Financial Data and Key Metrics Changes - For Q4 2025, reported sales were $4.8 billion, adjusted operating profit was $455 million, and adjusted EPS was $0.34, reflecting a year-over-year decline largely due to lower volumes in higher-margin CSA residential and light commercial businesses [16][17] - Total company organic sales were down about 1% for the full year, with a 9% decline in organic growth in Q4, partially offset by a 3% tailwind from foreign currency translation [16][18] - Free cash flow for Q4 was approximately $900 million, with full-year free cash flow at about $2.1 billion, aligning with expectations [17] Business Line Data and Key Metrics Changes - CSA segment had a challenging quarter with organic sales down 17%, while commercial sales were up 12%, but this was offset by a nearly 40% decline in residential sales [18] - The CSE segment saw organic sales down 2%, with commercial up mid-single digits, but residential and light commercial faced mid-single-digit declines [20] - The transportation segment experienced a strong quarter with 10% organic sales growth, driven by exceptional growth in container business [22] Market Data and Key Metrics Changes - In China, overall sales were down about 20%, with residential and light commercial down approximately 30%, while commercial in China was down mid-single digits [21] - The residential heating market in Germany, the largest market, continues to be challenging, with expectations of mid- to high-single-digit declines in the overall industry [20][46] Company Strategy and Development Direction - The company is focused on investing in high-return opportunities, maintaining a strong balance sheet, and returning cash to shareholders, with $3.7 billion distributed through buybacks and dividends [5] - The company aims for double-digit growth in commercial HVAC and aftermarket globally, while expecting continued softness in shorter cycle businesses [23] - Strategic initiatives include expanding data center investments, with fourth quarter CSA data center orders up more than 5x, and a focus on technology differentiation [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted that the short cycle residential and light commercial market softened more than expected in the second half of 2025, but they are positioned for stronger incrementals when these markets recover [4][15] - The outlook for 2026 includes expectations of flat to low mid-single-digit organic growth, with a focus on controlling costs and productivity [23][25] - Management expressed confidence in the company's ability to outgrow markets and deliver best-in-class solutions for customers [15] Other Important Information - The company expects to repurchase about $1.5 billion in shares and anticipates adjusted EPS of approximately $2.80, reflecting high single-digit growth versus 2025 [25][26] - The company has implemented cost actions expected to deliver over $100 million in savings in 2026 [5] Q&A Session Summary Question: Can you discuss the CSA margins and drivers? - Management expects CSA margins in Q1 to be close to about 15%, with a slight improvement from Q4 due to lower sales and a favorable tax rate [32] Question: What is the full-year guidance for the CSA residential business? - Management anticipates industry units to be down 10%-15%, with their sales expected to be down high single digits year-over-year, including a low single-digit benefit from pricing [41][43] Question: How are channel inventories in CSA residential? - Management reported that channel inventories are down about 32% year-over-year, aligning with targeted levels [52] Question: What are the expectations for the residential market in China? - Management expects RLC softness to continue in China, with residential sales down about 20% and overall sales in China down about 30% [87] Question: How is the company preparing for the cooling season? - Management emphasized operational agility and readiness to support demand if it picks up, given low inventory levels in the channel [95]

Core Insights - Manitowoc reported significant earnings and revenue misses in Q2 2025, with Non-GAAP EPS at $0.08 compared to expectations of $0.18, reflecting ongoing market and operational pressures [1][5] - Adjusted EBITDA decreased to $26.3 million from $36.0 million year-over-year, indicating margin compression and cash flow challenges despite a 6.0% rise in new orders [1][5][6] Financial Performance - Non-GAAP EPS fell 68% year-over-year from Q2 2024, missing estimates by $0.10 [2][5] - Revenue decreased by 4.0% year-over-year to $539.5 million, falling short of analyst estimates by 7.8% [2][5] - Adjusted EBITDA dropped 26.9% from the previous year [2][5] - Free cash flow turned negative at $(73.7 million), compared to $(1.9 million) in Q2 2024 [2][5] Business Overview - Manitowoc designs and manufactures a variety of lifting equipment for the global construction industry, including mobile cranes, tower cranes, and boom trucks [3] - The company emphasizes aftermarket services for crane maintenance and technical support [3] Geographic Segmentation - Manitowoc operates in three key geographic segments: the Americas, Europe and Africa (EURAF), and the Middle East and Asia Pacific (MEAP) [4] - The company focuses on operational efficiency, product innovation, and expanding aftermarket services to stabilize revenue [4] Market Dynamics - Despite revenue declines, new orders increased by 6.0% to $453.9 million, with notable strength in the European tower crane market due to government infrastructure spending [6] - The order backlog decreased from $797.8 million at the end of Q1 to $729.3 million at the end of Q2 2025, indicating a cautious outlook [6] Product Development - The company continues to focus on enhancing product performance, with positive feedback on hybrid all-terrain cranes [7] - Aftermarket services grew by 9.7% year-over-year to $161.6 million, providing a stabilizing factor for revenue [7] Operational Challenges - Inventory increased by 28% since year-end, reaching $782.5 million, contributing to negative cash flow [9] - Management expects to finish fiscal 2025 at the low end of guidance, with ongoing profitability challenges highlighted by an adjusted return on invested capital of 4.2% [10] Future Outlook - Key areas to monitor include the conversion of backlog into revenue, tariff mitigation impacts, inventory reduction efforts, and growth in aftermarket services [11]