The Manitowoc's CEO Discusses Q1 2012 Results - Earnings Call Transcript

The Manitowoc (MTW)

Q1 2012 Earnings Call

May 04, 2012 10:00 am ET

Executives

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

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

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

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

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

Analysts

Andy Kaplowitz - Barclays Capital, Research Division

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

Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division

Robert Wertheimer - Vertical Research Partners Inc.

Jerry Revich - Goldman Sachs Group Inc., Research Division

Ted Grace - Susquehanna Financial Group, LLLP, Research Division

Henry Kirn - UBS Investment Bank, Research Division

Joel G. Tiss - The Buckingham Research Group Incorporated

Seth Weber - RBC Capital Markets, LLC, Research Division

Vance Edelson - Morgan Stanley, Research Division

Presentation

Operator

Good day, everyone, and welcome to this Manitowoc Company Inc. First Quarter 2012 Earnings Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Khail. Please go ahead, sir.

Steven C. 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; 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 first 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For anyone who is not able to listen to today's entire call, an archived version of this call will be available later this morning.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 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 May 4, 2012. 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 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 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. During the first quarter, we saw positive year-over-year sales growth in both Cranes and Foodservice. Our performance creates a strong foundation for Manitowoc going forward, as both segments combined to deliver 18% top line growth and 150 basis point improvement in operating margins.

In one of the typically and seasonally soft quarter, the first quarter sales momentum and margin expansion underscore the improving operating environment in several of our end markets, the strength of our product offerings and the results from a variety of ongoing lean process improvement initiatives to streamline our business and improve our operational efficiency. Both market-leading businesses have worked diligently to leverage their competitive advantages and continue to benefit from the significant investments we have made to upgrade and rationalize our global manufacturing network focused on process improvements and drive continuous product innovation.

Turning to our segment performance, momentum in Foodservice continued with solid first quarter results as newer product successes and solid demand in select end markets drove our eighth consecutive year-over-year quarterly sales increase. Looking at our Foodservice products across the globe, the Refrigeration Solutions business, which includes our award-winning Indigo ice machines, was the strongest-performing product category during the quarter.

Our relationships with global and regional chain customers are continuing to drive sales growth in both mature and emerging markets. And our beverage category, notably the Carbonated Dispense business, is beginning to benefit from increased activity across the industry.

From a geographic perspective, we saw increased activity in North America during the first quarter, with strength from many of our market-leading brands. Europe, historically one of the toughest markets in Foodservice, grew substantially during the quarter, primarily driven by our Merrychef and Convotherm ovens business. In the Asia-Pacific region, we have seen a slowdown in the hotel sector in China, which somewhat muted our performance during the quarter. However, we continue to participate in growth from restaurant chains in this region, and our outlook for China remains positive. We will continue to deploy resources into China and other emerging markets as our customers seek international growth, primarily through new store expansion as well as new menu initiatives.

In addition, we recently opened a new test kitchen in India, which complements our similar set facilities in Singapore, Shanghai and Guangzhou to support our customers' growth strategy in these key emerging markets.

Our introduction of new technologies in Foodservice equipment recently resulted in 3 of our newest products receiving the NRA, National Restaurant Association's 2012 Kitchen Innovation Award. This award, which recognizes cutting-edge kitchen equipment in the foodservice industry, was given to: one, Frymaster's new Large Vat Fryers designed to maintain high-production capability, while also using significantly less oil and reducing energy consumption; second, Garland's induction grill that enables real-time temperature sensing and a unique power management system; and third, Merrychef's Planar Plume Technology, which delivers quicker heat transfer, less microwave destruction, enhances reliability and increases energy efficiency.

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