Manitowo Q1 2010 Earnings Call Transcript

Manitowo Q1 2010 Earnings Call Transcript
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Manitowo (MTW)

Q1 2010 Earnings Call

April 28, 2010 10:00 am ET

Executives

Glen Tellock - Chairman, Chief Executive Officer and President

Eric Etchart - Senior Vice President and President of Manitowoc Crane Group

Carl Laurino - Chief Financial Officer and Senior Vice President

Steven Khail - Director of Investor Relations & Corporate Communications

Mike Kachmer - Senior Vice President and President of Manitowoc Foodservice Group

Analysts

David Wells - Avondale Partners

Ann Duignan - JP Morgan Chase & Co

Henry Kirn - UBS Investment Bank

Nicole Deblase - Deutsche Bank

Charles Brady - BMO Capital Markets U.S.

Meredith Taylor - Barclays Capital

Robert McCarthy - Robert W. Baird & Co. Incorporated

Seth Weber - RBC Capital Markets Corporation

Joel Tiss - Lehman Brothers

Charles Rentschler - Morgan Joseph & Co., Inc.

Presentation

Operator

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Good day, everyone, and welcome to this Manitowoc Co. Inc. First Quarter Earnings Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Khail. Please go ahead, sir.

Steven Khail

Good morning, everyone, and thank you for joining Manitowoc's First Quarter Earnings Conference Call. Participating in today's call will be Glen Tellock, our Chairman and Chief Executive Officer; Carl Laurino, Senior Vice President and Chief Financial Officer; and Eric Etchart, President of Manitowoc Cranes. Glen will open today's call by providing an overview of our quarterly results and business outlook. Carl will then discuss our financial results for the first quarter in greater detail. He will be followed by Eric Etchart, who will offer insight into the market conditions for our Crane segment and to discuss the recent Bauma trade show in Munich. Following our prepared remarks, we will be joined by Mike Kachmer, President of Manitowoc Foodservice, who will also be available to participate in our question-and-answer session.

For anyone who is not able to listen to today's entire call, an archived version of this call will be available later this morning. Please visit the Investor Relations section of our corporate website at www.manitowoc.com to access the replay. Before Glen begins his commentary, I would like to review our Safe Harbor statement.

This call is taking place on April 28, 2010. During the course of today's call, forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, will be made during each speaker's remarks and during our question-and-answer session. Such statements are made based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied projections due to one or more of the factors explained in Manitowoc's filings with the Securities and Exchange Commission, which are also available on our website. The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or other circumstances.

With that, I'll now turn the call over to Glen.

Glen Tellock

Thanks, Steve, and good morning, everyone. Our first quarter results reflected the challenging market conditions in which we continue to operate. That said, our performance in both our Crane and Foodservice segments were in line with our expectations. While we are seeing continued signs of stabilization in the operating environment, 2010 is poised to remain challenging. Nonetheless, the entire Manitowoc team continues to execute on our objectives. Our ability to improve our business despite these headwinds is a testament to their hard work.

We remain committed to the three priorities I have outlined previously, which we believe will enable us to expand our leadership position in both Crane and Foodservice. First, we have continued to make significant progress against our goal of flawlessly executing the Foodservice integration. The addition of synergies achieved in the first quarter resulted in further operating margin expansion in this segment.

During the quarter, we continue to focus on all areas where we believe the greatest opportunities exist, which include organic growth, operational cost reductions and procurement savings. We leverage the combined knowledge and relationships of the legacy businesses to drive revenues and earnings from new product introductions. We have also realized cost benefits from facility consolidations implemented in 2009, which have already been completed or are in process.

In addition, our combined procurement organization is providing additional cost savings benefit by optimizing the cost structure of our large organization. The continued success in capturing synergies from the Foodservice integration gives us confidence that we should see full integration synergies in excess of $80 million by 2011.

In the Crane segment, we continue to position this business to drive performance as the market recovers. We have taken what was a very efficient and quality-focused infrastructure at the end of the fourth quarter, and have targeted additional areas, including operational efficiency, product innovation and our best-in-class customer service to drive optimum performance in this business.

And finally, we continue to remain focused on optimizing our cash generation to achieve both our near- and long-term debt reduction goals, while concurrently making ongoing investments in our business to drive future growth. We also made solid strides in managing our balance sheet during the quarter, as cash management and debt reduction continued to be a major focal point for our team despite the seasonal fluctuations in our working capital.

As we look at our segment performance for the first quarter, our Foodservice business continues to perform well and we are beginning to see meaningful benefits from the Enodis acquisition and the resulting integration efforts. We are pleased with our ability to boost operating margins as a result of the identification and realization of operating synergies with these two businesses. Furthermore, we continue to see significant potential for organic growth in both the hot and cold equipment categories through customer development initiatives like energy savings, speed of delivery, geographic expansion and menu changes.

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