The Manitowoc Company, Inc. (NYSE:MTW) Q3 2020 Earnings Conference Call November 5, 2020 10:00 AM ET Company Participants Ion Warner - Vice President, Marketing & Investor Relations Aaron Ravenscroft - President & Chief Executive Officer David Antoniuk - Senior Vice President & Chief Financial Officer Conference Call Participants Jerry Revich - Goldman Sachs Jacob Parsons - Colliers Securities Stephen Volkmann - Jefferies Shahrokh Moinian - JP Morgan Mig Dobre - Baird Seth Weber - RBC Capital Markets Stanle ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-11978 The Manitowoc Company, Inc. (Exact Name of Registrant as Specified in its Charter) | Wisconsin | 39-0448110 | | --- | - ...

Aaron Ravenscroft– President & Chief Executive Officer Second-Quarter 2020 Earnings Conference Call August 6, 2020 David Antoniuk – SVP & Chief Financial Officer Ion Warner – VP Marketing & Investor Relations Forward-Looking Statements Safe Harbor Statement Any statements contained in this presentation that are not historical facts are "forward-looking statements." These statements are based on the current expectations of the management of the company, only speak as of the date on which they are made, and a ...

Financial Data and Key Metrics Changes - The second quarter orders totaled $238 million, a decrease of 36% compared to $372 million in the previous year, driven by softer demand in the Americas and EURAF segments [19] - Net sales in Q2 were $328 million, down $176 million or 35% year-over-year, primarily due to lower crane shipments in the Americas [21] - Gross profit decreased by $47 million year-over-year, with gross profit percentage dropping to 15% from 19% in the same period of 2019 [22] - GAAP diluted earnings per share was a loss of $0.37 compared to income of $1.29 in the prior year, while adjusted diluted earnings per share were a loss of $0.47 compared to income of $0.94 [24] - Total liquidity remained strong at $375 million, unchanged from the previous quarter and up $35 million year-over-year [26] Business Line Data and Key Metrics Changes - The decrease in backlog was primarily due to the decline in orders in the Americas and EURAF segments, with a Q2 ending backlog of $431 million, down 23% year-over-year [20] - Engineering, selling, and administrative expenses decreased by approximately $1 million year-over-year, primarily due to lower short-term incentive compensation costs [23] Market Data and Key Metrics Changes - In the Americas, demand remained soft, particularly in the energy and commercial construction markets, with dealer stocking levels elevated and fleet utilization rates down [14] - In EURAF, construction sites are aggressively recovering lost time, but there is less confidence looking into next year's construction season [15] - In MEAP, while there was a pickup in multicrane deals in the Middle East, the fundamentals of the construction business remain weak [16] Company Strategy and Development Direction - The company aims to strengthen its balance sheet and maintain liquidity while preparing for long-term growth through new product investments and potential acquisitions [31] - The focus remains on health and safety, cash management, and positioning for growth, with a commitment to innovation despite current market challenges [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of the year, noting that while they can manage through turbulent times, they do not have a clear picture to reinstate 2020 guidance [17] - The company is confident in its ability to generate cash in the second half of the year despite uncertainties [39] Other Important Information - The company filed a Trade Expansion Act petition to investigate trade dynamics in the domestic crane market, with final comments due on August 10 [28] - Management emphasized the importance of maintaining flexibility in production capacity to respond to eventual demand rebounds [30] Q&A Session Summary Question: How bad could the backlog get in the back half? - Management indicated they are closely monitoring order intake and production cycles, but do not typically provide guidance on anticipated backlog levels [37] Question: Are you still comfortable you can generate cash in the second half? - Management expressed confidence in generating cash in the latter half of the year [39] Question: What are your three most significant priorities over the next year? - The focus remains on health and safety, managing cash and liquidity, and transitioning from cost-cutting to growth mode [45] Question: What is the outlook for the business from here? - Management noted that regular seasonality may not apply this year due to lost production and emphasized concerns about the Americas region [48] Question: Can you comment on used equipment values and utilization rates by region? - Utilization rates in Europe are strong, particularly in the tower crane business, while the Americas face challenges due to the pandemic and oil industry impacts [50] Question: How do you plan to manage costs to stay positive from an EBITDA standpoint? - Management indicated that while significant cost reductions have been made, they will look for surgical opportunities to manage costs further [72]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section details the company's Quarterly Report filing, stock exchange listing, and outstanding common stock shares - The document is a Quarterly Report (Form 10-Q) for The Manitowoc Company, Inc. for the period ended June 30, 2020[3](index=3&type=chunk) - The company's common stock is listed on the New York Stock Exchange under the trading symbol MTW[4](index=4&type=chunk) - As of June 30, 2020, the registrant had **34,521,063 shares of common stock outstanding**[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and comprehensive notes for the periods ended June 30, 2020 and 2019 [Condensed Consolidated Statements of Operations](index=2&type=section&id=THE%20MANITOWOC%20COMPANY%2C%20INC.%20Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited condensed consolidated statements of operations Condensed Consolidated Statements of Operations (in millions, except per share) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $328.3 | $504.7 | $657.5 | $922.7 | | Gross profit | $48.4 | $95.2 | $111.6 | $175.4 | | Operating income (loss) | $(1.6) | $41.9 | $4.1 | $58.1 | | Net income (loss) | $(12.7) | $46.0 | $(20.5) | $19.3 | | Basic income (loss) per common share | $(0.37) | $1.29 | $(0.59) | $0.54 | | Diluted income (loss) per common share | $(0.37) | $1.29 | $(0.59) | $0.54 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=3&type=section&id=THE%20MANITOWOC%20COMPANY%2C%20INC.%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's unaudited condensed consolidated statements of comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(12.7) | $46.0 | $(20.5) | $19.3 | | Total other comprehensive income (loss) | $9.3 | $2.3 | $(3.1) | $0.4 | | Comprehensive income (loss) | $(3.4) | $48.3 | $(23.6) | $19.7 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=THE%20MANITOWOC%20COMPANY%2C%20INC.%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets Condensed Consolidated Balance Sheets (in millions) | Metric | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $128.3 | $199.3 | | Total current assets | $881.7 | $872.4 | | Total assets | $1,604.9 | $1,617.7 | | Total current liabilities | $420.7 | $440.9 | | Long-term debt | $356.9 | $308.4 | | Total non-current liabilities | $568.5 | $530.9 | | Total stockholders' equity | $615.7 | $645.9 | | Total liabilities and stockholders' equity | $1,604.9 | $1,617.7 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=THE%20MANITOWOC%20COMPANY%2C%20INC.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows Condensed Consolidated Statements of Cash Flows (in millions) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used for operating activities | $(98.7) | $(235.4) | | Net cash provided by (used for) investing activities | $(7.9) | $121.4 | | Net cash provided by financing activities | $36.6 | $9.8 | | Net decrease in cash and cash equivalents | $(71.0) | $(105.3) | | Cash and cash equivalents at end of period | $128.3 | $35.0 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=THE%20MANITOWOC%20COMPANY%2C%20INC.%20Condensed%20Consolidated%20Statements%20of%20Equity) This section presents the company's unaudited condensed consolidated statements of equity Condensed Consolidated Statements of Equity (in millions) | Metric | June 30, 2020 | June 30, 2019 | | :-------------------------------- | :------------ | :------------ | | Common Stock - Par Value | $0.4 | $0.4 | | Additional Paid-in Capital | $596.0 | $588.8 | | Accumulated Other Comprehensive Loss | $(124.1) | $(116.2) | | Retained Earnings | $215.5 | $208.9 | | Treasury Stock | $(72.1) | $(62.2) | | Total equity | $615.7 | $619.7 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes supporting the unaudited condensed consolidated financial statements [Note 1. Accounting Policies and Basis of Presentation](index=7&type=section&id=Note%201.%20Accounting%20Policies%20and%20Basis%20of%20Presentation) This note outlines the company's business, its reportable segments, and the basis for preparing the unaudited condensed consolidated financial statements, including the impact of the COVID-19 pandemic on future estimates - Manitowoc is a leading provider of engineered lifting solutions, designing, manufacturing, marketing, and supporting mobile telescopic cranes, tower cranes, lattice-boom crawler cranes, and boom trucks under various brand names[21](index=21&type=chunk) - The company operates through three reportable segments: Americas, Europe and Africa (EURAF), and Middle East and Asia Pacific (MEAP)[22](index=22&type=chunk) - The COVID-19 pandemic introduces considerable uncertainty regarding future impacts on estimates for goodwill impairment, long-lived assets, income tax provision, inventory recoverability, and hedge accounting[25](index=25&type=chunk) [Note 2. Recent Accounting Changes and Pronouncements](index=7&type=section&id=Note%202.%20Recent%20Accounting%20Changes%20and%20Pronouncements) This note details recent accounting standard updates, including ASU 2019-12 (Income Taxes), ASU 2018-15 (Cloud Computing), and ASU 2016-13 (Credit Losses), and their impact on the company's financial statements - The company is evaluating the impact of ASU No. 2019-12 'Income Taxes (Topic 740)', effective for annual periods beginning after December 15, 2020[26](index=26&type=chunk) - The adoption of ASU No. 2018-15 'Intangibles – Goodwill and Other – Internal-use Software' did not have a material impact on the condensed consolidated financial statements[27](index=27&type=chunk) - The adoption of ASU 2016-13 'Financial Instruments - Credit Losses' resulted in a **$0.2 million reduction in beginning retained earnings and accounts receivable** as of June 30, 2020, with no material impact on operations or cash flows[28](index=28&type=chunk) [Note 3. Revenues](index=8&type=section&id=Note%203.%20Revenues) This note provides a summary of changes in the customer advances balance, which represents deferred revenue, for the three and six months ended June 30, 2020 and 2019 Customer Advances Balance (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $21.0 | $13.3 | $25.8 | $9.6 | | Cash received or due in advance | $15.9 | $18.3 | $44.8 | $50.2 | | Revenue recognized | $(21.6) | $(21.1) | $(54.1) | $(49.4) | | Currency translation | $0.5 | $0.1 | $(0.7) | $0.2 | | Balance at end of period | $15.8 | $10.6 | $15.8 | $10.6 | [Note 4. Fair Value of Financial Instruments](index=8&type=section&id=Note%204.%20Fair%20Value%20of%20Financial%20Instruments) This note details the fair value classification of the company's financial assets and liabilities, primarily focusing on forward currency exchange contracts and senior secured second lien notes - The fair value of the senior secured second lien notes due 2026 was approximately **$299.0 million** as of June 30, 2020, classified as Level 1 within the valuation hierarchy due to quoted market prices[32](index=32&type=chunk)[33](index=33&type=chunk) - Forward currency exchange contracts are valued through an independent valuation source and classified within Level 2 of the fair value hierarchy[35](index=35&type=chunk) [Note 5. Derivative Financial Instruments](index=9&type=section&id=Note%205.%20Derivative%20Financial%20Instruments) This note describes the company's use of forward currency exchange contracts to manage exposure to non-functional currencies and transaction risks - The company uses FX Forward Contracts to manage exposure on forecasted transactions and transaction gains/losses, with some designated as cash flow hedges[37](index=37&type=chunk) FX Forward Contracts Notional Amount and Fair Value (in millions) | Metric | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | Aggregate notional amount outstanding | $9.6 | $32.6 | | Net fair value (current asset) | $0.1 | $0.0 | | Unrealized gains in AOCI | $0.1 | $0.0 | Gain or Loss from FX Forward Contracts (in millions) | Category | Recognized Location | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--------------- | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Designated | Cost of sales | $0.2 | $0.7 | $0.3 | $1.5 | | Non-Designated | Other income (expense) - net | $(0.4) | $(1.6) | $(0.4) | $(2.3) | [Note 6. Inventories](index=9&type=section&id=Note%206.%20Inventories) This note provides a breakdown of the company's inventory components, including raw materials, work-in-process, finished goods, and the excess and obsolete inventory reserve Inventories Components (in millions) | Component | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Raw materials | $140.7 | $156.3 | | Work-in-process | $116.5 | $116.3 | | Finished goods | $329.7 | $239.4 | | Total inventories | $586.9 | $512.0 | | Excess and obsolete inventory reserve | $(52.4) | $(50.6) | | Inventories — net | $534.5 | $461.4 | [Note 7. Notes Receivable](index=10&type=section&id=Note%207.%20Notes%20Receivable) This note details the current and long-term notes receivable balances, primarily related to the company's captive finance entity in China Notes Receivable Balances (in millions) | Category | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | Current notes receivable | $14.0 | $17.4 | | Long-term notes receivable | $14.8 | $16.3 | [Note 8. Property, Plant and Equipment](index=10&type=section&id=Note%208.%20Property%2C%20Plant%20and%20Equipment) This note summarizes the components of property, plant and equipment, net of accumulated depreciation, as of June 30, 2020 and December 31, 2019 Property, Plant and Equipment Components (in millions) | Component | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Total cost | $716.5 | $722.2 | | Less accumulated depreciation | $(438.7) | $(432.3) | | Property, plant and equipment — net | $277.8 | $289.9 | [Note 9. Goodwill and Other Intangible Assets](index=10&type=section&id=Note%209.%20Goodwill%20and%20Other%20Intangible%20Assets) This note discusses the company's goodwill and other intangible assets, including impairment review and carrying amounts by segment - An interim goodwill impairment test as of March 31, 2020, triggered by the COVID-19 pandemic, indicated no impairment, as fair values of all reporting units exceeded their carrying values[44](index=44&type=chunk) Goodwill Carrying Amount by Segment (in millions) | Segment | December 31, 2019 | June 30, 2020 | | :-------- | :---------------- | :------------ | | Americas | $166.5 | $166.5 | | MEAP | $66.0 | $65.5 | | Consolidated | $232.5 | $232.0 | Other Intangible Assets (in millions) | Category | June 30, 2020 Net Book Value | December 31, 2019 Net Book Value | | :-------------------------- | :----------------------------- | :------------------------------- | | Definite lived intangible assets | $2.2 | $2.3 | | Indefinite lived intangible assets | $113.7 | $114.0 | | Total other intangible assets | $115.9 | $116.3 | [Note 10. Accounts Payable and Accrued Expenses](index=11&type=section&id=Note%2010.%20Accounts%20Payable%20and%20Accrued%20Expenses) This note summarizes the components of accounts payable and accrued expenses as of June 30, 2020 and December 31, 2019 Accounts Payable and Accrued Expenses (in millions) | Component | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Trade accounts payable | $177.9 | $187.1 | | Employee-related expenses | $40.3 | $56.6 | | Accrued vacation | $23.9 | $20.2 | | Miscellaneous accrued expenses | $90.5 | $76.9 | | Total | $332.6 | $340.8 | [Note 11. Debt](index=11&type=section&id=Note%2011.%20Debt) This note details the company's outstanding debt, including senior secured second lien notes and the ABL Revolving Credit Facility, along with their terms and covenants Outstanding Debt (in millions) | Debt Type | June 30, 2020 | December 31, 2019 | | :------------------------------------------ | :------------ | :---------------- | | Borrowings under ABL Revolving Credit Facility | $50.0 | $0.0 | | Senior secured second lien notes due 2026 | $300.0 | $300.0 | | Other debt | $15.4 | $16.7 | | Deferred financing costs | $(4.2) | $(4.5) | | Total debt | $361.2 | $312.2 | | Long-term debt | $356.9 | $308.4 | - The company issued **$300.0 million** in senior secured second lien notes due April 1, 2026, with a **9.000% annual coupon rate**, and entered into a **$275.0 million** senior secured asset-based revolving credit facility (ABL Revolving Credit Facility) in March 2019[49](index=49&type=chunk)[51](index=51&type=chunk) - During the six months ended June 30, 2019, the company recorded a **$25.0 million charge** related to the refinancing of its prior ABL Revolving Credit Facility and 2021 Notes[53](index=53&type=chunk) - As of June 30, 2020, the company was in compliance with all affirmative and negative covenants in its debt instruments[58](index=58&type=chunk) [Note 12. Accounts Receivable Securitization and Other Factoring Arrangements](index=13&type=section&id=Note%2012.%20Accounts%20Receivable%20Securitization%20and%20Other%20Factoring%20Arrangements) This note describes the termination of the prior U.S. receivables purchase agreement and current non-U.S. and U.S. accounts receivable financing programs - The company's prior **$75.0 million** Receivables Purchase Agreement was terminated on March 25, 2019[59](index=59&type=chunk) - The company has two non-U.S. accounts receivable financing programs with maximum availability of **€55.0 million** and one U.S. program with maximum availability of **$35.0 million**[62](index=62&type=chunk) - During the six months ended June 30, 2020, the company sold receivables and received cash of **€59.3 million** under its non-U.S. programs[62](index=62&type=chunk) [Note 13. Income Taxes](index=13&type=section&id=Note%2013.%20Income%20Taxes) This note details the provision for income taxes, the impact of the CARES Act, and the company's unrecognized tax benefits Provision for Income Taxes (in millions) | Period | 2020 | 2019 | | :-------------------------- | :--- | :--- | | Three months ended June 30, | $0.7 | $3.9 | | Six months ended June 30, | $2.6 | $7.2 | - A net discrete tax benefit of **$2.5 million** was recorded for the three months ended June 30, 2020, primarily due to U.S. tax planning strategies implemented as a result of the CARES Act[63](index=63&type=chunk)[64](index=64&type=chunk) - Unrecognized tax benefits, excluding interest and penalties, increased to **$22.6 million** as of June 30, 2020, from **$11.5 million** at December 31, 2019, mainly due to uncertainty regarding CARES Act tax planning strategies[66](index=66&type=chunk) [Note 14. Net Income (Loss) Per Share](index=14&type=section&id=Note%2014.%20Net%20Income%20%28Loss%29%20Per%20Share) This note reconciles weighted average shares outstanding for basic and diluted income (loss) per common share, noting anti-dilutive securities Weighted Average Common Shares Outstanding | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average common shares outstanding | 34,519,889 | 35,595,718 | 34,827,582 | 35,619,145 | | Diluted weighted average common shares outstanding | 34,519,889 | 35,725,908 | 34,827,582 | 35,799,089 | - Due to net losses incurred during the three and six months ended June 30, 2020, all equity instruments were anti-dilutive and excluded from diluted EPS calculations[67](index=67&type=chunk) - No cash dividends were paid during the three and six months ended June 30, 2020 and 2019[68](index=68&type=chunk) [Note 15. Equity](index=14&type=section&id=Note%2015.%20Equity) This note outlines authorized capital, common stock repurchase program details, and reconciliation of accumulated other comprehensive loss components - The company has authorization to purchase up to **$30.0 million** of its common stock; **$12.0 million** was repurchased during the six months ended June 30, 2020, and **$10.6 million** remained under authorization[70](index=70&type=chunk) - The share repurchase program was suspended due to the COVID-19 pandemic to preserve liquidity[70](index=70&type=chunk) Accumulated Other Comprehensive Loss (in millions) | Component | June 30, 2020 | June 30, 2019 | | :------------------------------------ | :------------ | :------------ | | Gains and Losses on Cash Flow Hedges | $0.1 | $0.4 | | Pension & Postretirement | $(38.1) | $(35.2) | | Foreign Currency Translation | $(86.1) | $(81.4) | | Total | $(124.1) | $(116.2) | [Note 16. Stock-Based Compensation](index=16&type=section&id=Note%2016.%20Stock-Based%20Compensation) This note details stock-based compensation expense and the types and quantities of equity awards granted to employees and directors Stock-Based Compensation Expense (in millions) | Period | 2020 | 2019 | | :-------------------------- | :--- | :--- | | Three months ended June 30, | $2.5 | $3.0 | | Six months ended June 30, | $5.9 | $6.1 | - As of June 30, 2020, **3,983,976 shares** of common stock were available for awards under the 2013 Omnibus Incentive Plan[73](index=73&type=chunk) - Performance shares granted in 2020 are based **100% on the 3-year average of Adjusted EBITDA percentage** from 2020 to 2022, with a potential **+/-20% modification** based on total shareholder return relative to a peer group[77](index=77&type=chunk) [Note 17. Segments](index=16&type=section&id=Note%2017.%20Segments) This note provides detailed financial information by the company's three reportable segments: Americas, EURAF, and MEAP, including net sales and operating income - The company's reportable segments are Americas, Europe and Africa (EURAF), and Middle East and Asia Pacific (MEAP), with performance evaluated based on net sales and operating income[80](index=80&type=chunk)[81](index=81&type=chunk) Segment Net Sales (in millions) | Segment | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $149.6 | $264.6 | $305.8 | $470.7 | | EURAF | $135.5 | $182.6 | $258.4 | $336.8 | | MEAP | $43.2 | $57.5 | $93.3 | $115.2 | | Total | $328.3 | $504.7 | $657.5 | $922.7 | Segment Operating Income (Loss) (in millions) | Segment | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $4.8 | $35.7 | $13.9 | $50.9 | | EURAF | $(4.4) | $1.7 | $(4.8) | $5.1 | | MEAP | $6.6 | $5.1 | $12.9 | $12.4 | | Total | $7.0 | $42.5 | $22.0 | $68.4 | Net Sales by Product (in millions) | Product | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cranes | $259.5 | $418.0 | $508.1 | $751.5 | | Aftermarket parts and other | $68.8 | $86.7 | $149.4 | $171.2 | | Total net sales | $328.3 | $504.7 | $657.5 | $922.7 | [Note 18. Commitments and Contingencies](index=18&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) This note outlines the company's involvement in various legal actions, including product-related lawsuits and asbestos-related claims, and details its product liability and warranty reserves - The company is involved in various legal actions, including product-related lawsuits and asbestos-related claims, which management believes will not have a material adverse effect on financial condition[84](index=84&type=chunk)[87](index=87&type=chunk) Product Liability and Warranty Reserves (in millions) | Reserve Type | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Product liability reserves | $11.6 | $12.8 | | Warranty claims | $60.1 | $60.6 | - During the three months ended June 30, 2019, the company settled a legal matter, resulting in a net **$24.7 million gain** (**$15.5 million** in other income and **$9.2 million** benefit in engineering, selling and administrative expenses)[89](index=89&type=chunk) [Note 19. Guarantees](index=18&type=section&id=Note%2019.%20Guarantees) This note describes the company's buyback commitments and loss guarantees with customers, as well as its product warranty obligations and related activity Buyback Commitments and Loss Guarantees (in millions) | Guarantee Type | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Total buyback commitments outstanding | $18.1 | $17.3 | | Maximum liabilities for loss guarantees | $17.1 | $11.3 | Warranty Activity (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $59.7 | $45.7 | $60.6 | $47.8 | | Accruals for warranties issued | $7.5 | $13.1 | $16.1 | $20.1 | | Settlements made | $(7.8) | $(7.7) | $(16.6) | $(16.5) | | Balance at end of period | $60.1 | $51.3 | $60.1 | $51.3 | [Note 20. Restructuring](index=19&type=section&id=Note%2020.%20Restructuring) This note provides details on restructuring expenses incurred and the rollforward of the restructuring accrual, primarily related to headcount reductions Restructuring Expense (in millions) | Period | 2020 | 2019 | | :-------------------------- | :--- | :--- | | Three months ended June 30, | $0.2 | $2.7 | | Six months ended June 30, | $1.7 | $7.2 | - Restructuring expenses for both periods in 2020 primarily related to headcount reductions in Europe[94](index=94&type=chunk) Restructuring Accrual Rollforward (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $2.4 | $4.6 | $2.0 | $3.1 | | Restructuring expenses | $0.2 | $2.7 | $1.7 | $7.2 | | Use of reserve | $(0.7) | $(4.2) | $(1.8) | $(7.2) | | Balance at end of period | $1.9 | $3.1 | $1.9 | $3.1 | [Note 21. Employee Benefit Plans](index=20&type=section&id=Note%2021.%20Employee%20Benefit%20Plans) This note summarizes the components of net periodic benefit cost for the company's pension, health care, and death benefit plans for eligible retirees Net Periodic Benefit Cost (in millions) | Component | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. Pension Plans | $0.4 | $1.0 | $0.8 | $2.0 | | Non-U.S. Pension Plans | $1.1 | $1.0 | $2.2 | $2.0 | | Postretirement Health and Other Plans | $(0.6) | $(0.4) | $(1.1) | $(0.8) | | Total Net Periodic Benefit Cost | $0.9 | $1.6 | $1.9 | $3.2 | [Note 22. Subsequent Events](index=20&type=section&id=Note%2022.%20Subsequent%20Events) This note discloses a significant leadership transition that occurred after the reporting period, specifically the appointment of a new President and CEO - Effective August 5, 2020, Aaron H. Ravenscroft was appointed President and Chief Executive Officer, succeeding Barry L. Pennypacker, who stepped down[98](index=98&type=chunk) - Mr. Pennypacker will serve in an advisory role through December 31, 2020, to ensure a smooth transition[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of the company's financial condition and results of operations [Cautionary Statements Regarding Forward-Looking Information](index=21&type=section&id=Cautionary%20Statements%20Regarding%20Forward-Looking%20Information) This section provides a standard disclaimer regarding forward-looking statements, highlighting various known and unknown risks and uncertainties that could cause actual results to differ materially from projections, including the impacts of COVID-19, economic conditions, and operational factors - All statements in the report, other than historical facts, are forward-looking and subject to known and unknown risks and uncertainties[101](index=101&type=chunk)[102](index=102&type=chunk) - Key risks include the negative impacts of COVID-19 on business, financial condition, cash flows, results of operations, supply chain, and customer demand[103](index=103&type=chunk) - Other significant risks encompass actions of competitors, changes in economic or industry conditions, unanticipated changes in customer demand, geographic and political risks, and the ability to implement strategic initiatives[103](index=103&type=chunk) [COVID-19 Update](index=23&type=section&id=COVID-19%20Update) This section provides an update on the company's response to the COVID-19 pandemic, noting the restart of operations, decline in demand, and anticipated adverse effects on financial results for the second half of 2020 - The company restarted operations in all facilities during Q2 2020 but experienced a decline in product demand across all segments due to COVID-19[107](index=107&type=chunk) - Management expects reduced demand, primarily from the Americas segment, and general production slowdowns to adversely affect financial results for the second half of 2020[107](index=107&type=chunk) - Uncertainty regarding future COVID-19 impacts on the global supplier network could also adversely affect financial results[107](index=107&type=chunk) [Segment Operating Performance](index=23&type=section&id=Segment%20Operating%20Performance) This section analyzes the net sales and operating income performance of the company's three reportable segments for the three and six months ended June 30, 2020 and 2019 [Americas Segment Performance](index=23&type=section&id=Americas%20Segment%20Performance) This section analyzes the Americas segment's net sales and operating income performance Americas Segment Performance (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | % Change | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net Sales | $149.6 | $264.6 | (43.5)% | $305.8 | $470.7 | (35.0)% | | Operating Income | $4.8 | $35.7 | (86.6)% | $13.9 | $50.9 | (72.7)% | - The decrease in net sales and operating income was primarily due to lower shipments of cranes, mainly from entering the quarter/year with a lower shippable backlog[111](index=111&type=chunk)[113](index=113&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) - The decrease in operating income was partially offset by lower engineering, selling, and administrative expenses (**$2.2 million** for Q2, **$1.7 million** for H1) and lower restructuring expense for H1[112](index=112&type=chunk)[114](index=114&type=chunk) [EURAF Segment Performance](index=24&type=section&id=EURAF%20Segment%20Performance) This section analyzes the EURAF segment's net sales and operating income performance EURAF Segment Performance (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | % Change | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net Sales | $135.5 | $182.6 | (25.8)% | $258.4 | $336.8 | (23.3)% | | Operating Income (Loss) | $(4.4) | $1.7 | * | $(4.8) | $5.1 | * | - Net sales decreased primarily due to lower crane shipments resulting from the COVID-19 pandemic and unfavorable foreign currency exchange rates (**$3.0 million** for Q2, **$6.7 million** for H1)[115](index=115&type=chunk)[117](index=117&type=chunk) - Operating income shifted to a loss, mainly due to lower volume on crane shipments and period costs from underutilized manufacturing facilities due to COVID-19 (**$7.9 million** for Q2, **$9.9 million** for H1)[116](index=116&type=chunk)[118](index=118&type=chunk) [MEAP Segment Performance](index=24&type=section&id=MEAP%20Segment%20Performance) This section analyzes the MEAP segment's net sales and operating income performance MEAP Segment Performance (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | % Change | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net Sales | $43.2 | $57.5 | (24.9)% | $93.3 | $115.2 | (19.0)% | | Operating Income | $6.6 | $5.1 | 29.4% | $12.9 | $12.4 | 4.0% | - Net sales decreased due to lower crane shipments, particularly for commercial construction, and unfavorable foreign currency exchange rates (**$1.3 million** for Q2, **$2.8 million** for H1)[119](index=119&type=chunk)[121](index=121&type=chunk) - Operating income increased due to favorable mix on crane shipments, lower engineering, selling, and administrative expenses (**$2.2 million** for Q2, **$3.5 million** for H1), and lower restructuring expenses (**$1.6 million** for Q2, **$1.9 million** for H1), partially offset by lower volume[120](index=120&type=chunk)[122](index=122&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202020%20and%202019) This section provides a detailed analysis of the company's consolidated results of operations, including net sales, gross profit, various expenses, interest, and income taxes, for the three and six months ended June 30, 2020 and 2019, highlighting significant changes and their drivers [Net Sales, Orders and Backlog](index=25&type=section&id=Net%20Sales%2C%20Orders%20and%20Backlog) This section analyzes the company's consolidated net sales, orders, and backlog Consolidated Net Sales, Orders, and Backlog (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | % Change | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net sales | $328.3 | $504.7 | (35.0)% | $657.5 | $922.7 | (28.7)% | | Orders | $237.8 | $372.0 | (36.1)% | N/A | N/A | N/A | | Total backlog (as of period end) | $430.5 | $561.4 | (23.3)% | N/A | N/A | N/A | - Consolidated net sales decreased primarily due to lower crane shipments across all segments, unfavorably impacted by foreign currency exchange rates (**$4.4 million** for Q2, **$9.6 million** for H1)[125](index=125&type=chunk)[126](index=126&type=chunk) - Orders decreased by **36.1%** for the three months ended June 30, 2020, mainly attributable to the Americas and EURAF segments[127](index=127&type=chunk) [Gross Profit](index=25&type=section&id=Gross%20Profit) This section analyzes the company's consolidated gross profit and gross profit percentage Gross Profit (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | % Change | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Gross profit | $48.4 | $95.2 | (49.2)% | $111.6 | $175.4 | (36.4)% | | Gross profit % | 14.7% | 18.9% | N/A | 17.0% | 19.0% | N/A | - The decrease in gross profit and gross profit percentage was primarily due to lower volume of crane shipments across all segments and period costs from underutilized manufacturing facilities due to the COVID-19 pandemic[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Engineering, Selling and Administrative Expenses](index=26&type=section&id=Engineering%2C%20Selling%20and%20Administrative%20Expenses) This section analyzes the company's engineering, selling, and administrative expenses Engineering, Selling and Administrative Expenses (in millions) | Period | 2020 | 2019 | % Change | | :-------------------------- | :--- | :--- | :------- | | Three months ended June 30, | $49.7 | $50.5 | (1.6)% | | Six months ended June 30, | $105.6 | $109.9 | (3.9)% | - The decrease was primarily due to lower short-term incentive compensation costs and reduced discretionary spending[133](index=133&type=chunk)[134](index=134&type=chunk) - This decrease was partially offset by a **$9.2 million benefit** recorded in 2019 related to the settlement of a legal matter[133](index=133&type=chunk)[134](index=134&type=chunk) [Restructuring Expense](index=26&type=section&id=Restructuring%20Expense) This section analyzes the company's restructuring expense Restructuring Expense (in millions) | Period | 2020 | 2019 | % Change | | :-------------------------- | :--- | :--- | :------- | | Three months ended June 30, | $0.2 | $2.7 | (92.6)% | | Six months ended June 30, | $1.7 | $7.2 | (76.4)% | - Restructuring expense significantly decreased, primarily related to headcount reductions in Europe for 2020, compared to reductions in India, Europe, and North America in 2019[135](index=135&type=chunk)[136](index=136&type=chunk) [Interest Expense](index=26&type=section&id=Interest%20Expense) This section analyzes the company's interest expense Interest Expense (in millions) | Period | 2020 | 2019 | % Change | | :-------------------------- | :--- | :--- | :------- | | Three months ended June 30, | $7.2 | $7.5 | (4.0)% | | Six months ended June 30, | $14.4 | $18.4 | (21.7)% | - The decrease in interest expense was primarily due to a reduction in the average effective interest rate, from **8.9% to 8.7%** for Q2, and from **11.2% to 9.0%** for H1[137](index=137&type=chunk)[138](index=138&type=chunk) - The reduction in the average effective interest rate for the six-month period was mainly due to the refinancing of the company's senior secured high yield notes in Q1 2019[138](index=138&type=chunk) [Loss on Debt Extinguishment](index=26&type=section&id=Loss%20on%20Debt%20Extinguishment) This section details the loss incurred from the extinguishment of debt during the period - During the six months ended June 30, 2019, the company recorded a **$25.0 million charge** associated with the refinancing of its Prior ABL Facility and Prior 2021 Notes[139](index=139&type=chunk) - The charge was composed of a **$16.6 million call premium**, **$5.3 million of unamortized discount**, and **$3.1 million of unamortized debt issuance costs**[139](index=139&type=chunk) [Other Income (Expense) - Net](index=26&type=section&id=Other%20Income%20%28Expense%29%20-%20Net) This section analyzes the company's other income and expense, net Other Income (Expense) - Net (in millions) | Period | 2020 | 2019 | % Change | | :-------------------------- | :----- | :---- | :------- | | Three months ended June 30, | $(2.9) | $15.9 | (118.2)% | | Six months ended June 30, | $(6.9) | $12.6 | (154.8)% | - The shift from net income to net expense in 2020 was primarily due to net foreign currency losses (**$2.1 million** for Q2, **$6.0 million** for H1) and the absence of a **$15.5 million benefit** from a legal settlement recorded in 2019[141](index=141&type=chunk)[142](index=142&type=chunk) [Income Taxes](index=27&type=section&id=Income%20Taxes) This section analyzes the company's provision for income taxes Provision for Income Taxes (in millions) | Period | 2020 | 2019 | | :-------------------------- | :--- | :--- | | Three months ended June 30, | $0.7 | $3.9 | | Six months ended June 30, | $2.6 | $7.2 | - The decrease in the provision for income taxes was primarily driven by a net discrete tax benefit of **$2.5 million** recorded in Q2 2020, resulting from U.S. tax planning strategies due to the CARES Act[143](index=143&type=chunk)[144](index=144&type=chunk) [Financial Condition](index=27&type=section&id=Financial%20Condition) This section analyzes the company's financial condition, focusing on cash flows, liquidity, capital resources, and debt, along with management's outlook [Cash Flows](index=27&type=section&id=Cash%20Flows) This section provides a detailed analysis of the company's cash flows from operating, investing, and financing activities [Cash Flows From Operating Activities](index=27&type=section&id=Cash%20Flows%20From%20Operating%20Activities) This section analyzes the company's net cash used for operating activities Net Cash Used for Operating Activities (in millions) | Period | 2020 | 2019 | | :-------------------------- | :----- | :----- | | Six months ended June 30, | $(98.7) | $(235.4) | - Cash used for operating activities in H1 2020 was primarily driven by a **$103.1 million increase in working capital**, including a **$73.4 million increase in inventory** and incentive compensation payments[146](index=146&type=chunk) - Cash used in H1 2019 was mainly due to trade receivables sold to a prior securitization program (**$126.3 million** reported in investing activities) and purchases of accounts receivable, partially offset by a **$36.5 million legal settlement**[147](index=147&type=chunk) [Cash Flows From Investing Activities](index=27&type=section&id=Cash%20Flows%20From%20Investing%20Activities) This section analyzes the company's net cash provided by (used for) investing activities Net Cash Provided by (Used for) Investing Activities (in millions) | Period | 2020 | 2019 | | :-------------------------- | :----- | :----- | | Six months ended June 30, | $(7.9) | $121.4 | - Cash used for investing in H1 2020 consisted of **$8.0 million in capital expenditures**, partially offset by **$0.1 million** from asset sales[148](index=148&type=chunk) - Cash provided by investing in H1 2019 included **$126.3 million** from cash collections on accounts receivable sold to the prior securitization program and **$4.8 million** from asset sales, offset by **$9.7 million in capital expenditures**[149](index=149&type=chunk) [Cash Flows From Financing Activities](index=28&type=section&id=Cash%20Flows%20From%20Financing%20Activities) This section analyzes the company's net cash provided by financing activities Net Cash Provided by Financing Activities (in millions) | Period | 2020 | 2019 | | :-------------------------- | :--- | :--- | | Six months ended June 30, | $36.6 | $9.8 | - Cash provided by financing in H1 2020 included **$50.0 million** from ABL Revolving Credit Facility borrowings and **$0.1 million** from stock option exercises, partially offset by **$12.0 million** in common stock repurchases[150](index=150&type=chunk) - Cash provided in H1 2019 included **$300.0 million** from long-term debt and **$82.8 million** from ABL borrowings, offset by **$276.6 million** in debt payments, **$82.8 million** in ABL payments, and **$8.2 million** in debt issuance costs[151](index=151&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's liquidity position and capital resources Liquidity Position (in millions) | Metric | June 30, 2020 | December 31, 2019 | June 30, 2019 | | :-------------------------- | :------------ | :---------------- | :------------ | | Cash and cash equivalents | $128.3 | $199.3 | $35.0 | | Revolver borrowing capacity | $260.8 | $210.4 | $275.0 | | Other debt availability | $38.7 | $38.8 | $38.7 | | Less: Borrowings on revolver | $(50.0) | $0.0 | $0.0 | | Less: Borrowings on other debt | $0.0 | $0.0 | $(4.5) | | Less: Outstanding letters of credit | $(3.0) | $(4.0) | $(4.0) | | Total liquidity | $374.8 | $444.5 | $340.2 | [Outlook](index=28&type=section&id=Outlook) This section provides management's outlook on the company's future liquidity and operational needs - The company believes its liquidity and expected cash flows from operations will be sufficient to meet operational needs for the next twelve months[153](index=153&type=chunk) - Actions taken to preserve liquidity include a preemptive **$50.0 million borrowing** on the ABL Revolving Credit Facility, reduced discretionary spending, suspended share repurchase program, reduced capital expenditures, and eliminated base salary increases[153](index=153&type=chunk) - The company is utilizing available government subsidies and programs to aid with liquidity and employee retention[153](index=153&type=chunk) [Cash Sources](index=28&type=section&id=Cash%20Sources) This section describes the company's historical and current sources of cash, including credit facilities - Historically, cash sources include cash flows from operations, borrowings under revolving credit facilities, and debt financing[154](index=154&type=chunk) - The current ABL Revolving Credit Facility has a maximum availability of **$275.0 million**, with borrowing capacity based on inventory, accounts receivable, and fixed assets[155](index=155&type=chunk) - The company also has access to non-committed overdraft facilities in Europe, totaling **$38.7 million** in availability as of June 30, 2020[156](index=156&type=chunk) [Debt](index=29&type=section&id=Debt) This section details the company's outstanding debt, including credit facilities and notes, and related covenants Outstanding Debt (in millions) | Debt Type | June 30, 2020 | December 31, 2019 | | :------------------------------------------ | :------------ | :---------------- | | Senior secured asset based revolving credit facility | $50.0 | $0.0 | | Senior secured second lien notes due 2026 | $300.0 | $300.0 | | Other debt | $15.4 | $16.7 | | Deferred financing costs | $(4.2) | $(4.5) | | Total debt | $361.2 | $312.2 | | Long-term debt | $356.9 | $308.4 | - Both the ABL Revolving Credit Facility and the 2026 Notes include customary covenants and events of default[157](index=157&type=chunk) - Management believes the company will comply with these covenants during the subsequent twelve months[157](index=157&type=chunk) [Non-GAAP Measures](index=30&type=section&id=Non-GAAP%20Measures) This section presents non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Operating Cash Flows, and Free Cash Flows, along with their reconciliations to GAAP - The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted Operating Income (Loss) to evaluate performance and provide supplemental information to investors[158](index=158&type=chunk) Reconciliation of GAAP Net Income (Loss) to Adjusted Operating Income (Loss) (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(12.7) | $46.0 | $(20.5) | $19.3 | | EBITDA | $4.7 | $66.5 | $15.5 | $63.3 | | Adjusted EBITDA | $7.8 | $53.3 | $24.1 | $82.9 | | Adjusted operating income (loss) | $(1.4) | $44.6 | $5.8 | $65.3 | | Operating income (loss) | $(1.6) | $41.9 | $4.1 | $58.1 | | Adjusted EBITDA margin percentage | 2.4% | 10.6% | 3.7% | 9.0% | | Adjusted operating income (loss) margin percentage | (0.4)% | 8.8% | 0.9% | 7.1% | Adjusted Operating Cash Flows and Free Cash Flows (in millions) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used for) operating activities | $(20.2) | $31.9 | $(98.7) | $(235.4) | | Adjusted operating cash flows | $(20.2) | $31.9 | $(98.7) | $(34.1) | | Capital expenditures | $(4.4) | $(5.3) | $(8.0) | $(9.7) | | Free cash flows | $(24.6) | $26.6 | $(106.7) | $(43.8) | [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) This section states that there have been no material changes to the company's critical accounting policies since its 2019 Form 10-K filing - The company's critical accounting policies have not materially changed since the 2019 Form 10-K was filed[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This section indicates that there have been no material changes to the company's market risk disclosures since its 2019 Form 10-K filing - The company's market risk disclosures have not materially changed since the 2019 Form 10-K was filed[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and states that there have been no material changes in internal control over financial reporting - Management, with the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2020, and concluded they are effective[164](index=164&type=chunk) - No changes have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period[165](index=165&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information, including risk factors, other disclosures, and a list of exhibits [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for 2019, except for prior supplements and amendments - No material changes to risk factors have occurred since the 2019 Annual Report on Form 10-K, other than those previously supplemented and amended in the Q1 2020 Form 10-Q[168](index=168&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) This section details the leadership transition, including the appointment of a new President and CEO, his compensation adjustments, and the severance package for the outgoing CEO - Aaron H. Ravenscroft was appointed President and Chief Executive Officer, effective August 5, 2020, succeeding Barry L. Pennypacker[169](index=169&type=chunk) - Mr. Ravenscroft's annual base salary was increased to **$800,000**, and his 2020 Short-Term Incentive Plan target award was increased to **100% of base salary**[172](index=172&type=chunk) - Mr. Pennypacker will receive **$4,000,000** in severance pay over 24 months, a pro rata 2020 bonus, accelerated vesting of some restricted stock units, and a **$175,000 contribution** to his Deferred Compensation Plan[173](index=173&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished with the Form 10-Q, including the severance agreement, certifications, and XBRL documents - Exhibits include the Severance and General Release Agreement for Barry L. Pennypacker, Rule 13a-14(a)/15d-14(a) Certifications, CEO and CFO certifications pursuant to 18 U.S.C. Section 1350, and Inline XBRL documents[177](index=177&type=chunk) [Signatures](index=34&type=section&id=SIGNATURES) This section lists the individuals who signed the report and the date of signing - The report was signed on August 6, 2020, by Aaron H. Ravenscroft (President and Chief Executive Officer), David J. Antoniuk (Senior Vice President and Chief Financial Officer), and Brian P. Regan (Vice President and Corporate Controller)[180](index=180&type=chunk)

Financial Data and Key Metrics Changes - First quarter orders totaled $375 million, a decrease of 15% compared to $441 million last year, with a currency neutral basis decline of 14% [22] - Net sales in Q1 were $329 million, down $89 million or 21% year-over-year, negatively impacted by approximately $37 million due to shipping delays and plant closures related to COVID-19 [24] - Adjusted EBITDA for the first quarter amounted to $16 million or 5% of net sales, reflecting a 15% flow-through on the year-over-year sales decline [26] - GAAP diluted earnings per share was a loss of $0.22, compared to a loss of $0.75 in the prior year, while adjusted diluted earnings per share was a loss of $0.18, down from income of $0.08 [27] Business Line Data and Key Metrics Changes - The Americas segment saw the largest year-over-year decline in net sales, driven by a lower shippable backlog entering the year [24] - Aftermarket revenue increased to 25% of net sales for the quarter, up from 20% last year, indicating a shift towards higher aftermarket sales [25] Market Data and Key Metrics Changes - The company experienced order cancellations of approximately $10 million in Europe and Asia during the quarter [22] - The crane market faced a pause in orders during the second half of March and all of April due to global shutdowns related to the pandemic [16] - The U.S. economy is beginning to reopen, with increases in construction activity deemed non-essential [18] Company Strategy and Development Direction - The company is focused on protecting employee health and safety while maintaining operations and preserving liquidity during the COVID-19 crisis [10][13] - Manitowoc has suspended share repurchases and reduced capital expenditures by 50% while continuing to fund mission-critical programs for future growth [19] - The company has filed a petition with the U.S. Department of Commerce to investigate mobile crane imports, aiming to protect domestic manufacturers and ensure a level playing field [35] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued soft order intake and expects Q2 and Q3 to be challenging, with revenue and profitability declines [20] - The company has withdrawn its 2020 financial guidance due to economic uncertainty and will reinstate it when there is a clearer business outlook [33] - Management remains confident that demand will return and that Manitowoc will be well-positioned to deliver stronger financial performance based on strategic priorities [37] Other Important Information - The company reported a total liquidity of approximately $382 million at the end of the quarter, with no outstanding borrowings under its revolving credit facility [19][31] - The company has implemented a prudent capital structure with no significant debt maturities until 2026 [13][32] Q&A Session Summary Question: Can you quantify how much discretionary cost actions will help offset volume declines? - Management identified cost actions in the range of $8 million to $10 million to help offset volume declines, with longer-term actions still to be implemented [42] Question: What is the expectation for free cash flow in Q2? - Management indicated that Q2 is expected to be a use of cash, with the determination dependent on the sales pipeline and order push-outs [49] Question: Can you provide insights on the aftermarket business performance? - The aftermarket business remained strong in April year-over-year, driven by increased crane erection on job sites in Europe [60] Question: How are you managing customer requests for payment relief? - Management noted that some customers have requested payment extensions, but overall, the market has remained stable [42][72] Question: What is the status of the oil and gas market and its impact? - The company has seen a loss of market share in the oil and gas business, particularly in the Middle East, but anticipates that any uptick in activity will spur demand for cranes [75][78] Question: How important is the RT business to your overall sales? - Management indicated that the RT business represents a significant portion of overall sales, although specific percentages were not disclosed [95]

PART I [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2020 financial statements show a net loss of **$7.8 million** on **$329.2 million** net sales, an improvement from Q1 2019, with total assets at **$1,584.0 million** and a **$78.6 million** net cash use from operations [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2020 net sales decreased **21.2%** to **$329.2 million**, resulting in an operating income of **$5.7 million** and a net loss of **$7.8 million**, significantly improved from Q1 2019's **$26.7 million** net loss which included a **$25.0 million** debt extinguishment loss Q1 2020 vs Q1 2019 Statement of Operations Highlights | Metric | Q1 2020 ($M) | Q1 2019 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | 329.2 | 418.0 | -21.2% | | Gross Profit | 63.2 | 80.2 | -21.2% | | Operating Income | 5.7 | 16.2 | -64.8% | | Loss on debt extinguishment | 0.0 | (25.0) | N/A | | Net Loss | (7.8) | (26.7) | +70.8% | | Diluted Net Loss per Share | ($0.22) | ($0.75) | +70.7% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2020, total assets were **$1,584.0 million**, with cash and cash equivalents decreasing to **$103.6 million** and inventories increasing to **$545.6 million**, resulting in total stockholders' equity of **$616.7 million** Balance Sheet Highlights (as of March 31, 2020 vs. Dec 31, 2019) | Metric | March 31, 2020 ($M) | Dec 31, 2019 ($M) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 103.6 | 199.3 | -48.0% | | Inventories — net | 545.6 | 461.4 | +18.2% | | Total current assets | 862.8 | 872.4 | -1.1% | | Total assets | 1,584.0 | 1,617.7 | -2.1% | | Long-term debt | 307.9 | 308.4 | -0.2% | | Total liabilities | 967.3 | 971.8 | -0.5% | | Total stockholders' equity | 616.7 | 645.9 | -4.5% | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used for operating activities was **$78.6 million** in Q1 2020, primarily due to an **$88.5 million** increase in inventories, leading to a **$95.8 million** decrease in cash and cash equivalents for the quarter Cash Flow Summary (Three Months Ended March 31) | Cash Flow Activity ($M) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used for operating activities | (78.6) | (267.3) | | Net cash provided by (used for) investing activities | (3.5) | 126.7 | | Net cash provided by (used for) financing activities | (12.4) | 49.7 | | Net decrease in cash and cash equivalents | (95.8) | (91.3) | | Cash and cash equivalents at end of period | 103.6 | 49.0 | - The primary drivers of cash used in operations for Q1 2020 were a net loss of **$7.8 million** and an **$88.5 million** increase in inventories, partially offset by non-cash charges like depreciation (**$9.0 million**)[15](index=15&type=chunk) - Financing activities in Q1 2020 included **$12.0 million** in common stock repurchases, contrasting with Q1 2019's debt refinancing activities including **$300.0 million** in proceeds and **$277.8 million** in payments on long-term debt[15](index=15&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the significant impact of COVID-19 on operations, segment performance, debt structure, and goodwill impairment testing, with total debt at **$311.8 million** as of March 31, 2020 - The company is a leading provider of engineered lifting solutions with brands like Grove, Manitowoc, and Potain, serving various end markets including construction and petrochemicals[21](index=21&type=chunk) - The COVID-19 pandemic led to disruptions at manufacturing facilities in the U.S., Europe, and China, creating uncertainty for future estimates regarding goodwill impairment, inventory recoverability, and income taxes[25](index=25&type=chunk)[26](index=26&type=chunk) - A triggering event for goodwill impairment was identified in Q1 2020 due to a decline in market capitalization from the COVID-19 pandemic, but a qualitative assessment concluded no impairment as of March 31, 2020[44](index=44&type=chunk) - In Q1 2020, the company repurchased **1.1 million** shares for **$12.0 million**, subsequently suspending the program to preserve liquidity due to the COVID-19 pandemic[70](index=70&type=chunk) [Management's Discussion and Analysis (MD&A)](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant negative impact of the COVID-19 pandemic, leading to plant closures, withdrawal of 2020 guidance, a **21.2%** decrease in Q1 2020 net sales to **$329.2 million**, and proactive liquidity preservation measures, with total liquidity at **$382.0 million** [COVID-19 Update](index=23&type=section&id=COVID-19%20Update) The company is actively managing the COVID-19 pandemic's impact, which caused temporary European facility shutdowns and led to the withdrawal of 2020 financial guidance due to ongoing uncertainty - Major European facilities in Germany, France, Italy, and Portugal were closed in mid-March, with reopenings staggered from late April to early May 2020[103](index=103&type=chunk) - The company withdrew its 2020 financial guidance on March 27, 2020, due to continuing economic uncertainties caused by the pandemic[105](index=105&type=chunk) [Segment Operating Performance](index=23&type=section&id=Segment%20Operating%20Performance) All three segments experienced declines in Q1 2020 net sales and operating income, with Americas sales down **24.2%**, EURAF down **20.3%** (impacted by **$31.5 million** from COVID-19), and MEAP down **13.2%** Segment Performance (Q1 2020 vs Q1 2019) | Segment | Net Sales Q1 2020 ($M) | Net Sales Q1 2019 ($M) | % Change | Operating Income Q1 2020 ($M) | Operating Income Q1 2019 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Americas | 156.2 | 206.1 | -24.2% | 9.1 | 15.2 | -40.1% | | EURAF | 122.9 | 154.2 | -20.3% | (0.4) | 3.4 | -111.8% | | MEAP | 50.1 | 57.7 | -13.2% | 6.3 | 7.3 | -13.7% | - The sales decrease in the Americas was primarily due to lower shipments for commercial construction and energy end markets resulting from a lower starting backlog[108](index=108&type=chunk) - The COVID-19 pandemic directly resulted in approximately **$31.5 million** of lower crane shipments in the EURAF segment[110](index=110&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Consolidated net sales for Q1 2020 fell **21.2%** to **$329.2 million**, with COVID-19 impacting sales by **$37.0 million**, while orders decreased **15.0%** and backlog stood at **$520.9 million** - Consolidated net sales decreased by **21.2%** YoY, with approximately **$37.0 million** of the decline attributed to the COVID-19 pandemic's impact on crane shipments[115](index=115&type=chunk) Orders and Backlog | Metric | Q1 2020 ($M) | Q1 2019 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Orders | 375.0 | 441.0 | -15.0% | | Backlog (as of Mar 31) | 520.9 | 693.6 | -24.9% | - Interest expense decreased to **$7.2 million** from **$10.9 million** in Q1 2019, primarily due to a lower average effective interest rate (**9.2%** vs **13.4%**) following the debt refinancing in March 2019[122](index=122&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=26&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company ended Q1 2020 with total liquidity of **$382.0 million**, including **$103.6 million** in cash, and is implementing measures like suspending share repurchases and reducing capital expenditures to preserve liquidity amidst COVID-19 uncertainty Liquidity Position | Component ($M) | March 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | 103.6 | 199.3 | | Revolver borrowing capacity | 244.2 | 210.4 | | Total liquidity | 382.0 | 444.5 | - Actions taken to preserve liquidity include reducing discretionary spending, suspending the share repurchase program, reducing capital expenditures, and deferring employer Social Security taxes under the CARES Act[135](index=135&type=chunk) - As of March 31, 2020, the company had no borrowings on its ABL Revolving Credit Facility and was in compliance with all debt covenants[54](index=54&type=chunk)[57](index=57&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) There have been no material changes to the company's market risk disclosures since its 2019 Form 10-K filing, with information incorporated by reference - There were no material changes to the company's market risk disclosures from the 2019 Annual Report on Form 10-K[146](index=146&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[147](index=147&type=chunk) - No changes were made during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[148](index=148&type=chunk) PART II [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor details the negative impacts of the COVID-19 pandemic, highlighting disruptions to operations, workforce, and supply chains, and increased economic uncertainty, with the full extent remaining unknown - A new risk factor was added to address the negative impact of the COVID-19 pandemic on the business, financial condition, cash flows, results of operations, and supply chain[151](index=151&type=chunk) - The pandemic has caused disruptions at manufacturing facilities, weakened demand, and created volatility in global capital markets, potentially affecting liquidity for the company, its customers, and suppliers[151](index=151&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - The full extent of the pandemic's impact is highly uncertain and depends on future developments such as its duration, spread, and the effectiveness of containment actions[155](index=155&type=chunk) [Issuer Purchases of Equity Securities](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2020, the company repurchased **1,061,711** shares for approximately **$12.0 million**, with **$10.6 million** remaining under authorization before the program was suspended to preserve liquidity Q1 2020 Share Repurchases | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | January 2020 | — | — | | February 2020 | 466,635 | 12.84 | | March 2020 | 595,076 | 10.06 | | **Total** | **1,061,711** | N/A | - As of the end of March 2020, approximately **$10.6 million** remained available under the company's **$30.0 million** share repurchase authorization[157](index=157&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2019 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 1-11978 The Manitowoc Company, Inc. (Exact name of registrant as specified in its charter) Wisconsin 39-0448110 (State or other ju ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2019, and 2018, including detailed notes on accounting policies and significant financial events [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2019, net sales were nearly flat at $448.0 million, while operating income nearly doubled to $32.5 million, and for the nine-month period, net sales increased by 2.9% to $1.37 billion with operating income more than doubling Condensed Consolidated Statements of Operations Highlights ($ in millions, except per-share data) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $448.0 | $450.1 | $1,370.7 | $1,331.5 | | **Gross profit** | $88.4 | $80.0 | $263.8 | $238.9 | | **Operating income** | $32.5 | $16.9 | $90.6 | $42.7 | | **Net income** | $18.1 | $11.5 | $37.3 | $11.2 | | **Diluted income per common share** | $0.51 | $0.32 | $1.05 | $0.31 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2019, total assets increased to $1.59 billion, driven by higher inventories and accounts receivable, while cash and cash equivalents decreased, and long-term debt increased due to refinancing activities Condensed Consolidated Balance Sheet Highlights ($ in millions) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $67.5 | $140.3 | | Inventories — net | $521.9 | $453.1 | | Total assets | $1,590.7 | $1,541.9 | | Long-term debt | $309.1 | $266.7 | | Total liabilities | $965.6 | $940.6 | | Total stockholders' equity | $625.1 | $601.3 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2019, the company experienced a net decrease in cash of $72.8 million, primarily due to a significant cash outflow from operating activities of $197.9 million, driven by working capital changes and the termination of an accounts receivable securitization program Condensed Consolidated Statements of Cash Flows Highlights ($ in millions) | Cash Flow Activity | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | | Net cash used for operating activities | $(197.9) | $(420.5) | | Net cash provided by investing activities | $121.1 | $392.1 | | Net cash provided by (used for) financing activities | $5.1 | $(2.1) | | **Net decrease in cash and cash equivalents** | **$(72.8)** | **$(32.4)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant financial events and accounting policies, including a major debt refinancing, a $25.0 million loss on debt extinguishment, the termination of a domestic accounts receivable securitization program, a $24.4 million net gain from a legal settlement, and the adoption of the new lease accounting standard - The company completed a debt refinancing on March 25, 2019, issuing **$300.0 million** of 9.000% senior secured second lien notes due 2026, with proceeds used to redeem the 12.750% notes due 2021[38](index=38&type=chunk)[40](index=40&type=chunk) - A loss on debt extinguishment of **$25.0 million** was recorded, comprising a **$16.6 million** call premium and write-offs of unamortized discount and debt issuance costs[41](index=41&type=chunk) - The domestic Receivables Purchase Agreement (RPA) with a commitment size of **$75.0 million** was terminated on March 25, 2019[47](index=47&type=chunk) - During the nine months ended September 30, 2019, the company settled a legal matter, resulting in a net gain of **$24.4 million**, which was recorded as other income and a reduction in SG&A expenses[81](index=81&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a 23% decrease in Q3 orders and a 33.4% drop in backlog year-over-year, with Americas segment growth offsetting declines in Europe and MEAP, while financial condition was impacted by debt refinancing and A/R securitization termination [Results of Operations](index=25&type=section&id=Results%20of%20Operations) In Q3 2019, consolidated net sales decreased 0.5% to $448.0 million, orders fell 23.0% to $352.8 million, and backlog dropped 33.4% to $466.5 million, despite gross profit rising to $88.4 million due to favorable pricing, with nine-month sales growing 2.9% driven by strong Americas performance Key Performance Indicators (Q3 2019 vs Q3 2018) | Metric | Q3 2019 | Q3 2018 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $448.0M | $450.1M | -0.5% | | Orders | $352.8M | $458.1M | -23.0% | | Backlog (as of Sep 30) | $466.5M | $700.2M | -33.4% | - The Americas segment was the primary driver of performance, with net sales increasing **12.0%** in Q3 and **17.5%** in the nine-month period, mainly due to the expansion of customers' rental fleets[141](index=141&type=chunk)[142](index=142&type=chunk) - Performance in other regions was weak: EURAF net sales decreased **9.0%** in Q3 due to lower shipments and currency effects, and MEAP net sales decreased **20.9%** in Q3 due to lower shipments to the energy end market[144](index=144&type=chunk)[148](index=148&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=28&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) The company's cash position decreased by $72.8 million in the first nine months of 2019, primarily due to the termination of the accounts receivable securitization program and working capital investments, but total liquidity increased to $354.4 million following a new, larger ABL credit facility - Cash and cash equivalents decreased by **$72.8 million** from December 31, 2018, primarily due to the termination of the accounts receivable securitization program, working capital investments, and debt issuance costs[152](index=152&type=chunk) Total Liquidity ($ in millions) | Component | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $67.5 | $140.3 | | Revolver borrowing capacity | $253.8 | $107.8 | | Other debt availability | $37.1 | $38.9 | | Less: Outstanding letters of credit | $(4.0) | $(11.3) | | **Total liquidity** | **$354.4** | **$275.7** | [Non-GAAP Measures](index=31&type=section&id=Non-GAAP%20Measures) The company provides non-GAAP metrics, with Adjusted EBITDA increasing to $42.8 million (9.6% margin) in Q3 2019 and $125.7 million for the nine-month period, and Adjusted free cash flow being positive at $24.9 million for Q3 2019 Reconciliation to Adjusted EBITDA ($ in millions) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Income from continuing operations | $18.1 | $11.5 | $37.3 | $11.4 | | EBITDA | $37.7 | $20.2 | $100.9 | $61.5 | | **Adjusted EBITDA** | **$42.8** | **$30.5** | **$125.7** | **$85.1** | | Adjusted EBITDA margin | 9.6% | 6.8% | 9.2% | 6.4% | Adjusted Free Cash Flows ($ in millions) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Adjusted operating cash flows | $37.6 | $7.9 | $3.4 | $(38.8) | | Capital expenditures | $(12.7) | $(6.2) | $(22.4) | $(21.4) | | **Adjusted free cash flows** | **$24.9** | **$1.7** | **$(19.0)** | **$(60.2)** | [Quantitative and Qualitative Disclosure about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company's disclosures regarding market risk, including interest rates, foreign currency exchange rates, and commodity prices, have not materially changed since its 2018 Annual Report on Form 10-K - The Company's market risk disclosures have not materially changed since the 2018 Form 10-K was filed[170](index=170&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with only changes related to the adoption of the new lease accounting standard, ASC 842, reported - The CEO and CFO concluded that the Company's disclosure controls and procedures are effective as of the end of the period[171](index=171&type=chunk) - Changes were made to the internal control structure related to the adoption of ASC 842 – "Leases," but there were no other changes that materially affected internal control over financial reporting[172](index=172&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018 - The Company's risk factors disclosures have not materially changed since the 2018 Form 10-K was filed[175](index=175&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, which include certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and Interactive Data Files (XBRL) - The report includes filed exhibits such as Rule 13a-14(a)/15d-14(a) certifications, Section 1350 certifications, and Inline XBRL documents[176](index=176&type=chunk) [Signatures](index=34&type=section&id=SIGNATURES) The report is duly signed by the company's President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, and Vice President and Corporate Controller on November 8, 2019

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR Wisconsin 39-0448110 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 11270 West Park Place Suite 1000 Milwaukee, Wisconsin 53224 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area ...