Manitowoc Company, Inc. (The)

Good day, everyone, and welcome to the Manitowoc third quarter 2021 earnings conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to Ian Warner, Vice President, Marketing and Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the Manitowoc conference call to review the company's third quarter 2021 financial performance and business update as outlined in last evening's press release. Participating on the call today are Aaron Ravenscroft, President and Chief Executive Officer, and Dave Antonik, Executive Vice President and Chief Financial Officer. Today's webcast includes a slide presentation, which can be found in the Investor Relations section of our website under Events and Presentations. We will reserve time for questions and answers after our prepared remarks. I would like to request that you limit your questions to one and a follow-up and return to the queue to ensure everyone has an opportunity to ask their questions. Please turn to slide two. Please note our safe harbor statement in the material provided for this call. During today's call, forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 are made based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied or actual projections due to one or more of the factors, among others, described in the company's latest SEC filings. The Manitowoc Company does not undertake any obligation to update or revise any forward-looking statements, whether the result of new information, future events, or other circumstances. And with that, please turn to slide three, and I will now turn the call over to Aaron.

Thank you, Ion, and good morning, everyone. Our third quarter reminds me of a book written by Chuck Clausing. Chuck was a legendary football coach from western Pennsylvania. He had a 45-year storied coaching career, which started in 1948, and concluded with his induction into the College Hall of Fame. When Chuck retired, he wrote a book about his trials and tribulations titled, Never Lost a Game, Time Just Ran Out. The title of Chuck's memoir is a good description of Manitowoc's third quarter. I've yet to see a quarter where a team executed so well that came up short of our financial expectations. Frankly, I think it was one of the most accomplished quarters our team has achieved since I joined the company in March of 2016. Beginning, as always, with safety, our journey to a zero-harm workplace continues to evolve using the principles of the Manitowoc Way. Internally, we track RIR, or recordable injury rate, on a rolling 24-month basis. During the third quarter, we set a record low for this metric with an average RIR of 1.46. This significant milestone is a testament to the growing maturity of our safety management system and our employees' daily hazard observation practice. In particular, the National Crane Boom Truck Value Stream in Shady Grove recently celebrated one year without any injuries. Congratulations to Justin Pilgrim and his team on this fantastic achievement. Also in the quarter, we finalized the acquisition of Aspen Equipment and the H&E Crane business for approximately $180 million. This translates to an all-in EBITDA multiple of roughly six times. The integration of these acquisitions are progressing as planned, and we welcome the Aspen and H&E crane teams to Manitowoc. Moving to the Manitowoc Way, during the quarter we revitalized a workshop at our factory in Niella, Italy, and integrated the assembly of chassis for self-erecting tower cranes, which significantly improves the safety and process flow on site. I look forward to visiting the team in two weeks to see these improvements. Looking at our financial results for the quarter, our orders were $535 million. Overall, markets for our products and aftermarket services remain robust. In North America, dealer inventory levels are in line with current demand and continues at a steady pace. In Europe, we are beginning to see recovery in the all-terrain products and the tower crane business remains at elevated levels. In the Middle East and South America, confidence is building as a result of sustained higher commodity prices. Finally, in Asia, while China continues to soften, other key markets, including South Korea and Australia, remain strong. I would note, however, that we did see a moderate slowdown in orders during September and October. However, it's too early to say whether this was a result of our orders coming in ahead of price increases during July and August or if price elasticity has finally caught up with the increases. Regardless, our sales teams have worked tirelessly to implement price increases to offset inflation. Until this fall, crane demand has proven resilient to rising input costs. Only time will tell whether inflation will hinder demand. Finally, I'd like to discuss our supply chain. Although our supply chain and operations teams have never worked so hard to keep the factories rolling, we are facing the same supply chain crisis that many of our peers have already reported. These supply chain constraints are broad-based. Every factory and product line we have is battling shortages. Every day, we are confronted with different issues. As a result of these supply chain disruptions, sales in the third quarter were approximately $405 million, which was more than 15% below our expectations. The combination of these lower volumes and the cost-to-price lag, which we discussed last quarter, resulted in an adjusted EBITDA margin of 4.9%. Overall, I was extremely proud of how our team executed during the third quarter. Our financial results, however, don't give a complete picture of our progress on safety, ESG, strategic initiatives, and the overall effort to battle the current supply chain and inflationary environment. As Chuck Lausing would say, time simply ran out on us. With that, I'll pass it to Dave to provide further details on our financial results. Dave?