Company accelerating restructuring activities
to drive long-term cash flow generation and margin expansion
The Manitowoc Company, Inc. (NYSE: MTW) (“Manitowoc”) today
reported third-quarter 2016 net sales of $349.8 million versus
$438.2 million in the comparable period in 2015.
On a GAAP basis, the company reported a net loss of ($140.0)
million, or ($1.01) per diluted share, in the third-quarter 2016
versus net income of $4.8 million, or $0.04 per diluted share, in
the third-quarter 2015. The company’s loss from continuing
operations in the third-quarter 2016 and 2015 was ($138.2) million
and ($29.6) million, respectively.
Non-GAAP adjusted net loss from continuing operations(1) was
($38.1) million, or ($0.28) per diluted share, in the third-quarter
2016 versus a non-GAAP adjusted net loss from continuing operations
of ($29.8) million, or ($0.22) per diluted share, in the
third-quarter 2015.
“As previously announced, the mobile crane market continued its
downward trend in the third-quarter and remains very challenging.
The weak global oil and gas market, coupled with lower used
equipment prices, continues to have a negative effect on demand.
Our tower crane business continues to perform as expected and we
look forward to its continued success as the new line of HUP
products are introduced in the fourth-quarter,” commented Barry L.
Pennypacker, President and Chief Executive Officer of The Manitowoc
Company, Inc.
“Our priority is to continue to improve our quality, make
significant market share gains and right-size the business to
current demand levels. We will do this without impacting our
long-term strategy of margin expansion, growth, innovation and
velocity. We have significantly cut production levels to match the
lower demand and accelerated the transition of crawler crane
manufacturing from Manitowoc, Wisconsin, to Shady Grove,
Pennsylvania. While this will have an adverse impact on our
near-term earnings outlook, we expect this action will have a
positive impact on our ability to maintain adequate liquidity
levels. We continue to transition the culture to one being driven
by the principles of The Manitowoc Way and remain committed during
this challenging time to our goals of improving our long-term
performance and attaining double-digit operating margins by 2020,”
concluded Pennypacker.
Financial Results
Third-quarter 2016 net sales were $349.8 million versus $438.2
million in the third-quarter 2015. The year-over-year decrease was
primarily due to continued deterioration within the company’s
mobile crane markets, mainly in North America and the Middle East.
This was partially offset by growth in towers due to residential
and commercial construction trends, particularly in Western
Europe.
GAAP operating loss for the third-quarter 2016 was ($133.5)
million, compared to ($8.2) million in the third-quarter 2015, and
includes $96.9 million of non-cash impairment charges primarily
related to certain software assets and other charges related to the
relocation of crawler and tower crane manufacturing operations. In
addition, $3.9 million of restructuring costs were recognized
during the third-quarter mainly related to severance costs.
Non-GAAP adjusted operating loss(1) for the third-quarter 2016
was ($31.5) million compared to ($7.7) million in the same period
last year. This resulted in an adjusted operating margin of (9.0)
percent for the third-quarter 2016 versus (1.8) percent for the
third-quarter 2015. The 2016 non-GAAP adjusted operating loss of
($31.5) million included $29.9 million of expenses related to
the relocation of crawler crane production from Manitowoc,
Wisconsin to Shady Grove, Pennsylvania, including certain inventory
related charges and charges associated with declines in used crane
market values. Non-GAAP adjusted operating loss excluding these
items would have been ($1.6) million, as outlined in the schedule
of “Non-GAAP Financial Measures” at the end of this press
release.
Backlog totaled $353.6 million for the third-quarter, down from
the second-quarter 2016 backlog of $393.5 million. Third-quarter
2016 orders of $309.9 million were lower by approximately $28
million or 8% compared to the third-quarter 2015. The third-quarter
2016 orders also included approximately $10 million of prototype
units for the U.S. military, of which approximately $3 million was
shipped in the quarter. The year-over-year order decline is due to
continued softness in the North American and Middle East markets,
partially offset by growth in Western Europe.
Cash Flow
Net cash flow from operating activities in the third-quarter
2016 was a use of $3.0 million, which includes continuing and
discontinued operations. This compares to a source of net cash flow
from operating activities in the third-quarter 2015 of $6.3
million, which also included continuing and discontinued
operations. Third-quarter capital expenditures totaled $10.1
million as compared to $9.4 million in the third-quarter 2015.
Fourth-Quarter 2016 Guidance:
- Revenue – down approximately 25% to 30%
year-over-year;
- Margin on non-GAAP adjusted operating
loss(1) – approximately (4)% to (6)%;
- Depreciation – approximately $11
million;
- Amortization of intangibles –
approximately $1 million; and
- Capital expenditures – approximately
$10 to $15 million
The Company provides guidance on a non-GAAP basis as there is
uncertainty in the timing and magnitude of future charges that
would be included in the reported GAAP results.
Investor Conference Call
On Wednesday, November 2nd, 2016, at 10:00 a.m. ET (9:00 a.m.
CT), The Manitowoc Company's senior management will discuss its
third-quarter earnings results and updated fourth-quarter outlook
during a live conference call for security analysts and
institutional investors. A live audio webcast of the call, along
with the related presentation, can be accessed in the Investor
Relations section of Manitowoc’s website at www.manitowoc.com. A
replay of the conference call will also be available at the same
location on the website.
About The Manitowoc Company, Inc.
Founded in 1902, The Manitowoc Company, Inc. is a leading global
manufacturer of cranes and lift solutions with manufacturing,
distribution, and service facilities in 20 countries. Manitowoc is
recognized as one of the premier innovators and providers of
crawler cranes, tower cranes, and mobile cranes for the heavy
construction industry, which are complemented by a slate of
industry-leading aftermarket product support services. In 2015,
Manitowoc’s revenues totaled $1.9 billion, with over half of these
revenues generated outside the United States.
Footnote:
(1) Non-GAAP adjusted net loss from continuing operations and
non-GAAP adjusted operating loss are financial measures that are
not in accordance with GAAP. For a reconciliation to the comparable
GAAP numbers please see schedule of “Non-GAAP Financial Measures”
at the end of this press release. Manitowoc believes these non-GAAP
financial measures provide important supplemental information to
both management and investors regarding financial and business
trends used in assessing its results of operations. Manitowoc
believes excluding specified items from net loss and operating loss
provides a more meaningful comparison to the corresponding
reporting periods and internal budgets and forecasts, assists
investors in performing analysis that is consistent with financial
models developed by investors and research analysts, provides
management with a more relevant measure of operating performance,
and is more useful in assessing management performance.
Forward-looking Statements
This press release includes "forward-looking statements"
intended to qualify for the safe harbor from liability under the
Private Securities Litigation Reform Act of 1995. Any statements
contained in this press release that are not historical facts are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on the current expectations of the management of the company
and are subject to uncertainty and changes in circumstances.
Forward-looking statements include, without limitation, statements
typically containing words such as "intends," "expects,"
"anticipates," "targets," "estimates," and words of similar import.
By their nature, forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements. Factors
that could cause actual results and developments to differ
materially include, among others:
- unanticipated changes in revenues,
margins, costs, and capital expenditures;
- the ability to significantly improve
profitability;
- potential delays or failures to
implement specific initiatives within the restructuring
program;
- issues relating to the ability to
timely and effectively execute on manufacturing strategies,
including issues relating to plant closings, new plant start-ups,
and/or consolidations of existing facilities and operations, and
its ability to achieve the expected benefits from such
actions;
- the ability to direct resources to
those areas that will deliver the highest returns;
- uncertainties associated with new
product introductions, the successful development and market
acceptance of new and innovative products that drive growth;
- the ability to focus on the customer,
new technologies, and innovation;
- the ability to focus and capitalize on
product quality and reliability;
- the ability to increase operational
efficiencies across Manitowoc’s business segment and to capitalize
on those efficiencies;
- the ability to capitalize on key
strategic opportunities and the ability to implement Manitowoc’s
long-term initiatives;
- the ability to generate cash and manage
working capital consistent with Manitowoc’s stated goals;
- the ability to convert order and order
activity into sales and the timing of those sales;
- pressure of financing leverage;
- matters impacting the successful and
timely implementation of ERP systems;
- foreign currency fluctuations and their
impact on reported results and hedges in place with Manitowoc;
- changes in raw material and commodity
prices;
- unexpected issues associated with the
quality of materials and components sourced from third parties and
the resolution of those issues;
- unexpected issues associated with the
availability and viability of suppliers;
- the risks associated with growth;
- geographic factors and political and
economic conditions and risks;
- actions of competitors;
- changes in economic or industry
conditions generally or in the markets served by Manitowoc;
- unanticipated changes in customer
demand, including changes in global demand for high-capacity
lifting equipment; changes in demand for lifting equipment in
emerging economies, and changes in demand for used lifting
equipment;
- global expansion of customers;
- the replacement cycle of
technologically obsolete cranes;
- the ability of Manitowoc's customers to
receive financing;
- efficiencies and capacity utilization
of facilities;
- issues related to workforce reductions
and subsequent rehiring;
- work stoppages, labor negotiations,
labor rates, and temporary labor costs;
- government approval and funding of
projects and the effect of government-related issues or
developments;
- the ability to complete and
appropriately integrate restructurings, consolidations,
acquisitions, divestitures, strategic alliances, joint ventures,
and other strategic alternatives;
- realization of anticipated earnings
enhancements, cost savings, strategic options and other synergies,
and the anticipated timing to realize those savings, synergies, and
options;
- unanticipated issues affecting the
effective tax rate for the year;
- unanticipated changes in the capital
and financial markets;
- risks related to actions of activist
shareholders;
- changes in laws throughout the
world;
- natural disasters disrupting commerce
in one or more regions of the world;
- risks associated with data security and
technological systems and protections;
- acts of terrorism; and
- risks and other factors cited in
Manitowoc's filings with the United States Securities and Exchange
Commission.
Manitowoc undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise. Forward-looking statements only speak
as of the date on which they are made. 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, 2015.
THE MANITOWOC COMPANY, INC. Unaudited Consolidated
Financial Information For the Three and Nine Months Ended
September 30, 2016 and 2015 (In millions, except share data)
INCOME STATEMENT Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Net sales $ 349.8 $ 438.2 $ 1,234.9 $ 1,322.6
Cost of sales 308.3 368.3
1,023.3 1,082.4 Gross profit 41.5 69.9 211.6
240.2 Engineering, selling and administrative expenses 73.0
77.6 218.8 239.8 Asset impairment expense 96.9 - 96.9 -
Restructuring expense 3.9 (0.4 ) 17.1 0.4 Amortization expense 0.7
0.8 2.2 2.3 Other 0.5 0.1 2.3
(0.0 ) Operating loss (133.5 ) (8.2 ) (125.7 ) (2.3 )
Amortization of deferred financing fees (0.5 ) (1.1 ) (1.8 ) (3.2 )
Interest expense (10.0 ) (24.0 ) (29.6 ) (71.3 ) Loss on debt
extinguishment - - (76.3 ) - Other income (expense) - net
0.5 (2.4 ) 3.7 0.2 Loss
from continuing operations before taxes (143.5 ) (35.7 ) (229.7 )
(76.6 ) (Benefit) provision for taxes on income (5.3 )
(6.1 ) 116.9 (17.3 ) Loss from
continuing operations (138.2 ) (29.6 ) (346.6 ) (59.3 )
Discontinued operations: (Loss) income from discontinued
operations, net of income taxes (1.8 ) 34.4
(5.8 ) 79.0 Net (loss) income $ (140.0 ) $ 4.8
$ (352.4 ) $ 19.7 BASIC (LOSS) INCOME PER COMMON
SHARE: Loss from continuing operations $ (1.00 ) $ (0.22 ) $ (2.52
) $ (0.44 ) (Loss) income from discontinued operations (0.01
) 0.25 (0.04 ) 0.58 BASIC (LOSS)
INCOME PER COMMON SHARE $ (1.01 ) $ 0.04 $ (2.56 ) $ 0.14
DILUTED (LOSS) INCOME PER COMMON SHARE: Loss from continuing
operations $ (1.00 ) $ (0.22 ) $ (2.52 ) $ (0.44 ) (Loss) income
from discontinued operations (0.01 ) 0.25
(0.04 ) 0.58 DILUTED (LOSS) INCOME PER COMMON
SHARE $ (1.01 ) $ 0.04 $ (2.56 ) $ 0.14
WEIGHTED AVERAGE SHARES OUTSTANDING: Weighted Average Shares
Outstanding - Basic 138,422,953 136,164,053 137,390,809 135,983,603
Weighted Average Shares Outstanding - Diluted 138,422,953
136,164,053 137,390,809 135,983,603
THE MANITOWOC
COMPANY, INC. Unaudited Consolidated Financial
Information For the Nine Months Ended September 30, 2016 and
2015 (In millions)
BALANCE SHEET
September 30, December 31, ASSETS
2016 2015 Current assets: Cash and temporary
investments $ 42.9 $ 31.5 Accounts receivable - net 132.5 155.7
Inventories - net 496.3 452.6 Notes receivable - net 60.4 65.1
Other current assets 54.5 45.9 Current assets of discontinued
operations - 254.2 Total current assets
786.6 1,005.0 Property, plant and equipment - net 315.3 410.7
Intangible assets - net 428.7 425.8 Other long-term assets 63.1
191.2 Long-term assets held for sale 5.5 5.5 Long-term assets of
discontinued operations - 1,501.5 TOTAL
ASSETS $ 1,599.2 $ 3,539.7
LIABILITIES
& STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable and accrued expenses $ 350.3 $ 436.3 Short-term borrowings
and current portion of long-term debt 15.3 67.2 Customer advances
10.3 10.3 Product warranties 38.4 35.9 Product liabilities 21.4
21.9 Current liabilities of discontinued operations -
312.0 Total current liabilities 435.7 883.6
Long-term debt 293.0 1,330.4 Other non-current liabilities 247.0
286.4 Long-term liabilities of discontinued operations - 219.8
Stockholders' equity 623.5 819.5 TOTAL
LIABILITIES & STOCKHOLDERS' EQUITY $ 1,599.2 $ 3,539.7
CASH FLOW SUMMARY Three Months Ended
Nine Months Ended September 30, September 30,
2016 2015 2016 2015 Net (loss) income $
(140.0 ) $ 4.8 $ (352.4 ) $ 19.7 Non-cash adjustments 115.0 (16.1 )
283.2 5.2 Changes in operating assets and liabilities 23.6
(25.9 ) (94.8 ) (101.7 ) Net cash used
for operating activities of continuing operations (1.4 ) (37.2 )
(164.0 ) (76.8 ) Net cash (used for) provided by operating
activities of discontinued operations (1.6 ) 43.5
(65.5 ) 2.9 Net cash (used for)
provided by operating activities (3.0 ) 6.3 (229.5 ) (73.9 )
Capital expenditures (10.1 ) (9.4 ) (34.8 ) (31.9 ) Other (0.6 )
(0.1 ) (0.3 ) 3.2 Proceeds from sale of fixed assets 1.4 1.1 2.3
6.2 Net cash used for investing activities of discontinued
operations (0.0 ) (3.1 ) (2.4 ) (10.1 ) Proceeds from (payments on)
borrowings - net 14.8 14.2 (1,090.0 ) 123.0 Payments on receivable
financing - net (3.7 ) (0.7 ) (8.7 ) (10.0 ) Exercise of stock
options 3.9 0.1 6.4 4.0 Debt issuance costs (0.6 ) - (8.9 ) - Cash
transferred to spun-off subsidiary - - (17.7 ) - Dividend from
spun-off subsidiary - - 1,361.7 - Net cash (used for) provided by
financing activities of discontinued operations - (0.1 ) 0.2 0.1
Effect of exchange rate changes on cash - (0.8
) 1.2 (3.4 ) Net increase (decrease) in cash
& temporary investments $ 2.1 $ 7.5 $ (20.5 ) $
7.2
Non-GAAP Financial Measures
Adjusted EBITDA
The company defines Adjusted EBITDA as earnings before interest,
taxes, depreciation, and amortization, plus certain items such as
pro-forma acquisition results and the addback of certain
restructuring charges, that are adjustments per the credit
agreement definition. The company's trailing twelve-month Adjusted
EBITDA for covenant compliance purposes as of September 30, 2016
was $112.3 million. The reconciliation of GAAP net loss
attributable to Manitowoc to Adjusted EBITDA is as follows (in
millions):
TTM September 30, 2016
Net loss
$ (308.6 ) Income from discontinued operations (50.6 ) Depreciation
53.4 Amortization 3.0 Interest expense and amortization of deferred
financing fees 56.7 Income taxes 91.9
EBITDA
(154.2 ) Costs due to early extinguishment of debt 76.5
Restructuring expense 26.6 Pension and post-retirement 15.3
Stock-based compensation 5.2 Asset impairment expense 112.2 Other
30.7
Adjusted EBITDA
$ 112.3
Non-GAAP Items
Non-GAAP adjusted net loss from continuing operations and
non-GAAP adjusted operating loss are financial measures that are
not in accordance with GAAP. Manitowoc believes these non-GAAP
financial measures provide important supplemental information to
both management and investors regarding financial and business
trends used in assessing its results of operations. Manitowoc
believes excluding specified items from net loss and operating loss
provides a more meaningful comparison to the corresponding
reporting periods and internal budgets and forecasts, assists
investors in performing analysis that is consistent with financial
models developed by investors and research analysts, provides
management with a more relevant measure of operating performance,
and is more useful in assessing management performance.
Non-GAAP Adjusted
Net Loss and Loss Per Share from Continuing
Operations
Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015 Net (loss)
income $ (140.0 ) $ 4.8 $ (352.4 ) $ 19.7 Special items: Loss
(income) from discontinued operations, net of tax 1.8 (34.4 ) 5.8
(79.0 ) Early extinguishment of debt - - 76.3 - Asset impairment
96.9 - 96.9 - Restructuring expense 3.9 (0.4 ) 17.1 0.4 Separation
equity awards 0.4 - 2.3 - Tax valuation allowance and one time tax
items - - 117.7 - Tax on special items (1.1 ) 0.2
(2.1 ) 0.1 Non-GAAP adjusted net loss
from continuing operations $ (38.1 ) $ (29.8 ) $ (38.4 ) $ (58.8 )
Diluted (loss) income per share $ (1.01 ) $ 0.04 $ (2.56 ) $
0.14 Special items, net of tax: Loss (income) from discontinued
operations 0.01 (0.25 ) 0.04 (0.58 ) Early extinguishment of debt -
- 0.56 - Asset impairment 0.69 - 0.70 - Restructuring expense 0.03
- 0.12 - Separation equity awards - - 0.02 - Tax valuation
allowance and one time tax items - -
0.86 - Diluted non-GAAP adjusted net
loss per share from continuing operations $ (0.28 ) $ (0.22 ) $
(0.28 ) $ (0.43 )
Non-GAAP Adjusted
Operating (Loss) Income
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Net sales $ 349.8 $ 438.2 $ 1,234.9
$ 1,322.6 Cost of sales 308.3 368.3
1,023.3 1,082.4 Gross profit 41.5 69.9
211.6 240.2 Engineering, selling and administrative expenses
73.0 77.6 218.8 239.8
Non-GAAP adjusted operating (loss) income $ (31.5 ) $ (7.7 )
$ (7.2 ) $ 0.4 Margin on non-GAAP adjusted operating (loss)
income -9.0 % -1.8 % -0.6 % 0.0 %
Non-GAAP adjusted operating loss $ (31.5 ) $ (7.2 )
Adjustments included in Non-GAAP adjusted operating loss Inventory
reserves 9.4 9.4
Losses from decline in used crane
values
13.5 13.5 Product improvement initiatives 3.4 3.4 Plant variances
3.6 3.6 Subtotal adjustments
29.9 29.9 Non-GAAP adjusted operating loss
excluding above adjustments $ (1.6 ) $ 22.7
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version on businesswire.com: http://www.businesswire.com/news/home/20161101006817/en/
The Manitowoc Company, Inc.Ion WarnerVP, Marketing and Investor
Relations717-593-5266
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