The Manitowoc Company, Inc. (NYSE:MTW) today reported third-quarter 2016 net sales of $349.8 million versus $438.2 million in the comparable period in 2015.
On a GAAP basis, the company reported a net loss of ($140.0) million, or ($1.01) per diluted share, in the third-quarter 2016 versus net income of $4.8 million, or $0.04 per diluted share, in the third-quarter 2015. The company’s loss from continuing operations in the third-quarter 2016 and 2015 was ($138.2) million and ($29.6) million, respectively.
Non-GAAP adjusted net loss from continuing operations(1) was ($38.1) million, or ($0.28) per diluted share, in the third-quarter 2016 versus a non-GAAP adjusted net loss from continuing operations of ($29.8) million, or ($0.22) per diluted share, in the third-quarter 2015.
“As previously announced, the mobile crane market continued its downward trend in the third-quarter and remains very challenging. The weak global oil and gas market, coupled with lower used equipment prices, continues to have a negative effect on demand. Our tower crane business continues to perform as expected and we look forward to its continued success as the new line of HUP products are introduced in the fourth-quarter,” commented Barry L. Pennypacker, President and Chief Executive Officer of The Manitowoc Company, Inc.
“Our priority is to continue to improve our quality, make significant market share gains and right-size the business to current demand levels. We will do this without impacting our long-term strategy of margin expansion, growth, innovation and velocity. We have significantly cut production levels to match the lower demand and accelerated the transition of crawler crane manufacturing from Manitowoc, Wisconsin, to Shady Grove, Pennsylvania. While this will have an adverse impact on our near-term earnings outlook, we expect this action will have a positive impact on our ability to maintain adequate liquidity levels. We continue to transition the culture to one being driven by the principles of The Manitowoc Way and remain committed during this challenging time to our goals of improving our long-term performance and attaining double-digit operating margins by 2020,” concluded Pennypacker.
Financial Results
Third-quarter 2016 net sales were $349.8 million versus $438.2 million in the third-quarter 2015. The year-over-year decrease was primarily due to continued deterioration within the company’s mobile crane markets, mainly in North America and the Middle East. This was partially offset by growth in towers due to residential and commercial construction trends, particularly in Western Europe.
GAAP operating loss for the third-quarter 2016 was ($133.5) million, compared to ($8.2) million in the third-quarter 2015, and includes $96.9 million of non-cash impairment charges primarily related to certain software assets and other charges related to the relocation of crawler and tower crane manufacturing operations. In addition, $3.9 million of restructuring costs were recognized during the third-quarter mainly related to severance costs.
Non-GAAP adjusted operating loss(1) for the third-quarter 2016 was ($31.5) million compared to ($7.7) million in the same period last year. This resulted in an adjusted operating margin of (9.0) percent for the third-quarter 2016 versus (1.8) percent for the third-quarter 2015. The 2016 non-GAAP adjusted operating loss of ($31.5) million included $29.9 million of expenses related to the relocation of crawler crane production from Manitowoc, Wisconsin to Shady Grove, Pennsylvania, including certain inventory related charges and charges associated with declines in used crane market values. Non-GAAP adjusted operating loss excluding these items would have been ($1.6) million, as outlined in the schedule of “Non-GAAP Financial Measures” at the end of this press release.
Backlog totaled $353.6 million for the third-quarter, down from the second-quarter 2016 backlog of $393.5 million. Third-quarter 2016 orders of $309.9 million were lower by approximately $28 million or 8% compared to the third-quarter 2015. The third-quarter 2016 orders also included approximately $10 million of prototype units for the U.S. military, of which
approximately $3 million was shipped in the quarter. The year-over-year order decline is due to continued softness in the North American and Middle East markets, partially offset by growth in Western Europe.
Cash Flow
Net cash flow from operating activities in the third-quarter 2016 was a use of $3.0 million, which includes continuing and discontinued operations. This compares to a source of net cash flow from operating activities in the third-quarter 2015 of $6.3 million, which also included continuing and discontinued operations. Third-quarter capital expenditures totaled $10.1 million as compared to $9.4 million in the third-quarter 2015.
Fourth-Quarter 2016 Guidance:
- Revenue – down approximately 25% to 30% year-over-year;
- Margin on non-GAAP adjusted operating loss(1)– approximately (4)% to (6)%;
- Depreciation – approximately $11 million;
- Amortization of intangibles – approximately $1 million; and
- Capital expenditures – approximately $10 to $15 million
The Company provides guidance on a non-GAAP basis as there is uncertainty in the timing and magnitude of future charges that would be included in the reported GAAP results.
Investor Conference Call
On Wednesday, November 2nd, 2016, at 10:00 a.m. ET (9:00 a.m. CT), The Manitowoc Company’s senior management will discuss its third-quarter earnings results and updated fourth-quarter outlook during a live conference call for security analysts and institutional investors. A live audio webcast of the call, along with the related presentation, 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.
Founded in 1902, The Manitowoc Company, Inc. is a leading global manufacturer of cranes and lift solutions with manufacturing, distribution, and service facilities in 20 countries. Manitowoc is recognized 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 aftermarket product support services. In 2015, Manitowoc’s revenues totaled $1.9 billion, with over half of these revenues generated outside the United States.