The Manitowoc Company, Inc. Price & Performance (MTW)

Earlier this morning, we posted our slide presentation on the InvestorRelationssectiononourwebsite,benetalak.com The. Which you can use to follow along with our prepared remarks. [indiscernible] Before we start, please note our Safe Harbor statement in the material provided for this call. During today's call, forward looking statements as defined in the Private Securities Litigation Reform Act of 1995 are made based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied or actual projections due to one or more of the The, among others, described in the company's latest SEC filings. Manitowoc Company does not undertake any obligation to update or revise any forward looking statement, whether the result of new information, future events or other circumstances. And with that, I'll now turn the call over to Aaron.

Thank you, Ion, and good morning, everyone. Please turn to Slide three. In the wise words of Winston Churchill, pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty. You can draw from our financial results, we faced plenty of difficulties during 2024. I'm proud to say that the Manitowoc team pursued every potential opportunity with great enthusiasm, optimism It's inspiring to see the level of motivation and passion throughout the company. Example, during the year, we set a new record with $629,000,000 in non new machine sales. We grew our field service technician count by 7% to over four team members. We launched 13 new cranes, including the next generation EV self erecting tower crane and the MCT 2,205, which is the largest tower crane that we've designed and built out of our China operations. And we renegotiated our debt to improve our liquidity and extend our tenor. I'd like to express my sincerest gratitude to the Manitowoc team for a hard fought 2020 For the full year, we reported $2,200,000,000 in sales $128,000,000 in adjusted EBITDA.

We generated $100,000,000 of free cash flow during the fourth quarter and ended the year with $321,000,000 in liquidity. Please turn to Slide four. I am extremely proud of the team's achievements. First and foremost, in terms of safety, we ended the year with an RIR or recordable incident rate of 1.19. This is the second best result in the company's history following a phenomenal year in 2023. In addition, we reduced our first aid incidents 25% year over year and saw a significant reduction in the severity of our lost time injuries. 2024 was arguably the safest year in our one hundred and twenty year history. Nevertheless, our gold still remains zero injuries the team continues to find ways to improve. We also continue to forge ahead with our environmental related Kaizens. In addition to the planet, these initiatives have been pretty darn good for our pocketbook During the year, we reduced our greenhouse gas intensity 6%, which equates to roughly $100,000 in savings. Since 2019, when we set our baseline for this metric, reduced our intensity by 36%.

Lastly, I'd like to recognize our maintenance team in Portugal who won our annual Manitowoc Way Lesson Learned Award Thanks to their ingenuity, team built an automated tester for welding torches that only cost €50 Previously, we fixed upon failure which could cause serious quality problems and significant loss of time. Addition to this invention, over the past two years, the team has done an excellent job integrating different IoT tools to track TPMs on our machine centers modifying our paint booths to reduce our emissions and gas consumption, and applying 5S to our maintenance area of the plant. Obregado to the team and congratulations. Please move to Slide five. Turning our attention to the market. Generated orders of $516,000,000 during the fourth quarter, Our backlog ended the year at $650,000,000 Regionally, The Americas rebounded in the fourth quarter following the U. S. Election. Customer sentiment has significantly improved post election Dealer inventory levels remain reasonable utilization rates at Crane operators have been strong and rental rates have held steady. There's optimism about the future demand. In Europe, the situation remains complicated, but there are a few positive indicators that suggest the European The crane market is gradually recovering. For the second quarter in a row, our orders for tower cranes grew modestly year over year.

While the French market remains weak, this has been offset by growth in Germany, Italy and The UK. In Italy, a new incentive plan called Transione five point zero has recently announced. And of course, we are keen to see the impact of the upcoming German elections. Regarding France, I visited our two largest dealers, four major construction companies in December.

Overall sentiment has yet to improve. All said, uncertainty still exists but I'm hopeful that there is some recovery in 2025.

For EU mobiles, in spite of The demand for all terrain cranes has been relatively stable. We continue to benefit from recent product introductions and our significant improvements in quality and service.

As a reminder, Munich Bauma event is just around the corner. We're excited to showcase our new products as well as a variety of our new aftermarket offerings. This show is always a good barometer for how Europe will shape up over the next couple of years. If you plan to attend the show, we'd be happy to host you. Turning to The Middle East, the overall market remains robust. Fourth quarter orders were up over 44% year over year.

I visited the region in December and the situation remains the same in Saudi.

While funding is tightening, numerous projects in the kingdom need to be completed to host the twenty twenty nine Asian Winter Games, the World Expo in 02/1930 The the World Cup in 02/1934 The. To put this into perspective, a total of 780,000 hotel rooms will be needed for the World Cup The. Three stadium projects have been awarded with another seven due to be granted. As for Neome, one of these stadiums will be integrated into the line. Although it may take some time before The 170 kilometer vision for the line is completed, The airport project is already underway and the initial modules are in progress. The Asia Pacific market is a mixed bag. There are no signs of construction recovery in China and overall competition with Chinese exporters has never been more intense. The biggest surprise during the quarter however came from South Korea. Due to the recent political upheaval, we had a couple cancellations and a few hot deals dried up worth roughly $8,000,000 in sales.

Lastly, Australia continues to be steady. The mobile business continues to be stable and demand for tower cranes gaining steam with new product deliveries and a robust aftermarket. With that, I'll pass it to Brian to walk you through financials before I close with an update on our strategy.

Thanks, Aaron, and good morning, everyone. Please move to Slide six. Despite entering the fourth quarter with a lot of uncertainty around the U. S. Election, The results were generally in line with our expectations in the guidance previously provided. To summarize, total revenue for the quarter was $596,000,000 and we achieved trailing twelve month non new machine sales, $629,000,000 a record high. Furthermore, we made significant improvements in reducing our inventory, generating $100,000,000 of free cash flows, had customer payments that slid into 2025 impacting our ability to achieve the cash flow guidance. Specific to fourth quarter results, orders were $516,000,000 increase of 8% from a year ago.

Notably, European tower crane orders were up year over year for the second quarter in a row, It is encouraging to see some early signs of a potential recovery. December 31 backlog was $650,000,000 a year over year decrease of 29%. Net sales in the fourth quarter were $596,000,000 flat versus a year ago. A year over year decrease in Americas was offset by stronger non new machine sales. SG and A expenses were $77,000,000 included a $1,000,000 charge related to a legal matter with the U. S. Environmental Protection Agency.

Excluding the impact of this charge, SG and A expenses as a percentage of sales were 13%, flat year over year. Our adjusted EBITDA for the fourth quarter was $35,000,000 decrease of 4% year over year. Adjusted EBITDA margin was 5.9%, a decrease of 20 basis points. Our GAAP diluted income per share in the quarter was $1.59 dollars On an adjusted basis, diluted income per share was $0.1 increase of a penny from the prior year. Please turn to Slide seven. Looking at the full year, twenty twenty four orders totaled $1,923,000,000 an 8% decrease year over year. Net sales for the full year were $2,178,000,000 a 2% decrease over the prior year. Our non new machine sales were $629,000,000 Reflecting back to twenty twenty, year prior to embarking on our Cranes Plus fifty strategy, non new machine sales were $376,000,000 Since then, have grown our non new machine sales by over $250,000,000 or 67%.

This reflects great progress in executing our strategy to grow the less cyclical higher margin aftermarket business. Adjusted EBITDA for the year was $128,000,000 a decrease of 27% year over year. Adjusted EBITDA margin decreased 200 basis points or to 5.9% primarily due to product mix and under absorption of fixed costs. The year over year adjusted EBITDA headwind of the European Tower Crane business was $32,000,000 On a GAAP basis, our benefit for income taxes in the year was $44,000,000 includes a non cash benefit of $56,000,000 related to the release of a valuation allowance. On an adjusted basis, our provision for income taxes was $12,000,000 This includes $4,000,000 $0.1 per share of non operational discrete items were not considered in our guidance. Our adjusted diluted earnings per share was $0.41 Turning to Slide eight, during the year, we generated $49,000,000 of cash flows from operations and had capital expenditures of $45,000,000 of which $5,000,000 was related to strategic rental fleet growth. This resulted in free cash flows of $4,000,000 an ending cash balance of $48,000,000 lower than guided free cash flows were the result of the timing of shipments at the end of the year which resulted in a delay in cash collections to 2025.

Net working capital as a percentage of sales the end of the year was 21% flat compared to the prior year. Our build plan adjustments were effective in getting our net leverage to 2.66 times targeted three times. Total outstanding borrowings under the ADL increased $19,000,000 during the year. With $79,000,000 outstanding at year end. With the successful refinancing of our debt during the The, the related incremental availability under our ABL, total liquidity was a healthy $321,000,000 Please turn to Slide nine. As we look ahead to 2025, the one consistency is that uncertainty persists. The U. S. Market, the positive sentiment we heard in May at our Crane Days event is coming back. There are still questions as to what will happen to interest rates and the effect of any tariffs. While there is some optimism in Europe for the first time in a while, any improvement is expected to be slight. Asia continues to be a challenge in the competition in The Middle East remains fierce. As you can see on the slide, the midpoint of our 2025 guidance reflects a marginally better year with net sales of $2,175,000,000 to $2,275,000,000 Adjusted EBITDA 120,000,000 to $145,000,000 In addition, we expect to generate between $55,000,000 and $85,000,000 of operational free cash flows excluding the impact of any potential in payment, to settle the EPA matter.

While we do not provide quarterly guidance, do want to note that the first quarter of twenty twenty five is expected to be extremely light. More so than usual as a result of the build schedule reductions we made in 2024. While historically, Q1 has provided approximately 20% to 25% of our full year adjusted EBITDA this Q1 is expected to contribute approximately half The amount. With that, will now turn the call back to Aaron.

Thank you, Brian. Please turn to Slide 10. 2024 was definitely a challenging year. European tower crane market reached what we believe is the bottom of its cycle. Chinese competition intensified globally, compressing prices in emerging markets. And The Americas experienced a significant slowdown leading up to the election. Nevertheless, the team continued to push our strategy forward finding pockets of opportunity for growth. Even in the weak European The crane market, we were able to grow our non new machine sales year over year. To stay ahead of the Chinese competition, we continue to introduce new tower cranes specifically designed for The Middle East projects.

For mobile cranes, we continue to aggressively service our customers with field service support, remanufacturing and used cranes.

And in The Americas, we continue to expand our service locations to support our Cranes plus 50 strategy. In addition to upgrading our locations in Phoenix and Baton Rouge, we recently announced the acquisition of certain crane assets and territories in North Carolina, South Carolina, Georgia, [indiscernible] continue to transform Manitowoc through the execution of our Cranes Plus 50 strategy. Just consider the progress that we made since 2020. First, non new machine sales in 2024 were $629,000,000 a 67% increase compared to twenty twenty. Second, we increased our field service tech population to four sixty seven techs in 2024, an increase of over 100% since twenty twenty. Third, in The U. S, we added 16 service locations compared to just one location in 2020. In addition, we added service shops in Lima, Peru, Barnsley, UK and The, France. And fourth, gross profits from non new machine sales in 2024 were $2.00 $8,000,000 a 64% increase since 2020. Although we can't control the ebbs and flows of the crane cycle Manitowoc has a strong reputation for managing it utilizing the Manitowoc The.

I'm convinced more than ever that our Cranes plus 50 strategy is the key to breaking The cycle's grip As a reminder, non new machine sales are significantly less volatile than new crane market and have average gross profits of roughly 35%. Our goal is to consistently generate stable and Cranes Plus 50 provides us a blueprint to achieve this. With that, operator, please open the line for questions.

We will now begin the question and answer session. Our first question comes from Jerry Revich with Goldman Sachs. Please go ahead.

Good morning, Jerry. Hi, Jerry.

Hey, you've got Clay on here for Jerry.

I'd start off.

The, to start off here, guidance implies sales up a little bit here at the midpoint. Can you just talk about where that embeds things staying the same or getting better just regionally? You talked a little bit about earlier. I was just curious where what guidance of beds on a regional basis Yes. I think it's marginally better, I'd say year over year from a revenue standpoint. We've got a wide range because there's a handful of possibilities The will happen during the year. But I mentioned that we expect Europe to be slightly better, in particular, on the tower crane side. U. S. Slightly better, but Asia continues to be uncertain, in particular, South Korea. So I'd say it's it's a mixed bag, hence why we've got the large range in the guidance.

Thanks. And separately on the non new machine [indiscernible] can you talk about how used values for cranes have trended? Throughout the quarter and now as we head into 2025?

Yes. I mean, in terms of values on used cranes, it always depends on The age and and the model of the crane. So I mean from my perspective, there's not been much change. Of course, sometimes whenever you go through some of these surveys, you look at Ritchie Bros. Numbers, usually those are cranes last resort. I mean, we're typically doing the deals directly and those are cranes I think that have more interesting value or more interesting models to the marketplace. So from my perspective, gone down or up.

Thanks. I'll pass it on. [indiscernible] This concludes our question and answer session. I would like to turn the conference back over to Ion Warner for any closing remarks.

Thank you. Please note that a replay of our fourth quarter twenty twenty four earnings call will be available later this morning by accessing the Investor Relations section of our website. At manitwak.com. Thank you everyone for joining us today. And for your continuing interest the Manitowoc Company. We look forward to speaking with you again next quarter.

The conference has now concluded.