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MANITOWOC CO INC 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Manitowoc Company, Inc. (The)

Filing date:

02/21/2025

TLDR:

Manitowoc’s 2024 performance shows a slight revenue decrease but achieved net income compared to a net loss in the prior year. The company focuses on its CRANES+50 strategy and manages macroeconomic and geopolitical risks.

ELI5:

Manitowoc, a crane company, made a profit this year after losing money last year, even though they sold slightly less. They’re trying to sell more crane services and parts, and they’re dealing with problems like inflation and conflicts around the world.

Accession #:

0000950170-25-024838

Published on

Analyst Summary

  • Net sales decreased by 2.2% from $2,227.8 million in 2023 to $2,178.0 million in 2024.
  • Gross profit decreased by 11.8% from $425.2 million in 2023 to $375.0 million in 2024.
  • Net income was $55.8 million in 2024, compared to $39.2 million in 2023.
  • Total debt increased from $372.1 million in 2023 to $390.2 million in 2024.
  • Orders decreased by 7.7% and backlog decreased by 29.1%, indicating potential future revenue challenges.
  • Gross Profit Margin decreased from 19.1% in 2023 to 17.2% in 2024.
  • Adjusted ROIC: 6.0% for 2024.

Opportunities and Risks

  • Opportunities: Expanding tower crane rental in Europe, growing the Belt and Road tower crane business, expanding aftermarket activities in North America, and leveraging all-terrain crane new product development.
  • Risks: Macroeconomic Conditions and Geopolitical Events, Competition, Cyclicality, Raw Material Costs, International Operations, Cybersecurity, Debt Leverage.

Potential Implications

Company Performance

  • Success hinges on its ability to execute its CRANES+50 strategy.
  • Success depends on managing its debt effectively.
  • Success depends on navigating the challenging macroeconomic and geopolitical environment.

Stock Price

  • Valuation ratios suggest the company may be undervalued.
  • Monitor Order and Backlog Trends: Closely track order and backlog trends in the coming quarters to assess the effectiveness of the company’s sales strategies.

SEC Filing Report: Manitowoc Co Inc. (MTW) 10-K for Fiscal Year Ended 2024

Executive Summary

This report analyzes Manitowoc Co Inc.’s 10-K filing for the fiscal year ended December 31, 2024. The analysis reveals a mixed performance. While revenue experienced a slight decrease, the company achieved net income compared to a net loss in the prior year. Key areas of focus include the company’s CRANES+50 strategy, management of debt, and exposure to macroeconomic and geopolitical risks. Overall, a cautious approach is warranted, monitoring the company’s ability to execute its strategic initiatives and navigate the challenging global environment.

Company Overview

The Manitowoc Company, Inc. (MTW) is a leading global provider of engineered lifting solutions, manufacturing and distributing mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes. The company operates through three reportable segments: Americas, Europe and Africa (EURAF), and Middle East and Asia Pacific (MEAP). MTW distributes its products through a global network of independent distributors and wholly-owned distribution networks.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management attributes the decrease in orders to lower demand in the Americas due to election uncertainty and high interest rates, and in MEAP due to slowdowns in China and South Korea. They highlight the CRANES+50 strategy, focusing on growing non-new machine sales to $1 billion. Initiatives include expanding tower crane rental in Europe, growing the Belt and Road tower crane business, expanding aftermarket activities in North America, and leveraging all-terrain crane new product development. The MD&A emphasizes cost management and operational efficiencies.

Financial Statement Analysis

Income Statement

  • Net sales decreased by 2.2% from $2,227.8 million in 2023 to $2,178.0 million in 2024.
  • Gross profit decreased by 11.8% from $425.2 million in 2023 to $375.0 million in 2024.
  • Engineering, selling, and administrative expenses decreased by 3.8% from $328.3 million in 2023 to $315.7 million in 2024.
  • Interest expense increased by 13.0% from $33.9 million in 2023 to $38.3 million in 2024.
  • Net income was $55.8 million in 2024, compared to $39.2 million in 2023.

Balance Sheet

  • Cash and cash equivalents increased from $34.4 million in 2023 to $48.0 million in 2024.
  • Accounts receivable decreased from $278.8 million in 2023 to $260.3 million in 2024.
  • Inventories decreased from $666.5 million in 2023 to $609.4 million in 2024.
  • Total debt increased from $372.1 million in 2023 to $390.2 million in 2024.
  • Stockholders’ equity increased from $603.3 million in 2023 to $640.1 million in 2024.

Cash Flow Statement

  • Net cash provided by operating activities decreased from $63.0 million in 2023 to $49.2 million in 2024.
  • Net cash used for investing activities decreased from $71.8 million in 2023 to $40.4 million in 2024.
  • Net cash provided by financing activities increased from -$21.4 million in 2023 to $6.7 million in 2024.

Key Ratios

  • Gross Profit Margin: Decreased from 19.1% in 2023 to 17.2% in 2024.
  • Adjusted ROIC: 6.0% for 2024.

Segment Performance

  • Americas: Net sales decreased slightly, and operating income decreased due to product mix and higher expenses.
  • EURAF: Net sales decreased, and operating loss increased due to lower sales and under absorption of fixed costs.
  • MEAP: Net sales increased, but operating income decreased due to lower realized price and unfavorable product mix.

Risk Factors

The 10-K outlines several key risk factors:

  • Macroeconomic Conditions and Geopolitical Events: Inflation, interest rates, supply chain disruptions, and conflicts in Ukraine and the Middle East could negatively impact the company’s financial performance.
  • Competition: Intense competition in end markets could lead to decreased sales and profits.
  • Cyclicality: Sales are sensitive to economic cycles and volatile factors, including government spending and customer replacement cycles.
  • Raw Material Costs: Increases in raw material costs or supply disruptions could negatively impact operating results.
  • International Operations: International operations are subject to various risks, including political and economic instability, adverse trade policies, and currency fluctuations.
  • Cybersecurity: The company acknowledges the risk of cybersecurity threats and potential disruptions to information systems.
  • Debt Leverage: The company’s leverage could impair operations and financial condition.

Uncommon Metrics

  • Orders and Backlog: Orders decreased by 7.7% and backlog decreased by 29.1%, indicating potential future revenue challenges.
  • Adjusted ROIC: Management uses Adjusted ROIC as a measure to assess operational performance and capital allocation.

Controls and Procedures

The company’s management, with the participation of the CEO and CFO, concluded that the company’s disclosure controls and procedures are effective.

Conclusion and Actionable Insights

Manitowoc’s 2024 performance presents a mixed picture. While the company achieved net income, revenue declined, and gross profit margin contracted. The decrease in orders and backlog raises concerns about future revenue growth. The company’s success hinges on its ability to execute its CRANES+50 strategy, manage its debt effectively, and navigate the challenging macroeconomic and geopolitical environment.

Recommendations:

  • Monitor Order and Backlog Trends: Closely track order and backlog trends in the coming quarters to assess the effectiveness of the company’s sales strategies.
  • Assess CRANES+50 Execution: Evaluate the progress of the CRANES+50 initiatives and their impact on non-new machine sales.
  • Debt Management: Monitor the company’s ability to manage its debt and comply with debt covenants.
  • Risk Mitigation: Evaluate the company’s strategies for mitigating macroeconomic and geopolitical risks.

Overall Assessment: A cautious approach is warranted, monitoring the company’s ability to execute its strategic initiatives and navigate the challenging global environment.

Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin

    • Ratio/Metric: Gross Profit / Net Sales = $375.0 / $2,178.0 = 17.2%
    • Trend: 2024 (17.2%) vs 2023 (19.1%). Percentage Change: ((17.2 – 19.1) / 19.1) * 100 = -9.95%
    • Industry: The construction machinery manufacturing industry typically sees gross profit margins ranging from 20% to 35%. Manitowoc’s margin is below this range, indicating potential issues with cost control or pricing strategy compared to industry peers.
  • Operating Profit Margin

    • Ratio/Metric: Operating Income / Net Sales = $51.8 / $2,178.0 = 2.4%
    • Trend: 2024 (2.4%) vs 2023 (92.4/2227.8 = 4.1%). Percentage Change: ((2.4 – 4.1) / 4.1) * 100 = -41.46%
    • Industry: An operating profit margin of 5% to 15% is considered healthy in the machinery manufacturing industry. Manitowoc’s operating margin is significantly lower, suggesting high operating expenses relative to sales.
  • Net Profit Margin

    • Ratio/Metric: Net Income / Net Sales = $55.8 / $2,178.0 = 2.6%
    • Trend: 2024 (2.6%) vs 2023 (39.2/2227.8 = 1.8%). Percentage Change: ((2.6 – 1.8) / 1.8) * 100 = 44.44%
    • Industry: A net profit margin of 3% to 10% is typical for this industry. Manitowoc’s net profit margin is at the lower end, indicating moderate profitability after all expenses and taxes.
  • Return on Assets (ROA)

    • Ratio/Metric: Net Income / Total Assets = $55.8 / $1,660.0 = 3.4%
    • Trend: 2024 (3.4%) vs 2023 (39.2/1706.7 = 2.3%). Percentage Change: ((3.4 – 2.3) / 2.3) * 100 = 47.83%
    • Industry: An ROA of 5% or higher is generally considered good. Manitowoc’s ROA is below this benchmark, suggesting that the company is not generating substantial profits from its assets.
  • Return on Equity (ROE)

    • Ratio/Metric: Net Income / Total Stockholders’ Equity = $55.8 / $640.1 = 8.7%
    • Trend: 2024 (8.7%) vs 2023 (39.2/603.3 = 6.5%). Percentage Change: ((8.7 – 6.5) / 6.5) * 100 = 33.85%
    • Industry: An ROE of 10% to 15% is often considered a good target. Manitowoc’s ROE is below this range, indicating moderate returns to shareholders.
  • Earnings Per Share (EPS)

    • Ratio/Metric:

      • Basic EPS: $1.58
      • Diluted EPS: $1.56
    • Trend:

      • Basic EPS: 2024 ($1.58) vs 2023 ($1.12). Percentage Change: (($1.58 – $1.12) / $1.12) * 100 = 41.07%
      • Diluted EPS: 2024 ($1.56) vs 2023 ($1.09). Percentage Change: (($1.56 – $1.09) / $1.09) * 100 = 43.12%
    • Industry: EPS varies widely. The trend is more important than a single period value.

Liquidity

  • Current Ratio

    • Ratio/Metric: Current Assets / Current Liabilities = $958.9 / $474.3 = 2.02
    • Trend: 2024 (2.02) vs 2023 (1033/563.3 = 1.83). Percentage Change: ((2.02 – 1.83) / 1.83) * 100 = 10.38%
    • Industry: A current ratio between 1.5 and 2.0 is generally considered healthy. Manitowoc’s current ratio is within this range, indicating good short-term liquidity.
  • Quick Ratio (Acid-Test Ratio)

    • Ratio/Metric: (Current Assets – Inventories) / Current Liabilities = ($958.9 – $609.4) / $474.3 = 0.74
    • Trend: 2024 (0.74) vs 2023 ((1033-666.5)/563.3 = 0.65). Percentage Change: ((0.74 – 0.65) / 0.65) * 100 = 13.85%
    • Industry: A quick ratio of 1.0 or higher is generally preferred. Manitowoc’s quick ratio is below 1.0, suggesting that the company may have difficulty meeting its short-term obligations without relying on inventory sales.
  • Cash Ratio

    • Ratio/Metric: Cash and Cash Equivalents / Current Liabilities = $48.0 / $474.3 = 0.10
    • Trend: 2024 (0.10) vs 2023 (34.4/563.3 = 0.06). Percentage Change: ((0.10 – 0.06) / 0.06) * 100 = 66.67%
    • Industry: A cash ratio of 0.1 to 0.2 is typical. Manitowoc’s cash ratio is at the lower end, indicating limited immediate liquidity.

Solvency/Leverage

  • Debt-to-Equity Ratio

    • Ratio/Metric: Total Debt / Total Stockholders’ Equity = $390.2 / $640.1 = 0.61
    • Trend: 2024 (0.61) vs 2023 (372.1/603.3 = 0.62). Percentage Change: ((0.61 – 0.62) / 0.62) * 100 = -1.61%
    • Industry: A debt-to-equity ratio of 0.5 to 1.0 is common. Manitowoc’s ratio is within this range, indicating a moderate level of financial leverage.
  • Debt-to-Assets Ratio

    • Ratio/Metric: Total Debt / Total Assets = $390.2 / $1,660.0 = 0.24
    • Trend: 2024 (0.24) vs 2023 (372.1/1706.7 = 0.22). Percentage Change: ((0.24 – 0.22) / 0.22) * 100 = 9.09%
    • Industry: A debt-to-assets ratio below 0.5 is generally considered acceptable. Manitowoc’s ratio is well below this level, indicating a relatively conservative capital structure.
  • Interest Coverage Ratio (Times Interest Earned)

    • Ratio/Metric: EBITDA / Interest Expense = $114.3 / $38.3 = 2.98
    • Trend: 2024 (2.98) vs 2023 (139.2/33.9 = 4.1). Percentage Change: ((2.98 – 4.1) / 4.1) * 100 = -27.32%
    • Industry: An interest coverage ratio of 3.0 or higher is generally preferred. Manitowoc’s ratio is slightly below this level, suggesting that the company’s ability to cover its interest expenses is adequate but could be improved.

Activity/Efficiency

  • Inventory Turnover

    • Ratio/Metric: Cost of Sales / Average Inventory = $1,803.0 / (($609.4 + $666.5) / 2) = 2.84
    • Trend: 2024 (2.84) vs 2023 (1802.6/((666.5+64.4)/2) = 2.77). Percentage Change: ((2.84 – 2.77) / 2.77) * 100 = 2.53%
    • Industry: An inventory turnover ratio of 4 to 6 is typical. Manitowoc’s ratio is below this range, suggesting that the company may be holding onto inventory for too long.
  • Days Sales Outstanding (DSO)

    • Ratio/Metric: (Accounts Receivable / Net Sales) * 365 = ($260.3 / $2,178.0) * 365 = 43.6 days
    • Trend: 2024 (43.6) vs 2023 ((278.8/2227.8)*365 = 45.7). Percentage Change: ((43.6 – 45.7) / 45.7) * 100 = -4.60%
    • Industry: A DSO of 30 to 45 days is common. Manitowoc’s DSO is within this range, indicating a reasonable collection period for accounts receivable.
  • Days Payable Outstanding (DPO)

    • Ratio/Metric: (Accounts Payable / Cost of Sales) * 365 = ($205.5 / $1,803.0) * 365 = 41.6 days
    • Trend: 2024 (41.6) vs 2023 ((254.7/1802.6)*365 = 51.6). Percentage Change: ((41.6 – 51.6) / 51.6) * 100 = -19.38%
    • Industry: A DPO of 30 to 50 days is typical. Manitowoc’s DPO is within this range, indicating a reasonable payment period for accounts payable.
  • Asset Turnover

    • Ratio/Metric: Net Sales / Total Assets = $2,178.0 / $1,660.0 = 1.31
    • Trend: 2024 (1.31) vs 2023 (2227.8/1706.7 = 1.30). Percentage Change: ((1.31 – 1.30) / 1.30) * 100 = 0.77%
    • Industry: An asset turnover ratio of 1.0 to 1.5 is common. Manitowoc’s ratio is within this range, indicating efficient use of assets to generate sales.

Valuation

  • Price-to-Earnings Ratio (P/E)

    • Ratio/Metric: Stock Price / EPS = $10.78 / $1.56 = 6.91
    • Industry: The average P/E ratio for the industrial machinery industry is around 20. Manitowoc’s P/E ratio is significantly lower, suggesting that the stock may be undervalued compared to its earnings.
  • Price-to-Book Ratio (P/B)

    • Ratio/Metric: Market Cap / Book Value of Equity = (35.134.245 * $10.78) / $640.100.000 = 0.59
    • Industry: A P/B ratio of 1 to 3 is typical. Manitowoc’s P/B ratio is below 1, suggesting that the stock may be undervalued relative to its assets.
  • Price-to-Sales Ratio (P/S)

    • Ratio/Metric: Market Cap / Net Sales = (35.134.245 * $10.78) / $2,178.000.000 = 0.17
    • Industry: A P/S ratio of 1 to 2 is typical. Manitowoc’s P/S ratio is below this range, suggesting that the stock may be undervalued relative to its sales.
  • Enterprise Value to EBITDA (EV/EBITDA)

    • Ratio/Metric: (Market Cap + Total Debt – Cash) / EBITDA = ((35.134.245 * $10.78) + $390.200.000 – $48.000.000) / $114.300.000 = 3.68
    • Industry: An EV/EBITDA ratio of 8 to 12 is typical. Manitowoc’s ratio is below this range, suggesting that the company may be undervalued relative to its earnings.

Growth Rates

  • Revenue Growth

    • Ratio/Metric: (Current Revenue – Previous Revenue) / Previous Revenue = ($2,178.0 – $2,227.8) / $2,227.8 = -2.2%
    • Industry: Revenue growth varies.
  • Net Income Growth

    • Ratio/Metric: (Current Net Income – Previous Net Income) / Previous Net Income = ($55.8 – $39.2) / $39.2 = 42.3%
    • Industry: Net income growth varies.
  • EPS Growth

    • Ratio/Metric: (Current EPS – Previous EPS) / Previous EPS = ($1.56 – $1.09) / $1.09 = 43.1%
    • Industry: EPS growth varies.

Other Relevant Metrics

  • Adjusted ROIC

    • Ratio/Metric: Adjusted NOPAT / Invested Capital = $58.1 / $969.9 = 6.0%
    • Industry: This is a company-specific metric.
  • Free Cash Flow

    • Ratio/Metric: Net cash provided by operating activities – Capital expenditures = $49.2 – $45.7 = $3.5
    • Trend: 2024 ($3.5) vs 2023 (-14.4).
    • Industry: This is a company-specific metric.

Commentary

Manitowoc’s financial performance in 2024 shows a mixed picture. While net income and EPS experienced significant growth, revenue declined slightly, and gross and operating profit margins contracted. Liquidity ratios are generally healthy, but solvency ratios indicate moderate leverage. Valuation ratios suggest the company may be undervalued, and the adjusted ROIC indicates a moderate return on invested capital.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️