Manitowoc Company, Inc.
) slumped over 13% and closed at $26.56 on Jul 31, a day after the
reporting sluggish second quarter 2014 results. The manufacturer of
cranes as well as commercial foodservice equipment reported
adjusted earnings from continuing operations of 35 cents per share,
which declined 25.5% year-over-year from 47 cents, primarily
impacted by lower crane demand. The bottom line also missed the
Zacks Consensus Estimate of 41 cents.
Including discontinuing operations, Manitowoc reported earnings of
34 cents per share compared with 43 cents in the prior-year
Total revenue was $1.01 billion in the reported quarter, down 2%
year over year as a decline in the Crane segment sales offset the
increase in Foodservice sales. Revenues fell short of the Zacks
Consensus Estimate of $1.04 billion.
Cost of sales decreased 2.7% to $740.5 million from $761 million in
the year-ago quarter. Gross profit went down 1.3% year over year to
$272 million. While gross margin expanded 30 basis points (bps) to
Engineering, selling and administrative expenses increased 4.7%
year over year to $167 million. Adjusted operating income was $96.4
million, down 10.4% year over year, leading to 90-bps contraction
in operating margin to 9.5%.
The Manitowoc Company Inc - Earnings Surprise |
Revenues from the
Crane and Related Products
segment decreased 6.4% year over year to $606 million due to a
volume decrease primarily in the boom truck and rough-terrain crane
markets. The segment's operating income plunged 22% year over year
to $54 million affected by lower sales volume, partially offset by
improved operational efficiency.
segment's revenues were up 4.4% year over year to $406.7 million
from $389.7 million in the prior-year quarter. The improvement was
mainly backed by a new product rollout in the EMEA region boosted
by brisk sales of hot holding, ice, and beverage equipment in the
Americas. The segment's operating income also improved 4.6% year
over year to $65.9 million. The year-over-year increase was driven
by improved operating efficiencies from key manufacturing
strategies offset by an unfavorable product mix and a lag in
Manitowoc's Americas ovens consolidation.
Backlog in the Crane segment was $728 million at the end of the
second quarter, down 14% sequentially. Total orders were $491
million, which declined 19% from the prior-year quarter,
representing a book-to-bill of 0.8x.
Manitowoc ended the second quarter with cash and cash equivalents
of $103.5 million, up from $54.9 million as of 2013-end. Long-term
debt was $1.75 billion as of Jun 30, 2014, compared with $1.5
billion as of Dec 31, 2013. Debt-to-capitalization ratio was 68.1%
as of Jun 30, 2014, up from 66.1% as of Dec 31, 2013.
Cash flow from operations was $72.2 million in the reported quarter
compared with $48 million in the prior-year quarter. Capital
expenditure was $18 million compared with $25.6 million in the
For 2014, Manitowoc cut its guidance for Crane segment revenue and
Foodservice operating margins. Manitowoc now expects flat to
slightly down top-line results at the Crane segment. The company
however reiterated its outlook of high-single-digit improvement in
operating margins in the Crane segment.
Further, Manitowoc reaffirmed its view of a mid-single digits gain
in the Foodservice segment revenues. However, it trimmed the
forecast for operating margins to a mid-teens growth from the
previous projection of a high teens improvement for the segment.
The company maintained its earlier forecast for capital expenditure
at $90 million for the year. Manitowoc also retained depreciation
and amortization projection of $120 million. Interest expenses are
predicted at less than $100 million.
Manitowoc will benefit from the momentum in the Foodservice
segment. During the quarter, the company closed the successful
rollout of blended beverage equipment in EMEA and a hot holding
rollout in the U.S., while expanding the penetration and success of
KitchenCare aftermarket services offering. These investments will
drive growth while further capitalizing on product development and
world-class innovation. Manitowoc remains optimistic regarding its
In addition, implementation of several strategic initiatives
including construction of multi-purpose Foodservice plant in
Monterrey, development of a shared-services platform in France to
streamline tower crane operations, expansion of product
verification center processes worldwide and organizational
realignment from a regional-to-product approach will improve cost
structure as well as accelerate product development processes.
However, the Crane segment performance remains doubtful due to
uncertainty in certain end markets. Rising competition from a
number of crane manufacturers in the Chinese market also continue
to pose as headwind.
Wisconsin-based Manitowoc is one of the world's leading innovators
and manufacturers of commercial foodservice equipment. The company
is one of the premier innovators and providers of crawler cranes,
tower cranes and mobile cranes for the heavy construction industry.
These are complemented by industry-leading product support
Manitowoc currently holds a Zacks Rank #4 (Sell). Some
better-ranked stocks in the same sector include H&E Equipment
Services Inc. (
), Komatsu Ltd. (
) and Blount International Inc. (
). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
MANITOWOC INC (MTW): Free Stock Analysis Report
KOMATSU LTD ADR (KMTUY): Get Free Report
H&E EQUIP SVCS (HEES): Free Stock Analysis
BLOUNT INTL (BLT): Free Stock Analysis Report
To read this article on Zacks.com click here.