Manitowoc 1Q09 Sales Drop 4 Percent on Lower Crane Demand

The Manitowoc Co. last week reported sales of $1.03 billion for the first quarter of 2009, a 4-percent increase from $988.5 million in the first quarter of 2008. The sales increase was due primarily to the October 2008 acquisition of Enodis plc. On a pro-forma basis, which includes relevant Enodis sales in the prior year, sales declined 22 percent from $1.31 billion in the first quarter of 2008. This includes a negative 7 percent impact from foreign currency fluctuations. Excluding one-time items, adjusted earnings from continuing operations were $22.9 million, or $0.18 per share, versus similarly adjusted earnings of $95.4 million, or $0.72 per share in the first quarter of 2008.

In connection with the preparation of the first-quarter financial statements, the company recorded non-cash impairment charges of $700 million for the write-down of goodwill and other intangible assets in certain Foodservice reporting units. This is in addition to the previously announced $29 million write-down related to the expected proceeds from the sale of the Enodis ice business

On a GAAP basis, the company reported a net loss of $656.3 million, or a loss of $5.04 per share, for the quarter versus net income of $102.7 million, or $0.78 per share in the first quarter of the prior year. The loss in the current quarter was due to the combined $729 million non-cash impairment charges. Also affecting profitability in the quarter was a reduction in crane sales, a $10.8 million reduction from foreign currency fluctuations, and restructuring charges of $2.8 million.

Operating earnings for the first quarter of 2009, excluding special items, were $62.8 million, down 53 percent from $132.6 million in the first quarter of 2008. This reflects a decline of $78.1 million in the Crane segment, partially offset by an increase of $15.2 million in the Foodservice segment.

“This quarter contrasts sharply with the first quarter of 2008 when we were near the peak of the business cycle in our Crane segment,” said Glen Tellock, Manitowoc’s chairman and CEO. “We experienced a dramatic reversal in demand for cranes over the past several quarters driven primarily by constrained credit availability. As a result, customers have cancelled or delayed deliveries across many of our end markets and product lines. Fortunately, we have experienced a less severe decline in the Foodservice segment.

“We have acted quickly and aggressively to maximize opportunities to improve our operations and adjust our cost structure in ways that will improve our competitive strength. We are focused on initiatives that will improve profitability for the long term and allow us to emerge from the worldwide recession in a stronger competitive position. On an annual run-rate we have lowered our cost structure by over $260 million.”

First-quarter 2009 net sales in the Crane segment were $672.9 million, down nearly 24 percent from $884.4 million in the first quarter of the prior year. This includes an 8-percent negative impact from foreign currency fluctuations. Crane segment operating earnings for the first quarter of 2009 decreased 58 percent to $56.5 million from $134.6 million in the same period last year.

Crane segment backlog totaled $1.4 billion at March 31, a decrease of 28 percent from the $1.9 billion backlog at Dec. 31. Although the backlog declined for a third consecutive quarter, the net-negative order flow driven by backlog cancellations has recently stabilized to net-positive orders on a more consistent basis.

“Even though the industry has reduced its capital spending in light of the current economic recession, we are encouraged by the positive dynamic of our new Foodservice segment,” Tellock said. “This dynamic drives equipment sales to end users who are aggressively seeking additional revenue and market share in these challenging times by pursuing multiple initiatives such as menu changes, energy efficiency, and productivity gains.”

“We remain confident in the long-term growth and profitability opportunities for both of our market-leading businesses,” Tellock said.

The Manitowoc Co., Manitowoc, Wis., is a multi-industry, capital goods manufacturer with more than 100 manufacturing and service facilities in 27 countries. It is a provider of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks.