Manitowoc (MTW) Q4 2025 Earnings Call Transcript

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Date

Tuesday, February 10, 2026 at 10 a.m. ET

Call participants

• President and Chief Executive Officer — Aaron H. Ravenscroft
• Executive Vice President and Chief Financial Officer — Brian P. Regan
• Senior Vice President, Marketing and Investor Relations — Ion Warner

Takeaways

• Orders -- $803 million in the fourth quarter, up 56% year over year, with three large December orders securing 2026 build slots.
• Backlog -- $794 million at year-end, a 22% increase from the previous year.
• Net sales -- $677 million, representing 14% growth year over year, driven by strong shipments in North America, European tower cranes, and non-new machine sales of $191 million (quarterly), and $690 million (trailing twelve months).
• Adjusted EBITDA -- $40 million for the quarter, with management stating that approximately 85% of tariff headwinds were mitigated by targeted pricing and sourcing actions.
• GAAP diluted EPS -- $0.20; adjusted diluted EPS of $0.32, down $0.09 from the prior year, impacted by $0.13 net tariffs year over year.
• Free cash flow -- Yearly use of $15 million; excluding $45 million in EPA settlement payments, free cash flow was $30 million.
• Net leverage -- Ended at 3.15 times, with total liquidity reported at $298 million, and cash balance at $77 million.
• 2026 outlook -- Management provided guidance of $2.25 billion-$2.35 billion in net sales, and $125 million-$150 million adjusted EBITDA, supported by pricing, European tower cranes, and continued non-new machine sales growth.
• 2026 free cash flow guidance -- Projected at $40 million-$65 million, with capital expenditures expected between $45 million-$50 million.
• Restructuring plan -- Expected to yield $10 million in cost savings during 2026, intended to offset inflation and FX headwinds.
• Regional order strength -- New crane orders increased 64% in Europe, and mobile crane orders up 39%, both year over year.
• Workplace safety -- Reportable injury rate (RIR) achieved 0.94, the first time below one in company history, and first aid incidents fell 10% year over year.
• Aftermarket expansion -- Non-new machine sales grew 10% to $690 million, a company record, and field service technicians expanded to over 500.
• Product innovation -- Eleven new cranes launched during the year, including largest topless and lift-in tower cranes produced to date; additional launches expected in March.
• January 2026 order update -- Aaron Ravenscroft reported "approximately $225 million" in January orders, supported by a successful winter campaign for tower cranes, and strong demand for large RT and crawler cranes.

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Risks

• Tariffs continue to present headwinds, highlighted by the statement that "the cost of new cranes is going up, and rental rates need to follow for crane operators to justify the purchase of new cranes or fleet renewals."
• Sequential "flat" rental rates in The Americas flagged as a key concern for driving purchase timing.
• GAAP cash flows from operations were negatively impacted by $45 million in payments associated with EPA settlement.
• Management expects Q1 2026 to be "a little bit low relative to the rest of the year" due to tariffs, FX headwinds, and delayed impact from restructuring actions.

Summary

Management emphasized a record order quarter and double-digit order and backlog growth, signaling broad-based demand recovery in several regions despite persistent tariff and pricing pressures. A 10% increase in non-new machine sales, combined with ongoing product launches, reflects ongoing execution of the Cranes Plus 50 strategy. Management projects further growth in European tower cranes and expects recent restructuring to offset inflationary and FX headwinds in 2026. Guidance updates reflect expectations for revenue expansion, adjusted EBITDA improvement, and lower net leverage, supported by solid January order activity and broadening aftermarket initiatives.

• "our long-term aspirational goal is simple. We want to achieve a return on invested capital of 15%," Aaron Ravenscroft stated, highlighting a focus on margin-rich, less-cyclical aftermarket sales.
• Management announced new strategic distribution partnerships, and planned service location expansions in multiple geographies, supporting further reach into non-new machine revenues.
• Workplace safety improvements may indicate effective execution of Lean initiatives and operational discipline.
• Restructuring efforts are projected to add flexibility for future strategic investments by improving liquidity and reducing leverage.

Industry glossary

• Non-new machine sales: Revenue from aftermarket parts, services, used equipment, and crane refurbishments rather than the sale of new machines.
• Cranes Plus 50 strategy: Company's focused growth initiative to expand aftermarket, parts, and service sales to provide less-cyclical, higher-margin revenue streams.
• RIR (Recordable Injury Rate): OSHA-defined workplace safety metric indicating the number of OSHA recordable injuries per 100 employees per year.

Full Conference Call Transcript

Aaron Ravenscroft: Thank you, Ion, and good morning, everyone. Please turn to slide three. To start, I'd like to express my appreciation to our team for their hard work and never-ending passion for our company and for our customers. With their grit and determination, we delivered solid results in the fourth quarter. 2025 was a hard-fought year. Given the great trade reset in the U.S., the operating environment wasn't exactly as we anticipated. Even so, The Middle East remained strong, and we began to see green shoots in Europe and Asia Pacific. We also continue to make great progress on our Cranes Plus 50 strategy. Non-new machine sales grew 10% to $690 million, reaching another record.

We continue to grow our aftermarket footprint, adding territory coverage in North Carolina, South Carolina, and Georgia in The United States, and several key provinces in France. In addition, we opened or upgraded new locations in Nashville, Phoenix, and Baton Rouge in The U.S., Sydney, Australia, and two locations in France. Lastly, we grew our field service technician population to over 500. Equally important to growing our aftermarket presence, new product development is the life of our company and critical to growing our population of cranes in the field. At the very end of 2024, we launched the MCT 2205, which is the largest topless tower crane we have ever produced.

We sold 19 of these units last year, which was a great result. During 2025, we launched 11 new cranes, including the GRT 550 rough terrain, a five-axle hybrid all-terrain crane, and the MCR 815, which is the largest left-in tower crane that we've ever sold. In March, we will unveil two more special cranes at CONEXPO. We will launch an 80-ton boom truck, which is the largest boom truck that we've ever produced, and we will launch an eight-axle 700-ton all-terrain crane, which is also the largest all-terrain crane we've ever developed. A big thank you to our engineering teams. It's been a big lift to extend our product portfolio into these higher ranges. Please turn to Slide four.

Turning our focus to the Manitowoc Way, I'm extremely pleased that we achieved an RIR of 0.94. For the first time in our company's history, we reduced our recordable injury rate below one. We also reduced our first aid incidents by 10% year over year. For some perspective, in 2015, we had 91 recordable injuries. In 2025, we had just 42. Our long-term goal remains zero injuries. Next, I would like to announce our CEO awards for the Manitowoc Way. Although our teams in the factories continue to do an awesome job, I was pleased that our winners were from the front end of our business.

I'm happy to announce our MGX Brands in Chesapeake was recognized for the new blast hopper concept, which was built by one of our welders and increased operational efficiency by 70% and improved safety. Second, our sales team in Portugal was recognized for their work that they did on a large military contract in Spain. In addition to selling multiple cranes, the team helped the customer with all of their rigging hardware needs, offering a complete suite of lifting products. Lastly, I want to recognize three outstanding team members who received this year's CEO award for their exceptional service to our customers: Stephane Dumont, Vitaly Hartemef, and Nick Bird.

Congratulations to each of them for their leadership and unwavering commitment to our customer success. Our entrepreneurial spirit inspires all of us to strive for excellence in serving our customers. Please move to slide five. Turning our attention to the market, we generated orders of $803 million during the fourth quarter, up 56% year over year. Backlog ended the year at $794 million, up 22% from a year ago. Regionally, The Americas remains pretty complicated. A year ago, U.S. elections fueled customer sentiment. However, that momentum was reversed by the tariff situation, which still remains fluid. Folks want and need new cranes, but they are waiting until the very last minute to place orders.

Our fourth-quarter orders were highlighted by three large orders in December, which secured build slots for these dealers and customers throughout 2026. Rental rates have remained flat, which is my biggest concern. Regardless of the specific tariff, the cost of new cranes is going up, and rental rates need to follow for crane operators to justify the purchase of new cranes or fleet renewals. Overall, dealer inventory is okay. It's not desperately low nor is it concerningly high. In Europe, we continue to see improvement driven by several new economic programs across the continent. Without a doubt, the tire crane market has improved significantly. New machine orders were up 64% year over year during the fourth quarter.

I was with a couple of our key dealers in early January, and their sentiment is a lot better than it was a year ago. Similarly, mobile crane orders in the quarter were up 39% year over year. Customers are beginning to feel better about the outlook on project work throughout the region. In The Middle East, I remain fairly optimistic, but the ride is definitely getting bumpier. In Saudi, while projects are moving forward, cash continues to tighten, which is making folks nervous. In Dubai, the large residential projects, which are skyscrapers by American standards, remain extremely hot. The Stargate Data Center Project, however, in Abu Dhabi is moving slower than I anticipated.

The tower crane work on phase one has been completed; surprisingly, phase two has not yet started. Meanwhile, the new Dubai Airport has already let the first three construction packages, and the fourth is under review. So the groundwork is underway, and I would expect to see tower crane work sometime this year. The Asia Pacific market resembles Europe. Momentum and sentiment are improving, and South Korea's optimism has grown despite a still weak currency, bolstered primarily by the announcement of large Samsung and SK Hynix semiconductor projects. Australia reflects a similar positive trend. We are waiting for the green light on a major power transmission project, which will provide a meaningful boost in sentiment.

With that, I'll pass it on to Brian to walk you through the financials before I close with an update on our strategy.

Brian Regan: Thanks, Aaron, and good morning, everyone. Please turn to Slide six. Our fourth-quarter results were in line with our expectations and prior guidance, demonstrating solid performance and resilience despite ongoing volatility in global markets and the continued headwinds from tariffs. We delivered strong orders for the quarter and achieved trailing twelve-month non-new machine sales of $690 million. In addition, we made meaningful progress in reducing our working capital, generating $78 million of free cash flows during the quarter. Quarterly orders totaled $803 million, driven by whole goods stocking orders in The Americas after two quarters of lagging orders and the continued improvement in the European tower crane demand. We saw a 64% increase in new crane orders year over year.

Year-end backlog was $794 million, up 22% versus the prior year. Net sales for the quarter were $677 million, up 14% year over year, supported by strong shipments in North America, European tower cranes, as well as continued growth from our non-new machine sales strategy, which reached $191 million. Adjusted EBITDA for the quarter was $40 million, and consistent with our expectations, we were able to mitigate approximately 85% of these headwinds through targeted pricing and sourcing actions. On a GAAP basis, our provision for income taxes was $5 million. GAAP diluted income per share was $0.20, and on an adjusted basis, $0.32, a decrease of $0.09 from the prior year.

Net tariffs resulted in $0.13 of unfavorable impact to DEPS on a year-over-year basis. Cash flows from operations for the year were $22 million, which was negatively impacted by payments of approximately $45 million associated with the settlement of the EPA matter. Capital expenditures were $38 million, including $19 million for rental fleet investment. Free cash flow was a use of $15 million. We ended the year with a cash balance of $77 million. Excluding the EPA matter, free cash flow was $30 million. Our net leverage ended the year at 3.15 times, and total liquidity was a healthy $298 million. Please turn to Slide eight.

We expect improved results in 2026 with net sales in the range of $2.25 billion to $2.35 billion and adjusted EBITDA between $125 million and $150 million. When looking at the midpoint of our guidance, expected improved results are driven by one, pricing to offset the incremental tariff headwind; two, the European tower crane market; and three, continued growth in our new non-new machine business. Additionally, we implemented a restructuring plan to streamline our organization with projected savings of roughly $10 million in 2026. These projected savings are expected to offset inflation and foreign currency headwinds. We project free cash flow to be $40 million to $65 million, which includes $45 million to $50 million in capital expenditures.

We expect to improve our net leverage to below three times during the year, improving our liquidity and adding flexibility for strategic investments. With that, I'll turn the call back to Aaron for closing remarks.

Aaron Ravenscroft: Thank you, Brian. Please turn to slide nine. Looking back, 2025 was not the year that we expected, but there's plenty of optimism as we move forward. Europe and Asia Pacific are moving in the right direction, the Middle East business remains positive. The American market appears poised for a rebound with interest rates trending down and the tariff environment stabilizing. Fundamentally, fleets continue to age, and at some point, a major refresh will be required. Strategically, we continue to execute our Cranes Plus 50 strategy. We have new locations planned in Portugal, Mexico, Chile, and France, and we continue to hire field service techs.

Recently, we also announced a new distribution agreement with Hyub, where MGX will represent their products across 13 states. Really excited about this opportunity given the synergies between knuckle boom cranes and boom trucks. In line with our Cranes Plus 50 strategy, we continue to expand our portfolio of lifting solutions. In closing, our long-term aspirational goal is simple. We want to achieve a return on invested capital of 15%. While stronger end market demand will certainly help, the key lies in continuing to grow our non-new machine sales, which is far less cyclical and delivers gross margins around 35%. I am confident that we are making progress and moving in the right direction.

As Warren Buffett wisely said, someone is sitting in the shade today because someone planted a tree a long time ago. We continue to grow our orchard at Manitowoc. With that, operator, please open the lines for questions.

Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. Our first question today is from Jerry Revich with Wells Fargo. Please go ahead.

Kevin Ujerik: Good morning, Jerry. This is sorry, not Jerry. It's Kevin Ujerik on for Jerry Revich. How are you guys?

Aaron Ravenscroft: Good, Kevin. Thanks, Kevin. Yeah. So first question that I had was about the 2026 outlook. How should we think about the sales growth by region? Which regions are expected to show the highest growth and what products are contributing?

Brian Regan: Yes. I think from a regional standpoint, our tower crane business continues to do strong, and the expectation will continue into 2026 to be a tailwind for us. That's the tower cranes. The U.S. is a bit of a mixed bag. While, you know, we did see some good orders and we got a good backlog, I think the tariffs still create some headwind for us. Hence why we're doing the restructuring action.

Kevin Ujerik: Gotcha. And then for the Crane Plus 50 strategy, could we talk about how to think about it through 2026 and the cadence?

Aaron Ravenscroft: Yeah. So, I mean, in terms of our cadence, I'd say it's pretty flat across it. The only thing that goes up and down is the used. So we look at non-new machine sales heading into the year. I think we're in a good position relative to the number of techs we've added, number of locations we've added. That being said, you know, we do have some headwind because we've had some good use sales the last couple of years, and tariffs have thrown a little bit of a wrench in there in terms of moving units from Europe to The United States.

But, yeah, I mean, I think it's probably safe in terms of a modeling standpoint to just assume that it's roughly the same every quarter. Don't you think, Brian?

Brian Regan: Yeah. Yeah. I think like you said, I think the used I think Q4, we had a good used quarter. So we saw a good revenue number. From a margin standpoint, the used is a little bit less than the normal margin in our non-new machine sales. So, you know, with expected lower revenue on the used next year, I think, you know, the margin should be a little bit better.

Kevin Ujerik: Okay. Got it. That's all I have for questions. Thank you.

Ion Warner: Thanks, Kevin.

Operator: Showing no further questions, this concludes our question and answer session. Would like

Ion Warner: Gary, got a couple of emails that have come my way with questions. So, I'll just ask the question and have management answer. The first question that came in was, what are your orders in January?

Aaron Ravenscroft: I'll take that one. So in terms of our orders in January, very, I would say, good month, approximately $225 million. When I look at it in terms of the you know, where the good news came from. We've ended our winter campaign for tower cranes. That was a good program for us. So that's the first time in a few years we've had a good winter campaign, so that was good. In North America, of course, we had some large stocking orders during the fourth quarter. So it was down a little bit, but overall, I would say it was still a pretty good number. Demand for large RTs and crawler has been really good.

So pleased to see the continued progress in January. So, yeah, good month.

Ion Warner: Okay. We received another question by email and I'll read it. Can you give us an update on the Manitowoc Way and your implementation of Lean? At the company?

Aaron Ravenscroft: Yeah. So, I mean, these days, I sort of look at the Manitowoc Way in three buckets. First, on the shop floor, I'm really, really proud of the things that we're doing. You know, a good example, I was in France a couple of weeks ago, and the team is really, I'd say, honed in on the details now where it's not just sort of talking about five minutes, but really diving into how do we apply SMED, changing out machine tools, how we're programming robots. So I feel like we're along our way, you know, well along our way, and the team doesn't need much help. I can be more of a cheerleader on that side of the business.

In terms of the office, I'm still super excited to see what we can do with AI. I think that's gonna give us a lot of tools to crunch data that we really couldn't attack in the past. We've had a couple of smaller wins so far, but nothing to brag about, I would say, just yet. Then lastly, when I look at the company, you know, the more we continue to invest in the MGX, and the aftermarket, non-new machine sales, and all these new locations, we've got a lot of work to do on that in terms of sharing lessons learned.

I find lots of creative solutions when I go visit the locations, but we're sharing them the way, I would say, that we do at the factory level. So I'd say that's really our focus in the next couple of years is how do we get better and really focus on the customer experience. So it's nice to see that what we're doing with Lean is starting to play in lots of different applications than just the shop floor.

Ion Warner: Got it. Oh, got another one. About the seasonality. How do you see the first quarter looking?

Brian Regan: Evan, I'll take that one. Okay. While we don't give quarterly guidance, I think we do expect 2026 to be similar in that Q2 and Q4 are generally our strongest quarters. Specifically related to Q1, I think we've got a few headwinds where Q1 will be impacted by one being tariffs, the big tariff hit came, really in the second part of the year. So we have that headwind. Also, FX will impact us negatively in the first quarter. And the restructuring actions that we took are going to be a positive impact later on in the year. So I think Q1 will be unfortunately a little bit low relative to the rest of the year.

Aaron Ravenscroft: Anything else, Diane?

Ion Warner: Nope. Those are the inbound questions that I got in my email.

Brian Regan: Thank you.

Operator: With no further questions, I would like to turn the conference back over to Ion Warner for any closing remarks.

Ion Warner: Thanks, Gary. Please note a replay of our earnings call will be available later this morning by accessing the Investor Relations section of our website at www.manitowoc.com. Thank you, everyone, for joining us today and for your continued interest in The Manitowoc Company. We look forward to speaking with you next quarter.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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