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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

img165356707_0.jpg

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-11978

 

The Manitowoc Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Wisconsin

 

39-0448110

(State or other jurisdiction

 

(I.R.S. Employer

of incorporation or organization)

 

Identification Number)

 

11270 West Park Place

Suite 1000

 

 

Milwaukee, Wisconsin

 

53224

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (414) 760-4600

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.01 Par Value

 

MTW

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of September 30, 2024, the registrant had 35,126,894 shares of common stock, $.01 par value per share, outstanding.

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Operations

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

($ in millions, except per share and share amounts)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net sales

 

$

524.8

 

 

$

520.9

 

 

$

1,582.0

 

 

$

1,632.0

 

Cost of sales

 

 

437.2

 

 

 

424.1

 

 

 

1,302.2

 

 

 

1,305.9

 

Gross profit

 

 

87.6

 

 

 

96.8

 

 

 

279.8

 

 

 

326.1

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Engineering, selling and administrative expenses

 

 

78.9

 

 

 

77.4

 

 

 

238.6

 

 

 

240.1

 

Amortization of intangible assets

 

 

0.7

 

 

 

0.7

 

 

 

2.2

 

 

 

2.4

 

Restructuring expense

 

 

0.5

 

 

 

0.7

 

 

 

3.4

 

 

 

1.0

 

Total operating costs and expenses

 

 

80.1

 

 

 

78.8

 

 

 

244.2

 

 

 

243.5

 

Operating income

 

 

7.5

 

 

 

18.0

 

 

 

35.6

 

 

 

82.6

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(9.6

)

 

 

(8.4

)

 

 

(28.4

)

 

 

(25.5

)

Amortization of deferred financing fees

 

 

(0.3

)

 

 

(0.3

)

 

 

(1.0

)

 

 

(1.0

)

Other income (expense) - net

 

 

(4.9

)

 

 

1.1

 

 

 

(3.9

)

 

 

(10.0

)

Total other expense

 

 

(14.8

)

 

 

(7.6

)

 

 

(33.3

)

 

 

(36.5

)

Income (loss) before income taxes

 

 

(7.3

)

 

 

10.4

 

 

 

2.3

 

 

 

46.1

 

Provision (benefit) for income taxes

 

 

(0.3

)

 

 

 

 

 

3.2

 

 

 

(1.0

)

Net income (loss)

 

$

(7.0

)

 

$

10.4

 

 

$

(0.9

)

 

$

47.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data and Share Amounts:

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common share

 

$

(0.20

)

 

$

0.30

 

 

$

(0.03

)

 

$

1.34

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per common share

 

$

(0.20

)

 

$

0.29

 

 

$

(0.03

)

 

$

1.31

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

35,123,015

 

 

 

35,080,037

 

 

 

35,251,847

 

 

 

35,095,211

 

Weighted average shares outstanding - diluted

 

 

35,123,015

 

 

 

35,787,704

 

 

 

35,251,847

 

 

 

35,836,672

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

 

2


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

($ in millions)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income (loss)

 

$

(7.0

)

 

$

10.4

 

 

$

(0.9

)

 

$

47.1

 

Other comprehensive income (loss),
   net of income tax

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on derivatives, net of
   income tax provision of $
0.0, $0.0, $0.0 
   and $
0.0, respectively

 

 

1.4

 

 

 

(4.6

)

 

 

(0.5

)

 

 

(10.4

)

Employee pension and postretirement benefit
  expense, net of income tax provision
   of $
0.0, $0.0, $0.0 and $0.0, respectively

 

 

(0.5

)

 

 

(0.3

)

 

 

(0.4

)

 

 

(2.2

)

Foreign currency translation adjustments, net of
   income tax benefit (provision) of $
0.0, ($0.2), $0.9, and
   $
0.7, respectively

 

 

19.0

 

 

 

(14.1

)

 

 

6.7

 

 

 

(0.4

)

Total other comprehensive income (loss), net of income tax

 

 

19.9

 

 

 

(19.0

)

 

 

5.8

 

 

 

(13.0

)

Comprehensive income (loss)

 

$

12.9

 

 

$

(8.6

)

 

$

4.9

 

 

$

34.1

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

3


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Balance Sheets

As of September 30, 2024 and December 31, 2023

(Unaudited)

($ in millions, except per share amounts)

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22.9

 

 

$

34.4

 

Accounts receivable, less allowances of $6.0 and $6.1, respectively

 

 

272.6

 

 

 

278.8

 

Inventories - net

 

 

769.9

 

 

 

666.5

 

Other current assets

 

 

38.6

 

 

 

53.3

 

Total current assets

 

 

1,104.0

 

 

 

1,033.0

 

Property, plant and equipment — net

 

 

366.0

 

 

 

366.1

 

Operating lease right-of-use assets

 

 

57.4

 

 

 

59.7

 

Goodwill

 

 

80.0

 

 

 

79.6

 

Intangible assets — net

 

 

123.8

 

 

 

125.6

 

Other non-current assets

 

 

45.5

 

 

 

42.7

 

Total assets

 

$

1,776.7

 

 

$

1,706.7

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

445.6

 

 

$

457.4

 

Customer advances

 

 

17.6

 

 

 

19.2

 

Short-term borrowings and current portion of long-term debt

 

 

40.5

 

 

 

13.4

 

Product warranties

 

 

38.5

 

 

 

47.1

 

Other liabilities

 

 

18.9

 

 

 

26.2

 

Total current liabilities

 

 

561.1

 

 

 

563.3

 

Non-Current Liabilities:

 

 

 

 

 

 

Long-term debt

 

 

426.7

 

 

 

358.7

 

Operating lease liabilities

 

 

44.5

 

 

 

47.2

 

Deferred income taxes

 

 

7.6

 

 

 

7.5

 

Pension obligations

 

 

51.6

 

 

 

55.8

 

Postretirement health and other benefit obligations

 

 

5.3

 

 

 

5.6

 

Long-term deferred revenue

 

 

21.0

 

 

 

24.1

 

Other non-current liabilities

 

 

51.3

 

 

 

41.2

 

Total non-current liabilities

 

 

608.0

 

 

 

540.1

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock (3,500,000 shares authorized of $.01 par value; none outstanding)

 

 

 

 

 

 

Common stock (75,000,000 shares authorized, 40,793,983 shares issued,
    
35,126,894 and 35,094,993 shares outstanding, respectively)

 

 

0.4

 

 

 

0.4

 

Additional paid-in capital

 

 

612.4

 

 

 

613.1

 

Accumulated other comprehensive loss

 

 

(80.6

)

 

 

(86.4

)

Retained earnings

 

 

142.6

 

 

 

143.5

 

Treasury stock, at cost (5,667,089 and 5,698,990 shares, respectively)

 

 

(67.2

)

 

 

(67.3

)

Total stockholders' equity

 

 

607.6

 

 

 

603.3

 

Total liabilities and stockholders' equity

 

$

1,776.7

 

 

$

1,706.7

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

4


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2024 and 2023

(Unaudited)

($ in millions)

 

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income (loss)

 

$

(0.9

)

 

$

47.1

 

Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

44.2

 

 

 

41.8

 

Amortization of intangible assets

 

 

2.2

 

 

 

2.4

 

Stock-based compensation expense

 

 

8.0

 

 

 

7.8

 

Amortization of deferred financing fees

 

 

1.0

 

 

 

1.0

 

Loss on debt extinguishment

 

 

1.1

 

 

 

 

Gain on sale of property, plant and equipment

 

 

(0.1

)

 

 

 

Deferred income tax benefit

 

 

 

 

 

(14.0

)

Loss on foreign currency translation adjustments

 

 

 

 

 

9.3

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

5.9

 

 

 

11.5

 

Inventories

 

 

(103.2

)

 

 

(114.3

)

Notes receivable

 

 

3.1

 

 

 

5.8

 

Other assets

 

 

11.2

 

 

 

5.2

 

Accounts payable

 

 

(0.6

)

 

 

(14.9

)

Accrued expenses and other liabilities

 

 

(35.1

)

 

 

34.5

 

Net cash provided by (used for) operating activities

 

 

(63.2

)

 

 

23.2

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Capital expenditures

 

 

(34.4

)

 

 

(59.9

)

Proceeds from sale of property, plant and equipment

 

 

5.3

 

 

 

5.3

 

Net cash used for investing activities

 

 

(29.1

)

 

 

(54.6

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

Payments on revolving credit facility

 

 

 

 

 

(10.0

)

Proceeds from revolving credit facility

 

 

67.4

 

 

 

 

Payments on long-term debt

 

 

300.0

 

 

 

 

Proceeds from long-term debt

 

 

(300.0

)

 

 

 

Proceeds from other debt - net

 

 

32.2

 

 

 

22.6

 

Debt issuance costs

 

 

(6.2

)

 

 

 

Exercises of stock options

 

 

 

 

 

0.3

 

Common stock repurchases

 

 

(5.7

)

 

 

(5.5

)

Other financing activities

 

 

(6.7

)

 

 

 

Net cash provided by financing activities

 

 

81.0

 

 

 

7.4

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(0.2

)

 

 

(0.4

)

Net decrease in cash and cash equivalents

 

 

(11.5

)

 

 

(24.4

)

Cash and cash equivalents at beginning of period

 

 

34.4

 

 

 

64.4

 

Cash and cash equivalents at end of period

 

$

22.9

 

 

$

40.0

 

Supplemental Cash Flow Information

 

 

 

 

 

 

Interest paid

 

$

38.6

 

 

$

19.4

 

Income taxes paid

 

 

7.7

 

 

 

6.1

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

5


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Equity

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

($ in millions, except share amounts)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Common Stock - Par Value

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

0.4

 

 

$

0.4

 

 

$

0.4

 

 

$

0.4

 

Balance at end of period

 

$

0.4

 

 

$

0.4

 

 

$

0.4

 

 

$

0.4

 

Additional Paid-in Capital

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

610.1

 

 

$

607.8

 

 

$

613.1

 

 

$

606.7

 

Stock compensation plans

 

 

(0.1

)

 

 

(0.7

)

 

 

(8.7

)

 

 

(5.0

)

Stock-based compensation expense

 

 

2.4

 

 

 

2.4

 

 

 

8.0

 

 

 

7.8

 

Balance at end of period

 

$

612.4

 

 

$

609.5

 

 

$

612.4

 

 

$

609.5

 

Accumulated Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(100.5

)

 

$

(101.9

)

 

$

(86.4

)

 

$

(107.9

)

Other comprehensive income (loss)

 

 

19.9

 

 

 

(19.0

)

 

 

5.8

 

 

 

(13.0

)

Balance at end of period

 

$

(80.6

)

 

$

(120.9

)

 

$

(80.6

)

 

$

(120.9

)

Retained Earnings

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

149.6

 

 

$

141.0

 

 

$

143.5

 

 

$

104.3

 

Net income (loss)

 

 

(7.0

)

 

 

10.4

 

 

 

(0.9

)

 

 

47.1

 

Balance at end of period

 

$

142.6

 

 

$

151.4

 

 

$

142.6

 

 

$

151.4

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(67.3

)

 

$

(67.9

)

 

$

(67.3

)

 

$

(65.7

)

Stock compensation plans

 

 

0.1

 

 

 

0.5

 

 

 

5.8

 

 

 

3.8

 

Common stock repurchases

 

 

 

 

 

 

 

 

(5.7

)

 

 

(5.5

)

Balance at end of period

 

$

(67.2

)

 

$

(67.4

)

 

$

(67.2

)

 

$

(67.4

)

Total stockholders' equity

 

$

607.6

 

 

$

573.0

 

 

$

607.6

 

 

$

573.0

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

6


 

THE MANITOWOC COMPANY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

1. Accounting Policies and Basis of Presentation

The Manitowoc Company, Inc. (“Manitowoc” or the “Company”) was founded in 1902 and has over a 120-year tradition of providing high-quality, customer-focused products and support services to its markets. Headquartered in Milwaukee, Wisconsin, United States, Manitowoc is one of the world's leading providers of engineered lifting solutions. Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, distributes, and supports comprehensive product lines of mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes under the Aspen Equipment, Grove, Manitowoc, MGX Equipment Services, National Crane, Potain, and Shuttlelift brand names. The Company serves a wide variety of customers, including dealers, rental companies, contractors, and government entities, across the petrochemical, industrial, commercial construction, power and utilities, infrastructure and residential construction end markets. Due to the ongoing and predictable maintenance needed by cranes, as well as the high cost of crane downtime, Manitowoc’s aftermarket support operations provide the Company with a consistent stream of recurring revenue.

The Company has three reportable segments, the Americas segment, the Europe and Africa ("EURAF") segment and the Middle East and Asia Pacific (“MEAP”) segment. The Americas segment includes the North America and South America continents. The EURAF reporting segment includes the Europe and Africa continents, excluding the Middle East region. The MEAP reporting segment includes the Asia and Australia continents and the Middle East region. The segments were identified using the “management approach,” which designates the internal organization that is used by management for making operating decisions and assessing performance. Refer to Note 16, “Segments,” for additional information.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments necessary for a fair statement of the results of operations for the three and nine months ended September 30, 2024 and 2023, the cash flows for the same nine month periods and the financial positions as of September 30, 2024 and December 31, 2023, and except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. The audited balance sheet as of December 31, 2023 was derived from the audited annual financial statements. The interim results are not necessarily indicative of results for a full year and do not contain information included in the Company’s annual consolidated financial statements and notes for the year ended December 31, 2023. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K.

All amounts, except per share data and per share amounts, are in millions throughout the tables in these notes unless otherwise indicated.

2. Recent Accounting Changes and Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting - Improvements to Reportable Segments Disclosures.” The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced footnote disclosures about significant segment expenses. The standard is effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The amendments in this ASU enhance the transparency and decision usefulness of income tax disclosures. The standard is effective for annual periods beginning after December 15, 2024, and for interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.

3. Net Sales

The Company defers revenue when cash payments are received in advance of satisfying the performance obligation. These amounts are recorded as customer advances in the Condensed Consolidated Balance Sheets. The table below shows the change in the customer advances balance for the three and nine months ended September 30, 2024 and 2023.

7


 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Balance at beginning of period

 

$

17.8

 

 

$

20.2

 

 

$

19.2

 

 

$

21.9

 

Cash received in advance of satisfying
   performance obligations

 

 

21.7

 

 

 

41.4

 

 

 

85.2

 

 

 

113.8

 

Revenue recognized

 

 

(22.4

)

 

 

(36.7

)

 

 

(86.8

)

 

 

(111.0

)

Currency translation

 

 

0.5

 

 

 

(0.6

)

 

 

 

 

 

(0.4

)

Balance at end of period

 

$

17.6

 

 

$

24.3

 

 

$

17.6

 

 

$

24.3

 

 

Disaggregation of the Company’s revenue sources are disclosed in Note 16, “Segments.”

4. Fair Value of Financial Instruments

The following table sets forth the Company’s financial assets and liabilities related to foreign currency exchange contracts (“FX Forward Contracts”) and The Manitowoc Company, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan") that were accounted for at fair value as of September 30, 2024 and December 31, 2023.

 

 

 

Fair Value as of September 30, 2024

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Recognized Location

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

1.2

 

 

$

 

 

$

1.2

 

 

 Other current assets

Deferred Compensation Plan - Program B

 

$

9.0

 

 

$

 

 

$

 

 

$

9.0

 

 

 Other non-current assets

Total current assets at fair value

 

$

9.0

 

 

$

1.2

 

 

$

 

 

$

10.2

 

 

 

 

 

 

Fair Value as of December 31, 2023

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Recognized Location

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

1.6

 

 

$

 

 

$

1.6

 

 

 Other current assets

Deferred Compensation Plan - Program B

 

 

8.1

 

 

 

 

 

 

 

 

 

8.1

 

 

 Other non-current assets

Total current assets at fair value

 

$

8.1

 

 

$

1.6

 

 

$

 

 

$

9.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

0.6

 

 

$

 

 

$

0.6

 

 

 Accounts payable and
   accrued expenses

The fair value of the $300.0 million senior secured second lien notes due on October 1, 2031, with an annual coupon rate of 9.250% (the “2031 Notes”), was approximately $307.5 million as of September 30, 2024. See Note 10, “Debt,” for a description of the 2031 Notes and the related carrying value.

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company estimates the fair value of its 2031 Notes based on quoted market prices of the instruments; because these markets are typically actively traded, the liabilities are classified as Level 1 within the valuation hierarchy. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term variable debt, including any amounts outstanding under the Company's revolving credit facility, approximate fair value, without being discounted as of September 30, 2024 and December 31, 2023, due to the short-term nature of these instruments.

FX Forward Contracts are valued through an independent valuation source which uses an industry standard data provider, with resulting valuations periodically validated through third-party or counterparty quotes. As such, these derivative instruments are classified within Level 2. See Note 5, “Derivative Financial Instruments” for additional information.

The Deferred Compensation Plan utilizes a rabbi trust to hold assets intended to satisfy the Company’s corresponding future benefit obligations. The plan assets and corresponding obligations for Program B under the Deferred Compensation Plan are classified within Level 1.

8


 

5. Derivative Financial Instruments

The Company’s risk management objective is to ensure that business exposures to risks are minimized using the most effective and efficient methods to eliminate, reduce, or transfer such exposures. Operating decisions consider these associated risks and, whenever possible, transactions are structured to avoid or mitigate these risks.

From time to time, the Company enters into FX Forward Contracts to manage the exposure on forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities in currencies other than the functional currency of certain subsidiaries. Certain of these FX Forward Contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income (loss) ("AOCI"). These changes in fair value are reclassified into earnings as a component of cost of sales, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded as a component of other income (expense) – net in the period in which the transaction is no longer considered probable of occurring. No amounts were recorded related to forecasted transactions no longer being probable during the three and nine months ended September 30, 2024 and 2023.

The Company had FX Forward Contracts with aggregate notional amounts of $68.6 million and $140.1 million in U.S. dollar equivalent as of September 30, 2024 and December 31, 2023, respectively. The aggregate notional amount outstanding as of September 30, 2024 is scheduled to mature within one year. The FX Forward Contracts are denominated in various foreign currencies. Net unrealized gains, net of income tax, recorded in AOCI were $0.8 million and $1.3 million as of September 30, 2024 and December 31, 2023, respectively.

 

The net gains (losses) recorded in the Condensed Consolidated Statements of Operations for FX Forward Contracts for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

Recognized Location

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Designated

 

Cost of sales

 

$

0.5

 

 

$

(0.6

)

 

$

(0.8

)

 

$

4.6

 

Non-designated

 

Other income (expense) - net

 

$

(0.6

)

 

$

0.7

 

 

$

1.7

 

 

$

(4.6

)

 

6. Inventories

The components of inventories as of September 30, 2024 and December 31, 2023 are summarized as follows:

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Raw materials

 

$

189.4

 

 

$

164.7

 

Work-in-process

 

 

154.9

 

 

 

111.3

 

Finished goods

 

 

425.6

 

 

 

390.5

 

Total inventories

 

$

769.9

 

 

$

666.5

 

 

7. Property, Plant, and Equipment

The components of property, plant, and equipment as of September 30, 2024 and December 31, 2023 are summarized as follows:

9


 

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Land

 

$

15.0

 

 

$

14.9

 

Building and improvements

 

 

204.0

 

 

 

201.5

 

Machinery, equipment, and tooling

 

 

340.9

 

 

 

318.4

 

Furniture and fixtures

 

 

13.9

 

 

 

13.8

 

Computer hardware and software

 

 

138.2

 

 

 

135.8

 

Rental cranes

 

 

206.9

 

 

 

201.9

 

Construction in progress

 

 

9.7

 

 

 

7.2

 

Total cost

 

 

928.6

 

 

 

893.5

 

Less accumulated depreciation

 

 

(562.6

)

 

 

(527.4

)

Property, plant, and equipment — net

 

$

366.0

 

 

$

366.1

 

 

Property, plant, and equipment is depreciated over the estimated useful life using the straight-line depreciation method for financial reporting and accelerated methods for income tax purposes.

 

Additions to property, plant, and equipment included in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 were $3.9 million and $7.0 million, respectively.

Assets Held for Sale

As of December 31, 2023, the Company had $3.0 million of property, plant, and equipment classified as assets held for sale in other current assets in the Condensed Consolidated Balance Sheets. As of September 30, 2024, the Company sold the property, plant, and equipment previously classified as assets held for sale.

8. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill as of September 30, 2024 is summarized as follows:

 

 

Americas

 

 

MEAP

 

 

Consolidated

 

Balance as of December 31, 2023

 

$

14.4

 

 

$

65.2

 

 

$

79.6

 

Foreign currency impact

 

 

 

 

 

0.4

 

 

 

0.4

 

Balance as of September 30, 2024

 

$

14.4

 

 

$

65.6

 

 

$

80.0

 

The gross carrying amount, accumulated impairment and net book value of the Company's goodwill balances by reportable segment as of September 30, 2024 and December 31, 2023, are summarized as follows:

 

 

September 30, 2024

 

 

December 31, 2023

 

 

 

Gross Carrying Amount

 

 

Accumulated Impairment Amount

 

 

Net Book Value

 

 

Gross Carrying Amount

 

 

Accumulated Impairment Amount

 

 

Net Book Value

 

Americas

 

$

180.9

 

 

$

(166.5

)

 

$

14.4

 

 

$

180.9

 

 

$

(166.5

)

 

$

14.4

 

EURAF

 

 

82.2

 

 

 

(82.2

)

 

 

 

 

 

82.2

 

 

 

(82.2

)

 

 

 

MEAP

 

 

65.6

 

 

 

 

 

 

65.6

 

 

 

65.2

 

 

 

 

 

 

65.2

 

Total

 

$

328.7

 

 

$

(248.7

)

 

$

80.0

 

 

$

328.3

 

 

$

(248.7

)

 

$

79.6

 

The Company performs its annual goodwill impairment test during the fourth quarter, or more frequently if events or changes in circumstances indicate that there might be an impairment of the asset. The Company will continue to monitor changes in

10


 

circumstances and test more frequently if those changes indicate that assets might be impaired. The Company determined there was no triggering event during the three and nine months ended September 30, 2024.

The gross carrying amount, accumulated amortization, and net book value of the Company’s other intangible assets other than goodwill as of September 30, 2024 and December 31, 2023, are summarized as follows:

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization
Amount

 

 

Net
Book
Value

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization
Amount

 

 

Net
Book
Value

 

Definite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

26.4

 

 

$

(12.7

)

 

$

13.7

 

 

$

26.5

 

 

$

(11.6

)

 

$

14.9

 

Patents

 

 

29.3

 

 

 

(29.0

)

 

 

0.3

 

 

 

29.2

 

 

 

(28.8

)

 

 

0.4

 

Noncompetition agreements

 

 

4.2

 

 

 

(2.6

)

 

 

1.6

 

 

 

4.2

 

 

 

(2.0

)

 

 

2.2

 

Trademarks and tradenames

 

 

2.2

 

 

 

(1.4

)

 

 

0.8

 

 

 

2.2

 

 

 

(1.0

)

 

 

1.2

 

Other intangibles

 

 

0.6

 

 

 

(0.6

)

 

 

 

 

 

0.7

 

 

 

(0.7

)

 

 

 

Total

 

$

62.7

 

 

$

(46.3

)

 

$

16.4

 

 

$

62.8

 

 

$

(44.1

)

 

$

18.7

 

Indefinite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and tradenames

 

$

93.0

 

 

$

 

 

$

93.0

 

 

$

92.6

 

 

$

 

 

$

92.6

 

Distribution network

 

 

14.4

 

 

 

 

 

 

14.4

 

 

 

14.3

 

 

 

 

 

 

14.3

 

Total

 

 

107.4

 

 

 

 

 

 

107.4

 

 

 

106.9

 

 

 

 

 

 

106.9

 

Total other intangible assets

 

$

170.1

 

 

$

(46.3

)

 

$

123.8

 

 

$

169.7

 

 

$

(44.1

)

 

$

125.6

 

Definite lived intangible assets are amortized over their estimated useful lives.

Long-lived assets, which are primarily made up of property, plant, and equipment and definite lived intangible assets, are subject to impairment testing whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. The Company determined there was no triggering event during the three and nine months ended September 30, 2024 with the exception of one asset group located in Europe. Based on the results of the recoverability test, it was determined that the undiscounted cash flows were in excess of the $55.6 million carrying value of the long-lived assets.

The Company performs its annual indefinite-lived intangible assets impairment testing during the fourth quarter, or more frequently if events or changes in circumstances indicate that there might be an impairment of the asset. The Company will continue to monitor changes in circumstances and test more frequently if those changes indicate that assets might be impaired. The Company determined there was no triggering event during the three and nine months ended September 30, 2024.

9. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of September 30, 2024 and December 31, 2023 are summarized as follows:

 

 

 

September 30, 2024

 

 

December 31, 2023

 

Trade accounts payable

 

$

254.3

 

 

$

254.7

 

Employee-related expenses

 

 

49.1

 

 

 

57.9

 

Accrued vacation

 

 

24.6

 

 

 

23.7

 

Miscellaneous accrued expenses

 

 

117.6

 

 

 

121.1

 

Total accounts payable and accrued expenses

 

$

445.6

 

 

$

457.4

 

 

11


 

10. Debt

Outstanding debt as of September 30, 2024 and December 31, 2023 is summarized as follows:

 

 

 

September 30, 2024

 

 

December 31, 2023

 

Borrowings under senior secured asset based revolving
   credit facility

 

$

128.6

 

 

$

60.0

 

Senior secured second lien notes due 2026

 

 

 

 

 

300.0

 

Senior secured second lien notes due 2031

 

 

300.0

 

 

 

 

Other debt

 

 

43.9

 

 

 

13.7

 

Deferred financing costs

 

 

(5.3

)

 

 

(1.6

)

Total debt

 

 

467.2

 

 

 

372.1

 

Short-term borrowings and current portion of long-term
   debt

 

 

(40.5

)

 

 

(13.4

)

Long-term debt

 

$

426.7

 

 

$

358.7

 

On March 25, 2019, the Company and certain subsidiaries of the Company (the “Loan Parties”) entered into a credit agreement (the “ABL Credit Agreement”) with JP Morgan Chase Bank, N.A. as administrative and collateral agent, and certain financial institutions party thereto as lenders, providing for a senior secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”) of up to $275.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and certain fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2031 Notes and the related guarantees. The ABL Revolving Credit Facility includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility (the “German Borrower”).

On June 17, 2021, the Company amended the ABL Credit Agreement to adjust certain negative covenants which reduced restrictions on the Company’s ability to expand its rental business. On May 19, 2022, the Company further amended the ABL Credit Agreement to (i) extend the maturity date to May 19, 2027 (subject to a springing maturity date of December 30, 2025 if the 2026 Notes have not been repaid in full or refinanced prior to December 30, 2025), (ii) permit the inclusion, subject to certain limitations, of the crane rental assets of certain subsidiaries in the borrowing base used to calculate availability under the ABL Credit Agreement, (iii) permit separate financing of crane rental assets not included in the borrowing base and (iv) replace U.S. dollar London Inter-bank Offered Rate with interest rates based on the secured overnight financing rate plus a credit spread adjustment (“SOFR”).

On September 18, 2024, the Company further amended the ABL Credit Agreement to (i) increase the aggregate commitment by $50.0 million to a total aggregate commitment of up to $325.0 million, of which $100.0 million is available to the German Borrower, (ii) increase the swingline sublimit by $20.0 million to an aggregate $50.0 million, of which $20.0 million is available to the German Borrower, and (iii) extend the maturity date to September 18, 2029.

Borrowings under the ABL Revolving Credit Facility bear interest at a variable rate using either the Alternate Base Rate or Term Benchmark, Applicable Overnight Rate, Central Bank Rate ("CBR") or RFR rate (each as defined in the ABL Credit Agreement) plus the applicable spread set forth below. The variable interest rate is based upon the average availability as of the most recent determination date as follows:

 

Average quarterly availability

Alternative Base Rate spread

Term Benchmark, Applicable Overnight Rate, CBR and RFR spread

Category 1

≥ 66% of Aggregate Commitment

0.25%

1.25%

Category 2

< 66% but ≥ 33% of Aggregate Commitment

0.50%

1.50%

Category 3

< 33% of Aggregate Commitment

0.75%

1.75%

As of September 30, 2024 and December 31, 2023, the Company had borrowings on the ABL Revolving Credit Facility of $128.6 million and $60.0 million, respectively. During the period from September 18, 2024 to June 30, 2025, the spreads for

12


 

SOFR and prime rate borrowings are deemed to be in Category 2. As of September 30, 2024, there was excess availability of $193.0 million, which represents revolver borrowing capacity of $325.0 million less $128.6 million of borrowings outstanding and $3.4 million of U.S. letters of credit outstanding.

As of September 30, 2024, the Company had other indebtedness outstanding of $43.9 million that had a weighted-average interest rate of approximately 5.2%. This debt includes balances on local credit lines, overdraft facilities, and other financing arrangements.

On September 19, 2024, the Company and certain of its subsidiaries entered into an indenture with U.S. Bank Trust Company, National Association as trustee and notes collateral agent, pursuant to which the Company issued $300.0 million aggregate principal amount of the 2031 Notes with an annual coupon rate of 9.250%. Interest on the 2031 Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year. The 2031 Notes are fully and unconditionally guaranteed on a senior secured second lien basis, jointly and severally, by each of the Company’s existing and future domestic subsidiaries that is either a guarantor or a borrower under the ABL Revolving Credit Facility or that guarantees certain other debt of the Company or a guarantor. The 2031 Notes and the related guarantees are secured on a second-priority basis, subject to certain exceptions and permitted liens, by pledges of capital stock and other equity interests and other security interests in substantially all of the personal property and fee-owned real property of the Company and of the guarantors that secure obligations under the ABL Revolving Credit Facility. The Company used the net proceeds from this offering, together with cash on hand, to redeem all of its outstanding 9.00% Senior Secured Second Lien Notes due 2026.

For the three and nine months ended September 30, 2024, the Company recorded a $1.1 million non-cash charge in other income (expense) – net in the Condensed Consolidated Statement of Operations associated with the Company’s refinancing of the ABL Revolving Credit Facility and 2031 Notes. The charge is related to unamortized debt issuance costs on the prior $300.0 million senior secured second lien notes due April 1, 2026 (the “2026 Notes”).

Both the ABL Revolving Credit Facility and the 2031 Notes include customary covenants which include, without limitation, restrictions on the Company’s ability and the ability of the Company’s restricted subsidiaries to incur, assume or guarantee additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of the Company’s capital stock or make other restricted payments, make certain investments, sell or transfer certain assets, create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates and designate the Company’s subsidiaries as unrestricted. Both the ABL Revolving Credit Facility and the 2031 Notes also include customary events of default. The ABL Revolving Credit Facility has customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in the Company’s business or financial condition since December 31, 2021.

Additionally, the ABL Revolving Credit Facility contains a covenant requiring the Company to maintain a minimum fixed charge coverage ratio under certain circumstances set forth in the ABL Credit Agreement.

As of September 30, 2024, the Company was in compliance with all affirmative and negative covenants in its debt instruments, inclusive of the financial covenants pertaining to the ABL Revolving Credit Facility and the 2031 Notes. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

11. Accounts Receivable Factoring

The Company has two non-U.S. accounts receivable financing programs with no maximum availability. Transactions under the non-U.S. programs were accounted for as sales in accordance with Accounting Standards Codification (“ASC”) Topic 860, “Transfers and Servicing.” Under these financing programs, the Company has the ability to sell eligible receivables up to the maximum limit.

For the three and nine months ended September 30, 2024, cash proceeds from the factoring of accounts receivable qualifying as sales were $33.0 million and $120.7 million, respectively. For the three and nine months ended September 30, 2023, cash proceeds from the factoring of accounts receivable qualifying as sales were $44.5 million and $127.1 million, respectively.

Financing charges incurred from the factoring of accounts receivable qualifying as sales for the three and nine months ended September 30, 2024 and 2023 were immaterial.

13


 

12. Income Taxes

The Company’s income before income taxes include income from both U.S. and foreign jurisdictions. The annual effective tax rate varies from the U.S. federal statutory rate of 21% due to results of foreign operations that are subject to income taxes at different statutory rates. In addition, tax expense is impacted by losses in jurisdictions where no tax benefit can be realized.

For the three months ended September 30, 2024, and 2023, the Company recorded a benefit for income taxes of $0.3 million and zero, respectively. For the nine months ended September 30, 2024, and 2023, the Company recorded a provision for income taxes of $3.2 million and a benefit for income taxes of $1.0 million, respectively. During the three months ended September 30, 2023, the Company recorded a $3.2 million discrete tax benefit related to the resolution of a previously reserved foreign income tax matter. During the nine months ended September 30, 2023, the Company recorded discrete net tax benefits of $17.1 million, of which $13.9 million related to a release of a valuation allowance and $3.2 million related to the resolution of a previously reserved foreign income tax matter.

The Company’s unrecognized tax benefits, excluding interest and penalties, were $10.9 million and $9.1 million as of September 30, 2024, and December 31, 2023, respectively.

13. Net Income (Loss) Per Common Share

The following is a reconciliation of the weighted average shares outstanding used to compute basic and diluted net income (loss) per common share:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Basic weighted average common
    shares outstanding

 

 

35,123,015

 

 

 

35,080,037

 

 

 

35,251,847

 

 

 

35,095,211

 

Effect of dilutive securities - equity
   compensation awards

 

 

 

 

 

707,667

 

 

 

 

 

 

741,461

 

Diluted weighted average common
   shares outstanding

 

 

35,123,015

 

 

 

35,787,704

 

 

 

35,251,847

 

 

 

35,836,672

 

 

Equity compensation awards for which total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on earnings per share during periods with net income, and accordingly, are excluded from diluted weighted average common shares outstanding. Due to the net loss incurred during the three and nine months ended September 30, 2024, the assumed exercise of all equity instruments was anti-dilutive and, therefore, not included in the net diluted income (loss) per share calculations for those periods. Anti-dilutive equity instruments of 427,025 and 435,025 common shares were excluded from the diluted weighted average common shares outstanding for the three and nine months ended September 30, 2023, respectively.

No cash dividends were declared or paid during the three and nine months ended September 30, 2024 and 2023.

14. Equity

Authorized capital consists of 75.0 million shares of $0.01 par value common stock and 3.5 million shares of $0.01 par value preferred stock. None of the preferred shares have been issued.

 

As of September 30, 2024, the Company has $29.3 million remaining under an authorization from the Board of Directors to purchase up to $35.0 million of the Company’s common stock at management’s discretion. The Company’s share repurchase program purchases shares in the open market to offset stock-based awards issued in conjunction with the Company’s 2013 Omnibus Incentive Plan. During the nine months ended September 30, 2024, the Company repurchased $5.7 million of common stock under this authorization.

 

The Company’s operations in Russia were substantially curtailed during the year ended December 31, 2023. As a result, for the nine months ended September 30, 2023, the Company released $9.3 million of non-cash foreign currency translation adjustments recorded in accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets to other income (expense) – net in the Condensed Consolidated Statement of Operations.

 

A reconciliation of the changes in accumulated other comprehensive income (loss), net of income tax, by component for the three months ended September 30, 2024 and 2023 are summarized as follows:

14


 

 

 

Cash Flow Hedges

 

 

Pension &
Postretirement

 

 

Foreign Currency
Translation

 

 

Total

 

Balance as of June 30, 2023

 

$

(0.4

)

 

$

(17.2

)

 

$

(84.3

)

 

$

(101.9

)

Other comprehensive loss before
   reclassifications

 

 

(5.2

)

 

 

(1.1

)

 

 

(14.1

)

 

 

(20.4

)

Amounts reclassified from accumulated other
   comprehensive loss

 

 

0.6

 

 

 

0.8

 

 

 

 

 

 

1.4

 

Net other comprehensive loss

 

 

(4.6

)

 

 

(0.3

)

 

 

(14.1

)

 

 

(19.0

)

Balance as of September 30, 2023

 

$

(5.0

)

 

$

(17.5

)

 

$

(98.4

)

 

$

(120.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2024

 

$

(0.6

)

 

$

(10.2

)

 

$

(89.7

)

 

$

(100.5

)

Other comprehensive income (loss) before
   reclassifications

 

 

1.9

 

 

 

(0.7

)

 

 

19.0

 

 

 

20.2

 

Amounts reclassified from accumulated other
   comprehensive loss

 

 

(0.5

)

 

 

0.2

 

 

 

 

 

 

(0.3

)

Net other comprehensive income (loss)

 

 

1.4

 

 

 

(0.5

)

 

 

19.0

 

 

 

19.9

 

Balance as of September 30, 2024

 

$

0.8

 

 

$

(10.7

)

 

$

(70.7

)

 

$

(80.6

)

A reconciliation of the changes in accumulated other comprehensive income (loss), net of income tax, by component for the nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

Cash Flow Hedges

 

 

Pension &
Postretirement

 

 

Foreign Currency
Translation

 

 

Total

 

Balance as of December 31, 2022

 

$

5.4

 

 

$

(15.3

)

 

$

(98.0

)

 

$

(107.9

)

Other comprehensive loss before
   reclassifications

 

 

(5.8

)

 

 

(4.4

)

 

 

(9.7

)

 

 

(19.9

)

Amounts reclassified from accumulated
   other comprehensive loss

 

 

(4.6

)

 

 

2.2

 

 

 

9.3

 

 

 

6.9

 

Net other comprehensive loss

 

 

(10.4

)

 

 

(2.2

)

 

 

(0.4

)

 

 

(13.0

)

Balance as of September 30, 2023

 

$

(5.0

)

 

$

(17.5

)

 

$

(98.4

)

 

$

(120.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2023

 

$

1.3

 

 

$

(10.3

)

 

$

(77.4

)

 

$

(86.4

)

Other comprehensive income (loss) before
   reclassifications

 

 

(1.3

)

 

 

(0.7

)

 

 

6.7

 

 

 

4.7

 

Amounts reclassified from accumulated other
   comprehensive loss

 

 

0.8

 

 

 

0.3

 

 

 

 

 

 

1.1

 

Net other comprehensive income (loss)

 

 

(0.5

)

 

 

(0.4

)

 

 

6.7

 

 

 

5.8

 

Balance as of September 30, 2024

 

$

0.8

 

 

$

(10.7

)

 

$

(70.7

)

 

$

(80.6

)

 

15


 

A reconciliation of the reclassifications from accumulated other comprehensive loss, net of income tax, for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

 

Amount Reclassified from Accumulated Other
Comprehensive Loss

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

Recognized
Location

Gains (losses) on cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

0.5

 

 

$

(0.6

)

 

$

(0.8

)

 

$

4.6

 

 

 

Cost of sales

Total before income taxes

 

 

0.5

 

 

 

(0.6

)

 

 

(0.8

)

 

 

4.6

 

 

 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total, net of income taxes

 

$

0.5

 

 

$

(0.6

)

 

$

(0.8

)

 

$

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of pension and
   postretirement items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses

 

$

(0.2

)

 

$

(0.8

)

 

$

(0.3

)

 

$

(2.2

)

(a)

 

Other income (expense) - net

Total before income taxes

 

 

(0.2

)

 

 

(0.8

)

 

 

(0.3

)

 

 

(2.2

)

 

 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total, net of income taxes

 

$

(0.2

)

 

$

(0.8

)

 

$

(0.3

)

 

$

(2.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses on foreign currency translation

 

$

 

 

$

 

 

$

 

 

$

(9.3

)

 

 

Other income (expense) - net

Total before income taxes

 

 

 

 

 

 

 

 

 

 

 

(9.3

)

 

 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total, net of income taxes

 

$

 

 

$

 

 

$

 

 

$

(9.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total reclassifications for the period,
   net of income taxes

 

$

0.3

 

 

$

(1.4

)

 

$

(1.1

)

 

$

(6.9

)

 

 

 

 

(a)
These accumulated other comprehensive loss components are components of net periodic pension cost (see Note 19, “Employee Benefit Plans,” for additional information).

15. Stock-Based Compensation

Equity compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to 2024 is included in the Company’s 2023 Annual Report on Form 10-K.

Stock-based compensation expense was $2.4 million for the three months ended September 30, 2024 and 2023. Stock-based compensation was $8.0 million and $7.8 million for the nine months ended September 30, 2024 and 2023, respectively. The Company reports stock-based compensation expense within engineering, selling, and administrative expenses in the Condensed Consolidated Statements of Operations. The Company recognizes stock-based compensation expense over the award’s vesting period, subject to retirement, death or disability provisions of the 2013 Omnibus Incentive Plan.

The Company granted 2,694 and 11,849 restricted stock units during the three months ended September 30, 2024 and 2023, respectively. The Company granted 461,632 and 512,132 restricted stock units, inclusive of 78,894 and 77,576 director awards, during the nine months ended September 30, 2024 and 2023, respectively. The restricted stock units granted to employees vest in three annual increments over a three-year period beginning on the grant date and director awards vest immediately on the grant date.

No performance shares units were issued by the Company to employees during the three months ended September 30, 2024 and 2023, respectively. A total of 365,174 and 316,022 performance shares units were issued by the Company to employees during the nine months ended September 30, 2024 and 2023, respectively. Performance share units vest after three years and are earned based on the extent to which performance goals are met over the applicable performance period. The performance goals and the applicable performance period vary for each grant year.

16


 

The performance goals for the performance share units granted in 2024 are weighted 60% on the 3-year average of the Company’s adjusted return on invested capital ("Adjusted ROIC") percentage from 2024 to 2026 and 40% on cumulative non-new machine sales from January 1, 2024 through December 31, 2026. The Company defines non-new machine sales as parts sales, used crane sales, rental revenue, service revenue and other revenue. The 2024 performance share units include a +/-20% modifier weighted on total shareholder return relative to a defined peer group of companies during the three-year performance period, not to exceed 200% of target shares granted.

The performance goals for the performance share units granted in 2023 are weighted 60% on the 3-year average of the Company’s adjusted EBITDA percentage from 2023 to 2025 and 40% on cumulative non-new machine sales from January 1, 2023 through December 31, 2025. The 2023 performance share units include a +/-20% modifier weighted on total shareholder return relative to a defined peer group of companies during the three-year performance period, not to exceed 200% of target shares granted.

16. Segments

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the Chief Executive Officer, who is also the Company’s Chief Operating Decision Maker (“CODM”), for making decisions about the allocation of resources and assessing performance as the source of the Company’s reportable operating segments.

The Company has three reportable segments: Americas, EURAF, and MEAP. The Company's operating segments were identified as its reportable segments.

The CODM evaluates the performance of its reportable segments based on net sales and operating income. Segment net sales are recognized in the geographic region where the product is sold. The Company does not include intercompany sales between segments for management reporting purposes. Operating income for each segment includes net sales to third parties, cost of sales directly attributable to the segment, and operating expenses directly attributable to the segment. Manufacturing variances generated within each operating segment are maintained in each segment’s operating income. Operating income for each segment excludes other income and expense and certain expenses managed outside the operating segments. Costs excluded from segment operating income include various corporate expenses such as stock-based compensation expense, income taxes, nonrecurring charges and other separately managed general and administrative costs. The CODM does not evaluate performance of the reportable segments based on total assets.

17


 

The following table shows information by reportable segment for the three and nine months ended September 30, 2024 and 2023:

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

287.1

 

 

$

276.8

 

 

$

867.0

 

 

$

860.6

 

EURAF

 

 

126.8

 

 

 

150.6

 

 

 

446.0

 

 

 

514.6

 

MEAP

 

 

110.9

 

 

 

93.5

 

 

 

269.0

 

 

 

256.8

 

Total

 

$

524.8

 

 

$

520.9

 

 

$

1,582.0

 

 

$

1,632.0

 

Segment Operating
   Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

23.1

 

 

$

23.5

 

 

$

76.5

 

 

$

81.6

 

EURAF

 

 

(14.9

)

 

 

(7.7

)

 

 

(33.5

)

 

 

2.3

 

MEAP

 

 

10.0

 

 

 

12.7

 

 

 

27.5

 

 

 

40.3

 

Total

 

$

18.2

 

 

$

28.5

 

 

$

70.5

 

 

$

124.2

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

7.6

 

 

$

7.1

 

 

$

22.2

 

 

$

21.7

 

EURAF

 

 

6.0

 

 

 

5.6

 

 

 

17.8

 

 

 

16.4

 

MEAP

 

 

0.6

 

 

 

0.4

 

 

 

2.1

 

 

 

1.6

 

Corporate

 

 

0.7

 

 

 

0.6

 

 

 

2.1

 

 

 

2.1

 

Total

 

$

14.9

 

 

$

13.7

 

 

$

44.2

 

 

$

41.8

 

Capital Expenditures

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

3.6

 

 

$

16.8

 

 

$

14.6

 

 

$

40.2

 

EURAF

 

 

4.8

 

 

 

6.5

 

 

 

17.0

 

 

 

18.4

 

MEAP

 

 

0.5

 

 

 

0.3

 

 

 

2.4

 

 

 

1.3

 

Corporate

 

 

0.4

 

 

 

 

 

 

0.4

 

 

 

 

Total

 

$

9.3

 

 

$

23.6

 

 

$

34.4

 

 

$

59.9

 

A reconciliation of the Company’s segment operating income to operating income in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Segment operating income

 

$

18.2

 

 

$

28.5

 

 

$

70.5

 

 

$

124.2

 

Unallocated corporate expenses

 

 

(10.7

)

 

 

(10.5

)

 

 

(34.9

)

 

 

(41.5

)

Unallocated restructuring
   expense

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

Total operating income

 

$

7.5

 

 

$

18.0

 

 

$

35.6

 

 

$

82.6

 

Net sales by geographic area for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

United States

 

$

253.9

 

 

$

245.2

 

 

$

761.2

 

 

$

729.9

 

Europe

 

 

123.8

 

 

 

141.0

 

 

 

433.9

 

 

 

493.4

 

Other

 

 

147.1

 

 

 

134.7

 

 

 

386.9

 

 

 

408.7

 

Total net sales

 

$

524.8

 

 

$

520.9

 

 

$

1,582.0

 

 

$

1,632.0

 

 

New machine and non-new machines sales for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

New machine sales

 

$

355.6

 

 

$

366.2

 

 

$

1,120.3

 

 

$

1,175.1

 

Non-new machine sales

 

 

169.2

 

 

 

154.7

 

 

 

461.7

 

 

 

456.9

 

Total net sales

 

$

524.8

 

 

$

520.9

 

 

$

1,582.0

 

 

$

1,632.0

 

 

18


 

 

17. Commitments and Contingencies

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business which have not been fully resolved. The outcome of any litigation is inherently uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter.

As of September 30, 2024, various product-related lawsuits were pending. To the extent permitted under applicable law, all of these lawsuits are insured with self-insurance retention levels. The Company’s self-insurance retention levels vary by business and have fluctuated over the last 10 years. As of September 30, 2024, the largest self-insured retention level for new occurrences currently maintained by the Company is $3.0 million per occurrence and applies to product liability claims arising in North America.

As of September 30, 2024, current and long-term product liability reserves were $2.9 million and $6.2 million, respectively. As of December 31, 2023, current and long-term product liability reserves were $11.4 million and $5.1 million, respectively. Current product liability reserves are included within other liabilities and long-term product liability reserves are included within other non-current liabilities in the Condensed Consolidated Balance Sheets. These amounts are not reduced for insurance recoveries for claims above the Company's self-insured retention level. As of September 30, 2024 and December 31, 2023, the Company had zero and $3.9 million, respectively, of estimated insurance recoveries included in other current assets in the Condensed Consolidated Balance Sheets.

Reserves for product-related lawsuits were estimated using a combination of actual case reserves and actuarial methods. Based on the Company’s experience in defending product liability claims, management believes the reserves are adequate for estimated case resolutions on aggregate self-insured claims and insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and solvency of insurance carriers.

As of September 30, 2024 and December 31, 2023, the Company had reserves of $46.6 million and $56.8 million, respectively, for warranty and other related claims included in product warranties and other non-current liabilities in the Condensed Consolidated Balance Sheets. Certain of these warranty and other related claims involve matters in dispute that ultimately are resolved by negotiation, arbitration, or litigation. See Note 18, “Guarantees,” for further information.

It is reasonably possible that the estimates for warranty and other related claims, product liability, asbestos-related claims, and other various legal matters may change based upon new information that may arise or matters that are beyond the scope of the Company’s historical experience. Presently, there are no reliable methods to estimate the amount of any such potential changes. The ultimate resolution of these matters, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

In July 2017, the Company received an Information Request from the United States Environmental Protection Agency (“U.S. EPA”) relating to the sales of cranes manufactured between January 1, 2014 and July 31, 2017 and the Company’s related participation in the Transition Program for Equipment Manufacturers (the “TPEM” program). The TPEM program allowed equipment manufacturers to delay installing engines meeting Tier 4 final emission standards in their products, subject to certain percentage allowance restrictions. The Company has provided, and continues to provide, information to the U.S. EPA and the U.S. Department of Justice (“U.S. DOJ”) on the approximately 1,420 engines included in the Company’s cranes relating to the TPEM program and other certification matters. The Company is engaged in confidential discussions with the U.S. EPA and U.S. DOJ with respect to these matters.

Based on management's current assessment of the facts underlying these matters, the Company recorded an additional charge of $2.6 million and $7.9 million for the three and nine months ended September 30, 2024, respectively. The total recorded estimated liability in accounts payable and accrued expenses in the Company’s Condensed Consolidated Balance Sheets was $44.0 million as of September 30, 2024 and $36.1 million as of December 31, 2023. Other than the foregoing, the Company is unable to provide further meaningful quantification as to the final resolution of these matters. However, the Company calculated the statutory maximum penalties under the Clean Air Act to be approximately $174.0 million. The Company believes it has strong legal and factual defenses and will vigorously defend any allegations of noncompliance and the factors that could apply in the assessment of any civil penalty. Final resolution of these matters may have a material impact on the Company’s financial condition, results of operations or cash flows.

18. Guarantees

The Company periodically enters into transactions with customers that provide for buyback commitments. The Company evaluates each agreement at inception to determine if the customer has a significant economic incentive to exercise the buyback

19


 

option. If it is determined that the customer has a significant economic incentive to exercise that right, the revenue is deferred and the agreement is accounted for as a lease in accordance with ASC Topic 842 – “Leases” (“Topic 842”). If it is determined that the customer does not have a significant economic incentive to exercise that right, then revenue is recognized when control of the product is transferred to the customer. The revenue deferred related to buyback obligations accounted for under Topic 842 included in other current and non-current liabilities as of September 30, 2024 and December 31, 2023 was $28.3 million and $32.2 million, respectively. The total amount of buyback commitments given by the Company and outstanding as of September 30, 2024 and December 31, 2023 was $38.9 million and $43.4 million, respectively. These amounts are not reduced for amounts the Company would recover from the repossession and subsequent resale of the cranes. The buyback commitments expire at various times through 2032. The Company also has various loss guarantees with maximum liabilities of $16.1 million and $13.0 million as of September 30, 2024 and December 31, 2023, respectively. These amounts are not reduced for amounts the Company would recover from the repossession and subsequent resale of the cranes securing the related guarantees.

In the normal course of business, the Company provides its customers a warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranties generally provide that products will be free from defects for periods ranging from 12 months to 60 months. In addition, the Company may incur other warranty related costs outside of its standard warranty period. Costs for other warranty-related work are recorded in the period a loss is probable and can be reasonably estimated. Below is a table summarizing the warranty and other warranty related work for the three and nine months ended September 30, 2024 and 2023.

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Balance at beginning of period

 

$

48.2

 

 

$

53.7

 

 

$

56.8

 

 

$

58.0

 

Adjustments to accruals for warranties

 

 

4.8

 

 

 

9.2

 

 

 

13.9

 

 

 

20.2

 

Settlements made (in cash or in kind) during
   the period

 

 

(7.2

)

 

 

(6.9

)

 

 

(24.1

)

 

 

(22.5

)

Currency translation

 

 

0.8

 

 

 

(0.7

)

 

 

 

 

 

(0.4

)

Balance at end of period

 

$

46.6

 

 

$

55.3

 

 

$

46.6

 

 

$

55.3

 

 

The long-term portion of the warranty liability is recorded in other non-current liabilities in the Condensed Consolidated Balance Sheets.

The Company sells extended warranty contracts, which it accounts for as a service type warranty under ASC Topic 606 – “Revenue from Contracts with Customers.” Revenue associated with extended warranty contracts is deferred and amortized on a straight-line basis over the duration of the extended warranty period. As of September 30, 2024 and December 31, 2023, there was $8.2 million and $6.1 million, respectively, of deferred revenue included in other current and non-current liabilities in the Condensed Consolidated Balance Sheets.

19. Employee Benefit Plans

The Company provides certain pension, health care, and death benefits to eligible retirees and their dependents. The funding mechanism for such benefits varies based on the country where the plan is located and the related plan. Eligibility for pension coverage is based on retirement qualifications. Healthcare benefits may be subject to deductibles, co-payments, and other limitations. The Company reserves the right to modify benefits unless prohibited by local laws or regulations.

The components of net periodic benefit cost (income) for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

 

 

 

Three Months Ended September 30, 2024

 

 

Three Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

Postretirement

 

 

 

 

 

 

 

 

Postretirement

 

 

 

U.S.

 

 

Non-U.S.

 

 

Health and

 

 

U.S.

 

 

Non-U.S.

 

 

Health and

 

 

 

Pension

 

 

Pension

 

 

Other

 

 

Pension

 

 

Pension

 

 

Other

 

 

 

Plans

 

 

Plans

 

 

Plans

 

 

Plans

 

 

Plans

 

 

Plans

 

Service cost - benefits earned during
   the period

 

$

 

 

$

0.3

 

 

$

 

 

$

 

 

$

0.3

 

 

$

0.1

 

Interest cost of projected benefit obligations

 

 

1.4

 

 

 

0.6

 

 

 

 

 

 

1.4

 

 

 

0.6

 

 

 

0.1

 

Expected return on plan assets

 

 

(0.9

)

 

 

(0.5

)

 

 

 

 

 

(1.0

)

 

 

(0.4

)

 

 

 

Amortization of prior service cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of actuarial net (gain) loss

 

 

0.5

 

 

 

 

 

 

(0.3

)

 

 

0.7

 

 

 

0.4

 

 

 

(0.3

)

Net periodic benefit cost (income)

 

$

1.0

 

 

$

0.4

 

 

$

(0.3

)

 

$

1.1

 

 

$

0.9

 

 

$

(0.1

)

 

20


 

 

 

Nine Months Ended September 30, 2024

 

 

Nine Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

Postretirement

 

 

 

 

 

 

 

 

Postretirement

 

 

 

U.S.

 

 

Non-U.S.

 

 

Health and

 

 

U.S.

 

 

Non-U.S.

 

 

Health and

 

 

 

Pension

 

 

Pension

 

 

Other

 

 

Pension

 

 

Pension

 

 

Other

 

 

 

Plans

 

 

Plans

 

 

Plans

 

 

Plans

 

 

Plans

 

 

Plans

 

Service cost - benefits earned during
   the period

 

$

 

 

$

1.0

 

 

$

 

 

$

 

 

$

0.9

 

 

$

0.1

 

Interest cost of projected benefit obligations

 

 

4.0

 

 

 

1.9

 

 

 

0.2

 

 

 

4.2

 

 

 

1.9

 

 

 

0.3

 

Expected return on plan assets

 

 

(2.9

)

 

 

(1.3

)

 

 

 

 

 

(2.9

)

 

 

(1.2

)

 

 

 

Amortization of prior service cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of actuarial net (gain) loss

 

 

1.4

 

 

 

0.1

 

 

 

(1.2

)

 

 

1.9

 

 

 

1.2

 

 

 

(0.9

)

Net periodic benefit cost (income)

 

$

2.5

 

 

$

1.7

 

 

$

(1.0

)

 

$

3.2

 

 

$

2.8

 

 

$

(0.5

)

The components of net periodic benefit cost (income) other than the service cost component are included in other income (expense) - net in the Condensed Consolidated Statements of Operations.

 

21


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, including the financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations therein, and the interim condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.

All dollar amounts are in millions throughout the tables included in Management’s Discussion and Analysis of Financial Conditions and Results of Operations unless otherwise indicated.

Cautionary Statements Regarding Forward-Looking Information

All of the statements in this Quarterly Report on Form 10-Q, other than historical facts, are forward-looking statements, including, without limitation, the statements made in the “Management's Discussion and Analysis of Financial Condition and Results of Operations.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “may,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements. These risks, uncertainties, and other factors include, but are not limited to:

Macroeconomic conditions, including inflation, high interest rates and recessionary concerns, as well as continuing global supply chain constraints, labor constraints, logistics constraints and cost pressures such as changes in raw material and commodity costs, have had, and may continue to have, a negative impact on Manitowoc’s ability to convert backlog into revenue which could, and has, impacted its financial condition, cash flows, and results of operations (including future uncertain impacts);
actions of competitors;
changes in economic or industry conditions generally or in the markets served by Manitowoc;
geopolitical events, including the ongoing conflicts in Ukraine and in the Middle East, other political and economic conditions and risks and other geographic factors, has had and may continue to lead to market disruptions, including volatility in commodity prices (including oil and gas), raw material and component costs, energy prices, inflation, consumer behavior, supply chain, and credit and capital markets, and could result in the impairment of assets;
changes in customer demand, including changes in global demand for high-capacity lifting equipment, changes in demand for lifting equipment in emerging economies and changes in demand for used lifting equipment including changes in government approval and funding of projects;
the ability to convert backlog, orders and order activity into sales and the timing of those sales;
failure to comply with regulatory requirements related to the products and aftermarket services the Company sells;
the ability to capitalize on key strategic opportunities and the ability to implement Manitowoc’s long-term initiatives;
impairment of goodwill and/or intangible assets;
changes in revenues, margins and costs;
the ability to increase operational efficiencies across Manitowoc and to capitalize on those efficiencies;
the ability to generate cash and manage working capital consistent with Manitowoc’s stated goals;
work stoppages, labor negotiations, labor rates and labor costs;
the Company’s ability to attract and retain qualified personnel;
changes in the capital and financial markets;
the ability to complete and appropriately integrate acquisitions, strategic alliances, joint ventures or other significant transactions;
issues associated with the availability and viability of suppliers;

22


 

the ability to significantly improve profitability;
realization of anticipated earnings enhancements, cost savings, strategic options and other synergies, and the anticipated timing to realize those savings, synergies and options;
the ability to focus on customers, new technologies and innovation;
uncertainties associated with new product introductions, the successful development and market acceptance of new and innovative products that drive growth;
the replacement cycle of technologically obsolete products;
risks associated with high debt leverage;
foreign currency fluctuation and its impact on reported results;
the ability of Manitowoc's customers to receive financing;
risks associated with data security and technological systems and protections;
the ability to direct resources to those areas that will deliver the highest returns;
risks associated with manufacturing or design defects;
natural disasters, other weather events, pandemics and other public health crises disrupting commerce in one or more regions of the world;
issues relating to the ability to timely and effectively execute on manufacturing strategies, general efficiencies and capacity utilization of the Company’s facilities;
the ability to focus and capitalize on product and service quality and reliability;
issues associated with the quality of materials, components and products sourced from third parties and the ability to successfully resolve those issues;
issues related to workforce reductions and potential subsequent rehiring;
changes in laws throughout the world, including governmental regulations on climate change;
the inability to defend against potential infringement claims on intellectual property rights;
the ability to sell products and services through distributors and other third parties;
issues affecting the effective tax rate for the year;
acts of terrorism; and
other risk factors detailed in Manitowoc's 2023 Annual Report on Form 10-K, as such may be amended or supplemented in Manitowoc’s subsequently filed Quarterly Reports on 10-Q (including this report), and its other filings with the United States Securities and Exchange Commission.

These statements reflect the current views and assumptions of management with respect to future events. Except to the extent required by the federal securities laws, the Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

 

Orders and Backlog

Orders and backlog are not measures defined by GAAP and our methodology for determining orders and backlog may vary from the methodology used by other companies. Management uses orders and backlog for capacity and resource planning. The Company believes this information is useful to investors to provide an indication of future revenues. Backlog represents the dollar value of orders which are expected to be recognized in net sales in the future. Orders are included in backlog when an executed binding contract with a price that has a floor has been received but has not been recognized in net sales.

Orders for the three months ended September 30, 2024 decreased 20.0% to $424.7 million from $531.2 million for the same period in 2023. The decrease was primarily attributable to lower demand in the Americas. Demand was impacted by uncertainty related to the U.S. presidential election and the high-interest rate environment. Orders were favorably impacted by $1.5 million from changes in foreign currency exchange rates.

Orders for the nine months ended September 30, 2024 decreased 12.4% to $1,407.2 million from $1,606.5 million for the same period in 2023. The decrease was primarily attributable to lower demand in the Americas and EURAF segments. Demand in

23


 

the Americas was impacted by uncertainty related to the U.S. presidential election and the high-interest rate environment. Orders were favorably impacted by $1.5 million from changes in foreign currency exchange rates.

As of September 30, 2024, total backlog was $742.1 million, a 19.1% decrease from the December 31, 2023 backlog of $917.2 million, and a 27.8% decrease from the September 30, 2023 backlog of $1,028.1 million. The decrease in backlog from December 31, 2023, was primarily attributable to lower demand during the year. Backlog was favorably impacted from changes in foreign currency exchange rates by $1.4 million and $11.4 million from December 31, 2023 and September 30, 2023, respectively.

Results of Operations For The Three and Nine Months Ended September 30, 2024 and 2023:

 

 

Three Months Ended
September 30,

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2024

 

 

2023

 

 

Percentage Change

 

 

2024

 

 

2023

 

 

Percentage Change

 

Net sales

 

 

524.8

 

 

 

520.9

 

 

 

0.7

%

 

 

1,582.0

 

 

 

1,632.0

 

 

 

(3.1

)%

Gross profit

 

 

87.6

 

 

 

96.8

 

 

 

(9.5

)%

 

 

279.8

 

 

 

326.1

 

 

 

(14.2

)%

Gross profit %

 

 

16.7

%

 

 

18.6

%

 

 

 

 

 

17.7

%

 

 

20.0

%

 

 

 

Engineering, selling and
   administrative expenses

 

 

78.9

 

 

77.4

 

 

 

1.9

%

 

 

238.6

 

 

 

240.1

 

 

 

(0.6

)%

Interest expense

 

 

9.6

 

 

 

8.4

 

 

 

14.3

%

 

 

28.4

 

 

 

25.5

 

 

 

11.4

%

Other income (expense) - net

 

 

(4.9

)

 

 

1.1

 

 

*

 

 

 

(3.9

)

 

 

(10.0

)

 

 

(61.0

)%

Provision (benefit) for income taxes

 

 

(0.3

)

 

 

 

 

*

 

 

 

3.2

 

 

 

(1.0

)

 

*

 

*Measure not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

Consolidated net sales for the three months ended September 30, 2024 were relatively flat at $524.8 million compared to $520.9 million in the same period in 2023. During the three months ended September 30, 2024, there were a lower number of new crane shipments in the EURAF segment, primarily in the Company’s tower crane product offerings. This was partially offset by a higher number of new crane shipments in the Americas segment. Non-new machine sales for the three months ended September 30, 2024 increased $14.5 million when compared to the same period for 2023, primarily due to higher used crane sales. Net sales were favorably impacted by $2.2 million from changes in foreign currency exchange rates.

 

Consolidated net sales for the nine months ended September 30, 2024 decreased 3.1% to $1,582.0 million from $1,632.0 million for the same period in 2023. The decrease was primarily attributable to a lower number of tower crane shipments in the EURAF segment. Non-new machine sales for the nine months ended September 30, 2024 increased $4.8 million when compared to the same period for 2023. Net sales were favorably impacted by $1.9 million from changes in foreign currency exchange rates.

 

Gross Profit

Gross profit for the three months ended September 30, 2024 was $87.6 million, a decrease of $9.2 million as compared to $96.8 million for the same period in 2023. The decrease was primarily attributable to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment. Gross profit was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Gross profit percentage decreased in the three months ended September 30, 2024 to 16.7% from 18.6% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit for the nine months ended September 30, 2024 was $279.8 million, a decrease of $46.3 million as compared to $326.1 million for the same period in 2023. The decrease was primarily attributable to the lower net sales, unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment. Gross profit was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Gross profit percentage decreased during the nine months ended September 30, 2024 to 17.7% from 20.0% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Engineering, Selling, and Administrative Expenses

24


 

Engineering, selling, and administrative expenses remained relatively flat at $78.9 million for the three months ended September 30, 2024 as compared to $77.4 million for the same period in 2023. During the three months ended September 30, 2024, there was $2.6 million of costs associated with a legal matter with the U.S. EPA, which was partially offset by lower employee related costs. Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

 

Engineering, selling and administrative expenses remained relatively flat at $238.6 million for the nine months ended September 30, 2024 as compared to $240.1 million for the same period in 2023. The decrease is primarily due to $2.9 million of lower costs associated with a legal matter with the U.S. EPA when compared to the prior year. Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

Interest Expense

Interest expense for the three months ended September 30, 2024 was $9.6 million as compared to $8.4 million for the same period in 2023. Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility. See further detail at Note 10, “Debt” to the Condensed Consolidated Financial Statements.

Interest expense for the nine months ended September 30, 2024 was $28.4 million as compared to $25.5 million for the same period in 2023. Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility. See further detail at Note 10, “Debt” to the Condensed Consolidated Financial Statements.

 

Other Income (Expense) - Net

Other income (expense) - net was $(4.9) million during the three months ended September 30, 2024 and $1.1 million for the same period in 2023. Other income (expense) – net during the three months ended September 30, 2024 was primarily composed of $3.2 million of currency loss and $1.1 million of non-cash losses associated with the refinancing of the Company’s 2026 Notes. Other income (expense) – net during the three months ended September 30, 2023 was primarily composed of $3.0 million of net foreign currency transaction gains, partially offset by $1.5 million of pension benefit and postretirement health costs.

 

Other income (expense) - net was $(3.9) million during the nine months ended September 30, 2024 and $(10.0) million for the same period in 2023. Other income (expense) - net during the nine months ended September 30, 2024 was primarily composed of $2.2 million of pension related costs, $1.4 million of currency loss, and $1.1 million of non-cash losses associated with the refinancing of the Company’s 2026 Notes, partially offset by $0.7 million of interest income. Other income (expense) – net during the nine months ended September 30, 2023 was primarily composed of a $9.3 million non-cash write-off of foreign currency translation adjustments related to the curtailment of operations in Russia and $4.5 million of pension benefit and postretirement health costs, partially offset by $4.8 million of net foreign currency transaction gains.

 

Provision (Benefit) for Income Taxes

For the three months ended September 30, 2024, and 2023, the Company recorded a benefit for income taxes of $0.3 million and zero, respectively. The year-over-year increase in the Company’s benefit for income taxes for the three months ended September 30, 2024, is driven by the tax impact of lower income compared to the prior year. This was partially offset by $2.0 million of discrete tax expense recorded in the current year as compared to $3.1 million of discrete tax benefit recorded in the prior year.

For the nine months ended September 30, 2024, and 2023, the Company recorded a provision for income taxes of $3.2 million and a benefit for income taxes of $1.0 million, respectively. The increase in the Company’s tax provision for the nine months ended September 30, 2024, relative to the prior year primarily relates to changes in the discrete tax recorded year over year, partially offset by lower income compared to the prior year.

Segment Operating Performance

The Company manages its business primarily on a geographic basis. The Company has three reportable segments: the Americas segment, EURAF segment and MEAP segment. Further information regarding the Company’s reportable segments can be found in Note 16, “Segments,” to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

 

25


 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

Dollar Change

 

 

Percentage Change

 

 

2024

 

 

2023

 

 

Dollar Change

 

 

Percentage Change

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

287.1

 

 

$

276.8

 

 

$

10.3

 

 

 

3.7

%

 

$

867.0

 

 

$

860.6

 

 

$

6.4

 

 

 

0.7

%

EURAF

 

 

126.8

 

 

 

150.6

 

 

 

(23.8

)

 

 

(15.8

)%

 

 

446.0

 

 

 

514.6

 

 

 

(68.6

)

 

 

(13.3

)%

MEAP

 

 

110.9

 

 

 

93.5

 

 

 

17.4

 

 

 

18.6

%

 

 

269.0

 

 

 

256.8

 

 

 

12.2

 

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

23.1

 

 

$

23.5

 

 

$

(0.4

)

 

 

(1.7

)%

 

$

76.5

 

 

$

81.6

 

 

$

(5.1

)

 

 

(6.2

)%

EURAF

 

 

(14.9

)

 

 

(7.7

)

 

 

(7.2

)

 

 

93.5

%

 

 

(33.5

)

 

 

2.3

 

 

 

(35.8

)

 

*

 

MEAP

 

 

10.0

 

 

 

12.7

 

 

 

(2.7

)

 

 

(21.3

)%

 

 

27.5

 

 

 

40.3

 

 

 

(12.8

)

 

 

(31.8

)%

*Measure not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

Americas segment net sales increased 3.7% for the three months ended September 30, 2024 to $287.1 million from $276.8 million for the same period in 2023. The increase was primarily attributable to higher new crane shipments. Non-new machine sales for the three months ended September 30, 2024 increased $2.6 million when compared to the same period in 2023, primarily due to higher used crane shipments and remanufacturing work.

 

Americas segment operating income remained relatively flat at $23.1 million for the three months ended September 30, 2024 as compared to $23.5 million for the same period in 2023. The decline was primarily due to unfavorable product mix, offset by higher net sales.

 

Americas segment net sales for the nine months ended September 30, 2024 was $867.0 million as compared to the $860.6 million for the same period in 2023. The increase was primarily attributable to higher new crane shipments. Non-new machine sales for the nine months ended September 30, 2024 were flat when compared to the same period in 2023.

 

Americas segment operating income decreased $5.1 million for the nine months ended September 30, 2024 to $76.5 million from $81.6 million for the same period in 2023. The decrease was primarily attributable to unfavorable product mix, $2.3 million of higher engineering, selling, and administrative expenses and $0.6 million of higher restructuring costs. This was partially offset by higher net sales.

 

EURAF

EURAF segment net sales decreased 15.8% for the three months ended September 30, 2024 to $126.8 million from $150.6 million for the same period in 2023. The decrease was primarily attributable to a lower number of new crane shipments, primarily in the Company’s tower crane product offering. Non-new machine sales for the three months ended September 30, 2024 increased $2.7 million when compared to the same period in 2023, primarily due to an increase in field service work. Segment net sales was favorably impacted by $1.6 million from changes in foreign currency exchange rates.

 

EURAF segment operating loss increased $7.2 million for the three months ended September 30, 2024 to $14.9 million from $7.7 million for the same period in 2023. The increase in operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

 

EURAF segment net sales decreased 13.3% for the nine months ended September 30, 2024 to $446.0 million from $514.6 million for the same period in 2023. The decrease was primarily attributable to a lower number of new crane shipments. Non-new machine sales for the nine months ended September 30, 2024 declined $6.2 million when compared to the same period in 2023, primarily due to lower aftermarket parts and used crane shipments. Segment net sales was favorably impacted by $2.3 million from changes in foreign currency exchange rates.

 

EURAF segment operating loss increased $35.8 million for the nine months ended September 30, 2024 to $33.5 million from operating income of $2.3 million for the same period in 2023. The increase in operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

 

MEAP

MEAP segment net sales increased 18.6% for the three months ended September 30, 2024 to $110.9 million from $93.5 million for the same period in 2023. The increase was primarily attributable to $9.1 million of higher non-new machine sales, as a

26


 

result of higher used crane shipments. Segment net sales was favorably impacted by $0.8 million from changes in foreign currency exchange rates.

 

MEAP segment operating income decreased $2.7 million for the three months ended September 30, 2024 to $10.0 million from $12.7 million for the same period in 2023. The decrease was primarily attributable to unfavorable product mix.

 

MEAP segment net sales increased 4.8% for the nine months ended September 30, 2024 to $269.0 million from $256.8 million for the same period in 2023. The increase was primarily attributable to $11.2 million of higher non-new machine sales, as a result of higher used crane shipments. Segment net sales was unfavorably impacted by $0.6 million from changes in foreign currency exchange rates.

 

MEAP segment operating income decreased $12.8 million for the nine months ended September 30, 2024 to $27.5 million from $40.3 million for the same period in 2023. The decrease was primarily attributable to higher manufacturing costs and unfavorable product mix.

Financial Condition

Cash Flows

A summary of cash flows for the nine months ended September 30, 2024 and 2023 are as follows:

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2024

 

 

2023

 

 

Dollar Change

 

Net cash provided by (used for) operating activities

 

$

(63.2

)

 

$

23.2

 

 

$

(86.4

)

Net cash used for investing activities

 

 

(29.1

)

 

 

(54.6

)

 

 

25.5

 

Net cash provided by financing activities

 

 

81.0

 

 

 

7.4

 

 

 

73.6

 

Cash and cash equivalents

 

 

22.9

 

 

 

40.0

 

 

 

(17.1

)

Cash Flows From Operating Activities

Cash flows used for operating activities of $63.2 million for the nine months ended September 30, 2024 increased $86.4 million from cash flows provided by operating activities of $23.2 million for the same period in 2023. The increase in net cash used for operating activities was primarily due to lower net income (loss) adjusted for non-cash items and an increase in net working capital primarily related to higher inventory.

Cash Flows From Investing Activities

Net cash used for investing activities of $29.1 million for the nine months ended September 30, 2024 decreased $25.5 million from $54.6 million for the same period in 2023. The decrease in net cash used for investing activities was due to $25.5 million of lower capital expenditures.

Cash Flows From Financing Activities

Net cash provided by financing activities of $81.0 million for the nine months ended September 30, 2024 increased $73.6 million from $7.4 million for the same period in 2023. The increase in net cash provided by financing activities was primarily due to $77.4 million of additional proceeds from the revolving credit facility and a $9.6 million increase of proceeds from other debt – net when compared to the prior year. This was partially offset by $6.7 million of payments for other financing activities and $6.2 million of payments for debt issuance costs related to the refinancing of the ABL Revolving Credit Facility and 2026 Notes.

27


 

Liquidity and Capital Resources

The Company’s liquidity position as of September 30, 2024, December 31, 2023 and September 30, 2023 is summarized as follows:

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

Cash and cash equivalents

 

$

22.9

 

 

$

34.4

 

 

$

40.0

 

Revolver borrowing capacity

 

 

325.0

 

 

 

275.0

 

 

 

275.0

 

Other debt availability

 

 

45.5

 

 

 

45.2

 

 

 

42.2

 

Less: Borrowings on revolver

 

 

(128.6

)

 

 

(60.0

)

 

 

(70.0

)

Less: Borrowings on other debt

 

 

(39.5

)

 

 

(11.2

)

 

 

(27.7

)

Less: Outstanding letters of credit

 

 

(3.4

)

 

 

(3.4

)

 

 

(3.2

)

Total liquidity

 

$

221.9

 

 

$

280.0

 

 

$

256.3

 

The Company believes its liquidity and expected cash flows from operations are sufficient to meet expected working capital, capital expenditure, and other general ongoing operational needs in the subsequent twelve months.

Cash Sources

The Company has historically relied primarily on cash flows from operations, borrowings under revolving credit facilities and overdraft facilities, issuances of notes, and other forms of debt financing as its sources of cash.

The maximum availability under the Company’s current ABL Revolving Credit Facility is $325.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and certain fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2031 Notes and the related guarantees. The ABL Revolving Credit Facility has a maturity date of September 18, 2029, and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the German Borrower.

In addition to the ABL Revolving Credit Facility, the Company has access to committed and non-committed lines of credit to fund working capital in Europe and China. There are six lines of credit, of which five are denominated in Euros totaling €37.0 million and one denominated in Chinese Yuan for ¥30.0 million. Total U.S. dollar availability as of September 30, 2024 for the six lines of credit is $45.5 million, with $39.5 million outstanding.

Debt

Outstanding debt as of September 30, 2024 and December 31, 2023 is summarized as follows:

 

 

 

September 30, 2024

 

 

December 31, 2023

 

Borrowings under senior secured asset based revolving credit facility

 

$

128.6

 

 

$

60.0

 

Senior secured second lien notes due 2026

 

 

 

 

 

300.0

 

Senior secured second lien notes due 2031

 

 

300.0

 

 

 

 

Other debt

 

 

43.9

 

 

 

13.7

 

Deferred financing costs

 

 

(5.3

)

 

 

(1.6

)

Total debt

 

 

467.2

 

 

 

372.1

 

Short-term borrowings and current portion
   of long-term debt

 

 

(40.5

)

 

 

(13.4

)

Long-term debt

 

$

426.7

 

 

$

358.7

 

 

Both the ABL Revolving Credit Facility and 2031 Notes include customary covenants and events of default. Refer to Note 10, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of covenants for the ABL Revolving Credit Facility and 2031 Notes. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months. From time to time, the Company seeks to opportunistically raise capital in the debt capital markets and bank credit markets.

28


 

Non-GAAP Measures

The Company uses EBITDA, adjusted EBITDA, adjusted operating income, Adjusted ROIC and free cash flows, which are financial measures that are not prepared in accordance with GAAP, as additional metrics to evaluate the Company’s performance. The Company believes these non-GAAP measures provide important supplemental information to readers regarding business trends that can be used in evaluating its results because these financial measures provide a consistent method of comparing financial performance and are commonly used by investors to assess performance. These non-GAAP financial measures should be considered together with, and are not substitutes for, the GAAP financial information provided herein.

Adjusted ROIC

Adjusted ROIC measures how efficiently the Company uses invested capital in its operations. Adjusted ROIC is not a measure defined by GAAP and the Company’s methodology for determining Adjusted ROIC may vary from the methodology used by other companies. Management and the Board of Directors use Adjusted ROIC as a measure to assess operational performance and capital allocation. The Company believes this information is useful to investors as it provides a measure of value creation as a percentage of capital invested.

Adjusted ROIC is determined by dividing adjusted net operating profit after tax (“Adjusted NOPAT”) for the trailing twelve-months ended by the five-quarter average of invested capital. Adjusted NOPAT is calculated for each quarter by taking operating income plus the addback of amortization of intangible assets, and the addback or subtraction of restructuring expenses, other non-recurring items – net, and provision for income taxes, which is determined using a 15% tax rate. Invested capital is defined as net total assets less cash and cash equivalents and income tax assets - net plus short-term and long-term debt. Income taxes are defined as income tax payables/receivables, net deferred tax assets/liabilities, and uncertain tax positions.

The Company’s Adjusted ROIC as of September 30, 2024 was 6.2%. Below is the calculation of Adjusted ROIC as of September 30, 2024.

 

 

Three Months Ended

 

 

 

 

 

September 30, 2024

 

 

June 30, 2024

 

 

March 31, 2024

 

 

December 31, 2023

 

 

Trailing Twelve Months

 

Operating income

$

7.5

 

 

$

12.9

 

 

$

15.2

 

 

$

9.8

 

 

$

45.4

 

Amortization of intangible assets

 

0.7

 

 

 

0.8

 

 

 

0.7

 

 

 

0.8

 

 

 

3.0

 

Restructuring expense

 

0.5

 

 

 

2.3

 

 

 

0.6

 

 

 

0.3

 

 

 

3.7

 

Other non-recurring items - net1

 

2.6

 

 

 

5.4

 

 

 

0.1

 

 

 

10.8

 

 

 

18.9

 

Adjusted operating income

 

11.3

 

 

 

21.4

 

 

 

16.6

 

 

 

21.7

 

 

 

71.0

 

Provision for income taxes

 

(1.7

)

 

 

(3.2

)

 

 

(2.5

)

 

 

(3.3

)

 

 

(10.7

)

Adjusted NOPAT

$

9.6

 

 

$

18.2

 

 

$

14.1

 

 

$

18.4

 

 

$

60.4

 

 

 

September 30, 2024

 

 

June 30, 2024

 

 

March 31, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

 

5-Quarter Average

 

Total assets

$

1,776.7

 

 

$

1,747.9

 

 

$

1,780.6

 

 

$

1,706.7

 

 

$

1,692.2

 

 

$

1,740.8

 

Total liabilities

 

(1,169.1

)

 

 

(1,155.6

)

 

 

(1,184.6

)

 

 

(1,103.4

)

 

 

(1,119.2

)

 

 

(1,146.4

)

Net total assets

 

607.6

 

 

 

592.3

 

 

 

596.0

 

 

 

603.3

 

 

 

573.0

 

 

 

594.4

 

Cash and cash equivalents

 

(22.9

)

 

 

(38.1

)

 

 

(31.5

)

 

 

(34.4

)

 

 

(40.0

)

 

 

(33.4

)

Short-term borrowings and current portion of long-term debt

 

40.5

 

 

 

21.4

 

 

 

42.5

 

 

 

13.4

 

 

 

30.3

 

 

 

29.6

 

Long-term debt

 

426.7

 

 

 

406.3

 

 

 

372.7

 

 

 

358.7

 

 

 

368.5

 

 

 

386.6

 

Income tax assets - net

 

(10.1

)

 

 

(4.4

)

 

 

(3.4

)

 

 

(2.6

)

 

 

(4.3

)

 

 

(4.9

)

Invested capital

$

1,041.8

 

 

$

977.5

 

 

$

976.3

 

 

$

938.4

 

 

$

927.5

 

 

$

972.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROIC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.2

%

(1) Other non-recurring items - net for the three months ended September 30, 2024 relate to $2.6 million of costs associated with a legal matter with the U.S. EPA. Other non-recurring items – net for the trailing twelve months relate to $18.3 million of costs associated with a legal matter with the U.S. EPA and $0.6 million of one-time costs. Refer to the Company’s previously filed Form 10-K and Form 10-Qs for a description of other non-recurring items - net for the three months ended June 30, 2024, March 31, 2024, and December 31, 2023.

29


 

EBITDA and Adjusted EBITDA

The Company defines EBITDA as net income (loss) before interest, taxes, depreciation, and amortization. The Company defines adjusted EBITDA as EBITDA plus the addback or subtraction of restructuring expense, other (income) expense - net, and other non-recurring items - net. The reconciliation of net income (loss) to EBITDA, and further to adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 and trailing twelve months is summarized as follows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

Trailing Twelve

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

Months

 

Net income (loss)

$

(7.0

)

 

$

10.4

 

 

$

(0.9

)

 

$

47.1

 

 

$

(8.8

)

Interest expense and amortization of deferred
   financing fees

 

9.9

 

 

 

8.7

 

 

 

29.4

 

 

 

26.5

 

 

 

38.1

 

Provision (benefit) for income taxes

 

(0.3

)

 

 

 

 

 

3.2

 

 

 

(1.0

)

 

 

9.2

 

Depreciation expense

 

14.9

 

 

 

13.7

 

 

 

44.2

 

 

 

41.8

 

 

 

59.0

 

Amortization of intangible assets

 

0.7

 

 

 

0.7

 

 

 

2.2

 

 

 

2.4

 

 

 

3.0

 

EBITDA

 

18.2

 

 

 

33.5

 

 

 

78.1

 

 

 

116.8

 

 

 

100.5

 

Restructuring expense

 

0.5

 

 

 

0.7

 

 

 

3.4

 

 

 

1.0

 

 

 

3.7

 

Other non-recurring items - net (1)

 

2.6

 

 

 

0.2

 

 

 

8.1

 

 

 

11.0

 

 

 

18.9

 

Other (income) expense - net (2)

 

4.9

 

 

 

(1.1

)

 

 

3.9

 

 

 

10.0

 

 

 

6.9

 

Adjusted EBITDA

$

26.2

 

 

$

33.3

 

 

$

93.5

 

 

$

138.8

 

 

$

130.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin percentage

 

5.0

%

 

 

6.4

%

 

 

5.9

%

 

 

8.5

%

 

 

6.0

%

(1)
Other non-recurring items - net for the three months ended September 30, 2024 relate to $2.6 million of costs associated with a legal matter with the U.S. EPA. Other non-recurring items - net for the nine months ended September 30, 2024 relate to $7.9 million of costs associated with a legal matter with the U.S. EPA and $0.2 million of one-time costs. Other non-recurring items - net for the three months ended September 30, 2023 relate to $0.2 million of one-time costs. Other non-recurring items - net for the nine months ended September 30, 2023 relate to $10.8 million of costs associated with a legal matter with the U.S. EPA and $0.2 million of one-time costs. Other non-recurring items – net for the trailing twelve months relate to $18.3 million of costs associated with a legal matter with the U.S. EPA and $0.6 million of one-time costs.
(2)
Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three, nine, and trailing twelve months ended September 30, 2024 and the three and nine months ended September 30, 2023. Other expense – net for the nine and trailing twelve months ended September 30, 2023 includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia.

 

Free Cash Flows

Free cash flows is defined as net cash provided by (used for) operating activities less cash outflow from investment in capital expenditures. The reconciliation of net cash used for operating activities to free cash flows for the nine months ended September 30, 2024 and 2023 is summarized as follows.

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Net cash provided by (used for) operating activities

 

$

(63.2

)

 

$

23.2

 

Capital expenditures

 

 

(34.4

)

 

 

(59.9

)

Free cash flows

 

$

(97.6

)

 

$

(36.7

)

Critical Accounting Policies

The Company's critical accounting policies have not materially changed since the 2023 Annual Report on Form 10-K was filed. Refer to the Critical Accounting Policies in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the year ended December 31, 2023 for information about the Company’s policies, methodology and assumptions related to critical accounting policies.

30


 

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company’s market risk disclosures have not materially changed since the 2023 Annual Report on Form 10-K was filed. The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures

Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Changes in Internal Control Over Financial Reporting: The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). During the period covered by this report, the Company made no changes that have materially affected, or that are reasonably likely to materially affect, its internal control over financial reporting.

 

31


 

PART II. OTHER INFORMATION

Item 1A. Risk Factors

 

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission on February 23, 2024.

Item 5. Other Information

(c) During the three months ended September 30, 2024, no director or Section 16 officer of the Company adopted a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement", as each term is defined in Item 408 of Regulation S-K.

 

Item 6. Exhibits

 

Exhibit No.

 

Description

 

Filed/Furnished

Herewith

 

4.1

 

Indenture, dated September 19, 2024, between The Manitowoc Company, Inc., the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, dated September 18, 2024).

 

 

 

 

 

 

 

 

 

4.2

 

Form of 9.250% Senior Secured Second Lien Note due 2031 (included as Exhibit 1 to Annex I of Exhibit 4.1).

 

 

 

 

 

 

 

 

 

10.1

 

Amendment No. 3, dated as of September 18, 2024 to Credit Agreement dated March 25, 2019, among The Manitowoc Company, Inc., the other borrowers and loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and certain financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated September 18, 2024).

 

 

 

 

 

 

 

 

 

31

 

Rule 13a - 14(a)/15d - 14(a) Certifications

 

X

(1)

 

 

 

 

 

 

32.1

 

Certification of CEO pursuant to 18 U.S.C. Section 1350

 

X

(2)

 

 

 

 

 

 

32.2

 

Certification of CFO pursuant to 18 U.S.C. Section 1350

 

X

(2)

 

 

 

 

 

 

101.INS

 

 

101.SCH

 

101.CAL

 

101.DEF

 

101.LAB

 

101.PRE

 

Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

Inline XBRL Taxonomy Extension Schema Document

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

Inline XBRL Taxonomy Extension Labels Linkbase Document

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

X

 

 

X

 

X

 

X

 

X

 

X

(1)

 

 

(1)

 

(1)

 

(1)

 

(1)

 

(1)

 

 

 

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

X

(1)

 

 

 

 

 

 

(1) Filed Herewith

(2) Furnished Herewith

32


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: October 31, 2024

The Manitowoc Company, Inc.

 

(Registrant)

 

 

 

 

 

/s/ Aaron H. Ravenscroft

 

Aaron H. Ravenscroft

 

President and Chief Executive Officer

 

(Principal Executive Officer and Director)

 

 

 

/s/ Brian P. Regan

 

Brian P. Regan

 

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

 

 

 

/s/ Ryan M. Palmer

 

Ryan M. Palmer

 

Vice President, Corporate Controller and Principal Accounting Officer

 

(Principal Accounting Officer)

 

33