The Manitowoc Company (MTW) FY Conference August 27, 2025 08:15 AM ET Speaker0Happy to have the Manitowoc company here, trades on New York and NYSE. They've been a client of ours for about a year and a half, maybe two years now, and really enjoyed working with them. You know, this is a name that, we think is an opportune time to be looking at it. The crane cycle has been really rough this last decade or so, but we think we're either at or near the bottom of the cycle. The stock's trading 25%, 30% below tang ...

24 August 2025 | 11:33PM HKT Sany Heavy (600031.SS) Earnings Review: Strong FCF generation leaves room for shareholder return enhancement; near-term cyclical setup more favorable; up to Neutral | | | We upgrade Sany Heavy to Neutral from Sell, post its 2Q25 results (see our first take note here) which revealed Sany's much improved FCF generation capability sustained so far in this cycle (1.5-2x net profit vs. historical mid-cycle average of 1.2x) and better-than-expected improvement in operational efficienc ...

Financial Performance - Q2 2025 - Net sales reached $540 million[17] - Adjusted EBITDA was $26 million[17] - Orders totaled $454 million[17] - Non-new machine sales increased by 10% year-over-year, reaching $162 million[13] Market Conditions - North America is experiencing a market on hold due to tariff-related uncertainty, but with high fleet utilization and declining dealer inventory[20] - Asia Pacific is seeing prolonged weakness in China, but improving sentiment in South Korea and mixed results in Australia[20] - Europe has varying market sentiment depending on the country, with new government stimulus programs and increasing residential permits[20] - The Middle East shows robust market demand driven by major residential, data center, and stadium project activity[20] Full Year 2025 Guidance - Net sales are projected to be between $2.175 billion and $2.275 billion[47] - Adjusted EBITDA is expected to be between $120 million and $145 million[47] - Capital expenditures are estimated at $47 million, with $23 million related to the rental fleet[47] - Adjusted free cash flows are projected to be between $55 million and $85 million, excluding EPA payment[47]

Summary of the Conference Call on China's Construction Machinery Sector Industry Overview - The conference call focused on the **China construction machinery sector** and the potential impact of the **lower YTR hydropower project** on annual sales [2][3]. Key Insights 1. **Sales Impact Estimates**: - The lower YTR project could boost annual construction machinery sales by approximately **3-5%** under base case scenarios and **5-10%** under bull case scenarios, based on data from the **China Construction Machinery Association (CCMA)** [2][3]. - The total revenue for the sector is estimated at **Rmb800 billion**, with new equipment sales accounting for around **Rmb500 billion** [2]. 2. **Equipment Type Demand**: - **Concrete-related machinery** is expected to see the most significant increase in demand, with projections indicating it may account for **40%** of the total equipment share from the lower YTR project [3]. - Other equipment types are expected to have varying impacts: **earthmoving equipment** and **cranes** at approximately **20%** each, **tunnel boring machines (TBM)** at **5-10%**, and various auxiliary equipment at **10-15%** [3]. 3. **Procurement Cycles**: - The first wave of excavator procurement is anticipated in **2027/2028**, with a second wave driven by replacement demand expected in **2030/2031** [4]. - The main construction phase of the lower YTR project is projected to commence in **H226**, leading to a peak in excavator purchases during the first wave [4]. 4. **Trends in Equipment Requirements**: - There is a growing emphasis on **electrification**, **upsizing**, **digitalization**, and **premiumization** in construction machinery, which is likely to favor leading domestic players over smaller brands [7]. - The expert highlighted that most construction equipment for tunnel operations will likely be new energy models, focusing on mid- to large-sized equipment, particularly **30-60 ton** excavators [7]. Risks and Opportunities 1. **Downside Risks**: - Potential risks include slower-than-expected growth in property and infrastructure investment due to government policies, weaker replacement demand, and impacts from trade friction [12]. - Overcapacity issues may persist if smaller manufacturers do not exit the market promptly [12]. 2. **Upside Risks**: - Faster-than-expected growth in property and infrastructure investment, stronger replacement demand, and supportive policies for domestic brands could enhance market conditions [13]. - Stricter environmental protection policies may accelerate the exit of older machinery, benefiting leading brands [13]. Conclusion - The lower YTR hydropower project presents a significant opportunity for the China construction machinery sector, with expected increases in sales and procurement cycles. However, stakeholders should remain vigilant regarding potential risks that could impact growth and demand in the sector [2][12][13].

Investment Rating - The report maintains a positive outlook for the construction machinery sector, projecting a full-year growth of 15% for domestic excavator sales in FY25, despite short-term fluctuations in demand [2][3][6]. Core Insights - Domestic excavator sales experienced a decline in May due to a significant drop in medium excavators, but the overall upward trend in the industry is expected to continue until 2027/28 [2][3]. - Small excavators showed the fastest growth in May, while large excavators lagged behind, primarily driven by urban underground utility tunnel construction [2][3]. - The expert anticipates that wheel-loader growth may surpass excavators in 2025E, influenced by the rise of electric wheel-loader penetration [2][3]. - The report highlights that the price competition for medium excavators has intensified, while competition for small and large excavators remains milder compared to previous cycles [4][6]. Summary by Sections Domestic Demand - Domestic excavator sales are expected to fluctuate in the short term, with a rebound anticipated in June due to mid-year KPI pressures, although real demand may remain weak during the off-season [3][6]. - The expert forecasts a 5% year-on-year growth in H225E for domestic excavators, indicating a gradual recovery post-September [3][6]. Competitive Landscape - Price competition is more pronounced in the medium excavator segment due to lower brand concentration, while Tier-1 manufacturers focus on profitability [4][6]. - The report notes that as domestic brands enter the large and extra-large excavator segments, price cuts may become more significant in those areas [4][6]. External Demand - The impact of trade tensions on external demand is considered limited, with Chinese OEMs expected to continue gaining market share in overseas markets [6].

Financial Data and Key Metrics Changes - The company generated $471 million in revenue, a decrease of 5% year over year, while adjusted EBITDA was $22 million, down 31% year over year [4][20] - Orders totaled $610 million, representing a 10% increase from the previous year, with a backlog of $798 million [19] - Non-new machine sales reached $161 million, up 11% year over year, contributing to a trailing twelve months total of $645 million [20][34] Business Line Data and Key Metrics Changes - The Americas drove higher order intake, while European tower crane orders increased by 68% year over year, indicating a potential market recovery [19] - Non-new machine sales have shown significant growth, with a 70% increase over the trailing twelve months [34] Market Data and Key Metrics Changes - In North America, orders through third-party dealer channels increased by 35% year over year, reflecting a healthy industry environment [12] - European mobile crane orders were lower year over year but showed sequential improvement, while tower crane orders surged nearly 70% year over year [13][14] - The Middle East experienced a slight decline in orders, but deal activity remains strong, particularly in Saudi Arabia and the UAE [14][15] Company Strategy and Development Direction - The company is focused on its "Cranes plus 50" strategy, aiming to enhance aftermarket services and reduce cyclicality [28][35] - Investments in new products and a rental fleet are being made to better serve customers and capitalize on market recovery [30] - The company is adapting to the global trade reset and is committed to maintaining competitiveness through strategic actions [27][35] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about demand in North America and Europe, citing low dealer inventory levels and strong customer engagement [12][13] - The company is modeling $60 million in incremental costs due to tariffs but has plans to mitigate 80% to 90% of these costs [6][26] - The overall sentiment is that the current economic environment is challenging, but the company is well-positioned for recovery [35] Other Important Information - The company has integrated AI into its improvement processes, resulting in significant labor savings and efficiency gains [11] - The company has doubled its number of field service technicians globally to nearly 500, enhancing its aftermarket presence [34] Q&A Session Summary Question: Can you unpack the mitigation to the tariff numbers shared? - Management indicated that mitigations include price increases, alternative sourcing, and vendor cooperation, emphasizing that the situation is expected to be short-term [38][39] Question: How much of the tariff cost impact is from China? - Management noted that the tariff impact is a mix of various factors, including steel and aluminum tariffs, and did not provide a clear breakdown [41] Question: What is driving the increased demand in Europe? - Management attributed the demand increase to low dealer inventory and overall economic recovery, though caution was expressed regarding specific regional conditions [43][44] Question: Are higher costs for raw materials factored into the tariff impact? - Yes, higher costs for raw materials such as steel and aluminum are included in the estimated tariff cost impact [51] Question: What is the current momentum in the U.S. non-residential construction markets? - Management noted strong utilization and ongoing large projects, but emphasized the need for clarity on specific end markets [53][54] Question: What are the drivers behind the growth in non-new machine sales? - Growth is broad-based, with strong performance in used machines and European tower crane business, supported by expanding service capabilities [56][57]

Summary of Custom Truck OneSource (CTOS) FY Conference Call Company Overview - **Company**: Custom Truck OneSource (CTOS) - **Industry**: Specialty equipment rental and sales, focusing on electric, utility transmission and distribution, communications, and rail markets in North America - **Business Model**: One-stop shop offering rental, sales, and aftermarket parts and services [1][2] Key Points and Arguments Rental Fleet Characteristics - **Fleet Size**: Over 10,000 units, with 70% focused on utility markets, 10% on rail and telecom, and the remainder on specialty vocational trucks [5][6] - **Asset Life**: Equipment has a useful life of 10 to 20 years, with an average rental duration of just over one year [7][8] - **Fleet Age**: The average age of the fleet is just over three years, which is considered a competitive advantage [9] Integrated Production Capabilities - **Production Model**: Custom Truck sources attachments and chassis directly from major suppliers, allowing for economies of scale and cost advantages [11][12] - **Customer Flexibility**: The company caters to customer needs through rentals, sales, and aftermarket services, enhancing customer retention [13][14] End Markets and Demand Trends - **Revenue Breakdown**: 55% from utility, just under 30% from infrastructure, and each rail and telecom contributing just under 5% [15][16] - **Market Drivers**: Strong demand for utility grid upgrades, infrastructure projects, and ongoing investments in rail and telecom, with a noted softness in telecom [17][19] Growth Opportunities - **Future Drivers**: Anticipated growth from utility grid upgrades, electrification, manufacturing onshoring, and data center investments [20][21] - **Q1 Performance**: Reported a 13% growth in the ERS segment, with improved rental fleet utilization at 78% [25] Tariff Impact and Procurement Strategy - **Tariff Resilience**: The company is well-positioned with a young rental fleet and significant pre-tariff inventory, minimizing the impact of potential tariffs [26][27] - **Supplier Relationships**: Strong relationships with suppliers have allowed for proactive procurement strategies to mitigate cost increases [28][30] Capital Allocation and Free Cash Flow - **Free Cash Flow Target**: Aiming for $50 million in levered free cash flow, with significant investments in the rental fleet projected between $375 million and $400 million [52][53] - **Debt Reduction Priority**: Focus on reducing net leverage to below three times by the end of 2026 [54][56] Backlog and Long-Term Growth - **Backlog Status**: Increased backlog by over $51 million in Q1, with a healthy range of four to six months on hand [60][62] - **Growth Projections**: Expected long-term growth rates in the high single digits to low double digits, with targeted gross profit margins of 15% to 18% for new sales [66][68] Customer Dynamics - **Demand from Customers**: Both larger and smaller customers are showing good demand, with smaller customers leaning towards rentals due to capital expense hesitancy [70][72] Additional Important Insights - **Greenfield Strategy**: The company is expanding its footprint with new locations and acquisitions, targeting areas with customer demand [45][49] - **Pricing Strategy**: Adjusted gross profit margins targeted at low to mid-seventy percent for rentals and mid-twenty percent for asset sales, with recent price increases reflecting market conditions [41][42][43] This summary encapsulates the key insights and strategic directions discussed during the Custom Truck OneSource FY Conference Call, highlighting the company's operational strengths, market dynamics, and future growth potential.