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TheStreet Open House

The Manitowoc Company Reports First-quarter Financial Results

Stocks in this article: MTW

■ Interest expense – approximately $100 million

■ Amortization of deferred financing fees – approximately $8 million

■ Total leverage – below 3x Debt-to-EBITDA

■ Effective tax rate in the mid-to-high 20 percent range

Investor Conference Call

On May 2 at 10:00 a.m. ET (9:00 a.m. CT), Manitowoc’s senior management will discuss its first-quarter results during an investor conference call. All interested parties may listen to the live conference call via the Internet by going to the Investor Relations area of Manitowoc’s Web site at http://www.manitowoc.com. A replay of the conference call will also be available at the same location on the Web site.

About The Manitowoc Company, Inc.

Founded in 1902, The Manitowoc Company, Inc. is a multi-industry, capital goods manufacturer with over 100 manufacturing, distribution, and service facilities in 24 countries. The company is recognized globally 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 product support services. In addition, Manitowoc is one of the world’s leading innovators and manufacturers of commercial foodservice equipment, which includes 24 market-leading brands of hot- and cold-focused equipment. In 2013, Manitowoc’s revenues totaled $4.0 billion, with more than half of these revenues generated outside of the United States.

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;
  • 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 each of Manitowoc’s business segments 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 and foodservice equipment in emerging economies, and changes in demand for used lifting equipment and foodservice equipment;
  • global expansion of customers;
  • the replacement cycle of technologically obsolete cranes;
  • the ability of Manitowoc's customers to receive financing;
  • foodservice equipment replacement cycles in national accounts and global chains, including unanticipated issues associated with refresh/renovation plans by national restaurant accounts and global chains;
  • efficiencies and capacity utilization of facilities;
  • issues relating to the ability to timely and effectively execute on manufacturing strategies, including issues relating to new plant start-ups, plant closings, and/or consolidations of existing facilities and operations;
  • 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 U.S. government budget sequestration or other government-related issues or developments;
  • the ability to complete and appropriately integrate restructurings, consolidations, acquisitions, divestitures, strategic alliances, and joint ventures;
  • 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 issues associated with the resolution or settlement of uncertain tax positions, including unfavorable settlement of a tax matter with the IRS related to the 2008 and 2009 calendar years;
  • unanticipated changes in the capital and financial markets;
  • 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, 2013.

 
 
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three Months Ended March 31, 2014 and 2013
(In millions, except share data)
   
 
INCOME STATEMENT
Three Months Ended
March 31,
2014 2013*
 
Net sales $ 850.0 $ 894.6
Cost of sales   622.9     672.5  
Gross profit 227.1 222.1
 
Engineering, selling and administrative expenses 162.7 156.6
Restructuring expense 2.0 0.3
Amortization expense 8.8 9.0
Other   -     0.3  
Operating earnings 53.6 55.9
Amortization of deferred financing fees (1.2 ) (1.8 )
Interest expense (19.3 ) (33.0 )
Loss on debt extinguishment (25.3 ) (0.4 )
Other income - net   0.8     1.6  
Earnings from continuing operations before taxes on income 8.6 22.3
Provision for taxes on income   2.6     8.5  
 
Earnings from continuing operations 6.0 13.8
 
Discontinued operations:
Loss from discontinued operations, net of income taxes (1.0 ) (4.1 )
Loss on sale of discontinued operations, net of income taxes   (9.9 )   (1.6 )
Net (loss) earnings (4.9 ) 8.1
Less: net earnings (loss) attributable to noncontrolling interests   3.9     (2.3 )
Net (loss) earnings attributable to Manitowoc   (8.8 )   10.4  
 
Amounts attributable to the Manitowoc common shareholders:
Earnings from continuing operations 1.7 14.1
Loss from discontinued operations, net of income taxes (0.6 ) (2.1 )
Loss on sale of discontinued operations, net of income taxes   (9.9 )   (1.6 )
Net (loss) earnings attributable to Manitowoc (8.8 ) 10.4
 
BASIC EARNINGS (LOSS) PER SHARE:
Earnings from continuing operations attributable to the Manitowoc $ 0.01 $ 0.11
common shareholders, net of income taxes
Loss from discontinued operations attributable to the Manitowoc - (0.02 )
common shareholders, net of income taxes
Loss on sale of discontinued operations attributable to the Manitowoc (0.07 ) (0.01 )
common shareholders, net of income taxes
   
BASIC EARNINGS (LOSS) PER SHARE: $ (0.07 ) $ 0.08  
 
DILUTED EARNINGS (LOSS) PER SHARE:
Earnings from continuing operations attributable to the Manitowoc $ 0.01 $ 0.10
common shareholders, net of income taxes
Loss from discontinued operations attributable to the Manitowoc - (0.02 )
common shareholders, net of income taxes
Loss on sale of discontinued operations attributable to the Manitowoc (0.07 ) (0.01 )
common shareholders, net of income taxes
   
DILUTED EARNINGS (LOSS) PER SHARE $ (0.06 ) $ 0.08  
 
AVERAGE SHARES OUTSTANDING:
Average Shares Outstanding - Basic 134,187,169 132,306,735
Average Shares Outstanding - Diluted 137,047,710 134,993,057
 
SEGMENT SUMMARY          
Three Months Ended
March 31,
2014 2013*
Net sales from continuing operations:
Cranes and related products $ 466.7 $ 544.0
Foodservice equipment   383.3     350.6  
Total $ 850.0   $ 894.6  
 
Operating earnings (loss) from continuing operations:
Cranes and related products $ 22.6 $ 34.9
Foodservice equipment 57.9 49.1
General corporate expense (16.1 ) (18.5 )
Restructuring expense (2.0 ) (0.3 )
Amortization (8.8 ) (9.0 )
Other - (0.3 )
   
Total $ 53.6   $ 55.9  
 
* Results have been prepared with the previously announced divested Manitowoc Dong Yue business treated as a discontinued operation.
     
 
THE MANITOWOC COMPANY, INC.
Unaudited Consolidated Financial Information
For the Three Months Ended March 31, 2014 and 2013
(In millions)
 
 
BALANCE SHEET          
 
March 31, December 31,
ASSETS 2014 2013
Current assets:
Cash and cash equivalents $ 78.8 $ 54.9
Restricted cash 25.9 12.8
Accounts receivable - net 298.4 255.5
Inventories - net 824.0 720.8
Deferred income taxes 88.3 89.9
Other current assets 120.9 113.9
Current assets of discontinued operation   -     15.1  
Total current assets 1,436.3 1,262.9
 
Property, plant and equipment - net 579.8 578.8
Intangible assets - net 1,980.2 1,984.8
Other long-term assets 122.4 126.8
Long-term assets of discontinued operation   -     23.3  
TOTAL ASSETS $ 4,118.7   $ 3,976.6  
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 788.8 $ 935.6
Short-term borrowings 65.8 22.7
Customer advances 25.9 34.9
Product warranties 77.5 81.1
Product liabilities 26.0 25.0
Current liabilities of discontinued operation   -     26.1  
Total current liabilities 984.0 1,125.4
 
Long-term debt 1,779.7 1,504.1
Other non-current liabilities 560.8 562.6
Long-term liabilities of discontinued operation - 2.2
Stockholders' equity   794.2     782.3  
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 4,118.7   $ 3,976.6  
 
 
 
CASH FLOW SUMMARY          
Three Months Ended
March 31,
2014 2013*
Net (loss) earnings attributable to Manitowoc $ (8.8 ) $ 10.4
Non-cash adjustments 42.5 39.2
Changes in operating assets and liabilities   (298.3 )   (152.5 )
Net cash used for operating activities of continuing operations (264.6 ) (102.9 )
Net cash used for operating activities of discontinued operations   (6.8 )   (5.1 )
Net cash used for operating activities (271.4 ) (108.0 )
Capital expenditures (16.7 ) (20.9 )
Restricted cash (13.2 ) (0.5 )
Proceeds from sale of business - 39.2
Proceeds from sale of fixed assets 1.0 0.5

Net cash used for investing activities of discontinued operations

- (0.2 )
Proceeds from borrowings - net 323.9 129.3
Payments on receivable financing - net (7.2 ) (14.3 )
Stock options exercised 19.9 2.7
Debt issuance costs (4.9 ) -
Net cash used for financing activities of discontinued operations (7.2 ) -
Effect of exchange rate changes on cash   (0.3 )   -  
Net increase in cash & cash equivalents $ 23.9   $ 27.8  
 
* Results have been prepared with the previously announced divested Manitowoc Dong Yue business treated as a discontinued operation.
 

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 March 31, 2014 was $461.5 million. The reconciliation of net income attributable to Manitowoc to Adjusted EBITDA is as follows (in millions):

           
Net income attributable to Manitowoc $     122.6
Loss from discontinued operations 8.8
Loss on sale of discontinued operations 11.0
Depreciation and amortization 98.2
Interest expense and amortization of deferred financing fees 121.1
Costs due to early extinguishment of debt 27.9
Restructuring charges 6.5
Income taxes 30.2
Forgiveness of Loan to Manitowoc Dong Yue 39.9
Other       (4.7 )
Adjusted EBITDA $     461.5  
 

GAAP Reconciliation

In this release, the company refers to various non-GAAP measures. We believe that these measures are helpful to investors in assessing the company's ongoing performance of its underlying businesses before the impact of special items. In addition, these non-GAAP measures provide a comparison to commonly used financial metrics within the professional investing community which do not include special items. Earnings and earnings per share before special items reconcile to earnings presented according to GAAP as follows (in millions, except per share data):

       
Three Months Ended
March 31,
2014 2013*
 
Net (loss) earnings attributable to Manitowoc $ (8.8 ) $ 10.4
Special items, net of tax:
Loss from discontinued operations 0.6 2.1
Loss on sale of discontinued operations 9.9 1.6
Early extinguishment of debt 16.4 0.3
Restructuring expense 1.3 0.2
Forgiveness of loan to Manitowoc Dong Yue   4.3     -
Net earnings before special items $ 23.7   $ 14.6
 
Diluted earnings (loss) per share $ (0.06 ) $ 0.08
Special items, net of tax:
Loss from discontinued operations 0.00 0.02
Loss on sale of discontinued operations 0.07 0.01
Early extinguishment of debt 0.12 -
Restructuring expense 0.01 -
Forgiveness of loan to Manitowoc Dong Yue   0.03     -
Diluted earnings per share before special items $ 0.17   $ 0.11
 
* Results have been prepared with the previously announced divested Manitowoc Dong Yue business treated as a discontinued operation.




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