The Manitowoc Company, Inc. (MTW) 2 Nov 232023 Q3 Earnings call transcript

Hello, and welcome to The Manitowoc Company Third Quarter 2023 Earnings Call. [Operator Instructions] I will now turn the conference over to Ion Warner. Please go ahead.

Good morning, everyone, and welcome to The Manitowoc conference call to review the company's third quarter 2023 financial performance and business updates as outlined in last evening's press release.

Today, I'm joined by Aaron Ravenscroft, President and Chief Executive Officer; and Brian Regan, Executive Vice President and Chief Financial Officer.

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Slide to provided material call. in this move safe harbor X Let's for statement the our on

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

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

will Aaron. And turn with that, I over the call to now

everyone. and Ion, good you, Thank turn morning, X. to Slide Please

our It's for challenging during very Overall, execution the team's was and operations, our of quarter. third different. period was XXXX pleased I no most the the with typically year

Although machine to continued or us, of quarter Non-new for the $XX XX% increased and to $XXX EBITDA X.X% delays part million, and sales were million our sales. plague $XXX adjusted shortages million. year-over-year sales vessel was

our third X. the turn strategy. quarter business. company to that I'd transition the Please a Cranes+XX Slide Manitowoc during from demonstrate to business services-oriented few a like to continues a under model wins product-driven to changing highlight

America, largest crawler rebuild XXXX we rental start, XX To won North for Works, an recently to cranes. crane Crane order house in Maxim the Manitowoc

to teams customer their The collaboration align this was from the the our real project we in to facilities and This end-to-end realize productive parts big key to thank aftermarket September. you MGX life the continue customers' value to acquisitions. example teams close of of at synergies multiyear assets. first The for leading for arrived the of meet X and an the our to excellent cost margin Manitowoc project their to important to pricing our Maxim this lengthening cranes an and brings business. winning between work and expectations. labor acceptable A is by our This the

we On branch new recently South a our this footprint with win, MGX Carolina. of the expanded in back

In for addition to providing and work, footprint more This Potain facility truck location brings represent locations. Crane branch our and to our product MGX remanufacturing this boom combined capacity new will National XX families. Aspen

new with for Next, Including industry Peru's in will facility Latin has a a locations combined serve throughout facility, Latin mining America, This Manitowoc America. of faster we growing delivery service team warehouse X now Peru. parts local opened branch new technicians. Lima, in with this

after the Moving short has from in Year-to-date, Turkey, we've cross-regional to has region. Regional meet February Carina in Turkey El side humanitarian help set worked other the a to cranes hard used Asia demand of support the to example locating Rkaiby, the to several expedited crisis and the the leadership, lead the reconstruction Turkey. unfolded cranes XX in Since great time Carina used efforts Georgia. earthquake, Manager, Sales Azerbaijan world. delivered of tower

relocated lemons, in many the and to of to need business when didn't there our from we Dubai location. leading from many market XXXX. team time, retain As very the We At you complicated members. lead used our Whether a a the life position East Middle job to tower team goes, the right Carina and and took you move forced has those using exit in The years saying or issues team a business Well was staff, to Ukraine done lemonade. the countries several executing Sergey. all but several our members in done time Georgia for Sergey Russian leap some key great resources Since has sales. had project, members. of hands of long-tenured team Russia Neznamov our enjoyed the strategy Manager crisis he activity make addressing as a the in and their we talented, crane of finding crane serve our people customers. extra and faith wanted CIS reinvigorated by We as possible. for Dubai, of introducing his Sales one our Cranes+XX

making become in I'm the business. Cranes+XX Manitowoc. of how services-oriented extremely a team company, is transition taking as corner product every our proud years to After of XXX hold is

to our for growth, turn If our The Way Slide Please engine is fuel. X. Manitowoc Cranes+XX is

in quarters, in Europe, softening for and demand cranes East in I is is business Middle As overall recent the tower mentioned booming.

we At our rough tower and mobile self-erecting Niella, manufacture cranes factory, terrain Italy cranes.

footprint quarter, our local tower During optimize the Middle production market in manufacturing the crane and decline workforce. operations the use to impact our Niella lean growing our throughout expanded this to third serve team us we mobile market. process terrain the East techniques on rough while members redeployed mitigating of We cranes help the of

Led completed teamwork. by on was in the shutdown. during his like the summer I'd Marabotto, group congratulate August Diego transformation great to

visit parts, the separated the return capacity line gray Germany boom an to and the distinct [Foreign paint on elbow I increased to had implemented line bottleneck the by team little creativity ] Language] and in factory. unloading the make and the my lines. some anymore. year formula to our control #X facility, grease, paint little the A opportunity improved was team. tele-cylinders. this month, a of With our Last Wilhelmshaven to during ultra-solid capital, the ago, XX%. the system for X Wilhelmshaven, paint Not renewed [ team They see Shuttlelift a how our

Slide Please X. to move

third build and trend States for at utilization few houses. orders the are my quarter. A placed update. dealers their crane holding high rates in initial United positive key continued The rental up remains to to Rental during XXXX guarantee Turning market the slots.

remain inventories to support the retail dealer sufficient levels current Finally, at pull-through.

if which still lead have U.S. point, excess for to waiting the economy lot to a back. cranes dealers channel the to on We inventory market. CHIPS remain quarter, a to last infrastructure market. maintain before short we pulls and about the positive come still Nevertheless, to outlook we long-term term deliver we're Similar fruition. the cautious At bill in of could to year-end, the U.S. the in our this

Europe, story. however, remains a different

subsequent machine XX% in has inflation previously has curbed residential tower interest and rates the crane which for As activity year-over-year. impacted increases the market, crane negatively significantly discussed, were in quarter demand. the Tower construction down orders

Please move to X. Slide

in managing rental customers see and that proactively fleet that As rates are are and is prices crane long-term visited and majority Utilization declining At customers, the upside down. permits market XX% rental average, the rates XX% is we France interest Germany to have from risen. rates is when in fleet tough the rental sentiment demand intervene. French their government recently years year-over-year. continue let dropped expect of were XXXX. statistics. their fleets Many dealers fleets of to down, math everyone old, their for XX this the strategy. longer. and have several confirmed August, renewal environment moment, their are age owners waiting rental and is rental I I to housing growing down cannot house on It's a for to over afford much and and justify the into The

Please move to X. Slide

is business soft by European construction cranes tower as mobile market the cranes. residential impacted not the Fortunately,

and market, impact adversely market all-terrain there the Scandinavian slowed Germany, the varies single in throughout Although largest EU Europe. plenty countries by FX. are mobile the has are of the impacted cranes the headwinds in being

In weakness to Iberia and Benelux hold showed of Demand and continue quarter. their addition, signs the up. France in first the in U.K., Italy

business. to The improve X our products quarter, efforts I cranes and momentum. help quality, last four-axle us launch As upcoming maintain our stated of new launch our buoy service help new our all-terrain grow will will

pace. at to In demand the rapid Middle contrast Europe, a East, in to continues grow

XX% quarter. have during entire efforts to Saudi Our region. year-over-year increased the orders sweeping lifted the Arabia's modernize

the be Asia Generally Lastly, the clearly to remained country. appear in for outside remains sentiment to the market China tower up. very overall. but Europe. are is the to down cranes speaking, of while region slow cranes mobile Moreover, behaviors a mixed spread cycle, those holding cranes in in pretty similar and starting Pacific the purchasing are soft,

the Indian which the big project crane good mobile is forward, finally, continues the tower remains some Samsung's and mainly And strong. positive there cranes, has to South been for market business. On is a bright moving be Australia next Korea, side, news the progress, In with spot.

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

Please morning, good everyone. and to move Slide Aaron, Thanks, X.

start orders. with Let's

increase. in the During demand In continue our increase segments. driven year-over-year than orders was EURAF a orders expectations. the orders EURAF had MEAP slightly MEAP, Saudi in decline from of driven of quarter, more orders, year-over-year. we $XXX were an expected, XX% crane million, and our the year significant by which to Americas exceeding drive higher order mobile by lower was in offset tower segment, the In orders. in The as primarily increase increase ago, The

by favorably impacted currency Foreign $XX orders million.

sequentially year-over-year. predominantly the and at billion Our quarter. increased our with of Americas. September It's XX $X.XXX was backlog X% second The is in backlog the consistent makeup flat

sales first of Non-new on progress sales the XX-month exceeded team trailing strategy. Net time, crane in Cranes+XX result a ago. sales million to great as year sales The by year-over-year and XX% driven to for a XX% non-new in machine reflecting quarter our million. perspective, response increase the third non-new higher increased From executing $XXX higher $XXX the from pressures, machine a million increased year-over-year were machine on by $XXX pricing was shipments inflationary and Cranes+XX.

Net were favorably $XX million $XX employee-related from rates. sales changes at $XX to due were higher expenses higher impacted million in exchange foreign primarily by year-over-year SG&A currency million, costs.

to exchange rates $X the currency million contributed year-over-year Foreign increase.

XX%, a of year-over-year. were expenses sales, As relatively percentage flat SG&A

the for margin points XX% EBITDA an an the million, EBITDA year-over-year. adjusted of year. quarter over million of Our X.X%, basis increase prior XXX Adjusted $X $XX was or was increase

of is year-over-year quarter tower This summer in illustrates quarter sales third our on Europe. business. slowest incremental to the the slower shutdowns the Flow-through the the reminder, a impact As was crane generally due XX%.

million to year. Third $XX million prior of the and amortization quarter decreased $X compared depreciation

quarter pretax XX% Our after income. a for the tax taxes settlement of or adjusted adjusting million our $X provision of was in for the matter income favorable

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

$X.XX, Our the increase quarter was of adjusted prior $X.XX an EPS in the year. from

Please move XX. to Slide

in the million a basis. currency-neutral and by higher This Our year-over-year million Americas. $XX constraints increased on logistics backlog $XX and is increase by chain inflation, supply net or working driven capital

working the On our million a net to end XX-month of of year-over-year. inventory sales, a targeted As our percentage capital slightly the balance we was last by XX%, call, year. trailing reduction $XX favorable

an During made the million to achieving we end and still of are some to of $XX by year. the committed additional inventory the reduction progress quarter, we goal, this

of generated $XX million, rental $XX for We were flows. cash expenditures Capital quarter. operating cash to the of the $XX million was in from Moving which activities million fleet.

$X with were Due to timing of to quarter a result, the at be $XX to range, flow We the million. our cash end which As are free ended was a cash million. likely the of of flows quarter in sequentially. low which balance receivables, million million $XX cash of million, increase $XX we the free our $XX an is

decreased resulting EBITDA, Total million Other Xx. million, ABL the at in debt X.Xx well $XX target adjusted quarter outstanding Due million, $XX ratio the quarter, end of our the at bringing to end. leverage under total million. borrowings of $XX $XXX increased strong under our liquidity net was our outstanding to continued our

of which share creep, repurchase to authorization. prior Board back replacing $XX the program, be million our October, primarily Directors buy our share approved In used a will

Please XX. turn to Slide

guidance we quarter, billion, as are million. to Given updating EBITDA our to the the follows: $XXX $XXX year million net adjusted billion full $X.XXX sales, strong and in $X.XXX performance

With call the turn back Aaron. that, will I now to

Please you, to turn Slide Thank XX. Brian.

great throughout the strategy the made on created continue ripples by we has manage this its COVID strides crisis, economic Although period. to Manitowoc

close positioned We but to for do have well to a deliver of lot work year. we're strong a the to performance out XXXX,

as is any but strong As too business read today, smaller tarot cards backlog a I our business. the to and comparisons for be by in aftermarket tough at the the in East it's supported have be focus. provide best. XXXX, The still early should of flattish concrete Europe difficult our U.S. increased be And to half. strengthen, Middle as although to it's very continues part first will still our Pacific Asia going we guidance,

is determined EU quickly b, Overall, escalating term, react resilience by: housing in I results horizon. I of and the the crisis. that believe on the will the the U.S. contentious year; be that remain renaissance our a a, to governments optimistic how the election address Long economy crane XXXX

rental around the getting are and This First world are tooth. the years Many in isn't old foremost, sustainable. majority long of fleets simply of the on large average. XX them

small but crawler the most where a minimal, is to cranes semiconductor or These quite a XX of work that Wisconsin. project spent doubt in late those no accepted middle projects. years, hourly projects are of stadium like not crane on old there's XX example, on For bridge can the new are demand years

fleet offshore wind power Several aimed plants Vision drivers major Europe will bill. at and Saudi contribute U.S. energy their to programs overhauling refresh, such the as in much-needed that XXXX, farms the including and strategy, nuclear infrastructure and are CHIPS

In production massive threefold increase with of to addition, succeed, in for by in U.S. needs some distribution. electrification the to investments electricity

Slide XX. aspirations. to view, the we've we move taken that long-term Please reflect our are recent combined learnings To from this with updating acquisitions, our

increasing are target sales $X.X $X billion from to We billion. our

equal. more split to a acquisitions organic expect We or less be between growth and

to billion. We machine are also $X raising our target $XXX from million non-new sales

cannot time have we them, acquisitions. assumed Although a few we

margin from our increasing adjusted In to XX% terms we are of XX%. EBITDA profitability, target

when weren't years, XX% benefits the see sales. far and machine grow out we we expect off volume And we look next to our recall, you of we the non-new improved mark mix over as XXXX. the in If additional X

In several a business." XXXX borrow achieve forward commensurate capital closing, Letter, the a years. with in can way goal come "Our next looking and and what earnings We've line obtain long to a the stable of since is XXXX, the reasonably Berkshire level our power Annual substantial to over Shareholders' employed team seeing to I'm Hathaway's

With operator, please for the questions. line that, open

Elliott [Operator line of Instructions] comes Your Stifel. first from the question Stanley of

or sort to sort I of on I war over guess starters, an if impact with very sounds it going any positive. seeing sounded curious East Middle relates like business. kind there the any of the of discussion And you're for it as that's was business your

it Saudis XXXX. execute I mean Vision is Saudi a the mean, seen about I to impact I Yes. the think continue talking everyone and but it, Israel's way business. from haven't long we their Saudi,

no very So impact. from a still I standpoint, is say active. everything project would

kind aspirational I'll switch to of guess I the And targets.

jump. raising footprint? I'd the are drivers is on to from going parts, piece, $X more the billion. the some better? to So I that non-machine to kind mean of it better pretty $XXX expanded is of Is get that that's good-sized piece just service, an it million a better remanufacturing love what you of see

always Yes. the around I because locations the mean core is is what getting rest of really business. of getting that the more text service it is more and drives

used better we continue have business. to The of other is component that to get at the

in more terms used still been we've we think given in had get prices, a doing activity to lot There's a for fact I this that had so more a lot like us year, we that, those great activity machines in at. need out continue year coming business of better that increases used move of much States. the that has there's like hot. more But to to United Europe trade-ins the

well. we'll that get to doubt some number that no there's And need acquisitions as to

Yes.

rate on comp-wise? that be the I mean updated then And fourth lastly with would aware that the like EBITDA it if high tracking revenue should then and kind relates be anything of we has to for the as seem well. tracking the quite to kind there it the the guidance, end the non-machine year-over-year sales been order a Is of the of at quarter. piece guide would me, too. of better, not business in least basis, and

that. we should just So that color be on aware any of curious,

it. at when Yes. look There's we X of components sort

tower the is First crane business.

off in compare If the an million tower year-over-year, standpoint you from we're business. $XX crane EBITDA

the that's So for us. headwind big first

Fortunately, and cautious going summer the on we of the going how it's cranes and to lot predict vessels in to we've vessel always got North issues. mix, out. been play is Sea, the A have hard around we've

Sachs. Revich of Goldman from Your comes the next of line Jerry question

is time? there on Jerry. for about This the Quick How chain lead or How seen still question. orders? new have Have extended? lead times we trended supply for the some times in Clay are lead normalization

times just pretty normal, have we enough lead some where product are crane product that to would in I soft strong. It times say, back mean, I depends lines is areas still demand product. lead to there's the where business tower are but

on seeing you come follow-up. the the things It just you're And sounds -- of a quick M&A bigger in color to in a that's some like quick portion what give Can pipeline? future.

but we funnel, a have can full never active We're on predict deals. you and timing

it's So We on no us. for keep real it. change say working I'd just

from Mig [Operator Instructions] of Your Dobre next question line of the comes Baird.

little fact EBITDA, a on the just And congrats want of on question you million here. mean, range that. -- a that to through on a have I good with to can quarter from guidance. ago I appreciate to to have drive a Stanley's fourth but the maneuver, quarter moment go the left truck I mean, room I bit on you $XX

-- I'm point maybe a on this? us help you can put finer So

Yes. know, a us. mix you I huge mean I component think, is as for

end So $XX million and narrowed million, this down, quarter. the bottom it we raised we $XX

yes, that, on is think $XX changes. the million comfortable of spread million based a feel I mix revenue So the we on that $XX reasonable range

as quarter. a of into uncertainty around pointed And lot the out, fourth going vessels there's Aaron still

that's to the the cash contributing of numbers. on low flow to or free So some concern guiding our end

essentially tower we crane no backlog we mean, so in out. just business hand have I them

Yes. of underutilization when you businesses, that's happening our And highest consider contributes the that -- currently. margin that's one especially

here standpoint is factor Price/cost price/cost in I'm are the through presuming Or a on items guys cost to Is Is into And side, really it's the narrow? year? mix? the it you have to starting you a positive? how or what's manage other that looking? gap positive. just that all been From QX? Because happening that

Yes, fourth I on no would quarter. impact say that the has

it's comment price it's of but have conversations sort because generally might the normalized. cost And interesting on You shifted.

is coming low demand super is like have the competitive like the East. so dollar about, they have strong, conversations where competitors are crane because of Chinese in yen areas where places and the currency feel aggressive this tower competition in business from Middle and fact, weak Now more we

And So as more that having us normal so say, around how for think we're past back I conversations now we most part. prices to I up. we're tell get the we do

Your of of JPMorgan. from next Zakaria comes Tami the line question

on This for is Chaya Tami.

bit For product? a little our trending color or you could can maybe provide your about by And they're talk more first question, you by region how on if backlog?

Yes.

majority As of in the is we U.S. the mentioned, backlog our

from don't region. So that we hasn't product quarter. by And last give changed backlog

then see inflation? Okay. just And key areas it. continue are to you quick Got What cost follow-up. the most a where

inflation, cost challenge most of seen terms news the with still In mean especially of States. the you've some in a a concern, is and I labor United

So where lot parts the value we see that. into it a fabricated through adding labor of and suppliers our are plays

that's So piece. still the biggest

I a High-strength think normal seen the couple we the say, way steel everyone steel And because of end. is high that of comes a lot our really The seen that other steel and flat from that Europe. go folks the you've down Bloomberg suppliers specialty right I'd demand thing equipment. biggest now, steel is of go. got And at we have in prices lot they've lot of challenge building a military pricing is look it's "Hey, of on add down." have not way a those

a Baird. of have We line of Dobre question from the follow-up Mig

are the say, I guys one one question very and enforcing got you follow-up. to on tight

because couple back I the had I So got more. in queue a

and half of is you're you extremely implication quarter the strike cranes' in being backlog way I and the as the comparisons, Because relatively the appreciate it given here the margin, 'XX, said. right, right? guide XXXX. low, for versus fact difficult What's the as -- the the me I tower that implied talking front would So fourth about margin

Yes.

concern then 'XX up. and the mean comps very hold related does about comment. a the towers U.S. half that's the think how that I in I first is that's our fair to

half. May be the particularly out, second in

the yes, particular, our inventory do end Where it's, But in year with dealer the exactly and that's all-terrain we concern. our side. on

I appreciate sort 'XX, thinking mean, we of Well, rate that. implied indicative Okay. kind quarter front be mix half for similar? run fourth I remains of if should of of But is the margins the the that

in think don't we're fair. right of I middle add the No, process. I'd budget also that's that the And

looking you're really an So you answer I for that possible not think. it's for, us to give

on kind of pricing. Okay. And my question general guess I question a then final on is

bit That's FX yen. in a happening given a been the bit the we've touched already that You little an from about on weakness what's standpoint. something wondering quite

sort at pricing? provide year is you that XXXX As model can look as see there color cranes, to you of you how some

after is for if advantage I Every don't know this year, I a in pricing, when of -- do JPY our a look yen and be that competition. don't year in today, or we're XXX I that's and a points different. XXX normal year JPY couple where at going will think it's you think major we're though, the

So fight. it's a tough

has euro the as bounced And around well.

building but Europe we in Europe ourselves shipping in got we're from in So the do buy to product the though so that think I that -- U.S. we've our that plants U.S., from competitors, we are build they're

as euro as that. that's the it's the yen into playing So well

There questions turn closing are further at time. call remarks. now for to over the this no will I Ion Warner

you. Thank

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

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