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President & Chief Executive Officer — Aaron H. Ravenscroft
Executive Vice President & Chief Financial Officer — Brian P. Regan
Senior Vice President, Marketing & Investor Relations — Ion M. Warner
Aaron H. Ravenscroft: Thank you, Ion, and good morning, everyone. I would like to take a moment to thank The Manitowoc Company, Inc. team for their unwavering commitment to serving our stakeholders. Over the last twelve months, the team has continued to execute our Cranes+50 strategy, enabling us to weather the downturn in the crane cycle and be better positioned for the next leg up. Although there is a great deal of uncertainty in the Middle East, Ukraine, and even in the United States with respect to tariffs, the overall market has been resilient. Our orders during the first quarter were almost $650 million, and our backlog ended the period at $940 million. In addition, rates in April remained strong.
Please turn to Slide three. Starting with the Manitowoc Way, I recently challenged our organization to eliminate hammers, similar to what we did with ladders a few years ago. We are simply too reliant on hammers. They create quality problems and are a major source of safety risk. In our Katy Grove plant alone, we had over 1,200 hammers in use. Thus far, we have eliminated 264. As you can see on this slide, the organization has quickly developed a variety of improvements ranging from simple to ingenious solutions. Eliminating hammers not only helps create a safer workplace but also supports the Manitowoc Way culture as we consistently drive for continuous improvement and innovation.
Ultimately, the goal is to have zero injuries. In terms of new product development, in March we unveiled an 80-ton boom truck and an 800-ton eight-axle all-terrain crane at CONEXPO. Both received outstanding feedback from customers and crane operators. The eight-axle crane was a real head turner at the show, and I really look forward to getting the first units into the field in 2027. Please move to Slide four. Turning to our Cranes+50 strategy, our non-new machine sales for the quarter grew 3% year over year. On a trailing twelve-month basis, we improved 8% to $696 million.
Growing this part of our business, which is less impacted by economic cycles and produces higher returns, is a key part of our strategic plan and is working well. As I preach to our teams, for us to continuously grow our non-new machine sales, we have to focus on four major buckets. Number one, we are adding more service locations. For example, in Australia we doubled the capacity of our Sydney facility, and we recently approved new service centers in Brisbane and Melbourne. Brisbane will host the 2032 Olympics, and we are preparing for a lot of activity in the region. Number two, we are adding more aftermarket sales representatives and field service techs.
We ended the first quarter with 567 field service techs, up 50 techs in just three months. The growth was driven by two major actions. First, we reorganized our approach to talent acquisition in North America by enhancing our recruiting team. And second, in India, we transitioned from a dealer model to a direct model in order to better service our customers. The third bucket, we are increasing sales of complementary lifting accessories. In Europe, our tower crane team has introduced anti-intrusion panels to reduce theft and to discourage curious social media influencers during the off hours. In addition, the team has introduced urinals to replace the less-than-desirable traditional bucket system.
In the UK, our mobile team has started selling outrigger pads and a rear-mounted storage compartment, which they designed in-house. Our goal is straightforward. We want to make our customers' lives easier so they can focus on executing lifts. And the fourth bucket is the fact that we are leveraging technology. I have mentioned our implementation of ServiceMax a few times. This tool has several different modules to help us better track machines and more effectively fix and bill crane repairs. In April, we completed the implementation of ServiceMax’s asset management system.
We are now under the development of the dispatching and work order module, which increases our visibility to service work and enables us to capture more incremental revenue opportunities. Please move to Slide five. For my regional update, let us start with the Americas. First and foremost, overall customer sentiment at CONEXPO was very positive. Crane rental houses were quite optimistic about the market outlook. While everyone is unhappy with tariffs, customers told us project work is abundant. In addition, dealer inventory levels declined during the first quarter, which is a great sign that folks are buying again. For example, all-terrain crane inventory levels are at a ten-year low. In Europe, the crane business feels pretty good.
Demand for tower cranes continues to grow with new machine orders up 76% year over year. Mobile demand has remained relatively steady. In the Middle East, many big projects like the new Dubai Airport continue to move forward. Not surprisingly, Saudi Arabia has pulled back on the home front, and considerable development activity remains underway in Riyadh. Given the circumstances around the Iran conflict, we find ourselves in a wait-and-see mode as we monitor the situation, but I am very encouraged by the level of optimism in the region, with construction companies eager to get back to business. Finally, Asia-Pacific continues to gain momentum with increasing demand in Hong Kong, Vietnam, Australia, and South Korea.
I recently visited the new SK Hynix and Samsung semiconductor projects where roughly 100 POTAIN tower cranes are currently operating. Korean construction companies continue to leave me in awe of their scale and speed. The Samsung site alone will reach 70,000 workers at its peak. I left South Korea very optimistic about demand in the coming quarters. With that, I will hand it over to Brian to walk you through the financials before I make a few closing remarks.
Brian P. Regan: Thanks, Aaron, and good morning, everyone. Please turn to Slide six. Our financial performance for the quarter tracked largely in line with expectations, which supports reaffirming our previously issued guidance. We anticipated difficult comps as tariffs were a headwind to the quarter versus the prior year. The tariffs introduced in 2025 fully impact us until the second half of the year. Moving to the numbers, we had orders of $646 million in the first quarter, relatively flat from a year ago on a currency-neutral basis. Order activity was solid and broadly consistent with recent trends.
Keep in mind, order comps were difficult in Q1 due to the post-election bump in 2025 and the large stocking orders we received at the end of the year. Backlog ended the quarter at a strong $940 million, up $146 million from where we exited 2025 and up $10.442 billion year over year. This supports our revenue expectations for the full year. Net sales in the quarter were $495 million, essentially flat on a currency-neutral basis. Non-new machine sales in the quarter were $166 million and, on a trailing twelve-month basis, reached a record $696 million, up 8% from the prior year.
While growth lagged our expectations in the first quarter, mainly due to used sales, the overall mix of non-new machine sales favored our higher-margin categories. SG&A expenses were $91 million in the quarter. On an adjusted basis, SG&A was up $7 million, with foreign currency accounting for $3 million of the increase. The remaining increase was driven primarily by the CONEXPO trade show and inflation from other employee-related costs. Adjusted EBITDA in the quarter was $20 million, down $2 million, or 10% year over year. As expected, tariffs impacted our results by $2 million. Please turn to Slide seven. Net working capital ended the quarter at $536 million, an increase of $47 million year over year, driven primarily by inventory.
The higher year-over-year inventory was driven by $26 million from foreign currency, $15 million from tariffs, and $10 million in prototypes, and was partially offset by operational improvements. Moving to cash flow, operating activities provided $27 million of cash during the quarter. Capital expenditures were $8 million, including $6 million for our rental fleet, resulting in free cash flow of $19 million. This was a $17 million improvement year over year, driven by increased collections on accounts receivable. We ended the quarter with $316 million in liquidity, and our net leverage ratio was 3.1 times. In April, S&P upgraded our corporate credit rating from B to B+.
This upgrade underscores the progress we are making in strengthening our financial profile through the cycle while investing in long-term growth through our Cranes+50 strategy. Looking ahead, first quarter results did not change our expectations for the full year, and as such, we are affirming our previously issued guidance of net sales of $2.25 billion to $2.35 billion and adjusted EBITDA of $125 million to $150 million. With that, I will turn the call back to Aaron.
Aaron H. Ravenscroft: Thank you, Brian. Please turn to Slide eight. Standing back and looking at the forest through the trees, I think there are many reasons to be optimistic. Number one, Europe is on the rebound. For sure, towers have rebounded more aggressively than mobiles, and there is still a big need for residential housing and power generation. Number two, in the Middle East, all things considered, folks are pretty optimistic to get back on track. In normal times, all construction would have dried up overnight with such regional conflict. Number three, in Asia, our strongest markets are pumping even in the face of weaker currencies. Number four, in LATAM, copper has traded above $6 per pound.
With several new governments in the region, I believe we will start to see more investments in brownfield and greenfield mining projects. Number five, in the U.S., although fleet ages continue to increase, customers are begrudgingly making purchases. Data centers continue to expand rapidly, and there is a strong need for additional power generation and transmission infrastructure. And finally, number six, the success of our Cranes+50 strategy is increasingly helping us weather this economic cycle and positioning us for a higher-margin profile in the long term. Of course, there is still a lot of uncertainty in the market, but I believe that we are starting to see light at the end of the tunnel.
Keep in mind, we have been living in this mode essentially since 2020. There is plenty of pent-up ambition from folks to renew and expand their businesses, which is why I believe that the markets have held up steady. With that, operator, please open the line for questions. We will now open the call for questions.
Operator: Yes, thank you. We will now begin the question-and-answer session. The first question comes from Jerry Revich from Wells Fargo.
Aaron H. Ravenscroft: Good morning, Jerry. Morning.
Analyst: This is Kevin on for Jerry. I just had a question on the changing tariff dynamics as it relates to your outlook. It would be helpful to get more color on that, maybe bifurcating between impacts from the AIIPA overturn and the new Section 232 ruling.
Brian P. Regan: Yep. Thanks, Kevin. A lot is going on with the tariff landscape, as you can imagine. I will start by saying that the net go-forward impact of what is in place today is in line with what we thought coming into the year. There are no real changes to our expectations based on those changes. With that said, there is still uncertainty regarding what the Section 301 country-by-country tariffs will be and what net effect they will have on us versus the Section 232 current tariffs. Related to AIIPA, we did file our refund through the process. We paid approximately $25 million in AIIPA, so we are in a wait-and-see mode as far as that process goes.
Additionally, you will see in our Q, we voluntarily submitted a prior disclosure to Customs related to potential errors in our methodology in calculating the 232 steel and steel derivative tariffs. This will allow us to review our calculation to determine if any adjustments are required. To give some perspective, we paid approximately $18 million prior to the April change in the 232 tariffs.
Analyst: Got it. Very helpful. And then given that Q2 is typically a seasonally strong quarter for both net sales and margin, how should we think about performance versus normal seasonality? Any one-time impacts we should be thinking about from Q1?
Brian P. Regan: As I said in the prepared remarks, from a comp standpoint, the second half is going to look better because of the impact of the tariffs. They really hit us more in the second half than the first half. With that said, we talked about restructuring in our plan, and that is still in place. Again, that is going to affect us more favorably in the second half. So, I think Q2 will be better than Q1, but the second half is going to be better than the first half.
Analyst: Understood. Thank you. That is all I have for questions.
Ion M. Warner: Thanks, Kevin. We received several emails this morning, and I would like to read them to you. The first question that I received online was: Could you provide more color on these lifting accessories as part of your Cranes+50 strategy?
Aaron H. Ravenscroft: Yes. The analogy that I use with our team internally is that the crane business is a lot like a restaurant. When you think about the restaurant, it is the steak that brings us all to the restaurant—it is that main platter. But the reality is the restaurant is living off of the appetizers, the desserts, and the wines. I think that the crane business is exactly the same. Obviously, you have to have a great crane to be in the lifting business, but there are a lot of accessories that go around that product and really add value to our business and to our customers. What really brings it all home is great service.
A great recent example: we got an order in France for seven tower cranes for €6.5 million, and on the back of that, the sales team was able to add commissioning and dismantling services for €900,000 and then several accessories for a total of €300,000. On top of the normal crane order, they added anti-intrusion panels, lighting, cameras, anti-collision software, aircraft warning systems, and lifts. To me, that is a great example of what the team can add when they think outside of the box and have a bigger view of the customer and how we service those customers. Hopefully, that color helps.
Ion M. Warner: Thanks. We received another email: What were your orders in April?
Brian P. Regan: Yes. As Aaron mentioned, orders were strong. We are still rolling up the numbers, but we expect between $225 million and $250 million of orders in April, which is a little bit higher than the run rate we saw in Q1.
Ion M. Warner: Okay. I just received this email: You seem more optimistic on this call. How should we think about the full-year guidance?
Aaron H. Ravenscroft: We reaffirmed our guidance, but orders have been strong, and April, as Brian just said, is looking good. Backlog is strong. Dealer inventory is on the low end in the United States, and we are really starting to see some momentum in places like South Korea. So I think there is a lot of optimism and a lot of opportunity. The big question mark is just how the Strait of Hormuz situation plays out because we still have plenty of orders that need to make their way into the Middle East through that strait, and as of right now, it is shut down.
So there are some good opportunities, but there is still some uncertainty in terms of our ability to execute within the year depending on how that situation plays out.
Ion M. Warner: I received another email, and I will read it to you: How is the implementation of the Manitowoc Way lean practices impacting the aftermarket business?
Aaron H. Ravenscroft: We traditionally were manufacturing-focused, so we are still figuring it out, and I think we are in the early innings, but we are starting to see some good gains. I think when you look at what we did in terms of our new hires of field service folks during the quarter, that is a good example of how we are gaining. We continue to tweak our approach to recruiting and how we manage each organization, and it looks like we have found the right formula. That is a real success of us trying to continuously do a better job and be more effective at it.
We have some good kaizens going this year; they are more than just a one-week kaizen. It will take us a few weeks to work through those. We do pre-delivery inspections at our dealerships. We have never really gotten good feedback; there are a lot of fixes that happen that people just do not report. So we built a system around that to start to get feedback closer to our assemblers, and I think that is going to yield good results for us. In our Jeffersonville distribution center, this is where we typically ship out parts, but there are a lot of kits that go with encore work and upfit and some bigger projects.
I could best describe that as a terrible IKEA project at the moment. There is a lot of work for us to do and improve in terms of the kitting because, when we do that, that is going to drive a significant productivity gain at our service centers when they are doing that work, because it is hard to figure out all the different nuts and bolts and parts that are in some of these boxes. I think that is great. And then a big shout-out to our team in Chesapeake. She has done a fantastic job.
She was a Manitowoc Way winner last year for improvements, and in the first quarter, she put forward an improvement around using QR codes to manage TPM on forklifts. I love the amount of creativity we have in those locations. To me, the big challenge and why I say we are in the early innings is just around how we collaborate and share all these lessons learned. It is a lot of cats to herd in all these different locations, but we are gaining speed. I am really looking forward to what we are able to do as we move forward. Thank you. Those are the questions that we received in the queue.
Ion M. Warner: Operator, any other questions in the queue?
Operator: No, sir. There is nothing at present.
Ion M. Warner: Very well. Please note that a replay of our first quarter 2026 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, Inc. We look forward to speaking with you again next quarter.
Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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Manitowoc (MTW) Q1 2026 Earnings Transcript was originally published by The Motley Fool