Manitowoc delivers strong third-quarter
results; Adjusted EBITDA margin improves 280 basis
points year-over-year on flat revenue; Increases adjusted EBITDA
midpoint for full year
The Manitowoc Company, Inc. (NYSE: MTW), (the “Company” or
“Manitowoc”) a leading global manufacturer of cranes and lifting
solutions, today reported third-quarter adjusted EBITDA(1) of $42.8
million representing a $12.3 million or 40% improvement compared to
the prior year. Third-quarter GAAP net income was $18.1 million or
$0.51 per diluted share. Adjusted net income from continuing
operations(1) was $19.2 million, or $0.54 per diluted share, in the
third-quarter 2019 versus $7.3 million, or $0.20 per diluted share,
in 2018.
Net sales in the third quarter were $448.0 million versus $450.1
million in 2018. On a currency adjusted basis, net sales for the
quarter were $456.7 million, an increase of $6.6 million or 1.5%
year-over-year.
Adjusted EBITDA margin increased 280 basis points year-over-year
to 9.6% of net sales, primarily driven by continued improvements
throughout the business.
“Manitowoc delivered solid third quarter results through
continued operational improvements and we achieved our tenth
consecutive quarter of year-over-year adjusted EBITDA margin
expansion. Our application of lean principles of The Manitowoc Way
continue to reflect favorably in our financial results. With this
solid year-to-date performance, we have raised the midpoint of our
2019 full-year adjusted EBITDA guidance while also reflecting
current market conditions in our revenue outlook,” commented Barry
L. Pennypacker, President and Chief Executive Officer of The
Manitowoc Company, Inc.
Pennypacker added, “Our results prove that we can effectively
deliver on our commitments despite challenging market conditions.
Through the transformation of Manitowoc over the past three years,
we are better positioned to generate positive returns to our
shareholders throughout the cycle while maintaining adequate
liquidity.”
Updated Full-Year 2019 Guidance:
- Revenue – approximately $1.850 to $1.880 billion;
- Adjusted EBITDA - approximately $145 to $160 million;
- Depreciation - approximately $35 to $37 million;
- Restructuring expense - approximately $10 to $12 million;
- Interest expense – approximately $31 to $33 million, excluding
debt refinancing costs;
- Income tax expense - approximately $12 to $16 million,
excluding discrete items; and
- Capital expenditures - approximately $35 million.
Investor Conference Call
On Friday, November 8th, 2019, at 10:00 a.m. ET (9:00 a.m. CT),
The Manitowoc Company’s senior management will discuss its
third-quarter 2019 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, published
in conjunction with this press release, 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.
The Manitowoc Company, Inc. was founded in 1902 and has over a
116-year tradition of providing high-quality, customer-focused
products and support services to its markets. Manitowoc is one of
the world's leading providers of engineered lifting solutions.
Manitowoc, through its wholly-owned subsidiaries, designs,
manufactures, markets, and supports comprehensive product lines of
mobile telescopic cranes, tower cranes, lattice-boom crawler cranes
and boom trucks under the Grove, Manitowoc, National Crane, Potain,
Shuttlelift and Manitowoc Crane Care brand names.
Footnote
(1)Adjusted net income from continuing operations, adjusted
EBITDA, adjusted operating cash flow, adjusted free cash flows and
adjusted diluted EPS 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 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:
- 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;
- unanticipated changes in revenues, margins, costs, and capital
expenditures;
- the ability to increase operational efficiencies across
Manitowoc’s businesses and to capitalize on those
efficiencies;
- the ability to significantly improve profitability;
- the risks associated with economic growth or contraction;
- changes in raw material and commodity prices;
- impairment of goodwill and/or intangible assets;
- foreign currency fluctuation and its impact on reported results
and hedges in place with Manitowoc;
- the ability to focus on customers, new technologies, and
innovation; and
- risks and factors detailed in Manitowoc's 2018 Annual Report on
Form 10-K and its other 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, 2018.
THE MANITOWOC COMPANY,
INC.
Unaudited Condensed
Consolidated Financial Information
For the three and nine months
ended September 30, 2019 and 2018
(In millions, except share
data)
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Net sales
$
448.0
$
450.1
$
1,370.7
$
1,331.5
Cost of sales
359.6
370.1
1,106.9
1,092.6
Gross profit
88.4
80.0
263.8
238.9
Operating costs and expenses:
Engineering, selling and administrative
expenses
54.8
62.1
164.7
184.6
Asset impairment expense
—
—
—
0.4
Amortization of intangible assets
—
—
0.2
0.2
Restructuring expense
1.1
1.0
8.3
11.0
Total operating costs and expenses
55.9
63.1
173.2
196.2
Operating income
32.5
16.9
90.6
42.7
Other income (expense):
Interest expense
(7.2
)
(9.9
)
(25.6
)
(29.3
)
Amortization of deferred financing
fees
(0.4
)
(0.5
)
(1.2
)
(1.4
)
Loss on debt extinguishment
—
—
(25.0
)
—
Other income (expense) - net
(3.7
)
(5.7
)
8.8
(8.6
)
Total other expense
(11.3
)
(16.1
)
(43.0
)
(39.3
)
Income from continuing operations before
income taxes
21.2
0.8
47.6
3.4
Provision (benefit) for income taxes
3.1
(10.7
)
10.3
(8.0
)
Income from continuing operations
18.1
11.5
37.3
11.4
Discontinued operations:
Loss from discontinued operations, net of
income taxes of $0.0, $0.0, $0.0 and $0.0, respectively
—
—
—
(0.2
)
Net income
$
18.1
$
11.5
$
37.3
$
11.2
Per Share Data
Basic income (loss) per common share:
Income from continuing operations
$
0.51
$
0.32
$
1.05
$
0.33
Loss from discontinued operations, net of
income taxes
—
—
—
(0.01
)
Basic income per common share
$
0.51
$
0.32
$
1.05
$
0.32
Diluted income (loss) per common
share:
Income from continuing operations
$
0.51
$
0.32
$
1.05
$
0.32
Loss from discontinued operations, net of
income taxes
—
—
—
(0.01
)
Diluted income per common share
$
0.51
$
0.32
$
1.05
$
0.31
Weighted average shares outstanding -
basic
35,348,597
35,564,946
35,527,971
35,488,271
Weighted average shares outstanding -
diluted
35,458,956
35,928,327
35,686,831
35,935,093
THE MANITOWOC COMPANY,
INC.
Unaudited Condensed
Consolidated Financial Information
As of September 30, 2019 and
December 31, 2018
(In millions)
CONDENSED CONSOLIDATED BALANCE
SHEETS
September 30,
2019
December 31,
2018
Assets
Current Assets:
Cash and cash equivalents
$
67.5
$
140.3
Accounts receivable, less allowances of
$9.8 and $10.3, respectively
225.3
171.8
Inventories — net
521.9
453.1
Notes receivable — net
16.6
19.4
Other current assets
32.7
58.3
Total current assets
864.0
842.9
Property, plant and equipment — net
278.9
288.9
Operating lease right-of-use assets
42.5
—
Goodwill
231.5
232.8
Other intangible assets — net
114.6
118.1
Other long-term assets
59.2
59.2
Total assets
$
1,590.7
$
1,541.9
Liabilities and Stockholders'
Equity
Current Liabilities:
Accounts payable and accrued expenses
$
372.5
$
425.2
Short-term borrowings and current portion
of long-term debt
4.3
6.4
Product warranties
41.4
39.1
Customer advances
9.7
9.6
Other liabilities
24.1
16.3
Total current liabilities
452.0
496.6
Non-Current Liabilities:
Long-term debt
309.1
266.7
Operating lease liabilities
32.5
—
Deferred income taxes
2.0
5.7
Pension obligations
80.3
85.7
Postretirement health and other benefit
obligations
17.8
18.3
Long-term deferred revenue
29.9
25.2
Other non-current liabilities
42.0
42.4
Total non-current liabilities
513.6
444.0
Stockholders' Equity:
Preferred stock (authorized 3,500,000
shares of $.01 par value; none outstanding)
—
—
Common stock (75,000,000 shares
authorized, 40,793,983 shares issued, 35,349,046 and 35,588,833
shares outstanding, respectively)
0.4
0.4
Additional paid-in capital
591.0
584.8
Accumulated other comprehensive loss
(131.0
)
(116.6
)
Retained earnings
226.9
189.6
Treasury stock, at cost (5,444,937 and
5,205,150 shares, respectively)
(62.2
)
(56.9
)
Total stockholders' equity
625.1
601.3
Total liabilities and stockholders'
equity
$
1,590.7
$
1,541.9
THE MANITOWOC COMPANY,
INC.
Unaudited Condensed
Consolidated Financial Information
For the three and nine months
ended September 30, 2019 and 2018
(In millions)
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Cash flows from operations:
Net income
$
18.1
$
11.5
$
37.3
$
11.2
Adjustments to reconcile net income to
cash used for operating activities:
Asset impairment expense
—
—
—
0.4
Depreciation
8.9
9.0
26.3
27.2
Amortization of intangible assets
—
—
0.2
0.2
Amortization of deferred financing
fees
0.4
0.5
1.2
1.4
Loss on debt extinguishment
—
—
25.0
—
(Gain) loss on sale of property, plant and
equipment
(3.5
)
0.5
(3.5
)
(1.7
)
Other
2.7
6.9
8.7
7.6
Changes in operating assets and
liabilities
Accounts receivable
38.4
(112.4
)
(184.2
)
(386.3
)
Inventories
19.1
(26.8
)
(87.4
)
(106.3
)
Notes receivable
1.8
9.7
(0.5
)
18.0
Other assets
(11.3
)
5.8
14.8
6.1
Accounts payable
(59.5
)
(24.4
)
(37.4
)
44.8
Accrued expenses and other liabilities
22.5
(32.5
)
1.6
(43.1
)
Net cash provided by (used for) operating
activities
37.6
(152.2
)
(197.9
)
(420.5
)
Cash flows from investing:
Capital expenditures
(12.7
)
(6.2
)
(22.4
)
(21.4
)
Proceeds from fixed assets
12.4
3.8
17.2
12.2
Cash receipts on sold accounts
receivable
—
163.3
126.3
401.3
Net cash provided by (used for) investing
activities
(0.3
)
160.9
121.1
392.1
Cash flows from financing:
Proceeds from revolving credit
facility
48.6
—
131.4
—
Payments on revolving credit facility
(48.6
)
—
(131.4
)
—
Payments on long-term debt
—
(4.6
)
(276.6
)
(4.6
)
Proceeds from long-term debt
—
—
300.0
—
Other debt - net
(4.7
)
3.0
(2.8
)
—
Debt issuance costs
(0.1
)
—
(8.3
)
—
Exercise of stock options
0.1
0.5
0.2
2.5
Common stock repurchases
—
—
(7.4
)
—
Net cash provided by (used for) financing
activities
(4.7
)
(1.1
)
5.1
(2.1
)
Effect of exchange rate changes on cash
and cash equivalents
—
(0.7
)
(1.1
)
(1.9
)
Net increase (decrease) in cash and cash
equivalents
$
32.6
$
6.9
$
(72.8
)
$
(32.4
)
Non-GAAP Financial Measures
Non-GAAP Items
Adjusted net income from continuing operations, adjusted EBITDA,
adjusted operating cash flows and adjusted free cash flows 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 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.
Adjusted Net Income and Net Income Per
Share from Continuing Operations
($ in millions, except share data)
Three Months Ended
September 30,
2019
2018
As reported
Adjustments
Adjusted
As reported
Adjustments
Adjusted
Gross profit
$
88.4
$
—
$
88.4
$
80.0
$
—
$
80.0
Engineering, selling and administrative
expenses (1)
(54.8
)
0.3
(54.5
)
(62.1
)
3.6
(58.5
)
Restructuring expense (2)
(1.1
)
1.1
—
(1.0
)
1.0
—
Operating income
32.5
1.4
33.9
16.9
4.6
21.5
Interest expense
(7.2
)
—
(7.2
)
(9.9
)
—
(9.9
)
Amortization of deferred financing
fees
(0.4
)
—
(0.4
)
(0.5
)
—
(0.5
)
Other income (expense) - net (3)
(3.7
)
—
(3.7
)
(5.7
)
4.5
(1.2
)
Income before income taxes
21.2
1.4
22.6
0.8
9.1
9.9
(Provision) benefit for income taxes
(4)
(3.1
)
(0.3
)
(3.4
)
10.7
(13.3
)
(2.6
)
Net income from continuing
operations
$
18.1
$
1.1
$
19.2
$
11.5
$
(4.2
)
$
7.3
Diluted income from continuing operations
per share
$
0.51
$
0.54
$
0.32
$
0.20
(1)
The adjustment in 2019 relates to other
non-recurring items. The adjustment in 2018 represents the add back
of a loss from a long-term note receivable from the 2014
divestiture of the Company’s Chinese joint venture.
(2)
The adjustments in 2019 and 2018 represent
the add back of restructuring related charges.
(3)
The adjustment represents the add back of
a pension settlement charge.
(4)
The adjustments in 2019 and 2018 represent
the net income tax impacts of items (1) through (3). The adjustment
in 2018 also includes the removal of an income tax benefit from the
partial release of a valuation allowance in the U.K.
Nine Months Ended
September 30,
2019
2018
As reported
Adjustments
Adjusted
As reported
Adjustments
Adjusted
Gross profit
$
263.8
$
—
$
263.8
$
238.9
$
—
$
238.9
Engineering, selling and administrative
expenses (1)
(164.7
)
0.3
(164.4
)
(184.6
)
3.6
(181.0
)
Asset impairment expense (2)
—
—
—
(0.4
)
0.4
—
Amortization of intangible assets
(0.2
)
—
(0.2
)
(0.2
)
—
(0.2
)
Restructuring expense (3)
(8.3
)
8.3
—
(11.0
)
11.0
—
Operating income
90.6
8.6
99.2
42.7
15.0
57.7
Interest expense
(25.6
)
—
(25.6
)
(29.3
)
—
(29.3
)
Amortization of deferred financing
fees
(1.2
)
—
(1.2
)
(1.4
)
—
(1.4
)
Loss on debt extinguishment (4)
(25.0
)
25.0
—
—
—
—
Other income (expense) - net (5)
8.8
(15.5
)
(6.7
)
(8.6
)
4.5
(4.1
)
Income before income taxes
47.6
18.1
65.7
3.4
19.5
22.9
(Provision) benefit for income taxes
(6)
(10.3
)
(0.7
)
(11.0
)
8.0
(13.8
)
(5.8
)
Net income from continuing
operations
$
37.3
$
17.4
$
54.7
$
11.4
$
5.7
$
17.1
Diluted income from continuing operations
per share
$
1.05
$
1.53
$
0.32
$
0.48
(1)
The adjustment in 2019 relates to other
non-recurring items. The adjustment in 2018 represents the add back
of a loss from a long-term note receivable from the 2014
divestiture of the Company’s Chinese joint venture.
(2)
The adjustment represents the add back of
non-recurring asset impairment charges.
(3)
The adjustments in 2019 and 2018 represent
the add back of restructuring related charges.
(4)
The adjustment represents the removal of
charges related to the Company’s refinancing of its Asset Based
Lending Revolving Credit Facility and senior secured second lien
notes.
(5)
The adjustment in 2019 represents the
removal of a gain associated with the settlement of a legal matter.
The adjustment in 2018 represents the add back of a pension
settlement charge.
(6)
The adjustments in 2019 and 2018 represent
the net income tax impacts of items (1) through (5). The adjustment
in 2018 also includes the removal of an income tax benefit from the
partial release of a valuation allowance in the U.K.
Adjusted Operating Cash Flows and
Adjusted Free Cash Flows
($ in millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Net cash provided by (used for) operating
activities:
$
37.6
$
(152.2
)
$
(197.9
)
$
(420.5
)
Cash receipts on sold accounts
receivable
—
163.3
126.3
401.3
Net payments (borrowings) on accounts
receivable securitization program
—
(3.2
)
75.0
(19.6
)
Adjusted operating cash flows:
37.6
7.9
3.4
(38.8
)
Capital expenditures
(12.7
)
(6.2
)
(22.4
)
(21.4
)
Adjusted free cash flows:
$
24.9
$
1.7
$
(19.0
)
$
(60.2
)
Adjusted EBITDA and Adjusted Operating Income
The Company defines adjusted EBITDA as earnings before interest,
income taxes, depreciation and amortization, plus an addback of
certain restructuring and other charges. The reconciliation of
income (loss) from continuing operations to adjusted EBITDA and
operating income to adjusted operating income for the three and
nine months ended September 30, 2019 and 2018 and trailing twelve
months, is as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Trailing Twelve
2019
2018
2019
2018
Months
Income (loss) from continuing
operations
$
18.1
$
11.5
$
37.3
$
11.4
$
(41.0
)
Interest expense and amortization of
deferred financing fees
7.6
10.4
26.8
30.7
37.0
Provision (benefit) for income taxes
3.1
(10.7
)
10.3
(8.0
)
13.5
Depreciation expense
8.9
9.0
26.3
27.2
35.2
Amortization of intangible assets
—
—
0.2
0.2
0.3
EBITDA
37.7
20.2
100.9
61.5
45.0
Restructuring expense
1.1
1.0
8.3
11.0
10.2
Asset impairment expense
—
—
—
0.4
82.2
Other non-recurring charges (1)
0.3
3.6
0.3
3.6
0.3
Loss on debt extinguishment
—
—
25.0
—
25.0
Other (income) expense - net (2)
3.7
5.7
(8.8
)
8.6
(5.9
)
Adjusted EBITDA
42.8
30.5
125.7
85.1
156.8
Depreciation expense
(8.9
)
(9.0
)
(26.3
)
(27.2
)
(35.2
)
Adjusted operating income
33.9
21.5
99.4
57.9
121.6
Restructuring expense
(1.1
)
(1.0
)
(8.3
)
(11.0
)
(10.2
)
Asset impairment expense
—
—
—
(0.4
)
(82.2
)
Other non-recurring charges
(0.3
)
(3.6
)
(0.3
)
(3.6
)
(0.3
)
Amortization of intangible assets
—
—
(0.2
)
(0.2
)
(0.3
)
Operating income
$
32.5
$
16.9
$
90.6
$
42.7
$
28.6
Adjusted EBITDA margin percentage
9.6
%
6.8
%
9.2
%
6.4
%
8.3
%
Adjusted operating income margin
percentage
7.6
%
4.8
%
7.3
%
4.3
%
6.4
%
(1)
Other non-recurring charges includes a
loss from a long-term note receivable resulting from the 2014
divestiture of the Company’s Chinese joint venture recorded in 2018
and other charges included in engineering, selling and
administrative expenses in the Condensed Consolidated Statement of
Operations.
(2)
Other (income) expense - net includes the
settlement of a legal matter in 2019, foreign currency transaction
(gains) losses, other components of net periodic pension costs and
other miscellaneous items.
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Ion Warner VP, Marketing and Investor Relations +1
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Manitowoc (NYSE:MTW)
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