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
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.
The Manitowoc Company, Inc.Carl J. Laurino, 920-652-1720Senior
Vice President & Chief Financial OfficerorJoele Frank,
Wilkinson Brimmer KatcherNick Lamplough, 212-355-4449
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