The Manitowoc Company, Inc. (NYSE: MTW) — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing provides full-year results, not a standalone fourth-quarter financial summary. Manitowoc designs, manufactures, sells, rents and supports cranes, with reporting segments in the Americas, Europe and Africa (EURAF), and the Middle East and Asia Pacific (MEAP).
Financial performance
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Orders | $2,082.3 million | $2,095.5 million | (0.6)% |
| Backlog at year-end | $917.2 million | $1,056.0 million | (13.1)% |
| Net sales | $2,227.8 million | $2,032.5 million | 9.6% |
| Gross profit / margin | $425.2 million / 19.1% | $364.5 million / 17.9% | Margin +1.2 percentage points |
| Operating income (loss) | $92.4 million | $(93.0) million | Improved |
| Net income (loss) | $39.2 million | $(123.6) million | Returned to profit |
| Diluted EPS | $1.09 | $(3.51) | Returned to profit |
| Adjusted EBITDA | $175.3 million | $143.1 million | +22.5% |
| Operating cash flow | $63.0 million | $76.9 million | Down $13.9 million |
| Free cash flow | $(14.4) million | $15.1 million | Lower |
Net sales growth reflected higher new and non-new machine sales in the Americas and MEAP, higher non-new machine sales in EURAF, and pricing actions. The 2023 gross margin improved despite higher material and transportation costs and unfavorable product mix. Adjusted EBITDA is a non-GAAP measure.
- Segment sales: Americas $1,211.2 million (+19.6%), EURAF $669.6 million (−12.1%), and MEAP $347.0 million (+34.5%). Segment operating income was $111.7 million, a loss of $7.9 million, and $52.3 million, respectively.
- Cash and investment: Year-end cash was $34.4 million versus $64.4 million. Capital expenditures were $77.4 million, up from $61.8 million; operating cash flow fell primarily due to higher inventory and receivables.
- Debt and liquidity: Total debt was $372.1 million, down from $385.6 million. Total liquidity was $280.0 million, including cash and available revolver and other borrowing capacity. The $300 million 9% secured notes mature in April 2026; the ABL facility matures in May 2027, subject to a springing maturity in December 2025 if the notes are not repaid or refinanced. The company reported covenant compliance.
- Other measures: Adjusted ROIC was 11.2%. Non-new machine sales were $612.7 million, versus $545.3 million. No cash dividends were paid; $5.5 million of shares were repurchased in 2023.
Material changes and outlook
Results improved substantially from 2022, when Manitowoc recorded $171.9 million of non-cash goodwill and indefinite-lived intangible impairment charges. FY2023 included no asset impairment charge, but expenses rose: engineering, selling and administrative costs increased 16.8% to $328.3 million, including a $21.2 million EPA-related charge and higher employee costs. Interest expense increased to $33.9 million from $31.6 million, partly due to higher ABL borrowing rates.
Orders were roughly flat while backlog declined, as higher shipments and lower orders reduced the year-end balance. Management cites some easing in supply-chain and logistics constraints but says certain key components remain constrained. It expects approximately $60 million of capital expenditures in 2024, including approximately $25 million for rental-fleet growth. The filing does not provide specific FY2024 revenue or earnings guidance.
Long-term aspirations, updated in 2023, include $3.0 billion in net sales, $1.0 billion in non-new machine sales, a 12% adjusted EBITDA margin and 15% adjusted ROIC. The CRANES+50 strategy targets growth in aftermarket and rental activities. These are long-term targets, not near-term guidance.
Risks, contingencies and unusual items
- EPA matter: Manitowoc is in confidential discussions with the U.S. EPA and Department of Justice over engine emissions certification and participation in the Transition Program for Equipment Manufacturers. The recorded liability was $36.1 million at year-end, including a $21.2 million FY2023 charge. The company calculated potential statutory maximum Clean Air Act penalties of approximately $174 million, says it has strong defenses, and warns final resolution could materially affect financial condition, results or cash flows.
- Russia: Operations were substantially curtailed. The company recognized a $9.3 million non-cash foreign-currency translation charge in 2023 and does not anticipate material future charges related to the curtailment.
- Operating and market risks: Management highlights cyclical crane demand, inflation and interest rates, supply-chain, labor and logistics constraints, steel and component costs, geopolitical disruptions, foreign exchange, competition, and the ability to convert backlog into sales.
- Other exposures: Outstanding crane buyback commitments were $43.4 million; the company also disclosed product-liability, warranty, tax and environmental contingencies. Pension and postretirement obligations exceeded related plan assets by approximately $61.4 million.
- Controls and audit: Management and the independent auditor reported effective internal control over financial reporting; the financial statements received an unqualified audit opinion. Goodwill valuation for the Americas–Distribution reporting unit was identified as a critical audit matter, involving judgment about revenue, margins and discount rate assumptions.
Investor verification priorities
- Track the EPA investigation, recorded liability, negotiations and any change in estimated exposure.
- Assess whether the lower backlog and subdued orders translate into slower sales, and monitor demand by segment.
- Check cash conversion, inventory and receivables, and whether spending on rental fleets supports the stated aftermarket growth strategy.
- Review debt repayment or refinancing plans for the 2026 notes, variable-rate borrowing costs, covenant headroom and liquidity.
- Compare progress toward the long-term sales, adjusted EBITDA margin and ROIC aspirations with reported results, noting that these targets are not annual guidance.