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Manitowoc investor presentation rbc sep 7 2016_vf_final
- 1. The Manitowoc Company, Inc. RBC CAPITAL MARKETS’ GLOBAL INDUSTRIALS CONFERENCE – LAS VEGAS, NV SEPTEMBER 7, 2016
- 2. 2 Safe Harbor Statement Any statements contained in this presentation that are not historical facts are “forward- looking statements.” These statements are based on the current expectations of the management of the company, only speak as of the date on which they are made, and are subject to uncertainty and changes in circumstances. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements include, without limitation, statements typically containing words such as “intends,” “expects,” “anticipates,” “targets,” “estimates,” and words of similar import. By their nature, forward- looking statements are not guarantees of future performance or results and involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, those relating to revenue growth of the company, future market strength of the company’s business segments and products, market acceptance of existing products and new product introductions and technology, economic conditions, successful acquisitions, manufacturing and facility utilization efficiencies, risks relating to actions of activist shareholders, and other factors listed in the company’s preliminary offering circular with respect to the notes, dated May 5, 2016. Any “forward- looking statements” in this presentation are intended to qualify for the safe harbor from liability under the Private Securities Litigation Reform Act of 1995.
- 5. 5 Investment Highlights Leading Global Crane Manufacturer with Well-Known Brands Broad Product / Services Portfolio With Innovative New Products Diversified Geographic, End Market, and End Customer Exposure Unique After Market Support Drives Recurring Revenue Focus on Operational Strategies & Cost Saving Initiatives New, Operationally-Focused Team Driving Results Early stages of transformation to a high quality, higher margin crane company compared to peers
- 6. 6 Manitowoc: Leading Global Crane Company High-Capacity Lattice Boom Crawlers Top-Slewing / Self-Erecting Tower Cranes Rough-Terrain Cranes Boom Trucks All-Terrain Cranes Strong Market Positions with Leading Brands in each Major Crane Segment
- 8. 8 Transformation: The Conditions are Right Stand-alone Crane Company • Foodservice spin-off complete • Right-sizing for new company structure Re-Capitalized Balance Sheet • Sufficient liquidity • Working capital focus New Management Team • Demonstrated record of turnarounds • Lean acceleration to drive margin improvement Cyclical Down-Turn • Increasing manufacturing flexibility to manage through the cycle
- 9. 9 Boom Trucks/Industrials/Rough-Terrains All-Terrain and Truck-Mounted Towers Crawlers 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 ~ 8-9 year cycle (1) BRIM units sales includes Boom Trucks, Rough-Terrain Cranes, Industrial Cranes and military applications. Rough-Terrain and Industrial Cranes are included in the Mobile Telescopic Cranes Product category. (2) AT/TM unit sales includes All-Terrain and Truck-Mounted Cranes, which fall under the Mobile Telescopic Cranes product category. (3) Crawlers unit sales include Lattice Boom Cranes. 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Transformation: The Time is Right
- 10. 10 Transformation: Vision for New Manitowoc Customers Shareholders Employees Velocity Innovation 1. Margin Expansion 2. Growth 3. Innovation 4. Velocity
- 11. 11 Transformation: Strategic Initiatives • Renew Focus on Quality & Reliability • Strengthen Channel Management • Increase Market Share • Optimize Global Capacity • Increase Manufacturing Agility • Improve Productivity • Reduce Material Cost • Accelerate New Product Development • Focus on ROIC for Our Customers • Leverage Advanced Manufacturing Technologies Margin Expansion Growth Innovation Velocity • Implement The Manitowoc Way • Re-invigorate the Company Culture • Strengthen Balance Sheet by Better Working Capital Mgmt.
- 13. 13 Execution: Margin Improvement • Headcount reductions • Plant rationalizations • Increase manufacturing flexibility • Material cost reduction • Productivity Right-sizing the business to match new company structure, current market environment, and future expectations
- 14. 14 Crawler Crane Production Relocation • Intent to relocate from Manitowoc, WI to Shady Grove, PA • Transition began Q3 2016 • Cross-functional task force in place to implement plan Actions • Annualized pre-tax cost savings: $25-30M • Cash outflows: $35-50M • Non-cash charges: Approx. $105-120M
- 15. 15 Execution: Growth • Improved quality & reliability • Strengthen dealer engagement • Sales excellence & training Improving competitive position to gain market share
- 16. 16 Execution: Innovation • Implement product development process • Leverage advanced design techniques • Invest in World-Class manufacturing disciplines • Standardization of components Enhancing user productivity to generate greater ROI for customers
- 17. 17 Execution: Velocity • Build a continuous improvement-based culture • Invest in productivity • Reduce Working Capital • Optimize back-office Better serving all of our stakeholders
- 18. 18 Strategy Summary • Actions to improve margins • Global footprint rationalization • Reduce cost structure • Innovate to increase market share • Deploy Lean – The Manitowoc Way 10 X 20 Early stages of transformation to a high quality, higher margin crane company compared to peers
- 20. 20 Future Growth Opportunities • Customer Engagement • Innovation • External Growth • Manufacturing Technology • People Development • Utilize Balance Sheet Increasing ROIC for All Stakeholders
- 21. 21 Conclusion Leading Global Crane Manufacturer with Well-Known Brands Broad Product / Services Portfolio With Innovative New Products Diversified Geographic, End Market, and End Customer Exposure Unique After Market Support Drives Recurring Revenue Focus on Operational Strategies & Cost Saving Initiatives New, Operationally-Focused Team Driving Results Early stages of transformation to a high quality, higher margin crane company compared to peers
- 22. Appendix: Additional Materials and Financials
- 23. 23 Manitowoc: Large Installed Base ~55,000 7-9 years ~50,0003 Self-Erecting: 6-8 years Top-Slewing: 10-12 years ~9,000 9-12 years ~27,000 7-9 years Mobile Telescopic Cranes Tower Cranes Lattice-Boom Cranes Boom Trucks Leading Brands Active Installed Base1Category Extensive installed base across diverse geographies provides recurring service and replacement parts revenue opportunities 1 Reflects management approximation of the active installed base based on internally available data. 2 Reflects management approximation of the average fleet replacement based on available data and feedback from the customers. 3 Includes top-slewing and self-erecting tower cranes. Average Fleet Replacement2 Total: ~140,000
- 24. 24 Diversified by Region, End Market and Product Key Brands 2015 Geographic Exposure 2015 End Market Exposure1 2016 YTD Revenue by Product3 Americas 52% APAC 12% EMEA 36% 1 Includes new equipment sales only. 2 Represents 2015 gross sales. Includes new equipment sales only. Government sales do not reflect our recent $192 million contract with the U.S. Army which will impact revenue over the next several years. 3 Crane Products includes new equipment sales only. Balanced Sales Footprint and Customer Segments We Serve 2015 Overall Customer Mix2 Industrial / Petrochemical 35% Power / Utilities 18% Commercial 25% Residential 5% Infrastructure 17% Contractor 13% Dealer 66% Gov't 0.2% Other 4% Rental 17% Crane Care 17% Crane Products 83%
- 25. 25 Q2 2016 Financial & Other Key Metrics 1 Excludes amortization and restructuring expense. Q2 2016 Q2 2015 YoY ∆ Q1 2016 QoQ ∆ Net Sales 457.7$ 477.7$ (4.2)% 427.4$ 7.1 % Orders 348.9$ 438.3$ (20.4)% 417.1$ (16.4)% Adjusted Operating Income 1 14.8$ 15.4$ (3.9)% 9.5$ 55.8 % GAAP Net Income / (Loss) (4.9)$ 23.3$ (121.0)% (207.5)$ 97.6 % Non- GAAP Adjusted Net Income / (Loss) 5.0$ (5.9)$ 184.7 % (5.3)$ 194.3 % Non- GAAP Adjusted DEPS 0.04$ (0.04)$ 200.0 % (0.04)$ 200.0 % Cash Flow from Operations (16.4)$ 55.5$ (129.5)% (210.1)$ 92.2 % Capital Expenditures 13.8$ 14.0$ (1.4)% 10.9$ 26.6 % Backlog 393.5$ 731.0$ (46.2)% 502.3$ (21.6)%
- 26. 26 2016 Outlook - Updated 1 Excludes amortization and restructuring expense. 2016 Full Year Guidance Net Sales Down approximately 10% to 12% Adj. Operating Margins1 Approximately 1% to 2% Depreciation $45 to $50 million Amortization $3 to $4 million Capital Expenditures $45 to $50 million Highlights • Separation from Foodservice completed March 2016 • Energy headwinds offset by modest recovery in residential/commercial • Restructuring actions to position for 2017 • Lean principles being institutionalized
- 27. 27 June 30, 2016 Trailing Twelve Month Adjusted EBITDA Reconciliation (US$ in millions) Net loss (163.8)$ Income from discontinued operations (86.7) Depreciation and amortization 62.5 Interest expense and amortization of deferred financing fees 71.3 Costs due to early extinguishment of debt 76.5 Restructuring expense 22.4 Income taxes 90.5 Pension and post-retirement 13.7 Stock-based compensation 7.9 Asset impairment 15.3 Other 2.2 Adjusted EBITDA 111.8$
- 28. 28 Historical Revenue and EBITDA (US$ in millions) Revenue EBITDA & Margin Cranes generates significant revenue and EBITDA during cyclical upturns During industry downturns, predictable replacement demand and differentiated product offerings support demand Restructuring initiatives in progress $1,708 $2,135 $2,427 $2,506 $2,305 $1,862 2010 2011 2012 2013 2014 2015 Revenue $149 $172 $214 $266 $210 $110 8.7% 8.1% 8.8% 10.6% 9.1% 5.9% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% $- $50 $100 $150 $200 $250 $300 2010 2011 2012 2013 2014 2015 EBITDA % Margin Note: Revenue and EBITDA from 2010 – 2015 represent historical Cranes segment results. EBITDA is calculated as Operating Earnings from Continuing Operations plus Depreciation and excludes corporate allocations.
- 29. 29 Historical Capital Needs & Cash Flow (US$ in millions) Capex & % of Sales Note: Capex and Unlevered Free Cash Flow represent historical Cranes segment results. EBITDA calculated as Operating Earnings from Continuing Operations plus Depreciation and excludes corporate allocations. 1 Free Cash Flow defined as EBITDA less Capex. Free Cash Flow1 & % Conversion Moderate capital intensity and working capital requirements allow earnings to largely flow to cash flow Working capital needs decrease when revenue declines, providing a strong cash flow offset during industry downturns Free cash flow¹ generation through the cycle $21 $52 $53 $69 $57 $52 1.2% 2.4% 2.2% 2.8% 2.5% 2.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% $- $20 $40 $60 $80 $100 $120 $140 2010 2011 2012 2013 2014 2015 Capex % of Sales $129 $120 $161 $196 $152 $5886.2% 69.7% 75.4% 73.9% 72.7% 52.9% 0.0% 50.0% 100.0 150.0 200.0 250.0 300.0 0 50 100 150 200 250 300 350 400 450 500 2010 2011 2012 2013 2014 2015 FCF % Conversion
- 30. 30 EBITDA and Free Cash Flow Reconciliation (US$ in millions) 2010 2011 2012 2013 2014 2015 Earnings (Loss) from Operations1 94$ 119$ 171$ 219$ 164$ 64$ Depreciation 55 53 44 47 46 47 EBITDA 149$ 172$ 214$ 266$ 210$ 110$ Capital Expenditures (21) (52) (53) (69) (57) (52) Free Cash Flow 129$ 120$ 161$ 196$ 152$ 58$ 1 Cranes segment data; excludes amortization expense, allocation of corporate costs, asset impairment expense, restructuring expense, and other (expense) income.
- 31. 31 Global Footprint Manufacturing footprint and extensive sales and customer service reach to serve both mature and emerging markets Key Statistics Sales / Service FacilitySales / Distribution Representation Manufacturing Facility 11 manufacturing sites in 8 countries Approximately 40 regional sales and support offices across 20 countries ~5,100 employees across North America, Latin America, Western Europe, the Middle East, Asia, and Australia Note: Manufacturing sites – Manitowoc, Port Washington & Shady Grove (U.S.), Fanzeres & Baltar (Portugal), Niella Tanaro (Italy), Wilhelmshaven (Germany), Moulin & Charlieu (France) , Pune (India), Zhangjiagang (China)
- 32. 32