Good day, everyone, and welcome to this Manitowoc Company Q4 2017 Earnings Conference Call. Today's call is being recorded. And at this time, for opening remarks and introductions, I would like to turn the call over to Ion Warner, Vice President, Marketing and Investor Relations. Please go ahead.

Thank you. Good morning, everyone. And welcome to The Manitowoc conference call to review the company's fourth quarter 2017 performance and our 2018 full year business outlook, as outlined in last evening's release. Conducting the call will be Barry Pennypacker, President and Chief Executive Officer, and David Antoniuk, Senior Vice President and Chief Financial Officer. Today's webcast includes a slide presentation, which can be found in the Investor Relations section of our website. We will reference these slides throughout the prepared remarks. We will be sure to reserve time for questions-and-answers after our remarks. I would like to request that you limit your questions to one and a follow-up and return to the queue to ensure everyone has an opportunity to ask their questions. Please turn to Slide 2. Before we begin, please note our Safe Harbor statement in the material provided for this call. During today's call, forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 are made based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied projections due to one or more of the factors among other described in the company's latest SEC filings. The Manitowoc Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or other circumstances. And with that, I'll now turn the call over to you, Barry.

Thanks, Ion, and welcome, everyone. Before I proceed I would like to take a moment to talk about the tragic accident that occurred last Friday, involving an NOC 300 quality crane at our test yard in Shady Grove, Pennsylvania. This tragic accident took the life two of our Manitowoc family members and injured three others. All of us share the profound shock and sadness this accident has caused. And our hearts go out to the employees and their families who have been affected by this heartbreaking event. The crane involved a prototype NOC 300 crawler crane with a test configuration that has not been released to the field. We are performing a comprehensive internal investigation into the accident and are actively cooperating with all government officials. As the investigation has not yet been finalized we cannot comment on the call at this time, however, make no mistake that Manitowoc takes safety very seriously and we will get to the bottom of cause of this accident as soon as possible. Due the fact the configuration a question of the prototype and one that is yet to be released to the market we are convinced that our entire fleet of NOC 300 cranes were made safe to operate in the field with the approved equipment and configurations. Now please turn to slide 3. I would like to discuss our fourth quarter performance. I am very proud of our fourth quarter results which showed significant year-over-year improvement across the board. Our results demonstrate that we are continuing to make progress in becoming the type of crane company that our global customers admire and trust. For the full year, despite a 2% decline in revenue, we delivered a significant improvement in adjusted EBITDA with a 313-basis point improvement. Operating cash flow was also a…

Thanks, Barry. And good morning, everyone. Let’s move to slide 4. Our fourth quarter adjusted EBITDA was in line with our expectations and consistent with our 2017 full year guidance. Fourth quarter orders totaled $620 million, an increase of 78% compared to $340 million of orders in the fourth quarter of 2016. Our year-over-year increase was driven by significant improvements in tower, all terrain and crawler crane orders. Within the U.S. and Europe, a significant amount of our orders represented stocking orders for our dealers, accordingly this may impact our order volume in 2018. Moreover, orders were also favorably impacted by approximately 3% due to changes in foreign currency exchange rates. Our December 31 backlog of 607 million was also up substantially over the prior-year. Currently over 80% of our year-end backlog is scheduled to be shipped in the first half of 2018. For the full-year orders totaled nearly 1.9 billion, an increase of 32% compared to 2016. The year-over-year increase was primarily driven by higher all cranes and tower crane orders, and was favorably impacted by approximately 1% due to changes in foreign currency exchange rates. And as I previously noted a significant portion of our fourth-quarter orders represented stocking orders for our U.S. and European dealers which may impact our 2018 order levels. Net sales in the fourth quarter of 482 million increased to 103 million or 27% from a year ago. The year-over-year net sales increase was primarily driven by increased shipments to European and U.S. customers. The improvements in Europe were primarily due to increased tower and all terrain crane shipments. With regard to the U.S. the improvement was broad-based across most products. The increase in net sales model was also favorably impacted by approximately 5% from changes in foreign currency exchange rates. Full-year net sales…

Thanks, David. Moving to slide 6, 2017 has proven to be a year of transition at Manitowoc. We are continuing to make solid steady financial improvements by focusing on the things that we can control. Our restructuring efforts in the US are on track but we are not able to unlock all the full benefits of our actions until we see a broad-based sustainable recovery in end markets that utilize crawler and rough terrain cranes. While we have significantly reduced our fixed cost to align with the current end market demand, it is still not enough to take full advantage of the leverage we thought we would get when we did our restructuring model in the US. Simply put, we are not going to produce at full capacity or flood the market. In addition, we are maintaining our price discipline and on moving to commoditize our products. We are confident that the market will full rebound but until it does we will not fully reap the benefits of our restructuring efforts in the US. Additionally, a tightening supply chain with steel price increases are realities that we have to actively manage. Despite these challenges, we are focused on executing our four key strategic priorities to differentiate Manitowoc from our competitors; margin expansion, growth, innovation and velocity. As you know by now, The Manitowoc Way is the engine the drives our continuous improvement and is the foundation of our strategic initiatives and encompasses the core values and growth strategies that add value for our key stakeholders, those being our customers, shareholders and employees. Turning to margin expansion. As we continue our journey to double-digit operating margins, we are making progress in executing our cost reduction initiatives, streamlining our structure and investing in innovation to take full advantage of the eventual market…

Alright, thank you Barry and David. Operator please provide instructions now.

[Operator Instructions] We will go first to Jamie Cook with Credit Suisse.

This is actually Themis on for the on for Jamie. Good morning. Just a question on orders, I mean, we saw very strong order numbers in your results. So, can you talk to order trends maybe throughout the quarter and in January? And then on the stocking actions that you mentioned in the Americas and how much of that was driven by sentiment maybe due to tax reform versus real underlying and user demand? And how much of a pull-backing orders should we expect to see in subsequent quarters on a sequential basis?

Well, I only have a little bit of time for that question, but let me try take a shot at. We’ll break it apart into pieces. With regards the Americas sentiment in our distribution bases is definitely improving. They’re starting to see that utilization is steady and improving, they're starting to see that used crane prices are coming off the bottom, they're starting to see in here continuous talk in Washington about an infrastructure bill. All of those things provide positive sentiment for our dealer network. And I can tell you that when we look at the United States in particular and an increase in orders that we received in the quarter, it's not just one section of the country either, it's pretty broad based and it’s given us the ability to see that - there is a time now coming where our strategic advantages that we have built into our innovation cycle are providing the types of productivity improvements that are driving demand for our products even in a flat market. So, if I look at the tempo throughout the quarter, I would say that it was pretty even throughout the quarter and it was not a happy stick in December, where everyone put their orders in, in order to get in line, it was a pretty broad brush throughout the quarter. And I would say that our orders thus far in 2018 are trending where we thought they were going to be. So, all good signs.

Great. Good to know. And then just my follow-up on profitability. It looks like you guys chose not to provide any top-line guidance this time, but can you help us in terms of your profitability assumptions anyway. I’m just trying to figure out what sort of incremental margins are implied based on your guide and how we should think about the year-over-year expansion in operating margins?

Right. So, I think if we look at our guidance, we're from $96 million to $216 million, I think you should - take the midpoint in model, the midpoint versus where we ended up with this year at $67 million. So that would give you good indication of our basic improvement that we're committed to.

Are we looking for single digit or maybe double digit increase in the top-line?

While at this point it, there's a reason why we didn't give revenue guidance and the reason we did is, I want to make sure that we deliver what we fact. I know for a fact we can deliver with revenue of whatever it may be, the midpoint of our guidance. I know that. If our revenue is lower than what we originally expect, we're still going to deliver that midpoint of that guidance. If our revenue happens to be higher, which quite frankly, we don't know as of yet, if its higher, then that guidance will be higher, but we have - we just came off a quarter where the orders were a little above $600 million, but if you go back in history and you look at fourth quarter orders for this company and try to get a trend for the following year’s revenue, there is zero correlation. So, for me at this point to say that our revenue is going to be in this range, I just don’t know where it’s going to be right now. But when I do, I will certainly be in a position to tell you guys.

We’ll go next to Steve Volkmann with Jefferies.

Hi, good morning. May be just a quick clarification because you mentioned a couple of times in your commentary. Order of magnitude, how much of the fourth quarter orders were dealer stocking and what would be normal for that?

Well the exact percentage, I am not going to give. But I will tell you that it’s not the lion’s share. We had some large orders that will definitely be retailed. But we also had very, very good orders in our tower business as I mentioned and those are not for stock. They go directly to our customers and end users. So, it is very difficult to get the exact number because quite frankly it’s changed from when the customers have placed their order, some of them have been retailed and some of them haven’t. So -- but I would tell you that I am encouraged by those orders. They’re -- as I said they are not in one particular category, they’re pretty broad-based. So that shows me that some of these guys who have been in this crane business as many years as I am old, have confidence that they’re seeing a starting.

Okay, alright. Fair enough. And then just to push one more time on the margin question. Barry, you mentioned at the outset that you haven’t really been able to get kind of the benefits of volume yet. And so, you haven’t shown -- I think you said you haven’t seen quite as much margin expansion as you would have hoped for, that you think you can do eventually. And I am trying to just get a sense of how you are thinking about 2018 relative to margin expansion. Will we see margin expansion, is there an order of magnitude to think about for that?

You will see margin expansion but much in line increasing above what our prior guidance has been, the 150-basis points margin improvement a year. We will definitely exceed that this year. But as I said in the prepared remarks, we truly need crawler and RT volume in the US to come back, not even to -- I don’t even need them to come back to historical highs, but if they come back 50% of historical highs which is still a very broad-brush recovery for those two particular segments for us in the US. Then we will really see a substantial, substantial increase in our overall operating margins.

We’ll go next to Ann Duignan with JPMorgan.

Hi, good morning. Barry, could you just -- or one of you, could you just walk us through may be the seasonality of your profitability, would you expect to be profitable in each of the four quarters or should we consider just given your comments about a lot of the backlog for spring delivery may be seasonality will be a little bit skewed to the front half of this year rather than back half.

I don't you think it's going to be skewed I think it's going to be pretty consistent with what we have exhibited in the past where it will come off a very low first quarter and have substantial increases as the year goes on.

Sorry I was just going to ask you to clarify, do you expect to deliver profit in Q1 or should we take normal seasonality in maybe a loss in Q1 and then strong solid performance thereafter?

We are trying to get that to point where we can understand exactly what the seasonality issues are but based on what I have seen in the past I don’t expect the seasonality for 2018 to be any different than 2017.

And then just a follow up. On the Q3 call you talked about CL cost inflation you talked about very competitive pricing and I think you talked about slight chain constrains. I think alluded to some of it like chain constrains again this quarter in your opening remarks. Could you expand on each of your growth -- three goals through '18?

If you are in the business of buying steel you know exactly what's happening steel prices, steel prices are increasing. But as I look at it all of our competition has the exact same situation going on. So, I would expect that they will have the same amount of discipline that we have and fully expecting to offset these inflationary activities with price. With regard to supply chain you know what I talked about it and in the third quarter it was primarily on things like hydraulic, unfortunately for us but as we enter this year its shifting itself into heavier higher labor content fabrications, I think as the broad-based recovery happens in the some of the large construction equipment, large fabrications are becoming tighter. So, we are evaluating those and we are moving production as I alluded to in the prepared remarks from one plant to another where we can take advantage of some of our automation that we have implemented over the last few years. So large fabrications are becoming a supply constraint but we have got a system in place that we utilize that’s a Manitowoc way that we don’t want to make pieces for that, and that we have got to go in and help our supply base with the same tools that we use in our factories in order to free up some of their capacity.

And pricing?

Yes, pricing in the U.S. is okay. I mean we continue to see the pocketed opportunities. I would say that Europe hasn’t changed very much. Europe is still very competitive particularly in Germany where all four of us to our competitor's manufacturer all terrain cranes I think that’s a competitive area. But in the Middle East it's not existent from a pricing perspective. So, we got that continue to utilize the principals and our innovation strategy. If we continue to introduce products that completely change the model and return the invested capital for our customers and as we do that we will continue to grow through the cycle.

We’ll go next to Mike Shlisky with Seaport Global.

Yes, good morning. So, I just want to ask about your comments on the U.S. business during the fourth quarter, it sounds like that you said that it was pretty good across most categories. So, I guess that would include some of the heavier crane category. So, could if you maybe give us some color on the gross margins of the most recent heavy crane shipments -- what you had maybe over the last couple of years, just kind of give us the kind of quantification as to how well the man to walk away [ph] has been implemented so far from your older shipments?

Yeah, Mike, I mean, I would generally say that when I look at the year-over-year change, really, it's not in the larger cranes that we're talking about, it's more of the -- what I'll say, the boom trucks and the industrial trucks and in addition to that we continue to push our aftermarket with our margins going up as well. So, I think, it's really not the larger models that we're talking about, it's more the other items that are generating the volume in U.S. The larger models that as you're referring to, Mike, are primarily crawlers and I think I beat that to death by saying that that's a market that we really need some help from infrastructure spending to make that come back where we can really fully utilize the efforts that we put in restructuring that business.

Okay. And then secondly, I want to ask about the whole India that started last quarter, it sounds like most of those cranes were in fact being marketed, but is that customer going to come back to the market anytime soon, I guess the issues they had in the last quarter, I mean, is that kind of resolved by now and [indiscernible] you may look at for 2018 there?

No. They’re not resolved. The answer is, yes, I think that anything that needs to have legislation change in India, it takes time. We know for a fact that our customer -- these cranes, we know our customer need these cranes and we also know that there’s a substantial amount of effort to try and get this resolved by the end of the second quarter.

We’ll go next to Seth Weber with RBC Capital Markets.

Good morning. So, I think first I just want to clarify what I think I heard earlier, Barry, did you say operating margins in 2018 up at least 150 basis points year-to-year. Is that right?

That’s correct. That is correct.

Great. There has been a lot of restructuring, and a lot of plant moves and things like that. Can you give us some idea of where you're at from a capacity utilization at this point, maybe by region if that's possible?

I mean, we know -- I mean, you can probably imply from my comments that it's still extremely low in the U.S. even though we closed that 550,000 square-foot facility, extremely low in the U.S. And as we go to Europe, I mean our plants are doing exactly what we envision them to do, and they're absorbing in big ways that are making us extremely happy.

Okay. So, would you say the US is below 50% so at this point?

Yes.

Okay. And then maybe, I don't know I might have missed this, sorry, Barry, the commentary around sort of this next growth initiative, I know you've talked about the aftermarket history over the last year or 2. What else should we be thinking about as part of this kind of growth move that you're kind of alluding to? Is it peripheral markets? Is it just more product? I'm just trying to think about how you're envisioning this process.

Manitowoc Cranes and President of Manitowoc Cranes When you look at what we've talked about for the last 21 months since I've been here, I mean, we've talked an awful lot about The Manitowoc Way, and all the tools and processes that we implement in order to ensure that we're going to get the type of results that we are communicating externally. So, with regards to our operational excellence program in this company, we have a very, very highly structured process-oriented approach. With regards to growth, we're not nearly as structured. And when you're as operationally focused as this company is, I said in the prepared remarks. And what I mean is we're trying to take a growth process and operationalize it, if you will, into something that all of our salespeople can utilize in order to get strategic growth. I mentioned we're starting out targeting 2 particular market segments that we are currently not exhibiting the type of growth rates that I had originally thought. And we are implementing a process that shows us how to approach these markets in different ways to grow substantially, and I just am absolutely astounded by what we found just in the last 2 months of effort. So, I'm very, very encouraged by this. As you know, we're very process-oriented people, and I just felt that in order for us to continue our success, once we operationalize this company the best way we can, we need to have process around strategic growth.

Sorry so what are these -- sorry if I missed, what are two areas that you are focused on?

Give us a few more months then I will tell you.

Okay. But it’s separate from the after-market initiative you talked about?

Absolutely. The aftermarket initiative is alive and well. It's one of our strategic priorities, and it continues on. This is in addition to all.

And will this require capital, capital investment or is it just using?

No, no, it’s just using new tools and process.

We’ll go next to Steven Fisher with UBS.

Thanks, good morning. If I could just gauge your confidence Barry in the message around 10% margins by 2020, I know it probably will still depend on some of the shape of the recovery in the crane markets. But how are you thinking about that target and the base case path for getting there? I know you just said at least 150 basis points to 2018 but that still is gap to get up to 10%. So, if you could just talk about that would be helpful.

I mean we are 100% committed to that still. As I have mentioned to you and I said a number of times during this question-and-answer session as well as prepared remarks when we are operating at the capacity levels that we are in the U.S. it's going to be extremely difficult in order to get to that target. However, I do know that by studying this market that we are not going to be at these historical lows in those two major product lines forever. And as positive sentiment comes back and those two particular areas of our business continue to rebound, it's going to be the proverbial hockey stick in that area. We continue to see nice improvement in all of our base businesses that are growing with 150 basis points of margin expansion. But when you have such as large portion of your revenue base -- remember when we put the target together was based on '15 revenue. And when you look at where our key volume, what our crawler crane volume was back in '15 we are a long away from that. Now we are supplementing with our areas and we are growing in other areas which is helping but we are going to need some market recovery in those areas because quite frankly that was part of the original assumption.

And then just to come back to the question about the stocking and the orders in the next couple of quarters because obviously you have a CONEXPO in the comps as well. S if you could just maybe frame directionally in the first quarter. Are you think thinking that that orders could be down?

Down from fourth quarter…

And year-over-year, or either from both?

Yes, I expect them to definitely be down from the fourth quarter but I think we have a shot at the end -- pretty close to what we did in the first quarter without CONEXPO.

Without CONEXPO is that you are adjusting that number or something absolute number?

No, no, no that’s absolute number.

CONEXPO this year. got it.

We will go next to Charlie Brady with SunTrust Robinson Humphrey.

Can you maybe just remind us at kind of what volume level -- obviously in the capacity utilization is not where you need to be because of the volumes. Can you tell us where your added capacity utilization at Shady Grove and kind of what does it need to be to try to get up to margin levels that you are aiming for?

We'll all I said Charlie is that it's under 50. And it needs to get north of that. The exact number I don’t think we have calculated, we can work on that and try to get you an answer but I just know that it has to go well above where it is today. But let me just clarify that if you will. Well above where it is today it's still not near not near peak levels we have exhibited.

Great. So, just as a follow-up here. I want to go back on the revenue question for 2018 and the guidance, or lack thereof. I understand visibility is challenged sometimes, particularly in a market, but it strikes me that you have provided guidance for the following year in the past, the market sounds though, it’s getting better coming off the bottom there is more interest from the dealer level, and I’m just trying square up, is it a function of a -- you had a large influx of orders in Q4 and then maybe we pull some stuff forward and then you got tough comp with the CONEXPO stuff and some other things in a year ago, I’m just trying to understand the visibility or the lack of visibility, and not being able to give some sort of sense of where you think 2018 is going to shakeout even in a range format for 2018?

Well, I could have given you a range, Charlie, but it wouldn't have been worth on the paper it was written on or where it was set. I mean, when you look at what we booked in the fourth quarter and you annualize that which is I know, it’s one of the things that you guys have a tendency to do, that’s well above what my revenue expectations are for 2018 because let’s face it. I mean, you heard me say that in Europe, there has been some change and there has been some utilization increases and modest growth, but by no sense of the imagination that I have said or anyone have said that the broad-based recovery in the crane market in the U.S. is imminent. So, until, I see signs that that is a broad-based recovery, I’m going to just pass to know what I have to do from a cost perspective and from a revenue perspective in order to meet our midpoint. And as I said, our midpoint isn't going to go down - our midpoint isn’t going to go down, but if revenue goes up above our expectations and this thing recovers faster than I think it was, then we'll update you.

And your…

You’re asking me to give you something that I don't have, and we're very transparent. It's not like we're trying to hide anything. We want to give you numbers that we know are good.

Yes, I mean I appreciate that. And I think we all do. I mean that’s -- I don’t want to -- no one wants bogus numbers out there that then get cut back. I’m just trying to get a sense from a capital [ph] standpoint, the visibility sounds like, maybe it different than it has been historically and that’s all I am trying to understand. Are you…

Yeah, yeah. I think that’s absolutely correct. I think that’s absolutely correct. Absolutely correct.

Does your guidance only half have implied revenues up year-on-year?

Yes, Charlie. So, our guidance -- our guidance is twofold. Number one, we have -- what I'll say is we put together what we have is what we consider a best-case scenario, but we've always said that we're going to have at minimum of 150 basis points to 200 basis points improvement on a year-over-year basis and we're going to live by that. With just on the revenue side what we don't know on the orders side and revenue side, what we don't know is, how many of those orders are going to go to the latter half of the year that are already in the stream. So we're not quite sure how it's going to play out with all of the dynamics within the U.S. market, whether or not, these orders are going to then be, flooding the market into the second half of the year or if there, truly a first half of the year and that visibility is yet to be determined by us, which is why we're a little cautious as to how we see the products that we’re putting into dealers channels turning into what I will say sales and rentals within the user group.

We’ll go next Mig Dobre with Baird.

Yes, thank you. Good morning. I am going to beat the order horse some more. So, I understand the comments on stocking but -- and seasonally and all of that. But if I look at this quarter, you’ve had the best order quarter in three years. So, what I am trying to understand is why is the stocking dynamic happening, there has to be a reason behind it. Is it that there’s too little inventory in the channel, is it that the end markets are truly getting better, is it that you’ve gotten new product? Because all these things matter in the way we’re thinking about 2018 that’s why I am asking.

I think it’s all of the above. It’s all of the above. Our customers are having a higher sentiment that they think that there’s going to be some pent-up demand as a result of the stymied investment that’s happened over the course of the last two years. I think there are some pockets of markets that are fundamentally improving but haven’t had the inflection point that everyone would like to see. And so, I think that’s -- it is that. I think it is anticipation that this thing is going to turn and people want to be in the queue for making sure that when it is required for the end market, doesn’t have to supply. I mean a dealer network without supply is deserting when there is recovery.

Okay, fair enough. Then is this the way I am kind about revenue, and Barry if I am off mark, help me out. But you said that less than half of your orders are meant for stocking which would be less than 300 million in the fourth quarter. You’ve done 1.86 billion of orders in 2017. So, let’s not get down by call it 200 million, 300 million but your backlog is up 282 million. So, on a net basis it looks to me like without any improvement in your business you should be able to at least 1.8 billion of revenue by converting backlog into 2018. Why am I wrong?

I am not saying you are wrong.

Okay, fair enough. That’s all I look for. Thank you.

We’ll go next to Nicole DeBlase with Deutsche Bank.

Hi, yes, thanks. Good morning, guys. So, I am not going to try to beat the order horse again, I feel like we’ve kind of explored that as much as possible. So just a couple of nitpicky ones. I am thinking about SG&A cognizant that you helped us with backing out some of one-time or 2017 specific items. How should we think about SG&A on a year-on-year basis in 2018?

Yes, I think we’ll be somewhere in the 245 to 250 range.

Okay. Thanks, Barry. That’s helpful. And then I guess like on oil and gas that’s one thing that we didn’t really talk about a whole lot. The crude prices continue to move higher. Have you guys started to see increased order activity from that end market at all or is still pretty low?

Still pretty low, pretty flat. And one of the things that is dynamic is as you’re well aware in particularly in the U.S. the wells today are substantially more productive than it did in the past. So, there is a need for less equipment in some cases. So, we are evaluating that. We continue to make sure that the products that we are putting into the market are performing well above our competition, and I believe that you know particularly when it comes to RTs which is know the number one crane is utilized in the oil and gas business. We were getting to the point where we have what I would call world class performance. and as that continues to -- that capacity continues to be utilized I think we are sitting very well with our product portfolio. With regard to the Middle East so I can tell you there is still very, very muted investment. And as I said in my prepared remarks that was once a very, very good region for the Manitowoc Company.

We will go next to Larry De Maria with William Blair.

A I recall your previously recent price increases in January just curious if that happened if it went in across the board as everything is just deal by deal. And if that contributed to any of the order shares before, obviously in the fourth quarter before the new year? And secondly what's steel price inflation you are using, I am not sure if you said it, I apologize if you do, but what inflation for steel or the price you are using for '18?

Well with regards to the pricing we didn’t get much pricing put in for the fourth quarter. But we are and have put pricing in place in the new year. And I can say that our orders are trending where we thought they should. Now as far as steel inflation David can...

I would generally just go back to what our philosophy is and that is to offset what I'll say input cost with price. So, we actively look at our steel requirements where we are and what we need to do with relative to pricing. So, where we think it's going to be is it's probably not as relevant as how we address the changes within the marketplace.

But obviously you are assuming its higher than '17 I guess?

Absolutely. Yes, that is correct.

And secondly, I would say you have talked about crawlers and [indiscernible] them to come back just curious if you are seeing and quoting or anything like that in those categories or its really on the comment you need infrastructure, the rubber to hit the ground so to speak with the infrastructure for those market to come back? Or if there is any moving quoting given the broad-based recovery you are seeing in cranes in North America?

Yes, I'll say that I'm glad someone finally asked that question because we are seeing increases in quoting activity in both of those product lines. So that is very positive. But it hasn’t translated itself into orders in our backlog yet. But the activity with RTs and crawlers in particular are improving [indiscernible] its coming back which is a big plus for us in the future.

We will go next to Stanley Elliott with Stifel.

Question is that on the 150 basis points on margin opportunity are you baking much in in terms of the RTs or the crawler is coming back and I apologies if you said that already.

I did not and no I'm not.

Perfect. And then secondly, how do we think about -- you guys have done a really nice job on improving the working capital of the business. With markets looking like they're firming up a little bit, what sort of level of working capital improvement should we think about in the coming year?

Yeah. I would say, Stanley that, we’ve always prided ourselves on looking at improving our inventory turns by half a turn the year. That's been a stated objective of ours and a stated goal. So, in that regard we’re doing that. And we also have different programs underway to monetize our receivables on a quicker basis as well. So, I’d say those are the two key things. And obviously, we work very closely with the vendors in looking at how we can partner with them for a long-term value relationship versus just buy and sell relationship.

And we’ll go to Steve Volkman with Jeffries for follow-up.

Yeah. Dave, I just wanted to ask you what cash looks like in 2018. So, I think you just started to do that, but maybe just flush that out?

Hey, Steve, I would say it’s a little premature for that, but obviously, this year in 2017, we looked at breakeven in cash and we ended up doing a lot better. So, we probably did better than we anticipated. So, it's probably taken a little bit away from 2018 perhaps. And I’d say it just depends on the volume and the working capital commitment relative to that. So, I think that's the biggest wildcard which we're trying to get our hands around, but make no mistake about it. Cash is our number one priority, monetizing anything that we can within our inventory to generate cash is going to be paramount because as you know, our $260 million in notes comes due or is callable in February of 2019 and we want to be in the best position to allow us to get the best type of syndicate rate that we can when we refinance those. So, long and short, I'd say that I don't see it’s being negative. I'm anticipating that we're going to be positive, but to the degree of positive, I can't say at this point in time. Yeah.

Great. Yeah, I was talking about those notes too. So, thank you and that's it.

And that concludes our question-and-answer session. I would like to turn the conference back over to Mr. Ion Warner for any closing remarks.

Thank you. Before we conclude today's call, please note that a replay of our fourth quarter 2017 conference call will be available later this morning by accessing the Investor Relations section of our website at manitowoc.com. Thank you, everyone, for joining us today and for your continuing interest in The Manitowoc Company. We look forward to speaking with you again during our first quarter 2018 conference call. Have a good day, everyone.

And that concludes today’s conference. We thank you for your participation. You may now disconnect.