MANITOWOC CO INC, 10-Q filed on 8/6/2020
Quarterly Report
v3.20.2
Document and Entity Information
6 Months Ended
Jun. 30, 2020
shares
Cover [Abstract]  
Entity Registrant Name The Manitowoc Company, Inc.
Entity Central Index Key 0000061986
Trading Symbol MTW
Document Type 10-Q
Document Period End Date Jun. 30, 2020
Amendment Flag false
Current Fiscal Year End Date --12-31
Entity Current Reporting Status Yes
Entity Filer Category Large Accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Entity Shares Outstanding 34,521,063
Document Fiscal Year Focus 2020
Document Fiscal Period Focus Q2
Entity File Number 1-11978
Entity Tax Identification Number 39-0448110
Entity Address, Address Line One 11270 West Park Place
Entity Address, Address Line Two Suite 1000
Entity Address, City or Town Milwaukee
Entity Address, State or Province WI
Entity Address, Postal Zip Code 53224
City Area Code 414
Local Phone Number 760-4600
Entity Incorporation, State or Country Code WI
Title of 12(b) Security Common Stock, $.01 Par Value
Security Exchange Name NYSE
Entity Interactive Data Current Yes
Document Quarterly Report true
Document Transition Report false
v3.20.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Net sales $ 328.3 $ 504.7 $ 657.5 $ 922.7
Cost of sales 279.9 409.5 545.9 747.3
Gross profit 48.4 95.2 111.6 175.4
Operating costs and expenses:        
Engineering, selling and administrative expenses 49.7 50.5 105.6 109.9
Amortization of intangible assets 0.1 0.1 0.2 0.2
Restructuring expense 0.2 2.7 1.7 7.2
Total operating costs and expenses 50.0 53.3 107.5 117.3
Operating income (loss) (1.6) 41.9 4.1 58.1
Other income (expense):        
Interest expense (7.2) (7.5) (14.4) (18.4)
Amortization of deferred financing fees (0.3) (0.4) (0.7) (0.8)
Loss on debt extinguishment       (25.0)
Other income (expense) - net (2.9) 15.9 (6.9) 12.6
Total other income (expense) (10.4) 8.0 (22.0) (31.6)
Income (loss) before income taxes (12.0) 49.9 (17.9) 26.5
Provision for income taxes 0.7 3.9 2.6 7.2
Net income (loss) $ (12.7) $ 46.0 $ (20.5) $ 19.3
Per Share Data        
Basic income (loss) per common share $ (0.37) $ 1.29 $ (0.59) $ 0.54
Diluted income (loss) per common share $ (0.37) $ 1.29 $ (0.59) $ 0.54
Weighted average shares outstanding - basic 34,519,889 35,595,718 34,827,582 35,619,145
Weighted average shares outstanding - diluted 34,519,889 35,725,908 34,827,582 35,799,089
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement Of Income And Comprehensive Income [Abstract]        
Net income (loss) $ (12.7) $ 46.0 $ (20.5) $ 19.3
Other comprehensive income (loss), net of income tax        
Unrealized income on derivatives, net of income tax provision of $0.0, $0.0, $0.0 and $0.0, respectively 0.1 0.6 0.1 0.7
Employee pension and postretirement benefit expense, net of income tax benefit of $0.3, $0.0, $0.0 and $0.0, respectively 0.6 0.5 1.8 1.0
Foreign currency translation adjustments 8.6 1.2 (5.0) (1.3)
Total other comprehensive income (loss), net of income tax 9.3 2.3 (3.1) 0.4
Comprehensive income (loss) $ (3.4) $ 48.3 $ (23.6) $ 19.7
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (Unaudited) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement Of Income And Comprehensive Income [Abstract]        
Unrealized income (loss) on derivatives, net of income tax benefit $ 0.0 $ 0.0 $ 0.0 $ 0.0
Employee pension and post retirement benefits, net of income tax benefit $ 0.3 $ 0.0 $ 0.0 $ 0.0
v3.20.2
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 128.3 $ 199.3
Accounts receivable, less allowances of $9.4 and $7.9, respectively 171.9 168.3
Inventories — net 534.5 461.4
Notes receivable — net 14.0 17.4
Other current assets 33.0 26.0
Total current assets 881.7 872.4
Property, plant and equipment — net 277.8 289.9
Operating lease right-of-use assets 42.8 47.6
Goodwill 232.0 232.5
Other intangible assets — net 115.9 116.3
Other non-current assets 54.7 59.0
Total assets 1,604.9 1,617.7
Current Liabilities:    
Accounts payable and accrued expenses 332.6 340.8
Short-term borrowings and current portion of long-term debt 4.3 3.8
Product warranties 45.8 47.2
Customer advances 15.8 25.8
Other liabilities 22.2 23.3
Total current liabilities 420.7 440.9
Non-Current Liabilities:    
Long-term debt 356.9 308.4
Operating lease liabilities 33.3 37.6
Deferred income taxes 4.3 5.5
Pension obligations 83.7 86.4
Postretirement health and other benefit obligations 15.6 16.4
Long-term deferred revenue 27.4 30.3
Other non-current liabilities 47.3 46.3
Total non-current liabilities 568.5 530.9
Commitments and contingencies (Note 18)
Stockholders' Equity:    
Preferred stock (authorized 3,500,000 shares of $.01 par value; none outstanding)
Common stock (75,000,000 shares authorized, 40,793,983 shares issued, 34,521,063 and 35,374,537 shares outstanding, respectively) 0.4 0.4
Additional paid-in capital 596.0 592.2
Accumulated other comprehensive loss (124.1) (121.0)
Retained earnings 215.5 236.2
Treasury stock, at cost (6,272,920 and 5,419,446 shares, respectively) (72.1) (61.9)
Total stockholders' equity 615.7 645.9
Total liabilities and stockholders' equity $ 1,604.9 $ 1,617.7
v3.20.2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Statement Of Financial Position [Abstract]    
Accounts Receivable, allowances (in dollars) $ 9.4 $ 7.9
Preferred stock authorized (in shares) 3,500,000 3,500,000
Par value of preferred stock per share (in dollars per share) $ 0.01 $ 0.01
Preferred stock outstanding (in shares) 0 0
Common stock, shares authorized (in shares) 75,000,000 75,000,000
Common stock, shares issued (in shares) 40,793,983 40,793,983
Common stock, shares outstanding (in shares) 34,521,063 35,374,537
Treasury stock (in shares) 6,272,920 5,419,446
v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash Flows from Operating Activities:    
Net income (loss) $ (20.5) $ 19.3
Adjustments to reconcile net income (loss) to cash used for operating activities:    
Depreciation 18.1 17.4
Amortization of intangible assets 0.2 0.2
Amortization of deferred financing fees 0.7 0.8
Loss on debt extinguishment   25.0
Other 5.9 6.0
Changes in operating assets and liabilities:    
Accounts receivable (6.4) (222.6)
Inventories (73.4) (106.5)
Notes receivable 5.6 (2.3)
Other assets (6.4) 26.1
Accounts payable (6.5) 22.1
Accrued expenses and other liabilities (16.0) (20.9)
Net cash used for operating activities (98.7) (235.4)
Cash Flows from Investing Activities:    
Capital expenditures (8.0) (9.7)
Proceeds from sale of fixed assets 0.1 4.8
Cash receipts on sold accounts receivable   126.3
Net cash provided by (used for) investing activities (7.9) 121.4
Cash Flows from Financing Activities:    
Proceeds from revolving credit facility 50.0 82.8
Payments on revolving credit facility   (82.8)
Payments on long-term debt   (276.6)
Proceeds from long-term debt   300.0
Other debt - net (1.5) 1.9
Debt issuance costs   (8.2)
Exercises of stock options 0.1 0.1
Common stock repurchases (12.0) (7.4)
Net cash provided by financing activities 36.6 9.8
Effect of exchange rate changes on cash and cash equivalents (1.0) (1.1)
Net decrease in cash and cash equivalents (71.0) (105.3)
Cash and cash equivalents at beginning of period 199.3 140.3
Cash and cash equivalents at end of period $ 128.3 $ 35.0
v3.20.2
Condensed Consolidated Statements of Equity - USD ($)
$ in Millions
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Loss
Retained Earnings
Treasury Stock
Balance at beginning of period at Dec. 31, 2018   $ 0.4 $ 584.8 $ (116.6) $ 189.6 $ (56.9)
Increase (Decrease) in Stockholders' Equity            
Stock options exercised and issuance of other stock awards     (2.1)     2.1
Stock-based compensation     6.1      
Other comprehensive income (loss)       0.4    
Net income (loss) $ 19.3       19.3  
Common stock repurchases           (7.4)
Balance at end of period at Jun. 30, 2019 619.7 0.4 588.8 (116.2) 208.9 (62.2)
Balance at beginning of period at Mar. 31, 2019   0.4 586.0 (118.5) 162.9 (55.0)
Increase (Decrease) in Stockholders' Equity            
Stock options exercised and issuance of other stock awards     (0.2)     0.2
Stock-based compensation     3.0      
Other comprehensive income (loss)       2.3    
Net income (loss) 46.0       46.0  
Common stock repurchases           (7.4)
Balance at end of period at Jun. 30, 2019 619.7 0.4 588.8 (116.2) 208.9 (62.2)
Balance at beginning of period at Dec. 31, 2019   0.4 592.2 (121.0) 236.2 (61.9)
Increase (Decrease) in Stockholders' Equity            
Stock options exercised and issuance of other stock awards     (2.1)     1.8
Stock-based compensation     5.9      
Other comprehensive income (loss)       (3.1)    
Adoption of accounting standards update         (0.2)  
Net income (loss) (20.5)       (20.5)  
Common stock repurchases   (12.0)       (12.0)
Balance at end of period at Jun. 30, 2020 615.7 0.4 596.0 (124.1) 215.5 (72.1)
Balance at beginning of period at Mar. 31, 2020   0.4 593.7 (133.4) 228.2 (72.2)
Increase (Decrease) in Stockholders' Equity            
Stock options exercised and issuance of other stock awards     (0.2)     0.1
Stock-based compensation     2.5      
Other comprehensive income (loss)       9.3    
Net income (loss) (12.7)       (12.7)  
Balance at end of period at Jun. 30, 2020 $ 615.7 $ 0.4 $ 596.0 $ (124.1) $ 215.5 $ (72.1)
v3.20.2
Accounting Policies and Basis of Presentation
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Accounting Policies and Basis of Presentation

1.  Accounting Policies and Basis of Presentation

The Manitowoc Company, Inc. (“Manitowoc,” “MTW” or the “Company”) was founded in 1902 and has over a 117-year tradition of providing high-quality, customer-focused products and support services to its markets. Manitowoc is one of the world’s leading providers of engineered lifting solutions.  Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, and supports comprehensive product lines of mobile telescopic cranes, tower cranes, lattice-boom crawler cranes, and boom trucks under the Grove, Manitowoc, National Crane, Potain, Shuttlelift and Manitowoc Crane Care 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. Additionally, the Company’s Manitowoc Crane Care offering leverages Manitowoc's installed base of approximately 149,000 cranes to provide aftermarket parts and services to enable its customers to manage their fleets more effectively and improve their return on investment. Due to the ongoing and predictable maintenance needed by cranes, as well as the high cost of crane downtime, Manitowoc Crane Care provides the Company with a consistent stream of recurring revenue.

The Company has three reportable segments, the Americas segment, Europe and Africa (“EURAF”) segment and Middle East and Asia Pacific (“MEAP”) segment. 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 17, “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, comprehensive income and equity for the three and six months ended June 30, 2020 and 2019, the cash flows for the same six-month periods and the financial position at June 30, 2020 and December 31, 2019, and except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. 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, 2019. 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 share and per share amounts, are in millions throughout the tables in these notes unless otherwise indicated.

Impact of COVID-19 Pandemic

 

There is considerable uncertainty regarding the future impact, and expected duration, of the COVID-19 pandemic, and restrictions on the Company’s access to its facilities or on its support operations or workforce, or similar limitations for its customers, dealers and suppliers. There is no certainty that measures taken by governmental authorities will be sufficient to mitigate the risks posed by the virus, and the Company’s ability to perform critical functions could be harmed. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the Company’s second quarter financial results, including, but not limited to, impairment of goodwill and other long-lived assets, income tax provision, recoverability of inventory and hedge accounting with respect to forecasted future transactions.  

v3.20.2
Recent Accounting Changes and Pronouncements
6 Months Ended
Jun. 30, 2020
Recent Accounting Changes And Pronouncements [Abstract]  
Recent Accounting Changes and Pronouncements

2.  Recent Accounting Changes and Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12 “Income Taxes (Topic 740).” The amendments in this ASU simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for annual periods beginning after December 15, 2020. The Company is currently evaluating the impact the adoption of the ASU will have on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15 “Intangibles – Goodwill and Other – Internal-use Software (Subtopic 250-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual periods beginning after December 15, 2019. The adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The new guidance is applicable to financial assets measured at amortized cost, net investments in leases and certain off-balance sheet credit exposures. The standard was effective for annual periods beginning after December 15, 2019. The adoption of the ASU resulted in a $0.2 million reduction in beginning retained earnings and a corresponding reduction in accounts receivable on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2020. There was no material impact to the Company’s Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows.

v3.20.2
Revenues
6 Months Ended
Jun. 30, 2020
Revenue From Contract With Customer [Abstract]  
Revenues

3. Revenues

 

The Company records deferred revenue when cash payments are received or due in advance of satisfying the performance obligation. The table below shows the change in the customer advances balance for the three and six months ended June 30, 2020 and 2019 which are included in current liabilities in the Condensed Consolidated Balance Sheets.

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Balance at beginning of period

 

$

21.0

 

 

$

13.3

 

 

$

25.8

 

 

$

9.6

 

Cash received or due in advance of satisfying

   performance obligation

 

 

15.9

 

 

 

18.3

 

 

 

44.8

 

 

 

50.2

 

Revenue recognized

 

 

(21.6

)

 

 

(21.1

)

 

 

(54.1

)

 

 

(49.4

)

Currency translation

 

 

0.5

 

 

 

0.1

 

 

 

(0.7

)

 

 

0.2

 

Balance at end of period

 

$

15.8

 

 

$

10.6

 

 

$

15.8

 

 

$

10.6

 

 

Disaggregation of the Company’s revenue sources are disclosed in Note 17, “Segments.”

v3.20.2
Fair Value of Financial Instruments
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value as of June 30, 2020 and December 31, 2019, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

 

 

Fair Value as of June 30, 2020

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Recognized Location

Forward currency exchange contracts

 

$

 

 

$

0.1

 

 

$

 

 

$

0.1

 

 

Other current assets

 

 

 

Fair Value as of December 31, 2019

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Recognized Location

Forward currency exchange contracts

 

$

 

 

$

0.1

 

 

$

 

 

$

0.1

 

 

Other current assets

Forward currency exchange contracts

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

 

Accounts payable and

   accrued expenses

 

The fair value of the senior secured second lien notes due on April 1, 2026, with an annual coupon rate of 9.000% (the “2026 Notes”), was approximately $299.0 million as of June 30, 2020. See Note 11, “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; 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 revolving

credit facility, approximate fair value, without being discounted as of June 30, 2020 and December 31, 2019, due to the short-term nature of these instruments.

Forward currency exchange contracts (“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. See Note 5, “Derivative Financial Instruments” for additional information.

v3.20.2
Derivative Financial Instruments
6 Months Ended
Jun. 30, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments

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). 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 these types of transactions during the three and six months ended June 30, 2020 and 2019, respectively.

 

The Company had FX Forward Contracts with an aggregate notional amount of $9.6 million and $32.6 million outstanding as of June 30, 2020 and December 31, 2019, respectively. The aggregate notional amount outstanding as of June 30, 2020 is scheduled to mature within one year. The FX Forward Contracts purchased are denominated in various foreign currencies. As of June 30, 2020 and December 31, 2019, the net fair value of these contracts was a net current asset of $0.1 million and a net zero balance, respectively. There was $0.1 million and zero unrealized gains, net of income tax, recorded in accumulated other comprehensive loss as of June 30, 2020 and December 31, 2019, respectively.  

 

The following table provides the amount of gain or loss recorded in the Condensed Consolidated Statement of Operations for FX Forward Contracts for the three and six months ended June 30, 2020 and June 30, 2019.

 

 

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

Recognized Location

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Designated

 

Cost of sales

 

$

0.2

 

 

$

0.7

 

 

$

0.3

 

 

$

1.5

 

Non-Designated

 

Other income (expense) - net

 

$

(0.4

)

 

$

(1.6

)

 

$

(0.4

)

 

$

(2.3

)

v3.20.2
Inventories
6 Months Ended
Jun. 30, 2020
Inventory Disclosure [Abstract]  
Inventories

6.  Inventories

The components of inventories as of June 30, 2020 and December 31, 2019 are summarized as follows:

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Raw materials

 

$

140.7

 

 

$

156.3

 

Work-in-process

 

 

116.5

 

 

 

116.3

 

Finished goods

 

 

329.7

 

 

 

239.4

 

Total inventories

 

 

586.9

 

 

 

512.0

 

Excess and obsolete inventory reserve

 

 

(52.4

)

 

 

(50.6

)

Inventories — net

 

$

534.5

 

 

$

461.4

 

 

v3.20.2
Notes Receivable
6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Notes Receivable

7.  Notes Receivable

The Company has notes receivable balances that are classified as current or long-term based on the timing of amounts due. Long-term notes receivable are included within other non-current assets on the Condensed Consolidated Balance Sheets. Current and long-term notes receivable balances primarily relate to the Company’s captive finance entity in China. As of June 30, 2020, the Company had current and long-term notes receivable in the amount of $14.0 million and $14.8 million, respectively. As of December 31, 2019, the Company had current and long-term notes receivable in the amount of $17.4 million and $16.3 million, respectively.

v3.20.2
Property, Plant and Equipment
6 Months Ended
Jun. 30, 2020
Property Plant And Equipment [Abstract]  
Property, Plant and Equipment

8.  Property, Plant and Equipment

The components of property, plant and equipment at June 30, 2020 and December 31, 2019 are summarized as follows:

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Land

 

$

23.2

 

 

$

24.0

 

Building and improvements

 

 

195.6

 

 

 

197.3

 

Machinery, equipment and tooling

 

 

275.3

 

 

 

274.2

 

Furniture and fixtures

 

 

18.8

 

 

 

18.5

 

Computer hardware and software

 

 

117.6

 

 

 

119.3

 

Rental cranes

 

 

75.2

 

 

 

77.7

 

Construction in progress

 

 

10.8

 

 

 

11.2

 

Total cost

 

 

716.5

 

 

 

722.2

 

Less accumulated depreciation

 

 

(438.7

)

 

 

(432.3

)

Property, plant and equipment — net

 

$

277.8

 

 

$

289.9

 

 

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

v3.20.2
Goodwill and Other Intangible Assets
6 Months Ended
Jun. 30, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

9.  Goodwill and Other Intangible Assets

The Company performs an annual impairment review of goodwill and indefinite-lived intangible assets during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. During the three months ended March 31, 2020, the Company considered the decline in its market capitalization due to the COVID-19 pandemic as an interim triggering event. The Company’s interim test results as of March 31, 2020 indicated that the fair values of all reporting units exceeded their carrying values and thus, no impairment of goodwill existed. No additional triggers for an interim impairment test have been identified since March 31, 2020. However, the Company is unable to predict future impacts of the COVID-19 pandemic, including a prolonged and/or more severe pandemic than anticipated, or future changes in management’s judgements and assumptions used to assess the fair value of the reporting units, which could result in a non-cash impairment charge in the future.

The changes in the carrying amount of goodwill for the year ended December 31, 2019 and the six months ended June 30, 2020 are summarized as follows:

 

 

 

Americas

 

 

MEAP

 

 

Consolidated

 

Balance as of January 1, 2019

 

$

166.5

 

 

$

66.3

 

 

$

232.8

 

Foreign currency impact

 

 

 

 

 

(0.3

)

 

 

(0.3

)

Balance as of December 31, 2019

 

 

166.5

 

 

 

66.0

 

 

 

232.5

 

Foreign currency impact

 

 

 

 

 

(0.5

)

 

 

(0.5

)

Balance as of June 30, 2020

 

$

166.5

 

 

$

65.5

 

 

$

232.0

 

The gross carrying amount, accumulated amortization and net book value of the Company’s intangible assets other than goodwill at June 30, 2020 and December 31, 2019 are summarized as follows:

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Book

Value

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Book

Value

 

Definite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

9.7

 

 

$

(8.2

)

 

$

1.5

 

 

$

10.0

 

 

$

(8.5

)

 

$

1.5

 

Patents

 

 

29.5

 

 

 

(28.8

)

 

 

0.7

 

 

 

29.5

 

 

 

(28.7

)

 

 

0.8

 

Total

 

 

39.2

 

 

 

(37.0

)

 

 

2.2

 

 

 

39.5

 

 

 

(37.2

)

 

 

2.3

 

Indefinite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and tradenames

 

 

95.1

 

 

 

 

 

 

95.1

 

 

 

95.3

 

 

 

 

 

 

95.3

 

Distribution network

 

 

18.6

 

 

 

 

 

 

18.6

 

 

 

18.7

 

 

 

 

 

 

18.7

 

Total

 

 

113.7

 

 

 

 

 

 

113.7

 

 

 

114.0

 

 

 

 

 

 

114.0

 

Total other intangible assets

 

$

152.9

 

 

$

(37.0

)

 

$

115.9

 

 

$

153.5

 

 

$

(37.2

)

 

$

116.3

 

 

Other intangible assets with definite lives are amortized over their estimated useful lives. Amortization expense for the three months ended June 30, 2020 and 2019 was $0.1 million. Amortization expense for the six months ended June 30, 2020 and 2019 was $0.2 million.

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 considered the impact of the COVID-19 pandemic on each of the Company’s definite lived intangible assets and long-lived assets. The Company determined there was not a triggering event during the second quarter of 2020.

v3.20.2
Accounts Payable and Accrued Expenses
6 Months Ended
Jun. 30, 2020
Payables And Accruals [Abstract]  
Accounts Payable and Accrued Expenses

10.  Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at June 30, 2020 and December 31, 2019 are summarized as follows:

 

 

 

June 30, 2020

 

 

December 31, 2019

 

Trade accounts payable

 

$

177.9

 

 

$

187.1

 

Employee-related expenses

 

 

40.3

 

 

 

56.6

 

Accrued vacation

 

 

23.9

 

 

 

20.2

 

Miscellaneous accrued expenses

 

 

90.5

 

 

 

76.9

 

Total

 

$

332.6

 

 

$

340.8

 

v3.20.2
Debt
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Debt

11.  Debt

Outstanding debt at June 30, 2020 and December 31, 2019 is summarized as follows:

 

 

 

June 30, 2020

 

 

December 31, 2019

 

Borrowings under senior secured asset based revolving credit facility

 

$

50.0

 

 

$

 

Senior secured second lien notes due 2026

 

 

300.0

 

 

 

300.0

 

Other

 

 

15.4

 

 

 

16.7

 

Deferred financing costs

 

 

(4.2

)

 

 

(4.5

)

Total debt

 

 

361.2

 

 

 

312.2

 

Short-term borrowings and current portion of long-term

   debt

 

 

(4.3

)

 

 

(3.8

)

Long-term debt

 

$

356.9

 

 

$

308.4

 

 

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 senior secured second lien notes due on April 1, 2026 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 (as defined below) 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. The 2026 Notes were sold pursuant to exemptions from registration under the Securities Act of 1933.

 

Additionally, 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 fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority bases, 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 has a term of 5 years and 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.

 

Borrowings under the ABL Revolving Credit Facility bear interest at a variable rate using either the Alternative Base Rate or the Eurodollar and Overnight London Interbank Offered Rate (“LIBOR”). 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

 

Eurodollar and overnight LIBOR spread

 

≥ 50% of Aggregate Commitment

0.25%

 

1.25%

 

< 50% of Aggregate Commitment

0.50%

 

1.50%

 

 

The Company used the initial extension of credit under the ABL Revolving Credit Facility, together with the net proceeds from the offering of the 2026 Notes, to (i) redeem all of the Company’s $260.0 million in outstanding 12.750% Senior Secured Second Lien Notes due 2021 (the “Prior 2021 Notes”); (ii) repay all obligations outstanding, and terminate all commitments, under (x) the Company’s previous $225.0 million ABL Revolving Credit Facility (“Prior ABL Facility”) and (y) $75.0 million AR Securitization Facility; and (iii) pay related fees and expenses, including $16.6 million of call premium on the Prior 2021 Notes, $5.0 million of closing costs and $4.6 million of accrued interest.

 

During the six months ended June 30, 2019, the Company recorded a $25.0 million charge in the Condensed Consolidated Statement of Operations associated with the Company’s refinancing of the ABL Revolving Credit Facility and 2026 Notes. The charge was composed of $16.6 million of call premium on the Prior 2021 Notes, $5.3 million of unamortized discount on the Prior 2021 Notes and $3.1 million of unamortized debt issuance costs.

As of June 30, 2020, the Company had other indebtedness outstanding of $15.4 million that had a weighted-average interest rate of approximately 5.13%. This debt includes balances on local credit lines and other financing arrangements.

 

At June 30, 2020 and December 31, 2019 the Company had $50.0 million and no borrowings on the ABL Revolving Credit Facility, respectively. During the quarter ended June 30, 2020, the highest daily borrowing under the ABL Revolving Credit Facility was $50.0 million and the average amount borrowed was $27.5 million, while the average annual interest rate was 1.82%. The interest rate spread of the ABL Revolving Credit Facility fluctuates based on excess availability. As of June 30, 2020, the spreads for LIBOR and prime rate borrowings were 1.25% and 0.25%, respectively, with excess availability of approximately $207.8 million, which represents revolver borrowing capacity of $260.8 million less U.S. letters of credit outstanding of $3.0 million and $50.0 million in borrowings.

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

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 June 30, 2020, 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.

v3.20.2
Accounts Receivable Securitization and Other Factoring Arrangements
6 Months Ended
Jun. 30, 2020
Transfers And Servicing [Abstract]  
Accounts Receivable Securitization and Other Factoring Arrangements

12.  Accounts Receivable Securitization and Other Factoring Arrangements

The Company had maintained a Receivables Purchase Agreement (“RPA”) among Manitowoc Funding, LLC (“MTW Funding”), as Seller, The Manitowoc Company, Inc., as Servicer, and Wells Fargo Bank, N.A., as Purchaser and as Agent, with a commitment size of $75.0 million. Under the RPA (and the related Purchase and Sale Agreements referenced in the RPA), the Company’s domestic trade accounts receivable were sold to MTW Funding which, in turn, sold, conveyed, transferred and assigned to a third-party financial institution (“Purchaser”), all of MTW Funding’s rights, title and interest in a pool of receivables to the Purchaser. Transactions under the program were accounted for as sales in accordance with Accounting Standards Codification Topic 860, “Transfers and Servicing,” (“Topic 860”). This program was terminated on March 25, 2019.

Trade accounts receivable sold to the Purchaser and being serviced by the Company totaled zero and $149.0 million for the three and six months ended June 30, 2019, respectively. Cash proceeds received from customers related to the receivables previously sold for the three and six months ended June 30, 2019 were zero and $182.8 million, respectively.

Proceeds received from the sale of trade receivables under the program were included in cash flows from operating activities; whereas cash collections related to the deferred purchase price were classified as cash flows from investing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

The Company has two non-U.S. accounts receivable financing programs with maximum availability of €55.0 million. Under these financing programs, the Company has the ability to sell eligible receivables up to the maximum limit and can sell additional receivables as previously sold are collected. During the six months ended June 30, 2020, the Company sold receivables and received cash of €59.3 million. The Company also has one U.S. accounts receivable financing program with maximum availability of $35.0 million. Transactions under the U.S. and non-U.S. programs were accounted for as sales in accordance with Topic 860.

v3.20.2
Income Taxes
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

13.  Income Taxes

For the three months ended June 30, 2020 and 2019, the Company recorded a provision for income taxes of $0.7 million and $3.9 million, respectively. For the six months ended June 30, 2020 and 2019, the Company recorded a provision for income taxes of $2.6 million and $7.2 million, respectively. During the three months ended June 30, 2020, net discrete tax benefits of $2.5 million were recorded primarily driven by the implementation of certain U.S. tax planning strategies as a result of the enactment of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).  The year over year decrease in the Company’s provision for income taxes for the three and six months ended June 30, 2020 primarily relates to the net discrete tax benefit recorded.  

The CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act allowed the Company to implement certain U.S. tax planning strategies which resulted in the Company filing an amended 2018 tax return during the three months ended June 30, 2020 and recognized a net tax benefit of $3.7 million for the three and six months ended June 30, 2020.

The Company will continue to evaluate its valuation allowance requirements on an ongoing basis considering changing facts and circumstances and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes will be reflected in the Company’s income tax provision and could have a material effect on financial results.

The Company’s unrecognized tax benefits, excluding interest and penalties, were $22.6 million and $11.5 million as of June 30, 2020 and December 31, 2019, respectively. The increase primarily relates to $10.9 million from the uncertainty of a portion of the U.S. federal tax planning strategies implemented as a result of the CARES Act. It is reasonably possible that the Company will reverse a portion of its unrecognized tax benefits in the future. Such changes will be reflected in the Company’s income tax provision and could have a material effect on financial results.

v3.20.2
Net Income (Loss) Per Share
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Net Income (Loss) Per Share


14.  Net Income (Loss) Per Share

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

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Basic weighted average common shares outstanding

 

 

34,519,889

 

 

 

35,595,718

 

 

 

34,827,582

 

 

 

35,619,145

 

Effect of dilutive securities

 

 

 

 

 

130,190

 

 

 

 

 

 

179,944

 

Diluted weighted average common shares outstanding

 

 

34,519,889

 

 

 

35,725,908

 

 

 

34,827,582

 

 

 

35,799,089

 

Equity incentive instruments 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 earnings, and accordingly, the Company excludes them from the calculation. Anti-dilutive equity instruments of 1,515,430 and 1,556,298 common shares were excluded from the computation of diluted net income (loss) per common share for the three and six months ended June 30, 2019, respectively. Due to the net loss incurred during the three and six months ended June 30, 2020, the assumed exercise of all equity instruments was anti-dilutive and, therefore, not included in the net diluted income (loss) per share calculations for those periods.

No cash dividends were paid during the three and six months ended June 30, 2020 and 2019.

v3.20.2
Equity
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Equity

15.  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 June 30, 2020, the Company has authorization from the Board of Directors to purchase up to $30.0 million of the Company’s common stock at management’s discretion. During the six months ended June 30, 2020, the Company repurchased 1,061,711 of the Company’s common shares for $12.0 million under this authorization. As a result of the COVID-19 pandemic, the Company suspended its share repurchase program to preserve its liquidity and manage cash flows. As of June 30, 2020, the Company had $10.6 million remaining under this authorization.

A reconciliation of the changes in accumulated other comprehensive loss, net of income tax, by component for the three months ended June 30, 2020 and 2019 are summarized as follows:

 

 

 

Gains and Losses on

Cash Flow Hedges

 

 

Pension &

Postretirement

 

 

Foreign Currency

Translation

 

 

Total

 

Balance at March 31, 2019

 

$

(0.2

)

 

$

(35.7

)

 

$

(82.6

)

 

$

(118.5

)

Other comprehensive income (loss) before

   reclassifications

 

 

(0.3

)

 

 

0.1

 

 

 

1.2

 

 

 

1.0

 

Amounts reclassified from accumulated other

   comprehensive loss

 

 

0.9

 

 

 

0.4

 

 

 

 

 

 

1.3

 

Net other comprehensive income

 

 

0.6

 

 

 

0.5

 

 

 

1.2

 

 

 

2.3

 

Balance at June 30, 2019

 

$

0.4

 

 

$

(35.2

)

 

$

(81.4

)

 

$

(116.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

$

 

 

$

(38.7

)

 

$

(94.7

)

 

$

(133.4

)

Other comprehensive income before

   reclassifications

 

 

(0.1

)

 

 

0.5

 

 

 

8.6

 

 

 

9.0

 

Amounts reclassified from accumulated other

   comprehensive loss

 

 

0.2

 

 

 

0.1

 

 

 

 

 

 

0.3

 

Net other comprehensive income

 

 

0.1

 

 

 

0.6

 

 

 

8.6

 

 

 

9.3

 

Balance at June 30, 2020

 

$

0.1

 

 

$

(38.1

)

 

$

(86.1

)

 

$

(124.1

)

 


A reconciliation of the changes in accumulated other comprehensive loss, net of tax, by component for the six months ended June 30, 2020 and 2019 are summarized as follows:

 

 

 

Gains and Losses on

Cash Flow Hedges

 

 

Pension &

Postretirement

 

 

Foreign Currency

Translation

 

 

Total

 

Balance at December 31, 2018

 

$

(0.3

)

 

$

(36.2

)

 

$

(80.1

)

 

$

(116.6

)

Other comprehensive income (loss) before

   reclassifications

 

 

(1.0

)

 

 

0.2

 

 

 

(1.3

)

 

 

(2.1

)

Amounts reclassified from accumulated

   other comprehensive loss

 

 

1.7

 

 

 

0.8

 

 

 

 

 

 

2.5

 

Net other comprehensive income (loss)

 

 

0.7

 

 

 

1.0

 

 

 

(1.3

)

 

 

0.4

 

Balance at June 30, 2019

 

$

0.4

 

 

$

(35.2

)

 

$

(81.4

)

 

$

(116.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

 

 

 

(39.9

)

 

 

(81.1

)

 

 

(121.0

)

Other comprehensive income (loss) before

   reclassifications

 

 

(0.2

)

 

 

1.0