The Manitowoc Company (MTW) Q4 2017 earnings summary

Executive summary

• FY17 was a transition year: sales declined 2%, while adjusted EBITDA rose to $67.4M from $18.2M and operating cash flow recovered to $78.5M from a $122.4M use.

• Orders rose 32% to $1.9B and year-end backlog increased 87% to $607M; Q4 sales grew 27% YoY and orders rose 78% YoY.

• Cost reductions, plant consolidation and customer-led product launches supported improved margins and a stronger position as some markets began to recover.

Financial highlights

• Net sales were $1,581.3M, down 2.0% YoY; gross profit rose 11.3% to $281.9M and gross margin increased to 17.8% from 15.7%.

• Reported operating income was $1.1M vs. a $153.3M loss; net income was $9.4M vs. a $375.8M loss in 2016.

• Adjusted EBITDA was $67.4M vs. $18.2M; adjusted operating income was $29.3M vs. a $27.4M loss.

• Engineering, selling and administrative expenses fell 10.0% to $252.6M; restructuring expense was $27.2M vs. $23.4M.

• Adjusted operating margin reached 1.9%, up 355 bps YoY; adjusted EBITDA margin improved 313 bps YoY.

Outlook and guidance

• FY18 guidance: adjusted EBITDA $96M–$116M, depreciation expense ~$39M and capital expenditures $25M–$30M.

• Continued cost savings, productivity initiatives and new product launches are expected to improve performance; the long-term target remains double-digit operating margins by 2020.

• Positive utilization, rental rates, used-equipment pricing and distributor sentiment support cautious optimism, though demand forecasts remain difficult and infrastructure initiatives may not generate orders quickly.