Manitowoc's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Manitowoc Company, Inc. (MTW)

Q2 2012 Earnings Call

August 7, 2012, 10:00 am ET


Steven C. Khail – Director of Investor Relations

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

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

Michael J. Kachmer – President of Manitowoc Foodservice

Eric P. Etchart – President of Manitowoc Cranes


Vlad Bystricky – Barclays Capital

Seth Weber – RBC Capital Markets

Mircea Dobre – Robert W. Baird & Co.

Jerry Revich – Goldman Sachs

Charles D. Brady – BMO Capital Markets

Robert Wertheimer – Vertical Research Partners

Vikram Malhotra – Morgan Stanley

Ann Duignan – JPMorgan

Christopher Schon Williams – BB&T Capital Markets

Henry Kirn – UBS Securities LLC

Eli S. Lustgarten – Longbow Research LLC



Good day, everyone, and welcome to the Manitowoc Company Second 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 second 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 second 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 For anyone who is not able to listen to today’s entire call, an archived version of this call will be available later this morning.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 Glenn begins his commentary, I would like to review our Safe Harbor statement. This call is taking place on August 7, 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 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'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 statement 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. We are pleased to report solid performance for the second quarter driven in large part by our unwavering focus on innovation, operational efficiency, and execution of our long-term strategies. Top line growth of 6% underscores our ability to navigate an uncertain global economic environment and fluctuating demand levels, while 120 basis points improvement in operating margins further validates many of the initiatives we had put in place to improve and enhance our operations globally.

Specific to each segment, Foodservice experienced another quarter of improved margins driven by a favorable product mix and improved operating efficiencies. While Cranes posted a significant improvement in margins complemented by continued strong order intake that resulted in the highest backlog level since 2009.

While a challenging environment persists across the globe, we are well positioned for our long-term, as we leverage growth opportunities from new and existing products in Foodservice, as we benefit from increasing Crane activity in the Americas, and as we capitalize on emerging market opportunities in both segments. Turning to our segment performance, our Foodservice offering continues to enjoy a very strong position in the global food service equipment industry. Looking at our products across the globe, the cold side of our business, which includes our award winning Indigo ice machines and market leading beverage products, was the strongest performing category during the second quarter.

In addition, our chain customers continue to drive the largest amount of growth across our geographic markets in this segment. For example, a leading quick service chain has implemented programs centered on Manitowoc's blended ice product category for the London Olympics.

Other core categories also continue to enjoy success with chain customers. One prime example of is our Frymaster oil conserving fryer which has been approved by one of the world’s largest quick service chains and is now replacing its large install base of legacy fryers with our equipment throughout their North American operations. Looking at other product categories, we continue to see considerable interest in our portfolio of advanced cooking technology products, which include our Convotherm combi ovens, Merrychef rapid cook ovens, Garland induction products, and others.

Of particular note, we expanded our test sites and enjoyed increased orders from the convenience store segment for our Merrychef ovens which featured our patented planar plume technology. We are experiencing similar interest in growth in the chain restaurant market for these oven products, especially in the sandwich and snack segments. Similarly, our investment in induction technology for our Garland cooking line is gaining traction, as we received formal notice that these products are now the prime specification for a boutique hotel brand of one of the world's largest hotel chains, providing further opportunities within our high end hotels around the world.

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