• Orders: $425 million, a decrease of 20% year-over-year.
• Backlog: $742 million.
• Net Sales: $525 million, flat versus the prior year.
• Non-New Machine Sales: $169 million, up 9% year-over-year.
• Adjusted EBITDA: $26 million, a decrease of 21% year-over-year.
• Adjusted EBITDA Margin: 5%, a decrease of 140 basis points from the prior year.
• Net Working Capital: $579 million.
• Cash Used in Operating Activities: $44 million.
• Capital Expenditures: $9 million.
• Free Cash Flow: Use of $53 million.
• Cash Balance: $23 million.
• Total Liquidity: $222 million.
• Net Leverage Ratio: 3.4 times.
• Debt Refinancing: Increased ABL credit facility to $325 million and issued $300 million notes at 9.25% due October 2031.

• Warning! GuruFocus has detected 5 Warning Signs with MTW.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The European Central Bank's interest rate cuts are expected to positively impact Manitowoc Co Inc (NYSE:MTW) in the long term.
• The Middle East market remains strong, with significant construction projects in Saudi Arabia and Dubai driving demand.
• Manitowoc Co Inc (NYSE:MTW) has made significant improvements in manufacturing processes, such as reducing material flow by 93% in their German factory.
• Non-new machine sales increased by 9% year over year, driven by used crane sales and aftermarket services.
• The company successfully refinanced its debt, increasing borrowing capacity and extending the tenure, which reflects market confidence in its strategy.

Negative Points

• Manitowoc Co Inc (NYSE:MTW) missed its book and ship sales target by over $40 million in the third quarter.
• Orders decreased by 20% year over year, primarily driven by a 28% decline in the Americas due to election uncertainty and interest rates.
• Adjusted EBITDA decreased by 21% year over year, with a significant portion of the decline attributed to the European towers business.
• The company's net leverage ratio is elevated at 3.4 times, with a target to reduce it below 3 times by year-end.
• The prolonged economic stagnation in China and aggressive competition from Chinese manufacturers are impacting the Asia Pacific market.

Q & A Highlights

Q: Can you provide some color on the potential for margin improvement when volumes return, given the productivity improvements you've outlined? A: Aaron Ravenscroft, President and CEO, explained that margin improvement depends significantly on the mix. The tower crane business, currently at its bottom, is expected to have great contribution margins as it recovers. Brian Regan, CFO, added that volume is needed for improvement, as reduced build plans have negatively impacted flow-through.

Q: How has the parts performance been as a part of non-new machine sales? A: Aaron Ravenscroft noted that parts performance has been good, with the MGX business showing year-over-year growth, primarily in parts and service. The European tower crane business also saw an increase in non-new machine sales despite a decline in whole goods sales.

Q: Do you think there is an election outcome that would help more than others, or is it just about moving from uncertainty to clarity? A: Aaron Ravenscroft suggested that a Trump outcome might be more favorable for the crane industry, as it is generally conservative. However, the main benefit would come from moving from uncertainty to clarity.

Q: What series of events would need to happen to get the European tower crane market jump-started again? A: Aaron Ravenscroft believes the market is at its bottom and expects it to slowly build over the next 12 months. Any government action to address housing shortages in Europe would help, and geopolitical changes in Germany could accelerate recovery.

Q: What levers would need to be pulled to achieve $130 million in free cash flow in the fourth quarter? A: Brian Regan mentioned reducing cash CapEx and achieving the book and ship rate as key factors. Cash collection by year-end is crucial, and the company has enough inventory to sell, but it depends on the book and ship rate.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.