Good day, everyone, and welcome to The Manitowoc’s First Quarter 2019 Earnings Conference Call. Today’s call is being recorded. 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 of the Manitowoc Company. Please go ahead.

Thank you and good morning, everyone, and welcome to The Manitowoc conference call to review the company’s first quarter 2019 performance and updated 2019 full year business outlook, as outlined in last evening’s press release. With me today are 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 under events and presentations. We will be sure to reserve time for questions and answers after our prepared 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 or actual projections due to one or more of the factors among others 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, please refer to Slide 3, and I will now turn the call over to you, Barry.

Thanks, Ion, and welcome, everyone. Manitowoc has a great start for the year. The strong earnings performance was driven by sales growth of 8% and our eighth consecutive quarter of year-over-year adjusted EBITDA percentage improvement. This also marks our fourth consecutive quarter of positive adjusted to EPS, another significant milestone from Manitowoc. I’m very pleased that our LEAN transformation continues to drive improving financial results. However, we’re always analyzing and identifying areas for improvement. While there was an inventory built for the first quarter as was expected and we’re confident as the year progresses we will consume this bill. Our topline results were driven by sales growth in North America and our aftermarket business. Gross margins improved to 150 basis points year-over-year driven by increased sales volume, a favorable mix coupled with the benefits of strategic pricing actions initiated in 2018. I’m extremely pleased with our progress particularly with the growth in our aftermarket business. Our transformation to a higher margin crane company is with the principles of Manitowoc way continues to produce improving results. We’re operating the business by aggressively managing costs, utilizing multiple sourcing strategy, outsourcing non-core activity and optimizing manufacturing capacity to name just a few. As I am sure, you’re aware additional Chinese imports have been in the news for the last few days. Like any industrial company Manitowoc is not immune. However, I’m proud to say that we’ve proactively partnered with the supply chain to ensure that any additional tariff impact to our financial results will be negligible. This quarter I see a mix picture in demand within the crane market. On a positive note, the U.S. continues to perform very well with encouraging customer sentiment and steady project work. Rental utilization rates are strong primarily driven by strength in the energy and commercial construction and markets. We are encouraged to use crane values continue to stabilize as well. Based on your first quarter results, improvement in ability to deliver on our commitments we are raising our outlook for the balance of 2019. David will provide more color on this shortly. In March, we completed the long anticipated refinancing of our debt. The interest savings are substantial and we have significantly increased our flexibility to deploy capital. Our preferred option is growth and increasing our recurring revenue as a percentage of sales. We are also pleased that our board has authorized the $30 million stock repurchase program allowing us to buyback our significantly undervalued stock. Rest assured we will deploy our capital in the most efficient way to provide superior returns to our shareholders. We remain committed to our long term goal at transferring Manitowoc into a standalone crane company with double-digit margins. And with that I will turn the call over to David to walk us through our financial results and updated 2019 guidance.

Thanks Barry, and good morning everyone. Let's move to slide 4. I would like to start off by discussing a transformative milestone from Manitowoc. As previously announced on March 25, we issued $300 million of 9% notes due April 1, 2026. In addition, we entered into a new ABL credit facility with an initial borrowing capacity of up to $275 million. We used the proceeds to retire our previous 12.75%, $260 million 2021 notes and the domestic account receivables securitization program. As noted by Barry, this transaction significantly lowers our annual interest cost and provides us flexibility to execute our strategy of focusing on growth and shareholder return. The first step in this strategy was announced on Tuesday with our board authorizing $30 million share repurchase program. Our first quarter results gave us a great start to the year. Net sales were $418 million, an increase of $32 million or 8% from the year ago. On a currency neutral basis sales increased $48 million or 12% year-over-year. Sales grew organically in the North American and European markets and were favorably impacted by the realization of global price increases from last year. First quarter orders totaled $441 million and more in line with our expectations. On a currency neutral basis our first quarter orders would be down 15% year-over-year. The decline in our year-over-year orders was primarily driven by a softening of commercial and residential construction demand in Europe and continued weakness in the Middle East. As I mentioned in the previous call, we did anticipate some orders moving out to Q2 because of the Bauma trade show. And our April orders indicate that our assumptions were correct. Ending backlog increased $23 million from December 2018 to $694 million at March 31. Compared to the prior year backlog decreased $63 million…

Thank you, David and let's move the slide 6. Our goal is clear. We are committed to continuously improving shareholder value by executing on our key four strategic priorities. Those being margin expansion, growth, innovation and velocity. I'd like to highlight the progress we are making on two of the strategic priorities innovation and growth. First innovation is the engine that delivers the increasing value by providing solutions to meet diverse customer needs in different markets around the world. This was most evident at the Bauma trade show in Munich Germany last month. The contrast between Bauma in 2016 and the last month was extraordinary. Three years ago I heard from customers firsthand about the product quality and reliability challenges we face. In addition they told us that we were behind on our innovation pipeline versus the competition. In fact customers wondered if Manitowoc would even survive the industry down turn. Fast forward three years, it was remarkable to hear from customers who value the swift and decisive actions we took to fix our quality while accelerating our velocity to bring new products to the market. Our product quality and reliability has marginally improved and customers have taken notice and we continue to build their confidence in the new Manitowoc. The six new products introduced t Bauma showcased our continued investment in developing industry-leading products with great quality that deliver excellent total cost of ownership and provide a product portfolio to enable market share growth. Customer reception was exceptional with Bauma, which has proof that the revolution is real at Manitowoc. For example, we introduced the grow of GMK 5250 XL a new 250 ton all-terrain crane. With three and a half meters more boom length and the strongest load of capacities in the five axle crane segment, this crane…

Thank you. [Operator Instructions] We'll take our first question from Ann Duignan of JP Morgan.

Hi, good morning everyone.

Morning Ann.

Barry, would you expand on your pursuit of acquisitions, is that something that's going to be more aggressive going forward and would you be looking for diversification of your portfolio by product or by geography? If you could just expand on that that'd be great.

Yes Ann, great question. As you know when we spun off the food service business three years ago, we were stuck with an indenture that basically gave us zero flexibility. Now with this new refinancing we have the ability to do acquisitions and deploy our cash in a much different way than we have in the past. As I said in the prepared remarks, if this journey that we're taking with regards to acquisition does not include a substantial portion of recurring revenue then we're not even acting the strategy the way we need to. With 20% recurring revenue in a cyclical business that is not necessarily a long-term design for success. So the acquisition strategy that we're enacting stays very close to the core in the crane market, but really will be focused on how we can provide more parts and services and continue to build our revenue streams that weather the cycle.

And theoretically, I agree with you those recurring revenues for a cyclical business is very important that we will watch carefully I guess. And then follow up question more technical just on days on hand you had 145 days versus last year 135 days and I know you said you had anticipated building inventory. But that seems higher than we might have forecasted. So did you build more inventory, were you're not able to ship as much as you thought you could shift? If you could just give us a little bit more color on the inventory side I'd appreciate it and I'll leave it there? Thank you.

Sure. Two primary drivers. One last year, we didn't have pre-buy of engines for the tier 5 transition that's happening in Europe. So we needed to do that for our GMK product line and secondly, quite frankly, we have a lot more prototypes in our inventory as a result of all the product development. So if there are two major areas of driving the increase, I would say it's because of prototypes and the pre-buy of engines and I am confident that as we analyze the balance of the inventory it's really just the building of seasonal inventory to handle the upcoming construction season.

And anyway to size the impact of the engines or the prototypes versus normal seasonal?

Yes Ann, this is David. I would just say in general it's to meet our needs. So from a size standpoint it's a number that is big enough to be material but not an overly sizable number.

Thank you. I appreciate the color. I'll get back in line.

Thank you. We'll take our next question from Seth Weber of RBC Capital Markets.

Good morning guys. I'm just wondering if you can help frame for us the confidence in the raise revenue outlook against the lower backlog, I mean maybe just give us some idea of the impact of the Bauma show how successful was it? Would you expect bookings to be up year-over-year versus the 430 or so from last year? I guess that's my first question. Thanks.

Yes, I mean the Bauma show is exactly as David had indicated in his prepared remarks. I mean and was reflected in our April orders. They're up substantially. We continue to evaluate where there is slowing. Everyone knows there is slowing in Europe and we're evaluating that very handedly, but we are very confident that the incoming order rate that we're currently experiencing will definitely carry us throughout the year and not have any problem affecting our overall ability to deliver the guidance that we've just put forth.

So you'd expect orders to be up year-to-year versus to 2Q 18?

Yes.

And then, maybe just a question for Dave. The implied incremental margins kind of narrowing here as you go through the year which seems I'm trying to put that versus the improved pricing and mixed commentary from the release. Is there something in the order book that's making you just less positive on the incremental margins going forward or what's going on there? Thanks.

Yes. So Seth I think Q1 was really a great quarter in terms of the items that were shipped from a product mix point of view and a couple of other items in there relative to the overall gain. So we've always said that incremental should be 20 to 25 on a year-over-year basis and when you categorize where we come out in 2019 it'd be 25% - 26% at the midpoint at that level. So we're looking at it over the whole year versus one quarter and I would say that product mix is probably the biggest impact in the margin decline for the rest of the year.

So the mix is getting less rich as you go forward just so I'm understanding is that –

Correct.

Is that a function of region or is it –

Little bit of both. It's both. Its regions and products.

All right, I'll leave it there. Thank you very much guys.

Thank you. We'll take our next question from Mircea Dobre with Baird.

Good morning guys, and a nice job on margins this quarter. I guess my question is back to Bauma. Barry can you give us a sense for how this trade show compared to prior trade shows from a from a demand perspective? Obviously, I understand the comment that you got from customers that your product seems to be improving which is great but how do you think demand shaped up?

Our orders at Bauma were up we're up over 16.

And I'm kind of going back a few trade shows here and it sort of looks to me if I'm looking at my model that oftentimes you would see a 150 maybe even as much as $200 million worth of orders coming from a trade show like that and obviously I'm trying to pin you down here and getting more of a sense as to how big of a trade show this was. Can you help me here?

No. Nice try, but no. All I can say is that the number of units that we booked this year was up over the number of the units that we booked in 16 and I think the product mix was what I would say is favorable and again I would also say that we are – these orders that we have put on our books in April as a result Bauma are at our higher prices also.

Okay and then maybe last question for me. I'm sort of trying to understand what you're communicating here. You've got this $30 million buyback that you've announced. You're also raising guidance a little bit on a top-line and you talked about diversifying the business. So I'm trying to understand how you were thinking about your priorities at this point especially given this buyback announcement and some of the puts and takes on a macro?

Yes. The buyback again I would say is a confidence level in our board that we will deploy our capital opportunistically in the best interest of our shareholders. That does not mean that as a result of that that at noon today when our blackouts lifted we're going to go by $30 million worth of our stock. We will certainly do that opportunistically because we do believe and we remain committed that we have the ability now to go after acquisitions that will finally prove to the industry that we know what we're doing and we will enact a strategy that will allow us to continuously build our recurring revenue as we go through the cycle. And that I hope will be evidence certainly within the next six months and I think as we unveil that strategy and we continue to evolve it I think the world will finally see that double digit operating margins are in the future.

Just to clarify though when you're saying that it's going to be evident in the next six months are you saying that your -- something is imminent and you're contemplating something here in terms of potential acquisition?

Yes.

Thank you for taking my question.

Thank you. We'll take our next question from Jamie Cook of Credit Suisse.

Hi good morning. A nice quarter. I guess, just following up on your commentary in terms of increasing your recurring earnings stream, I mean I think you said you're aftermarket which is more recurring as 20% of sales and at your analyst day, you targeted 25% of sales and that probably seems right for a crane company. So I guess my question is like one, is there a target in terms of recurring that year, is there a target of percent of sales that you're trying to get to and I don't understand how you could really get there without staying sort of core to the current – sorry without getting outside of the crane business because structurally I would just think aftermarket sales for a crane business is 25%. So that's my first question and then second question and sorry if I missed this, have you guys talked this year I know you talked about the cash flow dynamics in the quarter but how do we think about sort of free cash flow for the year? Thank you.

Thank you Jamie. Very good question. The answer to the first part of the question is, we are absolutely convinced that we can raise this recurring revenue as a portion of our revenue stream to 25% to 30% range. Yes, you are correct that these cranes are designed to not fail and the amount of spare parts that are necessary are a lot different than other businesses that have built in consumables. However, what I will say is that crane uptime and crane availability through service is absolutely imperative as this industry of ours. And we want to make sure we're at the forefront of being able to capture that service as a result of what we're seeing from our larger customers as we become closer and closer to them. And we look at the original cost of the crane, that's really over time only a third of the total cost of ownership in the life of a crane. So, 65% of the cost that an operator utilizes over the life of a crane is outside the original equipment cost. So, we must as we continue to evolve and become a premier standalone crane company, we must participate in that 65% of the time. And that's exactly what our strategy is to do. And with regards to the second part, I'll let David answer that.

So Jamie, when we look at cash flow for the year, as you know the one dynamic that's a little bit different is our account receivables securitization program that was in existence at the end of life here. Outstanding on that facility was $75 million, when we collapse that facility into the new ABL facility, we in essence paid off that facility which show as a use of cash on our cash flow statement within the accounts receivable line. Which is why there's such an increase in the receivable line. So, adjusting for that, we would anticipate that a full-year cash flow from operating activities is probably going to be in the vicinity of $20 million to $30 million negative, excluding that accounts receivable of course it would be positive. So, that's kind of what we're targeting for the year.

Okay, thank you.

You're welcome.

Thank you. We'll take our next question from Jerry Revich of Goldman Sachs.

Hi, good morning everyone. This is Ben Burud on for Jerry.

Hi, Ben.

Hi, Ben.

Good morning. Just wanted to touch on orders a little bit more. So, if we just think about orders and how they're turning year-to-date over last year, can you kind of give us a flavor for how those are looking maybe ex-bauma and obviously that's a predominantly European Trade Show. Can you kind of give us a feel for how orders have shaped up in North America specifically as well?

In North America, orders were up year-over-year. I mean, we're continuing to grow in North America, the market is growing, there's a lot of activity in the Gulf Coast which is driving future demand that we're in a very good position to start capturing. So, as far as the Americas are concerned, I feel pretty strong that we're going to continue to see growth. I mean Europe, I mean a lot of people sat on their check books while they were at bauma. Just waiting to see what would evolve over the next six months. There is so much uncertainty as you know with Brexit still out there, the yellow jack it's in France and all the other things that are happening throughout the European Union. There is not a high level of confidence. With that being said, I mean, we took a good portion of tower orders which for the European market. What indicates to me that our customers still believe that the construction activity in Europe is going to continue for the next few years anyway?

Got it. And then, can you give us an idea of how competitive intensity stacked up bauma; both at the trade show and as well as maybe some color on recent transactions in the crane industry now, those have impacted the competitive environment?

The recent trade's actions haven’t impacted the competitive environment at all. I think consolidation is always a good thing in industry and I think that will ultimately help the industry. I will say that competitive dynamics in the U.S. are exactly what we thought they would be. But in Europe, when there are signs of slowing demand, sometimes people decide to do crazy things and we worked really hard as you can see over the last three years to get our standard margins to the point they're at, that we're not going to participate in the silliness. But we'll continue to book orders that we know we can grow our margins in and the ones that these guys want to chase this and other plans well let them chase them and do it. But we're going to have discipline throughout the cycle.

Got it, thank you.

You're very welcome.

Thank you. [Operator Instructions] We'll take our next question from Steven Fisher of UBS.

Thanks. Good morning.

Good morning.

Good morning.

I'm wondering -- hi guys, I was wondering if you can just give us a little more detail on your view of a tariff impact. I know you said it's negligible. Maybe could you just talk a little bit about how you protected your procurement cost from here? And then, kind of the view on price versus cost for the rest of the year.

I'll talk about our strategy and David can give you a little more color on the actual detail. But when that whole thing set out, I mean few years ago when Trump was elected we knew this was going to happen. We had a very one portion of our product cost was severely impacted by the tariff. And we as well as others have gone to alternative sources that still have high quality still have low cost and are not subject to the tariffs. So, we have been changing our supply base, we have been moving production around the world, we've insourced them, we've outsourced them but overall we did the analysis -- excuse me -- in great detail. We see zero impact from the new tariffs in the U.S. And you want to comment on that?

Yes Steven, I think we're looking at it from an incremental standpoint and what was already in the books and what was there so as Barry indicated. A) Number one; a lot of the items that we bought were already at the higher level tariffs and B) when we looked at our supply chain, we started working on our supply chain understanding that this could be here for quite some time. So, the next go around that that was just instituted early this morning is not going to have an effect on us any material size.

Okay, that's helpful. And then, if you could just comment a bit more on the North American market demand footprints in particular, what you're seeing say from industrial construction markets versus infrastructure versus building construction kind of where you're seeing the markets have relative strength and where the ones that are kind of relatively lagging?

I would say yes the structure still lagging. As you know there's a lot of renewed talk in D.C. about that from both parties and we're anxiously awaiting the outcome of those decisions. And I think that will certainly be very good for overall demand. But if you want to know where the strength in U.S. market is, it's it comes down to one region and that's the Gulf Coast. The Gulf Coast with all the L&G actions the RTCS at are happening and pipeline that are happening, activities there is there is going to be a strong need for in particular RT cranes over the next three to five years, some of our customers that we talked to bauma were upwards of a 1000 cranes short in their projection over the course to the next three years. So, that goes very well for us particularly with the technology that we've introduced. There is a shortage of trained operators and when you look at our technology and with our City CCS [ph] it' much easier to understand and to learn that a manual system. So, we're extremely encouraged at what we see in the Gulf Coast.

Terrific, thank you.

You're welcome, Steven.

Thank you. We'll take our next question from Seth Weber of RBC Capital Markets.

Thanks for taking the follow-up. Just you know Barry last quarter you mentioned you kind of hinted maybe some additional restructuring in Europe and elsewhere. Is there any updates there, thanks?

As you could see we said we spent $4 million in the first quarter and our guidance was $14 million so we've got $10 million more to spend and I would say that's primarily going to be targeted at the European market.

Okay. But nothing incremental to what you were thinking last quarter, then?

Not at this point.

Okay, thank you.

You're welcome.

Thank you. At this time, there are no further questions in the queue. I would like to turn the floor back over to Mr. Ion Warner for closing remarks.

Before we complete today’s call, please note that a replay of our first quarter 2019 conference call will be available later this morning by accessing the investor relations section of our website at www.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 next quarter. Have a good day, everyone.