Manitowoc Company, Inc. (The)

Good morning and welcome to the Manitowoc second quarter 2023 earnings call. My name is Regina and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. I will now turn the call over to Mr. Ion Warner, Senior Vice President of Marketing and Investor Relations. Please proceed.

Good morning and welcome to the Manitowoc conference call to review the company's second quarter 2023 financial performance and business update as outlined in last evening's press release. Today I'm joined by Aaron Ravenscroft, President and Chief Executive Officer, and Brian Regan, Executive Vice President and Chief Financial Officer. Our call 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 ask 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. Let's move to slide two onto our safe harbor statement and 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. I'd like to start today's call by thanking the Manitowoc team for their outstanding performance during the quarter. Our second quarter results capped an excellent first half of the year. Net sales were $603 million for the quarter, and our adjusted EBITDA was $60 million, or 10% margin. In addition, non-new machine sales for the quarter increased 8% year over year. Please turn to slide four. Our Cranes Plus 50 strategy is our top priority. During the quarter, I had the opportunity to visit several MGX and Aspen locations, and I was continuously struck by our local team's enthusiasm to service their customers and to grow their businesses. For example, at our new branch in Kansas City, the team recently rented their very first photon self-erecting tower crane. And you won't find a more passionate group of crawler crane folks than our team in Belle Chase, Louisiana. When I visited, the team was rebuilding an MLC 300 crawler crane, an old Manitowoc 4600, and an old barge crane that must have been older than me. Frankly, what's been most impressive is how these acquisitions enable Manitowoc to better serve our customers through a broad range of service and remanufacturing solutions. I'd like to extend my appreciation to Keith Poff, General Manager of MGX, and Mark Coffman, General Manager of Aspen, for their hard work and leadership. It's been a lot of fun to watch these organizations evolve over the last two years. Please turn to slide five. It's amazing how time flies when you're having fun. In the seven years since we launched the Manitowoc Way, we've continued to mature our lean mentality across our businesses. Each time I visit our factories, I'm amazed by how far we've come, and I'm extremely proud of how the organization has embraced the philosophy of continuous improvement, making small improvements step-by-step each day. During the quarter, I visited our tower crane facilities in Europe. In Portugal, we held our annual Global Kaizen for our lean leaders. The Baltar facility is nothing short of world-class, and you won't find a more motivated team. In addition to sharing best practices, the global team identified great opportunities to improve cycle times and the facility's pivot fabrication processes. Well done to Vasco Rocha, our director of operations, and the Voltar team. In Moulin, France, I saw great progress. Our energy Kaizens were born at this location last year, and they are already producing significant savings at this site. Our digitalization efforts are also gaining traction. We've digitalized our visual pre-delivery inspections, and we continue to find ways to optimize our easy planning tool for work sequencing throughout the factory. My next stop was Charieux, France. This was the worst-performing plant among our European facilities when I moved to France in 2017. The aisleways were torn up. There were no signs of 5S or PPM. The paint system was new but totally dysfunctional. We had an electrical department that I wanted to close. They had just installed one used robot, and I think we had one machining center. It was younger than me. Today, you walk into a completely different facility. The team is in the process of integrating a state-of-the-art robot for welding IGO-T masks, and they recently commissioned a brand new horizontal machining center for milling large parts, reducing the cycle time on every major part by at least 50%. In addition, they had a very special surprise for me. For years, we dreamed of remanufacturing mask elements. With the new machining center, the team ran its first trial part. This could be a major breakthrough for our clean facility strategy. Elsewhere in the plant, the electrical department is now a work of art and a 5S haven. As for the paint system, the team was running the sandblaster paint booth and oven on two shifts six months ago. Today, the team completes the same amount of work in one shift thanks to ingenuity, digitization, and sequencing. This will have a significant financial benefit as well as improve our environmental sustainability. A big merci beaucoup to our Director of Operations, Jean-Luc Couvertot, and the entire SHRU team for a job well done. Please move to slide six. Lastly, I visited our China facility a few weeks ago, and I came away astonished with where we've come in the last three and a half years. Led by Zhenghua Shi, our General Manager, the team has completely streamlined the plant layout. I'll let the pictures do the talking. In summary, I'm very proud of how our organization has embraced the Manitowoc way. We've come a long way, and we are still finding new opportunities for improvement. A huge thank you to the organization. Please move to slide seven. Turning to the market, order intake during the quarter was $551 million, which exceeded expectations. Our backlog remained above $1 billion, and our mix continues to shift towards the Americas. Crane demand in the U.S. continues to be strong in spite of inflation and higher interest rates. Crane utilization is strong among major crane houses, and business activity has been good. This quarter, we heard the first hints of the infrastructure bill coming to fruition in the Northeast. While I remain cautious on the U.S. market due to the economic headwinds, it's encouraging to hear that money is starting to flow from this major government investment program. As for dealer inventory, I would describe it as well-balanced at the end of June. Nevertheless, we have a lot of cranes to ship scheduled to our dealers in the second half, which always leaves me a bit cautious. Even the slightest slowdown in retail activity could create a headwind by year end. Although the ride might be a little bumpy in the medium term, we remain very optimistic about the North American market long term as infrastructure and chips bills gain momentum. Unlike the U.S. marketplace, however, the European economy has been impacted by the increase in interest rates. We've seen construction activity slow across the continent for several quarters. Thus far, this has mostly impacted our tower crane business, which saw orders decline in the second quarter by almost 30% year over year. Although we are clearly in a cyclical downturn in the tower crane market, we see some positives building on the horizon. The UK and French governments are pushing hard for large-scale offshore wind farms and nuclear energy projects, and there are still significant housing shortages in every major European country. The European mobile business has the same underlying economic dynamics, but the story is a little different thanks to some self-help in recent years. I would certainly not describe the market as robust. but the large crane rental houses have been modestly refreshing their fleets, while the smaller rental houses have pulled back. Fortunately, with the help of several successful new product launches over the last two years, we've seen our market share tick up, which is helping to offset the market softness. Mobile business levels in Europe remain stable. Moving to the Middle East, during my trip to Riyadh last month, I saw two things. First, how quickly Saudi Vision 2030 is coming to life. and second, the strong presence of our biggest tower crane dealer, NFT, known locally as Arabian Towers. A big thank you to Nabil Zalawi, who has been our partner since 1975. His presence in the kingdom dates back to the 1980s. On my trip, I had the opportunity to visit King Solomon Park, one of the kingdom's megaprojects. When completed, the park will be five times the size of New York City's Central Park and the first major construction project is the Royal Art Complex, where there are 30 POTON tower cranes in operation. I also visited the Avenue Mall project, which will be one of the largest malls in the world, where another 38 POTON cranes are working. In addition to these projects, NFT is heavily engaged in every major project in Saudi. Although the Middle East is one of our smaller regions, it's growing rapidly with orders for the quarter up 40% versus the prior year. Lastly, Asia Pacific remains a mixed bag. The Indian crane market has been very strong this year, although China remains extremely muted. In South Korea, the semiconductor market has slowed as we wait for the next big lab project to begin, although the shipbuilding and petrochem markets are beginning to pick up. And Australia continues to be a good market, although it's become very difficult to get vessels out of Europe. In fact, we recently chartered our own ship to get machines delivered. With that, I'll turn the call over to Brian.

Thanks, Aaron, and good morning, everyone. Please move to slide eight. Let's start with orders. During the quarter, we had orders of $551 million, an increase of 27% from a year ago, exceeding our expectations. The year-over-year increase was driven by higher orders in all our segments. Looking more closely at the European market, mobile crane orders more than offset the tower's decline. Foreign currency favorably impacted orders by $4 million. Our June 30th backlog was slightly down sequentially at $1,025,000,000 and increased 8% year over year. The makeup of our backlog is consistent with the first quarter. It's predominantly in the Americas region. Net sales in the second quarter were $603,000,000 and increased 21% from a year ago. The year over year increase was driven by pricing in response to inflationary pressures, higher crane shipments, and higher non-new machine sales as a result of executing on our Cranes Plus 50 strategy. Non-new machine sales increased 8% year-over-year to $150 million. Net sales were favorably impacted by $3 million from changes in foreign currency exchange rates. SG&A expenses were $18 million higher year-over-year at $88 million. During the quarter, SG&A expenses included an $11 million charge related to a legal matter with the EPA. After adjusting for this, SG&A expenses were $7 million higher, primarily due to inflation. Adjusted SG&A expenses as a percentage of sales were 13%, a decrease of 120 basis points year over year. Our adjusted EBITDA for the quarter was $60 million, an increase of $24 million, or 66% year-over-year. Adjusted EBITDA margin was 10%, an increase of 270 basis points over the prior year, a great accomplishment during the quarter and reflective of the team's hard work. Flow-through on the year-over-year incremental sales was 23%. First quarter depreciation and amortization of $15 million decreased $1 million compared to the prior year. Other expense for the quarter was $10 million, an increase of $8 million year over year. Included in other expense during the quarter was a $9 million non-cash charge related to the curtailment of operations in Russia. Our benefit for income taxes in the quarter was $5 million, driven by a $14 million reversal of evaluation allowance. Adjusting for this, our provision for income taxes in the quarter was $9 million. As a reminder, we have tax valuation allowances established for certain countries, and therefore losses in those countries are not available to offset income tax expense in profitable jurisdictions. Our adjusted diluted net income per share in the quarter was 75 cents, an increase of 54 cents from the prior year. Please move to slide nine. Our networking capital increased year-over-year $77 million. This increase is from a combination of inventory and accounts receivable and driven by inflation, supply chain, and logistics constraints, along with our normal seasonality. As a percentage of trailing 12-month sales, networking capital was 22% flat year-over-year. As it relates to inventory, we are targeting a $75 million reduction by the end of the year. Moving to cash flows, we had a usage of $17 million of cash from operating activities in the quarter, primarily due to the growth in our working capital. Capital expenditures were $27 million, of which $20 million was for the rental fleet. This included $17 million for rental fleet growth and $3 million for replacement. As a result, our free cash flows in the quarter were a use of $44 million. We ended the quarter with a cash balance of $26 million which was a decrease of $31 million sequentially. Total outstanding borrowings under our ABL increased $12 million, resulting in $82 million outstanding at quarter end. Additionally, during the quarter, we repurchased $2 million of our common stock. Total liquidity decreased $41 million sequentially to $255 million. Due to our strong adjusted EBITDA, net leverage ratio remained at two times at the end of the quarter, well under the targeted three times. Please turn to slide 10. We are updating our full year guidance as follows. Net sales, $2.1 billion to $2.2 billion. Adjusted EBITDA, $150 million to $180 million. Depreciation and amortization, $58 million to $62 million. Interest expense, $33 million to $35 million. Provision for income taxes excluding discrete items, $16 million to $20 million. and adjusted diluted earnings per share, $1.10 to $1.70. As a reminder, the third quarter is historically our lowest quarter due to summer shutdowns in Europe. In addition, we expect the slowdown in the European tower crane business to be a $30 million adjusted EBITDA headwind in the second half versus the first half. With that, I will now turn the call back to Aaron.

Thank you, Brian. Please turn to slide 11. At the start of the year, I said that our results would rely on two major factors. How quickly our production of mobile cranes would rebound from the shortages and how badly the European tower crane market would trail off. The good news is that the mobile shipments have accelerated faster than I anticipated. The bad news is that the European tower crane market has slumped further than I expected. Fortunately, as we reflected in our updated guidance, the good news exceeds the bad news. While the first half was a great performance in terms of EBITDA, we will be laser-focused on working capital in the second half. Strategically, we continue to drive our crane specificity strategy, investing in organic growth initiatives while searching for our next acquisition opportunity. As for my medium-term view of the crane market, although infrastructure projects are beginning to move through the halls of government, spending hasn't begun to ramp up yet. I could see a lull in demand as we work through our dealer inventory and the U.S. election cycle heats up. Nevertheless, I remain extremely optimistic about the long-term nature of the crane business. Saudi Vision 2030 is in motion, the U.S. infrastructure and semiconductor bills will eventually begin to let, and the large offshore wind and nuclear projects coming down the pike in Europe will be a big boost to the crane market. Concurrently, most rental fleets are 10 to 15 years old on average. These broad trends will provide the confidence and fuel to refresh aging fleets. Manitowoc is well positioned to benefit from this crane's renaissance. With that, operator, please open the line for questions.

At this time, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. Our first question comes from the line of Jamie Cook with Credit Suisse. Please go ahead.

Morning, Jamie. Hi, Jamie.

Hi, good morning and congrats on a nice quarter. I guess, Aaron, you know, understanding the puts and takes to the back half of the year in terms of what you're saying with EBITDA margins, but related to the second quarter, even with tower grains, it sounds like it's softer than you'd expected. What drove the outperformance on the EBITDA relative to your expectations? And then my second question is, can you sort of talk to how you see orders trending over the next two quarters and how your dealers are approaching inventory as they're thinking about 2024 and the potential for IIJA, et cetera, kicking in. Thank you.

Yeah. So, I mean, for the second quarter, I think it's lots of small things. I mean, our pricing continues to get better. I'd say that's almost normalized now. We had good mix. FX was in our favor on a few things.

Yeah. And maybe a correction, Jerry, just Jamie, just the tower crane business, you know, we had decent backlog coming into the quarter. So really the softness is going to be in the second half, not the second quarter.

Okay. And then my other questions just in terms of, you know, dealer inventory, like how your dealers are approaching as you think about 2024 and order cadence in the second half.

Yeah, it's always difficult to predict the order cadence because some of it's so chunky. But, I mean, we're still in lots of dialogue with several of our large dealers, particularly in the U.S. I think we'll get some decent orders. So, I mean, we're just – I'm very – you know me, Jamie. I'm always conservative about how we view the future and looking at the way that – the number of machines we've got to ship into our dealers. It's good to see that they're still actively looking at the 2024 build schedules, but – July was a little bit lower than it was last year, although it was still in that sort of $150 million range, which I think is a good sign. The difficulty in commenting at this point is we're in the middle of the summer and there's just very little activity.

And then the... Sorry, I think we lost you, Jamie. Go ahead, Jamie.

Just the last question on dealer inventory. Thanks.

So the question is just where dealer inventory is currently or where we're seeing it in the second half, Jamie?

Yeah, like how dealers are approaching how they're thinking about inventory as we're exiting 2023, getting ready for 2024, wondering if they want to start to increase inventories given what they're seeing out there.

Based on the shipments that we have lined up, I'd say that they're increasing their inventory. So that's just a question of how high they plan on increasing in the second half. I think a lot of activity looking towards 2024 is more about just being on the build schedule, given the long lead times at the moment.

Okay, thank you.

Thanks, Jamie. Thanks, Shannon.

Your next question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead.

Morning, Jerry. Hi, Jerry. Hey, this is Clayon for Jerry. Quick question here. Can you talk about the utilization trends for your U.S. fleet in this quarter compared to the same period last year?

Yeah, we don't share that information. Our fleet's not that large. I'd say in total, even when we talk to our customers, if you look more broadly, utilization rates in the United States have been very good.

All right, thanks. And then I guess as a quick follow-up, regarding the non-new equipment growth, can you add more color on what the key drivers were within that? And then also, on top of that, can you break down the price versus volume on the non-new equipment sales? Thanks.

Yeah, in terms of what drove the 8% increase, I would say it was, you know, we continue to add service techs, which helps service in parts. But the used sales have been strong, too, and that's usually a big mover because it's a bigger number.

Yeah, and when I look year over year, the big part of it is just those service techs being more and more utilized. So most of it's on the service in parts side.

Thanks. I'll pass it on.

Your next question comes from the line of Mick Dober with Baird. Please go ahead.

Good morning, guys. Good morning. And very, very nice job this quarter. You know, picking up where you just left commentary on used cranes, I'm kind of curious as to what you're seeing on that side. I know you're very active in that market. What's going on with used crane prices? And what is going on with the availability of used cranes on the market, too? Can you comment on that?

Yeah, I mean, for sure, there's a lot less availability, I would say, than there was, say, two years ago. But activity still remains good. And for us, a big part of it is we never repurchased units that were out there. So, I mean, we're actively looking to buy used machines online. And we're actively looking at trade-ins, for instance, on ATs in Europe, which we never really did that in the past. So that's some of the reason it's been good for us. In terms of used pricing, I would say it's okay. I mean, if you really look, it's bifurcated world. I mean, the U.S., given that utilization is so strong, they're much better in Europe. However, specifically on the tyrocaine business, I mean, with the business being so soft, I would say that old machines, you know, if you've got a 15-year-old cat head that's got the old legacy software systems, those prices are going to be very low at this point.

But I'm wondering if there's a dynamic here, because we've kind of seen it in other categories of equipment where used equipment prices have come a lot and come up a lot and that to some degree supports the economics of a trade-in for people that are looking to upgrade to new equipment. Is that happening in the crane market or... you know, maybe not given what you just kind of mentioned?

Well, I think the difficulty is you got to look at every individual deal. And if you've got cranes that are 15 years old, those aren't very productive and it's difficult to move those machines. I think if you had new machines that were three years old, yeah, prices would be great. Interest would be huge. But if you've got machines that are 15 years old, I mean, there's a lot of old fleets out there. Folks that are looking at sitting on machines are even 20 and 25 years old. So it's, you know, those prices are,

challenging and and that's some of our strategy is to take some of those used cranes cranes and refurbish them and you know have them as more of like a uh certified used from our perspective but you know i'd say that that's more in its infancy and we're trying to drive that i see then my my follow-up um

is on the price-cost dynamic. You talked a little bit about pricing. I think I heard a term, normalizing. I'm kind of curious as to the contribution, how you think about the contribution from price that you're getting in a back half on a year-over-year basis relative to what you've seen in the front half. And on the cost side, material costs, have they actually been a tailwind in Q2? And how does that progress in the back half of the year? Thank you.

So I'd say from a price standpoint in the second half, you're not going to see it because of the headwinds associated with the tower demand. So I think when you look at the business that the demand is still strong in, we're holding pricing and that's going to contribute to the second half and partially offset that headwind associated with the towers. But when I think about other impacts to the second half, we also have... FX favorability that we saw in the first half. We had some very favorable hedges. Our average hedge rate on European purchased product coming into the US from our European manufacturers was around one, and the average rate was 108, and we're anticipating that the second half rate is a bit higher. So like I said, you're not necessarily going to see the benefit of pricing in the second half just because of the other headwinds that we've got.

and material cost?

I'd say it's no change.

I mean, everyone can see the steel prices have come down, but even in the United States, they're still high. But the problem is we don't buy a lot of that steel. A lot of our steel is very specialized. And all those high-strength steels, I mean, that's a pretty niche market. So I wouldn't say we've seen any dramatic changes yet.

Yeah, between Q1 and Q2. But compared to last year, we definitely saw price increases. relative to the labor market and how that got factored into prices for some of the products we buy.

Okay. Thank you. Good luck. Thanks, Megan. Thanks.

Your next question comes from the line of Seth Weber with Wells Fargo Securities. Please go ahead.

Morning, Seth.

Hi, Seth. Hey. Good morning, guys. How are you? Good. I guess just a clarification first on the $75 million inventory reduction comment. Is that from the second quarter or is that from 4Q year-end 22?

And can you just... Go ahead, Seth. Sorry.

And can you just... Your expectations for free cash flow for this year? Thanks.

So the $75 million is from Q2 and really driven by logistics and supply chain and some of that seasonality as well. We're definitely continuing to look at what demand looks like going into 24, which we'll adjust our inventory somewhat, but we feel comfortable about the $75 million by the end of the year versus Q2. What was the other half of that question?

Just, you know, I think free cash flow previously you talked about kind of neutral. Is that still the case or has that changed with the better?

No, I think we talked about $20 to $40 million. We're thinking $30 to $50 million with the increase in the EBITDA, some of that flowing through the cash flow. So $30 to $50 million is really what we're targeting.

Got it. Thank you. And then... just on on this this uh the 30 million um ebitda headwind for the second half european towers is that i'm just trying to you know i think everybody's trying to understand kind of the composition of the backlog is that uh more tilted 3q or versus 4q or is it kind of spread evenly and just you know just trying to think through how whether that bleeds into negative 2024 at all thanks third quarter is your normal third quarter because

half the plants, well, all the plants in Europe were shut down for a month, basically. So, naturally, it would wait a little bit more to the fourth. But, you know, I think what's key there is we're really hand-to-mouth. I mean, we don't have a whole heck of a lot of backlog. And, you know, even when I look at July, just to give you an example, we had less than $5 million in machine orders. So, it's tough times in the tower crane business in Europe. And, you know, we had a lot of big challenges. That being said, we're continuing to invest in NPD. So we are in the process of hiring between 15 and 20 new engineers between the French engineering team and the China engineering team to support new product development for pursuing more aggressively some of these jobs in the Middle East as well as what will eventually come in these big nuclear jobs in France and the UK.

But were European towers a big problem? part of the first half margin strength that you saw this year. I'm just trying to understand, like, how long this bleed, does this continue, does this headway continue to bleed into the first half of next year, or it's kind of like balanced? Yeah, I mean, first half wasn't crazy.

We have essentially no backlog, so it's hard to say when it'll start to turn around, right? So, I mean, basically, it's typical. You sort of fall off a cliff. I mean, we had good backlog, and we were shipping, given all the shortages we had, everything we could in the first half to meet customer demands. Now we're at the situation where we don't have any backlog. So hopefully it turns fast. I mean, there's a lot of things out there that could, I think, stimulate it. But who knows where Ukraine's going and what the interest rate situation is. But there's still lots of housing shortages in Europe. So if they change some of their policies, maybe it comes back faster. But in terms of the first half, I'd say normal, the same way it's been contributing for the last... however many quarters, six quarters. I wouldn't say it was more or less.

Yeah. I think the first half of 2023 was lower than last year, but still the first half or second half is that $30 million number that we talked about related to just towers alone.

Got it. Okay. That's helpful. I appreciate the color, guys. Thank you. Thanks.

Your next question comes from the line of Tammy Zachariah with JP Morgan. Please go ahead.

Good morning, Tammy. Hi. Hi, Tim.

Good morning.

Hi. This is Kaya. I'm for Tammy. Thank you for taking our questions. We were curious if you could talk a little bit more about which products are seeing more demand from the infrastructure projects that are coming live?

Yeah. So, generally, I would say the infrastructure money hasn't started to flow. It will be broad-based given the nature of that project when you look at the United States. So like electrification, there's a broad, there's a huge amount of applications, so I think it would be really good for boom trucks, and of course all the taxi work will come along with it. And then in terms of semiconductor, typically that's more crawlers in the United States.

Got it. Thank you. And then for a quick follow-up, if you could update us on how your market share is trending by region.

I'm sorry, we don't provide that level of detail.

Okay. Thank you. Again, for questions, press star one. Our next question is a follow-up from the line of McDover with Baird. Please go ahead.

Thanks for taking a follow-up, guys. The first one is on Ukraine, which you just mentioned a moment ago. And I'm kind of curious, when you talk to your dealers and obviously the folks that run your business in Europe, Is there a sense for how that conflict has impacted investment at all? And I'm kind of curious, I mean, if we do see a resolution at a point in time, presumably there's a lot of reconstruction that has to go on over there, and I would imagine that the European Union would be quite involved. Do you get any sense that there's chatter in terms of what that might mean for demand going forward and how you might play into that?

Yeah, I mean, anytime you got war on your doorstep and you get interest rates going up, I think that puts everybody in a pretty uncomfortable position in terms of Europe. So for sure, there's some sort of cloud overhanging the population. In terms of rebuilding Ukraine, everyone loves to talk about grand ideas, but there's nothing out there that's concrete to suggest what actually is going to happen. So I think it's hard to comment on what is really going to happen.

So you're not hearing anything at this stage in terms of your dealers or anything like that talking about that?

Yeah, just wishful thinking, I think. But I mean, there's been no bills passed. There's no activities. Nobody has a clue what's going to happen in terms of rebuilding Ukraine.

Sure. Do you have specific exposure to that market through dealers? Maybe I should know this. I apologize.

I just never really... No, for us, the bigger issue has been Russia. I mean, Ukraine is... sort of a, you know, it's not a huge market. It's more of a used market. So that wouldn't say that we were doing a tremendous amount of business there, but Russia was a big hit for us.

Yeah. And, and we, we stopped selling into Russia and, you know, the, we took a charge actually this quarter that I talked about in my prepared remarks.

Got it. Yep. And then my last question, uh, Middle East, uh, great to hear that orders are, are up and, and obviously there's a lot going on in, in, in Saudi Arabia. Um, you talk a little bit about competitive dynamics i know that's a that's a market that everyone is buying for the japanese the chinese competitors and and others um you know how are you staying competitive relative to those folks and do you get a sense that you'll be able to for lack of a better term capture your fair share of the uh of the pies that demand ramps up thanks yeah so i mean given the fact that the chinese market so down the china

So far down, the Chinese are extremely aggressive in the region, and I think for simpler creams, they'll make some gains. But these projects are so intensive in terms of the risk of what they're actually building that I think it still bodes well for us, especially in higher tonnage applications. They just can't afford to take the risk when you're looking at the line. 500 meter tall, 200 meter wide. I mean, that's a humongous structure to take the risk on some of these other cranes, I think would be really scary. So I think it'll be super competitive. It always is in the Middle East. But I feel really good in terms of where we are in the tower cranes because of our partner there, NFT. On the mobile side, it's more challenging, as I say, because the Chinese are more competitive. But again, we've got a good partner there in canoe and we're actively chasing everything. So I think it's more about picking the winners.

And as Aaron mentioned, we're continuing to invest in larger tower cranes and new product development there to be competitive in the region.

Understood. Appreciate the call. Thanks, Meg.

At this time, I'll turn the call back to Mr. Warner for closing comments.

Before we conclude today's call, please note that a replay of our second quarter 2023 conference call will be available later this morning by accessing the investor relationships section of our website at manitowoc.com. Thank you everyone for joining us today and for your continuing interest in the Manitowoc Company.

We look forward to speaking with you again next quarter.

That will conclude today's call. Thank you all for joining. You may now disconnect.