(EDGAR Online via COMTEX) -- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
OVERVIEW
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Current quarter earnings per diluted share (EPS) of $0.23 was unfavorably affected by restructuring and related charges of $0.04 per share, partially offset by differences in annual projected tax rates of $0.11 per share. The loss per diluted share (LPS) of $0.07 in the prior year quarter included restructuring and related charges of $0.55 per share, goodwill and other intangible asset impairment charges of $0.16 per share and loss on divestiture of $0.06 per share, partially offset by a discrete benefit from Swiss tax reform of $0.18 per share and differences in annual projected tax rates of $0.35 per share. The prior year quarter per share amounts have been recast to separately present the effect of the differences in projected annual tax rates during the period.
RESULTS OF CONTINUING OPERATIONS
SALES
Three Months Ended December 31, 2020 Six Months Ended December 31, 2020
As
(in percentages) As Reported Constant Currency Reported Constant Currency
End market sales decline:
Aerospace (42)% (43)% (44)% (44)%
Energy (20) (22) (23) (24)
General engineering (10) (10) (16) (15)
Earthworks (9) (10) (11) (11)
Transportation (3) (4) (13) (13)
Regional sales decline:
Americas (21)% (19)% (26)% (24)%
Europe, the Middle East and Africa (EMEA) (9) (12) (14) (16)
Asia Pacific - (3) (4) (4)
GROSS PROFIT
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
OPERATING EXPENSE
RESTRUCTURING AND RELATED CHARGES AND ASSET IMPAIRMENT CHARGES
We recorded restructuring and related charges of $32.9 million, of which $29.5 million was in Metal Cutting and $3.3 million was in Infrastructure, and $59.3 million for the six months ended December 31, 2020 and 2019, respectively. Of these amounts, restructuring charges totaled $27.4 million, of which $0.4 million is included in cost of goods sold, for the six months ended December 31, 2020 and $52.7 million, of which $0.3 million was included in cost of goods sold, for the six months ended December 31, 2019. Restructuring-related charges of $5.5 million and $6.6 million were recorded in cost of goods sold for the six months ended December 31, 2020 and 2019, respectively.
Goodwill and Other Intangible Asset Impairment Charges We recorded non-cash pre-tax intangible asset impairment charges of $14.6 million during the three months ended December 31, 2019. See Note 16 to our condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LOSS ON DIVESTITURE
INTEREST EXPENSE
BUSINESS SEGMENT REVIEW
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Our sales and operating income (loss) by segment are as follows:
Three Months Ended December 31, Six Months Ended December 31,
(in thousands) 2020 2019 2020 2019
Sales:
Metal Cutting $ 282,917 $ 323,579 $ 530,793 $ 647,664
Infrastructure 157,590 181,501 310,019 375,504
Total sales $ 440,507 $ 505,080 $ 840,812 $ 1,023,168
Operating income (loss):
Metal Cutting $ 13,693 $ (35,177) $ (9,933) $ (15,870)
Infrastructure 6,265 (11,570) 13,533 (14,260)
Corporate (924) (891) (1,743) (1,131)
Total operating income (loss) 19,034 (47,638) 1,857 (31,261)
Interest expense 8,317 8,055 18,896 15,936
Other income, net (3,857) (4,211) (7,875) (6,891)
Income (loss) before income taxes $ 14,574 $ (51,482) $ (9,164) $ (40,306)
METAL CUTTING
Three Months Ended December 31, Six Months Ended December 31,
(in thousands, except operating
margin) 2020 2019 2020 2019
Sales $ 282,917 $ 323,579 $ 530,793 $ 647,664
Operating income (loss) 13,693 (35,177) (9,933) (15,870)
Operating margin 4.8 % (10.9) % (1.9) % (2.5) %
Three Months Ended Six Months Ended
(in percentages) December 31, 2020 December 31, 2020
Organic sales decline (14)% (18)%
Foreign currency exchange impact(1) 1 -
Sales decline (13)% (18)%
Three Months Ended December 31, 2020 Six Months Ended December 31, 2020
(in percentages) As Reported Constant Currency As Reported Constant Currency
End market sales decline:
Aerospace (42)% (43)% (44)% (44)%
Energy (16) (18) (16) (17)
General engineering (11) (12) (15) (16)
Transportation (3) (4) (13) (13)
Regional sales decline:
Americas (21)% (20)% (26)% (24)%
EMEA (9) (12) (16) (18)
Asia Pacific (3) (6) (7) (7)
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three months ended December 31, 2020, Metal Cutting sales decreased 13 percent from the prior year quarter due to the effects of COVID-19 on global manufacturing activity. Aerospace end market sales declined in all regions due to a significant reduction in airplane manufacturing. Transportation end market sales declined in all regions except for the Americas, which had slight growth in the quarter. Sales in our general engineering end market declined in all regions except for Asia Pacific, which had slight growth in the quarter. The general engineering end market continued to be impacted by lower manufacturing activity related to the COVID-19 pandemic. Energy sales decreased primarily due to a decline in oil and gas drilling in the Americas, partially offset by continued strength in wind power generation in China. On a regional basis, the sales decrease in the Americas was driven by declines in the general engineering, aerospace and energy end markets, partially offset by an increase in sales in the transportation end market, while the sales decrease in EMEA was driven by declines in all four end markets. The sales decrease in Asia Pacific was primarily driven by declines in the transportation and aerospace end markets, offset by increases in sales in both the general engineering and energy end markets.
INFRASTRUCTURE
Three Months Ended December 31, Six Months Ended December 31,
(in thousands) 2020 2019 2020 2019
Sales $ 157,590 $ 181,501 $ 310,019 $ 375,504
Operating income (loss) 6,265 (11,570) 13,533 (14,260)
Operating margin 4.0 % (6.4) % 4.4 % (3.8) %
Three Months Ended Six Months Ended
(in percentages) December 31, 2020 December 31, 2020
Organic sales decline (14)% (15)%
. . .
Feb 03, 2021
COMTEX_380143599/2041/2021-02-03T15:34:56
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