Good morning. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the Manitowoc Earnings Conference Call. I will now turn the call to Ion Warner, Senior Vice President, Marketing and Investor Relations. You may begin your conference. Please proceed.

Good morning, everyone and welcome to The Manitowoc conference call to review the company's fourth quarter and full-year 2023 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 2. 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 3. Looking back over the last 12 months, I'm very pleased with the performance delivered by The Manitowoc team. While the challenges have varied, 2023 has proven to be just as tough as the previous years, although inflation appears to be mostly behind us. The team worked diligently throughout the year to manage cost increases from our suppliers while advocating for necessary price adjustments. In terms of demand, the European tower crane market was softer than we expected. Fortunately, the mobile crane market, especially in the U.S., showed greater resilience despite the interest rate hikes we’ve experienced. As a result, our team had their hands full. Their hard work in achieving these outcomes often goes unnoticed, but without their dedication, our performance would not be possible. Thank you to the team. For the full year, we generated slightly over $2.2 billion in sales, $175 million in adjusted EBITDA, reflecting a 23% increase year-over-year, and our adjusted EBITDA margins expanded by 90 basis points to 7.9%, which is commendable given the unfavorable mix we faced. Non-new machine sales for 2023 reached $613 million, representing a 12% increase. Please turn to slide 4. Shifting our focus to The Manitowoc way, I am extremely proud of the team's achievements. In terms of safety, we ended the year with a recordable incident rate of 1.01. Our goal is zero injuries, and while we haven't reached that yet, this is our best result in company history. I credit these results to a heightened focus on interactive observations, which are structured safety discussions between supervisors and our shop floor team that focus on safe and unsafe behaviors. Our interactive observations increased by 70% year-over-year to 17,000 in 2023. Moreover, we continue to actively pursue environmental improvements. Consequently, our waste to landfill decreased by 30%, and our scope 1 and 2 greenhouse gas emissions intensity improved by almost 9% compared to 2022. The paint value stream at our Charlieu factory in France received our CEO Manitowoc Way Award this year for the best environmental lessons learned. Among other improvements, the team developed a digital monitoring tool to optimize scheduling and eliminate bottlenecks in the shop's paint workstations. This resulted in a 44% increase in paint line capacity while reducing the carbon footprint by 435 tons of CO2 annually, equivalent to the yearly usage of 100 gasoline-powered cars. This exemplifies the impact of The Manitowoc way. Additionally, I would like to recognize three other award winners this year. One of the leaders at our Charlieu factory received the Leadership Award for his contributions to the electromechanical value stream. Over the last couple of years, he has become an expert in lean methodologies, and I have enjoyed watching his growth as a leader. Please turn to slide 5. We also created an award to acknowledge the implementation of The Manitowoc Way at our expanding service locations. Our Ankeny, Iowa location won the inaugural award for a mobile station they developed for conducting dielectric testing on booms in the field. Previously, we had to lift a 250-pound device onto the back of a flatbed truck, which was unsafe and clumsy to use. Now, technicians can easily bring the device to a crane in the field. Well done to the team. Please turn to slide 6. Lastly, the crawler crane value stream in Shady Grove won the best kaizen award. Some early-stage support from a few investors was instrumental in this project. Previously, we welded large boom inserts as one unit, constructing scaffolding around the part as it grew. By applying creativity and teamwork, the team transformed the process to weld in sections. This significantly improved safety and quality by enhancing ergonomics for our welders and allowed us to eliminate 750 hours from the process. Great job by the team, and congratulations. Please move to slide 7. Regarding market conditions, we received $476 million in orders during the quarter, ending the year with a backlog of $917 million. While the order rate was considerably lower compared to the exceptional fourth quarter of 2022, it still represented a solid performance given the sluggish European tower crane market. Regionally, the Americas remain stable; dealer inventory levels are reasonable, utilization rates for crane operators are strong, and rental rates have held steady. I believe our boom truck business is well-positioned for 2024. While I anticipate steady demand for all-terrain and rough terrain cranes, dealer inventory is slightly heavier than ideal. Given the expected fallout from the commercial real estate market, I anticipate weak tower crane demand, although this market is relatively small in the Americas. In Europe, the tower crane demand is very slow. According to the latest housing permit data on a trailing 12-month basis, France has seen a 24% decline and Germany a 28% decline. Rental rates for top tier cranes in France have faced significant pressure, and dealer inventory for self-directed cranes in Germany remains high. Conversely, demand for mobile cranes in Europe remains strong, with rental rates rising due to inflation, and the large rental firms are well-utilized and actively upgrading their fleets. Looking at the Middle East, the overall market remains strong, but we anticipate challenges in Turkey. Following the devastating earthquakes last February, there was a surge in demand to support reconstruction in the affected areas, but we don't expect this boost to continue. Activity in Saudi Arabia is progressing as planned, although we have experienced some delays due to the complexity and scale of projects. During my visit in December, I found that everyone shared similar insights regarding upcoming major events, including the 2029 Asian Winter Games, the 2030 World Expo, and the 2034 World Cup, all of which require significant execution on several revealed projects. The line project continues to receive high attention from the Crown Prince and is making progress, though they face challenges related to extreme engineering requirements. On a final note on Saudi Arabia, I highly encourage you to research the Six Flags Qiddiya Project. It's an impressive construction site involving Potain cranes for the world's largest and fastest roller coaster, slated to open in late 2024. Construction in that area will continue into the next decade to support additional developments, such as a Formula 1 racetrack and a soccer stadium. Briefly commenting on Asia Pacific, after my visit in January, I sense that the situation in China's construction market is even more concerning than what has been reported. Many cranes remain on-site, but there is a lack of movement, indicating projects are being paused. The local construction market is currently struggling, and it’s unclear when it might recover. Although our revenue from China is minor within our overall business, my bigger worry is the aggressive global expansion by Chinese manufacturers. Outside of China, we're starting to make progress in Hong Kong and Singapore; similar to Europe, South Korea's large commercial construction has slowed, affecting tower cranes, but the infrastructure markets will continue to promote demand for cranes globally. Finally, Australia remains stable. As long as the Australian dollar stays above $0.60 against the Euro, I expect solid crane demand. With that, I'll turn it over to Brian to go over the financials before I conclude with an update on our strategy.

Thanks, Aaron and good morning, everyone. Please move to slide 8. As a reminder, we entered the fourth quarter with difficult year-over-year comparables and expected unfavorable mix due to the softness in the European tower crane market. This held true and the fourth quarter results were in line with our expectations. Turning to orders. During the fourth quarter, we had orders of $476 million, a decrease of 33% from a year ago. Foreign currency favorably impacted orders by $9 million. Our December 31st backlog was $917 million, a year-over-year decrease of 13% and was favorably impacted by $9 million from changes in foreign currency exchange rates. Net sales in the fourth quarter were $596 million and decreased 4% from a year ago. The year-over-year decrease was primarily driven by softness in our European tower crane business. This impact was partially offset by global pricing efforts and product mix in the Americas. Net sales were favorably impacted by $9 million from changes in foreign currency. SG&A expenses were $88 million, which included a $10 million charge related to a legal matter with the U.S. Environmental Protection Agency. Excluding the impact of this charge, SG&A expenses as a percentage of sales were 13%, relatively flat year-over-year. Foreign currency unfavorably impacted SG&A expenses by $2 million year-over-year. Our adjusted EBITDA for the fourth quarter was $37 million, a decrease of 29% year-over-year. The adjusted EBITDA margin was 6.1%, a decrease of 220 basis points over the prior year, primarily due to the unfavorable product mix. Our provision for income taxes in the quarter was $6 million. As a reminder, we have 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 loss per share in the quarter was $0.23. On an adjusted basis, diluted income per share was $0.09, a decrease of $0.65 from the prior year. Looking at the full year, our 2023 orders totaled $2.82 billion, relatively flat year-over-year. On a currency-neutral basis, orders decreased $32 million. Net sales for the full year were $2.228 billion, a 10% increase over the prior year. The increase was primarily due to the progress made on our CRANES+50 strategy, the impact of higher crane volume in the Americas and MEAP, partially offset by lower tower crane sales in EURAF. Adjusted EBITDA for the full year was $175 million, an increase of 23% year-over-year. As a percentage of sales, the adjusted EBITDA margin increased 90 basis points over the prior year to 7.9%. Our GAAP diluted income per share for the full year was $1.09. On an adjusted basis, diluted income per share was $1.52, a 43% increase from the prior year. Please turn to slide 9. On our Q3 earnings call, we targeted a $70 million reduction to our inventory over the last three months of the year. On a currency-neutral basis, we reduced our inventory by $68 million, slightly short of that target. On a year-over-year basis, net working capital as a percentage of sales increased 90 basis points to 21%. This was primarily driven by higher finished goods inventory. Some of this was a consequence of our higher production levels, but we still have more work to do on finished goods. Moving to cash flows. We generated $63 million of cash from operating activities during the year. Our generation of operating cash flows was negatively impacted by the timing of shipments during the fourth quarter. Capital expenditures were $77 million, of which approximately $23 million was for strategic growth in our rental fleet. We ended the year with a cash balance of $34 million. Total outstanding borrowings under the ABL decreased $20 million during the year, leaving $60 million outstanding. Our net leverage ratio was 1.9 times as of December 31st, 2023, well under the targeted three times, and total liquidity was $280 million. Please turn to slide 10. As we look ahead to 2024, we entered the year with a strong backlog in the Americas, but expect ongoing softness in the European tower crane market. The impact of this unfavorable mix is reflected in our outlook. Our 2024 guidance is as follows: net sales of $2.275 billion to $2.375 billion, adjusted EBITDA of $150 million to $180 million, depreciation and amortization of $63 million to $67 million, interest expense of $32 million to $34 million, provision for income tax expense of $18 million to $22 million, adjusted diluted earnings per share of $0.95 to $1.55; capital expenditures of $60 million, of which $25 million relates to rental fleet growth; free cash flows of $30 million to $60 million. With that, I will now turn the call back to Aaron.

Thank you, Brian. Entering 2023, we expect the economic environment to look a lot like 2022, and overall it was much better. As we enter 2024, we anticipate global demand for mobile cranes to be strong. Unfortunately, however, we'll face difficult comparisons in the first half due to ongoing softness in the European tower crane business. This dynamic is reflected in our 2024 expectations. Please turn to slide 11. The rocky road to recovery since the COVID pandemic continues, and we await demand from the U.S. infrastructure bill. In the meantime, we remain committed to our CRANES+50 journey to reduce our cyclicality and increase our margins by growing our aftermarket. We recently refreshed our strategy with a few tweaks and I thought it was appropriate to provide an update on our four breakthrough initiatives. Starting with our European tower crane business, although we have not landed any acquisitions, we continue to grow our rental fleet as an avenue in generating rental income, building our used sales efforts and increasing our service work. During 2023, we increased our fleet from 124 units to 149 units. In terms of acquisitions, we've been inactive in this space; but unfortunately, the dynamic nature of the market has made it difficult to land the deal. Moving to the next breakthrough, we adjusted our Belt and Road initiative to emphasize our efforts in the Middle East. During 2023, we launched two tower crane models to support this rapidly-growing region, the first of which can be found at the Six Flags construction site in Saudi. In addition, we are investing approximately $3 million in our China factory to improve our capability and throughput to manufacture large tower cranes. Concurrently, we are developing three large capacity models that will serve the Middle East and will also be a good fit for Hong Kong and Singapore. Our third breakthrough initiative is to expand our aftermarket in North America. Growing in 2023, we started Greenfield locations in Denver, Kansas City and Aiken, South Carolina, and we added 22 field service technicians. To accelerate the efficiency of our new service technicians, we launched a quick start training program to fast track the development of proficient revenue-producing technicians while maintaining a path to certified master technician. Currently, we have roughly 70 students enrolled in this program. Our acquisitions of H&E’s crane business and Aspen have proven to be extremely successful, and now, we are in the process of increasing our market share in core territories while seeking additional opportunities to expand. As important, we are focused on increasing our boom truck market share by leveraging the synergies between MGX's geographic reach and Aspen's upfit capabilities. Lastly, we started to transition our All-Terrain initiative to be more aftermarket-oriented. Since we began this initiative, we launched five models and we have more in the hopper. New product development will always be a never-ending journey in the All-Terrain business; but now that we have a fresh lineup of cranes, we need to accelerate the aftermarket growth in this space. Within Europe, we are learning to become more flexible and agile with our customers in terms of aftermarket support. During 2023, we added 15 field service technicians and hired three parts and service sales managers. In addition, after a successful trial period in 2023, we have begun to proactively offer maintenance agreements. And finally, our Manitowoc Way team has been kaizening our service facilities in Mining Field Germany to increase capacity to rebuild cranes. The All-Terrain crane initiative is truly global in scope. For example, in Latin America, we sold 10 used ATs during 2023. These units were trade-ins from Europe. On one hand, this helps us on strategic deals with key accounts in Europe. On the other hand, this helps us compete with Chinese competitors in South America while growing the local population of our cranes. This in turn drives future parts and service sales. Concurrently, we nearly doubled our field service technicians during 2023 and added a location in Peru to serve local mining customers. We have a long way to go in this endeavor, but I'm really pleased with the progress that we've made. Please turn to slide 12. During our last analyst call, we restated our financial ambitions, resetting our targets to reflect the gains that we've made in the last couple of years. Today, I'd like to draw your attention to a new metric that we are emphasizing, ROIC. While we continue to drive for margin expansion, we felt that this metric also helps emphasize effective capital allocation. Please turn to slide 13. As you can see by the historical chart, it's been a long journey since 2016 and it's a great achievement to end 2023 with a return of 11.2%. Our long-term goal is 15%. Globally, the economy has been on an uneven road since 2020, but at Manitowoc, we continue to execute our long-term strategy to reduce our cyclicality and increase our margins by growing our aftermarket. I remain optimistic about the crane market long-term. Europe has a huge need for housing. Saudi Vision 2030 is in full swing, and the U.S. infrastructure bill is poised to generate demand. This is exactly the kind of economic backdrop that the industry needs to refresh the aging crane population around the world. With that, operator, please open the line for questions.

Your first question comes from the line of Jay Revich from Goldman Sachs. Your line is open.

Good morning, Jay.

Hey Jay.

Hi, this is Adam on for Jerry. Thanks for taking my question.

Yes.

Yes.

I was wondering if you could just talk about where labor hours per unit stand today compared to the levels you were seeing pre-COVID. And if they do normalize to historical levels, how much of a margin tailwind could that mean for your business?

I'm not sure I understand your question, Adam. Is it cost of labor?

Or is it efficiency what...?

Yes, just labor hours today compared to pre-COVID levels. Where are they versus historical levels?

I don't think it's applicable, because there's so many, so much mix of hours depending on the machines that we're making.

Yes, we are always seeking to enhance our efficiency throughout the plant, but I don't believe we have provided that level of detail from a hours per unit standpoint.

Got it. And then can you just update us on your aftermarket performance? Any signs of destocking and parts of the business where you sell through dealers?

The aftermarket business has been performing well, and we have set ambitious goals for this year. However, I believe we may see some leveling off due to the strong growth we've experienced over the past few years. As mentioned in the call, the addition of service technicians is seen as a way to further enhance our revenue growth. I should also note that we have not observed any significant destocking.

And then last one from me, with supply chain performance continuing to normalize, could decremental margins be relatively muted as improved productivity offsets lower volumes?

I think, in the mobile business, yes, in the Americas. But when you look at what's hitting us in the face, and what we've been talking about is the tower crane business in Europe. So, that's a pretty significant impact to us in '24 and that's what's reflected in our guidance.

Great. Thanks so much.

Your next question comes from the line of Mig Dobre from Baird. Please go ahead.

Good morning, Mig.

Hey, good morning. Good morning, guys. Hey, it's actually Joe on for Mig this morning. Good morning.

Good morning, Joe.

How are you doing, Joe?

I had a couple of questions around guidance. At the midpoint, your guidance assumes net sales of 4%, but EBITDA margin down 80 basis points. I know you mentioned unfavorable mix, but can you talk about any other year-over-year margin headwinds in the guidance?

The biggest piece of it all is the decline in the EU tower crane business. So, it's not just mix in terms of standard margin, but it's also under absorption at those factories.

Yes, you really saw it in Q4; our margin was 6.1%. The implied midpoint is at 7.1%, which is obviously better than what we experienced in Q4, but as Aaron mentioned, it's largely due to the tower crane mix.

Yes, okay. Makes sense. And then any thoughts on quarterly cadence for sales and EBITDA through the year?

Yes, we typically view the third quarter as our weakest period. In comparison, the first half of last year was stronger for tower cranes, especially in the first quarter. This headwind significantly affected us in the first half, particularly in the first quarter. Therefore, the first and second quarters will definitely be less favorable from a comparison standpoint. However, we expect the third and fourth quarters to return to normal.

Got it. Okay. And then maybe, one more any assumptions around crane sales versus non-crane sales in the guidance?

We don't give that level of granularity, but as Aaron mentioned, we do have an expectation that we'll continue to grow the non-new machine sales.

Okay. All right. Good luck, guys. Thanks.

Thanks, Joe.

Your next question comes from the line of Seth Weber from Wells Fargo. Please go ahead.

Good morning, Seth.

Hi guys. This is Larry on for Seth this morning. How are you?

Hey, Larry. How are you doing?

Good. I'm doing great. Thanks for taking the questions. I just wanted to ask about orders in January after the light fourth quarter, what you guys are seeing. Obviously, orders were down 33%. You did have a comp issue, but I was just wondering how they're trending in January so far?

Yes, January was a good month, so we were just shy of $200 million. So, I think we're continuing on the same path that we've been on for the last several quarters.

Okay, great. You have mentioned the challenges in the EU tower market. What indicators are you looking for to identify a bottom or any signs of improvement there?

Yes. The first thing we are examining is the regulatory environment and the actions taken by governments regarding stimulus. Germany made some moves a couple of months ago, but it hasn't significantly impacted the construction market yet. We continue to monitor the permits, even though that data is lagging. Additionally, we keep track of everyone's utilization within the business. Currently, there isn't much visibility for the first half of the year. Many projects typically commence around March, April, and May. Most major players have what they need for these projects. The next significant indicator is likely to emerge around September, as the summer tends to slow down. There is usually limited activity in France and Germany in August, so September is when operations typically pick back up, and we prepare for our normal winter campaign.

And I'd just say, just adding to that from a longer-term standpoint, I mean, I think we're excited that there are housing shortages all across Europe. So, from a long-term standpoint, I think the business is good for us. It's just when it's going to come back.

Got it. Thanks a lot for your time, guys.

Thank you.

Your next question comes from the line of Tami Zakaria from Manitowoc. Please go ahead. Your line is open.

Good morning, Tami.

Hi, this is Alex.

Good morning, Alex.

I was wondering if you could provide further color on sort of price and cost for 2024, given current conditions and power demand. I'm assuming continued added pressure from Chinese competition in the Middle East. The Japanese yen remains weak at 1.50 and the cost side, so do you expect labor and elevated high strength yield prices to remain a challenge for 2024?

Sure. Regarding price to cost, the answer is somewhat mixed. We have returned to a more normal state, but as you highlighted, there are several important factors to consider. In the U.S., the competition from imports and a weak Yen creates pressure on pricing, along with steel costs. The current steel tariffs disadvantage U.S. manufacturers since steel prices in Europe are significantly lower. So in the U.S., competition remains quite intense. Unless the strong dollar reverses, we can expect ongoing pressure. In Europe, the primary issue is low demand for tower cranes, but the situation is not irrational. As for competition from China, we mainly see that in the Middle East and Asia-Pacific, and it's challenging. Customers are generally divided between opting for Chinese products or sticking with us, and if they choose us, we leverage our competitive advantages. On the headwinds front, labor costs have stabilized after numerous adjustments last year. In terms of steel, not much is likely to change since the current tariffs leave U.S. manufacturers at a disadvantage compared to other major regions.

I'd say the labor inflation normalizes; there's still some, but it's normal going into '24.

Okay, thanks. That's super helpful. And just a quick follow-up, I'm just curious, when we look back at 2023, were there any share shifts in your view, either geographically or product wise that would be noteworthy?

No, not dramatic. I mean, the team's done a great job with the mobile cranes in Europe with some of the new product launches we had; nothing dramatic. But we had some gains there in the United States, I'd say it's all pretty steady.

Okay, understood. Thank you so much. I'll pass it on.

Thank you.

And there are no further questions at this time. Mr. Warner, I'll turn the call back over to you.

Thank you. Before we conclude today's call, please note that a replay of our fourth quarter 2023 conference call will be available later this morning by accessing the Investor Relations section of our website at 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.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.