Manitowoc Reports Disappointing Results, Splitting Company into Two
The Manitowoc Company, Inc. (NYSE: MTW – $19.24) reported that fourth quarter sales were $1.0 billion, a decrease of 6.1% compared to sales of $1.1 billion in the fourth quarter of 2013 and below consensus estimates. Excluding special items, the adjusted earnings from continuing operations were $37.5 million, or $0.27 per diluted share, versus $63.9 million or $0.47 per share in the fourth quarter of last year. The Street was looking for net earnings per share of Manitowoc of $0.32. Fourth-quarter 2014 net sales in Foodservice declined to $374.2 million from $399.5 million in the fourth quarter of 2013. The decrease was driven primarily by fewer new product rollouts and unfavorable foreign exchange rates and operating earnings for the fourth quarter were $48.3 million versus $68.7 million. Fourth-quarter 2014 net sales in Cranes were $663.2 million, versus $704.8 million in 2013. The decline in sales was due to the negative impact of foreign currency exchange rates between the Euro and US dollar, higher price discounting, and volume decreases that were most pronounced in the rough-terrain and boom truck product categories. Crane operating earnings for the fourth quarter of 2014 were $45.3 million, down from $54.8 million in the same period last year. After the bell, the company said that it would spin-off its Foodservice unit into an independent company; a long-awaited maneuver that was encouraged by a number of activist investors over the past year, including Carl Icahn that ratcheted up pressure last month. This would leave Manitowoc a pure play crane and industrial equipment manufacturer, with the Foodservice equipment unit to be operated separately sometime in the first quarter of 2016. The shares were higher after hours by about 8.5% on the news bidding around $20.50 per share. I have long been in favor of the separation and will continue to monitor ongoing developments and report back as to my thoughts on maintaining a position in one or the other businesses (or neither) in the weeks to come.