The Manitowoc Company, Inc. (MTW) Earnings Call Transcript & Summary

Good morning, and welcome to the 2021 Annual Meeting of Shareholders of the Manitowoc Company. I am Ken Krueger, Chairman of the Board of the Manitowoc Company, and I'll be conducting the meeting today. As you know, we are holding the 2021 annual meeting virtually due to the continued public health concerns related to the COVID-19 pandemic and the priority we place on the health and well-being of our shareholders, employees and other stakeholders. We have worked to offer the same participation opportunities that would be provided at an in-person annual meeting, and we are pleased to have each of you in virtual attendance. It's now 9:01 a.m. Central time, and I'm calling the meeting to order. If you've not voted yet, please do so now as we will close the polls in a few minutes. You may vote by clicking on the voting button on the web portal and following the instructions there. After the formal business of the meeting has been adjourned, we will answer questions that our shareholders may have. Before we begin the business portion of this meeting, I'd like to introduce the other directors of the company in attendance virtually: Anne Bélec, Robert Bohn, Donald Condon, Anne Cooney, David Myers and Aaron Ravenscroft, who is also the President and Chief Executive Officer of the company. Thank you, ladies and gentlemen. I'd also like to take this opportunity to introduce the other executive officers of the company in attendance virtually: Dave Antoniuk, Executive Vice President and Chief Financial Officer; Terrance Collins, Executive Vice President of Human Resources; Thomas Doerr, Executive Vice President, General Counsel and Secretary; and Leslie Middleton, Executive Vice President of Mobile Cranes. Thank you, gentlemen. Also in attendance is Chad Newman from PricewaterhouseCoopers, the company's independent registered public accounting firm. Mr. Newman will be available to answer appropriate shareholder questions at the end of this meeting. It's 9:03 Central time, and since everyone has now had the chance to vote, I hereby declare that the polls are closed. Please note that this meeting is being recorded. However, no one attending via the webcast is permitted to use any audio recording device. Mr. Doerr, our Corporate Secretary, has advised me that all the formal requirements have been met to conduct this meeting. Under the company's bylaws, the presence of holders of a majority in voting power of the company's common stock issued and outstanding and entitled to vote at the annual meeting, in person or represented by proxy, constitutes a quorum. A preliminary tally by the inspector of elections indicates that a quorum is present. For your information, as of the close of business as of March 3, 2021, the record date for determining shareholders entitled to vote at this meeting, 34,688,768 shares of the company's common stock were outstanding, with each share being entitled to 1 vote on all matters properly brought before this meeting. A certified list of shareholders entitled to vote at the meeting is available and may be inspected by any shareholder via the web portal for this meeting by using your control number found on your proxy card. Mr. Doerr will file the list of shareholders with the records of the company and filed a notice regarding the Internet availability of proxy materials and the notice of meeting and proxy statement, proxy card, 2020 annual report and the affidavit of mailing with the minutes of this meeting. Legal notice of this meeting has been given, and there's a quorum of common stock present. This meeting is therefore lawfully convened and ready to transact business. This meeting has been called to consider and vote upon the following items of business, each of which is described in detail in the company's 2021 proxy statement. Proposal 1. The first item of business is the election of 8 directors for 1-year terms expiring at the 2022 Annual Meeting of Shareholders. The nominees are: Anne Bélec, Robert Bohn, Donald Condon, Anne Cooney, Kenneth Krueger, David Myers, John Pfeifer and Aaron Ravenscroft. The company's bylaws require prior notice of any other nominations for director. Since there were none, the nominations are closed. Based on a preliminary count by the inspector of elections of the proxies and ballots submitted prior to this meeting and/or voted at this meeting, each of the 8 nominees has been elected to the Board of Directors with the requisite majority of the votes cast at this meeting. The second item of business is the ratification of the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. Based on a preliminary count by the inspector of elections of the proxies and ballots submitted prior to this meeting and/or voted at this meeting, the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021, has been ratified by a majority of the votes cast at this meeting. The third item of business is an advisory vote to approve the compensation of the company's named executive officers as disclosed in the company's 2021 proxy statement. The resolution being presented for shareholder approval is set forth in the 2021 proxy statement. Based on a preliminary count by the inspector of elections of the proxies and ballots submitted prior to this meeting and/or voted at this meeting, the compensation of our named executive officers as disclosed in the company's 2021 proxy statement has been approved on an advisory basis by a majority of the votes cast at this meeting. There being no other business for this meeting, the formal meeting of the shareholders of the Manitowoc Company is now officially adjourned. I'd now like to introduce Aaron Ravenscroft, President and CEO, who will spend a few minutes sharing a current overview of the company.

Thank you, Ken. Good morning, everyone, and thank you for joining us. As Ken mentioned, I'd like to spend a few minutes to provide a current overview of the company. As we previously announced, we will report our first quarter results on Wednesday, May 5, after the close of the market, which will be followed by an earnings call on Thursday, May 6. Therefore, I will not make any specific comments regarding our financial expectations for 2021. However, I will focus my prepared remarks on the operations of the business over the past year, our strategy for the future, and I will close on a couple of comments on ESG. Starting with our operations, I first want to recognize my team -- fellow team members around the globe for their extraordinary efforts to managing the business amid the-COVID-19 pandemic. I've been extremely proud of how our team has responded, taking quick actions in the first quarter of 2020 to mitigate the health and safety impacts of the virus as well as the financial repercussions of the economic downturn that ensued. In spite of a significant drop in our end market demand during this period, Manitowoc maintained a strong balance sheet, and I'm pleased to report that our key end markets are on the mend. Moving to our strategy. I think it's important to start with a little history. 5 years ago, Manitowoc spun off its foodservice business. From that time, we were extremely focused on making the company a sustainable stand-alone crane company, one that could thrive in spite of the strong cyclical nature of the global crane industry. Since the spin off, we've removed more than $100 million of cost, eliminated excess capacity while significantly improving our efficiency, and we renegotiated our debt which will allow us to invest in our future. Today, we have approximately $400 million of liquidity, and we are well prepared to turn our attention to the growth of business. As we move forward, we will focus on 4 strategic initiatives to accelerate our growth: Number one, build a rental fleet in our tower crane business to expand our market share in Europe; number two, build our Chinese tower operations into a regional business to support the belt-and-road regions while growing within the Chinese market. A big part of this strategy is developing new products that meet local specifications. Number three, accelerate our new product development in our all-terrain business. Over the last 5 years, we've been extremely focused on improving our quality, reducing our product costs and keeping our AT cranes compliant with several new European regulations, such as Tier 5 emission standards. In 2021, we have increased our R&D spending by $4 million with a strong focus on several product launches to be showcased in bauma 2022. And number four, lastly, we now have the ability and are prepared to use acquisitions to accelerate the other 3 initiatives. The core of Manitowoc's business is mobile and tower cranes, and we will use our balance sheet to strengthen those businesses. Finally, I would like to make a few comments on ESG. Since our founding, the culture at Manitowoc has been deeply rooted in respecting our employees, partners and the communities where we work. Safety is paramount in the crane industry. 3 years ago, we hired DuPont Sustainable Solutions to do a safety perception survey. There were several action items that came from this initiative and the most significant was reinvigorating our focus on safety observations. In 2020, we had the best safety performance in the history of our company, which far exceeded industry standards. In reinforcing our commitment to safety in 2021, we adopted safety observations, which we call SLAMs, as a compensation metric. With respect to climate change, we've recently promoted [ Felice Deschamps ] from our European tower business to be our environmental leader. And during the first quarter, we implemented Accuvio, a software solution that will enable us to track our carbon footprint. This data will form the basis of our climate strategy moving forward. Finally, we are in the early stages of developing our strategy around diversity, equity and inclusion. We have a number of ongoing programs that address this topic, one of which is our female mentoring program which is building future female leaders at Manitowoc. Nevertheless, I think it will come as no surprise to everyone at Manitowoc that we still have a lot of work to do in these areas, and we are striving to improve on all of these fronts. In closing, it's a very exciting time at Manitowoc. We have strong ambitions for the future of the company, and we will continue to run the Manitowoc Way to drive our organization in the next step of our evolution as a company, one that is focused on growth. I am honored with the opportunity to shepherd the next phase of Manitowoc's development. Thank you very much. And with that, I'll turn it back to Ken.

Thank you, Aaron. At this point, we will answer shareholder questions germane to the meeting. Any questions that we do not get to and that are applicable to our business will be addressed on our Investor Relations website. I remind you that Mr. Newman from PricewaterhouseCoopers is available to respond to questions you may have. We received a question on nonemployee director compensation. The annual compensation package for nonemployee directors is intended to be competitive relative to general industrial companies of comparable size to Manitowoc. The compensation committee typically reviews the market competitiveness of the nonemployee director compensation program every 2 years with the assistance of an outside consulting firm. We received a question in stock ownership guidelines for nonemployee directors. Our corporate governance guidelines contain stock ownership guidelines for nonemployee directors. The guidelines provide that by the end of the fifth calendar year after the nonemployee director is first appointed as a member of the Board, each nonemployee director should acquire and hold an amount to the company's common stock with a value equal to 5x the nonemployee director's total annual cash, with compliance measured annually at the first Board meeting in a given year based on each employee's non -- a nonemployee's director stock ownership and the stock price as of the close of business on the last day of the preceding calendar year. We received a question on nonemployee director performance. Prior to the expiration of the term of the director desiring to stand for reelection, the Corporate Governance Committee will evaluate the performance and suitability of that particular director. The evaluation includes the opportunity for other sitting directors to provide input to the Corporate Governance Committee or its chairperson and may include an interview of the director being evaluated. The Corporate Governance Committee will make a recommendation to the Board for the Board's final decision on each director seeking reelection. All of the Board's committees conduct annual assessments of their own performance, and the Corporate Governance Committee coordinates the annual evaluation of the Board. We also received a question regarding the company's donations to political parties. The company did not make any political contributions in 2020. We also received a question on the inclusion of facilities in our 10-K. As noted in the 10-K, only the material properties are included, so there are a number of our facilities that don't meet that threshold, but they're not included in the 10-K. Okay. At this time, I'd like to conclude the meeting by thanking you once again for virtually attending the Annual Meeting of the Shareholders of the Manitowoc Company.