Separation Expected to Generate Value for Shareholders by Creating
Two Strong, Industry-Leading Companies
Accelerates Fourth Quarter and Full Year 2014 Financial Results
Conference Call in Order to Discuss Separation; Call to be Held Today at
6:00 p.m. EST
MANITOWOC, Wis.--(BUSINESS WIRE)--Jan. 29, 2015--
The Manitowoc Company, Inc. (NYSE: MTW) (“Manitowoc” or the “Company”)
today announced that its Board of Directors has approved a plan to
pursue a separation of the Company's Cranes and Foodservice businesses
into two independent, publicly-traded companies. The Company currently
anticipates effecting the separation through a tax-free spin-off of the
Foodservice business and expects the spin-off to be completed in the
first quarter of 2016, creating two separate, industry-leading companies
with distinct enterprise strategies.
“Manitowoc’s management team and our Board of Directors regularly
evaluate and explore opportunities to optimize the Company’s performance
and create value for shareholders,” commented Glen E. Tellock, chairman
and chief executive officer of the Company. “Manitowoc has taken and
continues to take actions to enhance returns, including margin expansion
initiatives, re-investment in our businesses, and utilization of our
free cash flow to de-lever our balance sheet. We believe the separation
of Cranes and Foodservice will position these businesses to take
advantage of anticipated long-term improvement in demand and other
opportunities in their respective markets.”
Tellock continued, “Over the past several years, we have transformed
Manitowoc and worked to build two strong business platforms within one
enterprise, and each business enjoys global leadership and is positioned
for sustainable growth and value creation. After a comprehensive
evaluation, including a thorough review of the current and projected
operating environments for the two segments, we have determined that the
Cranes and Foodservice businesses are best-suited to realize their full
potential on a standalone basis.”
Two Industry-Leading, Independent Public Companies with Distinct
Strengths
The Cranes business, which reported annual revenue of $2.3
billion in the twelve-month period ended December 31, 2014, is one of
the world’s largest providers of lifting equipment for the global
construction industry, including lattice-boom cranes, tower cranes,
mobile telescopic cranes, and boom trucks. The business holds leading
market positions and highly recognized brands, including Manitowoc,
Grove, National Crane, Potain, Shuttlelift and Crane Care brand names.
The business operates 37 facilities in 18 countries and generates nearly
60% of its revenue from non-U.S. markets. Through its extensive global
footprint, strategic focus on product innovation, and strong
after-market support, the Cranes business is well-positioned to take
advantage of expected improving demand in the residential and
non-residential construction markets to generate long-term growth in
revenue and net income.
The Foodservice business, which reported annual revenue of $1.6
billion in the twelve-month period ended December 31, 2014, is one of
the world’s leading innovators and manufacturers of commercial
foodservice equipment serving the ice, beverage, refrigeration, food
prep, and cooking needs of restaurants, convenience stores, hotels,
hospitals, and other institutions. The business has a worldwide network
of 120 distributors serving dozens of well-recognized restaurant chains.
The business promotes more than 24 industry-leading brands, including
Manitowoc, Garland, Convotherm, Cleveland, Lincoln, Merrychef,
Frymaster, Delfield, Kolpak, Kysor Panel, Servend, Multiplex,
KitchenCare, Inducs, Koolaire and Manitowoc Beverage System, and has a
global presence that spans five continents and more than 80 countries.
Through its broad range of innovative products, expansion of its global
network, and launch of sustainability initiatives, the Foodservice
business is expected to enhance profitability and generate strong cash
flow.
Benefits
The Company determined to pursue the separation of the two businesses in
order to:
-
Position each business to pursue individual strategies as market
conditions improve;
-
Enable each business to attract a long-term investor base appropriate
for the particular operational and financial characteristics of each
entity;
-
Enable investors to value each company separately; and
-
Enhance the flexibility of each business to pursue distinct capital
structures and capital allocation strategies to meet the individual
needs of each business.
Manitowoc expects to continue to execute its stated strategy and capital
allocation plans as management works through the execution of the
separation, resulting in further deleveraging from now until completion
of the transaction. As a result, Manitowoc expects each independent
company to have a capital structure and credit rating consistent with
that of Manitowoc today.
Transaction Information
Additional information on structure, management, governance, and other
significant matters will be provided at a later date. The proposed
separation is subject to customary conditions, including receipt of
legal opinions concerning the tax-free nature of the transaction,
effectiveness of appropriate filings with the Securities and Exchange
Commission, and final approval by the Company's Board of Directors.
The Company notes that there can be no assurance that a separation will
ultimately occur or, if one does occur, as to its terms or timing. Any
transaction of this type is dependent on numerous factors that include
the macroeconomic environment, credit markets, and equity markets.
Governance Enhancements
Manitowoc also announced today that the Board has approved amendments to
the Company’s by-laws to eliminate its classified board structure on a
phased-in basis commencing with the elections occurring at the Company’s
2015 Annual Meeting of Shareholders. It is also expected that the
spun-off business will have an annually elected Board of Directors upon
completion of the separation and an overall corporate governance
structure that is in line with best practices.
Currently, the Manitowoc Board is divided into three classes, with each
director class serving a staggered term of three years. Under the terms
of the declassification, all current directors would serve the remainder
of their terms and thereafter become subject to election each year by
shareholders. The change would go into effect beginning with those
directors whose terms expire at the 2015 Annual Meeting. As of the 2017
Annual Meeting, all Board members will be subject to annual election.
“The Board regularly reviews its corporate governance practices to
ensure it is operating efficiently, effectively, and in the best
interests of shareholders,” said Tellock. “We believe that strong
governance practices help support value creation and that now is the
appropriate time to enhance our governance and ensure that our investors
have a regular opportunity to express their confidence in the
performance of the Board and management. The Board believes that this
action is in the best interest of the Company and its shareholders.”
Advisors
Goldman, Sachs & Co. is serving as financial advisor and Foley & Lardner
LLP and Skadden, Arps, Slate, Meagher & Flom LLP are serving as legal
advisors to the Company.
Investor Conference Call
Today at 6:00 p.m. ET (5:00 p.m. CT), Manitowoc’s senior management will
review the proposed separation as well as discuss its fourth-quarter and
full-year results announced separately today. All interested parties may
listen to the live conference call via the Internet by going to the
Investor Relations area of Manitowoc’s Web site at http://www.manitowoc.com.
A replay of the conference call will also be available at the same
location on the Web site.
About The Manitowoc Company, Inc.
Founded in 1902, The Manitowoc Company, Inc. is a multi-industry,
capital goods manufacturer with 92 manufacturing, distribution, and
service facilities in 25 countries. The company is recognized globally
as one of the premier innovators and providers of crawler cranes, tower
cranes, and mobile cranes for the heavy construction industry. Manitowoc
is also one of the world's leading innovators and manufacturers of
commercial foodservice equipment, which includes 24 market-leading
brands of hot- and cold-focused equipment. In addition, both segments
are complemented by a slate of industry-leading product support
services. In 2014, Manitowoc’s revenues totaled $3.9 billion, with
approximately half of these revenues generated outside of the United
States.
Forward-looking Statements
This press release includes "forward-looking statements" intended to
qualify for the safe harbor from liability under the Private Securities
Litigation Reform Act of 1995. Any statements contained in this press
release that are not historical facts, including statements about the
separation of the Company into two independent publicly-traded companies,
the nature and impact of such a separation, and the capitalization of
the two independent companies, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on the current expectations of the management of
the company and are subject to uncertainty and changes in circumstances.
Forward-looking statements include, without limitation, statements
typically containing words such as "intends," "expects," "anticipates,"
"targets," "estimates," “should” and words of similar import. By their
nature, forward-looking statements are not guarantees of future
performance or results and involve risks and uncertainties because they
relate to events and depend on circumstances that will occur in the
future. There are a number of factors that could cause actual results
and developments to differ materially from those expressed or implied by
such forward-looking statements. Factors that could cause actual results
and developments to differ materially include, among others:
-
possible negative effects on the Company’s business operations,
assets or financial results as a result of the planned separation of
the Company into two independent publicly-traded companies;
-
capitalization of the two independent companies;
-
unanticipated changes in revenues, margins, costs, and capital
expenditures;
-
the ability to significantly improve profitability;
-
the ability to direct resources to those areas that will deliver
the highest returns;
-
uncertainties associated with new product introductions, the
successful development and market acceptance of new and innovative
products that drive growth;
-
the ability to focus on the customer, new technologies, and
innovation;
-
the ability to focus and capitalize on product quality and
reliability;
-
the ability to increase operational efficiencies across each of
Manitowoc’s business segments and to capitalize on those efficiencies;
-
the ability to capitalize on key strategic opportunities and the
ability to implement Manitowoc’s long-term initiatives;
-
the ability to generate cash and manage working capital consistent
with Manitowoc’s stated goals;
-
the ability to convert order and order activity into sales and the
timing of those sales;
-
pressure of financing leverage;
-
matters impacting the successful and timely implementation of ERP
systems;
-
foreign currency fluctuations and their impact on reported results
and hedges in place with Manitowoc;
-
changes in raw material and commodity prices;
-
unexpected issues associated with the quality of materials and
components sourced from third parties and the resolution of those
issues;
-
unexpected issues associated with the availability and viability of
suppliers;
-
the risks associated with growth;
-
geographic factors and political and economic conditions and risks;
-
actions of competitors;
-
changes in economic or industry conditions generally or in the
markets served by Manitowoc;
-
unanticipated changes in customer demand, including changes in
global demand for high-capacity lifting equipment; changes in demand
for lifting equipment and foodservice equipment in emerging economies,
and changes in demand for used lifting equipment and foodservice
equipment;
-
global expansion of customers;
-
the replacement cycle of technologically obsolete cranes;
-
the ability of Manitowoc's customers to receive financing;
-
foodservice equipment replacement cycles in national accounts and
global chains, including unanticipated issues associated with
refresh/renovation plans by national restaurant accounts and global
chains;
-
efficiencies and capacity utilization of facilities;
-
issues relating to the ability to timely and effectively execute on
manufacturing strategies, including issues relating to new plant
start-ups, plant closings, and/or consolidations of existing
facilities and operations;
-
issues related to workforce reductions and subsequent rehiring;
-
work stoppages, labor negotiations, labor rates, and temporary
labor costs;
-
government approval and funding of projects and the effect of
government-related issues or developments;
-
the ability to complete and appropriately integrate restructurings,
consolidations, acquisitions, divestitures, strategic alliances, joint
ventures, and other strategic alternatives;
-
realization of anticipated earnings enhancements, cost savings,
strategic options and other synergies, and the anticipated timing to
realize those savings, synergies, and options;
-
unanticipated issues affecting the effective tax rate for the year;
-
unanticipated changes in the capital and financial markets;
-
risks related to actions of activist shareholders;
-
changes in laws throughout the world;
-
natural disasters disrupting commerce in one or more regions of the
world;
-
risks associated with data security and technological systems and
protections;
-
acts of terrorism; and
-
risks and other factors cited in Manitowoc's filings with
the United States Securities and Exchange Commission.
Manitowoc undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise. Forward-looking statements only speak as of
the date on which they are made. Information on the potential factors
that could affect the company's actual results of operations is included
in its filings with the Securities and Exchange Commission, including
but not limited to its Annual Report on Form 10-K for the fiscal year
ended December 31, 2013.
Source: The Manitowoc Company, Inc.
The Manitowoc Company, Inc.
Carl J. Laurino, 920-652-1720
Senior
Vice President & Chief Financial Officer
or
Joele Frank,
Wilkinson Brimmer Katcher
Nick Lamplough, 212-355-4449