Manitowoc Company, Inc. (The)

to review the company's fourth quarter and full year 2023 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. As I look back over the last 12 months, I'm very pleased with the performance delivered by the Manitowoc team. While the specific challenges seemed to ebb and flow, without a doubt, 2023 was just as tough as the previous few years. Although inflation seems to be mostly behind us at this point, the team worked diligently throughout the year to mitigate cost increases from our suppliers while continuing to push for the appropriate price increases. From a demand perspective, the European tower crane market was even softer than we anticipated. Unfortunately, the mobile crane market particularly in the U.S., proved to be far more resilient, considering the interest rate increases that we've seen. Consequently, our team had their work cut out for them. Their hard work in achieving these results often goes unnoticed on these calls, but without their willingness to go above and beyond, our performance would not be possible. Thank you to the team. For the full year, we generated slightly above $2.2 billion in sales and $175 million in adjusted EBITDA, a 23% increase year-over-year. and our adjusted EBITDA margins expanded 90 basis points to 7.9%, which is a great result when you take into account the unfavorable mix that we faced. Non-new machine sales for 2023 were $613 million, a 12% increase. Please turn to slide four. Turning our attention to the Manitowoc Way, I'm extremely proud of the team's results. First and foremost, in terms of safety, we ended the year with an RIR, or recordable incident rate, of 1.01%. Our goal remains zero injuries, but nevertheless, it is worth noting that this is our best result in the company's history. I attribute these results to an increased focus on interactive observations. This is essentially a structured on-the-job safety dialogue between supervisors and our shop floor team aimed at discussing safe and unsafe behaviors. Our interactive observations increased 70% year-over-year to 17,000 in 2023. In addition, we continue to aggressively pursue environmentally related cases. As a result, our waste-to-landfill improved 30%, and our Scope 1 and 2 greenhouse gas emissions intensity improved by almost 9% compared to 2022. The paint value stream at our Char-U factory in France won our CEO Manitowoc Away Award this year for the best environmental lessons learned. Among several improvements, the team developed a digital monitoring tool to optimize scheduling and eliminate bottlenecks in the shop glass line and paint workstations. The team was able to increase the capacity of the paint line by 44%, while reducing the carbon footprint by 435 tons of CO2 per year. That's equal to an annual usage of 100 gasoline-powered cars. This is the power of the Manitowoc Way. Lastly, I would like to recognize three other award winners this year. Ludo Purovat at our Char-U factory won the Leadership Award for his work on the electromechanical value stream. I mentioned some of his achievements on a previous call. Over the last couple of years, Ludo has become a real lean guru, and I've enjoyed watching him grow as a leader. Please turn to slide five. For the first time, we created an award to recognize the implementation of the Manitowoc Way at our growing service locations. Our Ankeny, Iowa location won the inaugural award for a mobile station that they developed to complete dielectric testing on booms in the field. Previously, we had to lift the 250-pound device under the back of a flatbed truck, which wasn't very safe. It was pretty clumsy to use, and it didn't look very professional. Now the service technicians can simply pull the device to a crane in the field. Well done to the team. Please turn to slide six. And finally, the crawler crane value stream in Shady Grove won the award for the best Kaizen. In fact, a couple of investors helped us in the early stages of this project. In the previous process, we welded large boom inserts as one unit, building scaffolding around the part as it got larger. With the application of a little ingenuity and some elbow grease, the team made the process progressive in nature, and now we weld the unit as sections. Imagine making sub-assemblies that are welded into the final part. This has significantly improved our safety and quality, putting our welders in a much better ergonomic position to weld the part, and as a result, improving productivity by eliminating 750 hours for the process. Great job by the team, and congratulations. Please move to slide seven. Turning our attention to the market, we generated orders of $476 million during the quarter. Our backlog ended the year at $917 million. While the order rate was down significantly from the anomaly of the fourth quarter of 2022, this was still a good showing considering how slow the European tower crane market has been. On a regional basis, the Americas remain pretty steady. The inventory levels remain reasonable. Utilization rates of crane operators have been strong. rental rates have held i believe that our boom truck business is in a great position for 2024 while i expect our all-terrain and rough terrain demand to be relatively steady even though dealer inventory is a tad heavier than we'd like given the impending fallout from the commercial real estate market i expect tower crane demand to be anemic although this market is pretty small in the americas in europe it's a tale of two halves demand for tower cranes is very very slow Looking at the latest housing permit data, on a trailing 12-month basis, France is down 24% and Germany is down 28%. Rental rates in France for top-selling cranes have been under a lot of pressure. In addition, dealer inventory for self-directing cranes in Germany remains very high. On the other hand, demand for mobile cranes in Europe continues to hold up. Rental rates definitely inched up with the inflation, and the large rental houses are well-utilized and actively refreshing their fleets. Turning to the Middle East, the overall market remains robust, but we expect Turkey to be a headwind. In the aftermath of the devastating earthquakes last February, demand surged to support the reconstruction of the areas affected. Naturally, we don't expect this to repeat. The activity in Saudi Arabia, however, continues to move forward. Not surprisingly, given the complexity and enormous scale of these projects, we have seen a few delays, but nothing to create concern. During my visit to the region in December, everyone had the same story. With the 2029 Asian Winter Games, the World Expo coming in 2030, and the World Cup in 2034, all of the major projects that have been revealed must be executed, except for the Line project in Neom. As for the Line, this continues to have high visibility with the Crown Prince and is moving forward, but we have reached a stage where they are grappling with how to perform so many extreme engineering feats. As a final word on SAILI, I highly recommend that you research the Six Flags Cadilla project. This is one of the most impressive construction sites that I've ever visited. Photon cranes are being utilized to build the world's largest and fastest roller coaster. The park is expected to open in late 2024. Construction in the area will continue well into the next decade as they build a Formula 1 racetrack and a soccer stadium, as well as the necessary accommodations. And finally, I'd like to briefly comment on Asia Pacific. After my visit in January, I felt the situation in China's construction market is even more dire than described in the news. There are lots of cranes in the air still, but you don't see many cranes moving on the job sites, which translates to projects being suspended. The local construction market is in a depression, and I don't think anyone knows when this will turn. While our China revenue is immaterial on a consolidated basis, the bigger concern that I have is the level of intensity at which Chinese manufacturers continue to expand globally. Outside of China, we are starting to build momentum in Hong Kong and Singapore. South Korea is similar to Europe. Large commercial construction has slowed, impacting power pains, but the heavier infrastructure markets will continue to support global crane demand. And finally, Australia continues to hold up. As long as the Australian dollar stays above $0.60 to the euro, I expect crane demand to be solid. With that, I'll pass it over to Brian to walk you through the financials before I close with an update on our strategy.

Thanks, Aaron, and good morning, everyone. Please move to slide eight. As a reminder, we entered the fourth quarter with difficult year-over-year comparables and expected unfavorable mix due to the softness in the European tower crane market. This held true, and the fourth quarter results were in line with our expectations. Turning to orders, during the fourth quarter we had orders of $476 million, a decrease of 33% from a year ago. Foreign currency favorably impacted orders by $9 million. Our December 31st backlog was $917 million, a year-over-year decrease of 13%, and was favorably impacted by $9 million from changes in foreign currency exchange rates. Net sales in the fourth quarter were $596 million and decreased 4% from a year ago. The year-over-year decrease was primarily driven by softness in our European tower crane business. This impact was partially offset by global pricing efforts and product mix in the Americas. Net sales were favorably impacted $9 million from changes in foreign currency. SG&A expenses were $88 million, which included a $10 million charge related to a legal matter with the US Environmental Protection Agency. Excluding the impact of this charge, SG&A expenses as a percentage of sales were 13%, relatively flat year over year. Foreign currency unfavorably impacted SG&A expenses by $2 million year-over-year. Our adjusted EBITDA for the fourth quarter was $37 million, a decrease of 29% year-over-year. The adjusted EBITDA margin was 6.1%, a decrease of 220 basis points over the prior year, primarily due to the unfavorable product mix. Our provision for income taxes in the quarter was $6 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 gap diluted loss per share in the quarter was 23 cents. On an adjusted basis, diluted income per share was 9 cents, a decrease of 65 cents from the prior year. Looking at the full year, our 2023 orders totaled $2,082,000,000, relatively flat year over year. On a currency neutral basis, orders decreased $32,000,000. Net sales for the full year were $2,228,000,000, a 10% increase over the prior year. The increase was primarily due to the progress made on our Cranes Plus 50 strategy, The impact of higher crane volume in the Americas and Miat, partially offset by lower tower crane sales in URF. Adjusted EBITDA for the full year was $175 million, an increase of 23% year-over-year. As a percentage of sales, the adjusted EBITDA margin increased 90 basis points over the prior year to 7.9%. Our GAAP diluted income per share for the full year was $1.09. On an adjusted basis, diluted income per share was $1.52, a 43% increase from the prior year. Please turn to slide nine. On our Q3 earnings call, we targeted a $70 million reduction to our inventory over the last three months of the year. On a currency neutral basis, we reduced our inventory by $68 million, slightly short of that target. On a year-over-year basis, net working capital as a percentage of sales increased 90 basis points to 21%. This was primarily driven by higher finished goods inventory. Some of this was a consequence of our higher production levels, but we still have more work to do on finished goods. Moving to cash flows, we generated $63 million of cash from operating activities during the year. Our generation of operating cash flows was negatively impacted by the timing of shipments during the fourth quarter. Capital expenditures were $77 million, of which approximately $23 million was for strategic growth in our rental fleet. We ended the year with a cash balance of $34 million. Total outstanding borrowings under the ABL decreased $20 million during the year, leaving $60 million outstanding. Our net leverage ratio was 1.9 times as of December 31, 2023, well under the targeted three times, and total liquidity was $280 million. Please turn to slide 10. As we look ahead to 2024, we enter the year with a strong backlog in the Americas, but expect ongoing softness in the European tower crane market. The impact of this unfavorable mix is reflected in our outlook. Our 2024 guidance is as follows. Net sales of $2.275 billion to $2.375 billion. Adjusted EBITDA of $150 million to $180 million. Depreciation and amortization of $63 million to $67 million. Interest expense of $32 million to $34 million. Provision for income tax expense of $18 million to $22 million. Adjusted diluted earnings per share of 95 cents to $1.55. Capital expenditures of $60 million, of which $25 million relates to rental fleet growth. Free cash flows of $30 million to $60 million. With that, I will now turn the call back to Aaron.