Manitowoc Foodservice Reports Another Strong Margin Quarter

Manitowoc Foodservice, Inc. (NYSE:MFS), today announced financial results for its 2016 third quarter. Net sales in the third quarter were $384.0 million compared to $425.3 million in last year's third quarter, a 9.7 percent decrease. However, prior year third quarter net sales included $38.5 million from Kysor Panel Systems ("KPS"), which was sold in December 2015 and excluded $2.7 million from Welbilt Manufacturing (Thailand), Ltd. ("Welbilt"), previously a 50 percent-owned joint venture of which we acquired the remaining 50 percent interest in October 2015. Adjusted for these items, organic net sales decreased by 1.4 percent in the third quarter compared to last year's third quarter. In addition, foreign currency translation negatively impacted 2016 third quarter sales by $5.7 million, or 1.5 percent, resulting in a constant currency organic net sales increase of 0.1 percent.

Year-to-date, net sales were $1,077.9 million compared to $1,178.4 million in 2015, an 8.5 percent decrease. Prior year net sales included $99.0 million from KPS and excluded $6.5 million from Welbilt. Adjusted for these items, year-to-date organic net sales decreased by 0.7 percent compared to the same period in 2015. In addition, foreign currency translation negatively impacted year-to-date sales by $17.4 million, or 1.6 percent, resulting in a constant currency organic net sales increase of 0.9 percent compared to the same period in 2015.

Net earnings in the third quarter were $24.9 million and diluted earnings per share were $0.18, compared to $41.1 million and $0.30 per share on a carve-out basis in the third quarter of 2015. Foreign currency translation negatively impacted 2016 third quarter net earnings by $0.5 million. Excluding separation, restructuring and asset impairment expenses, adjusted net earnings were $27.4 million and adjusted diluted earnings per share were $0.20 in the third quarter versus $42.2 million and $0.31 per share, respectively, on a carve-out basis in the third quarter of 2015. Earnings from operations were $60.6 million in the third quarter compared to $53.9 million in last year's third quarter. As a percentage of net sales, earnings from operations were 15.8 percent in the quarter versus 12.7 percent in last year's third quarter. Earnings before interest, taxes, other (income) expense and amortization (excluding separation, restructuring and asset impairment expenses), or "Adjusted Operating EBITA", were $72.1 million in the third quarter versus $63.6 million in last year's third quarter, a 13.4 percent increase. As a percentage of net sales, our third quarter Adjusted Operating EBITA margin was 18.8 percent versus 15.0 percent last year, a 380 basis point improvement. Adjusted Operating EBITA margin in the quarter also improved by 270 basis points versus the second quarter of this year. Prior year third quarter Adjusted Operating EBITA included $5.0 million from KPS and excluded $0.4 million from Welbilt. The main drivers of the margin improvement in the third quarter were savings from our Simplification and Right-Sizing initiatives and improved pricing and discounting discipline, partially offset by lower fixed cost absorption and higher incentive compensation.

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