Manitowoc Co. Inc.
) has reported an adjusted EPS of 14 cents in the fiscal 2011
fourth quarter, compared with 10 cents in the year-earlier quarter.
EPS in the quarter beat the Zacks Consensus Estimate by a
Total revenue during the quarter increased 24.5% year over year
to $1034.5 million, driven by sales improvement in both the
business segments. Revenue in the quarter was ahead of the Zacks
Consensus Estimate of $978 million.
Costs and Margins
Costs of goods sold increased to $825.4 million during the
quarter from $637.9 million in the year-earlier quarter. Gross
profit upped 8% to $209.1 million from $193 million in the year-ago
quarter. However, gross margins plunged 300 basis points year over
year to 20.2%.
Engineering, selling and administrative expenses also increased
to $143.3 million from $132.1 million in the year-earlier quarter.
Adjusted operating income increased to $65.8 million from $60.9
million in the prior-year quarter while operating margins
contracted 90 basis points year over year to 6.4%.
Net sales in the Crane segment were up 40% year over year to
$687.6 million. The improvement is mainly due to continued growth
in the Americas and strong demand in emerging economies and
the Greater Asia-Pacific region.
Segment operating earnings upped 30% to $39.5 million from the
year-earlier quarter. Operating margins however dipped 50 basis
points year over year to 5.7% due to higher volume leverage being
offset by commodity cost, production inefficiencies, and a negative
product sales mix.
Total revenue from the Foodservice segment was $346.9 million,
up 2% on the year-over-year basis driven by overall growth across
all regions and success of new products. Segment operating income
was up 13% year over year to $44.6 million. Operating margin
expanded 120 basis points to 12.9% driven by higher sales volumes
and the benefits from lean initiatives, scale economies and product
The Crane segment's backlog totaled $761 million as of fiscal
2011 end compared with $572 million as of fiscal 2010 end. The
segment also reported total orders of $676 million in the fourth
quarter, a 9% increase year over year. This marked Manitowoc's
highest level of order activity since the third quarter of
Fiscal 2011 Performance
Manitowoc reported fiscal adjusted EPS of 38 cents in 2011, more
than four times the 9 cents in 2010 and 2 cents above the Zacks
Consensus Estimate. Revenues improved 16% year over year to $3.65
billion, ahead of the Zacks Consensus Estimate of $3.58
As of fiscal 2011 end, cash and cash equivalents totaled $71.3
million, down from $86.4 million as of fiscal 2010 end. Cash from
operations was $30.8 million for the year, down substantially from
$202.9 million in the prior year. As of December 31 2011, the
debt-to-capitalization ratio remained flat at 80% compared with
December 31, 2010.
Manitowoc estimates Crane revenue to grow in the range of 10% to
15% year over year and Foodservice revenue in a high single-digit
percentage range. The Crane segment's operating income is expected
to increase in the 30% to 40% band, while operating income at the
Foodservice segment is expected to increase 10% to 15%.
Capital expenditure is forecast to be approximately $80 million;
depreciation & amortization of approximately $120 million;
reduction in interest expense in the range of $25 million to $30
million; and amortization of deferred financing fees of
approximately $10 million. Debt reduction is targeted at $150
million to $200 million.
Manitowoc holds a strong market position in the Cranes business.
After suffering repeated revenue declines ever since the third
quarter of 2008, the segment finally did a turnaround in the fourth
quarter of 2010.
The momentum has been maintained since then. The segment is
witnessing continued strength in several emerging markets,
including Asia, Latin America, India, and the Middle East.
We see significant long-term growth potential in this market,
driven by an increase in global energy consumption and the need for
infrastructure upgrade in both the developed as well as developing
nations. Furthermore, the Foodservice segment has significant
growth potential from further investments in new product
development and innovation besides expanding the global
On the flipside, Manitowoc's high debt level remains a cause of
concern. Manitowoc's growth strategy has historically relied on
acquisitions. The company's current leverage position may restrict
it from pursuing potential acquisition until it is able to reduce
its debt and leverage to a point where additional debt could be
incurred to support the financing. The stock currently retains a
Zacks #3 Rank (short-term Hold recommendation).
Manitowoc is a multi-industry, capital goods manufacturer with
over 100 manufacturing and service facilities in 26 countries. It
is one of the world's largest providers of lifting equipment for
the global construction industry.
It is also a leading manufacturer of commercial foodservice
equipment serving the ice, beverage, refrigeration, food
preparation and cooking needs of restaurants, convenience stores,
hotels, health care and institutional applications. Manitowoc
) and privately held Altec Industries Inc. and American Panel
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