The Manitowoc Company, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary. Manitowoc designs, manufactures and supports crawler, tower and mobile cranes, with operations reported in the Americas, Europe and Africa (EURAF), and Middle East and Asia Pacific (MEAP).
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net sales | $1,720.2 million | $1,443.4 million |
| Gross profit / margin | $307.2 million / 17.9% | $254.7 million / 17.6% |
| Operating income / margin | $46.5 million / 2.7% | $38.6 million / 2.7% |
| Net income (loss) | $11.0 million | ($19.1 million) |
| Diluted earnings (loss) per share | $0.31 | ($0.55) |
| Operating cash flow | $76.2 million | ($35.1 million) |
| Capital expenditures | $40.4 million | $26.3 million |
| Cash and cash equivalents at year-end | $75.4 million | $128.7 million |
| Total debt | $407.2 million | $310.9 million |
| Total liquidity | $254.2 million | $411.7 million |
Management-reported non-GAAP adjusted EBITDA was $116.0 million versus $83.1 million; free cash flow was $35.8 million versus negative $61.4 million. These measures are not GAAP substitutes.
Orders rose 43.4% to $2,166.6 million and year-end backlog rose 86.1% to $1,010.9 million. The company notes that orders and backlog are non-GAAP operating measures and may not be comparable with other companies.
Segment sales and operating income were: Americas $757.6 million and $57.3 million; EURAF $677.0 million and $8.9 million; MEAP $285.6 million and $30.9 million. Segment operating income totals differ from consolidated operating income because of corporate and other unallocated costs.
Material changes versus the prior year
- Sales increased 19.2%, driven mainly by higher crane shipments as demand recovered from pandemic-affected 2020. Sales remained below 2019’s $1,834.1 million.
- Gross margin improved slightly to 17.9%, but material and transportation cost inflation offset some sales gains. Supply-chain constraints limited production and shipments.
- The company returned to GAAP profitability, with net income of $11.0 million versus a $19.1 million loss. Operating income improved, while selling and administrative expenses rose 23.8% to $258.5 million.
- Operating cash flow improved by $111.3 million year over year. Cash declined by $53.3 million, reflecting acquisition spending and other cash movements.
- Debt rose by $96.3 million, principally reflecting $100.0 million drawn on the asset-based revolving credit facility to help fund acquisitions. Liquidity fell from $411.7 million to $254.2 million.
- In 2021, Manitowoc acquired Aspen Equipment and H&E’s crane business to expand North American distribution, aftermarket service and rental capabilities. Investing cash outflow included $186.2 million for the acquisitions.
Outlook, commentary and key risks
- Management described a transition toward a growth strategy, including expansion of aftermarket activities and the European tower-crane rental fleet. It provided no specific consolidated revenue or earnings guidance in the supplied filing text.
- Management expects liquidity and operating cash flows to be sufficient for working capital, capital expenditures, contractual obligations and other operating needs over the following 12 months, and expects to remain in compliance with debt covenants.
- 2022 capital expenditures are estimated at approximately $85.0 million; approximately $35.0 million is expected to be funded by rental-fleet sales. The company says planned spending would be reduced if fleet-sale proceeds are lower than expected.
- Major disclosed risks include continuing supply-chain and logistics constraints, inflation in materials and transport, COVID-19 uncertainty, cyclical crane demand, competition, customer financing availability, foreign-exchange movements and elevated leverage.
- EPA matter: Manitowoc recorded a $13.9 million charge in the fourth quarter related to discussions with the U.S. EPA and Department of Justice concerning engine emissions and the Transition Program for Equipment Manufacturers. The recorded liability was $14.9 million at year-end; the company calculated potential statutory maximum penalties of approximately $174 million, but says the final resolution cannot be meaningfully quantified and could materially affect results.
- Other notable items include a $3.6 million write-off of a long-term note receivable related to a former Chinese joint venture, a $1.9 million impairment of a Brazilian entity, and a June 2021 cybersecurity incident that caused business disruption; reported incident costs were immaterial and systems were restored.
- The 9.0% senior secured notes have $300.0 million principal due in 2026, with $27.0 million of annual cash interest. The company reported covenant compliance at year-end. No cash dividends were declared or paid in 2021.
Important facts for investors to verify
- Track conversion of the sharply higher orders and backlog into shipments and cash, given ongoing supply constraints.
- Monitor gross margin and the ability to pass through further material, freight and labor cost increases.
- Follow the EPA matter, including any settlement, additional accruals or other financial consequences beyond the $14.9 million recorded liability.
- Assess acquisition integration and returns from Aspen and MGX, including the impact on aftermarket, rental and working-capital needs.
- Review debt, revolver availability, cash levels and covenant headroom alongside the 9.0% notes and upcoming debt maturities.
- Consider that goodwill and other intangible assets totaled $389.3 million at year-end; the annual impairment test found no impairment, but valuations depend on management’s assumptions about growth and operating income.