Manitowoc Company Inc (MTW) 2007 Q4 法說會逐字稿

Good day everyone and welcome to this Manitowoc Company, Incorporated fourth quarter conference call. Today's call is being recorded.

At this time for opening remarks and introductions, I'd like to turn the call over to Mr. Khail. Please go ahead, sir.

[Inaudible] conference call will be Glen Tellock, our President and Chief Executive Officer, and Carl Laurino, Senior Vice President and Chief Financial Officer. Joining Glen and Carl on today's call will be Eric Etchart, President of Manitowoc Crane Group, Mike Kachmer, President of Manitowoc Foodservice Group and Bob Herre, President of Manitowoc Marine Group. Glen will open with commentary on our markets, Carl will discuss the financial results for the quarter and the three segment presidents will offer insights into their operations and outlook for 2008. We'll then conclude with a question-and-answer session following our prepared remarks.

For any of you who are not able to stay on the line for todays entire call, you can hear a replay beginning at 1 p.m. Eastern Time today until 1 a.m. Eastern Time on February 12th. The number to dial for the replay is area code (719) 457-0820. Please use confirmation code 9265214. You may also access an archived version of this call by visiting the investor relations section of our corporate website at www.manitowoc.com.

Before Glen begins his commentary, I would like to review our Safe Harbor Statement. This call is taking place on February 5, 2008. During the course of today's call, forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, may be made during each speakers' remarks and during our question-and-answer session. Such comments are based on the company's current assessment of its markets and other factors that affect our business. Actual results could differ materially from any implied projections due to one or more of the factors explained in Manitowoc's filings with the Securities and Exchange Commission including but not limited to the company's annual report on Form 10-K for the year ended December 31, 2006.

With that, I'll now turn the call over to Glen.

Thanks, Steve. Good morning. Yesterday's results were an outstanding achievement for everyone at Manitowoc. Sales for the year top $4 billion, EPS beat our own targets and our cash generation gives us plenty of flexibility for future growth. As great as 2007 was, we are even more excited about 2008. Our view of the near and intermediate term is every bit as strong as it was when we provided our initial 2008 guidance in December. Growth is our number one priority and we'll meet our 2008 targets by taking advantage of organic growth opportunities in all three of our business segments. Later in the call, each of our segment presidents will describe how he's managing his business for growth.

I'd like to take sometime now to share our views on the state of the markets we serve and where we see growth opportunities. We started to build a global crane company in 2001 and 2002 by adding Potain and Grove to our legacy Manitowoc Crane business. Our view is set by offering the broadest range of products on a global basis. We could maintain and add market share in a global growing world economy. That strategy has been very successful and we think the current global construction cycle has many years of growth left. Despite impressive growth in North America and Western Europe, the world's largest lifting markets, we are seeing even stronger growth in emerging market such as India, Eastern Europe, China and the Middle East. Regarding the traditional markets, if North America, Western Europe and Japan follow the historical 10 year building cycle, those markets should reach an influxion point of [winning] crane demand in approximately two to three years since crane sales typically peak later in the general construction cycle. The current U.S. housing market is getting most of the attention of construction industry observers and is basically masking the state of our end markets which remains solid. We like the U.S. Markets that we serve.

Our view of international market is even more favorable. Pick any of the key emerging markets and you'll find a huge need for lifting equipment. China's growth is well documented and our plant there is operating ahead of expectations to serve the growing demand for tower crane and key crawler crane components.

In India, our acquisition of that country's long-time Potain dealer has placed us in a strong position in one of the world's fastest growing construction markets. Today, India is the word's 12th largest consumer economy and Mackenzie forecast that it's growing middle class will raise it to number five by the year 2025. That brings demand not just for traditional construction projects like power plants and factories but also bridges, water treatment plants and other types of infrastructure projects that do not exist today.

Another key end market for us is energy. The major oil companies and state owned agencies are installing production, refining and petrochemical capacity around the world. Many of these projects are in areas where there's a small installed base of complex lifting equipment. Our global construction customers need new equipment for these projects and they also rely on our investments and after market support such as our new crane CARE support center in Dubai. These are just a few examples of the demand for global infrastructure that we believe support our 2008 growth targets and our optimism concerning the intermediate term. We're committing capital to ensure that we have the capacity and the technology to meet our customers needs and continue to create shareholder value.

Our foodservice segment faces a different environment in 2008. This is a largely domestic business and our key customers are restaurants, convenience stores in a [larking] market. We are seeing several customers revise their capital spending plan in response to lower consumer spending on meals outside the home. Consumers are facing higher energy prices in an uncertainty economic outlook. Yet that's not a new situation.

In the past 30 years, we've had run away inflation, recessions and oil embargoes. Yet restaurant sales have failed to out phase inflation only three times. This is a stable industry and we have a large base of installed equipment that puts us in a strong position for replacement sales. If 2008 were to be the fourth year of subpower industry performance, we're still confident in our growth forecast. That's because we're developing new products. We are serving new markets and we're leveraging our relationships with national and global accounts.

In our marine segment, our two facilities on the Great Lakes are now regarded as some of the best ship builders in the nation. This unit is the right size for our market and our goal is to build ships that matches capacity and skill levels. Our recent work with the Navy on the Littoral Combat Ship has proven that we can build very complex ships and the Navy has indicated that it wants 55 of the LCS. Feedback from the Navy on our work has been very favorable and participation in this program would use a significant portion of our capacity for several years. While the Navy still has the final design and construction program, we have a solid backlog of other government and commercial projects that goes well into 2010. An additional government program that will ramp up in 2008 is the responsible medium for the coast guard.

This multiyear program is a good compliment to our current backlog of larger vessels since it is a complex boat and allows manufacturing flexibility. We also expect to sign contracts for additional ocean going tank barges, tugs and other types of commercial vessels. with our team's history of quality workmanship and on time delivery, we are on the bid list for nearly every project in the 200 to 500 foot range. With our strong cash generation, we'll also pursue acquisition opportunities in both the crane and foodservice segments. We frequently evaluate targets that bring us new products, new end markets, or new geographies. We have a clear desire to grow the foodservice segment as we did with cranes in the earlier part of the decade. Regardless of segment, we require that the acquisitions, the EPS secreted in two years, the EVA positive in three years. I wanted to share those reasons why we are excited about 2008 and we can discuss any questions at the end of the call. I'll now ask Carl to take us through the financial results.

Thanks, Glen and good morning everyone. Yesterday, we reported fourth quarter 2007 net sales of $1.1 billion, a 44% increase over the fourth quarter of 2006. We also reported net earnings for the quarter of $99.2 million or $0.76 per diluted share compared with net earnings of $43.9 or $0.35 per diluted share for the same period last year. All per share amount in our comments reflect the two-for-one stock split that became effective in mid September.

Earnings per share from continuing operations for the 2007 quarter totaled $0.74. An increase of nearly 111% from the prior year. Please refer to our press release for reconciliation between reported GAAP earnings and earnings from continuing operations before special items. Turning to the segments. Crane segment sales for the quarter were $946 million. An increase of 56% from the fourth quarter of last year. Operating earnings were $141.7 million up 83% resulting in an operating margin of 15% compared to 12.8% a year-ago.

Our operating margins increased from both the prior quarter and the 2006 quarter primarily because of three factors. Streamline work flow at our facilities as we are beginning to see the early benefits of some of our capital programs, good performance by our supply chain teams in keeping critical components on hand and improve labor efficiencies as new workers are rising up the learning curve.

For the year, operating margin rose from 12.6% to 14.5% and we believe that we will see continued incremental margin improvements in the second half of 2008. Crane backlog at December 31 totaled $2.9 billion up 88% from a year ago. Growth and backlog were strong across all of our geographic markets and in virtually all product categories.

Last quarter, we saw a backlog increase by 28% from the prior quarter compared to this quarter's 8% sequential growth. In no way does this indicate that our business is slowing and Glen's earlier comments show how solid our order pipeline is. As we said for several quarters on these calls, backlog is just one element of our performance.

Moving to foodservice, sales increased 7% to $100 million from $94 million in the 2006 quarter. Operating earnings rose 11% and margin improved from 9.8% to 10.2%. This performance is especially impressive considering the tight capital spending environment in the U.S. restaurant industry. Restaurant remodeling and equipment refresh program continued to be delayed as consumer spending for meals outside the home have to compete with higher energy and housing costs. In this challenging macro environment, sales and margin for all three foodservice product categories increased for both the quarter and the year because of increased operating leverage on higher sales. Our 2008 forecast for foodservice is for mid single digit revenue growth which is greater than the industry's forecast along with improving margins in the mid-teens.

Marine sales for the quarter were $72 million down 6% from the 2006 quarter. Operating profit increased 68% to $5.7 million from $3.4 million in the fourth quarter last year. Profitability on both government and commercial projects remain solid at both of our Great Lake shipyard.

For 2008, we expect marine sales will be relatively flat from the $321 million in 2007. Operating margins will likely also remain in the range of the 8% we achieved in 2007. One reason for our stable forecast is that 2007 had a very high level of repair and dry docking work due to the coast guard mandated schedules for Great Lakes shippers. Even though fewer vessels are scheduled for required dry dockings in 2008, we will replace that work load with our backlog of INLS and OPA-90 projects. Improved operating performance in all of our segments obviously translated to the bottom line.

Compared to the fourth quarter of 2006, net income from continuing operations in the fourth quarter of 2007 increased more than 119% and benefited not only from the strong operating performance described earlier but reduced interest cost and a lower effective tax rate. All of these factors also impacted our EVA performance which increased more than 77% from last year. We add forecast the 50% increase in EVA in 2007 and even with a much higher base, we believe we can meet our goal of another 50% increase in 2008. One aspect of EVA is that it measures the effectiveness of capital expenditures. CapEx for fiscal 2007 total $120 million which was above our previous guidance because several crane expansion projects are ahead of schedule. For 2008, we forecast CapEx of approximately $120 million primarily for continued capacity expansion initiatives and an ongoing ERP deployment for the crane segment. Eric will discuss the status of the expansion projects in his remarks.

I'll conclude my comments by affirming our EPS guidance that we issued in December. Excluding any unusual items, we are targeting full year 2008 EPS in the range of $3.20 to $3.40 per share.

Our next speaker is Eric Etchart who will describe our progress at cranes. Eric?

Thanks, Carl. Good morning, everyone. As Glen said earlier, this has been a successful year for the crane segment. The indications are that 2008 will be even better. Given the strength for our end markets and the recognized value of the Manitowoc products, our after market services and our efforts to energize our manufacturing capacity. Our customer focus and the leverage of our crane offerings have created a strong demand for all of our products in all of our markets. This is demonstrated by our sales of $3.2 billion in 2007. An increase of $1 billion over 2006.

Each region is growing at a high pace In both established and emerging markets. If you look at Asia, which posted six consecutive year of growth and an impressive 75% growth over 2006. These regions, they cancel just 12% of our global business. We expect that our crane sales from emerging markets will total $1 billion in 2008 while demand will remain [bridge] across our traditional markets. Even though the market is growing very fast, we are growing even faster. Thanks to the success of our new product innovation strategy coupled with a global penetration of Crane CARE.

Our 2008 growth target of more than 20% will be achieved with a great team of employees while focused on executing on several strategies. To meet our customers demands for Manitowoc using products, we will boost our manufacturing capacities into 2008 that will subsentially augment the levels that we achieved last year.

Our new plant in Slovakia and India are already in production delivering i-value products into new and emerging markets. We also added a plant in Portugal that will streamline the production of tower cranes at any [inaudible] facility. We are using the same strategy here in the United States.

In Manitowoc, we are having 50 thousand square feet to the main plant while optimizing and focusing such on having total cranes involvements in the nearby Port Washington facility. When finished in mid-year, this facility enhancement will improve [fruitful] and streamline our factory flow and efficiency. The same intensive focus is also occurring in Pennsylvania at our Shady Grove facility where we will integrate space and equipment to compliment our product crane capacity. Similar improvements will also be made in Europe where we will ship some products made in Germany into our newly expanded EMEA factory in Italy. A remake of our rough terrain product [inaudible] from Shady Grove to EMEA some years back which has significantly boosted our market share for rough terrain cranes in Europe.

By having the global manufacturing network, we can produce cranes in the markets in which they are sold. Entering, we meet regional customer needs, reuse shipping costs, dig up local suppliers, introduce natural currency hedges and better support the customers [inaudible] to our brains. For example, we have been producing tower cranes for export to India at our plant in China. With our recent acquisition in India, we now can serve the India market better, with domestic supply while we are allocating the China plan capacity to serve customers in other regions of the world. This clearly demonstrates Manitowoc's success in leveraging its people, products and processes to capture optimal value in the lifting industry. But this doesn't mean that we are content with those success. We are also installing manufacturing in all of our plants to make the best use of our global network. To capture more efficiencies, we are launching any [inaudible] implementation this year. The state [inaudible] deployment will take four years to complete, but will bring value to our shareholders and allow us to become truly [inaudible].

Finally, we will grow sales by introducing more new products that make lifting saver, quicker and more profitable. An excellent example is the exciting GTK1100. A revolutionary crane concept that is suited for heavy and high lift in tight spaces. Yet requires only a fraction of the erection time that a traditional crane does.

This crane was named the most innovative product at [Belma] last year. Its features and benefits have been fully validated in the market with outstanding performance and recognition within the crane and lifting industry. Its success is self-evident by the full board and magnitude of lifting inquiries worldwide. In being on this success,we currently have over 30 new innovative products in our [delivery] pipeline that were specifically designed from valued feedback of the customers and markets that we serve.

Our next big trade show is for next fall which will be held next month in Las Vegas. We will showcase 12 innovative cranes that we are bringing to the market as well as new developments in our Crane CARE after market customer support system. Many of you on this call will be at the show. So please stop by our stand and allow the professionals of the Manitowoc Company give you a personal tour of the word's finest lifting solutions. That concludes my remarks. i'll now turn the call over to Mike Kachmer.

Thanks, Eric. As Glen and Carl mentioned, the Foodservice Group showed improvements across the board in 2007 despite difficult market conditions in some of our key segments.

At Manitowoc guys, our investments and energy saving technology are helping maintain our number one domestic market share position. With energy cost rising as a percentage of a restaurant's operating budget. Owners welcome the chance to cut cost by switching the Manitowoc or upgrading their current equipment. The beverage division sales benefited from new products such as Flex-Tower and new marketing strategy is focused on national accounts. At refrigeration, we continue to achieve significant improvements in our manufacturing processes. This drives lower cost and higher customer satisfaction because our quality and on time delivery metrics have also improved dramatically. With our leading market shares and strong relationships with key customers, we're confident that we will continue to see progress in 2008 in spite of pressures from reduced consumer spending. We'll do that through accelerated innovation, capturing economy of skill, manufacturing excellence and rigorous cost controls.

According to the National Restaurant Association, the top two transfer consumers are growing healthy and going [inaudible] and [inaudible] positioned for both. We developed the Flex-Tower to meet the desire for healthier selfserve menu items. It gives customer 16 drink choices, not only the standard carbonated drinks but also non-carbonated juices, teas, sports drinks and spring water. It's been a big hit in convenient stores and we're following it up with the FlavorPic. This new beverage unit has a proprietary nozzle that delivers the same carb and non-carb choices as Flex-tower but with the added benefit of either crushed or cubed ice. It's the only unit of its type in the industry and consumers love it in field test.

Foodservice operators have long recognized our commitment to having the most energy efficient product in the industry. We've built on the need for green technology by pioneering the use of insulation materials in manufacturing processes that minimize the use of volatile compounds and chemicals. It's [inaudible] is not only good for the environment, it creates a healthier restaurant. Operators and customers are being more sensitive to the need for products that match a commitment to conservation. We're also managing our operations to achieve and improve profitability. We've would reorganized the segment to put all operations on a common set of control metrics and created an engineering group to ensure that our current and future designs are the most efficient to build. We also attack cost by constantly reviewing the supply chain for savings opportunities and by using commodity hedges to stabilize pricing.

Finally, we'll complete our ERP implementation later this year. The new system will help us manage production on a global scale and better service on national and global accounts.

With that, I'll turn the call over to Bob Herre.

Thanks, Mike. Like cranes and foodservice, marine also had a great year in 2007. Sales and profitability were up sharply as we completed several vessels either right on schedule or ahead of schedule. We also continued to improve our operation efficiency and we accelerated training for skilled craft positions. Both of these factors helped drive our 2007 results and will help us do more great work in 2008. Nearly all of our peer shipyards are privately held so you may not appreciate what a rarity early deliveries are in this industry. It's one of the main reasons that the Manitowoc marine group is gaining a reputation as a go to shipyard for complex mid-sized ships.

Our strategic advantage is a stable workforce with an average of 15 years of experience that are enhanced by wide array of modern production facilities. The highlight of our work in 2007 expand projects in both the commercial and government aspects of our business. Our commercial work focus on OPA-90 tank barge construction and many of the vessels we delivered will repeat projects using common designs. Today, we have delivered 16 double whole tank barges and our performance continues to improve. This quarter, we delivered a tank barge a month ahead of schedule. As a result, we were able to schedule additional projects into our Sturgeon Bay shipyard.

Our government work continues to be dominated by the LCS FREEDOM which is scheduled for deliver in the third quarter of this year. As the workload on FREEDOM lines down, it will be replaced by work on additional modules for the Improved Navy Lighterage System. Because the INLS program is a continuation of an existing program, we are well at the learning curve and should be able to achieve target profitability. As Glen said earlier, the navy hopes to build a fleet of 55 LCS vessels and is very pleased on our work on FREEDOM. It is the first ship in a new class of vessels and we set a navy record for shortest time between contract award and ship launch. Current navy plans call for three additional LCS vessels to be awarded in 2008.

If we are chosen to be on the final build team, it would represent an excellent long term use of our facilities and a terrific return on the investment that we have made in this program. Glen will now share some closing comments. Glen?

Thanks, Eric, Mike and Bob for those summaries. We have a strong management team in place from the segment leaders and down through their organizations. We appreciate everyone's efforts and look forward to more success in 2008. This concludes our prepared remarks and we will now open the call to your questions. Shirlia?

Thank you, sir. The question-and-answer session will be conducted electronically. (OPERATOR INSTRUCTIONS) And we'll take our first question from Charlie Brady.

Hi. Good morning, guys. With respect to the crane segment, can you just give us a little bit more color on when you are looking out to LA with regard to the strength and some of the end markets and specific more geographic ares and how much of the strength is built into your forecast? Where that's really coming from?

Good morning, Charlie. Well, I think when you look at most of the end markets on the crane, the biggest driver we have going today is really the energy markets. If you look at petrochem, you look at power plants, you look at utilities, you throw that all together and that typically gives upwards of 40% of our end market. So that's why we get excited about the long term whether it would be North America, whether it would be Europe, Middle East, Africa or whether it be Asia. The energy markets are driving a good portion of this and we show in several presentations better than 40% of it. It's in all geographies and again, it certainly masks again what we talked about the residential market here in North America.

Thanks.

And next, we'll here from Seth Weber from Bank of America.

Thanks. Morning, everybody. Is it possible, Glen, I guess to maybe quantify how much, some of this new capacity whether it's India or Slovakia helped the third quarter revenue and margin during the quarter? And then as kind of a related question here, If you were to take a step back and look at the time line, could you handicap for us? How far along do you think you are in this process of adding capacity? Are we third inning, fourth inning, fifth inning? Thank you.

Okay. Good morning, Seth. First of all, on the first part of the question in the fourth quarter, there was minimal impact of any of the capacity additions that we had. It was a little bit from our acquisition in India in the fourth quarter, but as I would say from my old finance days, "Finance not enough to move the needle." And then with respect to where we're at in the again on the capacity additions, it depends which region we are in.

When you get to Slovakia and India, obviously, we're well into the game. And so, you're going to see the ramp up very quickly in Slovakia. We are going, I think, full term with respect to India. You are looking at the other expansions we talked about in North America where Shady Grove and Manitowoc and Port Washington. We'll probably in the third or fourth inning and it will ramp up by mid-year and then some of the things we are doing in Italy we're very close to that being a full year benefit probably three quarters and then in Germany probably a half to -- that will come in the mid to early fall. So you can see by the end of this year and we watch very closely what our run rates will be by the end of the year. And it's adding, by the end of the year, there's a good amount of capacity that we have on the run rate by the end of this year but we do get the benefits as I just mentioned a lot of it this year.

Okay. And is this the incremental spend that you are now adding even from what you talked about last quarter to this quarter, is that a reflexion of -- do you feel that you are losing business from competitors that have product available? Are your customers telling you that you need to act faster to get to shorten lead times here or is competition getting better or suggest that you trying to be proactive and you see the cycle going longer?

I think it's the strength of our outlook obviously and that's why we need, I think its again our strategy on many of the businesses whether it's the foodservice or the crane. To manufacture as close to the end-user as possible and this really gives an indication of the strength that we see the markets going forward. The customers certainly want their cranes faster. I know we talked a lot about the backlog. The customer would rather have a smaller backlog and a faster delivery, but that's the strength of the markets today and I think as we look out, it just shows how we feel these end markets are going to stay for a long time when we look in every region of the world.

Okay, so no real change to the competitive landscape then?

No. I don't think so. Not significantly.

Okay. Thanks I'll get back in cue.

And next, we'll hear from Jason Feldman from UBS.

Good morning. First question is I was wondering if you felt any impact from recently rising steel prices? And also if you could comment on how your backlog is protected essentially from pricing commodity cost.

Good morning Jason. The impact of steel, I think when you look at the commodity pricing here early in the year and we watched the high [inaudible] strength, prices continue to rise all last year and they are rising now maybe not at the same rates that they were in the middle of last year. The regular steel is, I think, normal pricing, but when you look at the crane backlog, we went out and priced what we went into the 2008 and said here is our pricing. We went out and pretty much project where we thought those were going and I think our assumptions and where our costs we're going to be are pretty solid. So the pricing in our backlog fits the delivery schedules for all of 2008.

Okay. Based on how far in advance you purchased steeling, your view of where it's going, you're fairly comfortable with the backlog price the way it is in the current commodity environment?

That's true.

Okay. And then last question. Also on the backlog, if you can just talk about how firm the backlog is. Under what circumstances our customers able to cancel orders if their needs or economic condition changed. And our deposits generally require is it ever an issue where you see some expected business not really materialized?

Again, Jason, when you look at the backlog, it's pretty firm. We've tracked a lot of things. We spent a lot of time talking about this and again, you've said it before. You can't go back. i mean, you can. If you look at 1983, I think it's the last time we've ever had a customer really cancel an order that wasn't somehow taken at the time it was needed. So we feel very comfortable about it. In addition, we are and I think you are going to hear from competitors and whatnot as you start looking out into 2009. We are starting to expect down payment on some of the large orders as people start talking about what they want to do in 2009.

Okay. Thank you very much.

Next, we'll to Joel Tiss with Lehman Brothers.

Good morning. How is it going?

Hey, Joel.

Just two sort of quick ones for Carl and then a bigger one. The free cash flow looks like it got cut in half and also the receivables were off by almost 50% over the course of 2007. Can you just give us a little bit of an idea what's going on behind the scene?

Well, I think, from a free cash flow standpoint the biggest pinch for us Joel has not been on the receivable side. It has been on the inventory side. And that's a function of the explosive growth that we've been able to achieve. Obviously, at the beginning of the year, we were guiding to have a 20% plus expectation on the revenue and Eric and his team were able to achieve significantly more than that double plus both levels and making sure that we had the inventory necessary in order to do that created a lot of stress on the working capital. So that's probably the key element to that one.

Okay. And then maybe if you can help us to understand to like in past cycles. you guys have been doing a lot longer than we have. In past cycles, what would be some of the earlier signs that you would see that maybe the supply and the demand in the crane industry is starting to come into balance. I know there are many segments and all that but just sort of generalized. Thank you.

Joel, one of the things that we watch and I'll make it specifically to North America and it's somewhat a little bit easier for us to watch because of our strength for the distribution that we have in North America as we watch our utilization rates and the dealer fleet levels and we track. We've been tracking that for over 20 years and right now, the utilization of our dealer fleet is over 90%. So there's some reports out there that verify that and some other objective reports. At the same time, you look at their rental fleets. And right now, as of the end of the third quarter which is the best data that I have, the rental fleet inventories of our leaders in North America are half of what they were at the [Trof] in 2003. So you can see those are two barometers that we watch.

At the same time, you look outside of North America you are going to watch the number of conversations that customers have of what new products are coming out. I think every year at every trade show we try to sit down with a lot of our customers. We go through their dealer business plans so there's a lot of things worldwide that we go through, could be tender than China but I'll give you an example of North America because that's obviously where you are sitting today. But there are other factors that are certainly on a macro economic basis but those just give you good indication.

Thank you very much.

And next we'll hear from Matt McConnell with Robert W. Baird.

Good morning. Could you give us the currency contribution to crane segment revenue growth in the quarter and let us know what your 2008 outlook assumes for currency contribution?

We had about 16% of the overall growth was attributable to revenue.

Currency.

To currency. Excuse me.

Okay.

The outlook -- there really isn't an appreciative expectation as we laid out the '08 expectation right now.

Does that assume currency stays at the current rate for -

Currency neutral.

Okay. And could you give us a sense of what percent of your crane backlog is from international markets and how that compares to the current crane segment revenue mix right now?

Virtually equivalent to what you see in the revenue break down which is about 60% international.

Okay. Thanks very much.

Next, we'll go to Steve Volkmann from J.P. Morgan.

Good morning. I just wanted to maybe this just answered the question now but the crane sales were up by 55% or so. It's a lot better than I expected. I just wonder was there anything any timing stuff in the quarter or I guess sort of sound to me like you didn't have the capacity to be up that much but is there anything in there that we should look at?

Steve, some of it is the year end and push to get some of this stuff out, and if you look at what happens in the fourth quarter, you do have in the third quarter the European holidays, and I know that it gets old listening to that but you do have that -- you try to plan around it but if things don't happen in that third quarter period some of it comes and spills over into fourth quarter, but again, we've had -- we've had many customers with things that we were hoping to get everything in by the end of 2007.

So you plan for that and then you just wonder how much you are going to get out those two last weeks of the year before the holidays but I got to attribute a lot of it to the efficiencies of the factories that we have around the world on getting that out and getting the stuff to the customers. Now what I'm excited about is that put some of it that we do see some of those efficiencies coming through the factories and we are expecting a lot of that to stay through in the rest of 2008 and moving forward.

Okay. Great. And that was my follow up because I think the things Carl listed in terms of the benefits of work flow and supply chain and labor and so forth. Seems like they ought to be sustainable and yet, the forecast is obviously unchanged for now. And that seems like that doesn't quite square to me. Do you have a comment on that?

Well, I think the surprise for us was really what we were able to do in the fourth quarter which was obviously extraordinary. We obviously have an expectation that we would be able to do that from the December time frame when we finalized our initial guidance and those expectations for the improvements in that longer time frame were already in place in that time frame.

So you got that a little fast are, I guess?

That and you mentioned part of it, Steve. Some of the supply chain. Let's take for instance you have a supplier of - for example, I'll use chassis. There's a bottler neck with your supplier and all of a sudden you get all of that. You can see the strength of how fast we can put it thoroughly. You try to plan for that making it efficient as possible but sometimes it doesn't always work that way and so I think it's a matter of getting everything insync and that's the ultimate goal to make sure that there aren't those hiccups in the supply chain and I think we did have some of the benefits of all that through the fourth quarter.

Okay. Great. Just a quick follow up, Glen. It seemed like the language you were using regarding the potential for foodservice acquisitions today was kind of the strongest I've heard. Is there sort of an up take activity there or anything we should read into that?

No. I don't think so. I wasn't trying to make any connotations by that. I just think it's - my only point is, I think and I've said it before, if you could look out five years and say look at the strength of what we've done on the crane side internationally with distribution and manufacturing. If we can emulate some of those things, I think we'll have a nice package going forward and that is really the message that we want to send. But there's no difference in any activity now than before and I think it's equally spread amongst the crane and foodservice.

Great. Thanks very much.

And next, we'll hear from Kent Green from Boston American Asset Management.

Two quick [inaudible] crane CARE. How much is that contributing now to just direct profitability and then how much is it contributing to say solidify market share, new orders just because you are offering that and do you offer that on a full variety of cranes including competitors cranes?

With respect to the revenues, we typically don't give up the profit side it. But on the revenue side anywhere from 14 to 16 percent which it mask a little bit, Kent, by the strength of the old goods market.

But that's a growing piece of our business on a regular basis and over the past four, five years since we've really strengthened that strategy but we have not gone into competitors type products right now. I think there's a lot that we have that have to do on our own side. But with respect to many of the strategies that we have in place it's become a very very global business. We have all the call centers up and running now, and it is a key differentiator for us and it is a competitive advantage as we look at selling whole goods.

Then you mentioned energy. Is there any other broad base vertical or say markets, you know, that are grouped as markets like the brick companies that you would like to disclose which you think is extra good for you?

Well, I think the other end market that is good obviously outside of the energy is the utilities market but I would say even outside while I think it's still good in North America the nonresidential construction. It's better outside of North America. So there are strengths in those markets. With respect to the amount of business doing in the brick countries Eric mentioned that we have when you look outside of some of our mature markets, we have over a billion dollars or growing to be over a billion dollars in the emerging markets for us and that's all news for us since 1999 and 2000.

Thank you.

(OPERATOR INSTRUCTIONS) Next, we'll go to Seth Weber from Bank of America.

Carl, you are sitting on your cash net cash positive here following the fourth quarter. I think you have a [inaudible] bond that's outstanding at some point in 2008. Can you just comment on your capital allocation plans here for this year?

Well, I think Glen talked a little bit about the growth imperative of both crane and foodservice and I think priority one would be satisfying both the organic and the external growth asperations that we have to grow out those businesses. We have had buyback programs in our history to the extent so we are not philosophically oppose as a means to return cash to the shareholders, but it's in an environment when we think that other opportunities that we might be looking at we did do a modest increase in the cash dividends last year. Really small numbers makes it look impressive at 14% increase but it's obviously a modest element at this stage. So those are the things that we would be looking at.

All right. Thank you.

Oh, excuse me, you mentioned the bond as well. You are right about that. We do have the 2003 bonds that come through. They're [inaudible]. In November of this year, those will carry a pretty attractive coupon at 7 and 3 A's.

Okay. Thanks, Carl.

Next, we'll go to Charlie Brady from BMO Capital Markets.

Okay, thanks. just sort of - with regards to China, in terms of what the weather they are seeing over there and ice storm, is that having any impact either in the first quarter or the plant over there in production, that might add delays or something out of China?

It had an impact on Eric and I last week because we couldn't get into there, but it would have an impact obviously because we had the factory closed for a couple days but that's -- whether it's a power outage in our factory in Shady Grove or Manitowoc or closed factory there, we contact the customers. We told them what the situation is. Things will be back on line. So I think it's a very very short-term and our people will get that rectified and back on schedule very shortly. So I think it's a very short-term impact and not meaningful to anything that you'll see mid-year.

Okay. Thanks. And with respect to the installed base of cranes out there can you give us a sense of what the age of some of the various types of cranes, the flee of crawlers and how much business do you see coming out of replacing an aging equipment base? Thanks.

Charlie, I think that's an ongoing discussion for us and a review of the world markets. When you start looking at some of the emerging markets, a lot of times, you'll find out people are going in with [inaudible]the equipment first. So it's sometimes difficult to get the number of cranes that are out there being utilized in places whether it be Africa, whether it be parts of Russia or whether it be Latin America, but I would tell you in the mature markets that people are using that as a viable end market for them as they renew their fleets and you see a lot of the people saying I have a viable alternative to sell things into could be India.

It's not so much China but it's other parts of Asia. And what is happening is, cranes are going out and that's how people are renewing their fleet because in 2003, everybody was sitting with their fleets and they started to age. So you are seeing that and that's where the strength of this global economy comes. I would also say that's the strength of our business as a global manufacturer. Many of our customers look towards us and ask us you know if I buy this with Manitowoc at the end of the life cycle I have for this product order, what do I do with it. That's where Crane CARE comes in. That's where is use the equipment business comes. And I think that's why you see some of the high resale value of the products that we have on the crane side.

Thanks very much. It's helpful.

That concludes the question-and-answer session today at this time. For closing remarks, I'll turn it back over to Mr. Khail.

Before we conclude today's call, I'd like to remind everyone that a replay of our call will be available beginning at 1 p.m. Eastern Time today until 1 a.m. Eastern Time on February 12th. The number to dial for the replay is (719) 457-0820. Please use confirmation code 9265214. You may also access an archived version of today's call on our website at www.manitowoc.com. Thanks again for joining us. Have a good day.

That concludes today's conference. We appreciate your participation. You may now disconnect.