Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Manitowoc Co Inc (MTW, Financial) hosted a successful Crane Days event with over 850 customers and dealers from 18 countries, showcasing 35 cranes and receiving excellent feedback.
- The company has a strong backlog of $836 million, indicating sustained demand despite current challenges.
- Positive sentiment in the Americas, with strong quote logs and interest in new cranes, suggests potential future growth.
- The aftermarket business remains robust, with non-new machine sales at $147 million, only slightly down year over year.
- Progress in the Asia Pacific region, particularly in China, with advancements in the large tower crane strategy and increased manufacturing capacity.
Negative Points
- Orders were down 22% year over year, reflecting a challenging operating environment and geopolitical uncertainties.
- High interest rates and political uncertainties, particularly related to the US election, are negatively impacting customer purchasing decisions.
- Part shortages and logistics disruptions continue to affect production and sales, contributing to a significant sales miss in the quarter.
- The European tower crane market remains weak, with new crane orders down 21% year over year, impacting adjusted EBITDA.
- The company had to adjust its build schedule due to lower demand and elevated inventory, negatively affecting short-term financial performance.
Q & A Highlights
Q: What changed in the last 90 days that affected Manitowoc's performance, and why is there optimism for the future?
A: Aaron Ravenscroft, CEO, explained that while short-term challenges like the US election and interest rate discussions have impacted confidence and orders, long-term opportunities remain strong due to large infrastructure projects, particularly in power transmission. The optimism is based on these projects finally starting to materialize, which are significant drivers of crane activity.
Q: Are there any competitive dynamics or price-cost headwinds to be aware of?
A: Aaron Ravenscroft noted increased price competition in Asia Pacific and the Middle East due to Chinese competitors. However, in Western markets, there hasn't been a significant change. Brian Regan, CFO, added that the yen's strength, despite recent interest rate hikes by the Bank of Japan, continues to impact competitiveness.
Q: How does Manitowoc view the cadence of the second half of the year, particularly between Q3 and Q4?
A: Brian Regan stated that Q3 is typically the weakest quarter due to seasonal factors, especially in Europe. Q4 is expected to be stronger in terms of revenue and margins. The company does not provide quarterly guidance but anticipates a better performance in Q4 compared to Q3.
Q: What is the impact of rent-to-purchase options, and how might they change post-election or with interest rate adjustments?
A: Aaron Ravenscroft mentioned that rent-to-purchase options have become more common, even among customers who typically purchase outright. This trend is linked to expectations of declining interest rates. Brian Regan added that post-election, there might be a shift back to outright purchases if interest rates decrease.
Q: What was the impact of part shortages in the quarter, and how did it affect non-new machine sales?
A: Brian Regan explained that part shortages were one of several factors impacting the quarter, each contributing roughly equally to a near $100 million internal miss. Non-new machine sales were slightly down, primarily due to the European tower crane market's weakness, but overall, the aftermarket business performed well given the circumstances.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
