The Manitowoc Company, Inc. (MTW) 8 May 212021 Q1 Earnings call transcript

Good day, everyone, and welcome to Manitowoc Company First Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ion Warner, Vice President, Marketing and Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the Manitowoc conference call to review the company's first quarter 2021 financial performance and business update, as outlined in last evening's press release. today Dave Ravenscroft, and Antoniuk, Officer. call Executive and Chief the and Officer; Executive on are President Aaron Chief Financial Participating Vice President webcast Events and be which Relations Today's of Presentations. slide the section under in Investor can website our a includes found presentation,

would opportunity questions to reserve I an to the everyone ask a and for call. return one this queue Please Slide prepared time that to turn has request will provided material our X. and answers and to We our their questions. Please you the for ensure in after Safe to questions remarks. like limit your to statement Harbor follow-up note

on and in affect today's Private XXXX Reform Securities the forward-looking other the assessment business. Litigation based of company's its of factors as During current call, that markets defined the Act made statements are

from filings. differ factors, any of or Aaron. results events SEC now latest described materially to a information, new undertake any projections actual others, And of not does more result among any over However, or to or future as whether the forward-looking due The Company implied Manitowoc other call to company's one the that, the could actual update I statements, turn with circumstances. will or obligation in revise

the logistics the and the the challenges with operations and everyone. of for current job of in exceeded COVID-XX a mention performance Thank cash the I you, was by of by ongoing delivery year. morning, delivered well by strong from created accomplished pandemic. and environment, Adjusted team our Manitowoc Ian, was Frankly, quarter. done. and Slide Please to pleased in production our X. to spite myriad start really start very turn persevered flow Nevertheless, not the good this supply the would a like team chain EBITDA and thanking created I expectations. issues a first to

we the were pleasantly surprised of quarter. for terms orders, In

Starting the the to was first strong same and crane backlog Europe, with versus we three XX% up were million. this period during ended I year, dynamics. the business a tower attribute with $XXX quarter orders Our period. last the unusually of

countries particularly which cranes. First, self-erecting as tax capital orders, drove European such incentives Italy investments, for promote to certain implemented

we dealers during due winter to placed key had Second, fourth several quarter orders uncertainties. the partial economic campaign

follow-on As the dealers economy the quarter. reopened, these in placed first orders

to that Lastly, the however, was offset Unfortunately, EU. we in in and not some genuinely Net-net, the the implemented material quarter. surprised robust placed the region increases, business was crane were increases the dealers first as more as hear price of additional of cautious cost tones we Europe out the price mobile advance orders the we of by reflective performance of during change.

feel to in The Asia Middle And strong during good is continue the bookings quarter. pipeline we South encouraging. China, East activity East the project about in Middle Pacific. and the and east, Moving general Korea, the posted Australia

in North and Finally, significant information outlook the vaccine the reflective high to we our The U.S. marketplace speculation is the lot Clearly, great all order we is for of change which news, America days. the there infrastructure I see that that around nobody the tempered digits, don't our these a signals that U.S. news necessarily conclusion the in was was The the is the with see wanted in of U.S. that increase on match in to bill. in quarter the positive news market. jumps to positive, performance you of Americas ensure remain total market. a single but end

is invest are back of equipment remain still as However, Big on that, oil even still cautious And the rental still $XX. major used purses. houses to crane depressed. tight above are top prices companies the to holding oil

that are to books, seize an orders at our in look our I network I well say that would when for Finally, on inventory uptick opportunity dealer positioned consider the their the dealer business. and is levels

a have we measured American market. North the of So crane view

The Given to Way improve the to volatility our continuously flexibility the of the of operations. crane in keep essential for market, Manitowoc it's us investing

cells over tower increase investment. our I assembly production to the by self-erecting our mentioned, In cranes demand, line As has team Niella, for XX% team will executing been and standard demand offline two surprisingly the of several last the the that in is rebalance create in can of kaizens tax few Italy time. strong meet we main the with production Using customer minimal meet to capital ensure a quarters. order to overall process work,

we of is capital increasing much as of about it safety improving this a manipulators, about couple install productivity. will investment, terms In but really, is

provide grease little elbow Dave? long spikes financial details his As big us Niella. Dave team a unpredictable meeting in crane lean, always to to business. to way the results. creativity a our I'll pass A you in and can it that, take on in in Pier and thank Domenico With our

good and Aaron, everyone. morning, Thanks,

Let's move to Slide X.

quarter each last basis, On first pockets Orders compared currency-neutral were higher same million, increase all driven million Our orders to year. in a our $XXX period QX XX%. or of improved in region. million segments, totaled of $XXX orders customer demand $XX orders the by of an XX% within of up

in segments ago. up the first rates. segments up by the and also SG&A segment. impacted up offset foreign a the XX% was Americas and, of XX%. were were sales backlog MEAP currency X% favorably months. results EURAF Net by sales from on increased million prior currency-neutral a expenses. basis. mostly increase was expenses Our the in or XX% in Net to within ship in year-end, currency-neutral increased over next in a $X by $XX The all short-term legal on scheduled million million by On a partially decrease of basis, basis, by and better $XXX driven quarter six changes foreign and backlog and adjusted was rates, XX% unfavorable over Compared offset year the Backlog March higher travel expense Stronger from X% increased an XX decline incentive and approximately year insurance primarily our exchange million year-over-year. to with across marketing compensation XX% of increased $XXX by costs, a exchange

reminder, the CONEXPO to expenses show. were trade a the XXXX higher Triennial As marketing due

Our approximately increase volumes for XX% year-over-year. quarter the EBITDA product an adjusted increase. million, a of drove Higher $XX year-over-year first favorable and was mix the

over of leveraging percentage improved a to to primarily sales, EBITDA our basis an sales a year XXX margin fixed of higher As adjusted points the volume. due improvement prior over of costs X%,

of total First $XX capital quarter fleet. million of our and rental half European between $X the we to in expenditures of million higher In investment increased million, XXXX, expenditures million includes $XX anticipate the second prior depreciation the reflecting compared level capital the which $XX year, in XXXX.

by and million Our provision in for the first income quarter was jurisdictions. non-U.S. in income taxes $X driven

in the offset not a countries expense As income has tax tax available reminder, jurisdictions. countries, therefore, valuation established allowances are for company to certain in those losses profitable and

the share higher Our On of prior improved loss share increased per an $X.XX year, $X.XX. GAAP income from diluted driven diluted partially by quarter by the loss tax in was $X.XX operating per offset by expense. and adjusted basis, income

Capital of related of quarter operating million of in we compared prior spending quarter the to million million, year. million European in a which $X activities the in from to $XX $XX the amounted generated rental $X liquidity, fleet. to to the use cash Moving tower

a primary ended in cash $XX from cash million. capital. working decrease was driver cash an increase of free our quarter result, $XX a $XXX quarter with of balance was our positive year-end. flow the The a in of the net flow As We million million,

to no million of on liquidity call with back XX borrowings as total now $XXX With ABL. March was Our will Aaron. that, I turn the our

Thank you, to Dave. X. Slide move Please

As production to Pune, recently action which during of COVID. pandemic the in a I for We And hospitalizations to which tested a first due India, have long temporary colleagues certain was the the and of spiked significantly Shady fact impacted positive in of quarter, minimize as the to Grove spreading workforce communicated quarter The production from resulted transition. an possibility when crawler XXXX took is and of areas. campus I oxygen over in a shortage. our in has last our protect resulted virus, shutdown few COVID, see our year immediate at COVID-XX

supply help local medical temporarily effort have operations for We uses. the welding to closed and our oxygen of conserve

Turning economy. the to

prices the high is supply quarter predicted, prices will entire and dislocations as spiked the in multitude quarter throughout capacity A at today, is the capitulate the the on the a to we chain. that world of year. creating first forecasted to Unfortunately, was steel remain the As and view steel return world for levels normalcy ago, general we're headed. year industrial

costs transportation logistics, We steel, $XX expect as for year-over-year. to million much as increase see and

lead lag times mitigate We impact, the are always raw the price of raising increase. effective but to between the date and material a there prices is

shortage, chip semiconductor supply the is significant complication throughout has major our base. issues second The which created

will in example, the our shipments the impact boom quarter. industry For truck shutdowns during the truck heavy-duty second

positive backlog and XXXX headwinds we short-term benefits, to are to and With as full $XXX So trends, year-over-year $XX of second that, about about million. are half guidance adjusted plans, insurance complications. while that order X. XXXX. our this contribution feel relief we than we of move to year lower supply and discussed call, likely such increases, light we inflation our the other In chain last on incentive we and nervous be anticipate COVID nonrecurring introducing normal Slide million the margins in EBITDA Please of

our may questions strategic some cycle, the Moreover, European track. us generally in advantage of though believe is XXXX, in one, Number position that that crane we rental is beyond about building to we European will the global strategy Looking we the tower on market our four have fleet cycle. momentum tower crane believe take how crane market. overall put strong initiatives a still

than cranes by quarter, We excellent. our in continues most a million another fourth MCT to plan model More already during million to XXX and on our the fleet Potain by we Chinese invested for this team, business launch $X of the these CapEx was the crane China two, factory year. this Number expand tower the new initiative, visit customer XXX. move product the first in feedback designed just with $X We our rented forward. and approximately service. customers During launched

in XXXX in effort strategy we additional grow Belt grow us it are market share investing business during product Number our in crane an three, fill helps permits our While this to the all-terrain our million to position China, an in gaps. Road $X and regions. also in

will While these a five-year be this strategy. at is next Bauma launched cranes of new year, several

on engineering and X the Over business designs to others. three of the years, focus Tier requirements, a last team quality updating meet in to as few refocus standards the emission our was regulatory improve among innovation. a main our on nice change such It's while pace our legacy machines AT attention to

fourth the speak quarter. pleased diagnostic Connect. our is about publicly very team to off I'm that Grove This remote technology addition, during engineering In picked a

testing currently all-terrain and significantly are the with this the end to technology will Adding follow. new phase cranes to launch serviceability the conditions. this We drive of to but by capabilities complex team it Number of Grove acquisition expect well four, least, year first last our has not additional substantial closing, these difficult under we very of will continue In long-term performed growth. that Connect machines. to opportunities the improve pursue

As normalizes. year chain supply we as of be stated our transition a will the several ago, months XXXX economy and

We our Manitowoc to to lines times. our greater four-point generating The please to Way value to are that growth on returns questions. confident our deliver us the With ability long-term shareholders. that, greater open will will strategy these for Concurrently, operator, we improve for guide our while through continue lean customers challenging

will We instructions] [Operator Jerry Goldman our go from question Revich ahead. sir. you, Please take from now Sachs. first Thank

morning, Yes. on Good quarter. strong the everyone, congratulations Hi. and

Thanks, Jerry.

much. very you Thank

I'm sounds order in that just continued you point opening shared this at crane on if into cadence you're it April. momentum the like about wondering expand could the the tower talk European comments remarks, you seeing has

region on what maybe terms you've more by since and So quarter-end just little touch in bit a seen products? of

Yes.

a at level. of is a implemented. us but speak was we've that coming some advance increases I'll orders, mean, of price of I good in April we month high So orders that that in for terms see

Okay.

So that forward, pull as a see you purely Aaron?

think so. I Yes,

you the We've of forward pull so okay. can in folks will longer-term you seeing then this a pretty your base supply years. in cost if comments having to what the extent drag healthy cost just talk matching well about matching, be I'm couple versus I'm you agreements you're volatile of anticipated XQ? manage inflation about wondering are supply that of input have input cost folks as you seen is past with over lot orders. environment price wondering pretty actually price/cost the folks chain And just fear the generally And price/cost

to answer Dave going ask that to So I'm question.

say see would it an the see in XXXX And and quarter does, the only even that, say back we instance increased, of years, the we down. last back over it he today. I'd five a just I was Before steel in inflation six up didn't systematic or it for that way came

you Dave, in take more detail do on that? So to want

Yes, sure.

So our which going steel, pricing job of XXXX and which our to done over price. prices we're year. fast the But to with in why a have and because increases, into exchange effect the your is our causing nice to is the Jerry, the the know, the the steel going we've everything, second with degradation in adverse long-term, typical we a buying half in enough get short-term, And of the actually to increase up going market prices comparison results on see to with half flow-through prolonged of you foreign high you're an cost first it's as can like cost price/cost the our material to get offset there.

And that? think than announced, increases price/cost that in just point you to what's terms And right side Dave, going up? you've the then it you're drag on be that? put Is can a based do basis So finer we less points? hundreds on price of the when of

we So number I don't quarterly Jerry, one, would guidance. say, give

little So even – full think where we'll anticipated the as we're – challenging more. will I a the looked full being out and see of that year, we've the year, will this XXXX we've bit kind in we year. be year be at will the XXXX throughout kind of

just I'd the on effect steel we have second start have into we that more into coverage get second prices really half quarter the where add And the when to us. an

guidance, that's just in And for the put order of could headwind us? the magnitude anticipated the finer of a that point you on

the to I'd prepared in that just the commented million $XX on point remarks. we

on of pricing. basis, a net net That's

Okay. Alright. Thanks.

go from Duignan JPMorgan. question We from will next now take Ann our Please ahead.

Good morning, Ann.

go Please ahead.

line open. Your is [Operator instructions]

mute was on. indeed Thank button you very My much.

be talk a about the about the free should versus what about operating should was Could Sorry of on we back there how it cash the that capital. negative noted you talk as think positive forward, you that. You flow? cadence little happened working Can cash it we bit generation? and about that of just seasonally, go

Yes.

we do of the converted mean the I had for speaking. AR the fact first had the us was higher So quarter that with unusual at that to over. historically Part end that of year

as of helped So a manage this Right us. And building lower level our goes how on. then other the is just inventory we side that the year year. up throughout at now, the we're and

really to as in have we and our the think in you in will be add? down we Normally, the But inventory make Dave, anything as the low we quarter for pulled potential we I some happen fourth see decisions on really as which fourth next us sales because we don't on manage going market first can inventory the miss the quarter. quarter. how question quarter. the our to regarding if up, we're do have build quarter, typically to decide to picking would out schedule draw in to the want fourth we

being the flow that's indicates with after upon always the part. of and end positive that the order capital book At And this last – the would that we'll be line about offset time, if we capital sight in year the us one flow how recall, offset free Yes. cash free contingent in and of most time the that flow, to activities, I by CFOA, And the positive we have takes that from wildcard I talked spending. say operating about for cash cash inventory will being our spoke spending.

Okay.

You headwind half that had be working the and reversing will also first a two. half capital said

had Then QX, costs $XX you you'd So just that talked return Is just had that Just sales. just you it. discretionary color. you headwind $XX the about from I helpful. – the talk are that. us can changed. mix If up stronger million curious us now us was you inflation, you you a crawler so update different material you appreciate in I'd on could other on negative costs? picking about the and million those, why that also And about Thank for Can cost bit you. discussed the that's talk much? get update towers of Thank because talked little on then

Yes.

out. is You hit than on the us nail held it business helps respect the the the mix to The crawler head net-net, with business tower stronger because anticipated. we is steady

I way costs So change $XX good is about million. at significant maintained. There to that's to the in fourth quarter, respect say of we a no it. would looking think I those talked that With the

Right. And costs we that the big big last show, in first XXXX year-over-year associated the the came, million Ann, the which with of $X That's XXXX, in driver in year, didn't we quarter against that away. benefit about did going is results. say a and the had CONEXPO for – I'd when comparison decrease repeat, was

of continue And the the so year. will those then rest headwinds through

Okay.

think missed just I I your comment.

just Could CONEXPO said You you cost. that, sorry? repeat

Yes. show $X about That provided a were CONEXPO a on trade – year-over-year benefit cost CONEXPO XXXX in the million. comparison.

a That's going forward for proxy least Thank banner you. and trade Okay. it. at CONEXPOs good banners. Appreciate shows

our next We go will question now Please ahead. Mig with Baird. from Dobre take

Mig. morning, Good

Yes. Good everyone. morning,

the net and are clarified these $XX all pressures inflationary logistics steel headwind. you So a million

on if for what wondering this have So sort that, your XXXX? looked $XX plan, operating guidance I of have guess we're incremental margins say based for headwind, million that I'm your would normalizing didn't you like

difficult a think look that? Dave, as look do anything answer there's and a yes, But next couple when to lot better. have we in bit add little you we to the a quarters. I we is especially to to the mix forward at that you’re really of mix of I asking XXXX quarter fourth we where question, started Mig, think question, to were, but it's thought headwinds

No, sorry, I’d that – just Mig, say go ahead. I'm

is I all given you this of Well, inflationary you've margin What all what the trying variations? a you point, understand really investments or given said view you've run sort view as ex that. incremental think we're these understand we the at made, normal I capacity, with rate some a what to what cost for business of done that

Right.

higher upside always little up but flow-through sales around the we've at So the depending on incremental at the product could under looked as we've range. – that on bit go it that, mix, in Mig, XX% normal said always conditions. XX% And than right the a

temporary on prior Is with dealers it of – at there surcharges? sort these progresses? if list other on a and of on if point sort prices you year I'm forward and in there And and is see. curious of mechanism implementing kind curious permanent How of adjust to year beginning aspect like the work at price you're increases? are the as of pricing have on. your XXXX? here. into it I going kind are price are moves carries a pricing Or so that of about do And what these you I is mean there certain or ordering I'm then you another the matter exactly doing

Yes.

So it's things. combination a of

we when were not you as to get to pressure of And a on change being as much more and much is offset question That discount. course, the that. said, don't we putting we our team discount that First negotiated into – as we're actually how deals, change We – of surcharges. there's we do prices. it's

So it's couple of things. a say I'd

increase like when talked, is the the us increase we price were for back in of those of cause It drift to that it couple did we struggle competitive to ago years because At the then would less price would got down. too that could first you place when for want really you real quarter, months anticipated started in to be or a ago. steel orders the a three look we quarter think that time, a put much future. don't I it

tight prices stand are where the maybe obvious we half. it's going think even pretty to and is the hold I that increase steel second in now

for go we'll a increases round instances, some second price year. in this of So

curious $XX baked made figure into And spot we're on When shared we're is Thank here? currently as looking from you million Okay. all steel converged the your that assuming there cost then you Are to with to what's this assumption rates? that's you. another where question at Or us, final sort is seeing that I'm me. of figure?

at out where the steel, the And mean, it, components on the transportation, today components No. that the to are are right looking there so within and are when I three at we're now. really marketplace futures obviously, the just we relative crane. steel look is listed that

your apologize. there. don’t I comment follow I I think

lot the components add I'd all steel. across the that the Well, inflation board. folks we're buying, that and A those it's of are just seeing subassemblies same

right for on just not if are say as us, now And prices crane business. not just it's our suppliers broad-based increasing I everyone. steel the So everyone, would basically there's inflation

this offline. you. Okay. I'll take Thank

[Operator go instructions] next will question our Jamie now take from ahead. Please Credit from Cook We Suisse.

Jamie. Good morning,

Hi, is Katoku Chigusa this on for Jamie.

return So particular on at is on our hear what was half But variables Thank companies do the conditions to they $X.X year. the is, And I of the or have wondering to the the chain of to And second normalized the for timeline talk expect billion could – to then improve can just you you they that you're billion back in saying talked that of least some to highway around previously? in revenues about better year? the this differently. think seeing line how first you. top question manage you question supply we $X.X

say question shortages. thinking. would every I see that's first different that the on day mean wishful I we So,

it into in the seen part. that's goes every in received every letters XX I've my majeure sensor in chip just And I year-to-date, basically see would when I is career. the add fact, In something we've that which alone, never shortage, United force States

get to battle the $X.X difficult With think to will be we top ready predict to day-to-day. short I respect very literally think to line, It's something billion. we who back we us for we're it's So next. on comment the don't when

Thank Okay. you.

Bank. Please go UBS from question next our take now ahead. Steven Investment Fisher will with We

Thanks. Good guys. morning,

just kind in of tempered the little your ask have the to in about of the reserved North North guess with wanted American do highway Just oil need building bit you what extent that come absorb capacity your in capacity because Or cycle instead? and it would you side if around were America capacity? business to waiting to for anything cycle I do comment's remain And – to potential business. would expectations gas back? energy to a iron you a differently

Yes. I look mean think when main I I is RTs. the on it, at large effect

to and If oil drive you'll around, see houses. you go rental patch the lot a today the of those in sitting

extremely Obviously, but the both So see in quarters. that we'd We in factories expect think to do in business is back well love our in slow, of change sides don't low capacity couple very, next on I significant don't a utilization. need to very the that But our that of we're any a get restructuring, to pickup line. like additional we anything it. positioned business,

you Okay. then at What past. are in seeing been driver point? wind of somewhat there has this the helpful a And

orders think I Yes. it's the months last three that, since about on saw over think I been crawler the the call. four I'd jump But I in last since that or in really ago talked orders. But just – mean dialogue. the good say saw we jump had we that, we that

wind on in that that's speculation I ago, think pick people the – I think putting would orders up. months were business three

and haven't much we moves Over three folks they say than seen that the that months, those more that. machines have I'd last on want, though, the order

Okay. Thanks very much.

Steve. Thanks,

any to Warner, the no like at conference turn are to time. Mr. there you or further closing this additional questions I'd appears back remarks. for It

Thank first joining again us our this in for please Before accessing next conference the call, we and with continuing quarter today will speaking conclude that www.manitowoc.com. quarter. today's a We section morning look website by interest to replay Investor XXXX available Company. Relations of call note forward everyone, Manitowoc later of your our you at you, for be The

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