Manitowoc's (MTW) Q3 Earnings Top, Revenues Meet Estimates

The Manitowoc Company, Inc. (NYSE:MTW) posted third-quarter 2018 adjusted earnings per share of 20 cents, which slumped 45% year over year. However, the bottom-line figure comfortably beat the Zacks Consensus Estimate of 8 cents.

Including special items, the company posted earnings of 32 cents per share compared to 27 cents per share recorded in the prior-year quarter.

Manitowoc’s revenues increased 13%, year over year, to $450 million in the third quarter, driven by improved crane shipments across all regions. The top-line figure came in line with the Zacks Consensus Estimate.

Operational Update

Cost of sales jumped 13% to $370 million in the reported quarter from $327 million in the prior-year quarter. Gross profit climbed 10% year over year to $80 million. Gross margin shrunk 40 basis points to 17.8%.

Engineering, selling and administrative expenses flared up 5% year over year to $62 million. Adjusted EBITDA was $31 million in the quarter under review compared to $23 million witnessed in the year-earlier quarter. Adjusted operating income was $17 million in the quarter, which increased from $10 million reported in the year-ago period.

Backlog

Backlog in the Sep-end quarter came in at $700 million, up 50% from third-quarter 2017. Third-quarter 2018 orders came in at $458 million, marking a 22% jump from the year-ago quarter.

Financial Updates

Manitowoc reported cash and cash equivalents of $91 million at the end of the quarter under review, down from $123 million recorded at the end of 2017. Long-term debt was $265 million as of Sep 30, 2018, compared with $267 million as of Dec 31, 2017.

The company used $441 million of cash in operating activities during the nine-month period ended Sep 30, 2018, compared with cash usage of $294 million reported in the comparable period last year.

Guidance

Manitowoc raised its full-year 2018 revenue guidance to $1.80-$1.83 billion from $1.78-$1.85 billion. The company affirmed its 2018 adjusted EBITDA guidance of $105-$115 million. Manitowoc also revised its outlook for capital expenditures to roughly $30 million for the current year.

Manitowoc is poised to gain from focus on operational progress using the principles of The Manitowoc Way. Nonetheless, material inflation, tariffs and supply-chain challenges remain concerns. Also, foreign currency exchange rates are straining its margins.

Share Price Performance

Over the past year, Manitowoc has underperformed the industry with respect to price performance. The stock has lost around 50%, while the industry recorded loss of around 2%.

Zacks Rank & Key Picks

Manitowoc currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same sector include Enersys (NYSE:ENS) , Donaldson Company, Inc. (NYSE:DCI) and Encore Wire Corporation (NASDAQ:WIRE) . While Enersys sports a Zacks Rank #1 (Strong Buy), Donaldson and Encore Wire carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enersys has a long-term earnings growth rate of 10%. Shares of the company have appreciated 28% over the past year.

Donaldson has a long-term earnings growth rate of 11.5%. Its shares have rallied around 19% in the past year.

Encore Wire has a long-term earnings growth rate of 10%. Shares of the company have gained 13% in a year’s time.

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