Shares of Manitowoc Foodservice fell 5% Thursday following the release of its second quarter earnings report that missed Wall Street forecasts. The drop was not exactly pleasing to CEO Hubertus Muehlhaeuser, but then again, the company’s shares have ripped over 25% higher since the company started trading independently in March. ‘We had a very good start with two very strong quarters into the year,’ said Muehlhaeuser. ‘Our restructuring journey is fully on track so we are very pleased.’ Manitowoc Foodservice on Thursday reported second-quarter adjusted earnings of 12 cents per share, short of Wall Street expectations of 16 cents per share. The food and beverage equipment maker posted revenue of $368.4 million in the period, which also missed Street forecasts of $379.1 million. Muehlhaeuser said 2016 marks a transition year for the company after it was spun-off from the crane-operator earlier this year. Despite the earnings miss relative to Wall Street expectations, he said the company is on track to meet its 2016 goals of delivering operational improvement initiatives, driving new products and deleveraging the balance sheet. ‘We beat profitability estimates and we improved another 200 basis points on our EBITDA margin which is our prime focus this year,’ said Muehlhaeuser. ‘We have said all along that this is a transition year and we would like to spend the right amount of time restructuring our business and correcting the issues of the past.’ Muehlhaeuser said second quarter organic net sales in constant currency were flat primarily due to softness in the Quick Service Restaurant (QSR) market in North America. And while he expects this softness to continue, he is still forecasting sales growth in the second half of 2016 as it introduces new products over the next several months with a couple of large QSRs. The company also announced the next steps in ‘right-sizing’ its global manufacturing capacity by transferring manufacturing from its Sellersburg, Indiana plant to its plants in Tijuana and Monterrey, Mexico and subsequently closing the Sellersburg plant, which is anticipated to occur by early 2017. The company will also transfer the products made at its Singapore plant to its plants in Prachinburi, Thailand and Foshan, China. Subsequently, the company will close the Singapore plant which should occur by the end of the third quarter of 2016. The company expects to incur approximately $3 million of restructuring expenses in 2016 related to the product transfers and plant closures and will have achieved the majority of its rightsizing milestone of 20% manufacturing capacity reduction by the end of 2016.
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