Glen Tellock has reportedly resigned as Manitowoc’s chairman, president and chief executive officer, and he will step down from the board of directors. The company has named current board member Kenneth Krueger as interim chairman, president and chief executive officer, while the board initiates a search for a CEO of Manitowoc Cranes. Hubertus Muehlhaeuser will remain the chief executive officer of Manitowoc Foodservice
With the pending spin-off of the Foodservice business in the first quarter of 2016, Roy Ames, the Manitowoc Co.'s lead independent director, said the board believes it is the right time for new leadership at the company. “Ken’s deep knowledge of Manitowoc’s businesses, coupled with his robust financial and operational expertise, make him an excellent choice to lead the company’s efforts as we execute a search for our next chief executive officer," he said. "In his interim role, Ken will be focused on executing the company’s efforts to improve financial performance and executing the spin of the Foodservice business, as well as implementing the restructuring initiatives we announced today. Our commitment to delivering superior quality, innovative products and unmatched customer support is unwavering as we further extend our leadership in the marketplace.”
Krueger has been member of the company’s board of directors since 2004, including four years as audit committee chair. He most recently served as chief operating officer at Bucyrus International Inc. before retiring in 2009.
Financial Results
Yesterday, in its third-quarter 2015 financial report, the Manitowoc Co. stated its quarterly sales were $863.5 million, a 12.5 percent decrease from $986.3 million in the third quarter of 2014. Approximately 40 percent of this decline was due to unfavorable foreign currency impacts.
On a GAAP basis, the company reported net income of $4.8 million, or $0.03 per diluted share, in the third quarter of 2015, versus net income of $73.1 million, or$0.53 per diluted share, in the third quarter of 2014. Excluding special items, adjusted income from continuing operations was $12.8 million, or $0.09 per diluted share in the third quarter of 2015, versus adjusted earnings from continuing operations of $50.1 million, or $0.36 per diluted share, in the third quarter of 2014.
Third-quarter 2015 net sales in Cranes were down 23% to $438.2 million, versus $569.2 million in the third quarter of 2014. The decline was broad-based, particularly in the Middle East and Asia, which fell short of expectations. Slower than anticipated deliveries of VPC crawler cranes exacerbated the weakness.
Crane operating earnings for the third quarter of 2015 were $4.3 million, down from $41.6 million in the same period last year. This resulted in an operating margin of 1% percent for the third quarter of 2015 versus 7.3% for the third quarter of 2014. Third-quarter 2015 margins were affected by lower production levels and pricing pressure exacerbated by U.S. dollar strength, that were partially offset by the impact of continuing operational efficiencies and cost reduction efforts.
Crane backlog totaled $631 million as of Sept. 30, 2015, down from the third-quarter 2014 backlog of $716 million, and represented a 0.77 times book-to-bill ratio. Third-quarter 2015 orders of $337 million decreased from $557 million in the third quarter of 2014.
“Continued global economic uncertainty, coupled with the devaluation of the Chinese yuan that negatively affected the rest of the Asian markets, weighed on end market demand in the third quarter,” said Krueger. “As we look to the remainder of 2015 and into 2016, we will focus on those aspects of the business we can control, which include executing on our operational efficiency initiatives and optimizing our cost structure.”
He said this cycle has proven to be different from any other in recent memory, particularly with regard to customer order patterns. As a result, we are taking a number of aggressive actions in Cranes to offset this decline in demand, including right-sizing the business, plant rationalizations, headcount reductions, and other cost optimization initiatives. "These actions will likely result in an approximate $10 million to $15 million restructuring charge in the fourth quarter, and savings of approximately $35 million to $45 million over the next three years,” explained Krueger.
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