UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(I.R.S. Employer |
of incorporation or organization) |
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Identification Number) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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 |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 March 31, 2024, the registrant had
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE MANITOWOC COMPANY, INC.
Condensed Consolidated Statements of Operations
For the three months ended March 31, 2024 and 2023
(Unaudited)
(In millions, except per share and share amounts)
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Three Months Ended |
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2024 |
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2023 |
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Net sales |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Operating costs and expenses: |
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Engineering, selling, and administrative expenses |
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Amortization of intangible assets |
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Restructuring expense |
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Total operating costs and expenses |
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Operating income |
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Other income (expense): |
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Interest expense |
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( |
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( |
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Amortization of deferred financing fees |
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( |
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Other income (expense) - net |
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( |
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Total other expense |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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Per Share Data and Share Amounts |
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Basic net income per common share |
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$ |
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$ |
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Diluted net income per common share |
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$ |
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$ |
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Weighted average shares outstanding - basic |
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Weighted average shares outstanding - diluted |
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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 months ended March 31, 2024 and 2023
(Unaudited)
(In millions)
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Three Months Ended |
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2024 |
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2023 |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss), net of income tax: |
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Unrealized losses on derivatives, net of income tax |
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Employee pension and postretirement benefit income (expense), net of |
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Foreign currency translation adjustments, net of income tax benefit |
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Total other comprehensive loss, net of income tax |
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( |
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Comprehensive income (loss) |
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$ |
( |
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$ |
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The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.
3
THE MANITOWOC COMPANY, INC.
Condensed Consolidated Balance Sheets
As of March 31, 2024 and December 31, 2023
(Unaudited)
(In millions, except par value and share amounts)
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March 31, |
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December 31, |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less allowances of $ |
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Inventories - net |
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Notes receivable - net |
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Other current assets |
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Total current assets |
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Property, plant, and equipment - net |
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Operating lease right-of-use assets |
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Goodwill |
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Intangible assets - net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current Liabilities: |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Customer advances |
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Short-term borrowings and current portion of long-term debt |
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Product warranties |
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Other liabilities |
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Total current liabilities |
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Non-Current Liabilities: |
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Long-term debt |
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Operating lease liabilities |
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Deferred income taxes |
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Pension obligations |
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Postretirement health and other benefit obligations |
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Long-term deferred revenue |
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Other non-current liabilities |
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Total non-current liabilities |
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(Note 17) |
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Stockholders' Equity: |
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Preferred stock ( |
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Common stock ( |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Treasury stock, at cost ( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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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 three months ended March 31, 2024 and 2023
(Unaudited)
(In millions)
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Three Months Ended |
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2024 |
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2023 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to cash provided by (used for) operating activities: |
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Depreciation expense |
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Amortization of intangible assets |
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Stock-based compensation expense |
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Amortization of deferred financing fees |
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Loss on sale of property, plant, and equipment |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Inventories |
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( |
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( |
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Notes receivable |
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Other assets |
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Accounts payable |
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Accrued expenses and other liabilities |
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( |
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Net cash provided by (used for) operating activities |
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( |
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Cash Flows from Investing Activities: |
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Capital expenditures |
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( |
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Proceeds from sale of fixed assets |
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Net cash used for investing activities |
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( |
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Cash Flows from Financing Activities: |
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Proceeds from (payments on) revolving credit facility - net |
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( |
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Proceeds from (payments on) other debt - net |
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( |
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Exercises of stock options |
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Common stock repurchases |
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( |
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Other financing activities |
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( |
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Net cash provided by (used for) financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental Cash Flow Information |
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Interest paid |
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$ |
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$ |
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Income taxes paid |
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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 months ended March 31, 2024 and 2023
(Unaudited)
(In millions)
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March 31, |
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March 31, |
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Common Stock - Par Value |
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Balance at beginning of period |
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$ |
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$ |
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Balance at end of period |
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$ |
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$ |
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Additional Paid-in Capital |
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Balance at beginning of period |
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$ |
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$ |
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Stock compensation plans |
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( |
) |
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( |
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Stock-based compensation expense |
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Balance at end of period |
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$ |
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$ |
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Accumulated Other Comprehensive Loss |
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Balance at beginning of period |
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$ |
( |
) |
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$ |
( |
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Other comprehensive loss |
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( |
) |
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( |
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Balance at end of period |
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$ |
( |
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$ |
( |
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Retained Earnings |
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Balance at beginning of period |
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$ |
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$ |
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Net income |
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Balance at end of period |
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$ |
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$ |
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Treasury Stock |
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Balance at beginning of period |
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$ |
( |
) |
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$ |
( |
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Stock compensation plans |
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Common stock repurchases |
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( |
) |
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Balance at end of period |
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$ |
( |
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$ |
( |
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Total stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6
THE MANITOWOC COMPANY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
1. Company and Basis of Presentation
The Manitowoc Company, Inc. (“Manitowoc” or the “Company”) was founded in 1902 and has over a
The Company has
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 months ended March 31, 2024 and 2023, the cash flows for the same three-month periods, and the financial position as of March 31, 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 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. Early adoption is permitted. The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.
7
3. Net Sales
The Company defers revenue when cash payments are received in advance of satisfying the related performance obligation. These amounts are recorded as customer advances in the Condensed Consolidated Balance Sheets.
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Three Months Ended |
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2024 |
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2023 |
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Balance at beginning of period |
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$ |
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$ |
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Cash received in advance of satisfying |
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Revenue recognized |
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( |
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( |
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Currency translation |
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( |
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Balance at end of period |
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$ |
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$ |
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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 March 31, 2024 and December 31, 2023.
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Fair Value as of March 31, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Recognized Location |
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Current Assets: |
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FX Forward Contracts |
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$ |
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$ |
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$ |
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$ |
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Other current assets |
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Deferred Compensation Plan - Program B |
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Other non-current assets |
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$ |
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$ |
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$ |
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$ |
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Current Liabilities: |
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FX Forward Contracts |
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$ |
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$ |
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$ |
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$ |
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Accounts payable and |
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Fair Value as of December 31, 2023 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Recognized Location |
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Current Assets: |
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FX Forward Contracts |
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$ |
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$ |
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$ |
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$ |
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Other current assets |
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Deferred Compensation Plan - Program B |
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Other non-current assets |
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$ |
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$ |
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$ |
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$ |
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Current Liabilities: |
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FX Forward Contracts |
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$ |
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$ |
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$ |
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$ |
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Accounts payable and |
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The fair value of the $
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 2026 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
8
Company’s revolving credit facility, approximate fair value, without being discounted as of March 31, 2024, 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. Refer to 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.
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 months ended March 31, 2024 and 2023.
The Company had FX Forward Contracts with aggregate notional amounts of $
The net gains (losses) recorded in the Condensed Consolidated Statements of Operations for FX Forward Contracts for the three months ended March 31, 2024 and 2023 are summarized as follows:
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Three Months Ended |
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Recognized Location |
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2024 |
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2023 |
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Designated |
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Cost of sales |
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$ |
( |
) |
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$ |
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Non-Designated |
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Other income (expense) - net |
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$ |
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$ |
( |
) |
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6. Inventories
The components of inventories as of March 31, 2024 and December 31, 2023 are summarized as follows:
|
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March 31, |
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December 31, |
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Raw materials |
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$ |
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$ |
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Work-in-process |
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Finished goods |
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Total Inventories |
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$ |
|
|
$ |
|
||
9
7. Property, Plant, and Equipment
The components of property, plant, and equipment as of March 31, 2024 and December 31, 2023 are summarized as follows:
|
|
March 31, |
|
|
December 31, |
|
||
Land |
|
$ |
|
|
$ |
|
||
Building and improvements |
|
|
|
|
|
|
||
Machinery, equipment, and tooling |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Computer hardware and software |
|
|
|
|
|
|
||
Rental cranes |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Total cost |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant, and equipment - net |
|
$ |
|
|
$ |
|
||
Property, plant, and equipment is depreciated over the estimated useful life of the asset 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 March 31, 2024 and December 31, 2023 were $
Assets Held for Sale
As of March 31, 2024 and December 31, 2023, the Company had $
8. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the three months ended March 31, 2024 is summarized as follows:
|
|
Americas |
|
|
MEAP |
|
|
Consolidated |
|
|||
Balance as of December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency impact |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The gross carrying amount, accumulated impairment and net book value of the Company's goodwill balances by reportable segment as of March 31, 2024 and December 31, 2023, are summarized as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Gross Carrying Amount |
|
|
Accumulated Impairment Amount |
|
|
Net Book Value |
|
|
Gross Carrying Amount |
|
|
Accumulated Impairment Amount |
|
Net Book Value |
|
||||||
Americas |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
$ |
|
||||
EURAF |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
||||
MEAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
$ |
|
||||
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 circumstances and test more frequently if those changes indicate that assets might be impaired. The Company determined there was no triggering event for the three months ended March 31, 2024.
10
The gross carrying amount, accumulated amortization, and net book value of the Company’s intangible assets other than goodwill as of March 31, 2024 and December 31, 2023, are summarized as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
Definite lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Patents |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Noncompetition agreements |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Trademarks and tradenames |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Other intangibles |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trademarks and tradenames |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Distribution network |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible 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 for the three months ended March 31, 2024.
Definite lived intangible assets and long-lived 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 for the three months ended March 31, 2024.
9. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses as of March 31, 2024 and December 31, 2023 are summarized as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Trade accounts payable |
|
$ |
|
|
$ |
|
||
Employee-related expenses |
|
|
|
|
|
|
||
Accrued vacation |
|
|
|
|
|
|
||
Miscellaneous accrued expenses |
|
|
|
|
|
|
||
Total accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
10. Debt
Outstanding debt as of March 31, 2024 and December 31, 2023 is summarized as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Borrowings under senior secured asset-based |
|
$ |
|
|
$ |
|
||
Senior secured second lien notes due 2026 |
|
|
|
|
|
|
||
Other debt |
|
|
|
|
|
|
||
Deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Total debt |
|
|
|
|
|
|
||
Short-term borrowings and current portion of long-term |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
$ |
|
|
$ |
|
||
11
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 $
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”).
Borrowings under the ABL Revolving Credit Facility bear interest at a variable rate using either the Alternative Base Rate or SOFR plus the 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 |
SOFR spread |
≥ 50% of Aggregate Commitment |
||
< 50% of Aggregate Commitment |
As of March 31, 2024 and December 31, 2023, the Company had borrowings on the ABL Revolving Credit Facility of $
As of March 31, 2024, the Company had $
On March 25, 2019, the Company and certain of its subsidiaries entered into an indenture with U.S. Bank National Association as trustee and notes collateral agent, pursuant to which the Company issued $
Both the ABL Revolving Credit Facility and the 2026 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 2026 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
12
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, 2018.
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.
11. Accounts Receivable Factoring
The Company has two non-U.S. accounts receivable financing programs with
For the three months ended March 31, 2024 and 2023, cash proceeds from the factoring of accounts receivable qualifying as sales were $
Financing charges incurred from the factoring of accounts receivable qualifying as sales for the three months ended March 31, 2024 and 2023 were immaterial.
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 March 31, 2024 and 2023, the Company recorded a provision for income taxes of $
13. Net Income Per Common Share
The following is a reconciliation of the weighted average shares outstanding used to compute basic and diluted net income per common share:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Basic weighted average common shares outstanding |
|
|
|
|
|
|
||
Effect of dilutive securities - equity |
|
|
|
|
|
|
||
Diluted weighted average common shares outstanding |
|
|
|
|
|
|
||
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. Anti-dilutive equity instruments of
13
14. Equity
Authorized capital consists of
As of March 31, 2024, the Company has $
A reconciliation of the changes in accumulated other comprehensive income (loss), net of income tax, by component for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Cash Flow Hedges |
|
|
Pension & |
|
|
Foreign Currency |
|
|
Total |
|
||||
Balance as of December 31, 2022 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Amounts reclassified from accumulated other |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Net other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance as of March 31, 2023 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of December 31, 2023 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive loss before |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Amounts reclassified from accumulated other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of March 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
A reconciliation of the reclassifications from accumulated other comprehensive loss, net of income tax, for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Amount Reclassified from Accumulated Other Comprehensive Loss |
|
|
|
|||||
|
|
Three Months Ended March 31, |
|
|
Three Months Ended March 31, |
|
|
Recognized |
||
Gains (losses) on cash flow hedges |
|
|
|
|
|
|
|
|
||
FX Forward Contracts |
|
$ |
( |
) |
|
$ |
|
|
Cost of sales |
|
Total before income taxes |
|
|
( |
) |
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
||
Total, net of income taxes |
|
$ |
( |
) |
|
$ |
|
|
|
|
Amortization of pension and |
|
|
|
|
|
|
|
|
||
Actuarial losses |
|
$ |
( |
) |
|
$ |
( |
) |
(a) |
Other income (expense) - net |
Amortization of prior service cost |
|
|
|
|
|
|
(a) |
Other income (expense) - net |
||
Total before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
||
Total, net of income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Total reclassifications for the period, |
|
$ |
( |
) |
|
$ |
|
|
|
|
(a) These accumulated other comprehensive income (loss) components are components of net periodic pension cost (refer to Note 19, “Employee Benefit Plans,” for further details)
14
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. The total number of shares of the Company’s common stock available for awards under the Company’s 2013 Omnibus Incentive Plan is
Stock-based compensation expense was $
The Company granted
A total of
The performance goals for the performance share units granted in 2024 are weighted
The performance goals for the performance share units granted in 2023 are weighted
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
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 the product is sold. 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 Company does not include intercompany sales between segments for management reporting purposes. The Company’s operating segments were identified as its reportable segments. The CODM does not evaluate performance of the reportable segments based on total assets.
15
The following table shows information by reportable segment for the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net Sales |
|
|
|
|
|
|
||
Americas |
|
$ |
|
|
$ |
|
||
EURAF |
|
|
|
|
|
|
||
MEAP |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Segment Operating Income (Loss) |
|
|
|
|
|
|
||
Americas |
|
$ |
|
|
$ |
|
||
EURAF |
|
|
( |
) |
|
|
|
|
MEAP |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Depreciation |
|
|
|
|
|
|
||
Americas |
|
$ |
|
|
$ |
|
||
EURAF |
|
|
|
|
|
|
||
MEAP |
|
|
|
|
|
|
||
Corporate |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Capital Expenditures |
|
|
|
|
|
|
||
Americas |
|
$ |
|
|
$ |
|
||
EURAF |
|
|
|
|
|
|
||
MEAP |
|
|
|
|
|
|
||
Corporate |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
A reconciliation of the Company’s segment operating income to operating income in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Segment operating income |
|
$ |
|
|
$ |
|
||
Unallocated corporate expenses |
|
|
( |
) |
|
|
( |
) |
Unallocated restructuring expense |
|
|
|
|
|
( |
) |
|
Total operating income |
|
$ |
|
|
$ |
|
||
Net sales by geographic area for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
United States |
|
$ |
|
|
$ |
|
||
Europe |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
||
New machine and non-new machine sales for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
New machine sales |
|
$ |
|
|
$ |
|
||
Non-new machine sales |
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
||
16
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 March 31, 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 have varied over the last
As of March 31, 2024, current and long-term product liability reserves were $
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 March 31, 2024 and December 31, 2023, the Company had reserves of $
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 total recorded estimated liability in accounts payable and accrued expenses in the Company’s Condensed Consolidated Balance Sheets was $
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 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
17
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 March 31, 2024 and December 31, 2023 was $
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
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Adjustments to accruals for warranties |
|
|
|
|
|
|
||
Settlements made (in cash or in kind) during |
|
|
( |
) |
|
|
( |
) |
Currency translation |
|
|
( |
) |
|
|
|
|
Balance at end of period |
|
$ |
|
|
$ |
|
||
The long-term portion of the warranty liability is recorded in other non-current liabilities in the Condensed Consolidated Balance Sheets.
The revenue deferred related to extended warranty periods included in other current and non-current liabilities as of March 31, 2024 and December 31, 2023 was $
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 for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Three Months Ended March 31, 2024 |
|
|||||||||
|
|
|
|
|
|
|
|
Postretirement |
|
|||
|
|
U.S. |
|
|
Non-U.S. |
|
|
Health and |
|
|||
|
|
Pension |
|
|
Pension |
|
|
Other |
|
|||
|
|
Plan |
|
|
Plans |
|
|
Plans |
|
|||
Service cost - benefits earned during the period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest cost of projected benefit obligations |
|
|
|
|
|
|
|
|
|
|||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Amortization of prior service cost |
|
|
|
|
|
|
|
|
|
|||
Amortization of actuarial net (gain) loss |
|
|
|
|
|
|
|
|
( |
) |
||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
18
|
|
Three Months Ended March 31, 2023 |
|
|||||||||
|
|
|
|
|
|
|
|
Postretirement |
|
|||
|
|
U.S. |
|
|
Non-U.S. |
|
|
Health and |
|
|||
|
|
Pension |
|
|
Pension |
|
|
Other |
|
|||
|
|
Plan |
|
|
Plans |
|
|
Plans |
|
|||
Service cost - benefits earned during the period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest cost of projected benefit obligations |
|
|
|
|
|
|
|
|
|
|||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Amortization of prior service cost |
|
|
|
|
|
|
|
|
( |
) |
||
Amortization of actuarial net loss |
|
|
|
|
|
|
|
|
|
|||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
19
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:
20
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.
Current Events
Supply Chain and Logistics Constraints
The Company continues to actively monitor global supply chain and logistics constraints which had a negative impact on the Company’s ability to timely source parts, complete and ship units, and service cranes for the three months ended March 31, 2024. While the Company has experienced some relief of the supply chain and logistics constraints, supply chains for certain key components remain distressed. The Company continues to actively monitor and manage supply chain constraints through alternative sourcing of parts and adapting production to limit waste and inefficiencies in the facilities. Continuing or worsening
21
supply chain and logistics constraints may have a material adverse impact on the Company’s financial condition, results of operations, or cash flows.
Results of Operations for the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Percentage Change |
|
|||
Orders |
|
$ |
554.1 |
|
|
$ |
524.8 |
|
|
|
5.6 |
% |
Backlog |
|
|
971.3 |
|
|
|
1,075.7 |
|
|
|
(9.7 |
)% |
Net sales |
|
|
495.1 |
|
|
|
508.3 |
|
|
|
(2.6 |
)% |
Gross profit |
|
|
92.5 |
|
|
|
106.3 |
|
|
|
(13.0 |
)% |
Gross profit % |
|
|
18.7 |
% |
|
|
20.9 |
% |
|
|
|
|
Engineering, selling, and administrative |
|
|
76.0 |
|
|
75.1 |
|
|
|
1.2 |
% |
|
Interest expense |
|
|
9.2 |
|
|
|
8.1 |
|
|
|
13.6 |
% |
Provision for income taxes |
|
|
1.9 |
|
|
|
4.2 |
|
|
|
(54.8 |
)% |
*Measure not meaningful
Orders and Backlog
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 and backlog are not measures defined by accounting principles generally accepted in the United States of America (“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. We believe this information is useful to investors to provide an indication of our future revenues.
Orders for the three months ended March 31, 2024 increased 5.6% to $554.1 million from $524.8 million for the same period in 2023. The increase was primarily attributable to higher demand in the EURAF segment, mainly in the Company’s mobile product offering. Orders were favorably impacted by $2.0 million from changes in foreign currency exchange rates.
As of March 31, 2024, total backlog was $971.3 million, a 5.9% increase from the December 31, 2023 backlog of $917.2 million, and a 9.7% decrease from the March 31, 2023 backlog of $1,075.7 million. The decrease in backlog from March 31, 2023 is primarily attributable to higher shipments due to continuing easing of supply chain and logistics constraints. Backlog was unfavorably impacted by $7.6 million and $1.7 million from December 31, 2023 and March 31, 2023, respectively, from changes in foreign currency exchange rates.
Net Sales
Consolidated net sales for the three months ended March 31, 2024 decreased 2.6% to $495.1 million from $508.3 million for the same period in 2023. This decrease was primarily attributable to lower new and non-new machine sales in the EURAF segment, partially offset by higher new and non-new machine sales in the Americas and MEAP segments. Net sales were favorably impacted by $2.3 million from changes in foreign currency exchange rates.
Gross Profit
Gross profit for the three months ended March 31, 2024 was $92.5 million, a decrease of $13.8 million compared to $106.3 million for the same period in 2023. The decrease was primarily attributable to lower net sales, unfavorable product mix, and lower absorbed costs due to lower manufacturing volume in EURAF. Gross profit was favorably impacted by $0.3 million from changes in foreign currency exchange rates.
Engineering, Selling, and Administrative Expenses
22
Engineering, selling, and administrative expenses were $76.0 million for the three months ended March 31, 2024 compared to $75.1 million for the same period in 2023. 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 March 31, 2024 totaled $9.2 million compared to $8.1 million for the same period in 2023. Interest expense increased year-over-year primarily due to higher debt and interest rates on borrowings from the Company’s ABL revolving credit facility.
Provision for Income Taxes
For the three months ended March 31, 2024 and 2023, the Company recorded a provision for income taxes of $1.9 million and $4.2 million, respectively. The decrease in the Company’s provision for income taxes for the three months ended March 31, 2024 compared to the prior year is due to lower year-to-date income partially offset by a change in jurisdictional mix. In addition, the Company’s 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 and losses in both the U.S. and foreign jurisdictions where no tax benefit can be realized.
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.
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
Dollar Change |
|
|
Percentage Change |
|
||||
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Americas |
|
$ |
283.2 |
|
|
$ |
264.4 |
|
|
$ |
18.8 |
|
|
|
7.1 |
% |
EURAF |
|
|
143.0 |
|
|
|
178.2 |
|
|
|
(35.2 |
) |
|
|
(19.8 |
)% |
MEAP |
|
|
68.9 |
|
|
|
65.7 |
|
|
|
3.2 |
|
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Operating |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Americas |
|
$ |
29.5 |
|
|
$ |
28.5 |
|
|
$ |
1.0 |
|
|
|
3.5 |
% |
EURAF |
|
|
(11.8 |
) |
|
|
3.6 |
|
|
|
(15.4 |
) |
|
* |
|
|
MEAP |
|
|
8.2 |
|
|
|
8.6 |
|
|
|
(0.4 |
) |
|
|
(4.7 |
)% |
*Measure not meaningful
Americas
Americas segment net sales increased 7.1% for the three months ended March 31, 2024 to $283.2 million from $264.4 million for the same period in 2023. The increase was primarily attributable to higher new machine sales, favorable product mix and pricing actions. Non-new machine sales were relatively flat year-over-year.
Americas segment operating income increased 3.5% for the three months ended March 31, 2024 to $29.5 million from $28.5 million for the three months ended March 31, 2023. The increase was primarily due to higher net sales.
EURAF
EURAF segment net sales decreased 19.8% for the three months ended March 31, 2024 to $143.0 million from $178.2 million for the same period in 2023. The decrease was primarily due to lower new machine sales in the Company's tower product offering and lower non-new machine sales. Segment net sales was favorably impacted by $2.2 million from changes in foreign currency exchange rates.
EURAF segment operating loss was $11.8 million for the three months ended March 31, 2024 compared to operating income of $3.6 million for the same period in 2023. The change was primarily due to lower net sales, unfavorable product mix, and higher
23
labor costs in engineering, selling and administrative expenses. Segment operating income was unfavorably impacted by $0.1 million from changes in foreign currency exchange rates.
MEAP
MEAP segment net sales increased 4.9% for the three months ended March 31, 2024 to $68.9 million from $65.7 million for the same period in 2023. The increase was primarily attributable to higher non-new machine sales. MEAP segment net sales was unfavorably impacted by $0.2 million from changes in foreign currency exchange rates.
MEAP segment operating income decreased 4.7% for the three months ended March 31, 2024 to $8.2 million from $8.6 million for the same period in 2023. The decrease was primarily due to unfavorable product mix. Segment operating income was favorably impacted by $0.1 million from changes in foreign currency exchange rates.
Financial Condition
Cash Flows
A summary of cash flows for the three months ended March 31, 2024 and 2023 are as follows:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net cash provided by (used for) operating activities |
|
$ |
(30.6 |
) |
|
$ |
15.4 |
|
Net cash used for investing activities |
|
|
(12.0 |
) |
|
|
(8.6 |
) |
Net cash provided by (used for) financing activities |
|
|
40.2 |
|
|
|
(15.1 |
) |
Cash and cash equivalents |
|
|
31.5 |
|
|
|
56.5 |
|
Cash Flows From Operating Activities
Net cash used for operating activities of $30.6 million for the three months ended March 31, 2024 increased $46.0 million from net cash provided by operating activities of $15.4 million for the same period in 2023. The increase in net cash used for operating activities was primarily due to lower net income adjusted for non-cash items, and higher use of cash driven by an increase in accounts receivable, and a decrease in accrued expenses and other liabilities. This was partially offset by a decrease in cash used for inventories.
Cash Flows From Investing Activities
Net cash used for investing activities of $12.0 million for the three months ended March 31, 2024 increased $3.4 million from net cash used for investing activities of $8.6 million for the same period in 2023. The increase in net cash used for investing activities is due to $1.6 million of additional capital expenditures and a $1.8 million reduction in proceeds from sale of property, plant, and equipment.
Cash Flows From Financing Activities
Net cash provided by financing activities of $40.2 million for the three months ended March 31, 2024 increased $55.3 million from net cash used for financing activities of $15.1 million for the same period in 2023. The increase is primarily driven by proceeds of $29.7 million and $14.0 million on the Company’s overdraft facilities and ABL revolving credit facility, respectively, as compared to payments of $11.9 million in the prior year.
Liquidity and Capital Resources
The Company’s liquidity position as of March 31, 2024 and December 31, 2023 is summarized as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Cash and cash equivalents |
|
$ |
31.5 |
|
|
$ |
34.4 |
|
Revolver borrowing capacity |
|
|
275.0 |
|
|
|
275.0 |
|
Other debt availability |
|
|
44.1 |
|
|
|
45.2 |
|
Less: Borrowings on revolver |
|
|
(74.0 |
) |
|
|
(60.0 |
) |
Less: Borrowings on other debt |
|
|
(40.5 |
) |
|
|
(11.2 |
) |
Less: Outstanding letters of credit |
|
|
(3.4 |
) |
|
|
(3.4 |
) |
Total liquidity |
|
$ |
232.7 |
|
|
$ |
280.0 |
|
24
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, 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 $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 senior secured second lien notes due on April 1, 2026 (the "2026 Notes") and the related guarantees. The ABL Revolving Credit Facility has a maturity date of May 19, 2027 (with 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), and 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.
In addition to the ABL Revolving Credit Facility, the Company has access to non-committed overdraft facilities to fund working capital in Europe and China. There are six facilities, of which five are denominated in Euros totaling €37.0 million and one denominated in Chinese Yuan totaling ¥30.0 million. Total U.S. dollar availability as of March 31, 2024 for the six overdraft facilities is $44.1 million, with $40.5 million outstanding.
Debt
Outstanding debt as of March 31, 2024 and December 31, 2023 is summarized as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Borrowing under senior secured asset based |
|
$ |
74.0 |
|
|
$ |
60.0 |
|
Senior secured second lien notes due 2026 |
|
|
300.0 |
|
|
|
300.0 |
|
Other debt |
|
|
42.7 |
|
|
|
13.7 |
|
Deferred financing costs |
|
|
(1.5 |
) |
|
|
(1.6 |
) |
Total debt |
|
|
415.2 |
|
|
|
372.1 |
|
Short-term borrowings and current portion of long-term |
|
|
(42.5 |
) |
|
|
(13.4 |
) |
Long-term debt |
|
$ |
372.7 |
|
|
$ |
358.7 |
|
Both the ABL Revolving Credit Facility and 2026 Notes include customary covenants and events of default. Refer to Note 10, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of the covenants for the ABL Revolving Credit Facility and the 2026 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.
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
25
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, certain 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/liabilities - 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 March 31, 2024 was 9.5%. Below is the calculation of Adjusted ROIC as of March 31, 2024.
|
|
Three Months Ended |
|
|
|
|
||||||||||||||
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
June 30, 2023 |
|
|
Trailing Twelve Months |
|
|||||
Operating income |
|
$ |
15.2 |
|
|
$ |
9.8 |
|
|
$ |
18.0 |
|
|
$ |
34.4 |
|
|
$ |
77.4 |
|
Amortization of intangible assets |
|
|
0.7 |
|
|
|
0.8 |
|
|
|
0.7 |
|
|
|
0.7 |
|
|
|
2.9 |
|
Restructuring expense |
|
|
0.6 |
|
|
|
0.3 |
|
|
|
0.7 |
|
|
|
0.3 |
|
|
|
1.9 |
|
Other non-recurring items - net1 |
|
|
0.1 |
|
|
|
10.8 |
|
|
|
0.2 |
|
|
|
10.8 |
|
|
|
21.9 |
|
Adjusted operating income |
|
|
16.6 |
|
|
|
21.7 |
|
|
|
19.6 |
|
|
|
46.2 |
|
|
|
104.1 |
|
Provision for income taxes |
|
|
(2.5 |
) |
|
|
(3.3 |
) |
|
|
(2.9 |
) |
|
|
(6.9 |
) |
|
|
(15.6 |
) |
Adjusted NOPAT |
|
$ |
14.1 |
|
|
$ |
18.4 |
|
|
$ |
16.7 |
|
|
$ |
39.3 |
|
|
$ |
88.5 |
|
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
5-Quarter Average |
|
||||||
Total assets |
|
$ |
1,780.6 |
|
|
$ |
1,706.7 |
|
|
$ |
1,692.2 |
|
|
$ |
1,701.1 |
|
|
$ |
1,691.1 |
|
|
|
1,714.3 |
|
Total liabilities |
|
|
(1,184.6 |
) |
|
|
(1,103.4 |
) |
|
|
(1,119.2 |
) |
|
|
(1,121.7 |
) |
|
|
(1,138.3 |
) |
|
|
(1,133.4 |
) |
Net total assets |
|
|
596.0 |
|
|
|
603.3 |
|
|
|
573.0 |
|
|
|
579.4 |
|
|
|
552.8 |
|
|
|
580.9 |
|
Cash and cash equivalents |
|
|
(31.5 |
) |
|
|
(34.4 |
) |
|
|
(40.0 |
) |
|
|
(25.9 |
) |
|
|
(56.5 |
) |
|
|
(37.7 |
) |
Short-term borrowings and current portion of long-term debt |
|
|
42.5 |
|
|
|
13.4 |
|
|
|
30.3 |
|
|
|
6.7 |
|
|
|
7.9 |
|
|
|
20.2 |
|
Long-term debt |
|
|
372.7 |
|
|
|
358.7 |
|
|
|
368.5 |
|
|
|
380.7 |
|
|
|
369.5 |
|
|
|
370.0 |
|
Income tax (assets) liabilities - net |
|
|
(3.4 |
) |
|
|
(2.6 |
) |
|
|
(4.3 |
) |
|
|
(2.1 |
) |
|
|
6.3 |
|
|
|
(1.2 |
) |
Invested capital |
|
$ |
976.3 |
|
|
$ |
938.4 |
|
|
$ |
927.5 |
|
|
$ |
938.8 |
|
|
$ |
880.0 |
|
|
$ |
932.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted ROIC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.5 |
% |
|||||
(1) Other non-recurring items - net for the three months ended March 31, 2024 relate to $0.1 million of one-time costs. Other non-recurring items – net for the trailing twelve months relate to $21.2 million of costs associated with a legal matter with the U.S. EPA and $0.7 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 December 31, 2023, September 30, 2023, and June 30, 2023.
EBITDA and Adjusted EBITDA
26
The Company defines EBITDA as net income 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 certain other non-recurring items.
The reconciliation of net income to EBITDA, and further to adjusted EBITDA for the three months ended March 31, 2024 and 2023, are summarized as follows:
|
Three Months Ended |
|
|
Trailing Twelve |
|
||||||
|
2024 |
|
|
2023 |
|
|
Months |
|
|||
Net income |
$ |
4.5 |
|
|
$ |
16.5 |
|
|
$ |
27.2 |
|
Interest expense and amortization of deferred |
|
9.5 |
|
|
|
8.4 |
|
|
|
36.3 |
|
Provision for income taxes |
|
1.9 |
|
|
|
4.2 |
|
|
|
2.7 |
|
Depreciation expense |
|
14.7 |
|
|
|
13.9 |
|
|
|
57.4 |
|
Amortization of intangible assets |
|
0.7 |
|
|
|
1.0 |
|
|
|
2.9 |
|
EBITDA |
|
31.3 |
|
|
|
44.0 |
|
|
|
126.5 |
|
Restructuring expense |
|
0.6 |
|
|
|
— |
|
|
|
1.9 |
|
Other non-recurring items - net (1) |
|
0.1 |
|
|
|
— |
|
|
|
21.9 |
|
Other (income) expense - net (2) |
|
(0.7 |
) |
|
|
1.1 |
|
|
|
11.2 |
|
Adjusted EBITDA |
$ |
31.3 |
|
|
$ |
45.1 |
|
|
$ |
161.5 |
|
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA margin percentage |
|
6.3 |
% |
|
|
8.9 |
% |
|
|
7.3 |
% |
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 provided by (used for) operating activities to free cash flows for the three months ended March 31, 2024 and 2023 are summarized as follows:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net cash provided by (used for) operating activities |
|
$ |
(30.6 |
) |
|
$ |
15.4 |
|
Capital expenditures |
|
|
(12.2 |
) |
|
|
(10.6 |
) |
Free cash flows |
|
$ |
(42.8 |
) |
|
$ |
4.8 |
|
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.
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.
27
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.
28
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 March 31, 2024, no director or Section 16 officer of the Company adopted a "
Item 6. Exhibits
Exhibit No. |
|
Description |
|
Filed/Furnished Herewith |
|
|
|
|
|
|
|
31 |
|
|
X |
(1) |
|
|
|
|
|
|
|
32.1 |
|
|
X |
(2) |
|
|
|
|
|
|
|
32.2 |
|
|
X |
(2) |
|
|
|
|
|
|
|
101.INS |
|
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 |
|
X |
(1) |
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
X |
(1) |
|
|
|
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
X |
(1) |
|
|
|
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
X |
(1) |
|
|
|
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Labels Linkbase Document |
|
X |
(1) |
|
|
|
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
X |
(1) |
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
X |
(1) |
|
|
|
|
|
|
(1) Filed Herewith
(2) Furnished Herewith
29
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: May 8, 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) |
30