Manitowoc(MTW) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Orders for the third quarter were $425 million, a decrease of 20% year-over-year, primarily driven by a 28% decline in the Americas due to the US presidential election and interest rates [23] - Net sales in the third quarter were$ 525 million, flat compared to the prior year, with a backlog of $742 million [24] - Adjusted EBITDA for the quarter was$ 26 million, a decrease of 21% year-over-year, with an adjusted EBITDA margin of 5%, down 140 basis points from the previous year [25] Business Line Data and Key Metrics Changes - Non-new machine sales increased by 9% year-over-year to $169 million, primarily driven by used crane sales [24] - The European towers business contributed significantly to the decline in adjusted EBITDA, indicating challenges in that segment [25] Market Data and Key Metrics Changes - In the Americas, demand for new cranes has been slow, with a cautious optimism prevailing in the crane industry despite a slight slowdown in utilization [10] - Orders in the mobile crane market were down nearly 30% year-over-year in the third quarter, reflecting a muted customer sentiment [12] - The Middle East market remains strong, with ongoing projects in Saudi Arabia and Dubai driving residential construction activity [13] Company Strategy and Development Direction - The company is focused on continuous improvement through "The Manitowoc Way" and the execution of the "CRANES+50" strategy, which emphasizes aftermarket sales and service expansion [16][18] - The company is increasing the number of branch locations and service technicians to drive non-new machine sales and enhance long-term shareholder value [33] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the impact of the US presidential election on customer sentiment and order intake, drawing parallels to the 2016 election [29] - There is cautious optimism regarding long-term recovery in the crane market, particularly in Europe, contingent on government actions to address housing shortages and geopolitical stability [41][42] - Interest rates are declining globally, which could provide a tailwind for the crane market in the future [33] Other Important Information - The company completed refinancing its debt, increasing borrowing capacity and extending the tenure of its credit facility [22] - The net working capital at the end of the quarter was$ 579 million, elevated due to higher inventory levels [26] Q&A Session Summary Question: Can you provide some color on the potential for margin improvement when volumes return? - Management indicated that margin improvement is complex and depends on product mix, particularly in the tower crane business [35] Question: How has the parts performance been as part of non-new machine sales? - Parts performance has been strong, with growth in the MGX business primarily driven by parts and service [38] Question: Do you think there is an election outcome that would help more than others? - Management suggested that a Trump outcome could be more favorable for the crane industry, reflecting the industry's conservative nature [40] Question: What series of events would need to happen to jumpstart the European tower crane market? - Management noted that addressing the housing shortage and low inventory levels would be crucial for recovery in the European market [41] Question: What other levers would need to be pulled to achieve the $130 million free cash flow target? - Management highlighted the need to reduce cash CapEx and improve book and ship rates to achieve the target [45] Question: Can you recap the impact of tariffs on imports or steel in the past? - Management noted that steel tariffs previously posed challenges, but current pricing dynamics may make tariffs less impactful now [49]