The Manitowoc Company, Inc. Q2 FY2026 earnings call

• Core Q2 2026 Financial and Operational Wins

  • Consolidated sales up 10% year-over-year, adjusted EBITDA up over 85% year-over-year, marking one of the strongest quarters in recent years.
  • Year-to-date workplace recordable incident rate improved substantially to 0.79, with safety prioritized as the company's top core value.
  • Net leverage ratio fell to 2.6x, below the company's 3x target; backlog increased to $1.05 billion, up $110 million from the prior quarter.
  • US tariffs imposed on dumped Japanese crawler cranes leveled the competitive playing field for the company.

• AI Integration into Operational Continuous Improvement (The Manitowoc Way)

  • Launched Poton eTech, an AI agent developed by the French aftermarket team to support tower crane field service technicians; this tool will be adapted for mobile cranes.
  • Expanded AI adoption to over 450 company users (doubling from the prior quarter) via structured internal enablement: cross-functional AI user groups, enterprise-wide lessons learned sharing, mandatory AI training, and a requirement for all leaders to complete at least one AI-focused continuous improvement (Kaizen) project per month.
  • Scoping larger AI agent projects for engineering and aftermarket service functions.

• Cranes Plus 50 Non-New Machine Growth Strategy

  • Secured a 3-year, $2.5 million service contract with a large copper-zinc mine in Peru, resulting from the 2023 greenfield service operation expansion into the country.
  • Opened a new rapid response aftermarket component shop at the Shady Grove campus for critical crawler and tower crane parts, and launched an East Coast boom refurbishment center of excellence with a proprietary safety- and productivity-improving fixture (the Boominator) that will be replicated at global service locations.
  • Launched new standardized rigging kit aftermarket offerings for all-terrain cranes, developed from a global Kaizen event for the company's new 8-axle all-terrain crane, improving customer setup speed and work site safety.

• Regional Market Performance

  • Americas: Healthy underlying conditions, high crane utilization, lean dealer inventories driving strong dealer replenishment orders; encore rebuild business is slow because owners are unwilling to take machines out of service, signaling strong utilization.
  • Europe: Mixed conditions, with new German economic stimulus offset by inflationary pressures from the Iran conflict; mobile crane orders grew strongly, tower crane orders declined modestly due to the self-erecting crane transition to new EN standards (existing build schedule is sold out for the rest of 2026).
  • Middle East: Demand remains solid despite the Iran conflict, with alternative shipping routes adopted for cargo that previously transited the Strait of Hormuz; pent-up demand remains for future investment once uncertainty eases.
  • Asia: Robust demand in South Korea driven by semiconductor industry investment; Vietnam and Australia remain strong growth markets, with regional strength expected through 2027.

The Manitowoc Company reports consolidated results for its crane business, with breakdowns provided for new and non-new machine segments: 1) Non-new machine (aftermarket, service, rebuilds): Q2 2026 sales were $172 million, up 6% year-over-year. This segment represented 28.9% of total Q2 net sales, and hit a record trailing 12-month total of $706 million, growing 7% year-over-year. 2) New machine cranes: Q2 2022 net sales were $423 million, representing 71.1% of total Q2 net sales. No standalone year-over-year percentage change is provided for this segment beyond the 10% consolidated net sales growth. Total consolidated Q2 2026 net sales were $595 million, up 10% year-over-year. Total Q2 orders were $709 million, up 56% year-over-year, with a book-to-bill ratio of 1.2.

Management upwardly revised full year 2026 guidance from prior levels, driven by stronger than expected Q2 performance, improving market conditions, and tariff refund benefits:

• Updated full year 2026 guidance: Net sales of $2.3 billion to $2.4 billion, adjusted EBITDA of $150 million to $170 million, adjusted diluted earnings per share of $0.80 to $1.20, and free cash flow of $50 million to $70 million.
• The midpoint of adjusted EBITDA guidance increased by $22.5 million, from $137.5 million to $160 million, driven by $50 million in higher projected midpoint revenue, a $16 million net benefit from tariff refunds, partially offset by higher expected variable compensation tied to improved results.
• Normal seasonality is expected for the second half, with Q3 2026 lighter than Q2 due to the annual European summer holiday period; an additional $4 million in incremental tariff benefit is projected for Q3 2026.
• The downside risk of the Iran conflict is already incorporated into the full year guidance range.

• Prolonged regional instability in the Middle East tied to the Iran conflict could eventually suppress economic activity and reduce customer equipment investment.
  • Inflationary pressures across Europe have been amplified by the Iran conflict, creating ongoing operational and cost challenges.
  • Actual results could differ materially from forward-looking projections due to market, geopolitical, and regulatory factors, as outlined in the company's SEC filings.

Q: Can you break down the 56% year-over-year order growth by region, and clarify how much growth comes from dealer inventory replenishment versus project-specific orders? / A: Management did not provide disaggregated percentage growth by region. They confirmed that order growth is strong in the US, with meaningful contribution from dealer inventory replenishment, and that overall demand is strong across all regions, with dealer inventories still remaining at low levels.

Q: What is the expected cadence of revenue and EBITDA in the second half of 2026, and what incremental margins should be expected for the second half and into 2027? / A: Normal seasonality will hold, with Q3 lighter than Q2 due to the European summer holiday, outside of an expected $4 million incremental tariff benefit that will be recognized in Q3, which matches the prior seasonal pattern. No additional margin guidance for 2027 was provided.

Q: Can you explain the bridge between the $26 million IEPA tariff refund received and the $12 million year-over-year operating benefit recognized in Q2? / A: Of the $26 million received, $12 million was recognized as operating benefit in Q2, with an additional $4 million expected to be recognized in Q3. The remaining $10 million covers refunds to customers, corrections of previously recognized tariff costs, and $1 million in recognized interest income from the refund.

Q: Now that net leverage is below the 3x target, how has your capital allocation strategy changed? / A: Management is now positioned to opportunistically pursue two priorities for excess capital: share repurchases and accretive acquisitions, after prioritizing balance sheet deleveraging over prior periods.