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Manitowoc(MTW) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter orders totaled $474 million, an increase of 26% compared to $375 million in the same period last year [15] - Net sales in the first quarter were $354 million, an increase of $25 million or 8% from a year ago [17] - Adjusted EBITDA for the first quarter was $21 million, an increase of approximately 29% year-over-year, with an adjusted EBITDA margin improvement to 6% [19] - The company generated $41 million of cash from operating activities in the quarter, compared to a use of $79 million in the prior year [22] - GAAP diluted loss per share was $0.09, while adjusted diluted loss per share improved to $0.06, a $0.12 improvement from the prior year [21] Business Line Data and Key Metrics Changes - Orders improved in all segments, with a backlog of $663 million, up 27% over the prior year [16] - The tower crane business in Europe was particularly strong, driven by tax incentives and follow-on orders from dealers [7][9] - The Americas segment saw a high single-digit increase in orders, but the overall performance was tempered by cautious market signals [11][12] Market Data and Key Metrics Changes - The Middle East and Asia Pacific regions showed encouraging project pipelines and strong bookings [10] - The North American market remains cautious, with major crane rental houses holding back on investments despite positive vaccine news and speculation around infrastructure spending [11] Company Strategy and Development Direction - The company is focused on four strategic initiatives: expanding the European tower crane rental fleet, advancing the Chinese tower crane business, filling product gaps in the all-terrain crane business, and pursuing acquisition opportunities for long-term growth [28][30][31] - The company plans to invest approximately $35 million to $40 million in capital expenditures in 2021, including investments in the European rental fleet [20] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about ongoing supply chain challenges, including high steel prices and semiconductor chip shortages, which are expected to impact operations [25][26] - The company anticipates a year-over-year contribution margin lower than normal in the second half of 2021 due to these headwinds [27] - Full year 2021 adjusted EBITDA guidance is set at $90 million to $105 million [27] Other Important Information - The company is implementing price increases to mitigate the impact of rising material costs, but there is a lag between raw material lead times and the effective date of these increases [25] - The company has seen a significant increase in orders due to dealers placing orders in advance of price changes [8] Q&A Session Summary Question: Order cadence and European tower crane momentum - Management noted that April was a good month for orders, with some orders coming in advance of price increases [38] Question: Price/cost matching and inflation impact - Management indicated that while they have managed pricing well, prolonged high steel prices will adversely affect price/cost comparisons in the second half of the year [42][43] Question: Operating free cash flow and working capital - Management explained that the positive cash flow in the first quarter was unusual and attributed to higher accounts receivable converting over and managing inventory levels [50] Question: Supply chain conditions and top-line revenue normalization - Management expressed skepticism about supply chain improvements and indicated uncertainty regarding the timeline to return to normalized revenues of $1.9 billion to $2.2 billion [76] Question: Energy side of the business and capacity management - Management stated that the North American market for large RTs is slow, with low utilization, but they are well-positioned without needing additional restructuring [80]