Manitowoc, crane--The Manitowoc Company Reports Declining Crane Sales vs. 2009

The Manitowoc Company, Inc. reported sales of $876.5 million for the second quarter of 2010, down 12.4 percent from $1.0 billion in the second quarter of 2009. The sales decrease was due primarily to a 31 percent decline in Crane segment sales, partially offset by an 11 percent increase in Foodservice segment sales.

On a GAAP basis, the company reported earnings of $14.1 million, or $0.11 per diluted share, for the quarter versus a net loss of $12.3 million, or $0.09 per share, in the second quarter of 2009. Both periods included special items. Excluding special items, the adjusted earnings from continuing operations were $15.7 million, or $0.12 per share, for the second quarter of 2010, versus adjusted earnings of $29.9 million, or $0.23 per share, in the second quarter of 2009. A reconciliation of GAAP net earnings to net earnings before special items is provided later in this press release.

“Despite the prolonged challenges presented by the state of the global economy, we maintained our focus on executing against our goals during the second quarter of 2010. As a result, we were able to deliver results consistent with our expectations,” said Glen E. Tellock, Manitowoc's chairman and chief executive officer. “Emerging markets continue to be encouraging for both of our businesses. While some recent positive indicators suggest a stabilization in certain mature markets, we remain guarded as we move into the second half of 2010. At the same time, we continue to drive the operational efficiencies, process improvements, and cost reduction initiatives we implemented last year, which should provide enhanced profitability as demand strengthens across our business.”

“Balance sheet improvements continue to be a key area of focus for our management team, and prudently managing our cash flow remains a top priority. Achieving our near- and long-term debt reduction goals will continue to be a key component of our strategy.”

Foodservice Segment Results
Second-quarter 2010 net sales in the Foodservice segment were $424.9 million versus $382.5 million in the second quarter of 2009. Second-quarter 2010 results were driven by a continued focus on innovation, the introduction of new products, and strengthening demand in certain end markets and geographies.

Foodservice operating earnings for the second quarter of 2010 were $56.9 million, versus $46.4 million in the second quarter of 2009. This resulted in Foodservice segment operating margins of 13.4 percent for the second quarter of 2010, up from 12.1 percent in the same period in 2009. The year-over-year margin improvement was primarily due to a favorable product mix and ongoing integration synergies.

“Our strong position in the Foodservice segment continues to grow as our innovative and broad product line makes us an important element of our customers’ success. In the second quarter, we experienced increasing demand in both North America and across our emerging markets, along with cost savings from our successful integration efforts. Our product offering and existing relationships, coupled with our global footprint, provide us with a unique opportunity to further penetrate international markets, which we expect to be a key driver of future revenue and earnings growth,” said Tellock.

Crane Segment Results
Second-quarter 2010 net sales in the Crane segment were $451.6 million, down 31 percent from $652.3 million in the second quarter of 2009. Second-quarter 2010 sales were up 23 percent from first-quarter 2010 sales of $366.8 million.

Crane segment operating earnings for the second quarter of 2010 decreased to $38.6 million from $49.5 million in the same period last year. Operating earnings were up $34.1 million from the first quarter of 2010, due primarily to higher volumes, product mix, and favorable receivable collection activity. This resulted in Crane segment operating margins of 8.6 percent for the second quarter of 2010, up from 7.6 percent in the same period in 2009, and up from 1.2 percent in the first quarter of 2010.

Crane segment backlog totaled $531 million as of June 30, 2010, a decrease of 13.4 percent from the $613 million backlog at March 31, 2010. The decrease in backlog during the second quarter was due to higher shipment activity, currency impact, and a sizable order removed from backlog due to persistent financing challenges in the current credit markets.

Tellock continued, “The second-quarter Crane segment results illustrate the continuing challenges of the current economic environment in which we operate. However, our focus on operational improvements and execution drove a notable improvement in operating margins during the quarter, which helped offset the weakness in global demand. Similar to prior quarters, emerging markets such as Asia, Latin America, and the Middle East demonstrated positive signs of improvement, while demand in the developed economies of North America and Europe continues to be weak. While we have seen modest improvements in utilization rates and significant reductions in dealer inventories in developed markets, rental rates continue to be soft. Nevertheless, we remain focused on executing on the opportunities we see in emerging markets that we anticipate will drive both near- and intermediate-term results for our Crane business.”

Cash Flow/Debt Reduction
Cash flow provided by operations in the second quarter of 2010 was $83.0 million. Second-quarter operating cash flow compared to prior periods was impacted by a change in the structure of the company’s accounts receivable securitization facility. As a result, the company was able to classify year-to-date cash inflows from this facility as an operating activity instead of a financing activity as in the first quarter. This new accounting guidance did not require the company to restate 2009 cash flow results and therefore year-to-date cash flows in both periods are now comparable. Year-to-date cash from operations in 2010 was $12.9 million versus negative $17.9 million for the same period in 2009.

2010 Guidance
Given second-quarter results that were in-line with the company’s expectations, the company is reaffirming its full-year guidance for 2010.

For the full-year 2010, the company expects:

• Foodservice segment revenues to improve modestly over 2009 results;
• Full-year Foodservice segment operating margins should exceed those of 2009;
• Year-over-year declines in Crane segment revenues to be significantly lower than the decline experienced in 2009;
• Crane segment revenues in the second half of 2010 to be higher than the second half of 2009; and,
• Full-year Crane segment operating margins to be above the 3.5 percent trough margins that were experienced in 2003.

In addition, the company expects capital expenditures of approximately $50 million, depreciation and amortization of approximately $140 million and debt reduction of $200 million for full-year 2010.

About The Manitowoc Company, Inc.
The Manitowoc Company, Inc. is a multi-industry, capital goods manufacturer with over 100 manufacturing and service facilities in 23 countries. It is recognized as one of the world's largest providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. Manitowoc also is one of the world's leading innovators and manufacturers of commercial foodservice equipment serving the ice, beverage, refrigeration, food prep, and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications.

Source: AED News