Crane and lifting equipment company Manitowoc (NYSE:MTW) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 4.9% year on year to $470.9 million. Its non-GAAP loss of $0.16 per share was 72.7% below analysts’ consensus estimates.
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Manitowoc (MTW) Q1 CY2025 Highlights:
- Revenue: $470.9 million vs analyst estimates of $482 million (4.9% year-on-year decline, 2.3% miss)
- Adjusted EPS: -$0.16 vs analyst expectations of -$0.09 (72.7% miss)
- Adjusted EBITDA: $21.7 million vs analyst estimates of $16.14 million (4.6% margin, 34.4% beat)
- Operating Margin: 1.3%, down from 3.1% in the same quarter last year
- Free Cash Flow was $2.1 million, up from -$42.8 million in the same quarter last year
- Backlog: $793.7 million at quarter end, down 18.3% year on year
- Market Capitalization: $416.8 million
StockStory’s Take
Manitowoc’s Q1 performance was shaped by ongoing global trade dynamics and shifting demand across key regions. Management attributed the quarter’s results to tariff-related cost pressures, mixed demand trends in North America and Europe, and the continued growth of aftermarket sales. CEO Aaron Ravenscroft specifically highlighted the impact of new tariffs, stating the company is modeling $60 million in incremental costs this year, with plans to mitigate 80% to 90%. He also pointed to the successful integration of artificial intelligence into operational processes, which is expected to improve efficiency.
Looking ahead, management’s guidance is supported by a strong backlog and optimism regarding a recovery in the European tower crane business. Ravenscroft emphasized that the company’s CRANES+50 strategy, which prioritizes aftermarket sales and customer service, is central to navigating current market uncertainties. The team expressed cautious optimism, noting that evolving tariff negotiations and macroeconomic factors will continue to influence demand patterns and pricing in the coming quarters.
Key Insights from Management’s Remarks
Management’s remarks focused on the interplay between macroeconomic uncertainty, evolving trade policy, and Manitowoc’s aftermarket-driven strategy. The quarter’s performance deviated from expectations due to tariff-related costs, regional demand variability, and investments in product and market development.
- Tariff Impact and Mitigation: Management outlined $60 million in expected tariff costs for 2025, with mitigation plans including price increases, alternative sourcing, and cost-sharing with vendors. These actions are expected to offset most, but not all, of the incremental costs.
- Aftermarket Sales Growth: Non-new machine sales increased 11% year over year, driven by expanded field service coverage and a focus on rebuilt and used equipment. This supports the CRANES+50 strategy, which aims to reduce earnings volatility by growing less cyclical business lines.
- European Tower Crane Recovery: Orders for European tower cranes rose nearly 70% year over year, marking the third consecutive quarter of growth and indicating a potential market rebound. This trend is underpinned by historically low dealer inventory and increased infrastructure investment in Germany.
- Operational Efficiency Initiatives: Manitowoc integrated artificial intelligence into its improvement process, automating repetitive IT tasks to save an estimated 2,000 man hours and $400,000 in costs. Management views this as an important step in ongoing operational efficiency efforts.
- Market-Specific Demand Trends: While North American dealer orders increased, management remains cautious due to tariff uncertainty. In the Middle East and India, demand remains stable to strong, while Korean and Australian markets are in a holding pattern due to local political and currency factors.
Drivers of Future Performance
Management’s outlook for the remainder of the year is shaped by external trade policy, regional economic conditions, and execution of the company’s aftermarket growth strategy.
- Tariff Resolution and Pricing: The company’s ability to mitigate ongoing and potential new tariffs will be key to maintaining margins. Management expects price increases and sourcing changes to offset most cost impacts, but notes the situation remains dynamic.
- Aftermarket Expansion: Continued investment in service capabilities, used equipment, and parts is expected to drive more stable revenue streams, reducing exposure to the cyclical nature of new crane sales.
- European Infrastructure Recovery: Anticipated infrastructure spending in Europe, particularly in Germany, could support further growth in tower crane demand, though timing and magnitude depend on government rollout and customer confidence.
Top Analyst Questions
- Jerry Revich (Goldman Sachs): Asked how much mitigation of tariff costs would come from pricing versus supply changes. Management replied that mitigations include price increases, vendor cost sharing, and alternative sourcing, but benefits depend on evolving currency and trade dynamics.
- Jerry Revich (Goldman Sachs): Inquired about the share of China-related tariffs in the $45 million estimate and underlying tariff assumptions. Management stated the figure includes both China tariffs and Section 232 steel and aluminum tariffs, and that the mix will depend on production and sourcing flexibility.
- Jerry Revich (Goldman Sachs): Sought detail on the drivers of increased European tower crane orders and whether current momentum matches prior cycle highs. Management said the recovery is broad-based, driven by low dealer inventory and utilization, but market levels are still well below historical peaks.
- Steven Fisher (UBS): Asked if higher steel and aluminum costs are included in the $45 million tariff impact. Management confirmed that raw material cost increases are factored into the estimate.
- Steven Fisher (UBS): Requested color on visibility for continued non-new machine sales growth. Management responded that growth is broad-based, driven by new locations, increased field service technicians, and expansion in used and rebuilt equipment offerings.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be monitoring (1) the evolution of global tariff negotiations and their impact on Manitowoc’s cost structure and pricing, (2) sustained growth in aftermarket sales as the company expands its service and used equipment business, and (3) the pace of recovery in the European tower crane market, particularly as government infrastructure funding in Germany moves from announcement to implementation. Progress on operational efficiency initiatives and further adoption of AI tools may also influence future margin trends.
Manitowoc currently trades at a forward P/E ratio of 15.8×. Should you load up, cash out, or stay put? The answer lies in our free research report.
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