Manitowoc(US:MTW)2020-05-08 20:31Financial 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order intake and expects Q2 and Q3 to be challenging, with revenue and profitability declines [20] - The company has withdrawn its 2020 financial guidance due to economic uncertainty and will reinstate it when there is a clearer business outlook [33] - Management remains confident that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]