MTW Stock Increased 9.3%: Why It Happened

By Amit Chowdhry ● July 20, 2021
  • The stock price of Manitowoc Company Inc (NYSE: MTW) increased 9.3% today. This is why it happened.

The stock price of Manitowoc Company Inc (NYSE: MTW) increased 9.3% today, going from a previous close of $20.54 to $22.45. Investors responded positively to H&E Equipment Services, Inc. (NASDAQ: HEES) (H&E) announcing that it has entered into a definitive agreement to sell its crane business to a wholly-owned subsidiary of The Manitowoc Company, a leading global manufacturer of cranes and lifting solutions, for $130 million in cash. And the transaction is expected to close during the fourth quarter of 2021, subject to customary closing conditions, including regulatory approval.

As a result of the deal, H&E will fully exit the crane distribution business. This divestiture — which was unanimously approved by H&E’s Board of Directors — is expected to increase, and further stabilize the company’s EBITDA margin as it intensifies its focus on the higher-margin equipment rental business.

H&E’s equipment rental business has shown consistent growth with a compound annual growth rate of 11% in the 5 years leading up to 2020. And this rapid growth has seen the rental portion of H&E’s business expand from 32 percent of revenues 10 years ago to 51% in 2020. And the overall demand for equipment rentals has continued to expand and has proven to be more stable and resilient to market disruptions than the distribution business.

The possible uses of proceeds from the deal include, but are not necessarily limited to, further expansion of new facilities, investment in the rental fleet, and the delivery of a differentiated customer experience through enhanced technology capabilities. And the proceeds will fortify the company’s strong cash position while supporting strategic growth initiatives and ongoing dividends.

KEY QUOTES:

“This transaction marks an important step in H&E Equipment’s transition to a pure-play equipment rental company. We expect our continued migration to higher margin rentals will promote our strategic focus on geographic expansion and fleet investment, drive outsized revenue and profitability growth, and enable us to take full advantage of opportunities created by favorable industry and macro trends.”

— Brad Barber, H&E’s Chief Executive Officer

“H&E has a long history and excellent reputation for serving the lifting industry, and we look forward to welcoming the H&E crane team to Manitowoc.”

— Aaron H. Ravenscroft, President and Chief Executive Officer of The Manitowoc Company

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.