Good morning everyone and welcome to the Manitowoc conference call to review the company's first quarter 2022 financial performance and business update as outlined in last evening's press release. Participating on the call today are Aaron Ravenscroft, President and Chief Executive Officer; and Brian Regan, Executive Vice President and Chief Financial Officer. Today's webcast includes a slide presentation which can be found in the Investor Relations section of our website under Events and Presentations. We will reserve time for questions and answers after our prepared remarks. I would like to request that you limit your questions to one and a follow-up and return to the queue to ensure everyone has an opportunity to ask their questions. Please turn to slide two. Please note our Safe Harbor statement in the material provided for this call. During today's call, forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 are made based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied or actual projections due to one or more of the factors among others described in the company's latest SEC filings. The Manitowoc Company does not undertake any obligation to update or revise any forward-looking statements whether the result of new information future events or other circumstances. And with that, I will now turn the call over to Aaron.

Thank you, Ion and good morning everyone. Please turn to slide three. To start, I would like to thank the Manitowoc team for an outstanding performance in the first quarter despite another challenging period. I'll provide an update on our outlook during my closing comments, but it's fair to say that the crisis in Ukraine has intensified both parts shortages and inflation. Additionally, labor markets in the logistics environment remain extremely tight. We reported healthy orders and backlog for the first quarter. However, it's clear that there are cracks that are beginning to appear in the crane market. Nevertheless, in true Manitowoc fashion, our team rose to the challenge and delivered a strong first quarter. Our net orders for the first quarter were just north of $480 million. In the quarter, we reversed roughly $20 million of orders in the backlog into Russia in reaction to the Ukrainian crisis. Excluding these orders, the first quarter would have been slightly better than $500 million, which I always use as a good measuring stick for a bull market. Our sales for the quarter were just shy of $460 million. This was a $100 million improvement year-over-year, but unfortunately, it was approximately $35 million short of our internal forecasts. Our backlog is strong remaining above $1 billion. Operationally, the team did a great job of battling parts shortages while maintaining productivity, managing rising prices for purchased materials, and dealing with higher shipping costs to deliver $31 million in adjusted EBITDA. While the year-over-year adjusted EBITDA margin was significantly lower than our normal expectations, 6.8% was a very respectable performance considering all the headwinds. As it relates to our progress on Cranes+50, we grew non-new machine sales by approximately 20% year-over-year. Our recent acquisitions combined with our four strategic initiatives have given us good momentum in the early stages of our journey to grow our non-new machine sales by 50% over the next five years. Concurrently, we continue to make progress on our sustainability commitments, fueled by the Manitowoc Way. Recently, our team deployed a new methodology that leverages value stream mapping to help us identify kaizen opportunities to reduce our energy consumption. In addition, the team has used TPM to improve our energy efficiency. For example, at one factory the team is performing regular Gemba Walks to identify and eliminate air leaks. Compressed air is one of the biggest energy consumers in a factory. Another one of our opportunities to improve sustainability is to eliminate landfill waste. In the first quarter, we made considerable improvements against our internal targets by implementing line-side recycling in our factories, working with suppliers to reduce packaging material, and partnering with waste contractors to improve recycling programs. This is a good example of the old adage what gets measured gets improved and it is exactly the type of behaviors that embody the Manitowoc Way culture. Turning to our acquisitions, I'm extremely pleased with where we stand for the first six months. Our integration plans are completed, the financial performance has been in line with our expectations, and the leaders have started to participate in our regular operational review process. While they haven't fully adopted priority deployment, we are well down the path of identifying priorities and finding new ways to grow our non-new machine sales while tracking KPIs. With that, I would like to introduce our new CFO, Brian Regan. Brian, would you please walk us through the details of our first quarter financial results?

Thanks, Aaron and good morning everyone. I'm excited to be here with you today. It's an honor to be named CFO of a company with such a long history in the lifting solutions business. Dave has been a great mentor since I joined the company three years ago, and I look forward to building on his accomplishments as we move forward. With that, let's move to slide 4. Our first quarter orders totaled $482 million, an increase of 2%. The year-over-year increase was driven by growth in the Americas segment, inclusive of our acquisitions. This increase helped to offset lower orders in our EURAF Segment, which included both market softening and the canceled Russian orders previously mentioned by Aaron. Additionally, foreign currency impacted orders unfavorably by approximately $15 million. Our March 31st backlog was up $22 million sequentially and unfavorably impacted by approximately $14 million from changes in foreign currency exchange rates. Net sales in the first quarter of $459 million increased $105 million or 30% from a year ago. The year-over-year increase was driven by the strong backlog entering the year, primarily in the Americas and EURAF regions. However, revenue continues to be negatively impacted by supply chain constraints, resulting in shipments shifting to the right. The year-over-year benefit from incremental sales associated with our acquisitions amounted to $31 million in the quarter. Net sales were also unfavorably impacted by $16 million from changes in foreign currency exchange rates. SG&A expenses increased by approximately $9 million year-over-year, which included a $5 million benefit associated with the partial recovery of a note receivable balance in China. The gross increase in SG&A expenses of $14 million year-over-year is primarily related to our acquisitions. Our adjusted EBITDA for the first quarter was $31 million, an increase of approximately 47% year-over-year. As a percentage of sales, adjusted EBITDA margin was 6.8%, an improvement of approximately 80 basis points over the prior year, primarily due to leveraging of fixed cost on a higher volume. Flow-through of the incremental revenue for the quarter was approximately 10%, which is lower than our normalized rate mainly due to the price cost dynamic. First quarter depreciation of $16 million increased $6 million compared to the prior year which was driven by the acquisitions. Our provision for income taxes in the quarter was $7 million and associated with the tax on income in non-U.S. jurisdictions. As a reminder, the company has tax valuation allowances established for certain countries and therefore, losses in those countries are not available to offset income tax expense in profitable jurisdictions. Our GAAP diluted income per share in the quarter was $0.09. On an adjusted basis, diluted income per share was $0.03, an improvement of $0.09 from the prior year. Our net working capital year-over-year increased $92 million, of which $70 million relates to the acquisitions. The remaining increase is attributable to higher throughput in our factories, exacerbated by supply chain disruptions and inflation. Moving to cash flow, we generated $6 million of cash from operating activities in the quarter, compared to $41 million in the prior year. The lower cash flow in the quarter was primarily due to an increase in net working capital, mostly related to an increase in accounts receivable. Capital spending in the quarter amounted to $9 million, of which $4 million was investment in the rental fleet. As a result, our free cash flow in the quarter was a use of $3 million. We ended the quarter with a cash balance of $52 million, a decrease of $24 million from year-end, of which $20 million was used to pay down a portion of the outstanding borrowing under our ABL. Total outstanding borrowings under the ABL was $80 million at the end of the first quarter and total liquidity was $267 million. As a reminder, we guided to $85 million of CapEx for the year, of which $25 million was related to growth in the rental fleet and $35 million related to the replacement of the rental fleet expected to be sold during the year. We expect the replacement rental fleet CapEx to be more dynamic than traditional manufacturing CapEx due to the dependence on opportunistic sales transactions. We continue to assess our investment in CapEx and based on current macroeconomic conditions, we anticipate that our spend will be lower than previously stated. With that, I will now turn the call back to Aaron.

Thank you, Brian. Let's move to slide five. The first quarter reminded me of an old Don Rickles' quote, "struggling is hard because you never know what's at the end of the tunnel." Three months ago it looked like the economy was on the mend after two years of COVID. Unfortunately, as we approach the end of the tunnel, we've encountered a new set of challenges. First, as a consequence of the humanitarian crisis in Ukraine, commodity and energy prices have soared and supply chains have become more strained, causing a significant disruption to Europe's economy and our local businesses. Second, the U.S. economy is clearly overheated and the Federal Reserve is playing catch-up with interest rate increases. And lastly, the severe COVID lockdowns in China are taking their toll on the already stressed global supply chain. As I previously mentioned, we have begun to see cracks in what has been a very strong crane market. While our orders were good in the first quarter and construction activity was strong, confidence is subsiding. On construction sites, contractors are experiencing severe difficulty obtaining raw materials and labor, causing projects to be delayed. At crane rental houses, they are having difficulty finding operators and skilled technicians. And of course, crane manufacturers are struggling to hit delivery dates and continue to extend lead times. For example, we lost six days of production in China and two weeks in Niella, Italy in April, throwing double-digit price increases by manufacturers in a growing interest rate environment and I fear that confidence is beginning to wane, particularly in Europe and North America. Spring purchasing is normally a good indicator of crane orders for the year. And March and April orders trended down at the same time that we implemented our last round of price increases. Looking at the traditional western markets, we see some pockets of strength in North America and Europe, but generally these markets appear to be losing steam. In places like Florida, where construction is booming and in Italy, where the market is supported by strong tax benefits, the crane business is robust. However, in spite of strong oil prices, the oil patch in the U.S. Gulf region remains completely muted. In North America and Europe, where everyone has been raising prices for the last 12 months, crane rental rates have been stagnant. The situation is further exacerbated by the fact that production slots in 2022 are close to being sold out, leaving everyone wondering how high interest rates and prices will be in 2023. Finally, with regard to our dealer inventories, we are closely tracking the speed at which these cranes will be retailed over the next six months. Dealer inventories are currently okay, but based on our backlog, are going to be replenished at a pretty good clip over the next couple of quarters. This is traditionally where we see the first signs of a downturn. Taking a look at other markets, there is quite a hotchpotch, but traditional mining markets like South America and Australia are performing well. And our outlook for the Middle East is significantly improved. I recently visited Saudi Arabia. I was very encouraged by the level of investment activity. The recovery is quickly building in Saudi, and all indications suggest that Qatar and Kuwait will likely follow in the coming quarters. In Asia Pac, the story remains unchanged. China's construction market is still dormant and the recent hard COVID lockdowns across the country have only contributed to the problem. South Korea, however, remains a bright spot and we are beginning to see green shoots in Vietnam and Singapore. Lastly regarding Russia, let me be clear. Manitowoc vehemently opposes Russia's aggression against Ukraine and we are deeply saddened by the tragic events that continue to occur. We have approximately 20 employees, which includes Russians and non-Russians. Our primary focus is to support our Manitowoc family and we will continue to do so. We've contributed funds to support the urgent and long-term needs of Ukraine. From a business standpoint, shortly after the conflict began, we stopped accepting new business. We've subsequently canceled all orders not in transit and we continue to evaluate the potential financial implications related to this entity. Looking at our 2022 outlook, given our backlog and the dynamic nature of the current environment, we are not changing our guidance at this time. However, make no mistake, we will see significant downward pressure on our margins during the second half relative to our original expectations. The spike in commodity and energy costs resulting from Russia's aggressions in Europe will cause our second half to look more like our first half. That being said, we have continuously taken aggressive actions to adjust to these inflationary pressures with price increases and our team continues to battle the parts shortages. In short, we are presently targeting the low end of our guidance until we have a clearer picture of how the second half will play out. If the theme of Manitowoc's journey was transition in 2021, the theme for 2022 is endurance. Endurance is the ability to resist with sand and recover. We remain resolute in pursuing our core breakthrough initiatives, and we are laser-focused on our CRANES+50 target for non-new machine sales growth. In the crane industry, it's always a matter of time before the next cycle occurs. Unfortunately, since our last conference call, I have noticed a significant change in buyer confidence and it appears that this cycle may be quickly peaking as a result of ongoing inflation and rising interest rates. Given these market conditions, we will continue to be judicious in our management of working capital and liquidity. There is, however, a silver lining. The installed base of cranes continues to age. At some point in the not-so-distant future, our industry will require a refresh. In addition, after years of patience, we have a U.S. infrastructure bill percolating in the hall of the government. While we await the inevitable crane renaissance, Manitowoc will continue to strengthen its product offering and aftermarket focus, both of which will fuel our long-term growth and drive shareholder value. With that, operator, please open the lines for questions.

Thank you. Our first question comes from Mig Dobre with Baird.

Good morning, Mig.

Mig.

Yeah. Good morning. And Brian, welcome to you. Aaron, I really appreciate all the color that you have given. There's sort of a lot to think through from your prepared remarks. But obviously, the main takeaway here is that there are cracks that you note in the crane market. And I'm wondering, if we can go back to your comments on Europe and North America and maybe flush that out a bit here. I'm curious, in Europe, is this simply a function of what's happening in Ukraine, staffing, buyer confidence? And as you look at the North American market, what is it that is driving this incremental softness? You talked about orders in March and April; maybe you can kind of give us a little more context on that post your price increases that you talked about.

Let's begin. The guidance comments are primarily influenced by the situation in Europe. Looking at 2022 from a tactical perspective over the next three quarters, our challenges in Europe are mainly cost-driven. There are differing stories regarding general demand and overall customer confidence. On the tower crane side in Europe, we are nearly sold out. Given the uncertainty around pricing and interest rates in 2023, people are being conservative and tightening their spending. The mobile business faces a similar situation. In the U.S., the situation is more detailed; the RT business has not improved despite oil prices, which typically would lead to stronger performance, and rental rates in that area remain weak. In the boom truck sector, we are able to acquire Class A trucks, indicating some improvement. However, the uncertainty about lead times and rising interest rates makes it hard for customers to act aggressively. Regarding our dealer network in the U.S., dealer inventories are in good shape, which is encouraging. However, part of our backlog is focused on fulfilling orders for dealers in the next nine months. Dealers are currently satisfied with their orders for 2022 and are not yet ready to make significant changes for 2023. We are being selective about the orders we are willing to accept for 2023.

Yeah. So that's kind of what I'm trying to get at. How much of what you're talking about is a function of maybe you limiting the order intake that you're willing to accept, given all the uncertainty as opposed to other dynamics, right? I mean you talked about the fact that pricing has gone up quite a bit and that is posing a bit of an issue for customers. Are we getting to the point where these price increases are detrimental to additional demand?

Yes. So, there's so many things, so many variables sort of crashing at the same time into one another it's hard to pick one of them and say that that's the root cause of it. But if I look at order rates for the first quarter and we did some price increases in the middle of the quarter to deal with the latest round of cost increases coming out of Europe. But January we had really good orders and then all of a sudden it really started to fall off February, March and April, and they've been pretty consistently lower than the level we've been. So, I do think that they're starting to see an impact of all the price increases have an effect. And that's really what I anticipate for the remainder of the year is that orders will be lower. I mean, we've got difficult comparisons. We look year-over-year in the second, third, and fourth quarter. And I think we'll just start to eat some of our backlog away until we get more visibility on what 2023 is going to really look like.

Understood. And if I may squeeze one final one. Going back to supply chains right? Certainly, some things seem to have gotten a little more challenging on input costs specifically. But I'm curious in terms of availability where is it that you're still seeing parts shortages? And really has anything changed from a couple of months ago when we had this discussion last time?

Yes, the challenging part is that every day presents a different issue. I believe that the shortages have become more difficult during the first quarter compared to the end of last year. It's important to remember that before this crisis, 35% of all heavy plate steel in Europe was produced in Ukraine and Russia. My main concern is regarding the steel coming from that region into Europe and the steel fabrication. There is a significant Ukrainian population in Europe that was involved in welding in countries like Poland and the Czech Republic, and many of them have returned to Ukraine. Additionally, there is the energy issue to consider. Therefore, steel fabrication and steel production in Europe are my biggest worries, and in China, the port backups are exacerbating the situation. Overall, I don't see the situation becoming any easier. Even as far back as last quarter, we expected the shortages would be particularly challenging.

Understood. Good luck, guys.

Thanks.

And our next question will come from Jamie Cook with Credit Suisse.

Hi good morning.

Hi Jamie.

Hello. I have a couple of questions. You mentioned that January orders were strong, but then they significantly declined in February, March, and April. Could you provide some figures to illustrate how January compared to those other three months? Additionally, what was the price cost in the quarter, and what are your expectations now considering the price increases implemented during this time? Finally, could you give me an update on the shipments that were delayed last quarter? I believe $50 million worth was scheduled to be shipped in January and February. Where do we stand on that, and are there any additional delays? Thank you.

You want to take the last question of those, Brian?

So looking at Q1, so yes the stuff that fell from Q4 to Q1 got shipped but we had another shifting of the right. You look at our working capital and you see that it's elevated and some of that was due to things shifting to the right. So AR was elevated because revenue got recognized later in the quarter. And then inventory was up say, about $35 million, fell out of the quarter to Q2 and we're continuing to see that slide. As Aaron mentioned, the sourcing issues that we've been having.

Yes. Regarding the order rates, I wouldn't say it significantly dropped. January was as strong as we've experienced, with $500 million in quarterly sales, which is solid considering our deliveries over the past five to six years. Looking at it quarterly helps smooth out some fluctuations. On that basis, we might be down 10% to 20%, depending on the product line. It's not a complete downturn, and we sometimes have slower periods. I’m particularly concerned about typical spring orders, as March and April usually indicate how the year will trend. A slow April might lead to a weak May, and then we enter summer months, which can affect us. Regarding pricing, it's challenging to predict when it will stabilize, especially given the part shortages that cause delivery timelines to fluctuate. To address your question about full-year guidance, we've adjusted it down from the $130 million to $160 million range, aiming for around $145 million. We expect additional cost headwinds of $15 million to $20 million in the second half, but we're still trying to estimate what to expect for the third and fourth quarters. We were in a good position until the Ukrainian crisis emerged, which has significantly affected us, especially in Europe.

Okay. Thank you. I appreciate the color.

Thanks, Jamie.

And our next question will come from Seth Weber with Wells Fargo.

Good morning, Seth.

Hi, Seth.

This is Larry Saxby on for Seth. Thanks for taking the question. You maintain your revenue assumptions for 2022, but you're at the lower end you said that kind of implies 16% growth. Can you kind of elaborate on what your expectations for price versus volume are for the year?

I'm not sure, what is your question specifically regarding price versus volume?

All right. Okay. And then, do you have your $2.5 billion revenue goal. Is that still a reasonable long-term target, or are you kind of internally tempering that given where we are in the operating environment, or is that still a long-term aspirational goal?

Yeah. I mean that goal doesn't change. I mean if you want my honest opinion, the longer we are slower that just means the eventual rebound is going to be even bigger. So I think that's still very doable when you look at the overall crane market over the long term. It's just a question of when we get back into a more normalized basis whether it be the inflation issues or the interest rate issues. But there's definitely continuing to build up of a refresh that's going to need to happen at some point on cranes.

Great. Okay. Thank you, guys. Appreciate it.

Operator, thank you.

And our next question will come from Steven Fisher with UBS.

Good morning, Steve.

Hi, Steve.

Good morning, guys. So, obviously a lot of talk about the cracks in the confidence and on the crane market side and I get to that maybe starting to flow through your orders. I'm curious if that's flowing through the inquiries as well. Because, it does seem like there are a number of larger projects in the works, particularly in the United States be it reshoring, manufacturing or infrastructure or even on the energy front. And so, while maybe your customers are a little bit hesitant to put in the orders now for 2023, I'm wondering how does that flow through the discussions on what they might need should all those activities start to really happen?

Inquiries have certainly decreased. The main point I want to emphasize from your comments, Steve, is that many customers are expressing concerns about project delays. Although there are several projects in the pipeline, people are having difficulty getting them off the ground due to issues like securing raw materials, price increases, and labor shortages. A significant challenge we encounter in the crane market is the difficulty in finding trained and skilled crane operators to operate the equipment. While it's positive that an infrastructure bill is in place, we haven't seen any real progress as many are hindered by raw material issues, pricing, or labor availability.

So, it could still be a timing factor. But in the meantime, it's actually having a real impact by not generating orders, it sounds like.

Yeah. I think that's fair.

Okay. Why do you think crane rental rates are stagnant? We're seeing a lot of pricing changes across both equipment rental and manufacturing. To what extent is this due to competition, loose supply and demand, or why do you believe the rental rates are stagnant?

We always consider the RT market as an indicator for rental rates, and there is very little activity in the oil sector compared to what we've seen over the past 20 years in relation to current oil prices. This significantly influences the situation, and it's a major topic of discussion for us. While I believe demand for boom trucks is increasing, many are struggling to grasp that we are currently tied to existing projects. I'm uncertain about what will ultimately change the rental rates, but this is a persistent concern expressed by our customers.

Okay. And just lastly, in terms of the margins in the second half of the year, I think you were answering an earlier question of something about $15 million to $20 million of additional costs in the second half. Is that – so should we just assume basically kind of take a 1% or so off of your kind of 6.8% margin in the first quarter and that might be what you're kind of running at for the second half?

I was going to say, I'll let Brian. But before Brian answers that, my comment is, I've just been staring at it from a dollar standpoint, because we look at the issues we have and how we offset it with price. So if that's what the math says it probably doesn't make sense, $15 million, $20 million.

I'd say, remember that Q3 tends to be our worst quarter, because of the shutdowns and – the normal shutdowns in Europe. So second half Q4, we've generally been pretty strong. So I think it's probably a little bit less than the numbers you're talking about versus the $6.8 million.

Got it. Thanks a lot.

Thanks, Steven.

And moving on to Tami Zakaria with JPMorgan.

Hi. Good morning.

Hi, Tami.

Can you give us what are the top two or three challenge areas you've seen in the supply chain today? Is it freight? Is it specific parts shortages? Is it lockdown? You mentioned plate steel, but any specific examples that you could share with us?

I would say it's a combination of factors. It's not just one issue; it really depends on the current situation. I believe China will pose a significant challenge as we enter the second half of the year because there are many ships still at sea, so we haven't fully experienced the worst effects coming from China yet. I anticipate that this will become a serious concern going forward. Additionally, I worry every time I watch the news, particularly about the activity in Ukraine regarding the steel mills there. Surprisingly, there's a lot more steel being produced in Ukraine than most people realize, including myself. Those are the two main concerns that trouble us the most.

And just from a cost standpoint, the energy costs are definitely increasing in the second half due to the Ukraine crisis. So that's another negative.

Yeah. If you get us going Tami, we could go for a while, I think it's probably more than two or three that worry us.

Got it. Okay. So China steel energy, the top areas of concern right now. So on China, can you remind…

Yeah. I think that…

Got it. So on China, remind us what your manufacturing exposure is in China, like what percent of your capacity is in China? And are you still able to run operations there amid the lockdowns?

Yeah. So in China, there's sort of the double whammy. One is what we produce and what we would ship out of China, I'd have to look at what it says in the 10-K, or some indication with our Asia Pac businesses. But I don't think, I wouldn't say it's significant relative to the overall. I think the bigger challenge it could hurt us is just the supply chain. So it's the parts coming out of China and going to the factories, whether it be in North America and Europe that probably could create a lot more problems for us.

Got it. Understood. Thank you.

Thanks, Tami.

And our next question will come from Stanley Elliott with Stifel.

Good morning, Stanley.

Yes, thanks. Good morning everybody. Thank you all for taking the question. A quick question here. I thought I heard you say that you were talking about or thinking about shrinking the product offering. Let me know if that's because in December, we talked about or you all talked about kind of expanding the AT offering. I'm just trying to figure out exactly what's going on or where your head's at with that?

Yes. We're continuing to invest in all of our new product development projects we've got in the pipeline and we're definitely expanding the product line.

Okay. In regard to Europe, given the uncertainty you're currently facing with stagnant order and rental rates, at what point do you consider restructuring there? Are there opportunities available? Do you believe you can handle this situation with the Manitowoc walkaway and your lean initiatives? I'm interested in understanding what level of concern this is raising for you.

Yes. While we are facing pricing and cost challenges, which we expect to address with price increases, it's important to remember that we are currently at a certain capacity level. Even with the slowdown, there is still plenty of work available. Therefore, I would not consider restructuring projects at this time, as that would represent a significant change for the business. We have strong units; if we take a figure like $1.8 billion, we still have a substantial number of cranes to produce within our existing footprint. We invested a lot of effort in this area from 2016 to 2020. I don’t foresee any need for restructuring unless we face an extremely adverse situation on the demand side.

Great guys. Thanks very much.

Thanks, Stanley.

And that does conclude the question-and-answer session. Mr. Warner, I will go ahead and turn the conference back over to you for any additional or closing remarks.

Thank you. Before we conclude today's call, please note that a replay of our first quarter 2022 conference 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 continuing interest in The Manitowoc Company. We look forward to speaking with you again next quarter. Thank you.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.