8-K: Manitowoc Q2 Earnings Hit by Tariffs, Guidance Lowered

The Manitowoc Company reported a decline in second-quarter net sales and adjusted earnings, attributing the impact to tariffs and adjusting its full-year guidance to the lower end of its range.

Summary

• The Manitowoc Company reported second-quarter 2025 net income of $1.5 million, or $0.04 per diluted share, down from $1.6 million ($0.04 per diluted share) in Q2 2024.
• Adjusted net income for Q2 2025 was $2.8 million, or $0.08 per diluted share, a significant decrease from $8.8 million ($0.25 per diluted share) in Q2 2024.
• Orders in the second quarter increased by 6.0% year-over-year to $453.9 million, resulting in a backlog of $729.3 million.
• Net sales for the quarter were $539.5 million, a decrease of 4.0% from the prior year's $562.1 million.
• Non-new machine sales rose by 9.7% year-over-year to $161.6 million.
• Adjusted EBITDA was $26.3 million, a decrease of 26.9% from $36.0 million in Q2 2024, with the adjusted EBITDA margin falling to 4.9% from 6.4%.
• Operating income for the quarter was $9.8 million, down from $12.9 million in the prior year.
• Net cash used for operating activities was $67.7 million in Q2 2025, compared to cash provided of $11.0 million in Q2 2024.
• Free cash flows were negative $73.7 million for the quarter, a significant decline from negative $1.9 million in Q2 2024.
• The company anticipates finishing 2025 at the lower end of its guidance range due to expected market equilibrium adjustments in the U.S. crane market over the next six months.

Sentiment

Score: 4

Explanation: While orders and backlog show some underlying strength, and management points to future 'green shoots,' the immediate financial results are weak, with significant declines in net sales, adjusted net income, adjusted EBITDA, and a substantial negative free cash flow. The downward adjustment to full-year guidance and the expected six-month period for U.S. market equilibrium due to tariffs indicate ongoing challenges and uncertainty.

Positives

• Orders increased by a solid 6.0% year-over-year to $453.9 million, driven by strong performance in the MGX distribution business and momentum in the European tower crane market.
• The company's backlog remains robust at $729.3 million, indicating future revenue potential.
• Non-new machine sales showed strong growth, increasing by 9.7% year-over-year to $161.6 million.
• Management identified 'green shoots' in the market, including an improving general European economy, a massive infrastructure fund and advantageous depreciation program announced in Germany, a rebounding European tower crane business, active Middle East markets, improvements in Asia Pacific, and busy U.S. crane rental houses with contracting dealer inventory.

Negatives

• Net sales decreased by 4.0% year-over-year to $539.5 million.
• Net income declined to $1.5 million from $1.6 million in the prior year quarter.
• Adjusted net income significantly decreased to $2.8 million from $8.8 million year-over-year.
• Adjusted diluted EPS fell sharply to $0.08 from $0.25.
• Adjusted EBITDA decreased by 26.9% to $26.3 million, and the adjusted EBITDA margin declined to 4.9% from 6.4%.
• Operating income decreased to $9.8 million from $12.9 million.
• The company reported negative free cash flows of $73.7 million for the quarter, a substantial deterioration from negative $1.9 million in the prior year.
• Management adjusted build schedules for the second half of 2025 and anticipates finishing the year at the lower end of its guidance range.
• The U.S. crane market is expected to take six months to find a new equilibrium due to tariffs, indicating continued headwinds.

Risks

• Macroeconomic conditions, including inflation, elevated interest rates, and tariffs, as well as prior supply chain, labor, and logistics constraints, may negatively impact the ability to convert backlog into revenue.
• Actions of competitors and changes in economic or industry conditions generally or in the markets served, including tariffs, pose risks.
• Geopolitical events, including ongoing conflicts in Ukraine and the Middle East, tariffs, and other political/economic conditions, could lead to market disruptions, volatility in commodity prices, raw material/component costs, energy prices, inflation, and impact supply chain and credit/capital markets, potentially resulting in asset impairment.
• Changes in customer demand, including global demand for high-capacity lifting equipment, demand in emerging economies, and demand for used lifting equipment, as well as changes in government approval and funding of projects.
• Uncertainty regarding the ability to convert backlog, orders, and order activity into sales and the timing of those sales.
• Adverse changes to trade policy, including export duties, tariffs, import controls, and trade barriers.
• Uncertainties associated with new product introductions, and the successful development and market acceptance of new and innovative products.
• Failure to comply with regulatory requirements related to products and aftermarket services.
• Risks associated with high debt leverage.
• Potential impairment of goodwill and/or intangible assets.
• Work stoppages, labor negotiations, labor rates, labor costs, and the ability to attract and retain qualified personnel.
• Changes in the capital and financial markets.
• Issues associated with the availability and viability of suppliers.
• Foreign currency fluctuation and its impact on reported results.
• Risks associated with data security and technological systems and protections.
• Risks associated with manufacturing or design defects.
• Natural disasters, other weather events, pandemics, and other public health crises disrupting commerce.
• Issues relating to the ability to timely and effectively execute on manufacturing strategies, general efficiencies, and capacity utilization of facilities.
• Changes in laws throughout the world, including governmental regulations on climate change.
• The inability to defend against potential infringement claims on intellectual property rights.

Future Outlook

The company expects the 'Great Trade Reset' to continue through the balance of 2025 and anticipates it will take six months for the U.S. crane market to find a new equilibrium due to tariffs. As a result, build schedules have been adjusted for the second half of the year, and the company expects to finish the year at the lower end of its guidance range. Despite these headwinds, management sees 'green shoots' in the market, including an improving European economy, a rebounding European tower crane business, active Middle East markets, improvements in Asia Pacific, and busy U.S. crane rental houses with contracting dealer inventory, all of which bode well for the industry once the tariff environment stabilizes.

Management Comments

• "During the quarter, we achieved a solid 6% year-over-year growth in orders driven by strong performance in our MGX distribution business and continued momentum in the European tower crane market, despite the headwinds from tariffs."
• "Looking at the balance of 2025, although many trade deals have been announced, we expect it will take six months for the crane market in the U.S. to find a new equilibrium. Therefore, we have adjusted our build schedules for the second half of the year and anticipate finishing the year at the lower end of our guidance range."
• "While we expect the Great Trade Reset to continue through the balance of 2025, we see green shoots in the market: the general European economy is improving as Germany has announced a massive infrastructure fund and an advantageous depreciation program; the tower crane business in Europe continues to rebound; the Middle East remains active and we have started to see several improvements in Asia Pacific; and, in the U.S., crane rental houses remain busy and dealer inventory is contracting. All of this bodes well for the crane industry once the tariff environment stabilizes."

Industry Context

The company's performance is significantly impacted by global trade policies, particularly tariffs, which are creating headwinds in the U.S. crane market. However, the broader industry shows mixed signals, with strength in the European tower crane market, improving European economy, and activity in the Middle East and Asia Pacific. The 'Great Trade Reset' is a key theme, suggesting a period of adjustment for the global crane industry as trade dynamics evolve. The company's focus on non-new machine sales and distribution business (MGX) indicates a strategy to diversify revenue streams amidst new machine market volatility.

Comparison to Industry Standards

• NA

Legal Proceedings

• The company incurred costs associated with a legal matter with the U.S. Environmental Protection Agency (EPA) in 2024 ($5.3 million) and interest related to the settlement of this matter in 2025 ($0.6 million).

Stakeholder Impact

• Shareholders: Will likely experience negative sentiment due to significant declines in profitability metrics (adjusted net income, adjusted EBITDA), negative free cash flow, and a downward revision of full-year guidance.
• Employees: Adjusted build schedules for the second half of the year could imply potential impacts on production levels or workforce planning, though no direct employment changes were stated.
• Customers: May face continued market uncertainty and potential pricing adjustments due to the 'Great Trade Reset' and tariff environment, particularly in the U.S. market which is expected to take six months to stabilize.
• Creditors: The company's high debt leverage is noted as a risk factor, which could be a concern given the negative free cash flow and reduced profitability.

Next Steps

• The Manitowoc Company will host a conference call for security analysts and institutional investors to discuss its second-quarter 2025 earnings results on Friday, August 8, 2025, at 10:00 a.m. ET (9:00 a.m. CT).

Key Dates

Recommendation

The company's second-quarter results show a significant decline in key profitability metrics (adjusted net income, adjusted EBITDA) and a substantial negative free cash flow, leading to a downward adjustment of full-year guidance. These factors are strong negatives. However, the company reported solid order growth and a healthy backlog, indicating underlying demand. Management also highlighted 'green shoots' in various international markets and a contracting dealer inventory in the U.S., suggesting potential future recovery once tariff-related headwinds stabilize. Given these mixed signals – current financial weakness and cautious outlook versus some operational positives and long-term market potential – a 'hold' recommendation is appropriate. Investors should monitor the stabilization of the tariff environment and the realization of the 'green shoots' into improved financial performance before considering a more aggressive position.

Keywords

Cranes, Lifting equipment, Construction machinery, Heavy equipment, Industrial manufacturing, Financial results, Earnings, Tariffs, Global trade, Infrastructure, Manitowoc, MTW