the manitowoc company · 7 manitowoc: previously announced guidance 1 excludes amortization...
TRANSCRIPT
The Manitowoc Company
STIFEL CONFERENCE, NEW YORK: JUNE 13, 2016
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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. These factors include, but are not limited to, those relating to revenue growth of the company, future market strength of the company’s business segments and products, market acceptance of existing products and new product introductions and technology, economic conditions, successful acquisitions, manufacturing and facility utilization efficiencies, risks relating to actions of activist shareholders, and other factors listed in the company’s preliminary offering circular with respect to the notes, dated May 5, 2016. 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.
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Agenda
Building Something Real
Manitowoc Transformation
of Company
Execution of
Plan
Future Growth
Opportunities
4
Agenda
Building Something Real
Manitowoc Transformation
of Company
Execution of
Plan
Future Growth
Opportunities
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Investment Highlights
Leading $1.9B Global Crane Manufacturer with Well-Known Brands
Broad Product / Services Portfolio With Innovative New Products
Diversified Geographic, End Market, and End Customer Exposure
Unique After Market Support Drives Recurring Revenue
Focus on Operational Strategies & Cost Saving Initiatives
New, Operationally-Focused Team Driving Results
Early stages of transformation to a high quality, higher margin crane company compared to peers
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Manitowoc: Leading Global Crane Company
High-Capacity Lattice Boom Crawlers
Top-Slewing / Self-Erecting Tower Cranes
Rough-Terrain Cranes
Boom Trucks All-Terrain
Cranes
Strong Market Positions with Leading Brands in
each Major Crane Segment
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Manitowoc: Previously Announced Guidance
1 Excludes amortization expense.
2016 Q1 Actual
2016 Full Year Guidance
Revenue $427M Approximately flat
Operating Margins1 2.2% Approximately 4%
Capital Expenditures $11M Approximately $45-50 million
Depreciation and Amortization
$13M Approximately $48-59 million
Highlights
• Separation from Foodservice completed March 2016 • Energy headwinds offset by modest recovery in
residential/commercial • Restructuring actions to position for 2017 • Lean principles being institutionalized
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Manitowoc Transformation
of Company
Execution of
Plan
Future Growth
Opportunities
Building Something Real
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Transformation: The Conditions are Right
Stand-alone Crane Company
• Foodservice spin-off complete
• Right-sizing for new company structure
Re-Capitalized Balance Sheet
• Sufficient liquidity
• Working capital focus
New Management Team
• Demonstrated record of turnarounds
• Lean acceleration to drive margin improvement
Cyclical Down-Turn
• Increasing manufacturing flexibility to manage through the cycle
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Boom Trucks/Industrials/Rough-Terrains All-Terrain and Truck-Mounted
Towers Crawlers
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
~ 8-9 year cycle
(1) BRIM includes Boom Trucks, Rough-Terrain Cranes, Industrial Cranes and military applications. Rough-Terrain and Industrial Cranes are included in the Mobile Telescopic Cranes Product category. (2) AT/TM includes All-Terrain and Truck-Mounted Cranes, which fall under the Mobile Telescopic Cranes product category. (3) Crawlers include Lattice Boom Cranes.
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Transformation: The Time is Right
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Transformation: Vision for New Manitowoc
Customers
Shareholders Employees
Velocity
Innovation
1. Margin Expansion
2. Growth
3. Innovation
4. Velocity
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Transformation: Strategic Initiatives
• Renew Focus on Quality & Reliability • Strengthen Channel Management • Increase Market Share
• Optimize Global Capacity • Increase Manufacturing Agility • Improve Productivity • Reduce Material Cost
• Accelerate New Product Development • Focus on ROIC for Our Customers • Leverage Advanced Manufacturing Technologies
Margin Expansion
Growth
Innovation
Velocity
• Implement The Manitowoc Way • Re-invigorate the Company Culture • Strengthen Balance Sheet by Better Working Capital Mgmt.
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Manitowoc Transformation
of Company
Execution of
Plan
Future Growth
Opportunities
Building Something Real
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Execution: Margin Improvement
• Headcount reductions
• Plant rationalizations
• Increase manufacturing flexibility
• Material cost reduction
• Productivity
Right-sizing the business to match new company
structure, current market environment, and future
expectations
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Execution: Growth
• Improved quality & reliability
• Strengthen dealer engagement
• Sales excellence & training
Improving competitive position to re-gain
market share
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Execution: Innovation
• Implement product development process
• Leverage advanced design techniques
• Invest in World-Class manufacturing disciplines
• Standardization of components
Enhancing user productivity to generate
greater ROI for customers
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Execution: Velocity
• Build a continuous improvement-based culture
• Invest in productivity
• Reduce Working Capital
• Optimize back-office
Better serving all of our stakeholders
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Manitowoc Transformation
of Company
Execution of
Plan
Future Growth
Opportunities
Building Something Real
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Future Growth Opportunities
• Customer Engagement
• Innovation
• External Growth
• Manufacturing Technology
• People Development
• Utilize Balance Sheet
Increasing ROIC for All Stakeholders
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Conclusion
Leading $1.9B Global Crane Manufacturer with Well-Known Brands
Broad Product / Services Portfolio With Innovative New Products
Diversified Geographic, End Market, and End Customer Exposure
Unique After Market Support Drives Recurring Revenue
Focus on Operational Strategies & Cost Saving Initiatives
New, Operationally-Focused Team Driving Results
Early stages of transformation to a high quality, higher margin crane company compared to peers
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Appendix: Additional Materials and Financials
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Manitowoc: Large Installed Base
~55,000 7-9 years
~50,0003 Self-Erecting: 6-8 years Top-Slewing: 10-12 years
~9,000 9-12 years
~27,000 7-9 years
Mobile Telescopic Cranes
Tower Cranes
Lattice-Boom Cranes
Boom Trucks
Leading Brands Active Installed Base1 Category
Extensive installed base across diverse geographies provides recurring service and replacement parts revenue opportunities
1 Reflects management approximation of the active installed base based on internally available data. 2 Reflects management approximation of the average fleet replacement based on available data and feedback from the customers. 3 Includes top-slewing and self-erecting tower cranes.
Average Fleet Replacement2
Total: ~140,000
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Diversified by Region, End Market and Product
Key Brands
2015 Geographic Exposure
2015 End Market Exposure1
2016 Q1 Revenue by Product3
Americas52%
APAC12%
EMEA36%
1 Includes new equipment sales only. 2 Represents 2015 gross sales. Includes new equipment sales only. Government sales do not reflect our recent $192 million contract with the U.S. Army which will impact revenue over the next several years. 3 Crane Products includes new equipment sales only.
Balanced Sales Footprint and Customer Segments We Serve
2015 Overall Customer Mix2
Crane Care 18%
Crane Products 82%
Industrial / Petrochemical
35%
Power / Utilities18%
Commercial25%
Residential5%
Infrastructure17%
Contractor13%
Dealer66%
Gov't0.2%
Other4%
Rental17%
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Recent Performance
(US$ in millions)
1 Excludes amortization expense.
Revenue
Costs
Revenue
Commentary
Quarterly Performance
Operating Earnings1
Q1 2016 revenue was up 5% to $427mm versus $407mm in Q1 2015
Increase driven by continued strength in tower cranes as a result of improving residential and commercial construction trends, as well as new product introductions
Strength in crawler cranes driven by accelerating shipments of our VPC technology partially offset the decline in mobile hydraulic cranes
Currency and low oil prices producing headwinds for mobile crane demand, particularly in the U.S.
Operating earnings for Q1 2016 were $10mm compared to a loss of $7mm in Q1 2015
Produced a Q1 2016 operating margin of 2.2% compared to (1.8)% for Q1 2015
Q1 2016 margin improvement comes from increased sales and actions to right-size the business
Backlog totaled $502mm as of 3/31/16
Depreciation and amortization for Q1 2016 were $12mm and $1mm respectively
Capital expenditures were $11mm for Q1 2016
Diluted EPS of $(0.04) and $(0.21) for Q1 2016 and Q1 2015, respectively
$407
$427
Q1 2015 Q1 2016
$(7)
$10
Q1 2015 Q1 2016
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Historical Revenue and EBITDA
(US$ in millions)
Revenue EBITDA & Margin
Cranes generates significant revenue and EBITDA during cyclical upturns
During industry downturns, predictable replacement demand and differentiated product offerings support demand
Restructuring initiatives in progress
$1,708
$2,135
$2,427 $2,506
$2,305
$1,862
2010 2011 2012 2013 2014 2015
Revenue
$149
$172
$214
$266
$210
$110
8.7% 8.1%8.8%
10.6%9.1%
5.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
$-
$50
$100
$150
$200
$250
$300
2010 2011 2012 2013 2014 2015
EBITDA % Margin
Note: Revenue and EBITDA from 2010 – 2015 represent historical Cranes segment results. EBITDA is calculated as Operating Earnings from Continuing Operations plus Depreciation and excludes corporate allocations.
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Historical Capital Needs & Cash Flow
(US$ in millions)
Capex & % of Sales
Note: Capex and Unlevered Free Cash Flow represent historical Cranes segment results. EBITDA calculated as Operating Earnings from Continuing Operations plus Depreciation and excludes corporate allocations. 1 Free Cash Flow defined as EBITDA less Capex.
Free Cash Flow1 & % Conversion
Moderate capital intensity and working capital requirements allow earnings to largely flow to cash flow
Working capital needs decrease when revenue declines, providing a strong cash flow offset during industry downturns
Free cash flow¹ generation through the cycle
$21
$52 $53
$69
$57 $52
1.2%2.4% 2.2% 2.8% 2.5% 2.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
$-
$20
$40
$60
$80
$100
$120
$140
2010 2011 2012 2013 2014 2015
Capex % of Sales
$129 $120
$161 $196
$152
$58 86.2%69.7% 75.4% 73.9% 72.7%
52.9%0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015
FCF % Conversion
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EBITDA and Free Cash Flow Reconciliation
(US$ in millions)
2010 2011 2012 2013 2014 2015
Earnings (Loss) from Operations1 94$ 119$ 171$ 219$ 164$ 64$
Depreciation 55 53 44 47 46 47
EBITDA 149$ 172$ 214$ 266$ 210$ 110$
Capital Expenditures (21) (52) (53) (69) (57) (52)
Free Cash Flow 129$ 120$ 161$ 196$ 152$ 58$
1 Cranes segment data; excludes amortization expense, allocation of corporate costs, asset impairment expense, restructuring expense, and other (expense) income.
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March 31, 2016 Trailing Twelve Month Adjusted EBITDA Reconciliation
(US$ in millions)
Net loss (132.1)$
Loss from discontinued operations (115.9)
Depreciation and amortization 68.1
Interest expense and amortization of deferred financing fees 85.9
Costs due to early extinguishment of debt 72.2
Restructuring expense 14.4
Income taxes 91.4
Pension and post-retirement 14.7
Stock-based compensation 6.9
Other 17.4
Adjusted EBITDA 123.0$
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Global Footprint
Manufacturing footprint and extensive sales and customer service reach to serve both mature and emerging markets
Key Statistics
Sales / Service Facility Sales / Distribution Representation Manufacturing Facility
12 manufacturing sites in 8 countries
Approximately 40 regional sales and support offices across 20 countries
~5,300 employees across North America, Latin America, Western Europe, the Middle East, Asia, and Australia
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