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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

img165350942_0.jpg 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-11978

 

The Manitowoc Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Wisconsin

 

39-0448110

(State or other jurisdiction

 

(I.R.S. Employer

of incorporation or organization)

 

Identification Number)

 

11270 West Park Place

Suite 1000

 

 

Milwaukee, Wisconsin

 

53224

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (414) 760-4600

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.01 Par Value

 

MTW

 

New York Stock Exchange

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of March 31, 2024, the registrant had 35,540,950 shares of common stock, $.01 par value per share, outstanding.


 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Operations

For the three months ended March 31, 2024 and 2023

(Unaudited)

(In millions, except per share and share amounts)

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Net sales

 

$

495.1

 

 

$

508.3

 

Cost of sales

 

 

402.6

 

 

 

402.0

 

Gross profit

 

 

92.5

 

 

 

106.3

 

Operating costs and expenses:

 

 

 

 

 

 

Engineering, selling, and administrative expenses

 

 

76.0

 

 

 

75.1

 

Amortization of intangible assets

 

 

0.7

 

 

 

1.0

 

Restructuring expense

 

 

0.6

 

 

 

 

Total operating costs and expenses

 

 

77.3

 

 

 

76.1

 

Operating income

 

 

15.2

 

 

 

30.2

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(9.2

)

 

 

(8.1

)

Amortization of deferred financing fees

 

 

(0.3

)

 

 

(0.3

)

Other income (expense) - net

 

 

0.7

 

 

 

(1.1

)

Total other expense

 

 

(8.8

)

 

 

(9.5

)

Income before income taxes

 

 

6.4

 

 

 

20.7

 

Provision for income taxes

 

 

1.9

 

 

 

4.2

 

Net income

 

$

4.5

 

 

$

16.5

 

 

 

 

 

 

 

Per Share Data and Share Amounts

 

 

 

 

 

 

Basic net income per common share

 

$

0.13

 

 

$

0.47

 

 

 

 

 

 

 

Diluted net income per common share

 

$

0.12

 

 

$

0.46

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

35,265,449

 

 

 

35,121,473

 

Weighted average shares outstanding - diluted

 

 

36,060,640

 

 

 

35,748,021

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

 

2


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the three months ended March 31, 2024 and 2023

(Unaudited)

(In millions)

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Net income

 

$

4.5

 

 

$

16.5

 

Other comprehensive income (loss), net of income tax:

 

 

 

 

 

 

Unrealized losses on derivatives, net of income tax
   provision of $
0.0 and $0.0, respectively

 

 

(1.6

)

 

 

(3.3

)

Employee pension and postretirement benefit income (expense), net of
   income tax provision of $
0.0 and $0.0, respectively

 

 

0.1

 

 

 

(1.0

)

Foreign currency translation adjustments, net of income tax benefit
   of $
0.6 and $0.2, respectively

 

 

(11.0

)

 

 

4.2

 

Total other comprehensive loss, net of income tax

 

 

(12.5

)

 

 

(0.1

)

Comprehensive income (loss)

 

$

(8.0

)

 

$

16.4

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

3


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

(Unaudited)

(In millions, except par value and share amounts)

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

31.5

 

 

$

34.4

 

Accounts receivable, less allowances of $5.9 and $6.1, respectively

 

 

290.3

 

 

 

278.8

 

Inventories - net

 

 

748.0

 

 

 

666.5

 

Notes receivable - net

 

 

5.7

 

 

 

6.7

 

Other current assets

 

 

43.9

 

 

 

46.6

 

Total current assets

 

 

1,119.4

 

 

 

1,033.0

 

Property, plant, and equipment - net

 

 

357.5

 

 

 

366.1

 

Operating lease right-of-use assets

 

 

58.8

 

 

 

59.7

 

Goodwill

 

 

78.7

 

 

 

79.6

 

Intangible assets - net

 

 

123.3

 

 

 

125.6

 

Other non-current assets

 

 

42.9

 

 

 

42.7

 

Total assets

 

$

1,780.6

 

 

$

1,706.7

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

509.4

 

 

$

457.4

 

Customer advances

 

 

20.3

 

 

 

19.2

 

Short-term borrowings and current portion of long-term debt

 

 

42.5

 

 

 

13.4

 

Product warranties

 

 

41.3

 

 

 

47.1

 

Other liabilities

 

 

18.7

 

 

 

26.2

 

Total current liabilities

 

 

632.2

 

 

 

563.3

 

Non-Current Liabilities:

 

 

 

 

 

 

Long-term debt

 

 

372.7

 

 

 

358.7

 

Operating lease liabilities

 

 

46.6

 

 

 

47.2

 

Deferred income taxes

 

 

7.4

 

 

 

7.5

 

Pension obligations

 

 

54.9

 

 

 

55.8

 

Postretirement health and other benefit obligations

 

 

5.4

 

 

 

5.6

 

Long-term deferred revenue

 

 

21.1

 

 

 

24.1

 

Other non-current liabilities

 

 

44.3

 

 

 

41.2

 

Total non-current liabilities

 

 

552.4

 

 

 

540.1

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock (3,500,000 shares authorized of $.01 par value;
   
none outstanding)

 

 

 

 

 

 

Common stock (75,000,000 shares authorized, 40,793,983 shares issued,
   
35,540,950 and 35,094,993 shares outstanding, respectively)

 

 

0.4

 

 

 

0.4

 

Additional paid-in capital

 

 

608.5

 

 

 

613.1

 

Accumulated other comprehensive loss

 

 

(98.9

)

 

 

(86.4

)

Retained earnings

 

 

148.0

 

 

 

143.5

 

Treasury stock, at cost (5,253,033 and 5,698,990 shares, respectively)

 

 

(62.0

)

 

 

(67.3

)

Total stockholders' equity

 

 

596.0

 

 

 

603.3

 

Total liabilities and stockholders' equity

 

$

1,780.6

 

 

$

1,706.7

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

4


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2024 and 2023

(Unaudited)

(In millions)

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income

 

$

4.5

 

 

$

16.5

 

Adjustments to reconcile net income to cash provided by (used for) operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

14.7

 

 

 

13.9

 

Amortization of intangible assets

 

 

0.7

 

 

 

1.0

 

Stock-based compensation expense

 

 

3.7

 

 

 

3.1

 

Amortization of deferred financing fees

 

 

0.3

 

 

 

0.3

 

Loss on sale of property, plant, and equipment

 

 

0.2

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(15.3

)

 

 

17.1

 

Inventories

 

 

(89.1

)

 

 

(100.6

)

Notes receivable

 

 

1.5

 

 

 

1.7

 

Other assets

 

 

1.1

 

 

 

1.6

 

Accounts payable

 

 

56.6

 

 

 

56.2

 

Accrued expenses and other liabilities

 

 

(9.5

)

 

 

4.6

 

Net cash provided by (used for) operating activities

 

 

(30.6

)

 

 

15.4

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Capital expenditures

 

 

(12.2

)

 

 

(10.6

)

Proceeds from sale of fixed assets

 

 

0.2

 

 

 

2.0

 

Net cash used for investing activities

 

 

(12.0

)

 

 

(8.6

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

Proceeds from (payments on) revolving credit facility - net

 

 

14.0

 

 

 

(10.0

)

Proceeds from (payments on) other debt - net

 

 

29.1

 

 

 

(1.9

)

Exercises of stock options

 

 

 

 

 

0.3

 

Common stock repurchases

 

 

 

 

 

(3.5

)

Other financing activities

 

 

(2.9

)

 

 

 

Net cash provided by (used for) financing activities

 

 

40.2

 

 

 

(15.1

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(0.5

)

 

 

0.4

 

Net decrease in cash and cash equivalents

 

 

(2.9

)

 

 

(7.9

)

Cash and cash equivalents at beginning of period

 

 

34.4

 

 

 

64.4

 

Cash and cash equivalents at end of period

 

$

31.5

 

 

$

56.5

 

Supplemental Cash Flow Information

 

 

 

 

 

 

Interest paid

 

$

2.1

 

 

$

1.3

 

Income taxes paid

 

 

1.8

 

 

 

1.7

 

 

The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

5


 

THE MANITOWOC COMPANY, INC.

Condensed Consolidated Statements of Equity

For the three months ended March 31, 2024 and 2023

(Unaudited)

(In millions)

 

 

 

March 31,
2024

 

 

March 31,
2023

 

Common Stock - Par Value

 

 

 

 

 

 

Balance at beginning of period

 

$

0.4

 

 

$

0.4

 

Balance at end of period

 

$

0.4

 

 

$

0.4

 

Additional Paid-in Capital

 

 

 

 

 

 

Balance at beginning of period

 

$

613.1

 

 

$

606.7

 

Stock compensation plans

 

 

(8.3

)

 

 

(4.0

)

Stock-based compensation expense

 

 

3.7

 

 

 

3.1

 

Balance at end of period

 

$

608.5

 

 

$

605.8

 

Accumulated Other Comprehensive Loss

 

 

 

 

 

 

Balance at beginning of period

 

$

(86.4

)

 

$

(107.9

)

Other comprehensive loss

 

 

(12.5

)

 

 

(0.1

)

Balance at end of period

 

$

(98.9

)

 

$

(108.0

)

Retained Earnings

 

 

 

 

 

 

Balance at beginning of period

 

$

143.5

 

 

$

104.3

 

Net income

 

 

4.5

 

 

 

16.5

 

Balance at end of period

 

$

148.0

 

 

$

120.8

 

Treasury Stock

 

 

 

 

 

 

Balance at beginning of period

 

$

(67.3

)

 

$

(65.7

)

Stock compensation plans

 

 

5.3

 

 

 

3.0

 

Common stock repurchases

 

 

 

 

 

(3.5

)

Balance at end of period

 

$

(62.0

)

 

$

(66.2

)

Total stockholders' equity

 

$

596.0

 

 

$

552.8

 

 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

 

 

6


 

THE MANITOWOC COMPANY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

1. Company and Basis of Presentation

The Manitowoc Company, Inc. (“Manitowoc” or the “Company”) was founded in 1902 and has over a 120-year tradition of providing high-quality, customer-focused products and support services to its markets. Headquartered in Milwaukee, Wisconsin, United States, Manitowoc is one of the world's leading providers of engineered lifting solutions. Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, distributes, and supports comprehensive product lines of mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes under the Aspen Equipment, Grove, Manitowoc, MGX Equipment Services, National Crane, Potain, and Shuttlelift brand names. The Company serves a wide variety of customers, including dealers, rental companies, contractors, and government entities, across the petrochemical, industrial, commercial construction, power and utilities, infrastructure and residential construction end markets. Due to the ongoing and predictable maintenance needed by cranes, as well as the high cost of crane downtime, Manitowoc’s aftermarket support operations provide the Company with a consistent stream of recurring revenue.

The Company has three reportable segments, the Americas segment, the Europe and Africa ("EURAF") segment and Middle East and Asia Pacific (“MEAP”) segment. The Americas segment includes the North America and South America continents. The EURAF reporting segment includes the Europe and Africa continents, excluding the Middle East region. The MEAP reporting segment includes the Asia and Australia continents and the Middle East region. The segments were identified using the “management approach,” which designates the internal organization that is used by management for making operating decisions and assessing performance. Refer to Note 16, “Segments,” for additional information.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2024 and 2023, the cash flows for the same three-month periods, and the financial position as of March 31, 2024 and December 31, 2023, and except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. The audited balance sheet as of December 31, 2023, was derived from the audited annual financial statements. The interim results are not necessarily indicative of results for a full year and do not contain information included in the Company’s annual consolidated financial statements and notes for the year ended December 31, 2023. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K.

All amounts, except per share data and share amounts, are in millions throughout the tables in these notes unless otherwise indicated.

2. Recent Accounting Changes and Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting - Improvements to Reportable Segments Disclosures.” The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced footnote disclosures about significant segment expenses. The standard is effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The amendments in this ASU enhance the transparency and decision usefulness of income tax disclosures. The standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.

7


 

3. Net Sales

The Company defers revenue when cash payments are received in advance of satisfying the related performance obligation. These amounts are recorded as customer advances in the Condensed Consolidated Balance Sheets. The table below shows the change in the customer advances balance for the three months ended March 31, 2024 and 2023.

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Balance at beginning of period

 

$

19.2

 

 

$

21.9

 

Cash received in advance of satisfying
   performance obligations

 

 

39.1

 

 

 

34.4

 

Revenue recognized

 

 

(37.7

)

 

 

(32.4

)

Currency translation

 

 

(0.3

)

 

 

0.1

 

Balance at end of period

 

$

20.3

 

 

$

24.0

 

Disaggregation of the Company’s revenue sources are disclosed in Note 16, “Segments.”

4. Fair Value of Financial Instruments

The following table sets forth the Company’s financial assets and liabilities related to foreign currency exchange contracts ("FX Forward Contracts") and The Manitowoc Company, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan") that were accounted for at fair value as of March 31, 2024 and December 31, 2023.

 

 

Fair Value as of March 31, 2024

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Recognized Location

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

0.3

 

 

$

 

 

$

0.3

 

 

 Other current assets

Deferred Compensation Plan - Program B

 

 

8.9

 

 

 

 

 

 

 

 

 

8.9

 

 

 Other non-current assets

Total current assets at fair value

 

$

8.9

 

 

$

0.3

 

 

$

 

 

$

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

1.1

 

 

$

 

 

$

1.1

 

 

 Accounts payable and
   accrued expenses

 

 

 

Fair Value as of December 31, 2023

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Recognized Location

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

1.6

 

 

$

 

 

$

1.6

 

 

 Other current assets

Deferred Compensation Plan - Program B

 

 

8.1

 

 

 

 

 

 

 

 

 

8.1

 

 

 Other non-current assets

Total current assets at fair value

 

$

8.1

 

 

$

1.6

 

 

$

 

 

$

9.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FX Forward Contracts

 

$

 

 

$

0.6

 

 

$

 

 

$

0.6

 

 

 Accounts payable and
   accrued expenses

The fair value of the $300.0 million senior secured second lien notes due on April 1, 2026, with an annual coupon rate of 9.000% (the “2026 Notes”), was approximately $300.2 million as of March 31, 2024 and $302.7 million as of December 31, 2023. Refer to Note 10, “Debt,” for a description of the 2026 Notes and the related carrying value.

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company estimates the fair value of its 2026 Notes based on quoted market prices of the instruments; because these markets are typically actively traded, the liabilities are classified as Level 1 within the valuation hierarchy. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term variable debt, including any amounts outstanding under the

8


 

Company’s revolving credit facility, approximate fair value, without being discounted as of March 31, 2024, due to the short-term nature of these instruments.

FX Forward Contracts are valued through an independent valuation source which uses an industry standard data provider, with resulting valuations periodically validated through third-party or counterparty quotes. As such, these derivative instruments are classified within Level 2. Refer to Note 5, “Derivative Financial Instruments,” for additional information.

The Deferred Compensation Plan utilizes a rabbi trust to hold assets intended to satisfy the Company’s corresponding future benefit obligations. The plan assets and corresponding obligations for Program B under the Deferred Compensation Plan are classified within Level 1.

5. Derivative Financial Instruments

The Company’s risk management objective is to ensure that business exposures to risks are minimized using the most effective and efficient methods to eliminate, reduce, or transfer such exposures. Operating decisions consider these associated risks and, whenever possible, transactions are structured to avoid or mitigate these risks.

From time to time, the Company enters into FX Forward Contracts to manage the exposure on forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities in currencies other than the functional currency of certain subsidiaries. Certain of these FX Forward Contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income (loss) ("AOCI"). These changes in fair value are reclassified into earnings as a component of cost of sales, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded as a component of other income (expense) – net in the period in which the transaction is no longer considered probable of occurring. No amounts were recorded related to forecasted transactions no longer being probable during the three months ended March 31, 2024 and 2023.

The Company had FX Forward Contracts with aggregate notional amounts of $124.8 million and $140.1 million in U.S. dollar equivalent as of March 31, 2024 and December 31, 2023, respectively. The aggregate notional amount outstanding as of March 31, 2024, is scheduled to mature within one year. The FX Forward Contracts purchased are denominated in various foreign currencies. Net unrealized gains (losses), net of income tax, recorded in AOCI were $(0.3) million and $1.3 million as of March 31, 2024 and December 31, 2023, respectively.

The net gains (losses) recorded in the Condensed Consolidated Statements of Operations for FX Forward Contracts for the three months ended March 31, 2024 and 2023 are summarized as follows:

 

 

 

 

Three Months Ended
March 31,

 

 

 

Recognized Location

 

2024

 

 

2023

 

Designated

 

Cost of sales

 

$

(0.9

)

 

$

3.4

 

Non-Designated

 

Other income (expense) - net

 

$

1.4

 

 

$

(2.3

)

 

6. Inventories

The components of inventories as of March 31, 2024 and December 31, 2023 are summarized as follows:

 

 

March 31,
2024

 

 

December 31,
2023

 

Raw materials

 

$

203.4

 

 

$

164.7

 

Work-in-process

 

 

154.0

 

 

 

111.3

 

Finished goods

 

 

390.6

 

 

 

390.5

 

Total Inventories

 

$

748.0

 

 

$

666.5

 

 

9


 

 

7. Property, Plant, and Equipment

The components of property, plant, and equipment as of March 31, 2024 and December 31, 2023 are summarized as follows:

 

 

March 31,
2024

 

 

December 31,
2023

 

Land

 

$

14.7

 

 

$

14.9

 

Building and improvements

 

 

199.6

 

 

 

201.5

 

Machinery, equipment, and tooling

 

 

320.7

 

 

 

318.4

 

Furniture and fixtures

 

 

13.3

 

 

 

13.8

 

Computer hardware and software

 

 

134.8

 

 

 

135.8

 

Rental cranes

 

 

199.3

 

 

 

201.9

 

Construction in progress

 

 

6.7

 

 

 

7.2

 

Total cost

 

 

889.1

 

 

 

893.5

 

Less: accumulated depreciation

 

 

(531.6

)

 

 

(527.4

)

Property, plant, and equipment - net

 

$

357.5

 

 

$

366.1

 

Property, plant, and equipment is depreciated over the estimated useful life of the asset using the straight-line depreciation method for financial reporting and accelerated methods for income tax purposes.

Additions to property, plant, and equipment included in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 were $5.8 million and $7.0 million, respectively.

Assets Held for Sale

As of March 31, 2024 and December 31, 2023, the Company had $3.5 million and $3.0 million, respectively, of property, plant, and equipment classified as assets held for sale in other current assets in the Condensed Consolidated Balance Sheets. This amount relates to a manufacturing building and land in Fanzeres, Portugal.

8. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 is summarized as follows:

 

 

Americas

 

 

MEAP

 

 

Consolidated

 

Balance as of December 31, 2023

 

$

14.4

 

 

$

65.2

 

 

$

79.6

 

Foreign currency impact

 

 

 

 

 

(0.9

)

 

 

(0.9

)

Balance as of March 31, 2024

 

$

14.4

 

 

$

64.3

 

 

$

78.7

 

The gross carrying amount, accumulated impairment and net book value of the Company's goodwill balances by reportable segment as of March 31, 2024 and December 31, 2023, are summarized as follows:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

Accumulated Impairment Amount

 

 

Net Book Value

 

 

Gross Carrying Amount

 

 

Accumulated Impairment Amount

 

Net Book Value

 

Americas

 

$

180.9

 

 

$

(166.5

)

 

$

14.4

 

 

$

180.9

 

 

$

(166.5

)

$

14.4

 

EURAF

 

 

82.2

 

 

 

(82.2

)

 

 

 

 

 

82.2

 

 

 

(82.2

)

 

 

MEAP

 

 

64.3

 

 

 

 

 

 

64.3

 

 

 

65.2

 

 

 

 

 

65.2

 

Total

 

$

327.4

 

 

$

(248.7

)

 

$

78.7

 

 

$

328.3

 

 

$

(248.7

)

$

79.6

 

The Company performs its annual goodwill impairment test during the fourth quarter, or more frequently if events or changes in circumstances indicate that there might be an impairment of the asset. The Company will continue to monitor changes in circumstances and test more frequently if those changes indicate that assets might be impaired. The Company determined there was no triggering event for the three months ended March 31, 2024.

10


 

The gross carrying amount, accumulated amortization, and net book value of the Company’s intangible assets other than goodwill as of March 31, 2024 and December 31, 2023, are summarized as follows:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization
Amount

 

 

Net
Book
Value

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization
Amount

 

 

Net
Book
Value

 

Definite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

26.4

 

 

$

(12.0

)

 

$

14.4

 

 

$

26.5

 

 

$

(11.6

)

 

$

14.9

 

Patents

 

 

28.8

 

 

 

(28.4

)

 

 

0.4

 

 

 

29.2

 

 

 

(28.8

)

 

 

0.4

 

Noncompetition agreements

 

 

4.2

 

 

 

(2.2

)

 

 

2.0

 

 

 

4.2

 

 

 

(2.0

)

 

 

2.2

 

Trademarks and tradenames

 

 

2.2

 

 

 

(1.1

)

 

 

1.1

 

 

 

2.2

 

 

 

(1.0

)

 

 

1.2

 

Other intangibles

 

 

0.6

 

 

 

(0.6

)

 

 

 

 

 

0.7

 

 

 

(0.7

)

 

 

 

Total

 

$

62.2

 

 

$

(44.3

)

 

$

17.9

 

 

$

62.8

 

 

$

(44.1

)

 

$

18.7

 

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and tradenames

 

$

91.3

 

 

$

 

 

$

91.3

 

 

$

92.6

 

 

$

 

 

$

92.6

 

Distribution network

 

 

14.1

 

 

 

 

 

 

14.1

 

 

 

14.3

 

 

 

 

 

 

14.3

 

Total

 

 

105.4

 

 

 

 

 

 

105.4

 

 

 

106.9

 

 

 

 

 

 

106.9

 

Total intangible assets

 

$

167.6

 

 

$

(44.3

)

 

$

123.3

 

 

$

169.7

 

 

$

(44.1

)

 

$

125.6

 

The Company performs its annual indefinite-lived intangible assets impairment testing during the fourth quarter, or more frequently if events or changes in circumstances indicate that there might be an impairment of the asset. The Company will continue to monitor changes in circumstances and test more frequently if those changes indicate that assets might be impaired. The Company determined there was no triggering event for the three months ended March 31, 2024.

Definite lived intangible assets and long-lived assets are subject to impairment testing whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. The Company determined there was no triggering event for the three months ended March 31, 2024.

Other intangible assets with definite lives are amortized over their estimated useful lives. Amortization expense for the three months ended March 31, 2024 and 2023 was $0.7 million and $1.0 million, respectively.

9. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of March 31, 2024 and December 31, 2023 are summarized as follows:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Trade accounts payable

 

$

306.9

 

 

$

254.7

 

Employee-related expenses

 

 

47.0

 

 

 

57.9

 

Accrued vacation

 

 

24.7

 

 

 

23.7

 

Miscellaneous accrued expenses

 

 

130.8

 

 

 

121.1

 

Total accounts payable and accrued expenses

 

$

509.4

 

 

$

457.4

 

 

10. Debt

Outstanding debt as of March 31, 2024 and December 31, 2023 is summarized as follows:

 

 

March 31, 2024

 

 

December 31, 2023

 

Borrowings under senior secured asset-based
   revolving credit facility

 

$

74.0

 

 

$

60.0

 

Senior secured second lien notes due 2026

 

 

300.0

 

 

 

300.0

 

Other debt

 

 

42.7

 

 

 

13.7

 

Deferred financing costs

 

 

(1.5

)

 

 

(1.6

)

Total debt

 

 

415.2

 

 

 

372.1

 

Short-term borrowings and current portion of long-term
   debt

 

 

(42.5

)

 

 

(13.4

)

Long-term debt

 

$

372.7

 

 

$

358.7

 

 

11


 

On March 25, 2019, the Company and certain subsidiaries of the Company (the “Loan Parties”) entered into a credit agreement (the “ABL Credit Agreement”) with JP Morgan Chase Bank, N.A. as administrative and collateral agent, and certain financial institutions party thereto as lenders, providing for a senior secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”) of up to $275.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and certain fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2026 Notes and the related guarantees. The ABL Revolving Credit Facility includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility.

On June 17, 2021, the Company amended the ABL Credit Agreement to adjust certain negative covenants which reduced restrictions on the Company’s ability to expand its rental business. On May 19, 2022, the Company further amended the ABL Credit Agreement to (i) extend the maturity date to May 19, 2027 (subject to a springing maturity date of December 30, 2025 if the 2026 Notes have not been repaid in full or refinanced prior to December 30, 2025), (ii) permit the inclusion, subject to certain limitations, of the crane rental assets of certain subsidiaries in the borrowing base used to calculate availability under the ABL Credit Agreement, (iii) permit separate financing of crane rental assets not included in the borrowing base and (iv) replace U.S. dollar London Inter-bank Offered Rate with interest rates based on the secured overnight financing rate plus a credit spread adjustment (“SOFR”).

Borrowings under the ABL Revolving Credit Facility bear interest at a variable rate using either the Alternative Base Rate or SOFR plus the spread set forth below. The variable interest rate is based upon the average availability as of the most recent determination date as follows:

Average quarterly availability

Alternative base rate spread

SOFR spread

≥ 50% of Aggregate Commitment

0.25%

1.25%

< 50% of Aggregate Commitment

0.50%

1.50%

As of March 31, 2024 and December 31, 2023, the Company had borrowings on the ABL Revolving Credit Facility of $74.0 million and $60.0 million, respectively. As of March 31, 2024, the spreads for SOFR and Eurodollar, and Alternative Base Rate borrowings were 1.25% and 0.25%, respectively, with excess availability of approximately $197.6 million, which represents revolver borrowing capacity of $275.0 million less $74.0 million of borrowings outstanding and $3.4 million of U.S. letters of credit outstanding.

As of March 31, 2024, the Company had $42.7 million of other indebtedness outstanding that has a weighted-average interest rate of approximately 5.4%. This debt includes balances on local credit lines, overdraft facilities, and other financing arrangements.

On March 25, 2019, the Company and certain of its subsidiaries entered into an indenture with U.S. Bank National Association as trustee and notes collateral agent, pursuant to which the Company issued $300.0 million aggregate principal amount of the 2026 Notes with an annual coupon rate of 9.000%. Interest on the 2026 Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year. The 2026 Notes are fully and unconditionally guaranteed on a senior secured second lien basis, jointly and severally, by each of the Company’s existing and future domestic subsidiaries that is either a guarantor or a borrower under the ABL Revolving Credit Facility or that guarantees certain other debt of the Company or a guarantor. The 2026 Notes and the related guarantees are secured on a second-priority basis, subject to certain exceptions and permitted liens, by pledges of capital stock and other equity interests and other security interests in substantially all of the personal property and fee-owned real property of the Company and of the guarantors that secure obligations under the ABL Revolving Credit Facility.

Both the ABL Revolving Credit Facility and the 2026 Notes include customary covenants which include, without limitation, restrictions on, the Company’s ability and the ability of the Company’s restricted subsidiaries to incur, assume or guarantee additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of the Company’s capital stock or make other restricted payments, make certain investments, sell or transfer certain assets, create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates and designate the Company’s subsidiaries as unrestricted. Both the ABL Revolving Credit Facility and the 2026 Notes also include customary events of default. The ABL Revolving Credit Facility has customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and

12


 

correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in the Company’s business or financial condition since December 31, 2018.

Additionally, the ABL Revolving Credit Facility contains a covenant requiring the Company to maintain a minimum fixed charge coverage ratio under certain circumstances set forth in the ABL Credit Agreement.

As of March 31, 2024, the Company was in compliance with all affirmative and negative covenants in its debt instruments, inclusive of the financial covenants pertaining to the ABL Revolving Credit Facility and 2026 Notes. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

11. Accounts Receivable Factoring

The Company has two non-U.S. accounts receivable financing programs with no maximum availability. Transactions under the non-U.S. programs were accounted for as sales in accordance with Accounting Standards Codification (“ASC”) Topic 860, “Transfers and Servicing.” Under these financing programs, the Company has the ability to sell eligible receivables up to the maximum limit.

For the three months ended March 31, 2024 and 2023, cash proceeds from the factoring of accounts receivable qualifying as sales were $36.0 million.

Financing charges incurred from the factoring of accounts receivable qualifying as sales for the three months ended March 31, 2024 and 2023 were immaterial.

12. Income Taxes

 

The Company’s income before income taxes include income from both U.S. and foreign jurisdictions. The annual effective tax rate varies from the U.S. federal statutory rate of 21% due to results of foreign operations that are subject to income taxes at different statutory rates. In addition, tax expense is impacted by losses in jurisdictions where no tax benefit can be realized.

For the three months ended March 31, 2024 and 2023, the Company recorded a provision for income taxes of $1.9 million and $4.2 million, respectively.

As of March 31, 2024 and December 31, 2023, the Company’s unrecognized tax benefits, excluding interest and penalties, were $9.2 million and $9.1 million, respectively.

13. Net Income Per Common Share

The following is a reconciliation of the weighted average shares outstanding used to compute basic and diluted net income per common share:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Basic weighted average common shares outstanding

 

 

35,265,449

 

 

 

35,121,473

 

Effect of dilutive securities - equity
   compensation awards

 

 

795,191

 

 

 

626,548

 

Diluted weighted average common shares outstanding

 

 

36,060,640

 

 

 

35,748,021

 

Equity compensation awards for which total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on earnings per share during periods with net income, and accordingly, are excluded from diluted weighted average common shares outstanding. Anti-dilutive equity instruments of 497,801 and 682,930 common shares were excluded from the computation of diluted net earnings per share for the three months ended March 31, 2024 and 2023, respectively.

No cash dividends were declared or paid during the three months ended March 31, 2024 and 2023.

13


 

14. Equity

Authorized capital consists of 75.0 million shares of $0.01 par value common stock and 3.5 million shares of $0.01 par value preferred stock. None of the preferred shares have been issued.

As of March 31, 2024, the Company has $35.0 million remaining under an authorization from the Board of Directors to purchase up to $35.0 million of the Company’s common stock at management’s discretion. The Company’s share repurchase program purchases shares in the open market to offset stock-based awards issued in conjunction with the Company’s 2013 Omnibus Incentive Plan.

A reconciliation of the changes in accumulated other comprehensive income (loss), net of income tax, by component for the three months ended March 31, 2024 and 2023 are summarized as follows: