Manitowoc’s Earnings Call: Mixed Sentiment Amid Tariff Challenges

Manitowoc Company ((MTW)) has held its Q2 earnings call. Read on for the main highlights of the call.

The Manitowoc Company’s recent earnings call presented a mixed sentiment, reflecting both optimism and caution. While the company celebrated significant growth in certain areas, such as the impressive surge in tower crane orders and improved performance in the Middle East, these positive developments were tempered by challenges in North America. The uncertainty surrounding tariffs has led to a cautious outlook, with concerns about pricing and demand affecting the overall sentiment.

Tower Crane Orders Surge

The Manitowoc Company reported a remarkable 104% year-over-year increase in new tower crane orders, marking the fourth consecutive quarter of improvement. This surge underscores the company’s strong position in the crane market and its ability to capitalize on growing demand for construction equipment.

Record Safety Performance

Safety remains a top priority for Manitowoc, as evidenced by the company’s recordable injury rate of 0.67 for the first half of the year. This achievement sets a new safety record and highlights the company’s commitment to maintaining a safe working environment for its employees.

Strong Performance in the Middle East

The Middle East continues to be a dynamic growth market for Manitowoc, with significant projects in Saudi Arabia and the UAE driving strong demand for cranes. This region’s robust performance is a key contributor to the company’s overall growth strategy.

Aftermarket Business Growth

Manitowoc’s aftermarket business is thriving, with non-new machine sales reaching $162 million in the quarter, up 10% year-over-year. The company achieved a trailing 12-month record of $659 million, demonstrating the strength and resilience of its aftermarket segment.

Uncertainty in North America

Tariff-related uncertainties have created significant challenges in North America, leading to delayed purchasing decisions by dealers and crane rental houses. This uncertainty is a major concern for Manitowoc as it navigates the complexities of the current market environment.

Decreased Net Sales and EBITDA

Manitowoc reported a 4% year-over-year decrease in net sales, totaling $540 million, while adjusted EBITDA fell by $10 million to $26 million. These declines reflect the broader challenges faced by the company, particularly in the North American market.

Impact of Tariffs on Demand

The company projects a full-year gross impact of $35 million due to tariffs, with significant elasticity in pricing affecting demand decisions. Manitowoc is actively working to mitigate these costs, aiming to offset 90% of the tariff impact.

Higher SG&A Expenses

SG&A expenses increased by $9 million year-over-year, driven by foreign currency fluctuations and employee-related costs. This rise in expenses is another factor contributing to the company’s cautious outlook.

Forward-Looking Guidance

Looking ahead, Manitowoc provided guidance reflecting a cautious outlook due to market dynamics, particularly tariffs. The company expects to hit the low end of its adjusted EBITDA guidance of $120 million to $145 million, citing uncertainties in the U.S. market and dealer inventory reductions. Free cash flow for the year is anticipated to be at the low end of the previous range, around $10 million to $15 million.

In conclusion, The Manitowoc Company’s earnings call highlighted a mixed sentiment, with significant growth in certain areas counterbalanced by challenges in North America due to tariff uncertainties. While the company is making strides in safety and aftermarket business growth, the impact of tariffs and decreased net sales remain concerns. The forward-looking guidance reflects a cautious approach as Manitowoc navigates these challenges in the coming quarters.