Manitowoc Company, Inc. (The)

Good day, everyone, and welcome to the Money to Walk second quarter 2022 earnings call. For information, today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to Mr. Ion Warner, Vice President, Marketing and Investment Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the Manitowoc conference call to review the company's second quarter 2022 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 Brian Regan, 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 statement whether the result of new information, future events, or other circumstances. And with that, I will now turn the call over to Aaron.

Thank you, Ion, and good morning, everyone. Please turn to slide three. Our financial results in the second quarter were relatively in line with our expectations. The team made monumental efforts to deliver just shy of $500 million in revenue and over $36 million of adjusted EBITDA. These results reflect the team's hard work to find solutions to our part shortages, implement price increases, and manage costs. I am very proud of our team's mettle in an extremely difficult operating environment. Day-to-day execution in our business remains challenging, and the team continues to face a multitude of logistical and supply chain constraints. I would like to take the opportunity to thank the Manitowoc team for going above and beyond to achieve these results. On the demand front, although markets such as the Middle East are continuing to gain strength, the overall global crane market is clearly slowing. When surveying our customers, there are anecdotal signs that crane activity is strong and rental rates are inching higher. However, inflation and rising interest rates have significantly tempered the momentum that had been building the previous 18 months for new equipment. Price elasticity for new machines has reached an inflection point, but I'll save my detailed comments for my closing statements. As portended in last earnings call, orders softened in the second quarter, reflecting the wait-and-see approach customers are taking as they react to the standoff between inflation and extended lead times. Our backlog remains healthy, although this quarter represents the first decline in two years. Turning to Crain's Plus 50, I'm very pleased with our progress. For the quarter, we grew our aftermarket business by 21% versus the same period a year ago. This growth was mainly driven by the acquisitions of the H&E crane business in Aspen. With the integration phase behind us, we are turning our attention to growing these businesses, which includes proactively engaging key accounts, expanding our service tech population, growing service contracts for crane repairs, and penetrating underserved territories. For example, we are in the process of expanding Aspen into Missouri with a new location in Kansas City. Lastly, before I hand it over to Brian, I would like to highlight our continuous improvement efforts. I'm incredibly proud of how our team continues to lean in the Manitowoc way. Please turn to slide four. I recently visited our facilities in Porto, Portugal, and Niella, Italy. When I first joined Manitowoc, we had two pretty disappointing factories in Porto that were reminiscent of the 1970s. There was virtually no real fixturing for welding. We had a paint booth with a conveyor system that employees had to physically push to operate, and I think every machine that we owned was older than me. Fast forward to today, and we have a world-class factory with dynamic manipulators for fixturing, robotic welding, a new paint system, and a team culture that would make any CEO envious. The organization embodies the Manitowoc way. Additionally, to reduce natural gas consumption, the team recently retrofitted the paint booth and reduced the size of the room that is used to dry parts for just 9,000 euros with an immediate payback. As part of their efforts to reduce their landfill waste, the team found a nearby foundry to repurpose our shop last waste. Again, an immediate payback. And in the fabrication area of the factory, driven by TPM, the team held a SMED Kaizen to machine the cab mast as one assembly rather than two assemblies. This resulted in a 15% reduction in cycle time and the changeover time dropped from 90 minutes to 30 minutes. Finally, as anyone that has visited the factories with me would know, one of my biggest pet peeves on the shop floor is forklifts. Every factory has too many forklifts, and they typically look like they've been through a demolition derby, not to mention they're a potential safety hazard. Not so at our Portugal facility. Our forklifts are 5S'd, TPM controlled and they have a digital safety log system to track who's using them and how they are using them. A big kudos to our team in Porto and a special obrigado to Pedro Ezevedo Vieira. I was equally pleased with our team's work in the Italy. Demand for self-directing cranes has been strong, which has significantly reduced our tech time at the factory. In accordance with Murphy's Law, this is also where we have the most part shortages within the tower crane business. Nevertheless, the team has worked diligently to improve flow throughout the factory to meet the lower tack time. During the August shutdown, the team will move four sub-assembly production lines, and they will add two stations to our main assembly line, advancing their mission to achieve standard work. During my visit, I was most impressed with their prototype data logging system for managing and controlling manual welding machines. Although still in the test phase, by using a low-cost black box and some smart programming, the machines can be automatically put to sleep when they aren't in use. We have more than 50 welding machines on site, so reducing their power consumption has a meaningful cost and environmental impact. In addition to using the same technology, the team has some great concepts for improving welding quality by analyzing wire usage and welding times. A big thank you to the team, and best of luck to Alessandro, Duto, and Diego this month with their line moves. With that, I'll turn the call over to Brian to take us through the financials.