The Manitowoc Company, Inc. — FY 2022 Form 10-K
Business context and reporting period. Manitowoc designs, manufactures, sells, rents and supports cranes and lifting equipment, with Americas, Europe and Africa (EURAF), and Middle East and Asia Pacific (MEAP) segments. This annual report covers the fiscal year ended December 31, 2022; the filing does not provide a separate Q4 summary.
Financial results
| Metric | 2022 | 2021 |
|---|---|---|
| Net sales | $2,032.5 million | $1,720.2 million |
| Gross profit / margin | $364.5 million / 17.9% | $307.2 million / 17.9% |
| Operating income (loss) | $(93.0) million | $46.5 million |
| Net income (loss) | $(123.6) million; $(3.51) per diluted share | $11.0 million; $0.31 per diluted share |
| Adjusted EBITDA (non-GAAP) | $143.1 million | $116.0 million |
| Operating cash flow | $76.9 million | $76.2 million |
| Capital expenditures / free cash flow (non-GAAP) | $61.8 million / $15.1 million | $40.4 million / $35.8 million |
| Cash and cash equivalents | $64.4 million | $75.4 million |
| Total debt | $385.6 million | $407.2 million |
| Total liquidity | $295.9 million | $254.2 million |
Changes and operating performance
- Sales rose 18.2%, reflecting higher new-machine sales in the Americas and EURAF, pricing, and additional aftermarket and other sales from acquisitions. Acquisitions contributed $189.8 million; foreign exchange reduced reported sales by $106.5 million.
- The $123.6 million net loss was driven principally by $171.9 million of non-cash impairment charges: $166.5 million to eliminate Americas-Manufacturing goodwill and $5.4 million against the Grove tradename. Gross margin remained 17.9% as pricing and sales gains were offset by higher input, logistics and labor costs and supply-chain inefficiencies.
- Orders declined 3.3% to $2,095.5 million, while year-end backlog increased 4.5% to $1,056.0 million, partly because shipment delays held orders in backlog. Americas sales increased 33.7% to $1,013.0 million; EURAF increased 12.5% to $761.5 million; MEAP declined 9.7% to $258.0 million.
- Americas reported an $88.8 million segment operating loss, substantially reflecting the impairment; excluding that charge, management reported segment operating income of $83.1 million. EURAF recorded a $3.2 million segment operating loss, while MEAP operating income rose to $40.2 million.
- Operating cash flow was nearly unchanged, but free cash flow fell as capital expenditures increased, including investment in the rental fleet. Inventory and receivables tied up cash. The company repaid $20.0 million of revolver borrowings and repurchased $3.0 million of stock; no dividends were declared or paid.
Outlook, risks and unusual items
- Management expects inflation and supply-chain and logistics constraints to continue through 2023, potentially affecting costs, margins, production, shipments and customer demand. Price increases are intended to offset cost inflation, but pricing realization lags because of long order lead times. No specific revenue or earnings guidance is provided.
- Planned 2023 capital expenditures are approximately $65–$75 million; about $25 million is expected to be funded from rental-fleet sales, and spending may be reduced if those sales fall short. The company says liquidity and expected operating cash flows should meet needs over the next 12 months.
- The CRANES+50 strategy targets 50% growth in non-new-machine sales, to approximately $675 million, by 2026. Its initiatives include expanding European tower-crane rental and aftermarket activity, developing the China tower-crane business, growing all-terrain cranes and expanding North American aftermarket services.
- Russia operations were curtailed in 2022; $21.0 million of orders were cancelled, and the company stopped taking new orders. Management expects $5–$10 million of future non-cash charges related to foreign-currency adjustments. Russia accounted for less than 2% of 2021 consolidated sales.
- The ABL revolving facility has a $275 million maximum and matures in May 2027, but has a springing maturity of December 30, 2025 if the 9% $300 million notes due April 2026 are not repaid or refinanced before then. The company reported covenant compliance at year-end. Variable-rate debt exposes it to higher interest costs.
- The company recorded a $14.9 million liability for discussions with the EPA and DOJ concerning emissions certification and the TPEM program. It calculated statutory maximum Clean Air Act penalties of approximately $174 million, says it has legal and factual defenses, and warns final resolution could materially affect results or cash flows.
- Other exposures include $42.5 million of outstanding crane buyback commitments, product-liability and warranty claims, and environmental and regulatory matters. Pension and postretirement obligations exceeded plan assets by approximately $62.9 million at year-end.
- PricewaterhouseCoopers issued unqualified opinions on the financial statements and internal control over financial reporting. The audit identified goodwill and Grove tradename impairment assessments as a critical audit matter, given the judgment involved in valuation assumptions.
Important facts for investors to verify
- Whether backlog converts to sales on schedule as supply constraints ease, and how order trends develop across regions.
- Whether pricing offsets inflation and whether gross margins improve without relying on non-GAAP adjustments.
- The assumptions behind the impairment valuations and whether further impairment indicators arise.
- Refinancing or repayment plans for the 2026 notes ahead of the ABL facility’s springing maturity date.
- The eventual EPA/DOJ resolution and related cash, penalty or compliance costs.
- Actual rental-fleet sale proceeds and capital spending versus the 2023 plan, alongside working-capital and liquidity trends.