The Manitowoc Company (MTW) Q4 2016 earnings summary

Executive summary

• FY16 marked the first year as a stand-alone crane business after the March 4 Foodservice spin-off; net sales fell 13.5% to $1,613.1M and net loss was $375.8M.

• Weak crane demand and lower production weighed on results, while cost reductions, new products and manufacturing changes positioned the business for a possible recovery.

Financial highlights

• FY16 gross profit was $253.3M, down 23.8% YoY; gross margin was 15.7% vs. 17.8%, reflecting lower volume and unfavorable manufacturing absorption.

• Operating loss was $153.3M vs. $12.4M in FY15; FY16 included $96.9M of asset impairment and $23.4M of restructuring expense.

• Net loss attributable to shareholders was $375.8M, or diluted loss per share of $2.73, vs. net income of $65.5M and diluted EPS of $0.48 in FY15.

• Adjusted EBITDA was $18.2M vs. $65.9M; adjusted operating loss was $27.4M vs. adjusted operating income of $15.3M.

• Q4 FY16 net sales were $378.2M vs. $543.1M; operating loss was $23.8M vs. $13.9M, on FIFO-adjusted figures.

Outlook and guidance

• FY17 net sales guidance was down 8%–10% YoY; adjusted EBITDA $41M–$59M and adjusted operating margin ~0%–1%.

• FY17 guidance included depreciation of $40M–$45M, intangible amortization of $2M–$2.5M and capital expenditures of ~$30M.

• No meaningful global crane-demand recovery was expected in 2017; 2017 revenue was expected to resemble H2 2016, partly due to the absence of large VPC crawler shipments from the prior-year backlog.

• Long-term target: 10% adjusted operating margin by 2020, with at least 150 bps of annual improvement.