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Manitowoc’s (MTW) Q3 Earnings Beat on Improved U.S Markets

Zacks

The Manitowoc Company, Inc. MTW reported third-quarter 2017 adjusted earnings of 9 cents per share, a reversal from the prior-year quarter’s loss of 28 cents. The year-over-year improvement was mainly driven by focus on consolidating manufacturing footprint and reducing cost of organizational structure as well as positive momentum in certain end markets such as the U.S. energy and commercial construction markets. Earnings also beat the Zacks Consensus Estimate of a loss of 4 cents per share.

Including special items, the company posted earnings of 7 cents in the reported quarter. It had posted a loss of $1.01 per share in the year-ago quarter.

Manitowoc witnessed a 14% year-over-year improvement in sales to $399.4 million in the reported quarter. Higher demand, primarily in the U.S. markets, partly offset by lower demand in the Asia-Pacific market, drove revenues in the quarter. Approximately 40% of unit revenue in the third-quarter stemmed from new products introduced since becoming a stand-alone crane company. Additionally, revenues beat the Zacks Consensus Estimate of $381 million.

Manitowoc Company, Inc. Price, Consensus and EPS Surprise

Manitowoc Company, Inc. Price, Consensus and EPS Surprise | Manitowoc Company, Inc. Quote


Operational Update

Cost of sales increased 5.8% to $326.9 million in the reported quarter from $309 million in the prior-year quarter. Gross profit soared 78% year over year to $72.5 million. Gross margin expanded 650 basis points to 18.2%.

Engineering, selling and administrative expenses plunged 17% year over year to $60.9 million. Adjusted operating income was $11.6 million compared to an operating loss of $32.2 million in the year-ago quarter.

Backlog

Backlog for the quarter came in at $467.9 million as of Sep 30, 2017, up 32% from $353.6 million in third-quarter 2016. Third-quarter orders were at $376.1 million, up 21% from the comparable period in the last year boosted by strong customers’ demand for new products.

Financial Updates

Manitowoc ended the quarter with cash and temporary investments of $29.3 million compared with $69.9 million at year-end 2016. Long-term debt was $277 million as of Sep 30, 2017, compared with $269 million as of Dec 31, 2016. The company used $33.9 million of cash in operating activities in the nine-month period ended Sep 30, 2017 compared with cash usage of $180.2 million recorded in the prior-year comparable period.

Guidance

Manitowoc maintained full-year 2017 financial guidance. The company now expects revenues to decline approximately 5-7% year over year in 2017. Adjusted EBITDA is anticipated to lie between $59 million and $69 million. Depreciation is projected at approximately $40 million. Capital expenditures are estimated at approximately $30 million.

The company anticipates to achieve long-term target of double-digit operating margins by 2020 by continuing to streamlining organizational structure.

Share Price Performance

Year to date, Manitowoc has outperformed the industry with respect to price performance. The stock gained around 69.9%, while the industry recorded growth of 47.0%.

Zacks Rank & Stocks to Consider

Currently, Manitowoc carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector include Caterpillar Inc. CAT, Terex Corporation TEX and H&E Equipment Services, Inc. HEES. All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar has expected long-term growth rate of 10.33%.

Terex has expected long-term growth rate of 11.25%.

H&E Equipment Services has expected long-term growth rate of 15.55%.

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