Moody's Investors Service - the rating unit of
) - assigned a Ba1 rating to the proposed $1.05 billion Senior
Manitowoc Company, Inc.
). The Senior Facility includes a $500 million revolving credit,
a $350 million Term Loan A and a $200 million Term Loan B.
H&E EQUIP SVCS (HEES): Free Stock Analysis
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MANITOWOC INC (MTW): Free Stock Analysis
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The proposed $1.05 billion facility will refinance current
outstanding facilities. Thus, the rating on the refinanced
facilities will be withdrawn upon completion of the refinancing.
In addition, Manitowoc's Corporate Family Rating (CFR) has been
upgraded by Moody's. Manitowoc now enjoys a CFR of B1, up from
B2. The new rating is attributable to the company's favorable
business outlook for both the Crane and Foodservice segments.
Moody's also upgraded Manitowoc's Senior Unsecured obligations to
B2 from B3 and expects that Manitowoc will continue deleveraging
over the near term.
Manitowoc's Probability of Default Rating (PDR) was lifted to
B1-PD from B2-PD. Its Speculative Grade Liquidity (SGL) rating
was also raised by Moody's to SGL-2 from SGL-3. The upgrade
reflects Manitowoc's good liquidity profile. The rating agency
remains optimistic that the company will maintain its present
liquidity profile in the next twelve months.
The ratings outlook was revised to stable from positive. This
outlook is based on expected improvement in the key end markets.
Moody's anticipates that steady revenue growth for both the
Cranes and Food Service segments will lead to improved
profitability and cash flow and the company will use its improved
cash flows to pay down debt.
Furthermore, Moody's estimates year-end leverage of about 4.5x
for 2013 and coverage of over 2x with improvement in 2014.
Moody's feels the company has made significant progress in
diversifying its geographic base by increasing exposure to
Western Europe and high growth regions. Manitowoc currently
generates more than 50% of its sales from outside the U.S.
However, Moody's remains cautious about Manitowoc's high leverage
for the rating category. Moody's also stated that the ratings
could be downgraded if the earnings before interest, taxes,
depreciation and amortization (EBITDA) or interest coverage
decreased to less than 2x or debt to EBITDA increased to over
5.5x over the next few quarters.
Manitowoc, belonging to the machinery and construction industry
Joy Global, Inc.
), reported third-quarter 2013 adjusted earnings from continuing
operations of 39 cents per share, up a sharp 129% year over year.
Earnings were helped by sound performance in the Crane segment,
successful introduction of products, as well as Manitowoc's
strategic initiatives. The results beat the Zacks Consensus
Estimate of 32 cents.
For full-year 2013, Manitowoc lowered its revenue guidance for
the Crane segment from high single-digit to mid single-digit
growth. However, crane demand is expected to increase
significantly, aided by the new highway bill and a turnaround in
the construction sector. The segment will also benefit from
innovation of products and services.
Foodservice revenues are expected to rise in modest single digits
compared with the mid single-digit gain expected earlier. The
Foodservice segment will be assisted by new manufacturing
facilities and product launches.
Margins for both the Crane and Foodservice segments are expected
to expand in fiscal 2013. However, high debt levels will continue
to be a headwind.
Wisconsin-based Manitowoc is one of the world's leading
innovators and manufacturers of commercial foodservice equipment.
The company is among 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 services.
Manitowoc currently carries a Zacks Rank #3 (Hold).
H&E Equipment Services Inc.
) also belongs to the same industry and holds a Zacks Rank #2