Manitowoc's CEO Discusses Q3 2011 Results - Earnings Call Transcript

Manitowoc (MTW)

Q3 2011 Earnings Call

October 26, 2011 10:00 am ET


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

Steven C. Khail - Director of Investor Relations & Corporate Communications

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

Glen E. Tellock - Chairman, Chief Executive Officer and President

Carl J. Laurino - Chief Financial Officer and Senior Vice President


Jerry Revich - Goldman Sachs Group Inc., Research Division

Matthew Vittorioso - Barclays Capital

Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division

Henry Kirn - UBS Investment Bank, Research Division

Ben Elias - Sterne Agee & Leach Inc., Research Division

Seth Weber - RBC Capital Markets, LLC, Research Division

Joel G. Tiss - Buckingham Research Group, Inc.

Charles D. Brady - BMO Capital Markets U.S.

Andy Kaplowitz - Barclays Capital, Research Division

Ann P. Duignan - JP Morgan Chase & Co, Research Division

Brian Michael Rayle - Northcoast Research



Good day, ladies and gentlemen, and welcome to this Manitowoc Company, Inc. Third Quarter 2011 Manitowoc Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, it is my pleasure to turn the call over to your host, Mr. Khail. Please go ahead, sir.

Steven C. Khail

Good morning, everyone, and thank you for joining Manitowoc's Third Quarter Earnings Conference Call. Participating in today's call will be Glen Tellock, our Chairman and Chief Executive Officer; and Carl Laurino, Senior Vice President and Chief Financial Officer.

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 third quarter in greater detail. Following our prepared remarks, we will be joined by Eric Etchart, President of Manitowoc Cranes; and Mike Kachmer, President of Manitowoc Foodservice, for 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For anyone who is not able to listen to today's entire call, an archived version of this call will be available later this morning.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 to access the replay.

Before Glen begins his commentary, I would like to review our Safe Harbor statement. This call is taking place on October 26, 2011. 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 speakers remarks and during our question-and-answer session. Such statements are 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 filings with the Securities and Exchange Commission, which are also available on our website. The Manitowoc 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 E. Tellock

Thanks, Steve, and good morning, everyone. Our third quarter 2011 results were driven by solid year-over-year sales growth in both our Crane and Foodservice segments. We witnessed sustained success in emerging markets, particularly those geographies where we moved our advantage. While persistent pressure in the broader economic landscape has tempered a growing recovery, we are well positioned for the long term as we continue to be driven by large [Audio Gap] and energy projects in Cranes and momentum from new product launches in Foodservice.

We continue to be focused on executing on our initiatives to drive increased operational efficiency and new product developments, which should drive margin expansion over the long term, as pricing and commodity cost pressures remain. Additionally, we continue to benefit from the expanded diversification of our Foodservice business, which moderates the impact of the cyclicality of our Crane segment.

For the third quarter, Foodservice showed positive momentum, as the success of recent product launches, increased operational efficiency and improvements across geographic markets drove another year-over-year quarterly sales gain. More specifically, our recently launched Indigo ice machines and Merrychef ovens continue to track well in the market.

From a geographic perspective, we have seen notable improvement in Europe, which is historically one of our toughest markets in Foodservice. This further validates that the restructuring and consolidation we implemented in that region following the Enodis acquisition is paying dividends.

In addition, Asia-Pacific had a strong quarter in Foodservice, which reinforces the fact that emerging markets are an important element of our success. We continue to deploy resources into that region as customers seek international growth, primarily through new store expansion, as well as new menu initiatives.

We continue to solidify our position as a trusted and valued partner for our customers, particularly as the revolving needs demand new and innovative products. In addition, the breath of our product offerings supports our customers' initiatives as they expand their menus, streamline their operations, expand their geographic footprint and reduce their overall costs.

Moving to our Crane segment, our third quarter results were encouraging. Consistent with recent trends, we experienced higher demand in select emerging markets, particularly in parts of Asia, Latin America, India and the Middle East.

In addition, third quarter sales benefited from growth in certain regions within the Americas. As we have seen over the past few quarters, demand is being driven by energy and infrastructure projects, which is a clear difference from the last recovery and should continue for the foreseeable future.

Demand in the Middle East, more specifically Saudi Arabia and Turkey, further increased during the recent quarter, and we expect the high level of activity to continue in these countries in the near term. As anticipated, Europe was negatively impacted by seasonality, and overall activity remains [Audio Gap] particularly in southern Europe.

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