New product innovation drives first-quarter
orders of $488 million, an increase of 17% over prior year;
financial results in line with expectations; disciplined cash
management drives stable liquidity position at March 31, 2017
The Manitowoc Company, Inc. (NYSE: MTW) (“Manitowoc”) today
reported first-quarter 2017 net sales of $305.8 million versus
$427.4 million in the comparable period in 2016.
On a GAAP basis, the Company reported a net loss of ($36.0)
million, or ($0.26) per diluted share, in the first-quarter 2017
versus a net loss of ($195.9) million, or ($1.43) per diluted
share, in the first-quarter of 2016. The Company’s loss from
continuing operations in the first-quarter 2017 and 2016 was
($36.0) million and ($192.7) million, respectively.
Non-GAAP adjusted net loss from continuing operations (1) was
($24.2) million, or ($0.17) per diluted share, in the first-quarter
2017 versus non-GAAP adjusted net loss from continuing operations
of ($7.6) million, or ($0.05) per diluted share, in the
first-quarter 2016.
“In the first-quarter, we were pleased by the strong customer
reception of our new products, many of which were highlighted at
ConExpo. Nearly half of our equipment orders in the quarter were
for products introduced since becoming a stand-alone crane company
last year, which drove year-over-year and sequential orders up by
17% and 40%, respectively. Although the market has not shown signs
of a sustained recovery, we are encouraged by the increased orders
we booked in the quarter, and at this time reiterating our
full-year financial guidance,” commented Barry L. Pennypacker,
President and Chief Executive Officer of The Manitowoc Company,
Inc.
“Our first-quarter revenue was negatively impacted by the low
level of backlog entering 2017, mainly due to historically low
levels of crawler crane demand. In addition, our Mobile crane
business remains soft in the Americas and the Middle East as a
result of continued low rental rates, weakness in used equipment
prices and low oil prices, notwithstanding the increased activity
in some of the American shale basins. Our Tower crane business
performed in line with our expectations, reflecting market share
gains in key product lines,” said Pennypacker.
“Despite the challenging market conditions, we remain focused on
the things we can control. The relocation of our crawler crane
production continues to proceed as planned; on time and within
budget. Through judicious working capital management, we delivered
improved cash flow from operational activities versus last year and
ended the quarter with no outstanding borrowings on our ABL credit
facility. This was mainly attributable to utilizing the principles
of The Manitowoc Way throughout the organization. Our overall
long-term objectives remain unchanged, that is targeting
double-digit operating margins by 2020, and being a market leader
in lifting solutions,” concluded Pennypacker.
Financial Results
First-quarter 2017 net sales were $305.8 million versus $427.4
million in the first-quarter 2016. Approximately half of the
year-over-year decline was attributable to lower crawler crane
shipments, with the remaining decline primarily due to lower sales
in the Americas, partly offset by increases in Europe from strength
in residential and commercial construction trends and new product
introductions. Changes in foreign currency rates negatively
impacted revenue by $6.4 million for the current quarter.
GAAP operating income (loss) for the first-quarter 2017 was
($23.7) million, compared to income of $0.8 million in the
first-quarter 2016. The first-quarter 2017 GAAP operating loss
includes $11.7 million of restructuring costs mainly related to
plant relocation and severance expenses. Non-GAAP Adjusted EBITDA
for the first-quarter 2017 was ($0.8) million compared to Non-GAAP
Adjusted EBITDA of $19.5 million in the same period last year.
Backlog totaled $506.3 million at March 31, 2017, up from the
fourth-quarter 2016 backlog of $323.8 million. The first-quarter
book to bill ratio of 1.6 was the first quarter since the
first-quarter 2015 with a book to bill ratio in excess of 1.0.
Cash Flow
Net cash used for operating activities of continuing operations
in the first-quarter 2017 was ($32.5) million, compared to ($163.4)
million from first-quarter 2016. First-quarter capital expenditures
totaled $3.8 million as compared to $10.9 million in the
first-quarter 2016.
The Company’s cash totaled $36.1 million at March 31, 2017, a
decrease of $33.8 million from the end of the fourth-quarter 2016.
At the end of the first-quarter, and consistent with December 31,
2016, the Company had zero borrowings on its ABL revolver. The
decrease of $33.8 million of cash during the quarter was mainly
attributable to restructuring and other benefit payments, as well
as the semi-annual interest payment on the Company’s long-term
debt.
Full-Year 2017 Guidance
Manitowoc’s 2017 financial guidance for the full year remains
unchanged, and the Company is now providing guidance for income tax
expense as:
- Revenue – down approximately 8-10%
year-over-year;
- Adjusted EBITDA – approximately $41 to
$59 million;
- Depreciation – approximately $40 to $45
million;
- Capital expenditures – approximately
$30 million; and
- Income tax expense – approximately $7
to $10 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 Tuesday, May 9th, 2017, at 10:00 a.m. ET (9:00 a.m. CT), The
Manitowoc Company’s senior management will discuss its
first-quarter earnings results 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 2016,
Manitowoc’s revenues totaled $1.6 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) income 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;
- 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 first parties and
the resolution of those issues;
- unexpected issues associated with the
availability and viability of suppliers;
- the risks associated with growth and
contraction;
- 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;
- impairment of goodwill and/or
intangible assets;
- 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, 2016.
THE MANITOWOC COMPANY, INC. Unaudited Consolidated
Financial Information For the Three Months Ended March 31, 2017
and 2016 (In millions, except share data)
INCOME
STATEMENT Three Months Ended
March 31, 2017 2016 Net sales $ 305.8 $
427.4 Cost of sales 253.9 347.7 Gross
profit 51.9 79.7 Operating costs and
expenses: Engineering, selling and administrative expenses 63.3
72.4 Amortization of intangible assets 0.4 0.7 Restructuring
expense 11.7 4.4 Other expense 0.2 1.4
Total operating costs and expenses 75.6 78.9
Operating (loss) income (23.7 ) 0.8 Other (expense) income:
Interest expense (10.1 ) (9.7 ) Amortization of deferred financing
fees (0.5 ) (0.9 ) Loss on debt extinguishment - (76.3 ) Other
(expense) income - net (0.2 ) 1.1 Total other
expense (10.8 ) (85.8 ) Loss from continuing
operations before taxes (34.5 ) (85.0 ) Provision for taxes on
income 1.5 107.7 Loss from continuing
operations (36.0 ) (192.7 ) Discontinued operations: Loss from
discontinued operations, net of income taxes -
(3.2 ) Net loss $ (36.0 ) $ (195.9 ) BASIC LOSS PER COMMON SHARE:
Loss from continuing operations $ (0.26 ) $ (1.41 ) Loss from
discontinued operations, net of income taxes -
(0.02 ) BASIC LOSS PER COMMON SHARE $ (0.26 ) $ (1.43 ) DILUTED
LOSS PER COMMON SHARE: Loss from continuing operations $ (0.26 ) $
(1.41 ) Loss from discontinued operations, net of income taxes
- (0.02 ) DILUTED LOSS PER COMMON SHARE $
(0.26 ) $ (1.43 ) Weighted average shares outstanding -
Basic 140,081,711 136,599,912 Weighted average shares outstanding -
Diluted 140,081,711 136,599,912
In the fourth-quarter of 2016 the Company changed its method of
inventory costing for certain inventory to the FIFO method from the
LIFO method. The Company applied this change in method of inventory
costing by retrospectively adjusting the prior period financial
statements.
THE MANITOWOC COMPANY, INC. Unaudited Consolidated
Financial Information As of March 31, 2017 and December 31,
2016 (In millions)
BALANCE SHEET
March 31, December 31, ASSETS
2017 2016 Current assets: Cash and cash equivalents $
36.1 $ 69.9 Accounts receivable - net 138.1 134.4 Inventories - net
461.3 429.0 Notes receivable - net 47.4 62.4 Other current assets
52.6 54.0 Total current assets 735.5 749.7 Property,
plant and equipment - net 306.2 308.8 Intangible assets - net 417.7
413.7 Other long-term assets 44.6 45.6 Long-term assets held for
sale 1.9 - TOTAL ASSETS $ 1,505.9 $ 1,517.8
LIABILITIES & STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued expenses $ 336.1 $ 321.2
Short-term borrowings and current portion of long-term debt 12.9
12.4 Product warranties 32.2 36.5 Customer advances 22.8 21.0
Product liabilities 23.7 21.7 Total current
liabilities 427.7 412.8 Non-current liabilities: Long-term debt
268.6 269.1 Other non-current liabilities 238.9 245.4
Total non-current liabilities 507.5 514.5 Stockholders' equity
570.7 590.5 TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $ 1,505.9 $ 1,517.8
In the fourth-quarter of 2016 the Company changed its method of
inventory costing for certain inventory to the FIFO method from the
LIFO method. The Company applied this change in method of inventory
costing by retrospectively adjusting the prior period financial
statements.
THE MANITOWOC COMPANY, INC. Unaudited Consolidated
Financial Information For the Three Months Ended March 31, 2017
and 2016 (In millions)
CASH FLOW SUMMARY
Three Months Ended March 31,
2017 2016 Cash flows from operations: Net loss
$ (36.0 ) $ (195.9 ) Non-cash adjustments - net 18.2 132.5 Accounts
receivable (1.8 ) (26.1 ) Inventories (31.2 ) (33.7 ) Notes
receivable 5.7 1.6 Other assets (1.4 ) (6.4 ) Accounts payable 37.2
(11.2 ) Accrued expenses and other liabilities (23.2 )
(24.2 ) Net cash used for operating activities of continuing
operations (32.5 ) (163.4 ) Net cash used for operating activities
of discontinued operations - (46.8 ) Net cash
used for operating activities (32.5 ) (210.2 ) Cash
flows from investing: Capital expenditures (3.8 ) (10.9 ) Proceeds
from sale of fixed assets 1.7 1.2 Other 1.1 -
Net cash used for investing activities of continuing
operations (1.0 ) (9.7 ) Net cash used for investing activities of
discontinued operations - (2.4 ) Net cash used
for investing activities (1.0 ) (12.1 ) Cash flows
from financing: Payments on long-term debt - net (1.3 ) (1,090.0 )
Payments on notes financing - net (2.2 ) (3.7 ) Exercises of stock
options 2.7 1.9 Debt issuance costs - (7.9 ) Cash transferred to
spun-off subsidiary - (17.7 ) Dividend from spun-off subsidiary
- 1,361.7 Net cash (used for) provided
by investing activities of continuing operations (0.8 ) 244.3 Net
cash provided by investing activities of discontinued operations
- 0.2 Net cash (used for) provided by
investing activities (0.8 ) 244.5 Effect of
exchange rate changes on cash 0.5 1.6
Net (decrease) increase in cash and cash equivalents $ (33.8 ) $
23.8
Non-GAAP Financial Measures
Non-GAAP Items Non-GAAP adjusted net loss from
continuing operations and non-GAAP adjusted operating (loss) income
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) income 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 March 31,
2017 2016 Net loss $ (36.0 ) $ (195.9 )
Special items, net of tax: Loss from discontinued operations, net
of income taxes - 3.2 Loss on debt extinguishment - 76.3
Restructuring expense 11.7 4.4 Separation equity awards 0.1 1.4 Tax
valuation allowance and one time tax items - 103.3 Tax on special
items - (0.3 ) Non-GAAP adjusted net loss from
continuing operations $ (24.2 ) $ (7.6 ) Diluted loss per
share $ (0.26 ) $ (1.43 ) Special items, net of tax: Loss from
discontinued operations, net of income taxes - 0.02 Loss on debt
extinguishment - 0.56 Restructuring expense 0.08 0.03 Separation
equity awards 0.00 0.01 Tax valuation allowance and one time tax
items - 0.76 Diluted non-GAAP adjusted
net loss per share from continuing operations $ (0.17 ) $ (0.05 )
Non-GAAP Adjusted
Operating (Loss) Income
Three Months Ended March 31, 2017
2016 Operating (loss) income $ (23.7 ) $ 0.8
Adjustments: Restructuring expense 11.7 4.4 Amortization of
intangible assets 0.4 0.7 Other expense 0.2
1.4 Non-GAAP adjusted operating (loss) income $ (11.4 )
$ 7.3 Margin on non-GAAP adjusted operating (loss)
income -3.7 % 1.7 %
Adjusted
EBITDA
The Company defines adjusted EBITDA as earnings before interest,
taxes, depreciation and amortization, plus an addback of certain
restructuring charges. The reconciliation of GAAP net loss to
adjusted EBITDA from continuing operations for the current and
previous four quarters, as well as the trailing twelve months is as
follows ($’s in millions):
Trailing Three Months Ended Twelve
March 31, 2016 June 30, 2016 September 30,
2016 December 31, 2016 March 31, 2017
Months Net loss $ (195.9 ) $ (5.8 ) $ (140.7 ) $ (33.4 ) $
(36.0 ) $ (215.9 ) Loss from discontinued operations, net of income
taxes 3.2 0.8 1.8 1.4 - 4.0 Interest expense and amortization of
deferred financing fees 10.6 10.3 10.5 10.4 10.6 41.8 Provision
(benefit) for taxes on income 107.7 0.7 (5.3 ) (2.6 ) 1.5 (5.7 )
Depreciation expense 12.2 11.4 11.3 10.7 10.6 44.0 Amortization of
intangible assets 0.7 0.8 0.7
0.8 0.4 2.7 EBITDA
(61.5 ) 18.2 (121.7 ) (12.7 ) (12.9 ) (129.1 ) Restructuring
expense 4.4 8.8 3.9 6.3 11.7 30.7 Asset impairment expense - - 96.9
- - 96.9 Other expense (income) - net (1) 76.6
(1.7 ) (0.0 ) 0.7 0.4
(0.6 ) Adjusted EBITDA 19.5 25.3 (20.9 ) (5.7 ) (0.8 ) (2.1 )
Depreciation expense (12.2 ) (11.4 ) (11.3 )
(10.7 ) (10.6 ) (44.0 ) Adjusted operating
income (loss) 7.3 13.9
(32.2
)*
(16.4 ) (11.4 ) (46.1 ) Restructuring expense (4.4 ) (8.8 ) (3.9 )
(6.3 ) (11.7 ) (30.7 ) Asset impairment expense - - (96.9 ) - -
(96.9 ) Amortization of intangible assets (0.7 ) (0.8 ) (0.7 ) (0.8
) (0.4 ) (2.7 ) Other operating costs and expenses (1.4 )
(0.4 ) (0.5 ) (0.3 ) (0.2 ) (1.4
) GAAP operating income (loss) $ 0.8 $ 3.9 $ (134.2 )
$ (23.8 ) $ (23.7 ) $ (177.8 ) Adjusted EBITDA margin
percentage 4.6 % 5.5 % -6.0 % -1.5 % -0.3 % -0.1 % Adjusted
operating income (loss) margin percentage 1.7 % 3.0 % -9.2 % -4.3 %
-3.7 % -3.1 % (1) Other expense (income) - net includes loss
on debt extinguishment, other (expense) income and other (expense)
income, net.
*
As previously disclosed in the Company's third-quarter press
release, adjusted operating loss includes $29.9 million of non-cash
charges related to inventory reserves, losses from decline in used
crane values, product improvement initiatives and plant variances.
Excluding these amounts the third-quarter adjusted operating loss
would have been $2.3 million.
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ContactThe Manitowoc Company, Inc.Ion WarnerVP, Marketing
and Investor Relations+1-717-593-5266
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