The Manitowoc Company Reports Second-Quarter Financial Results
On a GAAP basis, the company reported a net loss of
Non-GAAP adjusted net income from continuing operations, was
“During the second quarter, our sales were further impacted by a
challenging market environment on a number of levels, particularly in
Mobile cranes in the
Barry L. Pennypacker, president and chief executive officer of
“As we approach the back half of the year, we expect to see market
challenges continue and a similar dynamic in sales with continued
strength in Tower cranes more than offset by continued weakness in
Mobile cranes. In spite of the positive energy we experienced at bauma
this year, it is clear that our customers remain cautious around
spending given the ongoing global macro-economic uncertainty. As a
result, we have lowered our full-year 2016 sales and operating margin
guidance. We are confident, however, that the actions we are taking now
to position
Financial Results
Second-quarter 2016 net sales were
Adjusted operating income for the second quarter of 2016 was
Backlog totaled
Restructuring Activities
As mentioned in its press release dated
The company expects to recognize cash outflows of approximately
Cash Flow
Net cash flow from operating activities in the second quarter of 2016
was a use of
2016 Guidance
For the full-year 2016,
- Revenue – down approximately 10% to 12%;
- Adjusted operating income margins – approximately 1% to 2%;
-
Depreciation – between
\\$45 and \\$50 million ; -
Amortization expense – between
\\$3 and \\$4 million ; and, -
Capital expenditures – approximately
\\$45 to \\$50 million .
Investor Conference Call
On
About
Founded in 1902,
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 Manitowoc’s business segment 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 in emerging economies, and changes in demand for used lifting equipment;
- global expansion of customers;
- the replacement cycle of technologically obsolete cranes;
-
the ability of
Manitowoc's customers to receive financing; - 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 government-related issues or developments;
- the ability to complete and appropriately integrate restructurings, consolidations, acquisitions, divestitures, strategic alliances, joint ventures, and other strategic alternatives;
- 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 changes in the capital and financial markets;
- risks related to actions of activist shareholders;
- 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 theUnited States Securities and Exchange Commission .
THE MANITOWOC COMPANY, INC. | ||||||||||||||||||
Unaudited Consolidated Financial Information | ||||||||||||||||||
For the Three and Six Months Ended June 30, 2016 and 2015 | ||||||||||||||||||
(In millions, except share data) | ||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net sales | \\$ | 457.7 | \\$ | 477.7 | \\$ | 885.1 | \\$ | 884.4 | ||||||||||
Cost of sales | 369.5 | 382.8 | 715.0 | 714.1 | ||||||||||||||
Gross profit | 88.2 | 94.9 | 170.1 | 170.3 | ||||||||||||||
Engineering, selling and administrative expenses | 73.4 | 79.5 | 145.8 | 162.2 | ||||||||||||||
Restructuring expense | 8.8 | 0.6 | 13.2 | 0.8 | ||||||||||||||
Amortization expense | 0.8 | 0.7 | 1.5 | 1.5 | ||||||||||||||
Other | 0.4 | (0.1 | ) | 1.8 | (0.1 | ) | ||||||||||||
Operating income | 4.8 | 14.2 | 7.8 | 5.9 | ||||||||||||||
Amortization of deferred financing fees | (0.4 | ) | (1.0 | ) | (1.3 | ) | (2.1 | ) | ||||||||||
Interest expense | (9.9 | ) | (24.0 | ) | (19.6 | ) | (47.3 | ) | ||||||||||
Loss on debt extinguishment | - | - | (76.3 | ) | - | |||||||||||||
Other income - net | 2.1 | 2.8 | 3.2 | 2.6 | ||||||||||||||
Loss from continuing operations before taxes on income | (3.4 | ) | (8.0 | ) | (86.2 | ) | (40.9 | ) | ||||||||||
Provision (benefit) for taxes on income | 0.7 | (1.7 | ) | 122.2 | (11.2 | ) | ||||||||||||
Loss from continuing operations | (4.1 | ) | (6.3 | ) | (208.4 | ) | (29.7 | ) | ||||||||||
Discontinued operations: | ||||||||||||||||||
(Loss) income from discontinued operations, net of income taxes | (0.8 | ) | 29.6 | (4.0 | ) | 44.6 | ||||||||||||
Net (loss) income | \\$ | (4.9 | ) | \\$ | 23.3 | \\$ | (212.4 | ) | \\$ | 14.9 | ||||||||
BASIC INCOME (LOSS) PER SHARE: | ||||||||||||||||||
Loss from continuing operations | \\$ | (0.03 | ) | \\$ | (0.05 | ) | \\$ | (1.52 | ) | \\$ | (0.22 | ) | ||||||
(Loss) income from discontinued operations | (0.01 | ) | 0.22 | (0.03 | ) | 0.33 | ||||||||||||
BASIC (LOSS) INCOME PER SHARE | \\$ | (0.04 | ) | \\$ | 0.17 | \\$ | (1.55 | ) | \\$ | 0.11 | ||||||||
DILUTED INCOME (LOSS) PER SHARE: | ||||||||||||||||||
Loss from continuing operations | \\$ | (0.03 | ) | \\$ | (0.05 | ) | \\$ | (1.52 | ) | \\$ | (0.22 | ) | ||||||
(Loss) income from discontinued operations | (0.01 | ) | 0.21 | (0.03 | ) | 0.32 | ||||||||||||
DILUTED (LOSS) INCOME PER SHARE | \\$ | (0.04 | ) | \\$ | 0.17 | \\$ | (1.55 | ) | \\$ | 0.11 | ||||||||
AVERAGE SHARES OUTSTANDING: | ||||||||||||||||||
Average Shares Outstanding - Basic | 137,138,220 | 136,130,861 | 136,869,066 | 135,887,738 | ||||||||||||||
Average Shares Outstanding - Diluted | 137,138,220 | 137,985,899 | 136,869,066 | 137,431,565 | ||||||||||||||
MARGIN ANALYSIS | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net sales | \\$ | 457.7 | \\$ | 477.7 | \\$ | 885.1 | \\$ | 884.4 | ||||||||||
Cost of sales | 369.5 | 382.8 | 715.0 | 714.1 | ||||||||||||||
Gross profit | 88.2 | 94.9 | 170.1 | 170.3 | ||||||||||||||
Engineering, selling and administrative expenses | 73.4 | 79.5 | 145.8 | 162.2 | ||||||||||||||
Adjusted operating income | \\$ | 14.8 | \\$ | 15.4 | \\$ | 24.3 | \\$ | 8.1 | ||||||||||
Margin on adjusted operating income | 3.2 | % | 3.2 | % | 2.7 | % | 0.9 | % | ||||||||||
THE MANITOWOC COMPANY, INC. | ||||||||||||||||||||||
Unaudited Consolidated Financial Information | ||||||||||||||||||||||
For the Six Months Ended June 30, 2016 and 2015 | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||
BALANCE SHEET | ||||||||||||||||||||||
June 30, | December 31, | |||||||||||||||||||||
ASSETS | 2016 | 2015 | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and temporary investments | \\$ | 40.8 | \\$ | 31.5 | ||||||||||||||||||
Restricted cash | 16.3 | 16.9 | ||||||||||||||||||||
Accounts receivable - net | 189.7 | 155.7 | ||||||||||||||||||||
Inventories - net | 499.9 | 452.6 | ||||||||||||||||||||
Notes receivable | 58.2 | 59.7 | ||||||||||||||||||||
Other current assets | 45.2 | 43.0 | ||||||||||||||||||||
Current assets of discontinued operations | - | 254.2 | ||||||||||||||||||||
Total current assets | 850.1 | 1,013.6 | ||||||||||||||||||||
Property, plant and equipment - net | 415.4 | 410.7 | ||||||||||||||||||||
Intangible assets - net | 426.2 | 425.8 | ||||||||||||||||||||
Other long-term assets | 68.6 | 182.6 | ||||||||||||||||||||
Long-term assets held for sale | 5.6 | 5.5 | ||||||||||||||||||||
Long-term assets of discontinued operations | - | 1,501.5 | ||||||||||||||||||||
TOTAL ASSETS | \\$ | 1,765.9 | \\$ | 3,539.7 | ||||||||||||||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Accounts payable and accrued expenses | \\$ | 395.5 | \\$ | 436.3 | ||||||||||||||||||
Short-term borrowings and current portion of long-term debt | 17.2 | 67.2 | ||||||||||||||||||||
Customer advances | 9.8 | 10.3 | ||||||||||||||||||||
Product warranties | 38.3 | 35.9 | ||||||||||||||||||||
Product liabilities | 22.1 | 21.9 | ||||||||||||||||||||
Current liabilities of discontinued operations | - | 312.0 | ||||||||||||||||||||
Total current liabilities | 482.9 | 883.6 | ||||||||||||||||||||
Long-term debt | 275.0 | 1,330.4 | ||||||||||||||||||||
Other non-current liabilities | 256.7 | 286.4 | ||||||||||||||||||||
Long-term liabilities of discontinued operations | - | 219.8 | ||||||||||||||||||||
Stockholders' equity | 751.3 | 819.5 | ||||||||||||||||||||
TOTAL LIABILITIES & | ||||||||||||||||||||||
STOCKHOLDERS' EQUITY | \\$ | 1,765.9 | \\$ | 3,539.7 | ||||||||||||||||||
CASH FLOW SUMMARY | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Net (loss) income | \\$ | (4.9 | ) | \\$ | 23.3 | \\$ | (212.4 | ) | \\$ | 14.9 | ||||||||||||
Non-cash adjustments | 16.1 | (13.9 | ) | 168.2 | 21.3 | |||||||||||||||||
Changes in operating assets and liabilities | (25.8 | ) | 23.0 | (118.4 | ) | (75.8 | ) | |||||||||||||||
Net cash used for operating activities of continuing operations | (14.6 | ) | 32.4 | (162.6 | ) | (39.6 | ) | |||||||||||||||
Net cash provided by (used for) operating activities of discontinued operations | (1.8 | ) | 23.1 | (63.9 | ) | (40.6 | ) | |||||||||||||||
Net cash provided by (used for) operating activities | (16.4 | ) | 55.5 | (226.5 | ) | (80.2 | ) | |||||||||||||||
Capital expenditures | (13.8 | ) | (14.0 | ) | (24.7 | ) | (22.5 | ) | ||||||||||||||
Restricted cash | 0.4 | 3.1 | 0.3 | 3.3 | ||||||||||||||||||
(Payments) proceeds from sale of fixed assets, net | (0.3 | ) | 3.1 | 0.9 | 5.1 | |||||||||||||||||
Net cash used for investing activities of discontinued operations | - | (3.6 | ) | (2.4 | ) | (7.0 | ) | |||||||||||||||
(Payments) proceeds from borrowings - net | (14.8 | ) | (44.3 | ) | (1,104.8 | ) | 108.8 | |||||||||||||||
Payments on receivable financing - net | (1.3 | ) | (3.8 | ) | (5.0 | ) | (9.3 | ) | ||||||||||||||
Stock options exercised | 0.6 | 0.5 | 2.5 | 3.9 | ||||||||||||||||||
Debt issuance costs | (0.4 | ) | - | (8.3 | ) | - | ||||||||||||||||
Cash transferred to MFS | - | - | (17.7 | ) | - | |||||||||||||||||
Dividend from MFS | - | - | 1,361.7 | - | ||||||||||||||||||
Net cash provided by financing activities of discontinued operations | - | 0.2 | 0.2 | 0.2 | ||||||||||||||||||
Effect of exchange rate changes on cash | (0.4 | ) | 2.8 | 1.2 | (2.6 | ) | ||||||||||||||||
Net decrease in cash & temporary investments | \\$ | (46.4 | ) | \\$ | (0.5 | ) | \\$ | (22.6 | ) | \\$ | (0.3 | ) | ||||||||||
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
Net loss | \\$ | (163.8 | ) | ||
Income from discontinued operations | (86.7 | ) | |||
Depreciation and amortization | 62.5 | ||||
Interest expense and amortization of deferred financing fees | 71.3 | ||||
Costs due to early extinguishment of debt | 76.5 | ||||
Restructuring expense | 22.4 | ||||
Income taxes | 90.5 | ||||
Pension and post-retirement | 13.7 | ||||
Stock-based compensation | 7.9 | ||||
Asset impairment | 15.3 | ||||
Other | 2.2 | ||||
Adjusted EBITDA | \\$ | 111.8 | |||
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 | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Net (loss) income | \\$ | (4.9 | ) | \\$ | 23.3 | \\$ | (212.4 | ) | \\$ | 14.9 | |||||||||||
Special items, net of tax: | |||||||||||||||||||||
Loss (income) from discontinued operations | 0.8 | (29.6 | ) | 4.0 | (44.6 | ) | |||||||||||||||
Early extinguishment of debt | - | - | 76.3 | - | |||||||||||||||||
Restructuring expense | 8.1 | 0.4 | 12.2 | 0.6 | |||||||||||||||||
Separation equity awards | 0.5 | - | 1.9 | - | |||||||||||||||||
Tax valuation allowance and one time tax items | 0.5 | - | 117.7 | - | |||||||||||||||||
Non-GAAP adjusted net income (loss) | \\$ | 5.0 | \\$ | (5.9 | ) | \\$ | (0.3 | ) | \\$ | (29.1 | ) | ||||||||||
Diluted income (loss) per share | \\$ | (0.04 | ) | \\$ | 0.17 | \\$ | (1.55 | ) | \\$ | 0.11 | |||||||||||
Special items, net of tax: | |||||||||||||||||||||
Loss (income) from discontinued operations | 0.01 | (0.21 | ) | 0.03 | (0.32 | ) | |||||||||||||||
Early extinguishment of debt | - | - | 0.56 | - | |||||||||||||||||
Restructuring expense | 0.06 | 0.00 | 0.09 | 0.00 | |||||||||||||||||
Separation equity awards | 0.00 | - | 0.01 | - | |||||||||||||||||
Tax valuation allowance and one time tax items | 0.00 | - | 0.86 | - | |||||||||||||||||
Diluted non-GAAP adjusted net income (loss) per share | \\$ | 0.04 | \\$ | (0.04 | ) | \\$ | (0.00 | ) | \\$ | (0.21 | ) | ||||||||||
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