The Manitowoc Company, Inc. Q3 FY2025 earnings call

Key Sections - Thanks the Manitowoc team for their hard work through complex times and mentions the CRANES+50 strategy to grow aftermarket. - Visited the Zhangjiagang factory in China, noting improvements in the smaller crane value stream with a 30% increase in earned hours while headcount remained flat. - Achieved a recordable injury rate (RIR) of 0.83 in the third quarter, a 36% drop from the same period last year. - Market updates: - Europe: Cautiously optimistic with tower crane new machine orders up 34% year-over-year for the fifth consecutive quarter. - Middle East: Market remains strong with awards received, and projects like the Dubai Airport requiring 150 tower cranes. - Asia: China market quiet but South Korea showing optimism, with orders in Singapore and Hong Kong. - North America: Total orders up 20% but facing trade rate volatility and tariff obstacles. - CRANES+50 strategy highlights: - Denver branch opened in 2023 with nearly doubled sales by focusing on customers, including selling extreme telehandlers. - Langenfeld, Germany: Expanded aftermarket location and started tower crane rental fleet initiative, with 67 cranes in service. - Meru, France: New facility with creative service ideas, including trialing battery and flywheel power generation units for tower crane sites.

During the third quarter, Manitowoc generated $553 million in revenue and had an adjusted EBITDA of $34 million, which was a 30% year-over-year increase. Orders stood at $491 million compared to $425 million last year. Non-new machine sales were $177 million, up 5% year-over-year, and reached a record $667 million on a trailing 12-month basis. Revenue contribution from non-new machine sales, along with tower crane and other segment performances contributed to the overall financial picture.

- Expect full-year results to come in at the low end of adjusted EBITDA guidance. - Working capital is not expected to improve significantly during the quarter, which is delaying cash generation. - Approximately $100 million of free cash flow is needed to hit the low end of the guidance, which is challenging given shipment timing and receivable collection.

- Supreme Court is expected to decide on reciprocal tariffs by the end of the year, with uncertainty regarding a new tariff strategy. - Steel derivative tariffs added in August impact imported products, and overall demand for such products is expected to decline. - Antidumping claim in the U.S. against Japanese crawler crane manufacturers is expected to be delayed due to the government shutdown.

Q: So great quarter. Margins were up year-on-year, quarter-on-quarter. You mentioned positive mix, but yes, I wanted to ask about the drivers of the margin improvement.

A: Yes, it was really -- you saw the growth in our non-new machine sales, and we talked about the tower crane business as well. So those 2 businesses are really -- starting to operate a lot better, in particular, the tower crane business and both have good margins.

Q: The non-new machine sales have been consistent, but yes, I noticed that the total sales were up more, 5.4% versus 4.9%. Is that mainly driven by the tower cranes up 34% as well?

A: Some of that was the misses that we had in the second quarter that would have pulled in the third.