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

Good morning. My name is Ion Warner. On behalf of The Manitowoc Company, welcome to our Investor Day. Before we get started, I won't go through the entire slide, but we do have forward-looking statements as defined, as you can see in the document safe harbor statement based on the Private Securities Litigation Reform Act of 1995, and I just want to take a moment, so you can peruse it. We have a really action-packed agenda this morning, and we'll have a business overview by our President and Chief Executive Officer, Aaron Ravenscroft, who'll talk about our forward-looking strategies that really will grow our company and deliver value creation. We'll also have James Cook talk about The Manitowoc Way, focused on safety, lean and sustainability initiatives for the company. We'll then talk about the 4 breakthrough initiatives at the company to propel Manitowoc. Brian Regan will talk about the acquisition process, how we think about inorganic growth opportunities for Manitowoc. We'll have Dave Antoniuk talk about the midterm financial plan for the company. And then Aaron will wrap up, and then we'll go to Q&As. So without further ado, I'll turn it over to Aaron Ravenscroft, President and Chief Executive Officer. Aaron?

Thank you, Ion. Good morning, everyone. How are you doing today? Thank you, Matt, finally, the love that I appreciate. It's great to be here. It's great to be back in New York. We really appreciate everyone coming in today. And we also understand that a lot of folks couldn't make it with the Omicron situation, and we got a lot of folks on the phone. So we'll do our best to be considerate to the folks that are taking this in virtually. Let me make sure I learn how to use the clicker right. Okay. So first thing I want to do is just talk a little bit about the picture that's on the screen here because I think this does an excellent job of really symbolizing and telling the story of what Manitowoc is really all about. This is a project that started 5 years ago in the Quad Cities. So it's the bridge that goes between Illinois, in Moline, over to Iowa. The original bridge was built in the 1930s and it was 2 lanes. So it was an old steel structure. About 5 years ago, these folks put this out for bid. At that time, Luna was the construction company -- or Lunda was the construction company that took it on. But when you look at this picture, it's more than just the engineering element of it that you think of designing the architecture. In fact, there's a huge amount of engineering that goes into the barge and then to put a 300-ton crane on to the barge to do these sorts of lifts. So this was a lot of work done by our partners, Maxim. They had 5 or 6 different crawler cranes on this project. But for me, and when you really spend time with Manitowoc, with our team, what you start to realize is a lot of times we talk about products. But the reality, our passion for the business sits in what we're doing with our machines. So if you look at this and you think about what our contribution is to this, we're actually bringing 2 communities together. And as we go through this presentation, that's what I really want you folks to think and understand, is that we're changing the way that we do business. We're not in the business of products. We're in a business of solutions and services and supporting our partners, whether they be crane operators or large construction companies. That's a big change for us as a company. So in a couple of weeks, we'll be able to celebrate our 120th anniversary as a company. We were founded in 1902 as a shipbuilding business. And the one thing that's really kept the commonality through 120 years as a business is we've always been product focused, whether it was building ships, building submarines, building cranes, building food machines. I mean our history is really based on machines and products. The real interesting part about this is, believe it or not, in 1925, we got in the crane business to diversify our revenue streams to offset the cyclicality of the shipbuilding business. So who knew that 100 years later, we'd still be fighting with all these crazy cyclicalities in our business. The biggest change, of course, we made the acquisitions of Grove and Potain in 2001 and 2002. Interestingly enough, I was actually a sell-side analyst at the time. Got to know a little bit about the acquisitions from the outside, know a little bit more now. But again, when we did those acquisitions, we extremely focused on how do we diversify our geographic footprint and our application footprint. If you look at the products we took on, they were very different. Again, it was -- diversified ourselves away from the cyclical nature of the crawler crane business, which is predominantly in the United States. However, in the last couple of months, we've taken it a whole new direction. We're transitioning Manitowoc to be a service company, a supporter, I call it fleet support services, whether it be running cranes or doing the field service work. But at the end of the day, we're tied to being partners with the folks who go and rent the cranes, the crane operators, the folks like Maxim Crane and key with those sorts of customers. But that's a totally different approach. We've got to be much more local, and that's the real significance of these acquisitions. The other interesting part about these acquisitions is that it's the real testament to what we were able to achieve since our last meeting 5 years ago. Last time we got together was in Shady Grove, Pennsylvania. I think it was November of 2016. Steve reminded me earlier that it was also the day after the election. So at the time, we were all super excited with the possibility of an infrastructure deal which we'll talk about later. But that didn't come to fruition. That being said, we continue to control the things that we could control. We took out over $100 million of cost through restructuring in The Manitowoc Way. And in 2019, a huge credit to Dave and his team, they restructured our debt and put us in a much favorable position in terms of our interest rates, but also the springing covenants which allowed us to do these acquisitions. So if you look at the deal in total, we spent 6x for $30 million in EBITDA and it only cost us $1 million in interest payments. So we'll be cash accretive in our first year or sooner than our first year and then we'll be EBITDA accretive within our first 12 months. The other thing I want to point out here is, in these businesses, our non-new machine sales is over 60% of the total sales. Probably on the high side when you think about it historically, just because the overall machine business was slower with COVID the last 12 months. So we really think the timing of these acquisitions is great for us. But when you consider that more than 50% of the sales of these businesses comes from these less cyclical, higher margin components of the crane industry, that's great news because today roughly our core business were 25%. So it's really shifting the revenue streams that we have. So these acquisitions really are changing, not just how we go about business but who we are as a company and what our future will look like. So major takeaway I want you to have today is that we are totally focused on building a much more financially resilient company, one that's just not riding the crane cycle up and down. We want to build out the business in a way that we have less cyclical in nature, we have higher margins through growth, not just cost cutting we've done in the last 5 years. But this all starts, number one, with our culture, which I'll take you with through. I mean the base premise of everything we do at Manitowoc is the use of The Manitowoc Way, whether it be lean, innovation or growth or even ESG. That's how we tackle all problems. And that's really our -- the heart and soul of how we do things. It doesn't matter if it's an acquisition, a sales process, a finance process or machining a part out on the shop floor. Secondly, as I say, we're very focused on growing the aftermarket. Non-new machine sales is the term that you'll hear a lot from us in the coming days and in the future, as well as how do we build out the fleet support services. When we first made these acquisitions, there was a lot of questions about rental. But really, the rental aspect is how we're working and supporting our customers. In most cases, we're actually a supplement to our customers. We're their partner to help them be able to go out and execute projects. And acquisitions will be a core part of who we are and what we're doing. There will be more to come on, not just the 2 we've done. So I want to talk a little bit about culture and why this is so important for us. We really have 3 pillars to The Manitowoc Way. First is employee engagement, second is innovation and then lastly is growth. When you think about employee engagement, there's no greater opportunity for us to engage our employees and develop our employees than Kaizens. I'm a very traditional old-school Toyota production system guy. At the end of the day, when you have problems, you got to put them forward and go find solutions. The only way you do that is through people working as a team. So any time we have a Kaizen, there's always a certain level of training. There's champions and there's -- and frankly, there's doers. But through that process, it allows us to engage a lot of folks. And to be honest with you, that's really how we've started to develop our organization and to identify leaders throughout our business, whether it's moving them around into different roles or just seeing them execute acquisitions and finding the folks that really are the leaders in our company to be promoted or move them into more aggressive development plans or using coaching. But the base premise of this really started 6 years ago when we introduced The Manitowoc Way, and we started doing Kaizens out on the shop floor. That's since evolved. So as we've taken on ESG in the last 2 or 3 years, we view that as just an integration into The Manitowoc Way of us trying to solve problems and to continuously improve. The second pillar here is innovation. So over the last 5 years, we've launched 60 new models or products. I think, again, this has become something that I wouldn't call breakthrough anymore. This is normal course of business for us. The team will take you through different successes we've had in the last 5 years, but also start to give you a feel for what we intend to do to the future. So there's still a lot more work for us to do. And for us, in the crane business, constant new products is key to growth. The other things that are starting to evolve, we've talked a lot about the investment in our tower crane rental fleet in Europe. And that's why I say it's really bringing innovation to how we go about business and do sales. Traditionally, we never used renting cranes' avenue to actually sell cranes. Typically, in the tower crane business in Europe, you'll rent a crane for 2 years before you actually sell it. So you rent the top off, let to get the acquisition price down and then sell it. We had some great rental partners and old dealers that have done that, particularly in France, they do it very well. But we have other markets such as Germany where there's a lot of opportunity, and we're learning from some of our customers in some of the more core markets as we build those out. And then the last thing you'll hear about today is, it's Internet of Things as well as electrification. So as we look out over the next 5 years, it's how do we get more connected with our machines and bringing more information and more value through data. And then, of course, it's electrification in our efforts to reduce our environmental footprint. And then the last pillar is growth. How do we grow our market share? How do we grow our presence? As you can imagine, when we had this meeting 5 years ago, there was a lot of discussion around what our quality situation was, how we were going to improve the quality and reliability of our products so we can go grow market share. I think we've taken a strong stand on those items. We still have plenty of opportunity given that we believe in continuous improvement. This is going to be a never-ending journey for us. But if you read all of the surveys that go out, you see much fewer and fewer every month feedback from customers regarding our quality and reliability. Of course, we've closed 2 acquisitions. And then over the coming future, we'll continue to invest CapEx in our rental fleets to help support our customers as a supplemental option for machines. So again, this is what drives Manitowoc. This is how we do business. This is our operating system. This is what we talk about every single day. This is how we address problems and how we figure out how to get better and to get closer to our customers. Because at the end of the day, all of this starts with the voice of our customers. So in any good lean company, we also use Hoshin Kanri, our priority deployment. We've identified 4 strategic initiatives or breakthrough initiatives. We'll take you through these strategic initiatives or breakthrough initiatives throughout today's presentations, give you more color as to how we got into this. So the first one is grow the tower crane rental business. So I'm now Christophe's biggest customer, at least in the fourth quarter of this year. He owes me some machines. But we've invested $15 million this year in the rental fleet, and it's giving us great opportunities to grow our market share, not only in Germany but also with certain strategic accounts. So there's a lot of large construction companies, folks like VINCI and Bouygues in France, they'll go out and do projects maybe in the U.K. or Germany. But by having the rental fleet, it gives us the flexibility to really pursue those projects where they're asking for rentals as well. The second initiative that Les will take us through is accelerating the new product development of our all-terrain cranes. So we have fallen behind the bid in this product line. We spent the last 3, 4 years, superfocused on trying to meet the new regulatory standards, whether it be the Tier 5 emission standards or EN electrical standards or the new crashworthiness. So Les will walk you through what we're doing to accelerate our product development. And again, we're making some investments -- additional investments here that we haven't done in the past. The third initiative, Brian Wang, who runs our business out of Asia Pac, he was unfortunately unable to join us because of the travel restrictions. So Christophe is going to walk us through what we're doing in the Belt and Road regions to grow our tower crane business, really evolved. One day, we had a Chinese manufacturing plant. We've made a big effort to grow that into a tried-and-true business that serves the region. And then the last initiative on the back of the acquisitions, Les will take us through all the things that we're doing to get closer to our customers in North America. So for the million dollar question that everyone always has. When is the crane renaissance going to come? When is the next big cycle going to come? I think if you look at all the data points, there's definitely a lot more confidence today. Five years ago, Dave made the same prediction but he was wrong. Sorry, Dave. I mean I think we all thought in 2016, especially after the Trump election, that there would be an infrastructure program and that would really be the beginning of the next big run. That did not happen. There was no infrastructure plan. But I think there were a lot of things that were extremely different 5 years ago from where we are today. First of all, I think many of you have pointed out the advantages of rising commodity prices and how that benefits the construction industry. I mean that environment is entirely different. Even oil prices, which are somewhat oppressed at $75, that's still way better than where we were, and it feels like there's upward pressure there. So we really believe that that's going to provide some stimulus force. The other thing that's happening, of course, is we've got the infrastructure plan in the United States and then the Global Gateway program out of the European Union. So a couple of days ago, the EU announced that they're going to invest EUR 300 billion. So it's not unlike our $500 billion that we're investing in the United States. So that's a lot of stimulus to go in the construction business. And then, of course, a lot of this is on the back of the investment in our grid and alternative energies. And all these applications take cranes and are good for us. And to me, the real key there is it's giving us confidence. So in our business, it's tougher when you think about investing $1 million in the machine and you might need to renew 100 machines, it's a huge number. So our customers need to have confidence that the business is moving in the right direction. Now just to give you some feel for where we were 10 years ago, I guess, it's 2004 to 2008. During that period of time, on average, the industry in North America shipped 1,800 RTs. On our last "mini boom" here in the last couple of years, our average is around 600, and today, we're around 500. So do I think the 1,800 was overdone, yes, probably overdone. That was probably too many. But when you look at where we sit today, that's a really low number. And so if you take -- if you peel the onion back and you start to look at some of our customers and talk to those folks, what you really saw in the last 5 years, which is what I think we missed, was a lot of our customers, if you look, there was a lot of consolidation, the large crane rental houses were buying up some of the smaller folks and that was their avenue for growing their fleets. It was more effective cost wise for them to go do an acquisition of a smaller entity in the industry to grow their assets. But when you talk to those folks and you really start to understand what's in your fleet, you'll find out that a lot of these folks have rental fleets that are now more than 10 years old, which makes sense when you look at the chart. I mean these are our revenues, but this pretty well matches what the industry did. In some instances, we're hearing of large crane rental houses that have crawler crane fleets that are on average 5 and 20 years old. And the same is true. I mean almost everything across the board is more than 10 years old, which really matches what the chart says. So at some point, there needs to be a renewal. So I think all in all, there's a lot of things pointing in the right direction that timing is good. And I mean, the ultimate data point for us is if we look at our trailing 12 months orders, we're $2.2 billion. So for us, that's the largest, we've seen the largest backlog since I've been at the company and the highest order rates. And even when we look forward, there's still a lot of optimism, whether it be in Europe or the United States. I have said China is slowing a little bit, but throughout Asia Pac and the Middle East, there's a lot of positive signs. So hopefully, we'll get through our current supply chain crisis, and we'll start to come out of this and see some lift. So with that, I will pass it to James Cook. He's going to take us through all the things we've done. James joined us 4 or 5 years ago, he started in safety. And then since on, taken on challenges of The Manitowoc Way. He also handles sourcing and our ESG efforts. Thank you.

Thank you, Aaron. Good morning, everyone. So Aaron said, I'm responsible for health and safety, The Manitowoc Way and have also been taking on all of our ESG programs here at Manitowoc. Fundamental behind how we approach safety at Manitowoc is our safety vision. We firmly believe that every injury is preventable. Every failure every time an employee is hurt through our operations, we know that we could have done better, and we can prevent that. That's key behind our safety vision, and that's how we approach every failure when it comes to our workforce and keeping them safe. What's also been really influential in the last few years around our safety performance and how we've improved safety at The Manitowoc Company is SLAM. SLAM stands for Stop, Look, Assess and Manage. And this is our hazard observation program around how our employees can take risk that they identify and the hazards that they identify in their workplace and mitigate that, how they can put in control measures and reduce the likelihood of injuries happening within the environment that they work. I'll get into in the next slide how powerful that's been and how influential that's been in reducing the number of accidents we have. And our goal, of course, is 0 injuries. This is critical. This is what we want. We want our workforce to go to work safe and come home maybe a little tired but safe at the end of every day. And that's really important. That's our ethos. That's how we approach every meeting, every engagement when it comes around safety that our goal is 0 injuries, and that's where we want to get to. So the chart here gives the story behind how we've improved safety over the last 3 years. Our recordable injury rate looking back 3 years from January 2019 stood at 1.89. So that's 1.89 recordable injuries by the OSHA standard for every 200,000 hours that we were working. Since then, we've driven this down to 1.53. This is a huge reduction. The industry standard, we were already performing better than the industry standards, stands at 4.1, so 4.1 accidents per 200,000 hours. So we took this 1.89. We saw it as a challenge. We implemented the -- we took The Manitowoc Way, how we approach all the challenges that we have here. And we drove that number down through daily hazard observations within the organization. Every employee they're expected when they are presented with a different kind of task or the task changes or they have to look at, they have to look at a different way of approaching a particular task. They're expected to do a hazard observation. So every time a technician goes to a job site, they're expected to do this pre-work risk assessment, make sure that they've accounted for the different types of risks and undertake those, and that's how we've managed to drive our recordable injury rate from 1.89 down to 1.53. This year, we'll have conducted globally, throughout the entire organization, 55,000 SLAMs. Last year, it was 27,000. So you can see how this has had a massive effect on our safety performance here at Manitowoc. We've also made it easier for our workforce to report on the different types of hazards and risks and how they've tackled it. So we developed what's called the WorkSafe app. This has taken the SLAM process and made it accessible to every employee via either a mobile app or over their computer. It also allows our field technicians who might be out in the field, it might be a few days before they come back to a crane care site, to digitally report their hazard observations. Their supervisors can review and they can also comment on the submissions. It also allows immediate reporting of high-risk observations generated through an automatic e-mail, which is sent to the supervisor or the business leader. And this allows us to take corrective actions, record these, and make sure that they are being closed out. It also shares the lessons with the rest of the organization. I take time, I review these as well. I look for the SLAMs and make sure that we are driving quality also into the system, that, that 55,000 is not just -- is more than -- or making sure that, that 55,000 number has quality inside as well. Here, you can see the app. It's interactive. The employee can include hazard descriptions, do a risk assessment. They can add photos, which is also really important that you can see what the guys saw on the shop floor or at the job site when he reported this. Moving on to The Manitowoc Way in regards to employee engagement. One of the most important tools that we have for sharing our lessons learned, how we've implemented improvement, the outcomes of Kaizens is through our Lessons Learned program. It focuses on safety, productivity, problem solving. This year, we will have over 800 entries. And any employee can submit the lessons learnt. They come from really the shop floor, supervisors, managers, and we review these on a quarterly basis. We look for the best ones. We review for each business region. We review these and reward the best entries on a quarterly basis. And at the end of the year, we round all of these up and have an annual prize giving. The 3 you see here, these are the winners and the runners up from the global -- from our global review of all the lessons learned that we submitted. Wilhelmshaven in Germany, they implemented a boom measuring device, and you'll see a video of this later. That achieved significant reduction in cycle time per each boom being measured and achieved a major quality breakthrough. Zhangjiagang, our team in China, they implemented a jib bracing punching cell improvement, a relatively straightforward improvement within the cell that achieved a big saving and improved the utilization of the machine in use. And then Charlieu, our French site, they undertook a Kaizen on robot welding around our GMA, our self-erecting tower crane, the legs that come out of the side of the chassis on this, they really improved the utilization of the welding robot there. Lessons Learned program is really key for us, and it really drives and engages the workforce to share the improvements, and we reward and recognize that as well. One of the most exciting improvements that came out of the Lessons Learned program this year, it was actually just on the turn of the year, was our Robotic Boom Greasing Process. So you can see here on the top of the slide, the employee used to have to climb inside the boom and grease the inside of the boom from the top to the bottom and climb out of the boom. This is not -- this wasn't a pleasant job. This is a very difficult job, ergonomically challenging might be an understatement. So the new process, we set about, we looked for different ways of how we could tackle this. Our employee, Saliem Hammad, he's a product of Manitowoc. He was an apprentice. He worked on the test field, and he was a test field supervisor. He was approached, and Saliem is a real -- he's a real problem solver. We approached him with this problem, and he came up with a robotic greasing device that was developed and manufactured in-house by our own apprentices. I have a video to show you. [Presentation]

I'm really proud to share that video with you because that really epitomizes the employee engagement around The Manitowoc Way. Saliem did a lot of this work in his own time. He set about in his shed programming the software to be able to do this. He engaged the apprentice program that we had in Wilhelmshaven. He did this all for $15,000. We approached outside companies who are making -- who offered a not-as-robust solution as this for over $150,000. So this is a huge saving for us. And we rewarded Saliem at the end of 2020 with the CEO Award. So this is an award that recognizes personal contribution to The Manitowoc Way, and Saliem is a real -- he was the first receiver of this or the first recipient of this and really shows how powerful The Manitowoc Way is in regards to employee engagement. Moving on to ESG. This is the third year that The Manitowoc Company has published a corporate sustainability report. This was also the first year that we issued a TCFD, the Taskforce for Climate-related Financial Disclosure, which really talks about our strategy and the risks behind climate change and how it affects Manitowoc. And we also released our first SASB report, which is much more focused around our environmental footprint and also some social KPIs as well. I really encourage you to look into our corporate sustainability report. It really shows what we do in respect to environmental improvement and our social programs, diversity, equity and inclusion, our safety programs, how we engage the community as well and how we engage the workforce. It's a really, again, something else I'm proud of here at Manitowoc. I think it really shows how active our workforce is. So with that, since December 2018, we've come a long way in our ESG programs and what we've done and how we share that with the outside world. The ratings that you see here are from 2 of the largest ESG third-party rating organizations. We have -- our performance in regards to environmental and social was particularly bad back in 2018. Here, we've driven our numbers down to really, within the sector that we work in, leading scores. And you see the same from MSCI. We were rated back in May 2017 as BB and now we're A, which puts us much further along in regards to other organizations in the similar industries that we work in. Thank you very much. I'll now hand over to Christophe Simoncelli, our SVP for Towers in Europe. There's a step here, Christophe. Safety.

Okay. Good morning. My name is Christophe Simoncelli, and I'll be talking to you about the European activities for Tower Cranes. So a quick overview first. Our Tower product portfolio is made of 2 different product lines. We have the self-erecting cranes, also named or called GMA. This product line includes about 20 models ranging from 1 to 6 ton max load. And this machine can be erected and dismounted with a remote control in a few hours. They can also be transported on a single trailer. And they are aimed at construction jobsites for building height, which are not exceeding 100 feet. The second part of our product line is made of top-slewing cranes, also called GMEs. We have up to 30 models, which are available in this range with capacity -- max capacity ranging from 6 to 60 tons. Those cranes are mostly used on large jobsites, including infrastructure projects and high-rise buildings. Our European operation includes 4 factories located in France, Italy and Portugal. Charlieu in France and Niella Tanaro in Italy are focusing upon the self-erecting cranes, so the GMA. And the plant of Baltar and Moulins, Baltar in Portugal and Moulins in France, are focusing upon the production of GMEs, top-slewing cranes. A few words about our new product development. So new product development is one of our key success factors. We intend to cover all market segments in Europe, which are ranging from small self-erecting cranes that will be used by carpenters to 60-ton max load top-slewing cranes that would be used by big contractors on their large jobsites. But here are some of the most recent new product launches. So I'll start with the HUP M 28-22, which has been developed for higher mobility and very easy jobsite access. So it's very maneuverable, and it's very compact to achieve those targets. Next one is the IGOT 99, which is the first telescopic unit, which is equipped with our CANBus control command system which provides increased performance and higher safety levels. In the middle, you see the latest MDTs that we launched. So we developed those big capacity GME models in order to provide to the market a better solution, specifically for precast element or heavier loads. So these machines combined improve load charts and faster and easier erection as well as reduced transportation costs. Finally, the hydraulic luffing crane model, which is namely MRH175, was specifically designed for congested jobsites and in very crowded areas, in urban crowded areas. A few words about a large transformation we've done in our Portuguese facilities. So this transformation was needed to modernize our production facility in Portugal, but also to cope with an increasing demand of midsized top-slewing cranes. So before the transformation, we had 2 plants in 2 different locations around Baltar. We had one, which was pretty old, highly labor-intensive and not really at the standard expected in terms of safety and productivity. And the other one was more recent but a bit smaller. And you can see that one. That's basically the white part on the slide. So what we did is we closed down the old one and we transferred all activity into this one. So the first phase, which is in green on the slide, was completed back in 2018 with the creation of a new assembly area, a warehouse and shipping yard. And the second phase, which is highlighted in blue, was completed last year, and it includes a new welding hall, another extension on the assembly hall, waste area, additional storage area and also parking lot for employees. The production never stopped during the transformation. And actually, the activity level continued to grow, in particular, with the addition of new models that were previously manufactured in France and that we transferred to this new plant in order to carry on -- to do some further cost reduction. But I'd say, beyond the brick and mortar, we invested a lot of -- into new machines and new tools. We completely rearranged the production floor in accordance with The Manitowoc Way in order to improve the quality, to increase capacity, of course, and reduce cycle time and lower the product cost. And these initiatives were really key to maintain our profitability and our leadership on a very competitive mid-class -- mid-size, sorry, top-slewing crane segment. Another example of The Manitowoc Way is what we did in Moulins plant with a new tube cutting line. The tubes are pretty critical for -- are critical components to build our cranes. We use all kinds, all kind of diameters, all kind of lengths, thicknesses and shapes. I think to cover the complete top-slewing range, we use about 2,000 references. And if you look only about an MDT 809, which is one of the biggest cranes we produce, to product a jib, which is on the top part, we use about 200 different references. So we used our Manitowoc Way principle to review solutions to make the tube production leaner. And we installed and put into service this year this new automated line, which combines [ curing ], heating, shaping and [indiscernible] operations. And we have a short video for you. [Presentation]

So in addition to cycle time reduction, capacity increase and the quality improvement, we also get the flexibility that we need to produce all the different tubes needed to build a jib section. That's about innovation. So of course, new product development doesn't come without innovation. So here's an example of what our engineering department developed recently. So these batteries can supply enough power to set up and erect self-erecting crane and to operate it at low motion if the power supply is not yet ready at the beginning at the jobsite. And believe me, this happens pretty often on small construction jobsites. So it's a good time saver. The battery also compensates for weak power supply, allowing the crane to keep working without downgrading its performance in such condition. And finally, these batteries will recharge when the crane is operated at low intensity or when it is not operated. So they will recharge on the grid or the generator which is supplied to operate the crane. Another point concerning the electrification. If we look at the carbon emission over the life cycle of the self-erecting crane, it's actually much lower than what it is for telehandler, for instance. So replacing a portion of [indiscernible] engine powered products by self-erecting crane would be probably one of the best opportunity we have to reduce environmental impact on construction job sites. In the next slide, I'll be talking -- I'll be focusing upon the growth initiatives for the rental and aftermarket activities for towers in Europe. So the pie shows different component of the tower crane market in Europe. As you see, the rental activity accounts for the largest part of the market. It is also less cyclical than new crane sales, and it generates recurring revenues. Today, all contractors fulfill a significant part of the need through rental. Even the ones operating themselves a large fleet of cranes will probably go for -- 20% of what they need will be fulfilled by rental as a minimum. Rental is also a very good selling tool to acquire new direct customers, which are not yet familiar with our product. And it provides as well an access to the used crane market. You may see basically a rental fleet as a kind of used crane factory. And the used cranes offers also opportunities to better penetrate price-sensitive markets or to compete against low-cost producers. Finally, both rental and used cranes are basically contributing to grow our presence and our fleet and to put our fleet into those markets, which will ultimately generate additional opportunities for service and spare part business. But obviously, rental and service activities requires a solid footprint. Contrary to the historical distribution channel, which are used in North America for mobile cranes, in France, although we do have a distribution network, we also -- we've always managed directly a fair share of our sales. So our main base -- this is why our main base is in France, where we have our spare part logistics center, our main training center as well as our technical support department. But we also have about 90 field technicians who service the cranes, the GME cranes mostly, of our direct account over there. And France is the largest market in Europe for top-slewing cranes and it is also, by far, the largest contributor to our aftermarket revenues. Germany and U.K. are respectively the second and third largest GME markets in Europe. And this is obviously where there is opportunities to grow of the aftermarket footprint. So in Germany, we already started by creating our rental fleet, and we'll keep expanding it, and we'll continue to strengthen our service coverage to acquire more customers. And the continuous renewal of the rental fleet in Germany will also produce used cranes that will help us to increase our penetration into Eastern Europe markets such as Hungary, Czech Republic or Poland. Finally, we'll also continue to grow our aftermarket footprint in U.K. to further develop our business with key contractors over there. So basically, as a summary, I'll say that we'll definitely continue our initiatives to grow our aftermarket sales, providing customers focused offering. And with that, I'll pass it on to Les who will present you on the Mobile Crane side.

Thanks, Christophe and James, I viewed the step there. So good morning, everybody. I'm Les Middleton. I'm going to be speaking to you today about our all-terrain product line, giving you a brief introduction of the product as well as talking about our strategic initiatives to increase our velocity for new product development. Aaron had highlighted the photo on his original opening slide. This one, I think, is really unique for us because it just really emphasizes the fact that cranes aren't always used for infrastructure. They're not always used for putting a nacelle on a wind tower. This particular photo is actually an AT at the Vatican placing the Christmas tree this year, right? So it's not always exactly the certain way we think of cranes being utilized. The AT product line for us is our most technologically advanced product line. It's also our one true global product offering, meaning that the product that is produced in the AT product line ends up in every end market that we service today. So that's a bit unique because most of our other product lines tend to be somewhat regionally specific. So the team in Wilhelmshaven, where the product is produced, has to really take into account all of the end market regulatory requirements and needs for the product's performance. The product line is made up of 15 machines today, ranging from 55 U.S. tons to 550 U.S. tons and is produced in Wilhelmshaven, Germany. We have a team there of about 1,000 people, both design and production entities. But much like all of our manufacturing sites, when we joined the organization 5, 6 years ago, lean was something we were practicing, but I would say something that was not deployed widely. So when we went through all of our various manufacturing locations, you could see very traditional construction styles, very traditional product flows, very traditional mindsets for the way the factories were organized. So the photo that you see here from 2017 is from Wilhelmshaven, it is from one of the halls at Wilhelmshaven. And in typical fashion, we would have like machines gathered together, working in a department because it was efficient, so you could have operators who are used to running horizontal machining centers or vertical machining centers, work on the types of machines that they were comfortable with. And we would -- we had a factory focused on making parts. We didn't have a factory focused on making cranes, interestingly enough. So it's really difficult to visualize the production flow through the entire footprint and you could not tell if we were winning or losing at any given point in time. One cell could be doing a great job, making their particular widget but another cell could be falling behind producing its parts and when it came time to try to put the crane together, of course, you didn't have what you needed to get done in order to meet customers' delivery expectations. So you flash forward to today, that's the same photo of the same hall. And of course, it looks drastically different. Well, what we've done is the entire production flow has been reimagined. We now produce the product based upon major components. And we have value stream leaders that are focused in that area, and they now produce product to takt time, basically, the heartbeat of the business, the customers' demand cycle time. So the photo today, of course, you see no machining centers up there. So we've completely reimagined the entire footprint. So where we had machining centers before, we may now have assembly centers. Where we had paint lines before, we may now have fabrication centers. So I think every asset in that business has moved over the last 5 years, one of our largest capital projects that has been undertaken since we've joined the organization. The other thing that I think is really exemplary here is that this is what drives employee engagement, right? They see us investing in the business. They see us thinking about how do we meet customers' needs. They see us taking safety into account. In fact, the greasing robot that James highlighted for you actually is deployed at the very top of that photo in the upper left-hand corner. A crane historically would have traveled about 4 miles in its production cycle at Wilhelmshaven because we were moving parts back and forth and all over this campus. We've reduced the travel distance by 66% through the relay out of the facility. And that's really significant when you think about what it takes to move a crane before it's under power. So we have all this forklift movement. We have all of these crane picks, there's lots of rigging, lots of opportunity for injuries. So not only did we focus on driving our product -- excuse me, our performance in operations through efficiency we're also very focused on how do we eliminate risk for our employees. And it's funny. We're a crane manufacturer, but we hate crane picks right? We don't want to be picking up our own product as we're producing it. So it seems a bit counterintuitive. But when we really run through the risk assessments, we can see just how significant the risk is every time you pick up something that weighs a few tons. So the team in Wilhelmshaven has done just a fantastic job there. And again, it's a 75-year-old facility. There's a lot of problems in a 75-year-old facility. That team has been hyperfocused, and they're really doing a great job led by the team -- led by their leadership team there. James introduced you to The Manitowoc Way Lessons Learned program. This is actually the 2020 winner. I'll kind of set the stage here for you a little bit. Our telescopic booms are a series of welded tubes that ride one inside of another. And when you want to extend the boom, we have a hydraulic cylinder that forces those sections out one at a time or multiples at a time. So you can imagine it's a pretty dynamic situation. You've got droop, you've got weight out there on this thing. So they have to ride together very smoothly, otherwise you're going to have errors. So as these things start to telescope out, they ride on a wear pad or think of it as a shim. It's a nylon pad. When we would assemble these historically, we were kind of in this trial and error mode. So the operator would say, "I think it needs a 3-millimeter shim. I think it needs a 6-millimeter shim." And we were really reliant on the operator, right? The human being had to look at it. He had to assess it. Nah, there's a little bit of slack over here. Uh, it's a little bit tight over here. So he was constantly adjusting the shim installations. Well, needless to say that drove us to have quality issues, right? Because we're reliant on the person to make decisions that you couldn't qualify very well. So we were reliant on a senior person who could do it. And if we bring a new person out there, it'd take them 5 years to learn how to do it well. And even when we were doing it well, we were still finding problems way down the line with respect to quality. And you couldn't test for it before we got it on to a crane very effectively. So you flash forward to today, and the team has come up with a touchless measurement system. So we're using optical sensors and lasers to effectively characterize each of the components. So we're going to measure the geometry of the part, then the software takes all of that geometry measurement and creates a build plan for the assembler that says, "Here, you put this shim here, you put that wear pad there, you put this shim here." So in the end, we end up with a highly functioning product our first time through. And we've got a quick little video here for you to get a better idea of it. [Presentation]

One of the unique takeaway from this is it's our first foray into learning software or into machine intelligence. So here, once we have the build plan, it goes out, we assemble it. If we have issues with that product after it's built, that information can be fed back in to the system and the system learns from it then, as for the next time through, it won't make that same mistake. So this has really been exciting stuff for us. I mean visual inspection is not necessarily breakthrough technology, right? It's deployed in lots of different end industries. But for us, it's something that we had never experienced before. The team in Wilhelmshaven did a great job here. And it's been a real mix of engineers, shop floor people, supervisors, kind of everybody coming together, again, the essence of The Manitowoc Way, to come up with a solution that just absolutely knocked it out of the park. So with respect to our breakthrough objectives in ATs, our focus isn't so much on, gee, can I make it faster, can I increase our velocity in production? Our real focus here is how do we affect the velocity of our new product development. Aaron had mentioned in his opening comments, we've spent the last several years focused on regulatory issues and development and solutions related to that more so than on the release of new products. ATs are a product that, as I mentioned, it's our most technologically advanced. They have the highest use cases in terms of criticality. They have to be rotable, right? They're driving to their sites. They may be a taxi crane that goes from site to site each day, making multiple lifts. They may be on a site where they stay there for several days, setting steel on a bridge. So they have a super varied use case study that's out there. As a result of that, you have to have a proven product pretty much in every segment. There are 2-axle ATs, 3-axle ATs, 4-axles, all the way up to 8-axles. So in each of those particular size classifications, you have to have a global winner. So if you're not constantly releasing new product and innovating, you have a tendency to find yourself out of position going forward, where you might have 3 or 4 really good products but you need 7 or 10 or 12 really good products. And over the last 3 years, we found ourselves ending up with a few gaps with respect to that strategy. Customers will have a tendency or certain global customers, large strategic accounts will have a tendency to want to buy large bundles, meaning they want to buy machines in every classification in one tender. And if you find yourself where you were missing, you don't have a great 4-axle or you don't have an 8-axle or something along those lines, you can find yourself disqualified from that tender and you can then cannot participate very effectively with that end customer. So with that in mind, we've really been focused on how do we fill out our product line. In the past 12 months, we've increased spending by about $5 million on engineering. That's been a mixture of adding internal resources and engaging third-party experts. That's a significant increase year-over-year for us. Along with developing new machines, we've also been looking at driving our kind of our key technology architectures forward. And why that's important to us is we also get to take that technology and deploy it to other product lines around the globe. So it's not unusual for us to have pin booms on our RT products or our MAXbase variable outriggers that we deploy onto other machines, our CCS, those types of technology platforms get scaled across all of the products in our portfolio, many of them are driven in development here with the ATs first. So as I have mentioned and Aaron had mentioned, for the past 5 years, we had struggled in terms of releasing new machines because our focus just simply wasn't there. So the graphic clearly displays for you that we are less than one machine a year. Going forward, our plan is to effectively double our output going to 1.5 machines a year. We're going to be filling really critical gaps in our product line today, including producing the largest AT that we have in our history, hopefully, by the end of the time line. I had mentioned technology architectures. This is one example. So of course, we had CraneSTAR previously, if you follow our product line. That was our telematics product. It was effectively condition monitoring in GPS location, kind of just fundamental telematics functionality. Grove Connect, our newest product offering here is much more than that. So in this particular instance, Grove Connect will allow you to remotely diagnose problems on our cranes similar to the diag product that we have in tower cranes. It will allow a remote service technician to be able to connect live to the machine while there's an operator in the cab, see what he's seeing in terms of the errors, potentially troubleshoot that error live right then with the operator, resolve his problem and put him back to work. Whereas historically, if we couldn't do it by phone, we couldn't solve the problem with them, he'd have to lock the crane out. We'd have to dispatch a service technician. So that service technician may not get on site until the next day or sometimes two days if it's a very remote site, really costing our customers valuable time at the jobsite. So remote diagnostics are huge, gives us the ability to solve the problem. If we can't solve the problem remotely, it also at least gives us the ability to understand the failure in detail and make sure we pre-provision the appropriate spare parts on the service vehicle. So when it's going out, he's bringing the parts or she's bringing the parts that they need rather than getting out there, diagnosing and say, "Oh, gee, I need that hydraulic pump. Now I have to go back to the shop." And again, it's another day's travel. So again, huge time savings for us and not the capability that we had in our previous equipment. Beyond kind of those obvious savings, we also now have the ability to push software updates to our crane. So think about your handheld device. We're also accustomed to get your software updates, sometimes too many of them, right? You wake up the next morning, your software is updated on your phone. We can't do that on cranes today. Today, we legitimately take a PC and a thumb drive, and we have to go out to the crane, again, it could be hours or days away from our service center, plug it into the crane and load the software update. So that forces us to not want to update as frequently, right? So we end up kind of bulking up these patches. So we have a lot of information to move over all at one time. And sometimes it means we can't address problems quickly enough for our customers. So again, all of that focuses on keeping cranes up and running and managing and our customers getting better return on their investments. And on the dealer side, we didn't leave them out of this either. Grove Connect also creates a dealer portal. And inside of that dealer portal is a shared knowledge center. So this is done in conjunction with our service ticketing program, but that allows dealers to be able to go out and interrogate the system and say, "Gee, I have failure X. They can look for failure X, and they can find case studies where error X was resolved to help guide them in resolving the problem in the event they see something for the first time that they're not accustomed to." And this information sharing amongst our dealers is something that we have struggled with for a long time. You'd have an expert in one part of the country or in one country and maybe that same expert doesn't exist somewhere else, and we just didn't have an efficient way to be able to transfer information between ourselves. So Grove Connect answers all of those questions. So just quickly, in summary, related to All-Terrain, I guess the takeaways for me is we're really focused on filling the gaps in our product line that lets us gain share globally. We're developing core architecture elements alongside of developing 7 new cranes between now and 2026. And then we are continuing to invest in technology resources, both internally and externally and third party. So with that, I'll be handing it back over to Christophe, and he's going to come up and talk to you folks about Belt & Road.

Thank you, Les. Okay. As Aaron said earlier, our colleague, Brian Wang, from Shanghai could not make it today. So I'm going to be presenting his part. I'll start with a quick comment on the picture. That picture was taken in South Korea. That's a big industrial jobsite. As you can see, it's pretty crowded out there. The good news is like almost all the machines that you can see here, the tower crane machines, are actually the Potain cranes. So yes, should I get started saying that the European tower crane products that I presented earlier do not match the customer needs in this area, in the Belt & Road area. Construction methods over there are different. Use of precast and modular construction is growing faster in this market than in Western world. There is also more demand for great height solution, and [ wind ] regulation in this -- in countries such as Hong Kong and Taiwan are actually more stringent than what we have to comply with in Western Europe. And in addition to product adaptation required to answer these local needs, we also have to offer a value-based product. So beyond our design-to-cost approach, our tower crane production facilities in China and India largely contribute to achieve our cost target for these products. So Belt & Road also represents opportunity for mobile cranes, but our current focus today would be on tower cranes. And I'll start with The Manitowoc Way example. So in order to cope with request for a value-based great height solution, we developed a new mast section, new [ mast ] in China 3 years ago. As the demand for this quickly increased, we had to use our Manitowoc Way principle to improve capacity and without compromising on the quality standard. So here, we have a short video for you. [Presentation]

So yes, the C Mast is a very good example of demonstrating our ability to adjust or offer to local needs, both in terms of price positioning, but also in terms of local technical requirement. On next slide, I'll be presenting our initiative to grow our tower crane business in China and Belt & Road countries. So I'll start with China. So we will see that although the average price is significantly lower than what we have in Western market, China is, by far, still is the largest in volume, which is reaching up to 50,000 units a year. And in addition to China market, the demand in all countries that will be concerned, that are already concerned by the Belt & Road project will carry on to grow. So in addition to match customer demand in terms of product, which I will present later on, it's interesting to see that we can already rely on the market coverage and manufacturing facilities while located in the area. A big effort has been done on new product development, so in terms of -- we specifically designed and successfully launched in this market 6 new GME cranes since December 2019. And in order to achieve that, we obviously had to significantly reduce the time to market for these products. So we really focused upon training and developing a new calculation tool for the engineering team over there. And within the next 3 years, we will launch another 6 models, which are designed specifically for those markets by our Chinese engineering team. I think this is a good illustration of the transition, which has been operated in crane design for our Chinese range. Back in 2019, sales achieved in China and Belt & Road markets were almost entirely generated by products initially designed in Europe, as you can see. And over the last 2 years, our sales in China significantly increased, mostly thanks to the new products designed by our Chinese engineering team. So these products now account for the largest part of our sales, and we expect to share -- I mean, to keep growing that part in the coming years, that will be -- as we'll be introducing new products. So as a summary, I'll basically say we will carry on our effort, and we will intensify our efforts to adapt our product and service offering to the Belt & Road markets in order to keep increasing our presence in these very fast-growing economies. And with that, I'll take it back to Les.

Thanks, Christophe. Okay. Switching over to the Americas. We're going to be focused more here about our aftermarket activities and, obviously, the most recent acquisitions. Our manufacturing facilities in Shady Grove, Pennsylvania, many of you have visited to see it. We produce 5 primary product lines out of that site, so design and produce there multiple off-road technologies and on-road technologies. So you start to think about how an infrastructure bill affects us as an organization. Crawler cranes certainly benefit from it because we participate in alternative energy applications. So the wind industry, general construction, even investment, whether it's in the oil and gas space, all use crawler cranes for manufacturing. Rough terrains, kind of our Swiss Army knife, if you will, of cranes, you see them on every jobsite. They may be simply moving materials, they may be placing steel on a bridge, they might be working as an assist crane as you saw in the original photo out on a wind field. So very wide applications, kind of a simple tool that gets a lot of different uses. Our boom truck product line, a big play there in utility space and grid upgrades and so forth because they're rotable, they can cover large expanse and go off-road slightly as long as the ground is prepared appropriately. And you'll see these with man lift baskets on them. So probably our most customized product offering and there are really specific utility cases. There are really specific needs for whether it could be forestry. It's just a very wide application because they are rotable over such a long distance since they're based on Class 8 trucks. And then our TM product line is more of a specific built rotable crane, again, very much like a taxi service. We talked about with ATs. They can be moving from multiple jobsites in a day. You'll see them in tilt-up construction and where we have really limited space to operate. The Manitowoc Way is alive and well at Shady Grove as well. The example here today for this one is a purpose-built machine tool. And why is that significant? Well, it's easy to go out and spend millions of dollars or tens of millions of dollars for a commercially available machining center large enough to be able to produce the product that we produce. But in many cases, you are actually -- you find yourself having to kind of give up on or make certain concessions based upon what that machine is capable of. So here, we are replacing a 50-year-old asset that was a purpose-built machine, interestingly enough. So 50 years ago, Manitowoc was practicing lean, but didn't know it, I would say. But unfortunately, their application here, we had the man sitting up on the machine while the machine was operating. So he was legitimately in the line of fire with the machine. He had to get very close to it to be able to handle all the setting conditions. It was just a really clunky and unsafe situation. And obviously, with the machine being 50 years old, can't get spare parts any longer, right? So we've been struggling with this asset, and it's critical to us because what this does is it machines the face of our bearing that allows our operator to swivel versus the chassis. So it's a really critical component for us. Every crane needs this. The newly deployed solution, again, is purpose-built, allows the operator to stay at floor level. It dramatically increases our ability to machine effectively. So cycle time reduction is extraordinarily high, improved our finish quality and also is not a monument. So for some of you who've been to some of the sites, you hear us talk about roots and vines. And we don't want things that are stuck in the floor, right? We don't want monuments that you cannot move. We don't want things that are connected to stuff in the ceiling because we then can't change our manufacturing flow as we need as we continue to optimize the businesses. So the team did a great job here kind of solving all of those problems with this new design. [Presentation]

So some subtleties that maybe don't come out in the video, as you can -- those large yellow pieces, they're dedicated lifting lugs. Again, we talked about safety and how critical it is every time we're lifting large, difficult loads to make sure that we've got appropriate rigging. Also in the video, you'll notice as we were lifting the device off of the chassis, there was another position where the next chassis can be laid down and you can immediately drop the new machine on to it. So we don't have this load-unload lag time, which is typical in most true CNCs because you got to get something out of the way before you put your next part in, so really a great job done there by The Manitowoc Way team, the operators, engineers and so forth in the Shady Grove facility. Similar to our stories around the rest of the organization, Aaron highlighted, we've released 60 new models over the past 5 years. The team in the Americas has done a great job here. And again, they're managing 5 different product lines. So you can see we've released 20 new models in the past 5 years. So that's an extraordinary outcome for us. We've reintroduced our small crawler range. We now have a globally competitive 100- and 150-ton machine which is unique for us because for many years, we have been focused on the large end of the scale, but you need to have effective small machines if you really go into service the entire industry. So the team has done a great job there. The Rough Terrain product line. We've completely revamped over the last 5 to 6 years. So we've released multiple new models there, new technologies that may have pin booms in them as well as full powered booms. We now believe we have the lowest total cost of ownership related to the operation of our cranes, which is a significant change from some of the quality rhetoric we were hearing years ago related to RTs. And we also really focused on operator comfort and ergonomics as well during the design of that product line. And then boom trucks, our focus has been on the higher end. I mean we talked a minute ago about the various utility plays and so forth there. That product class keeps getting larger and it actually is cannibalizing to a certain degree some of our other product technologies because people are really adopting, using boom trucks for multiple things where they hadn't used them for in the past. And as we continue to make them bigger, it gives them a larger and larger use footprint. So electrification. This is our tribrid approach. We're focused here on both -- on shore power, meaning you can plug a crane into a generator, similar to what [ Christophe ] was showing on the tower cranes and have full crane functionality. We're looking at full electrification. So cranes that can run completely battery powered, so not a hybrid variant. And then our hybrid systems that will allow you to move the crane under diesel power but then operate solely under electric. And we are pursuing basically all 3 of these solutions across various product platforms, including our AT products, and we intend to have a product launch at CONEXPO in 2023. So the story for North America now, we've been very focused on our production capabilities, our design capabilities, filling out our product line and then the next step in our evolution is really how do we get closer to our customers? How do we really drive true value back to the customer base. And so we're focused now much more so on aftermarket than we have been in the past 5 years. Aaron already briefed you on the fact, and you're all aware that we've completed the acquisitions of both H&E's crane business and Aspen. Some of the highlights from that is it really does give us a comprehensive aftermarket business. Historically, aftermarket from Manitowoc really meant we sold parts, right? Or we came up with programs to help our dealers sell parts or we had factory-trained technicians that when our third-party representation couldn't resolve a problem, we could drop an expert in and help get the customer back up and running. But the acquisitions of MGX and Aspen now will give us a very different approach to the market. We now can be out there and be super focused on servicing, driving service hours, doing repetitive service works, doing preventive service work. We have rentals where we hadn't had that in the past. So this gives us the opportunity to rent product out to customers, to augment our customers' fleet, to service smaller customers on individual rentals, to have RPOs so that we can kind of go rent the top off of a new crane and then sell it as used in a few years, and that typically has a very good return. Obviously, it gives us a less cyclical higher margin revenue stream. And it's just -- it really brings us closer to our customers. Now that comes with a learning curve, right? We're learning to be direct servicing, which is a challenge and a change for us organizationally. What I want to highlight for you here is, this is a listing of major key accounts. And these are people that have large mixed fleets. So they may have Manitowoc product. They may have Liebherr product, they may have Tadano product. But lots and lots of machines in their portfolios. And they have all grown by acquisitions. So as a result of that, they all have mixed fleets. We have not traditionally done a great job being able to penetrate these large key lifting houses. Now the 2 green dots at the top, the 2 biggest dogs on the list, so to speak, those are direct house accounts for us, right? So yes, we have great penetration there. We've done a good job managing those 2 customers. I think we are thought of highly and respected by them, and they really do utilize a lot of our product. But kind of the mid-tier people, we have struggled maintaining relationships. And some of that has been based on the fact that it's a relationship business, and we had given our relationships over to our third-party distribution. So now you've got them representing you and sometimes that doesn't play so well. Some of these larger houses want to deal directly with the OEM. So MGX's footprint now gives us that ability to really be able to go pursue that more effectively. And it's no secret. There's been margin compression in the industry, right? So it's hard to have enough room in a strategic relationship for us to be in a solid position and somebody who's representing us on a third-party capacity to have enough room for enough margin for all of us to play. So I think it's necessary, and our competitors basically are organized this way. So Aaron used the moniker fleet support services earlier. And for us, now it's about how do I manage and help my customers get the highest return on their invested capital, right? And we now have -- had gone through some of this earlier. We have rental options and so forth to help supplement their fleets. Our focus going forward will be on service technicians. We have best-in-class training, and we have best-in-class tools, but trying to get that deployed out through our channel previously had always been a challenge. There's an expense to training and maintaining your talent pool. And I think we have a really progressive view of that, and we're willing to bear that expense, and we're willing to incur the time lost in the field to train our people to get them to the highest level, where some of our representation didn't necessarily have that mindset because they needed the people out there making money, so to speak, billing hours. I think we will be able to bring a fresh perspective to that and have a much longer view of the play now, and we're going to continue to start more and more technicians in our own persons channel at this point than what our dealers would have been willing to do previously. I mean parts sales is pretty self-explanatory. The one thing I think that this does help us with is we make sure we get our share of wallet, that we're not losing consumables, filters, things that are not necessarily privately branded for us that were easy to be sourced before. If we can get on to service contracts with some of those large key accounts, we get to carry in our full breadth of spare parts replacements rather than just the hard parts. And then something we haven't talked much about is our remanufacturing capability. We had a single remanufacturing facility previous to making the acquisitions. When we acquired the H&E crane business, we picked up a second full-blown remanufacturing facility in Belle Chasse, Louisiana. This gives us the ability to really extend the life cycle of customers' assets, if they so choose, right? We can bring cranes in, we can completely rebuild them. It also gives us some added flexibility for us to be able to produce parts for legacy cranes that are no longer in manufacturing and no longer fit our current production flows. So rather than outsourcing that to a job shop or to some other third party, we now can capture that revenue stream as well, which is a significant advantage for us that we didn't enjoy necessarily before. So I guess, in short, the entire strategy around our current acquisitions is getting much closer to our customers, being able to help them in support of our new products and new technologies, right, drive their return on invested capital. It gives us the opportunity to have direct feedback with customers. It diversifies our offerings and really stabilizes some of our cyclicality as we move forward with this because we'll have service revenue sitting on top of parts revenue, sitting on top of rental revenues. It's a very different case than where we were before. And our intent is to continue to grow organically, obviously, as we continue to capture more share and service customers at a very high level. And then as Aaron alluded to, inorganically. And with that, I'm going to turn it over to Brian Regan, and Brian is actually going to come up and talk a little bit about our acquisition process and funnel.

Thanks, Les. So looking at our acquisition summary. So over the next few slides, I'm going to talk about our acquisition framework. But before I move to that, I just want to mention the picture. So this is a picture in Russia of a hockey rink being built with some of our tower cranes. I'm a pretty big hockey fan. I got a chance to go to UBS Arena on Long Island this past weekend and saw one of our crawler cranes actually at the site there. So pretty neat to have that picture and then have the opportunity to see our crawler crane at the site on Long Island. So we have a criteria -- a slew of criteria that we look at when we assess acquisitions. We are in the crane business. So our acquisition focus is obviously on our mobile and tower crane business. We have both strategic as well as financial criteria that we look at. So looking from a strategic side, we have significant revenue -- we want to make sure that we have significant revenue from non-new machine sales. Les talked about that relative to our most recent acquisitions. We want to make sure that it complements our breakthrough initiatives that the team just talked about, our 4 breakthrough initiatives. And then we also want to make sure that we can -- we have the opportunity to leverage The Manitowoc Way. From a financial criteria standpoint, we want to make sure that it's accretive to our operating cash flow and EBITDA in year 1. Additionally, we want to make sure that our return on invested capital is greater than our WACC. And finally, we want to maintain our net leverage ratio of less than 3x. Dave will talk a little bit more about our capital allocation strategy. So if we do go above 3, we want to make sure that we have visibility to drop it back down below 3. So for our acquisitions, we did go through and assess all of those different criteria. And as you can see, there's the check marks for all of the ones that -- all of the criteria that I just mentioned. I think the most important thing to mention, and Aaron talked about it earlier, we paid 6x $30 million of EBITDA, so about $180 million, which we think drives significant value to the business. From an acquisition process, none of this is really new from a process standpoint when you think about acquisitions. But what's important is we implement The Manitowoc Way throughout the process. So the 2 that I'm going to highlight on the next couple of slides is our due diligence process and then our close and integration process. So for due diligence, we have a process that we use as part of the project management called 8 Keys. So what that allows us to do is throughout the organization, throughout the team that's part of the due diligence process, they are able to identify and highlight what risks there are throughout the whole project. And those get identified, and we have a weekly meeting with Aaron and team to make sure that everybody is aware of what those risks are. And we can assess those risks throughout the due diligence process, either through the negotiation process and ultimately through the go, no-go. From an integration system standpoint, we call the Manitowoc Integration System. Again, from a project management standpoint, we want to make sure that we have very, very, very detailed project management items that get rolled up and communicated, so if there are things that are not going well, they can get identified, highlighted, and it really holds the team accountable to make sure that they're getting their things done in a timely manner, and we can complete the project on time or, if need be, put more resources into things that aren't going well. Lastly, I'm going to talk about our acquisition funnel. So we've got over $1 billion in enterprise value in our funnel, in different phases throughout that funnel, over 10 targets on the Tower side, 10 targets on the Mobile Crane side. So we really believe that there's additional value to be had relative to our acquisition opportunities. And with that, I'll pass it over to Dave Antoniuk.

Thanks, Brian, and good morning, everyone. Really is good to see familiar faces in the audience, and I just want to thank everybody that was able to attend in person to be here with us today. Thank you very much. So it's great to be here. And for everybody listening virtually, thank you for joining us for this day. In this part of the presentation, what we're going to do is we're going to take you through and look at some of the financial things that we've done over the past 5 years. We're going to look at what the impact of what my colleagues have talked about today, the breakthrough objectives, how we see that impacting our results going forward. We're going to talk about capital deployment. We're going to talk about liquidity. And then we're going to just give you an update as to where we see the fourth quarter coming in and how that looks in everything there. So starting out, if we go back in 2016 when most of the management team joined the company, we looked at it and we said, we need to really enhance our balance sheet. So we undertook a $100 million cost restructuring business. A large part of that was the closure of our Manitowoc facility, which Les and team handled and moved that production into our Shady Grove facility. So I believe it was about 550,000, 600,000 square feet that we had at Manitowoc that we incorporated into Shady Grove into the existing footprint. So monumental task, a lot of heavy lifting, but something that needed to be done back then. In 2019, what we did is we had an opportunity to refinance our bonds. When we became a stand-alone public company, we went and we issued $260 million of bonds, and the effective interest rate was 14.25%, it was a 12.25% coupon and then it was sold at a discount. So that was a good thing. And -- but the most important part of that was our easing of the covenants. When we first joined the company in 2016, it wasn't one month into our tenure that we blew all of our covenants, and we did not have the ability to borrow money really from our ABLs because we just didn't have the capital within the structure to do so. So in 2019, March of '19, we had a lot of easing of our restrictive covenants that allow us to pivot at this point in time from a cost-focused company to a growth-focused company. In addition to that, on the top left, you'll see that what we were able to do is we were able to take our ABL, eliminate our AR securitization program, which was more costly and add $50 million more capacity into the ABL, which is what we see right now. We did complete the 2 acquisitions recently. And as Aaron pointed out in one of the earlier slides, we borrowed $100 million to offset the $180 million cost of the 2 acquisitions. And that the incremental rate associated with that is about 120 basis points, so just over $1 million of incremental interest costs. So our ABL is a great source of financing moving forward. We'll talk about how that's out there as well. One thing that people don't realize is that when we became a stand-alone crane company, we had a lot of NOLs. These are cash NOLs. So this is not the tax benefit, but this is the cash benefit. We were able to utilize, over the past 5 years, approximately $120 million of NOLs. Really twofold when I look at it, we're able to go back and file amended returns, which covered about $40 million of NOL. So we actually got refunds from the federal government of about $40 million. But in addition to that, when the 2017 Tax Reform Act came into existence, what we were able to do is, we were able to utilize our NOLs and avoid paying $54 million of taxes to the U.S. government. So it was a tax avoidance, if you would, whereas other companies had to make some of those payments. Finally, on this slide, we'll talk about, in June of this past year, we had a cybersecurity incident. Never forget that day, it was a Sunday morning, about 7:30 in the morning. Our Head of IT in the U.S., Jim Glenwright, gave me a phone call and said, "I believe that we have someone trying to access our systems." Within 2 hours of that phone call, all of our systems worldwide were shut down. Really, a great accomplishment by our team, our IT team around the world. And then what we ended up doing is we ended up going through over the next 2 weeks, identifying what had happened. And the good news about the whole story is that within 2 weeks, we were able to get totally up, utilizing our backup systems that we have in the organization and is a great job by the worldwide IT team in that regard. So a lot of good things have happened over the last 5 years, some you know, some are a little bit behind the scenes, but really, really good stuff. Just a review of financial metrics. When I look at the financial metrics, we look at the cyclicality. Starting on the top left, when we look at our revenue, in 2016, about $1.6 million (sic) [ $1.6 billion ] and $1.6 million (sic) [ $1.6 billion ] in 2017. We then saw a little bit of uptick from the election, where we thought we had this pent-up demand in the crane business, and we did see some increases and in 2020, we came down. And you can see one of the strategies at this point in time was to grow our operating or EBITDA margins over the life of that. But moving over to the other side of the slide, when I look at our adjusted free cash flow, kind of a tale of 2 stories here. We had some good years and some bad years, and most of our free cash flow is based on the changes within working capital. And you can see that in 2020, we ended up using about $61 million for working capital. To date, through September, we have about $46 million of free cash flow that we generated. And in 2020, we'll be positive in free cash flow to the tune of $20 million to $25 million, I believe we'll see it there. The nice thing, our net working capital, you can see that we have this line. Our net working capital is at 25%. What I'd like to point out is that when you look at the transition in 2019, we eliminated an accounts receivable securitization plan, which generated an additional $75 million in receivables because we literally sold receivables at that point in time. And we got rid of that program and put it into the ABL. So what that does is that it increased our receivable balance, so it was just another option of financing that we didn't need at that point in time because it was more costly than the ABL. And the good news is that orders and backlog, you see where orders are at the end of 2020, but quite honestly, when everybody realized where we are at the end of September, we have a significant backlog. Part of that is the fact that, like anybody, we have supply chain challenges that have occurred. So we're not able to ship what we thought we were going to ship. But at the end of the day, we have a healthy backlog starting the year in 2021. And then obviously, over the last 9 months, we've done very well in that regard. So where do we see ourselves going, where do we see ourselves going with our breakthrough initiatives? So the group talked about 4 breakthrough initiatives in the organization. And we look at those as pillars in our view of everything. So we have the 4 pillars that support our breakthrough organization. So we believe that the breakthrough initiatives can generate about $250 million of revenue. More importantly, we believe that those revenues will generate much higher margins than we typically enjoy as an average for the company. So typically, in the high teens. So as we grow and we get more volume, we see our adjusted EBITDA or operating income growing in terms of percentage as well. When you look at our capital structure and liquidity. At the end of September, we had about $1 billion of capital. And you'll see that we had long-term debt of $400 million. What we did is we actually borrowed $100 million a day before we closed on H&E so it would be available. So once we closed H&E in October, we already had the funds there, there's no incremental borrowing at that point in time. From a liquidity standpoint, we have ample liquidity of $253 million as of October 1. We talked about the significance of the interest, being only $1 million. And on a pro forma net leverage after the acquisition, we should be at about 2.2x. So what's next from our capital side. Well, as we said, in 2019, we refinanced our bonds. And in 2022, effective April 1, we have the ability to do that again. So we went from a 14% rate to a 9% rate and a rate to be determined. If I look at where our bonds trade today, our bonds are trading about 106%. So that bodes well. If we look at a 3% reduction, we'd have a $9 million benefit on the same amount that we borrowed. And that's just getting to 6%. Market rates seem to be a little bit better than that right now. But assuming that's the case, that would be 9%. Payback on something like that would be about 18 months, give or take a little bit, when you factored in everything. It will be a market-driven decision and some of the market-driven decisions are where our interest rate going to be at any particular point in time. And in addition to that, what's our need. So upsizing the bonds like we did in 2019 is a possibility as well. So this will offer some more cash and allow us to do some inorganic growth opportunities as well as some of the breakthrough initiatives that we have at this point in time as well. When we look at our capital allocation, how do we see this? We always talked about our rental fleet growth. We invested $15 million in 2021, and we continue to see investments in our rental fleet going forward. Part of the reason is that the return on our rental fleet investment is quite good. We'll talk about that in a little bit as well. Acquisitions. Brian talked about the funnel that we have. So I was looking at acquisitions. We invested $180 million in acquisitions, and we believe that we'll have the opportunity to continue investments in acquisitions in the future, both domestic and overseas potentially. We do have a share repurchase program that was put in place a while ago, it was the $30 million share repurchase program. We have about $10.6 million of that left. That's based on the availability of cash on hand, that if we do that, but it's mainly to buy back any equity offer to the employees on a share creep basis. So that's what we use for. We don't have a plan to just go out into the market and buy back shares. It would be more or less for the share creep buyback. And as far as dividends, we have no current plans to pay any dividends in the organization as well. So capital expenditures. So we went back a little bit more in time to show you some of the things that the company had spent in capital expenditure. So when you go back to 2014, you can say, and this is only a cranes-only capital expenditures, because the foodservice was part of that. We spent a significant amount of money in '14, '15 and '16. Some of that had to relate it to SAP, the implementation of SAP, which is used in our tower business, whereas the ERP system used in our mobile business is typically Baan in both manufacturing locations. But you can see when we got through '16, '17, '18, '19, we kind of curtailed the spending just because of the cash needs of the business and everything. And then when we look at 2021, we have approximately $40 million, of which $15 million were going to the rental fleet. And we can say that in 2022, we will continue investments in our rental fleet. So when I look at the average, we spend between $20 million and $30 million on our base replacement, what I'll say, property, plant and equipment. We'll spend somewhere between $15 million and $25 million in 2022 on our replacement of the rental fleet and based on a number of factors, how the rental market is in the market that we're participating in. So we're not going to just put items in the rental fleet without having the availability. So if usage is up, we're going to invest more, which we think is a good thing. And when we look at our rental business, we look at a payback of 3 to 5 years. Now how do we say that? Well, what we do is we invest in our capital, we would rent that out. And we believe that within a 3- to 5-year time period, those cranes would be sold, similar to what we talked about on an RPO basis, which then we recover all our costs and then use that as a platform for investment into future tower crane rentals as well. So the opportunity to generate, what I'll say is, significant EBITDA, significant EBITDA margins for the rental business will be based on the market dynamics, particularly in Germany, where our rental fleet is being started, but it's also going to be a really catalyst for when we look at growing the business into a higher-margin company at this point in time. So how does this all put together. When we look at the organization, we believe that we have line of sight to a $2.5 billion acquisition. Line of sight meaning that we have ideas of how we can get there. So we have $250 million of breakthrough objectives. We see that the market growth based upon the infrastructure plans that we talked about and the opportunities out there would generate another $250 million of that. But we also think that there's going to be normalized growth in the cycle, right? And we think that that's going to be there. Aaron showed a slide over, what I'll say, averages for 3 select periods of time, and you can see that the last average there is -- would say, we're ripe for another crane demand cycle. So we look at something like that. Pricing conditions, obviously, a lot of people we've talked about the price-cost discrepancy now. In the years, we didn't talk about it. But in this particular year, we had 3 -- sometimes 3, 4 price increases in the organization. So going into Q4, we believe we balance that price-cost discrepancy. So we think that the latter parts of 2022, we'll get to see the fruits of some of that as they come along. And we also talked about -- everybody talked about improvements in manufacturing, and those improvements all are going to generate incremental profit and margins to the organization as well. So we believe that at $2.5 billion, we'll be over 10% in EBITDA margins at this point in time. For full year guidance, this is where we were. Obviously, our organization is not immune to the supply chain challenges that everybody else has been commenting on. Needless to say, we missed our third quarter shipments by approximately $80 million due to supply chain issues. Fourth quarter, that hasn't subsided, and we see that continuing in the fourth quarter. So at this point in time, we have confidence in our full year guidance, but we believe that our fourth quarter guidance is going to cause us to come at the lower end of the guidance in both revenue and adjusted EBITDA at this point in time. So with that, I'd like to turn it back over to Aaron for some closing comments and then Q&A.

Thank you, Dave. So just to round out our discussion here today. As we say here, we're not your grandfather's crane company. We spent the last 5 years, really getting the house in order, whether it be the balance sheet or even our operations. Hopefully, you're impressed with some of the videos and some of the slides you saw. I have to thank the team, not just the team that's here, but our entire team globally. You can't imagine how much work our folks have done, whether it's out in the field or in our facilities, to make the improvements we've had really across the board. And if you've been to our factories 5 years ago, whether it's in France or Portugal, or China or in the United States, you wouldn't recognize those locations today. And I'm extremely impressed and proud of how our team has really responded to The Manitowoc Way and pulling together and continuously looking for opportunities to improve. So our culture is alive and well. I think this is going to be a huge opportunity as we start to do acquisitions. We've already seen some good gains in the recent acquisitions we've made, whether it be at Aspen or in the H&E crane business. But in any case, when you start to bring on new team members, there's always a grace period where you've got to train everyone, get them on board and get them on the same page. But I think the real takeaway here is, when you look at our business, it'd be easy to just continue to ride the crane cycle and hope that we're going to have this huge pickup and someday, the crane business will bounce back, and we'll see this renaissance. But that's not how we operate. We like to control what we can control, and we're very focused on using our balance sheet and our continued resources to grow our aftermarket, where we have the best margins and best returns. We will use acquisitions where it's possible. I've seen lots of acquisition lists. I think we're probably one of the very few companies that is able to get a single-digit multiple in the last 12 months, and I think that was a great thing for our shareholders. So what I'd like to do here today is just end on -- to me, these next couple of slides really show you the heart and soul of what Manitowoc is. This first picture, in 1990, 30 years ago, this was what Dubai looked like. There's a couple of buildings. By 2008, you had a complete city built. Manitowoc and the Potain business was the leader in the tower crane business. We played a critical role in all these major developments. If you go to Abu Dhabi today, in any major project, you're going to see our cranes as well as the Grove and the Manitowoc cranes, they had some role to play. But when you look at this business today, I mean, it's a magnificent city. That's what Manitowoc does. We don't just make products, but we're going to change your skyline. We're going to change your community. We're going to bring communities together, whether it's building an electric grid, building a bridge or literally building the world's tallest building, that's really where Manitowoc brings value to our customers. So thank you very much, and we'll open up to Q&A.

Thank you, everyone. Just some housekeeping matters. For those virtual attendees, please feel free to e-mail me at [email protected], and we'll do our best to answer all the questions that come our way. I've received -- actually during the presentation, received 2, and I'd like to pose it. One of them is actually to you, Aaron. Where do you see Manitowoc in your journey on lean? You've used the baseball analogy before? And what inning are we in?

Yes. So I mean, if I think about the business holistically, we're probably maybe in the third inning. I mean, we've made a lot of gains in our factories. But at the end of the day, there's huge opportunity for us in the field with some of the things we're doing around environmental. So yes, I think we're just at the beginning of it, and I'm pleased to say that, as an organization, it's no longer pushing. When I go to a factory, it's not about me or Les or Christophe pushing the team to go do acquisitions or make improvements. It's really them showing up and them showing off what they were able to accomplish since my last visit, which is a true testament to where we are culturally. So I mean, I'm really pleased with where we've gotten, but we still have a long way to go in terms of our complete application of it.

Okay. Thank you. I have one more inbound question from the virtual audience. And actually, I've received this from more than one. So can you give a little more color on the Aspen Equipment acquisition and how that fits in the strategy? The respondents have said they understand the H&E cranes acquisition, but yes, a little more color on that because of the non-crane business that Aspen has.

Yes. So Aspen does have an upfitting business. There's definitely some product lines that they have that don't look like they have "synergies" with the crane business, but when you start to look a little closer to it, the reality is Aspen is one of the leading boom truck upfitters in the country. And one of the key successes when you're in the upfitting business and you go to pursue opportunities at utilities, for example, or electric companies, is you've got to go on with a complete offering. So a lot of times, what made them really successful is their ability to walk in with not just say a Manitowoc National boom truck, but potentially a Palfinger knuckle boom and they've got some other brands. So those fit well for us. I mean, we'll continuously evaluate those and see what they mean strategically. But in the overall crane business, when you look at Aspen, there's huge synergies. When I say huge, Jay's going to smack me. But there's some big synergies between the boom truck business that Aspen has and the H&E business that we acquired. Some of the territories that H&E had, in fact, believe it or not, they had some competitive brands, and they were superfocused on the heavy-duty crane. So we're excited about the synergies actually between the 2 acquisitions.

Okay. We entertain any questions in the audience. I do have a handheld microphone. I'll give this to you, Aaron. And then I will move over here. Steve?

Great. So you mentioned that there needs to be a renewal of the crane market at some point. Can you just give us any sort of customer anecdotes that you have, that may give us a sense of how they're thinking about it and when this might really happen and what we could start to see for backlog growth over the next handful of quarters?

Yes. I mean it's been a tough one. I think if we look -- think about the last 12 months, if you take any of the large mobile crane houses, nearly all of them, whether it be in the United States or in Europe, came into basically, hey, we're battening down the hatches, we're managing our CapEx. But next year, this has got to come. So I mean you hear it anecdotally to folks, but I mean, you've seen us for the last 5 years, it's the same challenges we've had, and we talk about our own results, whether it was the 2016 slowdown or the COVID slowdown or even now the current supply chain challenge, there's been a lot of challenges out there. So I think what's important is that folks want it to happen. And these are the folks who want to buy the cranes. So they're super eager to get the opportunity to renew their fleets and something they've been waiting for. So it's all anecdotal at this point, although it's always a good time when you've got $2.2 billion of trailing 12-month orders. So typically, that's where we look most closely. But as I always say, we're a business of confidence and having things such as the infrastructure deal in place, and even when you took -- Latin America is not a huge market for us or Australia. Australia is a better market for us. But when you talk to those customers and they look at where copper prices are, they have a lot more confidence, you start to see a lot more quoting activity than we've seen in the past. So we're eager to see. Let's see our way through this current supply chain situation. And hopefully, when we get to the other side of this, we should see the market take off.

Great. And just as a follow-up, you mentioned in the beginning that you don't want to ride the crane cycles anymore and your acquisitions that you've done and the investment in the service and rental are steps to mitigate that, but it's all still around sort of the crane product. How should we think about aspirations sort of beyond the crane product as you build out your business?

Yes, I think there's more than enough opportunities within the crane space. And you look at the valuations that we can get in these businesses, we're happy to be where we are. That's our core and going away from that would be a distraction. I think one of the things too that folks underestimate is with our dealer network and the nature of the crane business, I actually think that having the dealer network created more volatility because you end up having dealers trying to get in line for build schedule slots. So I am hopeful that some of that also helps to reduce what our cyclicality is, because that definitely happened in the big boom and it's why you saw the huge cancellations, and I think it was the fourth quarter of 2008. So I think, to me, it's a combination of taking out some of our own cyclicality as folks try to get in line for build schedules. We'll always have that. But hopefully, we dampen that a little bit. And then on the other side of the equation, by having more rentals and service and parts, that will bring some stability too. But are we ever going to be not cyclical? After the few crane cycles, I'd be just happy to be less cyclical.

Makes sense.

Thank you, Steve. Next question -- oh, sure, please.

Great. When you look at the breakthrough initiatives, is there any of the 4 initiatives -- or just when you look at the cadence of those 4 initiatives, how do you see that playing out over the next couple of years? Are there some that are more mature in development today that can really impact revenues and EBITDA or -- versus some others that may be a couple of years down the road?

Yes, so you're going to get my standard answer. I grew up in Pittsburgh as a Pirates fan and followed Jim Leyland for a long time. So I'm a big fan of small ball. If we can just get runners on first, we'll bunt them the second all day long. And that's really how I look at any one of those breakthrough initiatives. I mean, obviously, having the acquisitions that we just made, that's a good shot in the arm, a little more than just a single, I think, for our aftermarket initiatives in the United States. But we don't have a lot of huge capacity to go do acquisitions, given all the cost reductions we've made through the year. So it's going to take us, in my mind, 12 months to get that embedded and really feel comfortable with the acquisition. So again, we're going to go back to work, and I call it rise and -- we got to go do the rise and grind, do the hard work with The Manitowoc Way over the next 12 months. So when I measure that one up against, let's say, the all-terrains initiative, we've got bauma coming up. So I actually think we sort of go back and forth between the initiatives. The all-terrain and the chinese tower initiatives are probably more consistent because we're constantly launching new products, whereas the other 2 will be highly dependent upon the opportunities to make acquisitions if you think of big moves.

Great. And then along the same lines here, just thinking about the long-term goals, clearly, long term, undefined in nature. But is there -- when you look at the plan over the next couple of years, I mean, is there any way to kind of ballpark it, ring-fence it for us as to where we could see some of the stuff right now?

I hope it's within 5 years. I mean -- but I said that the last time I stood in front of you guys in 2016, and we never really got much of a market. The good news is now we actually have our balance sheet in the spot where we can do some things to buy us a little more space than we had in the past. And to me, that's the real key, sort of back to Steve's point, is our ability to thrive through the cycle rather than just try to survive, which is what we saw the last downturn in '16.

And then just maybe one last one for me. On China, on that market summary, I think it stood out pretty clearly that the price in China was significantly less. So just curious how you think you're positioned to go-to-market there, just given where pricing is there and how do you think that?

Yes. So in some respects, we're pretty lucky with Potain because Potain entered China in the early 1980s, that was through license agreements. There were some of the normal challenges we had with managing the IP. But as a result of that -- the way that, that played out, it actually built our brand. So a lot of folks in China want Potain cranes, and they're willing to pay a little bit more. But I don't view pricing as our -- the bigger issue that we have when we play in China is really around payment terms. We're going to make sure that we're able to collect the receivables and, in many cases, that restricts some of the business we chase. So are we ever going to chase the whole 50,000? No. I think to me, strike one, if you really go back, if I'm totally honest with you, 5 years ago, you could see that the Chinese players were coming out of China and taking our market share and places in Asia Pac and the Middle East. So that was -- the first move is we needed to get ourselves in a much safer space that we didn't lose the business, which I'd say is where we are today. And then the next sort of cherry on top to me is how do we grow the China business. And it will be done step by step, just as we have over the last 3 years. I think when I took over the tower crane business 4 years ago, we sold 6 cranes into China. Right now, we're on pace for a couple of hundred. So it's, again, step-by-step every year. Single or double, we'll be happy with it.

Thank you. I just got another e-mail here from my -- into my e-mail box. Question is, I still find a lot of confusion with your rental business. Please explain how this does not compete with your customers, who are mostly in the crane rental business?

Yes. So I'll start with RPOs. I mean, essentially, RPO is a way of financing the cranes. We actually have our -- the rental houses asking us to do RPOs. So it's literally a request from our customers. So there's no level of competition. Many of our competitors do the same thing. Same thing with even some of the rentals, whether it'd be on the tower crane side or in the mobiles, we get requests all the time from the rental houses if we can rent them cranes. And it's a fine line we walk, but I don't think that's unusual for the industry, to be honest with you. We're behind the curve on some of these rentals. So we never rent with a crane operator either. We have no interest in competing with the rental houses. This is more of an issue of supplementing them when they get on the projects, where they don't have a full scope of project, or they just want to manage their fleet and don't want to get too overweighted with certain models.

Got it. Thank you. Any questions from the audience in person? Jeremy?

And I think this fits into one of the prior sort of questions. I was curious about sort of the -- if you look at the crane fleet, like, a decade ago and you look at it now and if you were to sort of stratify it by the different types of customers and then also whether they're -- what portion is owned versus leased, what kind of patterns are you seeing there? And do you expect them to change going forward? And...

You mean by the rental companies?

I guess, just as far as all cranes. We could just pick North America, which ones are -- what portion is -- are rented versus actually owned. And then as far as, yes, the customers, I was thinking, like are the larger customers, maybe like a Skanska or -- is there a trend towards them owning more of the market?

Yes, so I would say that the trend hasn't changed. It's more preference.

Okay.

In the tower crane business in Europe, I would definitely say there was -- if you look 10 or 20 years ago, no one really did rentals. All of our dealers -- because our dealers in France, for instance, they do a lot of rentals. I mean, Uperio is a large dealer for us and a large rental house throughout Europe. But if you look at why they got into it, is what the customers wanted. So that really evolved, I would say, over the last 10 years where they're renting -- whether it be rentals to do for 2 years or if it's just simply assisting a fleet or whatnot, where, in the U.S., I would say, it's more financing preferences. I don't think it's changed too dramatically.

Okay. All right. And then shifting to the supply chain sort of issues that everyone is talking about. Two questions on that is, one, has there been any upside from it as far as maybe imported competition having more difficulty? And then also, the negative, like, are there any sort of key components that doesn't seem to be sort of stabilizing at all?

Yes. So honestly, it's -- there's been no benefit, only challenges. And it's really whack-a-mole. I mean every -- I haven't asked Dave what the shortage was this morning, but I bet it's different what he told me last night. I mean, every day, we have a new challenge. That's what's really tough about the current crisis, is it's not just one component. I mean almost every day and even within a day, it can change. The one thing I will say, though, going back to the benefits of where we sit with this crisis. I mean, I just feel obligated to make the comment. One of the things that concerns me is the way that the steel tariff is set out. I mean it really creates an opportunity for some of these folks to get in underneath the tariff. We haven't seen the Chinese do that in the United States just yet. But that is something that we keep a close eye on, because even though there's a steel tariff, which doesn't help our situation with our steel pricing, that doesn't mean you can't ship a crane, and that's 90% steel and get underneath the tariff. So we haven't seen that yet, but that's something that I keep a very close look out on the overall construction equipment industry because it's a concern for me. It's a humongous opportunity for some of our competitors.

Thank you. I just got another e-mail. I'll put you on the spot again, Aaron and Dave. The reduction to the Q4 guide, any more specific commentary to share? Supply chain getting worse? Which aspects, in particular?

Yes. So I mean, the way I look at it is if you look at our -- the expected shipments we had in the fourth quarter are always higher than, say, what we had in the third. So I'm not sure if I'd say so much that it's getting worse. When we look at the data, that's still the same number of line items in terms of shortages. But we're also dealing with shipping more cranes in the fourth quarter than we were in the third. So that always just naturally creates some challenges for us.

Thank you. Any questions from in-house? Okay.

So H&E provided a disclosure of their discontinued operations, which was essentially what you guys bought. Can you just kind of remind us of those revenue lines, which one's you guys essentially will be keeping and which ones are sort of consolidated intersegment now as a result of some of the moving parts there?

It's around the H&E disclosures. I mean the issue -- I'll make my own response, and I'll let Dave answer. The difficulty I have when we look at those numbers, is there's always eliminations because today, now it's all intercompany transfers. So I -- honestly, I haven't dug that apart because I knew that the eliminations are so dramatic that it's hard to really compare apples-to-apples. Dave?

Yes. So a large part of our sales that went there are really -- get eliminated. It's because we don't get those until they go to the end customer. Our end customer is no longer H&E, our end customer is no longer Aspen. So the large majority of what I'll say is part sales or new machine sales, will have to wait or get delayed until such time that they get to the end customer. So our kind of the dealer input gets eliminated or -- and it's typically a one quarter issue, whereby we load the pipeline up for the quarter, which we did in the fourth quarter. And then this way, if inventory levels stay about the same, it's just a pure pass-through into the organization. But yes, so technically saying, what we're looking at is that when we look at the additional profit generated by our dealers, that's what we're picking up on a net basis. So it's not the whole machine sale twice.

Got it. And then just one follow-up. How much SG&A do you think you're going to have to add as a result of the...

So I'd say we have that number for 2022 and stay tuned until the first quarter when we give guidance on that one.

Getting a steady stream of questions, but allow me to ask this one from a virtual audience. Let me just -- where it is. This is a question on market share. You're currently targeting increased market share. Can you help us level set regarding your current market share? And where are you strong? Where are the opportunities? Any rough numbers can you provide?

No, I'm sorry, we don't share that information at that level.

[indiscernible] are we up or down?

I would say we're up in the last 5 years. If you look at where we sit almost across the globe -- I mean, I don't know if there's a product we're not up in over the last 5 years.

Another question from the virtual audience. Longer term, do you intend to acquire all the distribution in North America?

Yes. I mean so the strategy is to go step by step. I mean, obviously, we had a long, long, long working relationship with the Engquist family, and we got to a strategic decision, and that's sort of how we moved on that one. For us, it's to be more opportunistic relative to what their interests are. We're not in a rush to go do all those deals. We've got plenty of work with the acquisitions we have. If you said where we were 10 years from now, I guess maybe that's a possibility. But look, we love our dealers. The dealers do a great job. Some of those folks want to continue to run their businesses. I mean, we really stepped in because there's a couple of challenges that we have. I mean, in the case of the H&E, obviously, it was just -- you could see that the return on invested capital was more interesting for them in other areas, and that's how we ended up having those dialogues. In the case of Aspen, it was a succession planning issue, and the owner went out of the business. So if we look across our dealer network, I think there's a variety of those sorts of issues, and we'd much rather own our dealers and have them sold to a nonstrategic or non-crane customer, whether it's "a strategic or private equity form." And we've been through the consolidation of our dealers in the past, and I would much prefer that we step in and acquire them if that's the case, but there's no pressure on us to roll up the channel.

Any other questions from the in-person audience? Okay.

Well, thank you very much. Ion, I'll let you close up.

Yes. Can you grab this mic? Thank you. Just in closing, on behalf of The Manitowoc Company, I really appreciate you participating both in person and virtually. We're really on a glide path for growth and value creation. Any further questions you may have, of course, I'd be happy to entertain them. So feel free to e-mail me or contact me. Again, thank you very much, and happy holidays to you and yours.