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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission File Number: 1-11978

 

The Manitowoc Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Wisconsin

 

39-0448110

(State or other jurisdiction

 

(I.R.S. Employer

of incorporation or organization)

 

Identification Number)

 

11270 West Park Place

Suite 1000

 

 

Milwaukee, Wisconsin

 

53224

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (414) 760-4600

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.01 Par Value

 

MTW

 

New York Stock Exchange

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

As of March 31, 2021, the registrant had 34,734,972 shares of common stock, $.01 par value per share, outstanding.

 


 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Operations

For the three months ended March 31, 2021 and 2020

(Unaudited)

($ in millions, except per-share and average share amounts)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Net sales

 

$

354.3

 

 

$

329.2

 

Cost of sales

 

 

285.9

 

 

 

266.0

 

Gross profit

 

 

68.4

 

 

 

63.2

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Engineering, selling and administrative expenses

 

 

57.7

 

 

 

55.9

 

Amortization of intangible assets

 

 

0.1

 

 

 

0.1

 

Restructuring (income) expense

 

 

(0.1

)

 

 

1.5

 

Total operating costs and expenses

 

 

57.7

 

 

 

57.5

 

Operating income

 

 

10.7

 

 

 

5.7

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

 

 

(7.1

)

 

 

(7.2

)

Amortization of deferred financing fees

 

 

(0.4

)

 

 

(0.4

)

Other expense - net

 

 

(2.1

)

 

 

(4.0

)

Total other expense

 

 

(9.6

)

 

 

(11.6

)

Income (loss) before income taxes

 

 

1.1

 

 

 

(5.9

)

Provision for income taxes

 

 

4.2

 

 

 

1.9

 

Net loss

 

$

(3.1

)

 

$

(7.8

)

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

Basic net loss per common share

 

$

(0.09

)

 

$

(0.22

)

 

 

 

 

 

 

 

 

 

Diluted net loss per common share

 

$

(0.09

)

 

$

(0.22

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

34,809,725

 

 

 

35,135,525

 

Weighted average shares outstanding - diluted

 

 

34,809,725

 

 

 

35,135,525

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

 

2


 

 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the three months ended March 31, 2021 and 2020

(Unaudited)

($ in millions)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Net loss

 

$

(3.1

)

 

$

(7.8

)

Other comprehensive income (loss), net of income tax:

 

 

 

 

 

 

 

 

Employee pension and postretirement benefit income (expense), net of

   income tax of $0.0 and $0.3, respectively

 

 

(0.6

)

 

 

1.2

 

Foreign currency translation adjustments, net of income tax benefit (expense)

   of $3.2 and $(2.7), respectively

 

 

(10.0

)

 

 

(13.6

)

Total other comprehensive loss, net of income tax

 

 

(10.6

)

 

 

(12.4

)

Comprehensive loss

 

$

(13.7

)

 

$

(20.2

)

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

3


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Balance Sheets

As of March 31, 2021 and December 31, 2020

(Unaudited)

($ in millions, except share amounts)

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

158.5

 

 

$

128.7

 

Accounts receivable, less allowances of $8.2 and $8.5, respectively

 

 

188.4

 

 

 

215.1

 

Inventories — net

 

 

520.4

 

 

 

473.1

 

Notes receivable — net

 

 

12.8

 

 

 

13.6

 

Other current assets

 

 

30.6

 

 

 

35.5

 

Total current assets

 

 

910.7

 

 

 

866.0

 

Property, plant and equipment — net

 

 

286.3

 

 

 

294.3

 

Operating lease right-of-use assets

 

 

35.2

 

 

 

37.9

 

Goodwill

 

 

234.8

 

 

 

235.1

 

Other intangible assets — net

 

 

118.7

 

 

 

121.6

 

Other non-current assets

 

 

42.1

 

 

 

48.6

 

Total assets

 

$

1,627.8

 

 

$

1,603.5

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

378.7

 

 

$

329.4

 

Short-term borrowings and current portion of long-term debt

 

 

10.1

 

 

 

10.5

 

Product warranties

 

 

47.4

 

 

 

50.2

 

Customer advances

 

 

21.6

 

 

 

25.5

 

Other liabilities

 

 

20.6

 

 

 

20.2

 

Total current liabilities

 

 

478.4

 

 

 

435.8

 

Non-Current Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

300.1

 

 

 

300.4

 

Operating lease liabilities

 

 

26.1

 

 

 

28.4

 

Deferred income taxes

 

 

2.4

 

 

 

5.9

 

Pension obligations

 

 

88.0

 

 

 

89.3

 

Postretirement health and other benefit obligations

 

 

13.4

 

 

 

14.0

 

Long-term deferred revenue

 

 

32.6

 

 

 

32.4

 

Other non-current liabilities

 

 

53.8

 

 

 

53.8

 

Total non-current liabilities

 

 

516.4

 

 

 

524.2

 

Commitments and contingencies (Note 18)

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

Preferred stock (3,500,000 shares authorized of $.01 par value;

   none outstanding)

 

 

 

 

 

 

Common stock (75,000,000 shares authorized, 40,793,983 shares issued, 34,734,972

   and 34,580,638 shares outstanding, respectively)

 

 

0.4

 

 

 

0.4

 

Additional paid-in capital

 

 

596.4

 

 

 

595.1

 

Accumulated other comprehensive loss

 

 

(108.1

)

 

 

(97.5

)

Retained earnings

 

 

213.8

 

 

 

216.9

 

Treasury stock, at cost (6,059,011 and 6,213,345 shares, respectively)

 

 

(69.5

)

 

 

(71.4

)

Total stockholders' equity

 

 

633.0

 

 

 

643.5

 

Total liabilities and stockholders' equity

 

$

1,627.8

 

 

$

1,603.5

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

 

4


 

 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2021 and 2020

(Unaudited)

($ in millions)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(3.1

)

 

$

(7.8

)

Adjustments to reconcile net loss to cash provided by (used for) operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

10.0

 

 

 

9.0

 

Amortization of intangible assets

 

 

0.1

 

 

 

0.1

 

Amortization of deferred financing fees

 

 

0.4

 

 

 

0.4

 

Deferred income taxes

 

 

0.9

 

 

 

0.0

 

Gain on sale of property, plant and equipment

 

 

(0.1

)

 

 

(0.1

)

Net unrealized foreign currency transaction losses

 

 

0.3

 

 

 

3.0

 

Stock-based compensation expense

 

 

2.5

 

 

 

3.4

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

23.4

 

 

 

(5.6

)

Inventories

 

 

(59.5

)

 

 

(88.5

)

Notes receivable

 

 

2.3

 

 

 

2.6

 

Other assets

 

 

5.4

 

 

 

(4.7

)

Accounts payable

 

 

53.4

 

 

 

28.1

 

Accrued expenses and other liabilities

 

 

4.8

 

 

 

(18.5

)

Net cash provided by (used for) operating activities

 

 

40.8

 

 

 

(78.6

)

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8.0

)

 

 

(3.6

)

Proceeds from sale of fixed assets

 

 

 

 

 

0.1

 

Net cash used for investing activities

 

 

(8.0

)

 

 

(3.5

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Other debt - net

 

 

(0.8

)

 

 

(0.5

)

Exercises of stock options

 

 

0.8

 

 

 

0.1

 

Common stock repurchases

 

 

 

 

 

(12.0

)

Net cash used for financing activities

 

 

 

 

 

(12.4

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(3.0

)

 

 

(1.2

)

Net increase (decrease) in cash and cash equivalents

 

 

29.8

 

 

 

(95.7

)

Cash and cash equivalents at beginning of period

 

 

128.7

 

 

 

199.3

 

Cash and cash equivalents at end of period

 

$

158.5

 

 

$

103.6

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

 

5


 

 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Equity

For the three months ended March 31, 2021 and 2020

(Unaudited)

($ in millions)

 

 

 

March 31,

2021

 

 

March 31,

2020

 

Common Stock - Par Value

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

0.4

 

 

$

0.4

 

Balance at end of period

 

$

0.4

 

 

$

0.4

 

Additional Paid-in Capital

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

595.1

 

 

$

592.2

 

Stock options exercised and issuance of other stock awards

 

 

(1.2

)

 

 

(1.9

)

Stock-based compensation

 

 

2.5

 

 

 

3.4

 

Balance at end of period

 

$

596.4

 

 

$

593.7

 

Accumulated Other Comprehensive Loss

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(97.5

)

 

$

(121.0

)

Other comprehensive income (loss)

 

 

(10.6

)

 

 

(12.4

)

Balance at end of period

 

$

(108.1

)

 

$

(133.4

)

Retained Earnings

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

216.9

 

 

$

236.2

 

Adoption of accounting standards update

 

 

 

 

 

(0.2

)

Net loss

 

 

(3.1

)

 

 

(7.8

)

Balance at end of period

 

$

213.8

 

 

$

228.2

 

Treasury Stock

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(71.4

)

 

$

(61.9

)

Stock options exercised and issuance of other stock awards

 

 

1.9

 

 

 

1.7

 

Common stock repurchases

 

 

 

 

 

(12.0

)

Balance at end of period

 

$

(69.5

)

 

$

(72.2

)

Total equity

 

$

633.0

 

 

$

616.7

 

 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

 


6


 

 

THE MANITOWOC COMPANY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2021 and 2020

1.  Accounting Policies and Basis of Presentation

The Manitowoc Company, Inc. (“Manitowoc” and the “Company”) was founded in 1902 and has over a 118-year tradition of providing high-quality, customer-focused products and support services to its markets. Manitowoc is one of the world’s leading providers of engineered lifting solutions. Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, and supports comprehensive product lines of mobile hydraulic cranes, tower cranes, lattice-boom crawler cranes, and boom trucks under the Grove, Manitowoc, National Crane, Potain and Shuttlelift brand names. The Company serves a wide variety of customers, including dealers, rental companies, contractors, and government entities, across the petrochemical, industrial, commercial construction, power and utilities, infrastructure and residential construction end markets. Additionally, the Company leverages its installed base of approximately 152,000 cranes to provide aftermarket parts and services to enable its customers to manage their fleets more effectively and improve their return on investment. Due to the ongoing and predictable maintenance needed by cranes, as well as the high cost of crane downtime, Manitowoc’s aftermarket support operations provides the Company with a consistent stream of recurring revenue. The Company continues to expand its tower crane rental fleet in Europe to directly service its customers in the region.

The Company has three reportable segments, the Americas segment, Europe and Africa (“EURAF”) segment and Middle East and Asia Pacific (“MEAP”) segment. The segments were identified using the “management approach,” which designates the internal organization that is used by management for making operating decisions and assessing performance. Refer to Note 17, “Segments” for additional information.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments necessary for a fair statement of operations, comprehensive income (loss) and equity for the three months ended March 31, 2021 and 2020, the cash flows for the same three-month periods and the balance sheet as of March 31, 2021 and December 31, 2020, and except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. The interim results are not necessarily indicative of results for a full year and do not contain information included in the Company’s annual consolidated financial statements and notes for the year ended December 31, 2020. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K.

Certain prior period amounts have been reclassified to conform to the current period presentation. All amounts, except share and per share amounts, are in millions throughout the tables in these notes unless otherwise indicated.

Impact of COVID-19 Pandemic

 

There is still uncertainty regarding the future impact of the COVID-19 pandemic, which could include continuing or new restrictions on the Company’s access to its facilities or on its support operations or workforce, or similar limitations impacting its customers, dealers and suppliers. The extent to which the COVID-19 pandemic impacts the Company’s business, financial condition, results of operations, cash flows and/or liquidity may differ from management’s current estimates due this inherent uncertainty.

 

2.  Recent Accounting Changes and Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12 “Income Taxes (Topic 740).” The amendments in this ASU simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for annual periods beginning after December 15, 2020. The adoption of ASU 2019-02 did not have a material impact on the Company’s consolidated financial statements.

 


7


 

 

3. Sales

The Company records deferred revenue when cash payments are received in advance of satisfying the performance obligation. The table below shows the change in the customer advances balance for the three months ended March 31, 2021 and 2020 which are included in current liabilities in the Condensed Consolidated Balance Sheets.

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Balance at beginning of period

 

$

25.5

 

 

$

25.8

 

Cash received in advance of satisfying

   performance obligations

 

 

30.5

 

 

 

28.9

 

Revenue recognized

 

 

(34.1

)

 

 

(32.5

)

Currency translation

 

 

(0.3

)

 

 

(1.2

)

Balance at end of period

 

$

21.6

 

 

$

21.0

 

 

Disaggregation of the Company’s revenue sources are disclosed in Note 17, “Segments.”

 

4.  Fair Value of Financial Instruments

The Company has immaterial financial assets and liabilities related to foreign currency exchange contracts (“FX Forward Contracts”) that were accounted for at fair value as of March 31, 2021 and December 31, 2020.

 

The fair value of the senior secured second lien notes due on April 1, 2026, with an annual coupon rate of 9.000% (the “2026 Notes”), was approximately $324.8 million as of March 31, 2021. See Note 11, “Debt,” for a description of the 2026 Notes and the related carrying value.

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company estimates the fair value of its 2026 Notes based on quoted market prices of the instruments; because these markets are typically actively traded, the liabilities are classified as Level 1 within the valuation hierarchy. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term variable debt, including any amounts outstanding under our revolving credit facility, approximate fair value, without being discounted as of March 31, 2021 due to the short-term nature of these instruments.

FX Forward Contracts are valued through an independent valuation source which uses an industry standard data provider, with resulting valuations periodically validated through third-party or counterparty quotes. As such, these derivative instruments are classified within Level 2. See Note 5, “Derivative Financial Instruments” for additional information.

 

5.  Derivative Financial Instruments

The Company’s risk management objective is to ensure that business exposures to risks are minimized using the most effective and efficient methods to eliminate, reduce, or transfer such exposures. Operating decisions consider these associated risks and, whenever possible, transactions are structured to avoid or mitigate these risks.

 

From time to time, the Company enters into FX Forward Contracts to manage the exposure on forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities in currencies other than the functional currency of certain subsidiaries. Certain of these FX Forward Contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income (loss). These changes in fair value are reclassified into earnings as a component of cost of sales, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded as a component of other income expense – net in the period in which the transaction is no longer considered probable of occurring. No material amounts were recorded related to these types of transactions during the three months ended March 31, 2021 and 2020, respectively.

 

The Company had FX Forward Contracts with aggregate notional amounts of $6.0 million and $9.3 million in U.S. dollar equivalent as of March 31, 2021 and December 31, 2020, respectively. The FX Forward Contracts purchased are denominated in various foreign currencies. The Company has immaterial financial assets and liabilities related to FX Forward Contracts that were accounted for at fair value as of March 31, 2021 and December 31, 2020. There were zero unrealized gains (losses), net of income tax, recorded in accumulated other comprehensive loss as of March 31, 2021 and December 31, 2020.  

8


 

 

The following table provides the net amount of gains (losses) recorded in the Condensed Consolidated Statement of Operations for FX Forward Contracts for the three months ended March 31, 2021 and 2020.

 

 

 

 

 

Three Months Ended

March 31,

 

 

 

Recognized Location

 

2021

 

 

2020

 

Designated

 

Cost of sales

 

$

 

 

$

0.1

 

Non-Designated

 

Other expense - net

 

$

(0.2

)

 

$

 

 

6.  Inventories

The components of inventories as of March 31, 2021 and December 31, 2020 are summarized as follows:

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Raw materials

 

$

132.4

 

 

$

114.9

 

Work-in-process

 

 

137.9

 

 

 

105.5

 

Finished goods

 

 

303.0

 

 

 

305.8

 

Total inventories

 

 

573.3

 

 

 

526.2

 

Excess and obsolete inventory reserve

 

 

(52.9

)

 

 

(53.1

)

Inventories — net

 

$

520.4

 

 

$

473.1

 

 

7.  Notes Receivable

The Company has notes receivable balances that are classified as current or long-term based on the timing of amounts due. Long-term notes receivable are included within other non-current assets on the Condensed Consolidated Balance Sheets. Current and long-term notes receivable balances primarily relate to the Company’s captive finance entity in China. As of March 31, 2021, the Company had current and long-term notes receivable in the amount of $12.8 million and $11.3 million, respectively. As of December 31, 2020, the Company had current and long-term notes receivable in the amount of $13.6 million and $12.7 million, respectively.

8. Property, Plant and Equipment

The components of property, plant and equipment as of March 31, 2021 and December 31, 2020 are summarized as follows:

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Land

 

$

19.8

 

 

$

20.3

 

Building and improvements

 

 

199.2

 

 

 

203.7

 

Machinery, equipment and tooling

 

 

287.7

 

 

 

292.6

 

Furniture and fixtures

 

 

14.7

 

 

 

21.0

 

Computer hardware and software

 

 

125.2

 

 

 

119.3

 

Rental cranes

 

 

92.6

 

 

 

90.2

 

Construction in progress

 

 

8.5

 

 

 

9.0

 

Total cost

 

 

747.7

 

 

 

756.1

 

Less accumulated depreciation

 

 

(461.4

)

 

 

(461.8

)

Property, plant and equipment-net

 

$

286.3

 

 

$

294.3

 

 

Property, plant and equipment are depreciated over the asset’s estimated useful life using the straight-line depreciation method for financial reporting and accelerated methods for income tax purposes.

 

Assets Held for Sale

 

As of December 31, 2020, the Company had $3.3 million classified as other current assets in the Condensed Consolidated Balance Sheets related to assets held for sale for a building and land in Fanzeres, Portugal.

 


9


 

 

9.  Goodwill and Other Intangible Assets

The Company performs its annual goodwill and indefinite lived assets impairment testing during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. There have been no impairment indicators since the fourth quarter of 2020; therefore, no impairment review has occurred during the three months March 31, 2021.

 

The changes in the carrying amount of goodwill as of March 31, 2021 and December 31, 2020 are summarized as follows:

 

 

 

Americas

 

 

MEAP

 

 

Consolidated

 

Balance as of January 1, 2020

 

$

166.5

 

 

$

66.0

 

 

$

232.5

 

Foreign currency impact

 

 

 

 

 

2.6

 

 

 

2.6

 

Balance as of December 31, 2020

 

 

166.5

 

 

 

68.6

 

 

 

235.1

 

Foreign currency impact

 

 

 

 

 

(0.3

)

 

 

(0.3

)

Balance as of March 31, 2021

 

$

166.5

 

 

$

68.3

 

 

$

234.8

 

 

The gross carrying amount, accumulated amortization and net book value of the Company’s intangible assets other than goodwill as of March 31, 2021 and December 31, 2020 are summarized as follows:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

Amount

 

 

Net

Book

Value

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

Amount

 

 

Net

Book

Value

 

Definite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

9.8

 

 

 

(8.6

)

 

 

1.2

 

 

 

9.9

 

 

 

(8.6

)

 

 

1.3

 

Patents

 

 

30.3

 

 

 

(29.6

)

 

 

0.7

 

 

 

31.0

 

 

 

(30.3

)

 

 

0.7

 

Total

 

$

40.1

 

 

$

(38.2

)

 

$

1.9

 

 

$

40.9

 

 

$

(38.9

)

 

$

2.0

 

Indefinite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and tradenames

 

 

97.6

 

 

 

 

 

 

97.6

 

 

 

100.0

 

 

 

 

 

 

100.0

 

Distribution network

 

 

19.2

 

 

 

 

 

 

19.2

 

 

 

19.6

 

 

 

 

 

 

19.6

 

Total

 

 

116.8

 

 

 

 

 

 

116.8

 

 

 

119.6

 

 

 

 

 

 

119.6

 

Total other intangible assets

 

$

156.9

 

 

$

(38.2

)

 

$

118.7

 

 

$

160.5

 

 

$

(38.9

)

 

$

121.6

 

 

Other intangible assets with definite lives are amortized over their estimated useful lives. Amortization expense for the three months ended March 31, 2021 and 2020 was $0.1 million.

 

Definite lived intangible assets and long-lived assets are subject to impairment testing whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. The Company determined there was not a triggering event for the three months ended March 31, 2021.

10.  Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of March 31, 2021 and December 31, 2020 are summarized as follows:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Trade accounts payable

 

$

224.1

 

 

$

178.1

 

Employee-related expenses

 

 

41.5

 

 

 

38.5

 

Accrued vacation

 

 

24.2

 

 

 

22.4

 

Miscellaneous accrued expenses

 

 

88.9

 

 

 

90.4

 

Total accounts payable and accrued expenses

 

$

378.7

 

 

$

329.4

 

 

10


 

 

11.  Debt

Outstanding debt as of March 31, 2021 and December 31, 2020 are summarized as follows:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Borrowings under senior secured asset based revolving

   credit facility

 

$

 

 

$

 

Senior secured second lien notes due 2026

 

 

300.0

 

 

 

300.0

 

Other

 

 

13.8

 

 

 

14.7

 

Deferred financing costs

 

 

(3.6

)

 

 

(3.8

)

Total debt

 

 

310.2

 

 

 

310.9

 

Short-term borrowings and current portion of long-term

   debt

 

 

(10.1

)

 

 

(10.5

)

Long-term debt

 

$

300.1

 

 

$

300.4

 

 

On March 25, 2019, the Company and certain of its subsidiaries entered into an indenture with U.S. Bank National Association as trustee and notes collateral agent, pursuant to which the Company issued $300.0 million aggregate principal amount of the 2026 Notes with an annual coupon rate of 9.000%. Interest on the 2026 Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year. The 2026 Notes are fully and unconditionally guaranteed on a senior secured second lien basis, jointly and severally, by each of the Company’s existing and future domestic subsidiaries that is either a guarantor or a borrower under the ABL Revolving Credit Facility (as defined below) or that guarantees certain other debt of the Company or a guarantor. The 2026 Notes and the related guarantees are secured on a second-priority basis, subject to certain exceptions and permitted liens, by pledges of capital stock and other equity interests and other security interests in substantially all of the personal property and fee-owned real property of the Company and of the guarantors that secure obligations under the ABL Revolving Credit Facility.

 

Additionally, on March 25, 2019, the Company and certain subsidiaries of the Company (the “Loan Parties”) entered into a credit agreement (the “ABL Credit Agreement”) with JP Morgan Chase Bank, N.A as administrative and collateral agent and certain financial institutions party thereto as lenders, providing for a senior secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”) of up to $275.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2026 Notes and the related guarantees. The ABL Revolving Credit Facility has a term of five years and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility.

 

Borrowings under the ABL Revolving Credit Facility bear interest at a variable rate using either the Alternative Base Rate or the Eurodollar and Overnight London Interbank Offered Rate (“LIBOR”). The variable interest rate is based upon the average availability as of the most recent determination date as follows:

 

Average quarterly availability

Alternative base rate spread

 

Eurodollar and overnight LIBOR spread

 

≥ 50% of Aggregate Commitment

0.25%