MANITOWOC CO INC

Previous wording

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 supply chain and logistics constraints may have a material adverse impact on the Company’s financial condition, results of operations, or cash flows.

Current wording

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 and six months ended June 30, 2024. While the Company has experienced some relief of the supply chain and logistics constraints in certain regions, the ongoing crisis in the Red Sea has caused logistic constraints and further disruptions for certain key components. 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 supply chain and logistics constraints may have a material adverse impact on the Company’s financial condition, results of operations, or cash flows.

Previous wording

Results of Operations for the three months ended March 31, 2024 and 2023:

Current wording

Results of Operations For The Three and Six Months Ended June 30, 2024 and 2023:

Previous wording

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.

Current wording

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 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.

Previous wording

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.

Current wording

Orders for the three months ended June 30, 2024 decreased 22.2% to $428.4 million from $550.5 million for the same period in 2023. The decrease was primarily attributable to lower demand in the Americas and EURAF. The lower demand in EURAF was mainly in the Company’s tower crane product offering. Demand was impacted by higher interest rates and economic uncertainties. Orders were unfavorably impacted by $2.0 million from changes in foreign currency exchange rates.

Previous wording

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.

Current wording

As of June 30, 2024, total backlog was $836.3 million, an 8.8% decrease from the December 31, 2023 backlog of $917.2 million, and a 18.4% decrease from the June 30, 2023 backlog of $1,024.6 million. The decrease in backlog from December 31, 2023, was primarily attributable to lower demand during the year. Backlog was unfavorably impacted from changes in foreign currency exchange rates by $8.0 million and $4.4 million from December 31, 2023 and June 30, 2023, respectively.

Previous wording

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.

Current wording

Gross profit for the three months ended June 30, 2024 was $99.7 million, a decrease of $23.3 million as compared to $123.0 million for the same period in 2023. The decrease was primarily attributable to the lower net sales, unfavorable product mix, and lower absorbed costs due to lower manufacturing volume in the EURAF segment. Gross profit was unfavorably impacted by $0.3 million from changes in foreign currency exchange rates.

Previous wording

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.

Current wording

Interest expense for the three months ended June 30, 2024 was $9.6 million as compared to $9.0 million for the same period in 2023. Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility. See further detail at Note 10, “Debt” to the Condensed Consolidated Financial Statements.

Previous wording

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.

Current wording

For the three months ended June 30, 2024, and 2023, the Company recorded a provision (benefit) for income taxes of $1.6 million and $(5.2) million, respectively. For the six months ended June 30, 2024, and 2023, the Company recorded a provision (benefit) for income taxes of $3.5 million and a provision (benefit) for income taxes of $(1.0) million, respectively. During the three and six months ended June 30, 2023, a discrete net tax benefit of $13.5 million was recorded, mainly attributable to the release of a valuation allowance. There were no material discrete items recorded for the three and six months ended June 30, 2024. The increase in the Company’s tax provision (benefit) for the three and six months ended June 30, 2024, relative to the prior year primarily relates to a decrease in the discrete tax benefit recorded year over year. 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 jurisdictions where no tax benefit can be realized.

Previous wording

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 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.

Current wording

EURAF segment operating loss increased $13.2 million for the three months ended June 30, 2024 to $6.8 million from operating income of $6.4 million for the same period in 2023. The increase in the operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume. Segment operating loss was favorably impacted by $0.1 million from changes in foreign currency exchange rates.

Previous wording

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.

Current wording

MEAP segment operating income decreased $9.7 million for the three months ended June 30, 2024 to $9.3 million from $19.0 million for the same period in 2023. The decrease was primarily attributable to the lower net sales, higher manufacturing costs, and price attrition. Segment operating income was unfavorably impacted by $0.1 million from changes in foreign currency exchange rates.

Previous wording

A summary of cash flows for the three months ended March 31, 2024 and 2023 are as follows:

Current wording

A summary of cash flows for the six months ended June 30, 2024 and 2023 are as follows:

Previous wording

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.

Current wording

Cash flows used for operating activities of $19.6 million for the six months ended June 30, 2024 increased $16.5 million from$3.1 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.

Previous wording

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.

Current wording

The Company has historically relied primarily on cash flows from operations, borrowings under revolving credit facilities and overdraft facilities, issuances of notes, and other forms of debt financing as its sources of cash.

Previous wording

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.

Current wording

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 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.

Previous wording

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.

Current wording

In addition to the ABL Revolving Credit Facility, the Company has access to committed and non-committed lines of credit to fund working capital in Europe and China. There are six lines of credit, of which five are denominated in Euros totaling €37.0 million and one denominated in Chinese Yuan for ¥30.0 million. Total U.S. dollar availability as of June 30, 2024 for the six lines of credit is $43.8 million, with $20.3 million outstanding.

Previous wording

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.

Current wording

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 covenants for the ABL Revolving Credit Facility and 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.

Previous wording

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.

Current wording

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, 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 - 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.

Previous wording

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.

Current wording

The Company’s Adjusted ROIC as of June 30, 2024 was 7.1%. Below is the calculation of Adjusted ROIC as of June 30, 2024.

Previous wording

(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.

Current wording

(1) Other non-recurring items - net for the three months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S. EPA and $0.1 million of one-time costs. Other non-recurring items – net for the trailing twelve months relate to $15.7 million of costs associated with a legal matter with the U.S. EPA and $0.8 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 March 31, 2024, December 31, 2023, and September 30, 2023.

Previous wording

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.

Current wording

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 other non-recurring items. The reconciliation of net income to EBITDA, and further to adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 and trailing twelve months is summarized as follows.

Previous wording

Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three and trailing twelve months ended March 31, 2024 and the three months ended March 31, 2023. Other (income) expense – net for the trailing twelve months includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia.

Current wording

Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three and trailing twelve months ended June 30, 2024 and the three months ended June 30, 2023. Other expense – net for the three and six months ended June 30, 2023 includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia.

Previous wording

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:

Current wording

Free cash flows is defined as net cash used for operating activities less cash outflow from investment in capital expenditures. The reconciliation of net cash used for operating activities to free cash flows for the six months ended June 30, 2024 and 2023 is summarized as follows.