Manitowoc's (MTW) Q3 Results Affected by Weak Demand - Analyst Blog

Shares of Manitowoc Company, Inc. (MTW) plunged 5.5% following the company's announcement of preliminary third-quarter 2014 results and outlook for the full year.

The manufacturer of cranes and commercial foodservice equipment expects net sales to be just under $1 billion in the third quarter, whereas it reported net sales of $1.01 billion in the third quarter of 2013. Earnings before interest, amortization, restructuring, and tax are expected to decline 20% to $90 million in the third quarter of 2014.

The company stated that third-quarter results remain challenged by weak global demand. Sales in the Crane segment bore the brunt of weak North American rough-terrain and boom truck markets and in the Latin America region. The Foodservice witnessed weakness in some regions, such as Russia and Asia Pacific, as well as certain product categories.

In the light of these factors, for 2014, Manitowoc projects Crane segment revenues to decline by mid-to-high single-digit percentages year over year and operating margins to be in the 7% range. Foodservice segment revenues are expected to be up by low-to-mid single-digit percentages from 2013 levels. Segment operating margins is projected to be in the 15% range.

Manitowoc also adjusted its guidance for end-of-year debt-to-EBITDA to approximately 3.5 times from the previously expected 3 times and reduced its interest expense guidance to a low-to-mid $90 million range. The company affirmed its previously stated outlook for capital expenditures of approximately $90 million, depreciation & amortization of approximately $120 million and effective tax rate in the mid-teens percentage range driven by expected third-quarter discrete items.

Manitowoc had reported second-quarter adjusted earnings from continuing operations of 35 cents per share, a 25.5% decline year over year from 47 cents, primarily impacted by lower crane demand. The bottom line also missed the Zacks Consensus Estimate of 41 cents.

In September, Manitowoc's peer, Terex Corp. (TEX) lowered its 2014 guidance citing weak crane demand. Terex outlined its 2014 earnings expectation between $2.35 and $2.50, down from the previous range of $2.50 and $2.80. This reflects annual growth of 5% to 12% from $2.23 earned in the prior year. For the third quarter, the company provided an earnings per share guidance of 55 cents to 65 cents, compared with the year-ago quarter figure of 77 cents. This reflects a decline in the range of 16% to 29%.

Wisconsin-based Manitowoc is one of the world's leading innovators and manufacturers of commercial foodservice equipment. The company is one of the premier innovators and providers of crawler cranes, tower cranes and mobile cranes for the heavy construction industry. These are complemented by industry-leading product support services.

Manitowoc currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the same sector include Middleby Corp. (MIDD) and Nordson Corporation (NDSN).While Middleby holds a Zacks Rank #1 (Strong Buy), Nordson carries a Zacks Rank #2 (Buy).

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