What: Shares of Manitowoc (NYSE:MTW) were sinking on Tuesday and were down 10% at 10:30 a.m. EDT.
So what: Driving Manitowoc's decline was its second-quarter results. While it reported adjusted earnings of $5 million, or $0.04 per share, which was in line with the consensus, revenue and guidance fell well short of expectations. The company reported revenue of $457.7 million, which was down 4% year over year and $6.3 million less than the consensus estimate. Driving that soft result was weaker-than-expected sales of mobile cranes due to a challenging market environment.
Unfortunately, the company does not expect those market challenges to abate during the second half. As a result, the company is cutting its full-year sales and operating margin guidance. Manitowoc now sees revenue declining by 10% to 12% over last year after initially anticipating that revenue would be flat. Additionally, it expects operating margins to be between 1% and 2%, which is well below its initial expectations for operating margins of around 4%.
Meanwhile, the company's backlog dropped from $502 million as of the end of last quarter to $394 million at the end of the second quarter. This was after the company only received $349 million in new orders, which was down from $417 million last quarter.
Now what: There is growing uncertainty in the global economy at the moment, which is causing Manitowoc's customers to cut back on spending. While the company believes that its new outlook better reflects these more muted expectations, it is entirely possible that conditions could deteriorate even further if customer caution grows.