Crane and lifting equipment company Manitowoc $(MTW)$ fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 4% year on year to $539.5 million. Its non-GAAP profit of $0.08 per share was 56.3% below analysts’ consensus estimates.

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StockStory’s Take

Manitowoc’s second quarter was marked by a notable miss relative to Wall Street’s expectations, as both revenue and adjusted profit came in below consensus. Management attributed the underperformance primarily to persistent demand uncertainty in the U.S., driven by evolving tariff policies and cautious customer behavior. CEO Aaron Ravenscroft described the environment as the "eye of the storm," emphasizing that buyers are delaying new crane purchases due to uncertainty over final tariff rates and pricing structures. Additionally, supply chain constraints and last-minute commercial delays contributed to missed deliveries during the quarter, further weighing on results.

Looking ahead, Manitowoc’s outlook is shaped by continued volatility in global trade dynamics and a cautious approach to production planning. While management remains committed to its Cranes+50 aftermarket expansion strategy, Ravenscroft cautioned, "For the next six months, it’s hard to see a scenario where demand accelerates," citing ongoing dealer inventory reductions and hesitation to place new orders until pricing stabilizes. The company is focused on mitigating tariff impacts through targeted price increases and operational adjustments, but visibility into a sustained U.S. demand recovery remains limited.

Key Insights from Management’s Remarks

Management identified U.S. demand uncertainty, shifting regional trends, and ongoing tariff impacts as the central themes behind Q2 performance and the company’s near-term outlook.

• Tariff headwinds and mitigation: Management highlighted that evolving U.S. and European tariffs dampened demand, particularly in the U.S., as customers delayed purchases awaiting pricing clarity. While Manitowoc initially expected $60 million in incremental tariffs for the year, the estimate was revised down to $35 million due to lower purchases and a different mix of tariffs. The company aims to offset about 90% of these costs, primarily through targeted price increases on affected crane models.
• Regional divergence in market trends: The team noted slow demand in the U.K., Netherlands, and France, but signs of optimism in Spain, Italy, and Germany, where infrastructure projects and government incentives are spurring activity. In the Middle East, strong market momentum continues, driven by large-scale developments, while Asian markets are mixed—China remains subdued, but Korea and Vietnam show early signs of improvement.
• Backlog and order dynamics: Backlog declined year-over-year, reflecting ongoing dealer reluctance to place new orders in the U.S. due to tariff uncertainty. However, European tower crane orders rose sharply, up 104% from last year, bolstered by a positive outlook in several continental markets and successful project wins in the Middle East and Asia.
• Aftermarket and service strategy progress: Expansion of the Cranes+50 aftermarket business continued, with new service branches in Poland, Australia, France, and the U.S. The recent deployment of ServiceMax, a global asset management platform, is expected to improve technician productivity, streamline contract management, and enhance long-term customer engagement across the fleet.
• Cost and production adjustments: To protect cash flow and align with lower demand, Manitowoc reduced build schedules at key facilities and tightened supply chain management. Management underscored the importance of maintaining operational flexibility and disciplined inventory management, anticipating that dealer inventories could reach historic lows if current trends persist.

Drivers of Future Performance

Manitowoc’s outlook for the remainder of the year is shaped by ongoing demand uncertainty, tariff-related pricing pressures, and the company’s continued focus on aftermarket services and operational discipline.

• U.S. demand remains cautious: Management expects muted demand in the U.S. for at least the next six months, as crane buyers and dealers delay purchases in response to tariff increases and price uncertainty. Dealer inventories continue to decline, and customers prefer to acquire available units at pre-tariff prices rather than commit to new orders, limiting near-term order growth.
• Operational adjustments and cost focus: Manitowoc is proactively reducing production schedules to align with expected demand, particularly at its Shady Grove and Wilhelmshaven sites. The company is targeting free cash flow at the low end of its initial range and working to bring net leverage below 3x by year-end, with further actions possible if demand remains weak.
• Aftermarket growth and product mix: The Cranes+50 strategy emphasizes higher-margin, recurring aftermarket revenue streams, including expanded service capabilities and new offerings such as aftermarket tires and rigging hardware. Management views these initiatives as key to supporting margins and offsetting cyclical swings in new equipment sales.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will monitor (1) the pace of dealer inventory reductions and whether a rebound emerges as inventories reach new lows, (2) the effectiveness of Manitowoc’s Cranes+50 strategy in driving recurring aftermarket revenue, and (3) how tariff mitigation through targeted price increases impacts order volumes and customer behavior. Progress on international market recovery and the unfolding of global trade policy will also be key indicators.

Manitowoc currently trades at $10.37, down from $12.55 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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