Manitowoc Reports Disappointing Results
The Manitowoc Company, Inc. (NYSE: MTW – $32.28) reported sales of $850 million for the first quarter, a decrease of 5% compared to sales of $894.6 million in the first quarter of 2013. The Foodservice segment had a strong quarter thanks to new product introductions with sales increasing by 9.3%, which was offset by a 14.2% decrease in Crane segment sales. Despite pockets of strength in tower cranes in the Middle East and sales in the Americas, the overall decline resulted from the lower level of backlog at the start of the year coupled with some customer-related project delays. Excluding special items, adjusted earnings from continuing operations was $23.7 million, or $0.17 per diluted share, versus equivalent earnings of $14.6 million, or $0.11 per diluted share, in the first quarter of 2013. The consensus estimate was for $0.20 per share on revenue of about $914 million and the shares dipped about 6% in after-hours trading on the news. While management re-affirmed full-year guidance, the first quarter results were indeed a disappointing start for the year. The company believes it can achieve modest top-line growth in Cranes and mid-single digit gains for the rest of the year in Food Service. Some encouraging news was the outlook numbers of the Crane segment backlog, which totaled $842 million as of March 31, 2014, an increase of 47% from the fourth quarter 2013. First-quarter 2014 orders of $733 million were 29% higher than the first quarter of 2013. There have been ongoing rumblings that the company should separate its two businesses, but so far management has been reluctant to make the move. Such a breakup would, in my opinion, enhance shareholder value. With the shares up nearly 70% over the past twelve months on better expectations, current results dictate that MTW will need to be a stock to watch. But for now, I am holding onto Manitowoc in the aggressive portfolio for what could be above average returns through late in the decade, even if the company remains committed to its current business configuration.