Manitowoc Co Inc (MTW) Q1 2024 Earnings Call Transcript Highlights: Analyzing Financial Shifts ...

• Orders: $554 million, up 6% year-over-year.

• Backlog: $971 million as of March 31.

• Net Sales: $495 million, down 3% year-over-year.

• Non-New Machine Sales: $145 million, relatively flat year-over-year.

• SG&A Expenses: $76 million, 15% of sales, flat year-over-year.

• Adjusted EBITDA: $31 million, down 31% year-over-year.

• Adjusted EBITDA Margin: 6.3%, down 260 basis points year-over-year.

• GAAP Diluted Income Per Share: $0.12.

• Adjusted Diluted Income Per Share: $0.14, down $0.32 from prior year.

• Net Working Capital: $509 million at quarter end.

• Cash Used in Operating Activities: $31 million during the quarter.

• Capital Expenditures: $12 million, including $6 million for rental fleet.

• Cash Balance: $32 million at quarter end.

• Total Outstanding Borrowings: $74 million under ABL.

• Net Leverage Ratio: 2.4x.

• Total Liquidity: $233 million.

• Warning! GuruFocus has detected 3 Warning Sign with MTW.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Orders for the first quarter were up 6% year-over-year, indicating a strong demand for Manitowoc Co Inc (NYSE:MTW)'s products.

• The total backlog ended the period at a robust $971 million, showcasing a healthy pipeline for future revenue.

• Manitowoc Co Inc (NYSE:MTW) has seen a more than 10% increase in orders from the Middle East, driven by significant regional investments like Saudi Vision 2030 and Qatar's North Field expansion project.

• Innovations such as GROVE CONNECT and POTAIN CONNECT telematics solutions have been successfully launched, enhancing product offerings and customer engagement.

• The company's aftermarket business in the European tower crane market has remained resilient despite the broader market challenges, providing a stable revenue stream.

Negative Points

• Net sales in the quarter decreased by 3% year-over-year, primarily due to continued softness in the European tower crane business.

• The European tower crane market remains challenging with a significant 34% decrease in machine orders for tower cranes during the first quarter of 2024.

• Adjusted EBITDA for the first quarter decreased by 31% year-over-year, with a significant impact from the European tower crane market.

• The company is experiencing pricing pressure in the Middle East due to increased competition from Chinese manufacturers.

• Inventory levels have increased, necessitating focused management over the next few quarters to align with production and sales.

Q & A Highlights

Q: With supply chain performance normalizing, could decremental margins be relatively muted as improved productivity offsets lower volumes in the cycle? A: (Brian P. Regan - EVP, CFO & Principal Financial Officer) Yes, supply chain tailwinds are noticeable, but the larger impact is from the tower crane business, which will continue to affect the second quarter but should normalize in the second half of the year.

Q: Can you update us on strategic priorities over the next 12 to 18 months, particularly around capital deployment? A: (Brian P. Regan - EVP, CFO & Principal Financial Officer) The focus is on inventory management, particularly in the distribution business, aiming to reduce inventory significantly by year-end. CapEx remains at $60 million.

Q: Could you recalibrate our expectations relative to your prior guidance, especially for Q2 compared to Q1? A: (Brian P. Regan - EVP, CFO & Principal Financial Officer) Q1 was in line with expectations, and no guidance update was necessary. The wide range due to the uncertain tower crane market remains appropriate.

Q: Is the tower crane market expected to be flat in the second half of the year? A: (Aaron H. Ravenscroft - President, CEO & Director) The company is hand-to-mouth with tower crane orders, expecting the second half of the year to potentially normalize, but large orders could change the outlook.

Q: What key performance indicators (KPIs) are you watching for signs of inflection in the tower crane market? A: (Aaron H. Ravenscroft - President, CEO & Director) Watching interest rates and residential permits in Germany and France. Confidence in the market is crucial for a turnaround.

Q: Has the long-term outlook for the Middle East changed following reports of scaled-back mega projects in Saudi Arabia? A: (Aaron H. Ravenscroft - President, CEO & Director) The outlook remains strong despite scope adjustments in some projects. The company believes these are long-term investments, with other projects continuing to move forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.