Manitowoc Company, Inc. (The)

Good day, everyone, and welcome to the Manitowoc Second Quarter 2022 Earnings Call. For your 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. Ian Warner, Vice President, Marketing and Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the ManusWalk conference call to review the company's third 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 third quarter operating environment was similar to that of the last few quarters. Significant part shortages, labor constraints, logistics disruptions, and inflation. I greatly appreciate the persistence and determination of the Manitowoc team for managing through these difficult times while executing our four breakthrough initiatives to grow our aftermarket business. Growing our aftermarket reduces our cyclicality, provides recurring revenue streams, and improves our margins over the long term. During the third quarter, our sales were $455 million, and our adjusted EBITDA was 24 million. As I inferred on our last earnings call, we ended the second quarter with a fair number of machines that were nearly complete. I had high hopes that our naturally lower production demands in the third quarter, combined with those nearly finished goods, would prevent us to ship more. In spite of this, we fell short of our internal revenue forecast by $45 million, adjusted for FX. On the demand front, third quarter orders were 472 million. Our orders have tracked to roughly $150 million each month for the last eight months. That level of consistency is unusual in our business. Our backlog ended the quarter at a robust $943 million. During the third quarter, demand trends remain unchanged from the previous quarter. Across North America, customers are busy with a steady backlog of projects, dealer inventories remain healthy, and planned government investment in infrastructure and chip manufacturing provide good reasons to be optimistic. Not to mention, Oil prices are well above $65 per barrel, which was historically been a good barometer for crane demand in the oil patch. Of course, these tailwinds are juxtaposed against inflation, rising interest rates, ongoing parts and labor shortages, and longer lead times for cranes, which has stymied growth. In Europe, Russia's transgressions have given rise to dark clouds over the region. Inflation has risen to record highs, yet the European Central Bank has been slow to adjust interest rates. The tower crane business has begun to slow, And the mobile crane business, which was very subdued during the immediate fallout of the COVID pandemic, has experienced a sluggish recovery in spite of healthy crane utilization in the region. Among all of our markets, the Middle East offers the greatest opportunity for growth. Saudi Arabia's Vision 2030 initiative is coming to fruition. The government has committed more than a trillion dollars to a diverse slate of ambitious projects and the momentum is building. In addition, Qatar and Kuwait are showing promising signs of growth, After years of muted activity, it appears the Middle East is coming alive again. As in recent quarters, Asia-Pacific remains mixed. Although China is a relatively small market for Manitowoc, it continues to deteriorate. Our Chinese competitors are once again offering pricing and payment terms that defy logic. These Chinese players added enormous capacity over the last five years. As the domestic Chinese market continues to slow, we expect these competitors to aggressively pursue more export business in the Belt and Road regions. In South Korea, the local market remains robust, but the strong U.S. dollar has become a significant obstacle for us in the short term. Likewise, in Australia, crane activity is holding up, but supply chain issues have led to a cash crunch causing anxiety through the construction industry. Finally, in Singapore, we are starting to see some green shoots in the tower crane market. Please turn to slide four. Changing gears, we continue to make progress on our Cranes Plus 50 strategy to grow our aftermarket. For the quarter, our non-new machine sales increased 27% year-over-year, and we are on track to achieve our full-year 2022 goal. This growth is primarily driven by acquisitions, but the team continues to increase our field service population and expand our territory. Last month, we purchased certain assets from Haunted Equipment Company, adding Colorado, Wyoming, and Nebraska to our footprint. Although this investment was relatively small, I'm excited about the expansion of our direct-to customer territory. It's a great addition to our portfolio with a promising mix of non-new machine sales and synergies for our MGX and Aspen businesses. With the integration of the recent acquisitions completed, we have begun to accelerate our implementation of the Manitowoc way at these new businesses. To that end, last month, we completed two Kaizens at our Aspen equipment location in Bloomington, Minnesota. One of the Kaizens was focused on 5S, while the second Kaizen was aimed at increasing productivity in one of the location's truck body upfitting cells. The team created an action plan that is expected to eliminate approximately 80% of the waste in this upfitting cell and improve its capacity by 30%. Although we are in the initial stages of implementing LEED in Aspen, I'm proud of the team's receptiveness to the Manitowoc Way and I look forward to further success. Please turn to slide five. Before I hand the call over to Brian, I would like to comment on last month's BAMA show in Germany. As most of you know, BAMA is the largest constriction equipment trade show in the world. It's a phenomenal opportunity to showcase our new products and solutions, to celebrate milestones with our customers, and to drive the commercial side of our business. And it takes a tremendous amount of work to pull it off. I want to extend a heartfelt thank you to the many Manitowoc team members who made the show a big success. Customers at the show were very impressed with the 12 new cranes we introduced, including a four-axle, 100-ton all-terrain hybrid concept crane, and our first luffing tower crane model equipped with CCS, our crane control system. We also received good feedback on our recent dealer acquisitions in the U.S. These acquisitions will allow us to get closer to several of the large European-based multinational crane operators. And importantly, our customers noted that our product quality has improved significantly, which is a far cry from my first Bama six and a half years ago. Overall, feedback from our customers and global partners reinforce that we are on the right track with our strategy. With that, I will turn the call over to Brian to take us through the financials.