Executive Summary / Key Takeaways

• The Manitowoc Company, Inc. (NYSE:MTW) is strategically transforming from a product-dominant manufacturer to a customer-focused solutions provider, driven by its "CRANES+50" strategy, which emphasizes high-margin aftermarket services.
• Despite a complex global trade environment and tariff headwinds, the company demonstrated resilience in Q3 2025, with net sales up 5.4% year-over-year to $553.4 million and adjusted EBITDA increasing 30% to $34 million, reflecting a favorable revenue mix.
• Non-new machine sales, a cornerstone of the CRANES+50 strategy, reached a record $667 million on a trailing twelve-month basis as of Q3 2025, generating approximately 35% gross margins and providing a crucial offset to new equipment market softness.
• While U.S. demand faces uncertainty due to evolving tariff policies, European markets, particularly for tower cranes, are showing signs of recovery, supported by infrastructure investments and low dealer inventories.
• Manitowoc maintains its full-year 2025 guidance for net sales of $2.175 billion to $2.275 billion and adjusted EBITDA of $120 million to $145 million, though achieving the low end of free cash flow guidance will be challenging due to working capital dynamics.

A Century of Resilience and Strategic Evolution

The Manitowoc Company, Inc., founded in 1902, boasts over 120 years of experience providing engineered lifting products and services. This long history includes navigating significant global economic upheavals, from two World Wars to the Great Depression and more recent recessions, forging a resilient and adaptable corporate culture. Following the COVID-19 pandemic, Manitowoc embarked on a pivotal strategic shift, introducing its "CRANES+50" strategy. This initiative aims to reduce cyclicality and enhance return on invested capital by aggressively expanding its aftermarket business, which is characterized by lower capital intensity, greater predictability, and more attractive margins. This marks a fundamental transition from a traditional product-centric manufacturing model to a customer-focused solutions provider.

The global heavy construction and infrastructure machinery industry, in which Manitowoc operates, is mature and cyclical, heavily influenced by macroeconomic conditions and government spending. Key competitors include Terex Corporation , Caterpillar Inc. , Konecranes Plc (KNCRY), and Oshkosh Corporation (OSK). Manitowoc differentiates itself through its specialized focus on lifting solutions, particularly its strong brands like Grove (mobile hydraulic cranes) and Potain (tower cranes), and its expanding global aftermarket service network. This specialization allows Manitowoc to cater to complex projects in energy, petrochemical, and high-rise construction, where reliability and specialized support are paramount.

Technological Edge and Operational Excellence

Manitowoc's commitment to innovation and operational efficiency, encapsulated in "The Manitowoc Way," underpins its competitive positioning. The company consistently introduces new products and leverages advanced manufacturing techniques. For instance, at the Bauma Trade Show, Manitowoc showcased the industry's only hybrid all-terrain crane capable of operating for an entire shift, offering tangible benefits in fuel efficiency and reduced emissions. Furthermore, new all-terrain crane models feature upgraded operator-centric enhancements, directly addressing customer feedback for improved usability and performance. In the tower crane segment, the company launched the next-generation EV self-erecting tower crane and the MCT 2205, its largest tower crane designed and built from its China operations, specifically tailored for Middle East giga projects. These new cranes are designed to provide superior performance under challenging conditions, such as high winds or remote sites, potentially leading to better operational efficiency for customers.

The "Manitowoc Way" extends beyond product development to encompass operational excellence. The Zhangjiagang factory in China, for example, achieved a 30% increase in earned hours with flat headcount in Q3 2025, significantly improving flow and throughput in roughly half the space through lean methodologies like kitting and point-of-use materials. The company has also integrated Artificial Intelligence (AI) into its improvement processes, automating repetitive tasks in computer program conversion, which has already saved 2,000 man-hours and avoided $400,000 in spending. This demonstrates a tangible benefit of technology in reducing operational costs. Safety is another core tenet, with the company achieving a recordable injury rate (RIR) of 0.83 in Q3 2025, a 36% year-over-year drop, and reducing greenhouse gas intensity by 36% since 2019, equating to $100,000 in savings in 2024 alone.

To enhance its aftermarket capabilities, Manitowoc implemented ServiceMax in Q2 2025, replacing over a dozen legacy systems. This new platform significantly upgrades technician productivity, improves service contract management, and provides global asset management, enabling the company to track every machine from "cradle to grave." This technological advancement strengthens customer relationships and provides a robust repository for maintenance and service work, crucial for supporting the CRANES+50 strategy. The company is also trialing innovative solutions like battery systems and flywheel power generation units in France to help tower crane customers manage on-site electricity efficiently, potentially reducing connection times to the grid from months to just a day.

Financial Performance and Strategic Momentum

Manitowoc's financial performance in Q3 2025 reflects the early successes of its strategic initiatives, even amidst a challenging global backdrop. Consolidated net sales for the third quarter increased 5.4% year-over-year to $553.4 million. This growth was primarily driven by a $17.5 million increase in new machine sales from the European tower product line, a $7 million increase in Americas new machine sales due to favorable product mix, and an $8.3 million increase in non-new machine sales. Foreign currency exchange rates also provided a favorable impact of $11.2 million.

Gross profit for Q3 2025 rose 17.1% year-over-year to $102.6 million, with the gross profit percentage expanding by 180 basis points to 18.5%. This improvement was largely attributable to higher net sales and a favorable product mix, partially offset by lower absorbed costs due to reduced manufacturing volume in the Americas. Adjusted EBITDA for the quarter increased 30% year-over-year to $34 million, resulting in an adjusted EBITDA margin of 6%, a 120-basis-point improvement, reflecting a better mix of revenue. For the nine months ended September 30, 2025, net sales decreased 1.2% to $1.56 billion, primarily due to lower new machine sales in European mobile and MEAP segments, partially offset by higher European tower crane sales and non-new machine sales. Gross profit for the nine-month period increased 4.1% to $291.4 million, with the gross profit percentage rising 90 basis points to 18.6%.

A core tenet of the CRANES+50 strategy is the growth of non-new machine sales, which include parts, used crane sales, rental revenue, and service. This segment achieved a record $667 million on a trailing twelve-month basis as of Q3 2025, representing an 8% year-over-year increase. These sales generate approximately 35% in gross margins, providing a critical, less cyclical revenue stream that helps offset volatility in new equipment sales. Since 2020, non-new machine sales have grown by 67% to $629 million in 2024, with gross profits from this segment increasing 64% to $208 million in the same period. The company has also doubled its global field service technician count to nearly 500 since 2020 and expanded its U.S. service locations to 16 from just one.

Liquidity and Capital Management

As of September 30, 2025, Manitowoc reported total liquidity of $213 million. Net working capital stood at $622 million, with the increase primarily driven by inventory, influenced by unfavorable foreign currency exchange rates, tariffs, and missed shipments. While the company anticipates a substantial decrease in inventory in Q4, overall working capital is expected to only modestly decrease by year-end due to increasing accounts receivable and decreasing accounts payable. The net leverage ratio was 3.9x as of Q3 2025, an increase from 2.66x at year-end 2024, which was below the company's target of 3x. Management is focused on bringing this ratio back down. The company remains in compliance with all debt covenants and believes its liquidity and expected cash flows from operations are sufficient to meet operational needs for the next twelve months.

Market Dynamics and Competitive Landscape

Manitowoc operates in a highly competitive global market. In the Americas, total orders were up 20% in Q3 2025, yet the market faces significant uncertainty due to evolving tariff policies. Dealer inventory for rough terrain and all-terrain cranes is trending low, while boom trucks and crawlers are slightly elevated. The reenactment of 100% accelerated depreciation through the "One Big Beautiful Bill" could stimulate demand in Q4 2025 and potentially drive dealer inventories to historical lows, signaling a market acceleration in early 2026. However, the price elasticity of cranes and the uncertainty surrounding reciprocal tariffs (now at 15% for European imports) are causing buyers to delay decisions, impacting new orders. Manitowoc, as the only U.S. crane manufacturer, could potentially benefit from additional steel derivative tariffs on other imported crane products. The company has also filed an antidumping claim against Japanese crawler crane manufacturers, asserting predatory trade practices.

In Europe, a cautious optimism is emerging. Germany and France are showing positive signs, with increased housing permits and strong backlogs for French construction companies. Germany has enacted an accelerated depreciation program, established a EUR 500 billion infrastructure fund, and passed the "bio turbo law" to fast-track construction approvals, addressing critical needs like bridge repair and housing shortages. European tower crane orders for new machines grew 34% year-over-year in Q3 2025, marking the fifth consecutive quarter of improvement, with self-erecting crane dealer inventory at all-time lows in Germany. Mobile crane orders in Europe also increased 28% year-over-year. This recovery is supported by initiatives like the U.K.'s GBP 39 billion housing program and Italy's Transione 5.0 incentive plan.

The Middle East and Asia Pacific (MEAP) segment presents a mixed picture. The Middle East remains strong, particularly in the UAE, with major projects like Phase 2 of the Abu Dhabi data center and the potential new Dubai Airport, which could require 150 tower cranes. Saudi Arabia continues with giga-projects for the 2029 Asian Winter Games, 2030 World Expo, and 2034 World Cup, requiring extensive infrastructure development. In Asia, while China's market remains quiet, South Korea shows growing optimism, and Vietnam and Australia are signaling turnarounds. Manitowoc's new Potain MCT 2205 and Grove GMK6450-1 received "Best New" awards in the Middle East, and the Potain MCT 220 was recognized as a top new product in Asia, underscoring the value of its product development tailored to regional needs.

Manitowoc's competitive advantages stem from its strong brand recognition, proprietary technology in crane design, and extensive distribution and service networks. Its specialized expertise in lattice-boom and tower cranes offers higher efficiency in specific applications, differentiating it from broader heavy machinery manufacturers like Caterpillar . The company's expanding aftermarket services, including remanufacturing and training, enhance customer loyalty and provide a stable revenue base. However, Manitowoc faces vulnerabilities from its smaller scale compared to diversified rivals like Caterpillar (CAT) and Terex (TEX), which can impact cost structures and market share during downturns. The influx of Chinese mobile cranes into Europe, prompting a trade complaint by the VDMA, highlights ongoing competitive pressures in emerging markets and price compression.

Outlook and Risks

Manitowoc maintains its full-year 2025 guidance, projecting net sales between $2.175 billion and $2.275 billion and adjusted EBITDA between $120 million and $145 million. Operational free cash flows are expected to range from $55 million to $85 million, excluding a $43 million payment made in April 2025 to settle an EPA matter. Management anticipates a "marginally better year" overall, with slight improvements in Europe (especially tower cranes) and the U.S., while Asia, particularly South Korea, remains uncertain. The first quarter of 2025 is expected to be unusually light, contributing approximately half of its historical 20-25% share of full-year adjusted EBITDA, due to build schedule reductions made in 2024.

The primary risk to this outlook remains the "great trade reset" and its associated tariffs. The company estimates 2025 gross tariff costs to be approximately $44 million, with plans to mitigate 80% to 90% through price increases, surcharges, alternative sourcing, and vendor collaboration. However, the volatility and price elasticity of cranes mean that while tariffs may not alter the competitive landscape for imported products, overall demand is expected to decline. Geopolitical events, including ongoing conflicts and other economic conditions, continue to pose risks to commodity prices, supply chains, and overall market stability. Macroeconomic conditions, such as inflation and elevated interest rates, also impact Manitowoc's ability to convert backlog into revenue.

Conclusion

The Manitowoc Company is strategically positioned to leverage its "CRANES+50" strategy as a blueprint for long-term value creation, aiming to consistently generate stable and substantial returns regardless of the crane cycle. By focusing on its high-margin aftermarket business, expanding its global service footprint, and investing in innovative, customer-centric products and operational efficiencies, Manitowoc is building a more resilient and predictable business model. While the company faces ongoing challenges from global trade uncertainties and intense competition, particularly from Chinese exporters, its strong brand, technological advancements, and disciplined operational approach provide a solid foundation. The emerging recovery in European markets and the potential for accelerated demand in North America, driven by infrastructure spending and fleet modernization, offer tailwinds that could further propel Manitowoc's aftermarket ascent and long-term shareholder value.