world-leading producer of lattice boom crawler
cranes, tower cranes, mobile telescopic cranes and boom
trucks. After the transaction has closed we will provide
additional financial guidance.
We would now like to open the call for your questions.
Operator: Thank you. Today's question and answer session will be
conducted electronically. To ask a question, please press
star one at this time. We will take as many questions as
time permits and proceed in the order that you signal us.
Once again, please press star one to ask a question. And
we'll pause a moment to assemble the roster.
And our first question will come from John McGinty of CS
First Boston.
John McGinty: Good after -- good evening, guys. How are you
Man: Great, John.
John McGinty: Good. I wondered if I could just make sure I
understood. You're paying 70 million in cash -- 71 million
in stock and 199 million or call it 200 million to make the
math simple in cash. Are you assuming any debt as well
Glen Tellock: There is a little bit that they have in Europe but
it's a small portion of it. The rest will be retired.
John McGinty: So, I mean, essentially like under five or ten
million, I mean, a peanut or
Glen Tellock: Yeah, it's about 10 to 13 million.
John McGinty: 10 to 13 million, okay. And when you're looking
at 20 to 30 cents in accretion in 03, could you kind of give
us how much of that is synergies versus how much of that is
just, you know, the natural increase in the business
Glen Tellock: The natural increase in the business is probably
anywhere from five to ten cents of that and the rest would
be the synergies.
John McGinty: Okay. And since you're -- these are ongoing, is
there some carry over into 04 In other words, I assume if
you get, you know, what -- 20 to 25 cents in synergies in 03
I assume that's not a full rate. That's probably just what
you would achieve in 03. There's probably some carry over
into 04.
Glen Tellock: Yeah. Certainly John, as you know, we're looking
at anywhere out from 18 to 24 months. And as I said, you
know, the transaction closing into at June 30 is the
expectation, we're certainly going to take a lot of that
into 2003.
John McGinty: Okay. And final question -- I'll get back in
queue -- with regard to the, what I guess their National
Crane and your Boom Truck, is there anything with regard to
the Justice Department that's an issue on that because
that's the only possible carry over if you're looking at it
from a first blush.
Glen Tellock: We don't anticipate any regulatory challenges on
that.
John McGinty: Okay, great. Congratulations.
Glen Tellock: Thanks. I did want to follow up, John, with your
question on the $200 million in debt. That is inclusive of
anything we would assume.
John McGinty: Oh that does include it, okay.
Glen Tellock: Yes.
John McGinty: Okay, great. Thank you.
Operator: And our next question will come from Robert McCarthy of
RW Baird.
Robert McCarthy: Good afternoon, guys.
Man: Hi Rob.
Robert McCarthy: Congratulations, very interesting strategic
deal. Glen, what are you assuming for revenue growth in
this business in 03
Glen Tellock: In 03.
Robert McCarthy: Yeah.
Glen Tellock: We have I think it's like 3 to 5%. It's very
modest.
Robert McCarthy: And the business at around 700 million in the
September 01 year would have been down how much from prior
year
Glen Tellock: It was down about 15% from 2000 but our
projections for 2002 are down about another 13 to 15%.
Robert McCarthy: Okay. That helps put the_
Glen Tellock: And the majority of that, yeah really is coming
from Manlift, which because of that product rationalization,
we have that coming off almost 50%.
Robert McCarthy: Okay.
Glen Tellock: Actually it's about 40%.
Robert McCarthy: All right. And same question basically --
you said that adjusted EBITDA in that year of 41 million,
that would compare to what prior year
Glen Tellock: It was about oh 46, 47 million in 2000.
Robert McCarthy: Okay. And are there still in that 41 run
rate, are there still unrealized benefits from the work that
they've been doing
Glen Tellock: Yeah. We made -- there are. There are certainly
a lot of things that they were doing. The projections that
they have certainly came on the gross margin and operating
margin line offsetting some of the volume decreases. But we
made certain not to, as we looked at the business and looked
at the synergies, we certainly made it a point not to double
count some of the things we could do versus what they were
already doing.
Robert McCarthy: Yeah, okay. In our calculations what should
-- or maybe you should tell us what you're using for an
assumed average cost of debt. I mean, recognizing that
you're not sure yet, you know, what your source will be,
what would you recommend we assume
Glen Tellock: I don't think it's going to be substantially
different than the current blend that we have right now.
Robert McCarthy: Which you would put at
Glen Tellock: Our debt probably is anywhere from 7 -- 6-1/2 to
7%.
Robert McCarthy: Okay. And the 71 million in equity
consideration, is -- how is that structured Is that 71 with
the number of shares floating based on, you know, average
share price in some period before the deal closes or is it a
fixed number of shares or
Glen Tellock: Well it's a fixed share price and then there's a
collar on the share price over trading, I think if I
remember, ten days prior to the transaction.
Robert McCarthy: Okay. And so can you give us any detail on
how you're protected there
Glen Tellock: There's the collar that we have and, which is a
15%.
Robert McCarthy: In either direction
Glen Tellock: In either direction.
Robert McCarthy: Okay. And I can use the 71 million, if I wan
to get to a share count, I could use what
Glen Tellock: I mean, we're looking at anywhere from it could be
1.7 to 2.1.
Robert McCarthy: Okay. That will give me an idea of what
underlying price assumption was in place. Great.
Glen Tellock: The underlying assumption_
Robert McCarthy: Yeah.
Glen Tellock: Was about 36-1/2 to $37.
Robert McCarthy: Yeah, okay. And more, thanks for the
(gribble), the detail. In terms of operating the business,
what are your plans for, I mean, you've got two independent
distribution networks that have, you know, different product
focuses. Would it be your idea to try and combine those in
a fashion or maintain them as independent separate channels
Rob Giebel: Rob, this is Rob Giebel. The answer to that is
yes.
Robert McCarthy: Both.
Rob Giebel: Both. Depending on -- it'll be much like we did
with Potain where we picked the best of the Potain
distributors and the best of the Manitowoc distributors. If
we look at the North American business, which is the
primary, the largest piece of growth_
Robert McCarthy: Yeah.
Rob Giebel: About half of the Grove distributors are currently
already Manitowoc distributors.
Robert McCarthy: Okay.
Rob Giebel: Okay, so there's already a significant combination
there. And if you look outside the US our Manitowoc Potain
company owned distribution in Asia is also the Grove
distributor in Asia. So we already share that outlet as
well.
Robert McCarthy: Okay.
Rob Giebel: So you're going to see that combination throughout
the world. And we'll use the same process, the same
assimilation and valuation process that we did with Potain.
Robert McCarthy: Okay. But for the time being there's no --
you don't have any overlap or cross in the European market
Rob Giebel: There is no -- there are no Manitowoc distributors
in Europe that are also Grove distributors and there are no
Potain distributors that are Grove distributors.
Robert McCarthy: Okay.
Rob Giebel: But I guess I should caution you that the European
market for the most part is company owned distribution.
Robert McCarthy: Sure.
Rob Giebel: So there's where some of the synergy comes from.
Robert McCarthy: Right, right. Yeah. And in terms of
geographic split, I assume that Manlift and National Crane
are predominately North American franchises.
Rob Giebel: Yes, that's correct.
Robert McCarthy: Would it be fair to say 90% or more of their
revenue
Glen Tellock: In North America
Robert McCarthy: Yeah.
Glen Tellock: Well actually, Boom Truck in the National Crane it
would be yes and then on the Manlift they have the Delta
product in France, which is probably maybe -- hang on a
second -- probably 60% in France.
Robert McCarthy: Oh, okay.
Glen Tellock: Yeah, 40% here in the United States.
Robert McCarthy: Okay, very good. Okay, thanks. I'll turn it
over to somebody else.
Operator: And as a reminder, to ask a question please press star
one at this time. We'll take a follow up question from John
McGinty.
John McGinty: I have a feeling Rob and I may be the only ones
on.
Man: Nobody else is working late.
John McGinty: What tax rate should we assume, just the standard
Manitowoc one
Glen Tellock: I think consistently we have 39 to 40%.
John McGinty: Okay. And then you said -- and I'm sorry, I'm
scrambling for numbers here -- but that the EBITDA was 41,
right
Glen Tellock: Right.
John McGinty: Yeah 41. What was the depreciation amortization
In other words, if we just want to do EBIT of the 41, what
was EBIT
Glen Tellock: 14 million of depreciation and amortization.
John McGinty: Okay. And does that, I mean, is that a number
that stays In other words, amortization is not a big part
of that so that, in other words does that number stay going
forward about 14 million
Glen Tellock: Yes it does.
John McGinty: Okay. And what kind of capital spending would
Grove need, I mean
Glen Tellock: Well, they_
John McGinty: Relative to that, you know.
Glen Tellock: Relative to that probably a little bit less than
depreciation on a normal run rate.
John McGinty: Okay.
Glen Tellock: I think it's, you know, this year the plan was to
be maybe a little better than half of that and I think on a
normal run rate would be just a little bit less than the 14
million.
John McGinty: Okay. What about working capital You never know,
I mean, Grove itself with a company owned store has probably
at one point had working capital. On the other hand they've
just gone through a bunch of stuff. Are you at a point now
where as you look at Grove when you take it over when you
look at getting the synergies, do you see working capital as
a particularly significant source of funds or are they in
pretty good shape there
Glen Tellock: Well I think there's a significant opportunity
there, not only at Grove but now as we put people from
Potain in and at our own Manitowoc crane group, there is a
lot of opportunity and, you know, that's one of the things
that our people focus on very well from the EBA side and I
think we believe there's a great opportunity there.
John McGinty: Okay. And in terms of the profitability of Grove,
without getting into -- I guess, let me ask the question
this way. Are these three businesses all three businesses
that you're interested in keeping Clearly, two of them are
ones that fit like a glove. The other one is one where
there has been historically in the industry there have been
profit issues. Is there any thought in your mind of maybe
not keeping all three of these businesses
Glen Tellock: Well I think right now our thoughts certainly are
to keep all three. We have the, with the properties they
have in France they work well with our business that we have
with Potain, the access and the lift (lux) business.
John McGinty: Okay.
Glen Tellock: You have a lifting business there that the two of
them will complement each other and with a majority of it
being in France, that's -- they've done okay with their
Delta products. I think the majority of the problems were
the, here domestically and they really have downsized that
product line and really have taken necessary steps to
minimize, you know, the distractions in that product line
here in the United States.
John McGinty: Do they sell that through distribution which will
have to be rationalized by (Ron) or is it something that
goes primarily to rental companies, which is really a more
manufacturing issue than a, you know, than worrying about
distribution.
Rob Giebel: Are we talking specifically about the_
John McGinty: Man lift.
Rob Giebel: The personnel lift, yeah. Most of that business
is a rental business.
John McGinty: Okay.
Rob Giebel: It's a little different in Europe as we talked
when we did the Potain transaction with their access
business. The rental companies in Europe tend to generally
be more fragmented and a little bit smaller.
John McGinty: Right. I'm not worried about the European part of
it at all.
Rob Giebel: Oh okay. North America, yeah, it's pretty much --
it's like the rest of the industry. It's very heavily
weighted towards rental.
John McGinty: Okay and at first blush do you see with Potain and
with Grove, are there opportunities for manufacturing
rationalization in Europe
Rob Giebel: In Europe probably not.
John McGinty: Okay.
Rob Giebel: Capacity is pretty high in all the facilities
right now.
John McGinty: Okay. Great. Thanks very much.
Operator: We do have another follow up from Robert McCarthy of W
-- I'm sorry, RW Baird.
Robert McCarthy: Thanks, John. I'll pick it up here. You may
want to prepare a couple more questions. Intangibles, how
much goodwill will be associated with the purchase, if any,
recognizing that you won't be amortizing it
Glen Tellock: I understand. Between 40 and $50 million.
Robert McCarthy: Okay. Do you all, when you look at your
synergy opportunities in the short term, the things that
would contribute in 03, would it be fair on my part to
assume that purchasing's going to be your number one source
of short term synergies
Glen Tellock: Yes, that's fair.
Robert McCarthy: Okay. And what can you tell us about current
market share positions in the core telescopic crane business
in North America and Europe
Glen Tellock: Hang on one second.
Robert McCarthy: Sure.
Glen Tellock: The market share is in the US for 2002 currently
in the Grove Crane about 56%, 55% in North America. And
that compares to about 45% in 2001 and then in 2000, it's
about the same, 45%.
Robert McCarthy: Okay.
Glen Tellock: They have picked up market share. And in the
National side of the business, you know, as we've always
said, National was number one and then we probably traded
off and are now about third in that side of the business,
so.
Robert McCarthy: Okay. And the Grove franchise in Europe
Glen Tellock: I don't have those numbers. I'll have to get to
back to you on that, Rob.
Robert McCarthy: Well I bet Rob can put it in a shoebox or a
breadbox for us.
Rob Giebel: Yeah. In general the market in Europe is split
between (Lether Demac) and Grove. What gets a little
complicated in Europe, Rob, is they put them in different
buckets than we do in the US and not everybody competes in
every bucket.
Robert McCarthy: Right.
Rob Giebel: But, and I'd have to do some analysis to give you
a hard number but it's nothing to be embarrassed about.
Robert McCarthy: I certainly understood that. Okay, great.
Thank you.
Operator: We'll move now to Keith Hogan of Eaton Vance.
Keith Hogan: Hi. Good evening, gentlemen. I just have one
quick question but I thought I'd queue up just so the equity
guy knows that we fixed income people stay late too.
You talked about synergies and you put it in an earnings per
share perspective. Could you translate it into what you
think the EBITDA contribution will be in 03
Glen Tellock: Yeah. We've, when you look at -- we certainly
have a large range but I think the very conservative low end
of our range would be probably on the $10 million but it
could be upwards of $25 million too. But our real range is
probably between 10 and $15 million for 03.
Keith Hogan: Okay.
Glen Tellock: Synergies.
Keith Hogan: Okay. That's the only question I have. I'll just
close with a comment that if you're looking to keep your
weighted efforts cost of debt at 6-1/2 to 7%, I'm not sure
we can give you that good of a rate here in the high yield
market when you come to us. Thanks. That's it.
Man: Thank you.
Glen Tellock: Thanks.
Operator: We'll move now to Ken Wolfe of Ares Management.
Ken Wolfe: Hi. I just -- could you repeat the leverage, the
pro forma leverage number that you cited some time during
that intro
Glen Tellock: On the total debt to EBITDA it's about 3.7 times
and the total debt to cap is about 68%.
Ken Wolfe: Okay. And do you foresee any issues in terms of
the bank covenants Are you going to have to go back to the
banks to get an amendment or anything like that
Glen Tellock: We do on the acquisition side, yes.
Ken Wolfe: Okay. Okay, that's it.
Operator: And once again, if you have a question please press
star one. We'll go to John McGinty with another follow up.
John McGinty: God, where did those other two guys come from
Just one clarification -- 700 million in sales in fiscal 01
which was down 15% from fiscal 00 and you're expecting in
fiscal 02 another did you say 15 to 20% decline
Glen Tellock: No. About 15%.
John McGinty: 15, okay. I want to go back to the recent peak.
Was it 98 or 99 In other words, at recent peak what was the
recent Grove peak on the same businesses they have I don't
know if they're divested anything but, you know, on an
apples to apples basis where was Grove three or four years
ago at the peak
Glen Tellock: At -- in 98, and that's as far back as we go, they
were $870 million.
John McGinty: And what was the adjusted EBITDA at that point
Glen Tellock: About 70 million.
John McGinty: With that being the same about 14 million with
depreciation and amortization
Glen Tellock: That's -- hang on one second, I have -- actually I
go back to 97 was EBITDA of about 94 million on 860 million
in sales. 98 was 870 million in sales and 67 million of
EBITDA. And depreciation and amortization was about 17, 18
million.
John McGinty: Of the 67
Glen Tellock: Of the, yeah of the 67 million it was about 19
million.
John McGinty: 19 million. And then when was this thing LBOed
out of, was it Hanson that LBOed it to the people down in_
Glen Tellock: Yes. Hanson sold it in 98.
John McGinty: In 98. Okay, so the, okay, of the 97.
Glen Tellock: 97 was when Hanson still had it through that
fiscal year and then it changed over. In fiscal 98 is when
it went to the LBO.
John McGinty: Okay. Thanks very much.
Operator: And once again we'll hear from Robert McCarthy.
Robert McCarthy: I just wanted to get in the last word. Good
luck guys.
Man: Thanks Rob.
Operator: And one final reminder, to ask a question press star
one now. And Mr. Khail, it appears there are no further
questions. I'll turn the conference back over to you for
any additional or closing remarks.
Steve Khail: Thank you everyone for joining us today. As a
reminder, if you would like to listen to a replay of today's
call please dial area code 719-457-0820 any time from 9 pm
Eastern time today until 1 am Eastern time March 26 using
pass code 505702 or visit our web site at www.manitowoc.com.
Thank you everyone. Have a good day.
Operator: And that does conclude today's conference call. Thank
you everyone for participating.
END