Credit Suisse Industrials Conference
December 4, 2019
Barry Pennypacker - President & Chief Executive Officer David Antoniuk - SVP & Chief Financial Officer Ion Warner - VP Marketing & Investor Relations
Forward- Looking Statements
Safe Harbor Statement
Any statements contained in this presentation that are not historical facts are "forward-looking statements." These statements are based on the current expectations of the management of the company, only speak as of the date on which they are made, and are subject to uncertainty and changes in
circumstances.
We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements include, without limitation, statements typically containing words such as "intends," "expects," "anticipates," "targets," "estimates," and words of similar import. By their nature, forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. For a list of factors that could cause actual results to differ materially from those discussed or implied, please see the company's periodic filings with the SEC, particularly those disclosed in "Risk Factors" in the company's Form 10-K for the fiscal year ended December 31, 2018. Any "forward-looking statements" in this presentation are intended to qualify for the safe harbor from liability under the Private Securities Litigation Reform Act of 1995.
Non-GAAP Measures
The company uses certain non-GAAP measures in discussing the company's performance. The company believes that these non-GAAP financial measures provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations; however, these measures are not substitutes for GAAP financial measures. The reconciliation of
those measures to the most comparable GAAP measures is detailed in Manitowoc's press release for the
third-quarter of 2019, which is available at www.manitowoc.com, together with this presentation.
2
Company Overview
- Global leader in lifting solutions
- Leader in innovation (60+ new products introduced since becoming astand-alone crane company)
- Global customer financing and aftermarket solutions
- Serving wide range of end markets
- Stable customer base across diverse range of geographies
- Strategically located manufacturing footprint allows us to serve attractive markets globally
- Led by proven executive management team
Continued transformation to a high quality, higher margin crane company
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Leading Brands in every category
Rough-terrain | |
cranes | |
Truck- | Tower |
mounted | cranes |
cranes | |
Lattice | Boom |
Trucks / Industrial | |
crawlers | |
cranes | |
All-terrain | Telescoping |
cranes | crawler cranes |
4
Aftermarket Business
~144,000
Global Crane
Installed Base
Highly differentiated global aftermarket solutions and services
5
Highly Strategic Global Footprint
Americas: | EURAF: | |
48% of | 37% of | |
Revenue(1) | Revenue (1) |
MEAP: 15% of Revenue (1)
Sales / Distribution Representation | Manufacturing Facility |
- Unique ability to provide localized products, service and support globally
- Allows Company to capitalize on global growth trends
- Enhances worldwide brand recognition
- Unrivaled sales and distribution capabilities
(1) Based on 2018 full-year sales
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The Manitowoc Way
Customers
1. Margin
Expansion
Velocity | 2. Growth |
Innovation
3. Innovation
Shareholders | Employees | 4. Velocity |
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Strategic Priorities
Margin Expansion
Growth
Innovation
Velocity
- Optimize global capacity and cost structure
- Increase manufacturing agility
- Improve productivity
- Pricing to offset material cost increases
- Increase market share
- Expand recurring revenue streams using new tools
- Financial flexibility through new capital structure
- Pursue acquisition opportunities
- Utilize VOC process in new product development
- Accelerate product development cycle
- Leverage automated manufacturing technologies
- Agile Company culture through continuous improvement
- Improve working capital management through lean transformation
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State of the Business
Managing through the Crane Cycle
- Greater agility to maximize the peak while mitigating trough cycles
- Continuously drive operational improvements
Renewed Focus on Quality and Reliability
- Quality prior to product delivery
- Winning back customers
Well-Accepted New Products
- Voice of the Customer mindset
- Continue NPD pipeline→Five new products planned at 2020 ConExpo trade show
Balance Sheet Focus
- Sufficient liquidity - Recapitalized debt structure
- Cash flow focus
308% improvement in adjusted EBITDA on 14% higher revenue from 2016 to 2018
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Improving Financial Performance
Backlog & Orders by Quarter | Adjusted Diluted Earnings Per Share by Quarter |
$800 | $700 | $1.50 | |||||||||||||||||||||||||||
$800 | $700 | ||||||||||||||||||||||||||||
$620 | |||||||||||||||||||||||||||||
$700 | $600 | ||||||||||||||||||||||||||||
$1.00 | |||||||||||||||||||||||||||||
$536 | |||||||||||||||||||||||||||||
$600 | $488 | $486 | $500 | ||||||||||||||||||||||||||
$458 | $441 | ||||||||||||||||||||||||||||
$376 | $431 | $0.50 | |||||||||||||||||||||||||||
$500 | |||||||||||||||||||||||||||||
$380 | |||||||||||||||||||||||||||||
Backlog | $348 | $372 | $353 | $400 | Orders | ||||||||||||||||||||||||
$400 | $310 | $- | |||||||||||||||||||||||||||
$300 | |||||||||||||||||||||||||||||
$300 | |||||||||||||||||||||||||||||
$200 | $(0.50) | ||||||||||||||||||||||||||||
$200 | |||||||||||||||||||||||||||||
$100 | $100 | $(1.00) | |||||||||||||||||||||||||||
$- | $354 | $324 | $506 | $491 | $468 | $607 | $757 | $692 | $700 | $671 | $694 | $561 | $467 | $- | |||||||||||||||
$(1.50) | |||||||||||||||||||||||||||||
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 | |||||||||||||||||||||||||||||
Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||
Ending Backlog | Orders | 2016 | 2016 | 2017 | 2017 | 2017 | 2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | |||||||||||||||
Revenue & Adjusted EBITDA % by Quarter | |||||||||||||||||||||||||||||
$600 | 12.0% | ||||||||||||||||||||||||||||
$600 | 10.6% | ||||||||||||||||||||||||||||
9.6% | 10.0% | ||||||||||||||||||||||||||||
$500 | 7.6% | ||||||||||||||||||||||||||||
6.9% | 7.1% | 8.0% | |||||||||||||||||||||||||||
6.8% | |||||||||||||||||||||||||||||
5.7% | 6.0% | ||||||||||||||||||||||||||||
$400 | 6.0% | ||||||||||||||||||||||||||||
4.9% | 4.4% | ||||||||||||||||||||||||||||
4.0% | |||||||||||||||||||||||||||||
$300 | |||||||||||||||||||||||||||||
0.4% | 2.0% | ||||||||||||||||||||||||||||
$200 | -0.8% | 0.0% | |||||||||||||||||||||||||||
-2.0% | |||||||||||||||||||||||||||||
$100 | |||||||||||||||||||||||||||||
-5.2% | -4.0% | ||||||||||||||||||||||||||||
$- | $350 | $378 | $306 | $395 | $399 | $482 | $386 | $495 | $450 | $515 | $418 | $505 | $448 | -6.0% | |||||||||||||||
Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 |
Revenue | Adj EBITDA % | ||
Gross leverage ratio= (ST Debt + LT Debt)/ TTM Adjusted EBITDA | 10 |
Appendix
Q3 2019 Financial & Other Key Metrics
Q3 2019 | Q3 2018 | Y/Y ∆ | ||||
Net sales | $ | 448.0 | $ | 450.1 | (0.5)% | |
Engineering, selling & admin expenses | 54.8 | 62.1 | (11.9)% | |||
Operating income | 32.5 | 16.9 | 92.4 | % | ||
Adjusted operating income (1) | 33.9 | 21.5 | 57.6 | % | ||
Net income | 18.1 | 11.5 | 56.9 | % | ||
Adjusted net income (1) | 19.2 | 7.3 | 163.0 | % | ||
Adjusted EBITDA (1) | 42.8 | 30.5 | 40.2 | % | ||
Adjusted operating cash flows (1) | 37.6 | 7.9 | 375.9 | % | ||
Capital expenditures | 12.7 | 6.2 | 104.8 | % | ||
Backlog | $ | 466.5 | $ | 700.2 | (33.4)% |
(1)See appendix for reconciliation of GAAP to non-GAAP measures
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Updated Full-Year 2019 Guidance
Revenue | Approximately $1.850 to $1.880 billion |
Adjusted EBITDA | Approximately $145 to $160 million |
Depreciation | Approximately $35 to $37 million |
Restructuring expense | Approximately $10 to $12 million |
Interest expense | Approximately $31 to $33 million, excluding |
debt refinancing costs | |
Income tax expense | Approximately $12 to $16 million, excluding |
discrete items |
Capital expenditures | Approximately $35 million |
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Appendix- Adjusted EBITDA Reconciliation
Adjusted EBITDA and Adjusted Operating Income
The Company defines adjusted EBITDA as earnings before interest, income taxes, depreciation and amortization, plus an addback of certain restructuring and other charges. The reconciliation of income (loss) from continuing operations to adjusted EBITDA and operating income to adjusted operating income for the three and nine months ended September 30, 2019 and 2018 and trailing twelve months, is as follows (in millions):
Three Months Ended | Nine Months Ended | Trailing | |||||||||||||||||
September 30, | September 30, | Twelve | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | Months | |||||||||||||||
Income (loss) from continuing operations | $ | 18.1 | $ | 11.5 | $ | 37.3 | $ | 11.4 | $ | (41.0 | ) | ||||||||
Interest expense and amortization of deferred | |||||||||||||||||||
financing fees | 7.6 | 10.4 | 26.8 | 30.7 | 37.0 | ||||||||||||||
Provision (benefit) for income taxes | 3.1 | (10.7 | ) | 10.3 | (8.0 | ) | 13.5 | ||||||||||||
Depreciation expense | 8.9 | 9.0 | 26.3 | 27.2 | 35.2 | ||||||||||||||
Amortization of intangible assets | - | - | 0.2 | 0.2 | 0.3 | ||||||||||||||
EBITDA | 37.7 | 20.2 | 100.9 | 61.5 | 45.0 | ||||||||||||||
Restructuring expense | 1.1 | 1.0 | 8.3 | 11.0 | 10.2 | ||||||||||||||
Asset impairment expense | - | - | - | 0.4 | 82.2 | ||||||||||||||
Other non-recurring charges (1) | 0.3 | 3.6 | 0.3 | 3.6 | 0.3 | ||||||||||||||
Loss on debt extinguishment | - | - | 25.0 | - | 25.0 | ||||||||||||||
Other (income) expense - net (2) | 3.7 | 5.7 | (8.8 | ) | 8.6 | (5.9 | ) | ||||||||||||
Adjusted EBITDA | 42.8 | 30.5 | 125.7 | 85.1 | 156.8 | ||||||||||||||
Depreciation expense | (8.9 | ) | (9.0 | ) | (26.3 | ) | (27.2 | ) | (35.2 | ) | |||||||||
Adjusted operating income | 33.9 | 21.5 | 99.4 | 57.9 | 121.6 | ||||||||||||||
Restructuring expense | (1.1 | ) | (1.0 | ) | (8.3 | ) | (11.0 | ) | (10.2 | ) | |||||||||
Asset impairment expense | - | - | - | (0.4) | (82.2) | ||||||||||||||
Other non-recurring charges | (0.3 | ) | (3.6 | ) | (0.3 | ) | (3.6 | ) | (0.3 | ) | |||||||||
Amortization of intangible assets | - | - | (0.2 | ) | (0.2 | ) | (0.3 | ) | |||||||||||
Operating income | $ | 32.5 | $ | 16.9 | $ | 90.6 | $ | 42.7 | $ | 28.6 | |||||||||
Adjusted EBITDA margin percentage | 9.6 | % | 6.8 | % | 9.2 | % | 6.4 | % | 8.3 | % | |||||||||
Adjusted operating income margin percentage | 7.6% | 4.8% | 7.3% | 4.3% | 6.4% |
- Othernon-recurring charges includes a loss from a long -term note receivable resulting from the 2014 divestiture of the Company's Chinese joint venture recorded in 2018 and other charges included in engineering, selling and administrative expenses in the Condensed Consolidated Statement of Operations.
- Other (income) expense - net includes the settlement of a legal matter in 2019, foreign currency transaction (gains) losses, other components of net periodic pension costs and other miscellaneous items.
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Appendix- Non-GAAP Financial Measures
Non-GAAP Items
Adjusted net income from continuing operations, adjusted EBITDA, adjusted operating cash flows and adjusted free cash flows are financial measures that are not in accordance with GAAP. Manitowoc believes these non -GAAP financial measures provide important supplemental information to both management and investors regar ding financial and business trends used in assessing its results of operations. Manitowoc believes excluding specifi ed items provides a more meaningful comparison to the corresponding reporting periods and internal budgets and forecasts, assists investors in performing analysis that is consistent with financial models developed by investors and research analysts, provides management with a more relevant measure of operating performance and is more useful in assessing management performance.
Adjusted Net Income and Net Income Per Share from Continuing Operations ($ in millions, except share data)
Three Months Ended | ||||||||||||
September 30, | ||||||||||||
2019 | 2018 | |||||||||||
As reported | Adjustments | Adjusted | As reported | Adjustments | Adjusted | |||||||
Gross profit | $ | 88.4 | $ | - $ | 88.4 | $ | 80.0 | $ | - $ | 80.0 | ||
Engineering, selling and administrative | ||||||||||||
expenses (1) | (54.8) | 0.3 | (54.5) | (62.1) | 3.6 | (58.5) | ||||||
Restructuring expense (2) | (1.1) | 1.1 | - | (1.0) | 1.0 | - | ||||||
Operating income | 32.5 | 1.4 | 33.9 | 16.9 | 4.6 | 21.5 | ||||||
Interest expense | (7.2) | - | (7.2) | (9.9) | - | (9.9) | ||||||
Amortization of deferred financing fees | (0.4) | - | (0.4) | (0.5) | - | (0.5) | ||||||
Other income (expense) - net (3) | (3.7) | - | (3.7) | (5.7) | 4.5 | (1.2) | ||||||
Income before income taxes | 21.2 | 1.4 | 22.6 | 0.8 | 9.1 | 9.9 | ||||||
(Provision) benefit for income taxes (4) | (3.1) | (0.3) | (3.4) | 10.7 | (13.3) | (2.6) | ||||||
Net income from continuing | ||||||||||||
operations | $ | 18.1 | $ | 1.1 | $ | 19.2 | $ | 11.5 | $ | (4.2) | $ | 7.3 |
Diluted income from continuing operations | ||||||||||||
per share | $ | 0.51 | $ | 0.54 | $ | 0.32 | $ | 0.20 |
- The adjustment in 2019 relates to othernon-recurring items. The adjustment in 2018 represents the add back of a loss from a long-term note receivable from the 2014 divestiture of the Company's Chinese joint venture.
- The adjustments in 2019 and 2018 represent the add back of restructuring related charges.
- The adjustment represents the add back of a pension settlement charge.
- The adjustments in 2019 and 2018 represent the net income tax impacts of items (1) through (3) . The adjustment in 2018 also includes the removal of an income tax benefit from the partial release of a valuation allowance in the U.K.
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Appendix- Non-GAAP Financial Measures
Nine Months Ended
September 30,
2019 | 2018 | ||||||||||||||||||||
As reported | Adjustments | Adjusted | As reported | Adjustments | Adjusted | ||||||||||||||||
Gross profit | $ | 263.8 | $ | - | $ | 263.8 | $ | 238.9 | $ | - | $ | 238.9 | |||||||||
Engineering, selling and administrative | |||||||||||||||||||||
expenses (1) | (164.7) | 0.3 | (164.4) | (184.6) | 3.6 | (181.0) | |||||||||||||||
Asset impairment expense (2) | - | - | - | (0.4 | ) | 0.4 | - | ||||||||||||||
Amortization of intangible assets | (0.2) | - | (0.2) | (0.2 ) | - | (0.2) | |||||||||||||||
Restructuring expense (3) | (8.3 | ) | 8.3 | - | (11.0 | ) | 11.0 | - | |||||||||||||
Operating income | 90.6 | 8.6 | 99.2 | 42.7 | 15.0 | 57.7 | |||||||||||||||
Interest expense | (25.6 | ) | - | (25.6 | ) | (29.3 | ) | - | (29.3 | ) | |||||||||||
Amortization of deferred financing fees | (1.2) | - | (1.2) | (1.4 ) | - | (1.4) | |||||||||||||||
Loss on debt extinguishment (4) | (25.0 | ) | 25.0 | - | - | - | - | ||||||||||||||
Other income (expense) - net (5) | 8.8 | (15.5) | (6.7) | (8.6 ) | 4.5 | (4.1) | |||||||||||||||
Income before income taxes | 47.6 | 18.1 | 65.7 | 3.4 | 19.5 | 22.9 | |||||||||||||||
(Provision) benefit for income taxes (6) | (10.3) | (0.7) | (11.0) | 8.0 | (13.8) | (5.8) |
Net income from continuing | ||||||||||||
operations | $ | 37.3 | $ | 17.4 | $ | 54.7 | $ | 11.4 | $ | 5.7 | $ | 17.1 |
Diluted income from continuing operations | ||||||||
per share | $ | 1.05 | $ | 1.53 | $ | 0.32 | $ | 0.48 |
- The adjustment in 2019 relates to othernon-recurring items. The adjustment in 2018 represents the add back of a loss from a long-term note receivable from the 2014 divestiture of the Company's Chinese joint venture.
- The adjustment represents the add back ofnon-recurring asset impairment charges.
- The adjustments in 2019 and 2018 represent the add back of restructuring related charges.
-
The adjustment represents the removal of charges related to the Company's refinancing of its Asset Based Lending
Revolving Credit Facility and senior secured second lien notes. - The adjustment in 2019 represents the removal of a gain associated with the settlement of a legal matter. The adjustment in 2018 represents the add back of a pension settlement charge.
- The adjustments in 2019 and 2018 represent the net income tax impacts of items (1) through (5). The adjustment in 2018 also includes the removal of an income tax benefit from the partial release of a valuation allowance in the U.K.
Adjusted Operating Cash Flows and Adjusted Free Cash Flows | |||||||||||||||||||||
($ in millions, except share data) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net cash provided by (used for) operating | |||||||||||||||||||||
activities: | $ | 37.6 | $ | (152.2 | ) | $ | (197.9 | ) | $ | (420.5 | ) | ||||||||||
Cash receipts on sold accounts receivable | - | 163.3 | 126.3 | 401.3 | |||||||||||||||||
Net payments (borrowings) on accounts | |||||||||||||||||||||
receivable securitization program | - | (3.2 | ) | 75.0 | (19.6 | ) | |||||||||||||||
Adjusted operating cash flows: | 37.6 | 7.9 | 3.4 | (38.8 ) | |||||||||||||||||
Capital expenditures | (12.7 | ) | (6.2 | ) | (22.4 | ) | (21.4 | ) | |||||||||||||
Adjusted free cash flows: | $ | 24.9 | $ | 1.7 | $ | (19.0 ) | $ | (60.2 ) | |||||||||||||
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Disclaimer
Manitowoc Company Inc. published this content on 04 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 December 2019 20:39:03 UTC